Blue Cross blames hospital AI for $942 million in extra costs

Hospitals have started using AI to write up patient visits, and insurers now say it is making the same care look far more expensive.

The numbers

A Blue Cross Blue Shield Association study released on September 24, 2026 says more intense care added $942 million in costs for Blue Cross plans over two years, compared with 2023, Reuters reports. Secondary conditions, illnesses separate from the one being treated, drove $653 million in costs between 2024 and 2025.

According to the association, providers are using two kinds of AI to find more of those conditions: tools that scan existing patient records, and ambient scribes that listen to doctor visits and draft the notes.

Diagnoses without treatment

The study’s central argument is a mismatch. In bowel surgeries, it found no matching rise in treatment: diagnoses of secondary conditions such as partial intestinal blockages rose 55% from early 2023 to late 2025, yet anemia diagnoses did not bring more blood transfusions.

“The disconnect between diagnoses and treatment suggests that AI is identifying more billable conditions, not sicker patients,” said Luke Chalker, a senior vice president at BCBSA. Insurers such as Centene have made similar complaints about AI-driven billing.

The study is the insurers’ own analysis, and the conclusion that AI is the cause is theirs. The evidence it offers for that conclusion is the gap between what was diagnosed and what was treated.

Why it matters beyond insurers

AI scribes are sold to doctors as a way to save time on paperwork. This study suggests they also change what gets billed, because a system that documents more conditions produces more codes, and more codes produce higher claims.

Hospitals and insurers are now in a dispute where both sides use software, one to document and one to audit. The costs of that dispute do not stay between them. Insurers pass rising costs on through premiums, so a fight over billing codes ends up in the monthly bills of people who never saw the AI in the exam room.