Artificial intelligence (AI) is reportedly helping resolve a long-standing dispute between U.S. hospitals and insurance companies. A Reuters report, citing industry executives and analysts, claims that AI is resolving medical billing and reimbursement disputes between U.S. hospitals and insurance companies. Hospitals are using AI tools to document procedures and justify higher payments, while insurance companies are deploying similar systems to determine whether treatments and claims are necessary, creating a technology-driven battle over health care costs, the report said.The development highlights how technology is becoming part of the process by which insurers decide how much to pay health care providers. Experts say the widespread use of AI on both sides makes it difficult to predict whether hospitals or insurance companies will benefit more from new tools.
How hospitals and insurers are deploying AI tools to manage billing and reimbursement
Insurers have increased their use of AI systems in recent months to identify potentially unnecessary treatments and medical costs, according to Reuters. At the same time, hospitals are deploying AI-based software to help document services and assign medical billing codes, which could lead to higher reimbursement rates, according to company statements and interviews with industry analysts seen by Reuters.This issue was highlighted by Centene, who primarily focuses on Medicaid coverage for low-income Americans. The company said some hospitals may be actively using revenue software to trigger higher payments.“We’ve had some cases where people come into the emergency room with a fever and all of a sudden they all have sepsis,” Centene CEO Sarah London said at an investor conference last year, referring to severe symptoms that often require extensive treatment.
Insurers claim AI-driven coding could increase healthcare spending
A study conducted by the Blue Cross Blue Shield Association found that approximately $663 million in inpatient spending and at least $1.67 billion in outpatient spending nationwide could be linked to more aggressive coding practices enabled by AI tools.Razia Hashmi, the association’s clinical vice president, told Reuters: “More AI tools are being used at different points in the treatment and billing process, but when those tools operate independently, they can unintentionally create friction.”The broader debate is sparking as the United States continues to spend a significant portion of its economy on health care. The country’s health spending accounts for about 18% of gross domestic product, according to data cited by Reuters.
AI is expected to help manage healthcare costs
Hospitals and insurance companies both argue that AI could ultimately reduce costs for the healthcare system. Consulting firm McKinsey & Company estimates that insurers could save approximately $970 million for every $10 billion in revenue by leveraging AI for claims management, preauthorization review, and clinical decision support.Other predictions suggest that AI could also reduce costs for hospitals in the long run. In a research note published in September, Morgan Stanley estimated that AI-driven improvements in hospital care could save up to $900 billion by 2050. Still, some experts say the benefits of using AI on both sides could offset each other.“The idea of (AI) bot versus bot is essentially a no-win situation.” “We’re excited to announce that we’re thrilled to have the opportunity to be a part of the digital health industry,” said Christina Silcox, director of digital health research at the Duke Margolis Institute for Health Policy Research.
Healthcare companies are increasing investment in AI
Healthcare organizations are increasing spending on AI tools across sectors. Venture capital firm Menlo Ventures reported that investments in healthcare AI will reach approximately $1.4 billion in 2025, nearly triple the level recorded in 2024, based on a survey of 700 industry executives.Health systems accounted for 75% of total spending, or about $1 billion, and outpatient providers spent about $280 million. Insurance companies contributed about $50 million.Several insurance companies have also outlined plans to invest in AI. UnitedHealth Group says AI could save the company nearly $1 billion in 2026, and plans to invest about $1.5 billion in the technology this year, with similar spending expected in 2027. The company’s UnitedHealthcare division is focused on leveraging AI to guide patients to the right care, executives said.Meanwhile, Humana estimates that investments in AI could result in savings of more than $100 million over several years. CVS Health said its Aetna insurance business is investing in AI systems designed to improve clinical care and collaboration with health care providers.
Hospitals also turn to AI to counter insurance company surveillance
Hospitals say they need AI tools to combat rising claim denials and declining reimbursements from insurance companies. HCA Healthcare, the largest publicly traded hospital operator in the U.S., said its AI efforts are expected to save about $400 million in 2026.The company leveraged AI to automate revenue management processes and assist physicians with clinical documentation. HCA Chief Financial Officer Michael Marks previously described the introduction of AI tools as “a response to the increasing rate of denials and underpayments by payers.”Hospital systems say AI can also improve how they document medical services. Providence Health System says its AI tools will allow procedures to be more accurately recorded, leading to more accurate reimbursement from insurance companies.Maureen Shah, Providence’s chief medical information officer, said both insurers and healthcare providers need to adapt to the growing role of AI.“Understanding this new reality will require adjustments to the payer-provider relationship. Unfortunately, what we are seeing is a battle between AI and AI.” Shah added.
