Hospitals found more revenue with AI. Insurers are coming for it.

The BlueCross BlueShield Association recently put on a press conference to share that hospitals are billing for visits as more medically complex than they were a few years ago. The result is a billion dollars in additional spending for BlueCross plans over two years.  You can read the full analysis here.

The report echoes what payers have been saying for the last two years: with the help of AI, hospitals are getting more aggressive about how they bill. John Kao, Alignment CFO, said hospital billing is a headwind, during the 2026 Global Healthcare Conference in September, specifically, noting a spike in appeals and disputes reaching back to 2025. That was one of the first moments we saw this issue came up in a conversation with analysts. Alignment offers Medicare Advantage plans.

“More disputes, higher level of disputes, and aggressive billing practices,” is how he categorized it. 

The Bot Wars: Hospitals are rapidly adopting AI. Nearly two-thirds of health systems using Epic have already rolled out ambient scribes. Many of the AI scribes have moved into revenue cycle management in the face of unprecedented provider demand, which has led to an increase in revenue for the providers that use them. 

As hospitals get better at capturing reimbursement, payers are responding with upgraded payment integrity. That means every provider, not just those using AI coding tools, can expect more sophisticated scrutiny of claims, more post-payment review, and potentially more administrative work defending reimbursement. 

Payers already use AI and automation in their workflows. In recent years, some payers, including Cigna, Humana, and UnitedHealthcare have been accused in lawsuits of using AI and automation to deny claims. 

For subscribers: Ruth will report on the AI billing war as it enters its next phase, including how insurers are fighting back against rising hospital bills, why it will become a bigger headache for providers, and who gets paid no matter which side wins. Chrissy, who has spent this past week talking to providers and payers from across the industry to get their sense of where we’re at in the arms race, will share what’s being said behind the scenes.