Artificial intelligence is rapidly changing healthcare. In theory, that should be good news for patients, employers, and families struggling under the weight of rising medical costs. AI has the potential to streamline administrative work, reduce paperwork burdens on physicians, improve efficiency, improve coding accuracy, and help identify better treatment options.
But one of the fastest-growing uses of AI in healthcare today is not improving care — it is increasing costs.
Across the country, AI-powered coding and documentation tools are increasing the intensity of medical billing, driving up healthcare spending and putting more pressure on employers and families already struggling with rising premiums and deductibles.
AI Is Being Used to Maximize Billing
Medical billing depends heavily on coding systems that determine how much providers are paid. The more severe or complex a patient appears on paper, the higher the reimbursement.
Historically, coding was done manually by medical coders and clinicians. Today, AI tools can automatically review physician notes, suggest higher-complexity billing codes, identify additional diagnoses, and optimize documentation to increase reimbursement.
This leads to increased coding intensity even though we know patients are not becoming sicker or receiving meaningfully different care.
In fact, many AI systems are explicitly marketed to intensify coding and maximize revenue. One study found that roughly 93% of healthcare AI spending is focused on back-office functions, with nearly 89% directed toward provider billing and revenue cycle tools.
The message is clear: although there is a productive use for AI, it is also being used to generate more revenue simply for the sake of making more money – not improving affordability or outcomes.
The Cost Impact Is Already Significant
A recent analysis found that coding intensity contributed substantially to rising healthcare costs between 2023 and 2024.
Researchers estimated that AI-enabled coding practices may be associated with approximately $663 million in additional inpatient spending and at least $1.67 billion in additional outpatient spending nationwide.
A separate study found that after hospitals adopted AI-enabled scribing tools, outpatient visits steadily shifted toward higher-intensity billing codes — including for lower-acuity conditions where patient complexity had not meaningfully changed.
Researchers specifically noted that broader population health trends did not align with the magnitude and consistency of these coding increases.
In other words, the evidence increasingly suggests that AI is helping providers document and bill more aggressively — not that Americans suddenly became dramatically sicker over a two- to three-year period.
Small billing increases repeated across millions of patient visits quickly become billions in additional healthcare spending.
Those costs eventually show up in higher premiums, higher deductibles, and higher costs for employers and families.
AI Should Lower Costs — Not Inflate Them
None of this means AI itself is bad.
Used responsibly, AI could help reduce administrative burden, improve coordination, and make healthcare more efficient, and even improve access and assist with diagnosis, improving patient care.
But right now, one of the clearest financial impacts of AI adoption appears to be more aggressive billing and higher reimbursement.
That should concern policymakers.
North Carolina families and employers are already facing unsustainable healthcare costs. If AI becomes another tool used primarily to maximize reimbursement rather than improve efficiency and affordability, lawmakers should begin examining guardrails.
Healthcare innovation should help patients and lower costs.
If AI instead becomes another driver of healthcare inflation, policymakers cannot afford to look the other way.
