Insurance companies are mad the hospital AI is getting around their AI to deny coverage.
this post was submitted on 27 Sep 2026
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I know it's funny to say this but it's not actually what the article says or calls out. They're saying that hospitals are using AI to say the patients are more complex and deserve to be compensated more due to that complexity, but the gap that insurers are calling out is that there's not actually treatments happening that are aligned with the increased medical complexity being documented.
So a more sophisticated form of upcoding?
Yes, exactly that.
At the end of the day I think we all acknowledge that single payer is the optimal setup, but that's not to say that there aren't incentives on the provider side to maximize their payout.
While insurers have denials as their lever, providers have full coding and revenue cycle teams to ensure that they're charging as much as possible. Both sides of the equation need to be addressed to bring costs down.
I know what the hospitals are doing, and I also know insurance companies are using the same bullshit in reverse to make it harder for hospitals, and patients, make claims. The reality is that private health insurance shouldn't be a thing, and procedures should have standards that are overseen by qualified doctors without financial stakes. But neither is true, so we end up with the most expensive and mediocre health care system on the planet.
What if... the government set expected prices for things? Say they set the price for 90% of treatments. That includes life long medications and multiple tentative surgeries.
If it's on the government register, the cost is known.
Like, they say that 90% of medical treatment will be a fixed cost. And it starts off fairly expensive. But with aggregate data it gets cheaper. And the fact that the government mandates it. And I'm sure there is already a lot of data...
It costs 1$ for a dose of paracetamol (or whatever). Starts off whatever the average is, then trends towards the actual cost to acquire. Takes a year or 2 to bring costs inline, paracetamol is $20 per dose but 20¢ per dose, etc.
I mean, who the fuck is licencing these hospitals to charge this much? The government, right?
Who the fuck is licencing these pharma companies to sell the drugs this expensive? The government, right?
And who is letting medical insurance companies this much power? The government!
Why the fuck doesn't the government actually align price with cost?
Oh, money. Yeh, it's money.
It's about senators being bought for $10k.
It's about "lobbying" $10m, and generating a $1bn gap.
Here is a good essay on the topic comparing a system like Japans with strict price controls with the US free for all system. The premise is Japan has offered incentives to close the gap of drug availability and their price, even after this premium, is still significantly less than the US.
This is just a symptom of a failed healthcare system. The way things typically work is that you go into a hospital and receive care. The hospital has insurance and billing specialists which submit what they did to insurance to get money. The insurance pays the least amount they can and the patient gets the bill for the rest. Insurance companies know they should be covering more but patients don’t have the capacity and capability (in most cases) to dig deep into medical reimbursements to get what they are owed. Insurance companies like this as they keep that money. Now however, hospitals are using AI to get the full amount they are owed and thus having patients pay less and insurance pay more.
Which makes me wonder why hospitals don't slip a little something in the IV bag. Adding new problems can be quite lucrative.
Because then that's criminal liability
Because it takes medical staff to perform that action. If a hospital administration increases profits by 10-20%, the investors and execs get a bonus. The people providing the treatment are not financially incentivized to impact patient outcomes negatively. Pharma reps aren’t directly incentivized for that either but they pushed opioids for bonuses without issue…that’s a whole different conversation however. Anyways, the nurse administering an IV isn’t going to get a fat check for making you sick…they will however get in trouble for malpractice. Your hospital admin or exec ain’t getting their hands dirty by giving care either. So the only people providing care are those not incentivized to provide bad care and actively terrified of a malpractice suit in the event they provide less than standard care.
Does that mean the legal fees of fighting a malpractice suit (on the corporate side) would be more costly than actually providing good care? Sounds like something that can be solved if the profits gained from malpractice are big enough.
Like, if I went into the dentistry business, and got a little rowdy in a patient's mouth during a cleaning, I could go, "I advise a gold crown on Number Whatever the Fuck. Needed urgently". Then I can get a payday bonus of a few thousand.
Dental is certainly a bit different but I’ve only worked in medical so don’t have a ton of experience in dental.
dentist might lose thier business, or reputation which is a deathknell to thier business in an area if customers post bad reviews of being scammed by dentists, or report the dentist. insurance barely covers certain dental procedures as it is(for individual plans)
insurance barely covers certain dental procedures as it is(for individual plans)
that is your dentist's decision, not the actual cost of the procedure.
Back to medical, then. I bring up the case of Harold Shipman.
This guy got some profits by killing old people and claiming they died of old age. He messed up in the end by concocting a will that left a suspiciously high number of funds for himself rather than the deceased's children. An American doctor, in theory, could get away with this scheme by targeting old people without next of kin.
It’s more about who pays the malpractice suit. Doctors have their own malpractice insurance so those same people not incentivized to provide bad care are also financially on the hook if they provide bad care. Malpractice insurance is crazy expensive. If you see a hospital exec recommend a certain care strategy, that is cause for concern but medical staff have all the downside and no upside in giving bad care. That’s just hospitals though. Things change in private practice but there a malpractice suit could end their entire livelihood so the risk ain’t worth it. A hospital admin/investor would probably say the risk is worth it but the medical staff would absolutely know they would be taking the fall for it.
Because billing and patient care are intentionally managed by different people.
Just in time for dictator trump’s new policy that forces anyone on state insurance to either work or lose their coverage.
I'm certainly gonna get downvoted all to hell for saying something pro-LLM but this actually seems like a good application? More money from insurers to healthcare providers because their claims are more comprehensive
But while this is ultimately good news for the patient's health, US hospital reimbursement is influenced by diagnoses and complexity, so more diagnoses means more payouts.
I do see your point but the reality is that improving the flawed healthcare system through supercharged billing is like fixing your car with extra hard praying
I work in this space. I agree with the gist of what you’re getting at; the catch is that it’s mostly just feeding the beast rather than breaking the dynamic.
With LLMs, the problem is that they’re neither objective nor consistent, so the insurance companies are just going to increase their headcounts and hire more people to contest submitted claims. Deterministic output would change the picture in a big way, but I’m not seeing much appetite for that in the market for some reason.
There’s a lot more potential for disruption in the form of advanced monitoring that can automatically flag and document complications in an objective way (which is my professional wheelhouse, for the sake of disclosure), but even then I expect payors to mostly pass the increased reimbursement rates on to their enrollees.
A single-payor model is the biggest real cure for what ails our system, and I think I speak for a lot of us in the industry when I say that we’d happily lose our jobs to see that happen for the greater good.
so the insurance companies are just going to increase their headcounts and hire more people to contest submitted claims.
And this is where things get dicey. Insurance companies hire more people and invest more into AL tools to deny claims, while hospitals try to spend more money on coders and invest is AI solutions to code as accurately as possible so they can bill as much as possible. All the while wondering where law of diminishing returns kicks in...
If you kept reading you would see:
However, the BCBSA warns that if patients really were becoming sicker, we should be seeing increases in treatment – but we're not. "The disconnect between diagnoses and treatment suggests that AI is identifying more billable conditions, not sicker patients," SVP of Product and Data Science Luke Chalker said.
Who cares if it says it’s identifying more, the real indicator is healthier patients or increase in care, neither is happening.
Fun fact: Nope.
Ever get a little check back from your insurance company claiming they want to pass back the savings, or some bullshit like that? It's a lie. Insurance companies are legally required to pay out 85% of everything they collect back out to the insured. If you ever get one of those little checks, it's because they didn't pay out enough for the year and have to send money back out to get down to the 85%.
Insurance companies want prices to go up on everything. It means they can just charge more for insurance and their 15% chunk they get to keep is a bigger number.
What they don't want is things that are hard to be consistent with or high temporary costs for a small amount of people. It makes it harder to just barely hit that 85% payback for the year and could set a precedent for something they approve. They want 500 people paying $2,000 a piece for a broken limb through insurance every year. It's common, it tracks about the same every year, and it means they can count on it being fairly close to the same costs every year and makes it easy to factor in when telling everyone how much insurance will cost them for the year. $1,000,000 paid out, meaning they'll count on making around $150,000.
What they don't want is one patient needing $1,000,000 worth of cancer treatment. They can't plan for those as easily and there's a higher risk you could need something similar in the future again if you relapse. They'd rather you be dead.
So the short explanation is "no". There will just be a bit more adjusting and the insurance companies will be right back to getting their blood money maximized again.
The one thing it seems to be okay at is parsing text that’s devoid of emotion. If you just need it to find and point out loopholes and lapses in judgement, it can do that. Just don’t expect it to be able to produce something coherent on its own in the same context.
arms race
Will hospitals finally realize that 10mg of sodium azide per day is the cure for cancer? The AI agrees with me that sodium azide should be sold as an over-the-counter prescription.
This is only a problem if AI is pushing these recommendations directly to the insurance companies, without any input from the doctor.
However, if doctors are using AI to help identify previously unrecognized diagnoses in a patient's health data...then this is a good thing.
It’s a good thing until insurance raises costs for consumers because they’re butthurt (though they’re making record profits anyways).