Tag: Upcoding

Healthcare Is Fighting the Wrong AI War

Oct 7, 2026• 1

By KIM BELLARD

The Blue Cross Blue Shield Association is crying wolf about AI. Its new analysis claims that “hospital systems are increasingly billing patient hospital stays as more medically complex,” and that these upcodings cost BCBS plans almost $1b from 2023 to 2025. That’s just claims from hospital systems, just to BCBS plans, so the total number could be much higher.

Well, you might say, a billion here, a billion there – that’s just healthcare these days. Everything is going up. But BCBSA is less sanguine; it thinks the coding is part of a strategy, and it thinks AI is driving that strategy.

“If patients are truly sicker, we’d expect to see more treatment,” said Luke Chalker, BCBSA’s senior vice president of product and data science. “For example, we’re seeing significantly more anemia diagnoses at these hospitals without a corresponding increase in transfusions. The disconnect between diagnoses and treatment suggests that AI is identifying more billable conditions, not sicker patients.”

The analysis indicated that most (70%) of the increased costs came from secondary diagnoses that shifted payment into higher reimbursement categories, so the hypothesis is plausible.

The American Hospital Association, of course, is having none of it. An August 2026 ”fact sheet” on AI and coding intensity called claims of AI driving coding intensity “unsubstantiated,” citing numerous factors that drive coding intensity. It blamed insurers for having AI-supported “downcoding programs,” the purpose of which are “to arbitrarily and inappropriately reduce provider reimbursement for medically necessary care that has already been delivered.”

AHA also snarkily but accurately noted how many Medicare Advantage plans have been caught upcoding members to boost their Medicare payments, so it depends on where one is sitting.

It’s also worth noting that this year the Trump Administration rolled out a Medicare program — Wasteful and Inappropriate Service Reduction (WISeR) – to use AI to help identify “fraud, waste and abuse” – a.k.a., deny claims. It has not, to say the least, gone well.

Both sides are using AI, to each other’s detriment. Which is to say, our detriment.

How Health Plan Risk Adjustment Models May Change Under the ACA

Jan 3, 2014• 4

By KIP PIPER

Risk adjustment is a key mechanism to ensuring appropriate payments for Medicare Advantage plans, Medicare Part D drug plans, and Medicaid health plans. Since health plans vary in their mix of healthy and sick enrollees, risk adjustment modifies premium payments to better reflect the projected costs of members served and compensate plans that enroll high-cost patients.

Historically, risk adjustment was only used in Medicaid and Medicare – in effect, redistributing some revenue from health or drug plans with a relatively healthier mix of members to those plans with a more costly enrollment profile. However, the Affordable Care Act (ACA) extends risk adjustment to the individual and small group health insurance markets starting in 2014.

A new brief from The Synthesis Project tackles the issue and makes several interesting recommendations for how to improve risk adjustment methods for the post-ACA market. Without accurate risk adjustment, health plans have a strong financial incentive to seek out only the healthiest enrollees, especially under ACA-mandated adjusted community rating. Under adjusted community rating, health plans may not vary premiums based on health status or sex and are limited in how much they may vary premiums based on age. Under ACA, the healthy, the young, and men subsidize the health costs of the unhealthy, the older, and women.

Risk adjustment is therefore a necessary factor in stabilizing the dramatically new post-ACA health insurance marketplace, particularly the new Health Insurance Exchanges. Even then, the ACA is a giant game of musical chairs. The market under ACA will be chaotic and challenging, with a mix of winners and losers once the music stops and the dust settles, which will take at least three to five years.

How to Cut Medicare Spending: Attack Large Claims!!

Sep 26, 2013• 4

By Bob Hertz

Medicare reform thus far has been focused on $79 office visits, co-payments for home health care, hospital readmissions, Miami infusion clinics, the price paid for scooters, $45 resting EKG’s, the Plan B deductible, etc. These are important areas to pursue — but they are not where the real money is.

While we are debating the ‘doc fix’, the drug companies, device companies and hospitals are backing up the truck and cleaning out the store!

Consider the following paid claims paid by Medicare in Indiana in 2011:

113 Heart Transplants: average payment was $773,877 a piece
96 Bone Marrow Transplants: average payout was $509,637 apiece
129 Liver Transplants: average payout was $367,000 apiece
2,200 Tracheostomies: average payout was $376,103 apiece
1,517 Open Heart Surgeries: average payout was $185,000 apiece

Altogether, the 12,000 largest claims in one state totalled $2.4 billion in Medicare spending. If the other states are consistent, then large claims like these ate up $120 billion of Medicare’s total spending of $545 billion. And when you factor in sepsis treatments, defribillator-implants, and similar claims that cost “only” $75,000 each and so did not make the above list…….. then almost two-thirds of Medicare spending — over $300 billion a year — is focused on just ten percent of beneficiaries.

A Time for Boundless Energy and Optimism

Oct 9, 2012• 18

By John Halamka, MD

2012 has been a challenging year for me.

On the personal side, my wife had cancer. Together we moved two households, relocated her studio, and closed her gallery. This week my mother broke her hip in Los Angeles and I’m writing from her hospital room as we finalize her discharge and home care plan before I fly back to Boston.

On the business side, the IT community around me has worked hard on Meaningful Use Stage 2, the Massachusetts State Health Information Exchange, improvements in data security, groundbreaking new applications, and complex projects like ICD10 with enormous scope.

We did all this with boundless energy and optimism, knowing that every day we’re creating a foundation that will improve the future for our country, communities, and families.

My personal life has never been better – Kathy’s cancer is in remission, our farm is thriving, and our daughter is maturing into a fine young woman at Tufts University.

My business life has never been better – Meaningful Use Stage 2 provides new rigorous standards for content/vocabulary/transport at a time when EHR use has doubled since 2008, the State HIE goes live in one week, and BIDMC was voted the number #1 IT organization the country.

It’s clear that many have discounted the amazing accomplishments that we’ve all made, overcoming technology and political barriers with questions such as “how can we?” and “why not?” rather than “why is it taking so long?” They would rather pursue their own goals – be they election year politics, academic recognition, or readership traffic on a website.

As many have seen, this letter from the Ways and Means Committee makes comments about standards that clearly have no other purpose than election year politics. These House members are very smart people and I have great respect for their staff. I’m happy to walk them through the Standards and Certification Regulations (MU stage 1 and stage 2) so they understand that the majority of their letter is simply not true – it ignores the work of hundreds of people over thousands of hours to close the standards gaps via open, transparent, and bipartisan harmonization in both the Bush and Obama administrations.