By: TAHP | Monday, March 30, 2026

Part of TAHP’s Affordability Series: What’s Driving Up the Cost of Coverage

What’s new: Hospitals are increasingly using AI tools to listen to patient visits in real time and maximize billing codes. Often without the knowledge or consent of patients. The result is more expensive bills, higher costs for patients and employers, without better or even more care.

Need to know: Upcoding, the practice of billing a visit as more complex than it was, is getting faster and harder to catch.

• Upcoding is not new. But artificial intelligence is making it faster and harder to detect. As we broke down in our series opener, nearly 90% of health insurance increases are tied to rising health care prices. AI-assisted upcoding is one of the newest and fastest-growing reasons why. These tools are already in use at major Texas hospitals. The cost is real and growing. Over $2 billion in potentially inflated claims may already be linked to AI-assisted billing practices.

Why it matters: Texas employers are already facing 7% to 9% premium increases this year. AI-assisted upcoding is quietly adding to that bill. The care did not change. The cost did.

By the numbers:

• 28%: Over the past three years, some hospitals have increased upcoding by 28%. The same research showed that higher intensity coding didn’t coincide with higher intensity treatment.
• 60% of inpatient admissions at the top AI-adopting hospitals are now coded as complex, up from 47% in 2022.
• $663 million in inpatient spending may already be tied to AI-inflated claims.
• $1.67 billion in outpatient spending may be linked to more aggressive AI-assisted coding nationally.
• 37%: Between 2022 and 2025, the number of new mothers coded with postpartum anemia increased by 37%, but the number who received treatment never increased. More expensive bills for no change in care.

🔍 Go deeper:

• What ambient AI does: These tools are marketed to hospitals as revenue cycle optimization technologies — not just documentation helpers. They listen to patient-physician conversations in real time and automatically suggest billing codes, consistently pushing visits into higher-complexity categories that are more expensive without requiring more complex care.
• The billing incentive: Hospitals are paid more for complex visits. AI tools that consistently push visits into higher billing categories generate more revenue per patient, per day, with no additional care delivered.
• Wall Street is watching: A Raymond James analyst signaled that hospitals looking to increase their margins will use AI coding to increase reimbursements from insurers and government programs.

Health plans are fighting back: Texas health plans use data analytics tools to detect upcoding patterns and recover overpayments. Protecting those tools in the 90th Session matters for keeping health insurance affordable for Texas employers and families

The bottom line: AI is a powerful tool. When hospitals use it to increase billing rather than improve care, Texas employers and families pay the difference.

Part of TAHP’s affordability series: Read our series opener on what’s driving up the cost of coverage.