PwC Report Indicates AI Contributing to Increased Healthcare Costs
A new 60-page report by PwC suggests that artificial intelligence (AI) is currently contributing to higher medical bills, rather than reducing healthcare costs as many anticipated. The report identifies AI as one of five factors potentially driving health costs to climb by up to 9% in 2027, matching rates not seen since 2010-11. This increase is primarily attributed to AI note-taking tools enabling more detailed documentation of diagnoses and complications, which justifies higher-paying billing codes even when patient care remains consistent.
A recent PwC report indicates that artificial intelligence (AI), contrary to expectations of cost reduction, is among the factors leading to an increase in medical billing within the healthcare sector. The report highlights that AI's initial widespread application is contributing to larger medical bills.
According to PwC, AI is one of five potential drivers that could push health costs up by as much as 9% in 2027. This projected increase would match the current year's rate, which is noted as the highest since 2010-11. The primary mechanism identified is the use of AI note-taking tools, which document more specific details regarding diagnoses and medical complications. This enhanced documentation can support higher-severity, and thus higher-paying, billing codes, even if the actual care provided to a patient remains unchanged.
An analysis by Blue Cross Blue Shield (BCBS) cited in the report illustrates this trend. Some hospitals experienced a significant rise in the billing code for acute posthemorrhagic anemia in new mothers, increasing from 4% to 12.3% of maternity admissions between 2022 and 2025. During the same period, the number of blood transfusions, a common treatment for the condition, showed minimal change. An audit of a hospital system with the most substantial increase in this code revealed that less than 20% of the cases met the clinical criteria for the diagnosis.
This rise in higher-intensity coding coincides with the increasing adoption of AI by hospitals for billing purposes. BCBS data indicates that "coding intensity" added $22 million to maternity spending at the hospitals included in their study over three years.
While AI is ranked as the top *new* pressure on healthcare costs in the PwC report, it is not the largest overall driver. Traditional factors such as labor and supply costs still account for a greater portion of the increases. The report also acknowledges that AI tools could eventually lead to cost reductions by automating administrative tasks or facilitating earlier diagnoses.
According to Fortune, which originally reported on the PwC findings.
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