New data from Menlo Ventures shows U.S. hospitals and insurers spent about $1.4 billion on artificial intelligence last year — roughly three times the 2024 level — as both sides use the technology in fights over medical bills and responsibility for payments. UnitedHealth Group plans to spend $1.5 billion on AI in 2026 and expects nearly $1 billion in savings this year. HCA Healthcare says AI cost initiatives could save about $400 million. At the same time, patients have filed lawsuits alleging insurers are using AI to wrongfully deny coverage for essential care.
Most current AI activity in health care is administrative: billing and claims processing. Hospitals are deploying algorithms to maximize billing capture and revenue, while insurers run their own systems to scrutinize claims and reduce or deny payments. Those competing systems can process claims far faster — and can also issue denials more quickly.
Faster handling helps when claims are decided correctly, but it can accelerate incorrect denials. Dr. Céline Gounder points to Medicare Advantage data showing roughly 80% of initially denied claims are later approved on appeal, suggesting many denials stem from documentation or coding issues rather than medical necessity. Even if overturned, rapid denials can delay care, create financial stress, and erect barriers for patients seeking timely treatment.
AI is also being introduced in clinical workflows, especially in image-heavy fields like radiology and pathology, where algorithms flag abnormalities for clinician review. So far the technology tends to augment clinicians and speed routine tasks rather than replace clinical judgment.
Some consumer-facing AI tools claim to help patients review bills, explain charges, or draft appeal letters, but these services cannot substitute for human advocacy. If your claim is denied, ask your insurer for the specific reason, work with your provider to supply any missing documentation, and consider filing an appeal. Keep thorough records of all communications, note deadlines, and seek help from billing experts, patient advocates, or your clinician’s office when needed.
Bottom line: AI is reshaping administrative battles over revenue and payouts in health care, offering big cost savings for large organizations while raising concerns about faster, automated denials and potential delays in care. Careful documentation, appeals, and human review remain essential safeguards.