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AI will inflate healthcare costs before lowering them, Oz says

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AI will inflate healthcare costs before lowering them, Oz says

AI will “turbocharge” medical billing and drive up costs in the short term, CMS Administrator Dr. Mehmet Oz warned Wednesday. But he says the pain is worth it for long-term savings.

CMS Administrator Dr. Mehmet Oz delivered a candid assessment of artificial intelligence's impact on healthcare costs Wednesday: It's going to get worse before it gets better.

"Short term, AI is going to be inflationary because it's going to turbocharge the ability of the current billing systems to work more effectively," Oz said at Oracle's annual health and life sciences summit in Orlando.

It’s the latest signal from the industry that AI could be inflating healthcare costs — even as its proponents argue the technology will lower them over time.

Healthcare has been rapidly adopting AI across clinical and administrative realms. The tech has shown promise for reducing clinicians’ time spent on paperwork, helping doctors with clinical documentation and streamlining healthcare payments.

But researchers have observed rising healthcare costs tied to AI’s use in the coding and billing space that they say could become a systemic issue if not addressed.

For providers, AI-powered coding is enabling them to bill insurers for more conditions when they treat patients. They say the technology helps them more accurately bill for care, while insurers say doctors are using AI to charge more money without any actual increase in medical care.

A study released by the insurer group Blue Cross Blue Shield Association on Thursday found that the increase of billing has added nearly $1 billion in healthcare costs between 2023 and 2025.


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