Hospital billing technology a factor driving surge in sepsis cases

The number of hospitalizations Massachusetts has seen for septicemia has more than tripled since 2010, to more than 42,000 people in the year ending September 2025, preliminary state data show. Since at least 2019, it has been the third-leading cause of hospitalizations in Massachusetts. Some of the uptick may be better recognition and diagnosing.

But experts, insurers, and even some providers point to another explanation that is less about the actual medical threat and more a statement on modern health care: the increasingly sophisticated battle between hospitals and insurers over billing, each side using the power of artificial intelligence and other tech tools to protect their businesses. Insurers say hospitals are billing for the most expensive conditions and highest severity that patients could conceivably have with their symptoms. Hospitals say they have to optimize billing to combat higher rates of denials from insurers.

Regardless, experts say the practice is adding to health care costs while providing very little if any benefit to patients. On sepsis alone, the practice could add thousands of dollars to each bill hospitals submit.

“The way we pay for health care in the country creates a game, and people learn to play the game. The game has all to do with increasing revenue,” said Don Berwick, a former administrator of the Centers for Medicare and Medicaid Services and former president of the Institute for Healthcare Improvement.

“But it’s gotten way out of control.” Billing practices are a core contributor to both rising costs and wasteful spending in the health care sector, Berwick said. Insurers have cited more intense billing as one driver of spending, which contributes to ever escalating health insurance premiums that households, employers and even many towns are struggling to pay.

Insurers and some experts say hospitals are using tools and vendors to comb through medical records, submitting billing codes that make the patient look as sick as possible. And, the sicker the patient, the higher the payment.

“Providers [are] coding differently to generate, ultimately, higher payments without any change in the quality of care being delivered,” said Michael Guerriere, chief actuary at Blue Cross Blue Shield of Massachusetts.

“It’s just documentation.” Hospitals, for their part, say the size of the charges fully reflect the illnesses they treat and the care that is delivered; moreover, the tools that do this are necessary to capture as much revenue as possible in increasingly expensive operating environment, as well as to combat insurers’ growing use of AI to deny claims.

“The tension between payers and providers has never been higher and it’s likely to get much worse over several years,” said Dr. Eric Dickson, chief executive of UMass Memorial Health. Facing budget shortfalls, UMass last year cut some services and faced off with Blue Cross over a new rates, risking the access of 200,000 patients to their doctors, before reaching an agreement.

“Why is this happening? Providers are losing money,” Dickson said, adding: ”

When you start losing money, you are looking at any source of margin you can find to get back on track. One source is to make sure you are appropriately coding for everything you can.” Many are quick to point out that the practice largely is not fraudulent.

For example, take calcium levels. In the past, low levels in a patient might have just been something discussed and watched among clinicians. But with AI tools that record doctors’ visits or other technology that reviews those recordings and scours notes, that lab value can now be flagged as hypocalcemia for billing purposes, which increases the reimbursement.

Sometimes, even the order in which diagnoses are put on a claim can change a reimbursement. Though the underlying care sometimes hasn’t changed, the bill for the visit can stretch far higher. Matthew Day, senior adviser at Blue Cross Blue Shield of Massachusetts, said septicemia is the most intense and expensive example — hospital cases with a septicemia diagnosis garner $10,000 more on average per claim than one for an infection alone.

And, it isn’t just septicemia. Day said an analysis by Blue Cross revealed that patients with bronchitis or asthma are now being billed as having pulmonary edema or chronic obstructive pulmonary disease. C-section deliveries are now more frequently billed in conjunction with other complications, such as with posthemorraghic anemia — a serious condition that typically signals severe blood loss.

Commercial billing data of maternity admissions for a group of Blue Cross Blue Shield plans, compiled by their trade association, found the share of cases coded for acute posthemorrhagic anemia increased by more than one third, to 9.3 percent of all admissions, over a nearly three-year period ending in early 2025. Despite the more serious diagnosis, patients didn’t receive more intensive services. Many flagged with the diagnosis did not receive blood transfusions; in fact, blood transfusion rates across the same period remained relatively flat.

The increase in coding for acute posthemorrhagic anemia alone at the analyzed hospitals added an estimated $22 million to the costs of maternity admissions for those Blue Cross insurers, according to the report. If patients were fundamentally sicker than in the past, all hospitals would be billing for sicker patients uniformly. Instead, the higher reimbursements were occurring at hospital systems that have resources to invest in the new technology, Blue Cross executives said.

Additionally, studies have also shown that for-profit hospitals have been quicker than nonprofits to adopt the most aggressive billing practices. Health insurers are already feeling the effects of this more intense billing. The state’s largest insurer, Blue Cross Blue Shield of Massachusetts, reported a $380.5 million operating loss last year, and undertook a buyout and some staff reductions.

According to the insurer, approximately one-third of its rising expenses were attributed to higher-intensity medical services. While a portion might be people needing more complex care or being treated at more expensive places, the insurer said some of the increase is simply due to billing practices — to the tune of tens of millions of dollars. High volume of claims for cardiac conditions and sepsis also contributed to escalating spending at Point32Health, which similarly reported a $301 million operating loss last year and recently made layoffs.

While not the leading cause of escalating health care spending, billing practices are a “meaningful contributor,” Day said. That trend scares insurers, who worry what will happen when all hospitals start using the technology, and for a broader array of diagnoses. From a doctor’s perspective, the focus is on treatment of the patient, not how much each step generates in revenue, said Dr. Jeremy Faust, an emergency physician at Brigham and Women’s Hospital who has written about sepsis policy.

While coding experts within the hospital may ask doctors to record the visit in a way that maximizes the reimbursement, ultimately the hospital is being paid for care it has delivered, Faust said. For example, in the case of a patient with a rapid, irregular heartbeat, the doctor could either simply summarize the visit by noting the medications that were prescribed, or make more extensive notes reflecting the 35 minutes spent providing critical care to a patient in urgent need.

“In both cases, the patient got what they needed.