New
AI Billing, Upcoding, and the True Cost of Hospital Care
A BCBSA study shows AI hospital billing is increasing provider reimbursement rates. Claimocity has long known this. Learn what it means for hospital care.
From getting claims paid and managing denials to handling payment disputes and communicating with patients, out-of-network claims can create additional work (and complications). It’s especially vexing when a provider is out-of-network, but the hospital or facility where they practice is in-network. This situation is common among independent hospitalists, emergency physicians, anesthesiologists, radiologists, and other facility-based specialists.
In 2022, the No Surprises Act (NSA) took effect, and it changed how certain out-of-network services are handled. Among other protections, the law generally prevents patients from being balance-billed for certain emergency and out-of-network services provided at in-network facilities. When providers and insurers can’t agree on payment for an eligible claim, the federal Independent Dispute Resolution (IDR) process gives them a way to resolve the dispute.
For providers, understanding how these claims are handled is the first step toward getting paid accurately and keeping denials from eating into revenue.
Most commercial insurers aren’t required to publicly report their out-of-network denial rates, making reliable industry-wide statistics hard to come by. Health insurance plans sold through HealthCare.gov have additional reporting requirements that offer some clue about these denial rates.
According to KFF, 37% of out-of-network claims were denied in 2024, compared with 19% of in-network claims. These ACA claim denial rates are likely higher than the denial rates for employer-based plans, but it’s still notable that the out-of-network denial rate was almost twice as high. Hospitalists and other health providers who expect to provide any significant amount of out-of-network care services need revenue cycle management support. Accurate documentation, coding, and attention to detail throughout the RCM process is essential.
In the past, providers could bill health insurance and then continue billing patients for whatever insurance didn’t pay. This was called “balance billing,” and it covered the provider if the payout was less than their normal rate. In some situations, this meant a higher total payment amount for the provider. Historically, out-of-network treatments could result in higher total reimbursements from insurance companies, although commercially insured patients were frustrated when a surprise medical bill would arrive in the mail.
A patient’s insurance network includes more than the hospital where they receive care. The hospitalist treating them may have a different network status. In other words, out-of-network providers may work in in-network healthcare facilities. This distinction matters because hospitalists need to understand their own relationship with the patient’s health plan, rather than assuming that the facility’s network status applies to everyone practicing there. It also explains why some patients who never had any intention of using an out-of-network provider will sometimes find themselves doing so.
Depending on the provider’s billing arrangement, the practice may submit inpatient claims directly to the insurer. In other situations, the hospitalist or inpatient provider may give the patient a “superbill,” which contains the information needed to submit the claim themselves.
Before the NSA, patients could sometimes receive a surprise bill after receiving care from an out-of-network provider. The provider could then bill the patient for the difference between its charge and what the insurer paid, a practice known as balance billing.
The NSA generally prohibits balance billing for certain protected services, including emergency care and certain non-emergency services provided by out-of-network providers at in-network facilities. In these situations, patients generally can’t be charged more than the applicable in-network cost-sharing amount.
The NSA doesn’t mean providers simply have to accept whatever amount an insurer decides to pay. For eligible claims, providers and insurers can use the federal IDR process when they cannot agree on a payment amount. The patient protections remain in place, while the rules governing how providers and insurers resolve payment disputes continue to evolve.
When a provider and insurer disagree about payment for an eligible NSA claim, they may be able to use the federal Independent Dispute Resolution process. Providers and insurers generally must first complete a 30-business-day open negotiation period. If they can’t reach an agreement, either party can initiate IDR within the applicable deadline. A certified IDR entity reviews information submitted by both sides and selects one party’s payment offer. It doesn’t simply split the difference between the two offers.
The qualifying payment amount (QPA) is one factor considered during the process. Providers can also submit additional information supporting their payment offer. For providers, a strong IDR submission starts with a strong claim.
Before entering the process:
The federal IDR process continues to evolve. In May 2026, CMS issued a final rule making several changes to how the process operates. There are a couple of notable changes:
These changes make it especially important for providers to keep current with CMS requirements when pursuing payment disputes.
Not every out-of-network claim is submitted directly by the inpatient care provider. In some situations, a practice may provide the patient with a superbill that contains the information needed to submit the claim to their insurance company. In other cases, the provider may be able to submit the claim electronically on the patient’s behalf. Either way, the process can be confusing for patients, especially when they didn’t know that the hospitalist treating them was out of network.
Clear communication can help patients understand:
Good communication isn’t just about customer service. It can also support the revenue cycle by reducing confusion, preventing unnecessary disputes, and helping patients understand their financial responsibility.
Managing out-of-network claims effectively requires more than submitting a claim and waiting for payment. Hospitalists need processes that support accurate charge capture and coding, identify missing information, track claims and denials, and make it easier for billing teams to follow up on unpaid claims. Automated RCM tools can reduce some of the manual work involved in these processes and help billing teams stay on top of unpaid claims.
The combination of clean claims, supporting documentation, and proactive communication with payers puts you in the strongest position possible if it does become necessary to enter the IDR process.
Claimocity combines practice management, billing, charge capture, and RCM workflows in one platform. Its AI-powered charge capture can help hospitalists and inpatient providers capture billable services from signed EHR documentation, while automated workflows can help billing teams manage claims and follow up on unpaid balances.
Book a demo to see how Claimocity can help simplify your practice’s revenue cycle.
A BCBSA study shows AI hospital billing is increasing provider reimbursement rates. Claimocity has long known this. Learn what it means for hospital care.
Getting multiple claim denials from patients with ACA insurance plans? It’s not just you. These plans are known for higher denial rates.
Learn about the physician-owned multispecialty group model and how to connect inpatient billing with other practice management software.