How AI Is Inflating Hospital Bills & ICHRA's Big Rebrand | with Stephen Carrabba

"[AI] absolutely is an arms race, and this is what we're dealing with on a daily basis." - Stephen Carrabba, ClaimInformatics

In this episode of Last Month in Healthcare, Producer Nathaniel and I sat down with Stephen Carrabba, president and co-founder of ClaimInformatics, to break down the biggest healthcare news stories of September 2026.

We started with Blue Cross Blue Shield's claim that AI-powered medical coding tools added $942 million in costs over the past two years. One example: anemia diagnoses rose sharply at some hospitals with no matching rise in transfusions. The coding companies' response is that in a fee-for-service system, capturing a more complete picture of the visit means a bigger bill. Stephen deals with upcoding and unbundling every day. His take: if a service was rendered, it should be billed, but hospitals' AI and insurers' AI are now fighting each other, and the self-funded employer is the one paying for both.

We also dug into ICHRA's federal rebrand as the "CHOICE arrangement," a survey showing 73% of small and mid-size employers are considering dropping group coverage for 2027, and Oscar Health's projection of 2.5 million ICHRA lives by 2029. I shared the story of an employer who moved to ICHRA for $400,000 in projected savings and wanted out within a month.

Plus, more than half of hospitals still aren't fully complying with price transparency rules. Stephen explains why, for many health systems, paying the fine is cheaper than disclosing their prices.

To cap it off, we built two health plans by coin toss, where Stephen made the case against bundled payments from a payment integrity perspective. I also answered a listener question about how much of a stop-loss increase is normal before you should shop it.

Thank you to Walk-On Clinic for sponsoring this episode. Visit walkonclinic.com to learn more.

Chapters:

(00:00:00) Intro: Stephen Carrabba and Walk-On Clinic
(00:01:48) AI Billing and the $942M Fight
(00:04:51) ICHRA Becomes CHOICE
(00:07:49) 73% of Small Employers Weigh Dropping Coverage
(00:11:00) Oscar Predicts 2.5M ICHRA Lives by 2029
(00:12:13) Hospitals Still Dodging Price Transparency
(00:16:45) Game: Build a Health Plan by Coin Toss
(00:37:27) Ask Spencer Anything: When to Shop Stop-Loss