Sepsis cases tripled. The real growth is in the billing, not the disease

Massachusetts hospitals are diagnosing more patients with sepsis than ever. The question is whether the disease is getting worse — or whether the billing software is getting smarter.

Septicemia hospitalizations in the state have more than tripled since 2010, reaching more than 42,000 patients in the year ending September 2025, according to preliminary state data reported by the Boston Globe. Since at least 2019, it has been the third-leading cause of hospitalization in Massachusetts. But according to clinicians, epidemiologists, and insurers who have studied the trend closely, the surge has less to do with an actual increase in serious infections than with a fundamental shift in how hospitals code and bill for the patients they see.

The mechanism is AI-powered clinical documentation tools. Hospitals are using vendors and software that comb through medical records — and in some cases, transcribe and analyze doctor-patient conversations — to identify the most severe diagnosis a patient symptoms could support. The goal is not clinical: it is to generate the highest possible reimbursement code for each encounter.

The way we pay for health care in the country creates a game, and people learn to play the game, said Don Berwick, former administrator of the Centers for Medicare and Medicaid Services and former president of the Institute for Healthcare Improvement. But it has gotten way out of control.

The financial incentive is substantial. Matthew Day, senior adviser at Blue Cross Blue Shield of Massachusetts, said septicemia diagnoses add approximately $10,000 to an average hospital claim compared to a simpler infection code. Across thousands of cases, that differential adds up: Blue Cross estimates that higher-intensity medical services accounted for roughly one-third of its $380.5 million operating loss last year. Point32Health, another major Massachusetts insurer, reported a $301 million operating loss driven in part by the same dynamic.

The billing escalation is not accidental. Hospitals argue they are responding to a genuine threat: insurers have become far more aggressive about denying claims. A recent analysis by a Massachusetts state agency found that one in five claims submitted by providers to commercial insurers were denied. In that environment, optimizing billing codes is not profit-maximization — it is survival. When you start losing money, you are looking at any source of margin you can find to get back on track, said Dr. Eric Dickson, CEO of UMass Memorial Health. One source is to make sure you are appropriately coding for everything you can.

But the data suggests the pattern is not uniform across hospital systems. Blue Cross executives noted that higher reimbursements for severe diagnoses clustered at hospital systems with the resources to invest in the new technology — not at hospitals where patients were demonstrably sicker. A study by the trade association Blue Cross Blue Shield Association found that the share of maternity admissions coded for acute posthemorrhagic anemia — a serious condition typically associated with severe blood loss — increased by more than a third over a nearly three-year period ending in early 2025, adding an estimated $22 million to maternity costs across its plans. Notably, transfusion rates during the same period were flat, suggesting the clinical reality had not changed.

Dr. Chanu Rhee, director of the Center for Sepsis Epidemiology and Prevention Studies at the Harvard Pilgrim Health Care Institute, has spent years studying sepsis trends. His assessment: clinical data from electronic health records shows sepsis incidence has been more stable than the billing codes suggest. What we are seeing is not a true ballooning of disease incidence, but better recognition, enhanced diagnosis, and also enhanced coding, he said. Rhee was careful to note that sepsis remains a serious problem — but understanding the trends requires separating signal from billing artifact.

The insurers response has been to fight technology with technology. Blue Cross Blue Shield of Massachusetts has begun using computer algorithms to scrutinize doctors who routinely bill at the highest severity levels and has warned it may pay less than the submitted amount. Hospitals push back that the tools are necessary to combat insurer denials, not to game the system.

The irony is not lost on clinicians. In both cases — documenting minimally or extensively — the patient got what they needed, said Dr. Jeremy Faust, an emergency physician at Brigham and Women Hospital. In one case, the hospital got a bit more money. Am I wrong to document what I did?

What is clear is that the billing arms race is adding real costs to the healthcare system without adding real care. Whether regulators, legislators, or the market will intervene before the practice becomes universal is the unresolved question.