AI in Medical Coding: Transforming the US Healthcare System

The U.S. healthcare system struggles with heavy administrative burdens, with medical coding as a significant source of inefficiency and cost. This paper develops an analysis of the potential for artificial intelligence (AI) and automation to drive the evolution of medical coding methodologies. This paper discusses the underlying technologies, such as machine learning (ML), natural language processing (NLP), deep learning, and generative AI, that automate the assignment of code from unstructured clinical documents. The primary objective is to examine the impact of these tools on coding accuracy, coder productivity, revenue cycle management, and, in the process, regulatory adherence. By conducting an industry-based systematic review of peer-reviewed literature, industry reports, and recorded case studies, this paper identifies significant positive outcomes, including a substantial reduction in claim denial rates, increased coding throughput, and faster revenue velocity. It also examines what is wrong with it, including the persistence of algorithmic bias, major data privacy issues, extreme job displacement and evolution, and the urgent need for more flexible regulatory frameworks. The results provide evidence that AI represents a paradigm shift for medical coding: successful integration requires a strategic approach that addresses both technical and ethical considerations. From systematic and principled consideration of human-centered approaches toward data quality and data cleansing, the paper ends with the idea that AI-aided automation will revolutionize the human-coder dynamic toward a new role, moving coding from a role of repetitive task to one more complex in the case review, audit, and documentation integrity in clinical documentation system thus enhancing efficiency and quality of the processing of data, which is the heart and soul of the healthcare system.