How artificial intelligence controls your health insurance coverage

AI in Health Insurance: A Hidden Gatekeeper to Your Care?

Artificial intelligence is rapidly transforming many industries, including healthcare. While doctors and hospitals explore AI to enhance diagnosis and treatment, health insurance companies are deploying these powerful algorithms for a different purpose: deciding whether to pay for the care your physician recommends. This increasingly common practice, particularly in processes like prior authorization, is raising serious concerns among legal and health policy experts.

How Insurers Are Using AI

Health insurers are integrating AI into their operations to determine medical necessity and the extent of covered services, such as how long a patient can stay in the hospital after surgery. The stated goal is efficiency, speed, and ensuring appropriate care while reducing waste and harmful treatments. However, evidence suggests these systems are frequently used to delay or deny treatments and services recommended by doctors, often with the primary aim of cutting costs.

One of the most opaque aspects is the lack of transparency regarding how these algorithms function. Insurers often claim their algorithms are proprietary trade secrets, making it impossible for the public or even regulators to understand the criteria or data used to make life-altering coverage decisions.

The Real Impact on Patients

When an insurer's AI system denies coverage for a doctor-recommended treatment, patients are left with difficult options:

• Appeal the decision: This process is notoriously complex, time-consuming, expensive, and requires significant expertise. Alarmingly, very few denials are ever appealed.
• Accept an alternative treatment: Patients may be forced into less optimal or different care plans simply because they are the only ones covered.
• Pay out-of-pocket: Given the soaring cost of healthcare, this is often not a realistic option for most people.

These delays and denials have serious health consequences. Patients, especially those with chronic or debilitating illnesses requiring expensive, long-term care, can suffer significantly. Disturbingly, there are concerns that insurers might use algorithms to delay care for terminally ill patients, potentially saving money if the patient dies before an appeal is resolved.

Compounding the issue, research indicates that certain vulnerable populations, including individuals with chronic illnesses, Black and Hispanic individuals, people of other nonwhite ethnicities, and those identifying as LGBTQ+, are disproportionately likely to face claims denials. Ironically, prior authorization processes themselves may even increase overall health system costs due to administrative burdens and poorer health outcomes from delayed care.

The argument that patients can simply pay for care themselves ignores the harsh economic reality for many Americans.

Current Regulatory Landscape: A Patchwork of Inadequacy

Unlike AI tools used in medical diagnosis or treatment, which are subject to some level of review (like by the FDA), health insurance AI systems are largely unregulated. They operate behind a veil of secrecy, with no required independent testing to verify their safety, accuracy, fairness, or effectiveness in real-world scenarios. There are no peer-reviewed studies demonstrating their claimed benefits.

Recent steps by regulatory bodies have been limited. The Centers for Medicare & Medicaid Services (CMS) has mandated that Medicare Advantage plans base decisions on individual patient needs rather than solely generic criteria. However, this rule still allows insurers to set their own standards and lacks requirements for independent testing. Furthermore, CMS rules primarily apply to federal programs and don't cover the vast landscape of private health insurance.

Some states have attempted to introduce legislation. California, for instance, now requires licensed physician supervision for insurance coverage algorithms. Yet, most state-level efforts suffer from similar weaknesses: they grant insurers too much autonomy in defining 'medical necessity,' lack requirements for third-party algorithm review, and are inherently limited in scope, unable to regulate federal programs like Medicare or insurers operating across state lines.

The Call for Robust Oversight

Many health law experts believe the gap between insurance practices and patient needs necessitates comprehensive regulation of health care coverage algorithms. A compelling argument is being made for the FDA to play a central role. The FDA possesses the medical and technical expertise needed to evaluate these complex systems before they impact patient care, similar to how it reviews other medical AI tools for safety and effectiveness.

FDA oversight could establish a uniform national standard, preventing a confusing and ineffective patchwork of state-level rules. However, there are legal debates regarding the FDA's current authority, as existing definitions of 'medical device' focus on tools used for diagnosis, treatment, or prevention, not coverage decisions. Expanding the FDA's power may require legislative action from Congress.

In the meantime, CMS and state governments could immediately implement requirements for independent, third-party testing of insurance algorithms to verify their safety, accuracy, and fairness. Such requirements might even incentivize insurers to support a single national standard, potentially FDA regulation, to avoid navigating numerous differing state rules.

Conclusion: Patient Lives Are At Stake

The integration of AI into health insurance decisions presents a critical challenge to ensuring timely and appropriate patient care. While the movement towards regulating these algorithms has begun, it requires a significant and sustained push. The current lack of transparency and independent oversight allows systems designed for efficiency and cost-saving to become barriers to medically necessary treatment, with potentially devastating consequences for patient health and well-being. Establishing robust, independent regulation is not just a policy debate; for many patients, their lives literally depend on it.