The Growing Legal Challenges for Health Insurers' Use of AI
The increasing adoption of artificial intelligence (AI) in the health insurance industry is facing a surge in legal disputes, as patients argue that insurers are utilizing the technology to unjustly deny coverage for essential medical services.
These complaints primarily target health insurers United Healthcare and Humana, and have raised concerns that the integration of AI in the health insurance sector will lead to a rise in coverage claims rejections, ultimately preventing chronically ill and elderly patients from receiving the quality medical care they require. The escalating number of coverage denials has prompted calls for increased government oversight of the largely unregulated use of AI within the health insurance industry, according to experts cited by CBS MoneyWatch.
A class-action lawsuit, filed on September 12, alleges that health insurer Humana utilized an AI model called nHPredict to wrongfully deny medically necessary care for elderly and disabled patients covered under Medicare Advantage – a Medicare-approved plan operated by private insurers. Another lawsuit, filed last month, claims that United Healthcare also utilized nHPredict to reject claims, despite being aware that approximately 90% of the tool's denials were flawed, overriding the determinations made by physicians that the expenses were indeed medically necessary.
Use of AI by Humana, United Healthcare
NHPredicts, a computer program developed by NaviHealth, a subsidiary of United Healthcare, is being challenged in recent litigation. The program is designed to provide personalized care recommendations for patients based on real-world experience, data, and analytics. However, lawsuits allege that the program's AI model determines coverage criteria for Medicare Advantage patients in post-acute care settings with rigid and unrealistic predictions for recovery.
Both United Healthcare and Humana are accused of implementing policies that rely on the algorithmic decision-making of nHPredicts to make coverage determinations. Lawsuits claim that employees who deviate from the projections of the AI model are disciplined and terminated, regardless of whether a patient requires more care.
When contacted for comment, NaviHealth did not respond to CBS MoneyWatch's request.
Rise in Claim Rejections
According to David Lipschutz, a lawyer advocating for Medicare patients, there has been an increase in "more frequent" and "inappropriate" insurance claim denials this year. This rise coincides with health insurance companies adopting AI technology to determine coverage for Medicare patients.
Lipschutz stated, "In our experience, the use of these algorithmic tools has led to more denials, or premature terminations of coverage for things that otherwise would be covered."
In 2021, insurers have denied nearly one in five claims they received, which is an increase from previous years, as reported by KKF.
However, Lipschutz points out that it is challenging to determine whether insurers' AI tools are directly responsible for the surge in claim rejections. Insurance companies are not legally required to disclose the reasons behind their coverage decisions, making it difficult to assess the factors driving up denials.
Fast Rejection
Cindy Cardinal, a retiree in North Carolina who is responsible for her octogenarian father's care, has been engaged in a year-long battle against various claim denials from United Healthcare, the insurance company providing her father's Medicare Advantage plan.
The first dispute arose when Cardinal's father broke his hip, leading to an emergency hip-replacement surgery. Subsequently, a doctor recommended his admission to an intensive inpatient rehabilitation program to aid in his mobility recovery.
Program Costs
The program in question has a daily cost of $1,800, which is equivalent to the average mortgage payment in North Carolina.
Insurance Denial
After submitting a claim for the program, Cardinal received a response from United Healthcare stating that they would not cover the cost. The insurer did not provide any explanation for their decision.
Legal Battles and AI
Lipschutz believes that the ongoing litigation against UnitedHealthcare and Humana could lead to regulations on the use of AI technology in the health insurance industry. He hopes that these battles will result in a decrease in inappropriate behaviors.
Fighting for Coverage
Cardinal has been advocating for coverage for her father's physical therapy sessions and is anticipating a similar fight for coverage of palliative care. She has spent hours on the phone with United Healthcare in her efforts.
