Artificial intelligence (AI) is quietly transforming the way health insurance companies make decisions about your coverage. While AI has brought remarkable advances to medicine, its use by insurers is raising new questions—and concerns—about fairness, transparency, and patient rights.
The Rise of AI in Health Insurance
Over the past decade, health insurers have increasingly turned to AI algorithms to help decide whether to pay for treatments and services recommended by your doctor. Unlike the AI tools used by hospitals to diagnose or treat patients, these insurance algorithms focus on determining if a treatment is “medically necessary” and how much care you’re entitled to—such as the number of days you can stay in the hospital after surgery.
One of the most common ways AI is used is in prior authorization. This is when your doctor must get approval from your insurance company before providing certain care. AI systems can quickly review your records and compare them to medical standards, but they can also deny claims that might otherwise be approved by a human reviewer.
When AI Says No: The Impact on Patients
If your insurer denies a claim, you typically have three options: appeal the decision (a process that can be slow and complex), accept a different treatment that is covered, or pay for the recommended care out of pocket. Unfortunately, only a tiny fraction of denied claims are ever appealed, often because the process is daunting and expensive.
For patients with chronic illnesses or serious conditions, these denials can have life-altering consequences. Research shows that people with long-term health problems, as well as those from minority backgrounds or the LGBTQ+ community, are more likely to face denials. The lack of transparency around how these AI systems make decisions only adds to the frustration and uncertainty.
The Push for Regulation
Unlike medical AI tools, which are reviewed by the Food and Drug Administration (FDA), insurance algorithms are largely unregulated. Insurers often claim their algorithms are trade secrets, so there’s little public information about how they work or whether they’re fair and effective.
Some states have started to pass laws requiring more oversight, such as mandating that a licensed physician supervise the use of AI in coverage decisions. The Centers for Medicare & Medicaid Services (CMS) has also introduced rules for Medicare Advantage plans, requiring decisions to be based on individual patient needs. However, these efforts are still limited, and there’s no national standard or requirement for independent testing.
Many experts believe the FDA should step in to regulate these algorithms, just as it does for other medical devices. This would help ensure that AI tools used by insurers are safe, accurate, and fair. But for now, the regulatory landscape remains a patchwork, leaving many patients vulnerable.
What Can You Do If Your Claim Is Denied?
- Appeal the decision: Don’t be discouraged by an initial denial. Gather all relevant medical records and ask your doctor to provide detailed documentation supporting the treatment.
- Seek help: Consider reaching out to patient advocacy groups or legal experts who specialize in health insurance appeals.
- Stay informed: Know your rights under your insurance plan and keep records of all communications with your insurer.
- Share your story: If you believe you’ve been unfairly denied care, sharing your experience can help raise awareness and push for change.
Looking Ahead
The use of AI in health insurance is here to stay, but the rules governing its use are still evolving. As patients, staying informed and proactive is your best defense. Regulators and lawmakers are beginning to take notice, but meaningful change will require continued advocacy and oversight.
Key Takeaways:
- AI is increasingly used by health insurers to make coverage decisions, especially for prior authorization.
- These algorithms can speed up decisions but may also lead to more denials and less transparency.
- Patients with chronic illnesses and those from minority backgrounds are at higher risk of claim denials.
- Regulation is limited, but new state and federal efforts are emerging.
- If your claim is denied, appeal, seek help, and stay informed about your rights.