Insurance claim denials are increasing — is AI to blame?

The growing use of artificial intelligence by health insurance companies to process claims is creating significant challenges for hospitals and patients, with Medicare Advantage plans showing particularly concerning trends in denial rates.

The rising tide of denials: Insurance claim denials at hospitals have increased dramatically, with private claims rising 20% and Medicare Advantage claims jumping 56% between 2022-2023.

• Kurt Barwis, president of Bristol Hospital in Connecticut, witnessed patients unnecessarily occupying hospital beds during the COVID-19 omicron surge due to insurance authorization delays
• Hospitals now spend approximately $19.7 billion annually appealing insurance claim denials
• The surge in denials is particularly pronounced in Medicare Advantage plans, raising concerns about access to care for elderly patients

AI’s role in claim processing: Major insurance companies have integrated artificial intelligence systems to evaluate and process claims, leading to accusations of automated denial practices.

• Several leading insurers, including Cigna, UnitedHealthcare, and Humana, face lawsuits over alleged automated claim denials using AI tools
• UnitedHealthcare’s denial rate for skilled nursing facility admissions increased dramatically from 1.4% in 2019 to 12.6% in 2022 following their acquisition of an AI company
• Internal documents from CVS revealed efforts to calibrate automation systems to prevent approvals of cases “it felt ought to be denied”

Healthcare provider responses: Hospitals are developing strategies to address the increasing burden of claim denials while maintaining patient care standards.

• Some healthcare facilities are implementing their own AI tools to streamline and enhance their appeals processes
• Hospital administrators report that claim denials are negatively impacting patient health by delaying necessary care
• Healthcare providers struggle to balance patient care with the growing administrative burden of managing insurance appeals

Regulatory oversight: A Senate subcommittee investigation has revealed concerning patterns in how insurance companies utilize predictive technologies for claims processing.

• The investigation found evidence that UnitedHealthcare, Humana, and CVS increased denials for post-acute care after adopting new technological systems
• Recommendations include implementing greater transparency requirements and enhanced regulation of AI use in insurance claim decisions
• The findings suggest a need for closer scrutiny of automated decision-making processes in healthcare coverage

Critical implications: The intersection of AI technology and healthcare coverage decisions raises fundamental questions about the balance between efficiency and patient care, suggesting a need for careful evaluation of how automated systems influence medical access and outcomes.