AI-Driven Claim Denials: The Controversial Role of Artificial Intelligence in Health Insurance

Inside the shady world of health insurers -- and the 1.2 seconds it takes them to deny claims

"It was the closest hospital to where I had my event, so naturally the ambulance took me there. No fault to them." Although the hospital reduced the bill by 90 per cent, the incident laid bare the expensive complexity of the American healthcare system with patients finding that they are uncovered, despite paying hefty premiums, because of their policy's small print. In many cases the grounds for refusal hinge on whether the insurer accepts that the treatment is necessary and that decision is increasingly being made by artificial intelligence rather than a physician. It is leading to coverage being denied on an industrial scale. Much of the work is outsourced, with the biggest operator being EviCore, which is used by insurance companies serving about 100 million people. According to ProPublica, a non-profit investigative organisation, it uses AI to review -- and in many cases turn down -- doctors' requests for prior authorisation, guaranteeing to pay for treatment. Cynics call it the "dollars for denial" business, with some contracts providing incentives for cutting spending. The controversy over coverage denials was brought into sharp focus by the gunning down of UnitedHealthcare's chief executive Brian Thompson in Manhattan. While no official explanation has been given for the killing, the casings apparently left on the ammunition -- "deny", "defend" and "depose" -- are thought to refer to the tactics the insurance industry is accused of using to avoid paying out. Figures compiled by ValuePenguin, a consumer research site, found that UnitedHealthcare rejected one in three claims last year, about twice the industry average. 'Illegal scheme' Cigna, the fourth largest health insurance company in the US, rejected 18 per cent of its claims. It is being sued in a California class action over its mass denials of coverage. According to the writ, Cigna operated an "illegal scheme to systematically, wrongfully and automatically deny its insureds the thorough, individualised physician review of claims guaranteed to them by California law and, ultimately, the payments for necessary medical procedures owed to them under Cigna's health insurance policies". In response to the writ, Cigna said the lawsuit "appears highly questionable and seems to be based entirely on a poorly reported article that skewed the facts". It added: "Cigna uses technology to verify that the codes on some of the most common, low-cost procedures are submitted correctly based on our publicly available coverage policies, and this is done to help expedite physician reimbursement. "The review takes place after patients have received treatment, so it does not result in any denials of care. If codes are submitted incorrectly, we provide clear guidance on resubmission and how to appeal." Frequently, the insurers will deny claims on the basis that the treatment is unnecessary -- despite the view of the patient's own doctor. According to the California claim, medical reviews were done by computer rather than another physician. Algorithm used to deny claims At the heart of the operation was PXDX, an algorithm developed by Cigna that enabled the company's doctors to "automatically deny payments in batches of hundreds or thousands at a time". The system meant claims were rejected without opening files, "leaving thousands of patients effectively without coverage and unexpected bills". In just two months in 2022, it is alleged, Cigna's doctors denied more than 300,000 requests for payment, spending 1.2 seconds "reviewing" each request. The company was also accused of using the PXDX system in the knowledge that only around 2 per cent will contest the denial. "I think they are all using AI to cost cut," Glenn Danas from Clarkson Law Firm, which is representing the patients, told The Telegraph. "Our position is not that AI has no role in the insurance industry, but it has to be used responsibly and not in a way that does not supplant the doctor or individualised review." There are huge financial incentives to use AI, not only in cutting payouts but through savings on staff. "It's also probable that they are saving money from people who do not bother to appeal," said Mr Danas. Another major insurer, Anthem, ran into trouble over plans it had to cut reimbursements for anaesthesia during medical procedures. It planned to refuse payment for anaesthesia if it went beyond an arbitrary time limit, irrespective of whether surgery was still going on. 'Appalling behaviour' One angry anaesthetist asked whether he would have to stop in mid-operation, or leave the patient facing crippling medical expenses. "This is just the latest in a long line of appalling behaviour by commercial health insurers looking to drive their profits up at the expense of patients and physicians providing essential care," Donald Arnold, the president of the American Society of Anaesthesiologists said. "It's a cynical money grab by Anthem, designed to take advantage of the commitment anaesthesiologists make thousands of times each day to provide their patients with expert, complete and safe anaesthesia care." Anthem climbed down. "Based on feedback received and misinterpretation of our policy change, it is evident that our communication regarding this policy was not clear, and as a result, we have decided to not proceed with this policy change," it said in a statement. KFF, a nonprofit health policy research, polling and news organisation, found that six out of 10 Americans ran into problems when they tried to claim on their insurance. They either had claims turned down, faced delays getting prior authorisation for treatment, or found that their approved network of doctors and hospitals was inadequate. Worst hit were those who either got their insurance from their employer, or the marketplace set up by Obamacare. The Telegraph has approached Cigna, Anthem, EviCore and AHIP, the health insurance trade body, for comment.

How UnitedHealthcare and other insurers use AI to deny claims

The fatal shooting of UnitedHealthcare (UNH-5.42%) CEO Brian Thompson on Wednesday has sparked public scrutiny of health insurers, especially regarding their use of AI in evaluating claims. The incident also comes as several insurance providers have been facing litigation over their coverage practices and the potential impact they have on patient care. Thompson was fatally shot in New York City on Wednesday morning, just hours before he was set to speak at the insurance firm's annual investor day. Multiple outlets reported on Thursday that shell casings from the shooting had the words "deny," "defend," and "depose" written on them. The words appear to reference terms industry critics use to describe how insurers deny claims. At the same time, posts on social media have been claiming that UnitedHealthcare's claim-denial rate is the highest in the industry; however, since insurers try to keep these numbers hidden, the true extent of its denials remains uncertain, especially when it comes to private plans. Still, some recent reports show that denials for some patients have been on the rise. In October, a report from the U.S. Senate Permanent Subcommittee on Investigations showed that the nation's insurers have been using AI-powered tools to deny some claims from Medicare Advantage plan subscribers. The report found that UnitedHealthcare's denial rate for post-acute care -- health care needed to transition people out of hospitals and back into their homes -- for people with Medicare Advantage plans rose to 22.7% in 2022, from 10.9% in 2020. The rise coincides with UnitedHealthcare's implementation of an AI model called nH Predict, originally developed by naviHealth, a subsidiary of UnitedHealth Group that has since been rebranded. Algorithms like nH Predict can analyze millions of data points to generate predictions and recommendations by comparing patients to others with apparently similar characteristics, according to an article on JAMA Network. However, the article cautions that claims of enhanced accuracy through advanced computational methods are often exaggerated. Both UnitedHealth and Humana are currently facing lawsuits over their use of nH Predict. The suits allege that insurers pressured case managers to follow the algorithm's length-of-stay recommendations, even when clinicians and families objected. One lawsuit filed last year against UnitedHealth claims that 90% of the algorithm's recommendation are reversed on appeal. The lawsuit states that UnitedHealthcare wrongfully denied elderly patients care by "overriding their treating physicians' determinations as to medically necessary care based on an AI model that Defendants know has a 90% error rate." In court filings, lawyers for UnitedHealth argued that the lawsuit should be dropped because plaintiffs failed to complete Medicare's appeals process and that their grievances are with the federal government and not UnitedHealth, STAT News reported in May. UnitedHealthcare and Humana (HUM-0.63%) did not immediately respond to requests for comment from Quartz. Cigna (CI-1.48%) is also facing legal action over its use of a separate algorithm to reject insurance claims. A 2023 lawsuit alleges that the company uses its PxDx system to analyze and deny claims in bulk before forwarding them to physician reviewers for final approval. Cigna relies heavily on the automated system, allowing claims to be denied without any review of individual patient files, according to the complaint. It cites a ProPublica investigation revealing that a single Cigna medical director rejected 60,000 claims in just one month. Cigna also did not did immediately respond to a request for comment from Quartz.