A Healthcare.com Series
Part two of our series explores how AI is reshaping health insurance. Its integration into utilization management (UM) offers efficiency but sparks concerns over transparency, accountability, and equity.
Read PART 1: Current Landscape of AI in Utilization Management
Health insurers, regulators, and stakeholders must address these concerns head-on to harness AI’s potential responsibly.
Transparency: A Non-Negotiable Requirement
The adoption of AI in health insurance hinges on transparency. Consumers and regulators need clear, accessible information about how AI influences UM decisions, from determining care coverage to setting parameters for prior authorizations.
This transparency must include detailed disclosures about the data used to train AI systems, the consent process for obtaining this data, and the specific functions AI performs in decision-making.
Without this, proprietary AI tools can obscure accountability for errors or discriminatory outcomes, undermining consumer trust. For instance, if AI decisions lead to denied treatments or coverage gaps, insurers must take responsibility and provide actionable recourse for affected individuals.
Regulatory Oversight: Protecting Consumer Rights
Regulatory bodies must be equipped to oversee AI tools effectively. State regulators, for example, should assess AI compliance with laws on data privacy, fairness, and non-discrimination.
Specialized audits can identify and address biases or inaccuracies in AI decision-making. This is especially critical in scenarios like prior authorizations, where flawed algorithms could restrict access to necessary care.
In response to these challenges, organizations like the National Association of Insurance Commissioners (NAIC) and the Centers for Medicare and Medicaid Services (CMS) have emphasized human oversight and compliance.
- National Association of Insurance Commissioners (NAIC) Principles on Artificial Intelligence (AI) Read the full report.
- Consumer Health Advocacy at the NAIC: Artificial Intelligence in Health Insurance: The Use and Regulation of AI in Utilization Management. Read the full report.
Recent directives, such as the NAIC Model Bulletin and CMS’s 2024 memo, require insurers to ensure AI systems align with existing regulations, safeguarding consumer rights and preventing discriminatory practices.
The Need for Human Oversight
AI’s efficiency should augment—not replace—human judgment in UM decisions. Clinical expertise and authority are vital to ensuring AI recommendations align with medical standards.
Human oversight can correct errors, ensure contextual understanding, and make compassionate decisions that algorithms might overlook.
Equally important is the need for robust consumer protections, including an accessible appeals process. Consumers must be able to challenge AI-driven decisions that they believe are unfair or harmful. This ensures that automation does not strip individuals of their agency in healthcare.
Case Studies: Lessons Learned
The pitfalls of unchecked AI in health insurance are already evident. An insurer’s use of the nH Predict algorithm to determine post-acute care durations led to the premature termination of essential services.
Similarly, an AI claims denial system processed claims at an average of 1.2 seconds each, denying over 300,000 claims in two months, raising ethical concerns about fairness and oversight.
These cases underscore the need for governance frameworks prioritizing ethical AI use, particularly for marginalized populations. Without safeguards, AI could perpetuate biases, exacerbating disparities in healthcare access and outcomes.
Moving Forward: Balancing Efficiency and Ethics
AI has the potential to revolutionize health insurance, but its adoption must balance technological efficiency with ethical responsibility. Transparent practices, regulatory oversight, human involvement, and equity-focused governance are essential to ensuring AI benefits all stakeholders while safeguarding consumer rights and trust.
Stay tuned for Part Three, where we’ll explore how AI enhances consumer experiences at Healthcare.com.
