How Health Insurers Use AI Algorithms to Deny Care

The Rise of Algorithm‑Driven Denials 

Across the United States, medical insurers are now relying on AI systems to make decisions about patient care. And most of their clients are not even aware of this. The AI tools being used are being marketed as efficient and objective, but investigations show a different reality. Denials are at an all-time high due to these algorithms, and oftentimes, there is no human review afterward to justify them. Patients don’t receive clear explanations as to why their care was denied, and physicians are facing new barriers when advocating for their patients to receive necessary medical treatment. 

How AI Systems Make Decisions 

The AI systems and models being used evaluate treatment codes and patient history. More importantly, though, they evaluate cost benchmarks to determine whether or not care should be approved. Read that again. 

These systems are being trained on cost containment measures and protocols. This basically means that they are replicating flaws that are already embedded in the system. When an algorithm flags a claim, the result is often an automatic denial. 

Legal Challenges Are Growing 

A series of lawsuits has emerged against major health insurers. One case alleges that the company’s algorithm denied more than 300,000 claims in just two months. Most of these denials had an average review time of 1.2 seconds by an actual human being. AI systems are being used as decision-makers and not as tools anymore. 

The Impact on Hospitals and Physicians 

Hospitals are already feeling and facing the consequences. Denial rates have risen sharply in recent years. Between 20.2% and 55.7%, depending on the type of insurer. Many of these denials have come from automated systems. Recent investigations, however, say that up to 75% of these denied claims are eventually overturned. If that doesn’t highlight the issue behind using AI as a decision-maker in healthcare, what can? 

Physicians are facing increased scrutiny, and patients are facing unnecessary delays.  But as AI becomes more deeply embedded in claims processing, physicians must remain vigilant. Transparency must be demanded. And the legal system must be prepared to intervene.