A recent court ruling on UnitedHealth Group’s use of automation in the claims process may signal what’s ahead for its competitors.
Earlier this month, a federal judge partially advanced a potential class action lawsuit against UnitedHealth Group and its UnitedHealthcare insurance unit over their alleged use of artificial intelligence to deny post-acute care for some Medicare Advantage members. That could spell bad news for other insurers like Humana and Cigna that also automate the process and have seen lawsuits filed against them, legal experts said.
Related: Providers lean on AI startups to limit, challenge insurance denials
"It creates a model for other plaintiffs and other cases that are similar, to kind of see this opinion as a roadmap to think 'what claims could we bring that might also survive,'” said Leora Friedman, senior associate at the Center for Health Policy and the Law at Georgetown University’s O’Neill Institute.
Prior authorization, a process used by health insurers to make sure services and procedures are necessary before determining coverage, has long been a pain point for patients and providers. Backlash against the health insurance industry that followed the fatal shooting of UnitedHealthcare CEO Brian Thompson in December exposed widespread dissatisfaction.
The insurance units of UnitedHealth Group, Humana and Cigna are facing allegations they’ve used technology to deny patients the care recommended by physicians. The companies have denied the allegations, and in fact, insurers are investing in greater adoption of AI and other automation tools, which they say make workflows more efficient and create better experiences for members and providers.
“It's not inappropriate to use AI to review claims, but maybe there are certain levels of claims [or] certain types of medical care that may be too problematic to use AI,” said Kim Ruppel, healthcare attorney at law firm Dickinson Wright and chair of its telehealth task force, who is not involved with the cases.
Legal battles
The lawsuit against UnitedHealth Group, filed by family members of two deceased Medicare Advantage policyholders in the U.S. District Court for the District of Minnesota, will proceed with two allegations — breach of contract and breach of the implied covenant of good faith and fair dealing. The court will weigh whether the health insurer followed coverage decisions made by clinical services staff and physicians, as promised in its contracts with members, rather than letting AI make the final call.
Glenn Danas, a partner at Clarkson Law Firm representing the patient's family in the case against UnitedHealth, said he will seek details on why UnitedHealth Group acquired the software company naviHealth, which has been incorporated into its Optum brand, and how it uses nH Predict, an AI tool that informs providers about the amount of care patients may need. He also is representing patients who have filed suits against Cigna and Humana challenging their use of AI in the claims process.
Cigna and Humana have each filed motions to dismiss the lawsuits against them. Humana’s case, filed in the U.S. District Court for the Western District of Kentucky, is most similar to UnitedHealth Group’s given its emphasis on how the insurer used the nH Predict AI tool to determine whether it would cover Medicare Advantage members’ post-acute care.
The case against Cigna, filed in the U.S. District Court for the Eastern District of California, revolves around its insurance unit Cigna Healthcare’s use of the procedure-to-diagnosis, or PXDX, algorithm tool to determine coverage for a broader group of consumers for various procedures.
UnitedHealth Group, Humana and Cigna did not respond to questions about how they're using AI and algorithms in the claims process.
More use cases
The lawsuits aren't deterring payers from looking to further automate the claims process.
UnitedHealth Group CEO Andrew Witty said on an earnings call last month the company is seeking more ways to “use standardization and technology” to approve care more quickly for Medicare Advantage patients. The company is “very close” to launching a program to streamline prior authorization requests, he said
At Humana, nearly 70% of prior authorization requests are approved automatically, and the company wants to push that share higher, President and CEO Jim Rechtin said at an industry event in September. Aetna Chief Medical Officer Dr. Cathy Moffitt said in an interview the insurer aimed to automate about one-third of preapproval requests by the end of last year.
Patients' frustration has been fueled by the volume of denials rising along with the increasing use of technology, the American Hospital Association said in a September report. Automation contributed to a higher number of claims rejections between 2022 and 2023, with denials for Medicare Advantage claims jumping 55.7% and denials for commercial claims increasing 20.2%, the report said.
High denial rates can cause either consumers or providers to take action. Consumers may switch to other insurers with lower denial rates or fewer prior authorization requirements, and providers have already ended relationships with some Medicare Advantage carriers in part due to administrative burdens. Patients and providers are also working with AI startups to challenge care denials.
