Texas mulls limiting health insurance artificial intelligence

Artificial intelligence is becoming a larger part of life, including in the healthcare industry. Insurance companies at times use it to root out fraud but doctors worry it can also be used to tee-up claim denials.

Texas lawmakers in Austin will debate whether to limit the technology and by how much.

Michele Rayes from Friday is a patient with hypoparathyroidism and an advocate for the Texas Coalition for Patients. She's midway through the claims process for a drug. She didn't want to identify which insurance company she was processing the claim through for fear of retaliation.

“It had gone through the prior authorization process, then denied, then the next step, appeal, denied. Then another appeal, denial," Rayes told NBC 5.

She did not know an artificial intelligence bot could take action on her claim before she spoke to a human through a help line.

“Each situation, whether it be a drug, MRI, anything, needs to be taken on a case-by-case basis. These denials should not be about a group dataset," said Rayes.

At the state capitol in Austin, a bill by senator and doctor Charles Schwertner, R - Georgetown, opened up another front between the long-simmering battle between doctors and insurance companies. His Senate Bill 815 aims to ban health insurers from using artificial intelligence to solely deny, modify, or delay claims. During his committee hearing on the bill Thursday, he claimed AI is used to tee up thousands of actions on claims for a healthcare worker to push a button to take mass actions.

“Members as we know, insurers are deploying artificial intelligence focused on their bottom line, in my opinion over patient wellbeing," said Schwertner.

SB 815 also allows the Texas Department of Insurance to investigate insurance companies over AI and requires more transparency for patients.

"For too long insurers have hid behind automated process," said Schwertner.

However, in the committee on Thursday, a substitute was rolled out which worried Senator Lois Kolkhorst. She feared the language and definitions in the proposal made it too broad, affecting state-managed insurance programs like Medicaid and the Children's Health Insurance Program, or CHIP.

Sen. Kolkhorst feared it would get in the way of state efforts to root out billing fraud and "up-coding" where doctors improperly bill to make them more money. Those concerns were echoed by the insurance industry group, Texas Association of Health Plans, President Jamie Dudensing.

“The complexities around that will create obstacles in such a way that we cannot go after massive fraud, waste, and abuse - and billing errors," said Dudensing.

AI can be used to identify inconsistencies in large amounts of data.

In a statement after the hearing, a spokesperson for the Texas Association of Health Plans wrote NBC 5, "Texas regulations ensure that patients can never be denied care through AI—an essential safeguard. However, fraudulent billing continues to inflate costs for employers, families, and taxpayers."

The Texas Medical Association, the industry group for doctors in the state capitol, supported Sen. Schwertner's bill and a representative in the committee argued it could help prevent "down-coding" where insurance companies don't pay for care supported by a patient's doctor, saving the insurer money.

"We are seeing software in the market that is more powerful than anything we could have predicted," said Dr. "Zeke" Silva, for the Texas Medical Association.

"Nothing in this bill precludes pursuing fraud and abuse," said Dr. Silva.

Doctor groups and health insurance companies often tangle with each other in the capitol over payments, scope of practice, and liability.

The bill was left pending in committee waiting for further debate and discussion.