Texas legislation considers AI rules for health insurance claims

AUSTIN (KXAN) — This legislative session, artificial intelligence (AI) is on the minds of many Texas lawmakers. There are several bills already filed that have to do with regulating AI in different ways.

Sen. Charles Schwertner, R-Georgetown, filed SB 815 to stop health insurance companies from using AI to delay, deny or modify claims.

“Artificial intelligence is a technology that is still rapidly developing and has enormous potential to support many systems, including healthcare,” Schwertner said. “However, this technology should not be used to make critical, sometimes life-saving decisions regarding a patient’s care. We simply cannot and should not solely rely on algorithms to understand the complexities and unique needs of patients.”

SB 815 would prohibit health insurance companies from using the technology to determine medical necessity on behalf of patients, according to the press release.

“In addition, it gives the Texas Department of Insurance the authority to inspect or audit a health plan’s benefits to ensure compliance,” the release said.

The Texas Department of Insurance told KXAN it is aware of the increased use of AI tools by some health plans to process and approve claims more efficiently.

We’re not aware of any plans that are using A.I. to deny claims – which would clearly violate existing requirements. State law requires Texas-licensed healthcare professionals to review claim denials.”
Texas Department of Insurance Spokesperson

Insurance companies using AI

There have been reports nationwide of insurance companies using AI to process claims and review prior authorization requests.

“The main way that I’ve heard AI being used by insurance companies is to review claims,” said Dr. Samantha Shorey, an AI expert with the University of Pittsburgh. “Using AI in order to automate aspects of that process.”

Shorey said AI can help review information and notify if something is missing or point out an error.

“In that sense, AI is just kind of an alarm bell,” Shorey said. “The other thing that AI can be used to do is make decisions about whether or not a claim, for example, might be approved or denied or sent back to the beginning of the queue.”

Last October, the U.S. Senate Permanent Subcommittee on Investigations released an investigation into how some insurance companies have used AI to deny some claims from Medicare Advantage plan subscribers.

“When it becomes really concerning is when it’s not conducted with human oversight or transparency, so when nobody is reviewing the automated systems decisions for their accuracy.”

Dr. Samantha Shorey, University of Pittsburgh

Ultimately, Shorey said this bill and others like it could set the precedent for legislation across the country.

“Texas is a laboratory and a laboratory for technology development,” Shorey said. “If they can set the tone for what responsible regulation looks like, a lot of other places are going to follow suit.”

In June 2023, the American Medical Association adopted a policy calling for more oversight of AI in prior authorization.

“While the AMA supports automation to speed up the prior authorization process and cut down on the burdensome paperwork required by physicians, the fact remains that prior authorization is overused, costly, inefficient, and responsible for patient care delays,” the release said.

The new AMA policy called for insurers to require a human examination of patient records prior to a care denial.