As states strive to curb health insurers’ use of artificial intelligence, patients and doctors are arming themselves with AI tools to fight claims denials, prior authorizations and soaring medical bills.
Several businesses and nonprofits have launched AI-powered tools to help patients get their insurance claims paid and navigate byzantine medical bills, creating a robotic tug-of-war over who gets care and who foots the bill for it.
Sheer Health, a three-year-old company that helps patients and providers navigate health insurance and billing, now has an app that allows consumers to connect their health insurance account, upload medical bills and claims, and ask questions about deductibles, copays and covered benefits.
“You would think there would be some sort of technology that could explain in real English why I’m getting a bill for $1,500,” said cofounder Jeff Witten. The program uses both AI and humans to provide the answers for free, he said. Patients who want extra support in challenging a denied claim or dealing with out-of-network reimbursements can pay Sheer Health to handle those for them.
In North Carolina, the nonprofit Counterforce Health designed an AI assistant to help patients appeal their denied health insurance claims and fight large medical bills. The free service uses AI models to analyze a patient’s denial letter, then look through the patient’s policy and outside medical research to draft a customized appeal letter.
Other consumer-focused services use AI to catch billing errors or parse medical jargon. Some patients are even turning to AI chatbots like Grok for help.
A quarter of adults under age 30 said they used an AI chatbot at least once a month for health information or advice, according to a poll the health care research nonprofit KFF published in August 2024. But most adults said they were not confident that the health information is accurate.
State legislators on both sides of the aisle, meanwhile, are scrambling to keep pace, passing new regulations that govern how insurers, physicians and others use AI in health care. Already this year, more than a dozen states have passed laws regulating AI in health care, according to Manatt, a consulting firm.
“It doesn’t feel like a satisfying outcome to just have two robots argue back and forth over whether a patient should access a particular type of care,” said Carmel Shachar, assistant clinical professor of law and the faculty director of the Health Law and Policy Clinic at Harvard Law School.
“We don’t want to get on an AI-enabled treadmill that just speeds up.”
A black box
Health care can feel like a black box. If your doctor says you need surgery, for example, the cost depends on a dizzying number of factors, including your health insurance provider, your specific health plan, its copayment requirements, your deductible, where you live, the facility where the surgery will be performed, whether that facility and your doctor are in-network and your specific diagnosis.
Some insurers may require prior authorization before a surgery is approved. That can entail extensive medical documentation. After a surgery, the resulting bill can be difficult to parse.
Witten, of Sheer Health, said his company has seen thousands of instances of patients whose doctors recommend a certain procedure, like surgery, and then a few days before the surgery the patient learns insurance didn’t approve it.
In recent years, as more health insurance companies have turned to AI to automate claims processing and prior authorizations, the share of denied claims has risen. This year, 41% of physicians and other providers said their claims are denied more than 10% of the time, up from 30% of providers who said that three years ago, according to a September report from credit reporting company Experian.
Insurers on Affordable Care Act marketplaces denied nearly 1 in 5 in-network claims in 2023, up from 17% in 2021, and more than a third of out-of-network claims, according to the most recently available data from KFF.
Insurance giant UnitedHealth Group has come under fire in the media and from federal lawmakers for using algorithms to systematically deny care to seniors, while Humana and other insurers face lawsuits and regulatory investigations that allege they’ve used sophisticated algorithms to block or deny coverage for medical procedures.
