State governments and federal lawmakers intensify oversight on insurers’ use of artificial intelligence (AI) in underwriting. Lawsuits against major insurers spark state-level actions in Colorado, Pennsylvania, and more, demanding transparency and fairness in AI algorithms. The National Association of Insurance Commissioners sets guidelines, while federal lawmakers push CMS to monitor AI’s impact on Medicare. Vice President Kamala Harris and President Joe Biden underscore AI risks in health insurance, culminating in an executive order. These efforts seek to ensure responsible AI use, prevent discrimination, and safeguard consumer access to healthcare services.
As insurers increasingly deploy artificial intelligence (AI) in their operations, concerns mount among state and federal authorities. Notably, lawsuits against leading insurers highlight alleged unfair denials, propelling state-level actions and regulatory interventions. Colorado, Pennsylvania, and other states pursue transparency laws, while federal lawmakers urge CMS oversight of AI in Medicare. The National Association of Insurance Commissioners issues guidelines as Vice President Kamala Harris and President Joe Biden emphasize AI risks. This scrutiny aims to address potential biases and discriminatory practices arising from AI use in insurance, ensuring ethical and fair treatment for consumers.
Lawsuits against major players like UnitedHealthcare and Cigna allege the wrongful denial of medical claims through the utilization of automated data tools. This trend has prompted various states and regulatory bodies to take action.
Colorado has taken the lead by implementing regulations aimed at ensuring transparency in insurance algorithms, focusing initially on life insurers. Other states like Pennsylvania and New Jersey are following suit with proposed legislation requiring insurers to disclose their AI practices or prevent discriminatory behaviors stemming from non-human decision-making systems. Additionally, warnings and notices have been issued in states like New York, California, Connecticut, and Washington, D.C., cautioning insurers against discriminatory practices.
Experts view Colorado’s initiative as the pioneering step in a potential series of state-level rulings. Bryan Simms, President of Mammoth Life & Reinsurance Co., sees this as the beginning of a broader trend.
The National Association of Insurance Commissioners has also stepped in, publishing guidelines urging insurers to develop internal policies ensuring responsible and non-discriminatory AI use.
At the federal level, lawmakers have urged CMS (Centers for Medicare & Medicaid Services) to increase oversight of AI and algorithms used in Medicare Advantage prior authorization decisions. Their concern stems from reports indicating that AI-driven prior authorization decisions in Medicare Advantage plans are resulting in more restrictive care denials compared to traditional Medicare. Lawmakers have requested CMS to mandate reporting of prior authorization data by MA plans, comparing AI-generated guidance to actual coverage decisions, and evaluating if AI algorithms in prior authorization are self-correcting.
Vice President Kamala Harris highlighted the potential harms of AI in the health insurance industry, citing instances where faulty AI algorithms resulted in seniors being removed from healthcare plans. Her speech echoes President Joe Biden’s executive order, issued on October 30, directing federal health agencies to formulate a strategy for overseeing AI, particularly in the healthcare sector. The order tasks HHS with establishing a safety initiative focused on identifying unsafe AI practices that could cause harm.
The overarching concern from both state and federal perspectives revolves around ensuring AI in the insurance realm operates transparently, responsibly, and without discriminatory practices. This collective effort aims to protect consumers from potential biases and unjust denials in accessing necessary healthcare services.
The surge in state and federal scrutiny underscores the critical need for transparency and fairness in insurers’ deployment of artificial intelligence (AI). State initiatives in Colorado, Pennsylvania, and beyond, alongside federal interventions, aim to regulate AI algorithms in insurance. The National Association of Insurance Commissioners’ guidelines and calls for CMS oversight signal a collective effort to prevent biases and discriminatory practices. Vice President Kamala Harris and President Joe Biden’s emphasis on AI risks reaffirms the commitment to ethical AI use. Ultimately, these measures strive to safeguard consumer access to healthcare services and ensure responsible AI utilization in the insurance landscape.