AI is revolutionizing modern medicine, but some NC senators want guardrails that prevent artificial intelligence from denying insurance claims and overcharging patients. (Photo: Andriy Onufriyenko/Getty Images)
Senator Amy Galey (R-Alamance) says artificial intelligence in medical research has led to new understanding of diseases, new treatments, and new efficiencies. But she says AI in healthcare also has the potential to be disruptive and to contribute to increased costs for patients.
Galey introduced a proposed committee substitute to House Bill 565 Wednesday that would prohibit health insurers from denying a claim based solely on the use of AI.
“If the AI does not approve the claim, it must be reviewed by a living human being,” Galey told members of the Senate Health Committee. “We do not want robots or computers to deny care to sick people.”
More controversially, H565 would also create new rules for the use of AI in hospital coding and billing.
Senator Amy Galey (R-Alamance) says AI in healthcare could be contributing to increased costs for patients. (Photo: NCGA livestream)Galey says there is evidence that ambient AI is being used in medical settings not only to simplify charting, but also to select the most lucrative billing codes for a diagnosis. She said legislation is needed to keep AI from automatically increasing hospital bills without human oversight or intervention.
“[It’s] resulting in a higher bill that increases costs for insurers, including Medicaid and the state health plan and the patient,” said Galey.
Galey pointed to a report from Rice University’s Baker Institute for Public Policy that found hospital service prices have surged more than 200% since 2000.
Galey said it’s not labor costs or the fact that patients are sicker that drive up costs.
“There is evidence that AI and hospital billing is driving the appearance of more serious diagnoses without corresponding changes in treatment,” said Galey.
The more serious the diagnosis, the more a hospital charges for care, according to Galey.
Sen. Gale Adcock (D-Wake), a family nurse practitioner, was skeptical of the bill. She said upcoding, which is choosing a higher billing code than warranted, is already banned. The state Department of Health and Human Services can already suspend or terminate a provider’s status if they discover upcoding.
Adcock called the bill “one-sided” and noted that it didn’t address different charges for inpatient or outpatient services.
“I think this bill needs a great deal of work on it to achieve the balance we’re looking for, and also the ability to enforce it,” said Adcock.
Sen. Natalie Murdock (D-Durham) (Photo: NCGA livestream)Sen. Natalie Murdock (D-Durham) said the two large hospitals in her district were concerned with how the legislation defines upcoding and fraud.
“They definitely don’t want to be in a position where they believe they provided a service that was needed and thought that it was appropriate, [that] they’re not stuck with looking as if fraud came into play,” said Murdock.
The good, the bad and the unknown: The future of AI in North Carolina
Murdock said it’s clear that the legislation will evolve as AI technology evolves, but for now more people from the healthcare community are needed at the table.
“As a state, we haven’t even scratched the surface with what other states are doing in the AI space, but medical billing and coding is going to be a real issue. I just want to make sure we get it right,” said Murdock.
Blair Borsuk with the North Carolina Healthcare Association said AI coding and billing can be very complex, and the association looks forward to working with the General Assembly to evaluate current practices and develop appropriate language around AI usage and regulations.
A second committee hearing on the bill, originally set for Thursday, was canceled.
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