Dec 13, 2023 - Health

Class-action suit accuses another Medicare insurer of using AI to deny care

Illustration of a small hand and gavel next to giant binary code

Illustration: Sarah Grillo/Axios

Health insurer Humana has been using an AI algorithm that systematically denies seniors rehabilitation care recommended by their doctors, according to a class-action lawsuit filed Tuesday evening.

Why it matters: The suit makes Humana the second major health insurer to face legal action over its use of an AI tool to allegedly restrict medically necessary care for Medicare Advantage patients.

  • Last month, a similar class-action suit was filed against UnitedHealth Group for its use of the same algorithm, which was created by UnitedHealth subsidiary NaviHealth.

The big picture: This latest lawsuit is part of growing scrutiny around how insurers are using new AI tools to make coverage decisions as regulators race to catch up.

  • In June, a lawsuit accused Cigna of wrongdoing tied to the use of its own algorithm to reject claims. According to ProPublica, a Cigna-employed physician used AI tools to deny more than 60,000 claims in a single month.

Between the lines: The new suit against Humana, filed in federal court in Kentucky, claims the company deployed an algorithm in place of medical professionals' judgment "to wrongly deny elderly patients care owed to them under Medicare Advantage plans."

  • It says the algorithm predicts how much care an elderly patient should need and that employees face discipline or termination if they deviate from strict performance targets.
  • It also claims Humana used the algorithm despite knowing it is "highly inaccurate."

The details: JoAnne Barrows, one of the two plaintiffs named in the lawsuit, is an 86-year-old Minnesota woman who fell at home and fractured her leg. Her doctor instructed her to keep off the leg for six weeks.

  • The lawsuit alleges that Humana stopped paying for her post-acute care after two weeks and refused to pay for the continued rehabilitation treatment her doctor ordered.
  • "Appeals were denied, and Humana deemed Ms. Barrows ready to return home, despite being bedridden and using a catheter," the suit reads.
  • Barrows and her family paid out of pocket for a less expensive assisted living facility where she "deteriorated" under "substandard care" and returned home before her doctor deemed her medically ready.

What they're saying: "Humana continues to systemically use this flawed AI model to deny claims because they know that only a tiny minority of policyholders (roughly 0.2%) will appeal denied claims," the lawsuit reads.

  • The plaintiffs are asking for damages, as well as an order barring Humana from continuing to use the algorithm.
  • In a statement, a Humana spokesman said the company uses "augmented" intelligence that keeps humans included in decision-making when artificial intelligence is used.
  • "Coverage decisions are made based on the health care needs of patients, medical judgment from doctors and clinicians, and guidelines put in place by [the Centers for Medicare and Medicaid Services]," he said.
  • UnitedHealth has said it doesn't use the algorithm to make coverage determinations and that the class-action filed against it in November "has no merit," Stat previously reported.

Zoom in: The class-action lawsuits come as Congress and the Biden administration express concern about coverage denials in Medicare Advantage, the popular alternative to the traditional Medicare program.

  • A bipartisan group of lawmakers has been probing how often seniors who are on Medicare Advantage plans are being denied care compared with those in traditional Medicare, Politico wrote last month.
  • In November, a Senate panel sent a bipartisan letter questioning some of the biggest Medicare Advantage plans about their policies on coverage denials, including the use of AI-powered algorithms.
  • House Democrats recently called for stricter oversight from the Centers for Medicare and Medicaid Services on the use of AI algorithms in Medicare Advantage denials.

What's next: In January, federal rules will begin restricting how Medicare Advantage plans use predictive algorithms to make some coverage decisions.

Editor's note: This story has been updated to include a statement from a Humana spokesman.

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