Last 12 months, a couple of quarter of all medical health insurance claims in California were denied, a nationwide reality that has fueled public anger toward health care corporations and led to accusations that such decisions lack human empathy.
But this month, a latest state law takes the most recent twist in the talk and ensures that the human perspective can’t be literally faraway from such decisions by prohibiting denials of coverage based solely on artificial intelligence algorithms.
Senate Bill 1120 — referred to as “Doctors Make Decisions” — signed by Gov. Gavin Newsom last September comes at a time when frustration with the medical health insurance system has grown. The high-profile killing of UnitedHealthcare executive Brian Thompson in New York City last month sparked a wave of response that always reflected public anger.
According to 2024 data from the California Nurses Association, about 26% of insurance claims are denied, one among many aspects that inspired the law's lead writer, Menlo Park Democrat Sen. Josh Becker.
“In 2021 alone, (nationwide) data showed that health insurance companies rejected more than 49 million applications,” Becker said, citing data from the Kaiser Family Foundation. “Yet less than 0.2% of customers found favor.”
In November 2023, a lawsuit against UnitedHealthcare raised concerns in regards to the misuse of AI in medical health insurance decision-making and accused the corporate of using artificial intelligence to disclaim claims.
While SB 1120 doesn’t completely ban using AI technology, it mandates that human judgment stays central to coverage decisions. Under the brand new law, AI tools can’t be used to disclaim, delay or change health care services deemed medically vital by doctors.
“An algorithm cannot fully understand a patient’s individual medical history or needs, and misusing it can have devastating consequences,” Becker said. “This law ensures that human oversight is at the heart of all health care decisions and ensures Californians’ access to the quality health care they deserve.”
Becker emphasized the balance between accepting innovations and ensuring patient care.
“Artificial intelligence has enormous potential to improve healthcare, but it should never replace the expertise and judgment of physicians,” he said.
The California Department of Managed Health Care will monitor enforcement, review denial rates and supply transparency. The law also imposes strict timelines for approvals: standard cases require decisions inside five business days, urgent cases inside 72 hours, and subsequent reviews inside 30 days.
Under SB 1120, state regulators have the discretion to penalize insurance firms and refund amounts owed for violations, similar to: B. missed deadlines or improper use of AI.
Erin Mellon, spokeswoman for the California Medical Association, which co-sponsored the bill, stressed the importance of protecting the doctor-patient relationship.
“Artificial intelligence has the potential to improve patient care, but it should not harm or replace that relationship,” Mellon said. “Recent reports highlight cases where automated tools incorrectly denied patients access to medically necessary care. Physicians generally support AI in healthcare as long as it improves care and respects the needs of physicians and patients.”
Paula Wolfson, manager at Avenidas Care Partners, a Peninsula-based nonprofit for older adults, described the challenges her clients face when coping with insurance denials.
“It causes tremendous stress,” Wolfson said. “I hear from families who are struggling with high-risk situations because they don’t have access to the health services they need.”
Wolfson applauded California's proactive approach to regulating AI in healthcare.
“It gives me a glimmer of hope that policymakers are bringing common sense and reason to these decisions,” she said.
As concerns about medical health insurance practices grow, Becker noted that California's approach is attracting national attention.
“There are currently 19 states considering similar laws,” Becker said. “We have even been contacted by multiple congressional offices considering federal legislation. Our priority is helping Californians, but creating a national model is just as important.”
Originally published:
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