Physicians Warn of AI-driven Medical Claim Denials, Urge Legislators to Act

PHOENIX, Arizona — The Arizona Medical Association is calling on the Arizona State Senate to put patient safeguards in place as commercial medical insurers deploy Artificial Intelligence in reviewing and denying patients' claims by passing House Bill 2175.

While AI promises innovation for healthcare, the review and denial of medical claims — some of which represent life-changing treatments and procedures — should be left to physicians who can make nuanced clinical judgments about each patient's unique healthcare needs.

"Patients deserve healthcare delivered by humans with compassionate medical expertise, not pattern-based computer algorithms designed by insurance companies," stated ArMA President Nadeem Kazi, MD. "Physicians and patients already face daunting challenges in navigating medical insurers' bureaucratic administrative processes. Taking physicians' clinical experience out of these processes entirely is a misguided step."

The gap between AI's application and its regulation is wide, meaning its use across all industries, especially healthcare, is going largely unregulated. That's why ArMA introduced HB2175 alongside bill sponsor Representative Julie Willoughby at the Arizona State Capitol earlier this year.

"As a nurse and Arizonan, I am proud to champion HB2175," shared Rep. Willoughby. "I've seen firsthand how insurance denials can inappropriately interfere with patient care and wreak havoc on our health system. I came to the legislature to stand up for patients and fight for better care. The need for reform to ensure that AI is used in a fair and responsible manner is undeniable; HB2175 takes a meaningful step forward to rein in the use of AI in medical decision-making, which requires human oversight."

Arizona is in a position to set a precedent for the regulation of AI in U.S. healthcare. HB2175 is among the first legislation in the nation to prohibit the use of AI in reviewing and denying claims for medical necessity and prior authorization requests. The bill would guarantee that cases involving medical judgment are reviewed by licensed medical professionals who have the training, experience, and ethical responsibility to make clinical decisions.

"Perhaps the biggest concern is how AI removes the human element from medical decision-making. Algorithms can process vast amounts of data, but they can't understand the nuances of an individual's health or the judgment calls that doctors make every day," said Michael Dunn, MD, an East Valley physician, in an op-ed published by Arizona Capitol Times. "Instead of trained professionals weighing the specifics of each case, algorithms determine what gets approved and what doesn't — often without enough transparency or accountability."

Following its unanimous passage out of the Arizona State House, HB2175's trajectory is promising, but it still has hurdles left to clear. As it awaits consideration by the Senate, physicians are strongly urging senators to recognize and act on the need for guardrails against AI in situations where Arizonans' health and well-being are at stake.