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Artificial intelligence in medical research has led to new treatments and new efficiencies, but it also has the potential to increase costs for patients in healthcare, one lawmaker says.
North Carolina Senator Amy Galey (R-Alamance) has spearheaded a legislative effort to address the use of artificial intelligence in the healthcare sector. She acknowledges AI's significant contributions to medical research, including enhanced understanding of diseases, development of new treatments, and improved operational efficiencies. However, Senator Galey also highlighted AI's potential to disrupt healthcare systems and contribute to escalating costs for patients. Her proposed committee substitute to House Bill 565 aims to implement a crucial safeguard: prohibiting health insurers from denying a claim solely based on an AI system's decision. This provision mandates that if an AI system does not approve a claim, it must be reviewed by a human being, thereby preventing automated systems from unilaterally denying patient care.
A more controversial component of H565 targets the application of AI in hospital coding and billing. Senator Galey raised concerns that 'ambient AI' tools, which are integrated into medical settings, are being utilized not just for streamlining administrative tasks like charting, but also for strategically selecting the most lucrative billing codes for patient diagnoses. She argued that this practice leads to inflated hospital bills, which subsequently drives up costs for various stakeholders, including Medicaid, the state health plan, and individual patients. To support her argument, Galey cited a report from Rice University's Baker Institute for Public Policy, which revealed a substantial increase of over 200% in hospital service prices since 2000. She posited that AI-driven 'upcoding'—the practice of assigning more severe diagnoses without a corresponding change in the actual treatment provided—is a significant contributing factor, rather than other commonly cited reasons like rising labor costs or an increase in patient illness severity.
The proposed bill encountered skepticism and calls for further refinement from fellow lawmakers. Senator Gale Adcock (D-Wake), a family nurse practitioner, expressed doubts about the necessity of some provisions, noting that upcoding is already an illegal practice subject to enforcement by the state Department of Health and Human Services, which can suspend or terminate a provider's status. Adcock criticized the bill for being 'one-sided,' as it did not address other factors influencing healthcare costs, such as the differential charges for inpatient versus outpatient services. Senator Natalie Murdock (D-Durham) echoed these concerns, conveying that large hospitals in her district were particularly worried about how the legislation defines 'upcoding' and 'fraud.' Both senators stressed the importance of involving a broader spectrum of the healthcare community in future discussions to ensure the legislation is equitable and effective, particularly as AI technology continues its rapid evolution.
Following the initial committee discussion, the legislative process for House Bill 565 and its proposed AI restrictions entered a phase of further deliberation. A scheduled second committee hearing on the bill, which was slated for Thursday, was subsequently canceled. This postponement suggests that the complexities of regulating AI in healthcare necessitate additional review, potential amendments, and ongoing consultations with various healthcare stakeholders. The North Carolina Healthcare Association, through its representative Blair Borsuk, has already indicated its willingness to collaborate with the General Assembly. The association expressed its eagerness to evaluate current practices and work towards developing appropriate language and regulations concerning the ethical and economic implications of AI usage within the state's healthcare system.