North Carolina Senate advances bill to curb AI in healthcare billing
North Carolina lawmakers are moving to restrict how insurance companies and hospitals use artificial intelligence to make coverage and billing decisions. Sen. Amy Galey, R-Alamance, is sponsoring a revised version of House Bill 565 that would require human oversight before AI systems deny claims or increase charges.
The bill targets two specific practices. It would ban insurers from denying coverage based solely on AI review, and it would prohibit hospitals from using AI to bill for more expensive services - known as upcoding - without approval from a medical provider.
The case for restrictions
Galey says AI-driven billing decisions are inflating healthcare costs without improving patient outcomes. She pointed to research showing increased billing for expensive services that don't correlate with better care.
"Hospitals can use technology to automatically increase bills without human oversight or intervention," Galey said. "The hospital controls the medical record from the very beginning. There are concerns that the AI can be programmed to intentionally create the record in a way that increases reimbursement."
The higher charges flow through to public programs like Medicaid and Medicare, private insurers, and ultimately patients and taxpayers, she said.
Hospital industry pushback
The N.C. Healthcare Association is raising concerns about the bill. Blair Borsuk, representing the group, told the Senate Health Committee that AI can reduce administrative burden and free clinicians to focus on patient care.
"When AI can be appropriately utilized to streamline time-consuming and costly administrative burdens, practitioners spend more time actually practicing medicine and focusing on their priority of serving patients," Borsuk said. The association wants to work with lawmakers to modify the bill.
The Senate Health Committee held an initial hearing last week. The bill could receive its first committee approval next week.
Healthcare professionals working with billing systems and insurance processes may want to monitor this legislation. Understanding how regulators are approaching AI for Healthcare and AI for Insurance will matter as these rules potentially take shape across states.
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