A controversial bill to rein in AI use in medical billing advances in NC Senate

Facing a sea of doctors and medical students dressed in their white coats, Senator Amy Galey (R-Alamance) made the case Wednesday for her bill to limit the use of artificial intelligence in Medicaid and commercial insurance.

Galey said while AI transcribers have helped practitioners with charting, her proposal, House Bill 565, would focus on the increasing adoption by hospital systems and other providers of AI systems designed to maximize billing.

The amended bill presented to the Senate Health Committee would prohibit software developers from designing, training, or modifying AI systems for use in healthcare coding if the AI system is designed to “promote, incentivize or result in upcoding.”

Upcoding is choosing a higher billing code than warranted, a practice that is already illegal.

Galey says a person with knowledge of coding and data analytics in the field of artificial intelligence could manipulate and then program medical codes to generate higher billing.

“We are already looking at a billion-dollar Medicaid rebase for next year,” said Galey. “If we don’t get a handle on controlling these costs that are generated by a computer billing system which has an inherent bias in favor of higher bills, then we’re just not going to be able to afford it.”

Sen. Julie Mayfield (D-Buncombe) questioned whether the bill needed to be clearer about applying only to intentional acts by software developers.

“We wouldn’t want someone to get caught up in this if it’s unintentional, right?” asked Mayfield.

Galey said hospitals have a duty to make sure that whoever they’re working with in their hospital billing system has affirmatively not tried to bill for more than the services that were rendered.

Sen. Gale Adcock (D-Wake), a family nurse practitioner, said while the legislation has seen some improvements from the original version, she was unclear on why it would require doctors to submit an annual AI attestation of compliance to the state attorney general’s office.

“If alleged Medicaid overbilling is a driving concern, why do we need to create a new attestation process?” questioned Adcock. “Just [include] this in the Medicaid provider participation agreement, because that agreement already prohibits fraudulent upcoding.”

Sen. Gladys Robinson (D-Guilford) said her own local hospital system assured her that AI was only being used for notetaking, not upcoding in medical billing.

NC senators consider new restrictions on artificial intelligence in insurance and medical billing

“The hospitals are concerned that this is an attack on them, and I think that we ought to support hospitals and providers,” said Robinson. “I agree with Sen. Adcock in terms of, what is the need for the bill?”

Sen. Jim Burgin (R-Harnett), the Senate Health committee chairman, serves on a national AI task force on healthcare. He said AI usage dominated the discussion at a recent meeting attended by the American Medical Association, the American Hospital Association, Blue Cross and other large healthcare companies.

In the not too distant future, Burgin predicted, a patient’s first interaction with Medicare or Medicaid is going to be with an AI bot.

“There are companies developing technology that not only scribes, it diagnoses, it prescribes, it does all of that,” said Burgin.

Burgin said while Galey’s bill was not perfect, it is a step forward in legislating a field everyone will be dealing with.

“The decisions are being made so fast that humans can’t even keep up. Humans are becoming less a factor, instead of more of a factor,” said Burgin.

Ryan Blackledge, vice president of government and external affairs for Cone Health, said more work is needed around the upcoding language of the bill so that the professional judgment of a doctor won’t be subject to claims of unfair and deceptive trade practices.

“That’s confusing the issue,” said Galey. “This bill is looking at the computer code itself and whether or not it has been written to generate higher payments.”

Adcock said that Galey’s bill is based on an underlying premise that hospitals and individual providers are intentionally billing for services that are not supported by their care of the patient or the treatments that were given.

“I think that’s a dangerous premise on which this bill is based. For that reason, I’ll be voting no,” said Adcock.

Despite those concerns, House Bill 565 advanced on a voice vote and moves next to the Senate Judiciary Committee.