Aetna Accused of Using AI to Deny Medicare Claims, Sparking Senate Probe & Lawsuit

Washington, D.C. – A class-action lawsuit filed this week alleges that Aetna, a subsidiary of CVS Health, improperly utilized artificial intelligence to deny necessary post-acute care to its Medicare Advantage patients. Simultaneously, a Senate investigation is underway, examining similar practices across the major Medicare Advantage providers, raising serious questions about patient access to care, algorithmic bias, and the increasingly opaque decision-making processes within the healthcare system.

The lawsuit, spearheaded by the Schall Law Firm, alleges that Aetna circumvented its contractual obligations to review and determine prior authorizations for post-acute care by relying on an AI program, potentially leading to wrongful denials and impacting patient outcomes. The firm claims Aetna prioritized cost savings over patient needs.

“Our clients are deeply concerned that a machine was making life-altering decisions about their post-hospital care, without proper medical oversight,” stated a representative from the Schall Law Firm. “We believe Aetna breached its contract with policyholders and violated state laws by potentially using an AI program to deny necessary care.”

Senate Investigation Intensifies Scrutiny

The lawsuit coincides with a growing Senate investigation into the use of AI and algorithmic tools in Medicare Advantage claims processing. Senators are demanding greater transparency from insurers about how these technologies are being used, and whether they are contributing to inappropriate denials of care. The Senate probe was spurred by reports of high denial rates for post-acute care services among several major Medicare Advantage providers.

“We’ve received alarming reports of Medicare Advantage insurers using AI to deny claims at rates far exceeding those of traditional Medicare,” said a Senate aide familiar with the investigation. “The concerns are two-fold: are these algorithms accurate and unbiased, and are they being used to prioritize profits over patient well-being?”

Data from the Kaiser Family Foundation and the Centers for Medicare & Medicaid Services (CMS) reveal a significant increase in prior authorization requests and denials within the Medicare Advantage program in recent years. A recent KFF analysis found that Aetna had one of the highest prior authorization denial rates among the largest Medicare Advantage insurers in 2022, at 13%. While 2023 rates appear to have normalized for Aetna, other insurers continue to have much higher denial rates than Aetna.

The Role of AI: A Complex Landscape

While Aetna publicly acknowledges utilizing AI for various healthcare functions, including claims processing and workflow automation, the company has not directly addressed allegations that the technology is being used to unilaterally deny prior authorizations. A statement released by CVS Health asserts that AI is being employed to simplify prior authorization processes, not to make decisions on its own.

“We are committed to utilizing innovative technologies to improve the healthcare experience for our members,” the statement reads. “AI is being used to accelerate approvals and reduce administrative burdens, but all prior authorization decisions are ultimately made by qualified medical professionals.”

However, experts raise concerns about the potential for algorithmic bias and the lack of transparency in AI decision-making. “The problem isn't necessarily that AI is inherently bad, but that these algorithms are often ‘black boxes’,” explained one healthcare policy analyst who wished to remain anonymous. “We don’t know how these algorithms are weighting different factors, and there’s a risk that they’re perpetuating existing biases in the healthcare system.”

Further complicating the issue is the question of accountability. If an AI algorithm denies a patient’s claim, who is responsible? Is it the insurer, the AI vendor, or the medical professional who ultimately reviews the decision? These are questions that regulators are actively grappling with.

Post Acute Analytics & Shifting Blame

Initial reports linked Aetna's practices to a specific AI software called Post Acute Analytics (PAA), which was marketed to reduce spending on skilled nursing facilities. However, PAA released a statement clarifying that its software was never utilized by CVS/Aetna to make prior authorization recommendations and does not deny skilled nursing facility requests. While this shifts blame, questions remain about what did cause the surge in denials.

“The fact that PAA is disavowing involvement doesn’t absolve Aetna of responsibility,” argued a healthcare lawyer. “The company still needs to explain how it’s making these denial decisions, and whether it’s relying on any other type of AI technology.”

A Growing Trend & Calls for Regulation

The Aetna lawsuit and Senate investigation are part of a growing trend of scrutiny surrounding the use of AI in healthcare. Other major insurers, including UnitedHealth Group, are facing similar legal challenges and regulatory inquiries. A recent lawsuit against UnitedHealth alleges the insurer improperly relied on an algorithm to adjudicate claims, despite knowing it contained errors.

“We need greater transparency and accountability in the use of AI in healthcare,” said a consumer advocate. “Patients deserve to know how these algorithms are making decisions that affect their health and well-being.”

Calls for stricter regulation of AI in healthcare are growing louder. Some experts are advocating for mandatory audits of AI algorithms, as well as requirements for insurers to disclose how these technologies are being used. Others are calling for a moratorium on the use of AI in certain healthcare applications until more robust safeguards are in place.

For now, the Aetna lawsuit and Senate investigation are expected to shed light on the complex issues surrounding AI and healthcare, and may pave the way for much-needed reforms. The outcome of these legal and regulatory battles will likely have a significant impact on the future of healthcare and the millions of Americans who rely on Medicare Advantage for their healthcare coverage.