FDA's Role in Regulating Insurer Coverage Algorithms

A recent article highlights the authority of the FDA to regulate coverage algorithms used by health care insurers, emphasizing the repercussions of unregulated algorithms that lead to inappropriate claim denials and delays in patient care. The murder of UnitedHealthcare’s former CEO has intensified scrutiny on how health insurers employ AI algorithms to assess the medical necessity of care, which in turn affects patient coverage decisions. The increasing reliance on these algorithms has resulted in a significant uptick in claim denials, with reports indicating that UnitedHealthcare's denial rates for post-hospital care doubled between 2020 and 2022.

Jennifer D. Oliva, a law professor, argues that current federal regulations are insufficient to safeguard patients against erroneous denials and lack specific guidelines for insurers using these algorithms. Despite new rules from the Centers for Medicare & Medicaid Services intended to improve the prior authorization processes, Oliva states that they do not address the fundamental issues of algorithm transparency or the burdensome appeals process. She emphasizes the need for stronger FDA oversight to ensure the fairness and accuracy of these coverage algorithms.

Oliva contends that coverage algorithms qualify as “medical devices” under the Food, Drug, and Cosmetic Act, and therefore should be subject to FDA regulation. This oversight is particularly important given the serious health consequences that can arise from algorithmic denials in a profit-driven insurance market. Oliva calls for better regulatory frameworks to protect patients, who face life-or-death situations contingent on insurance coverage decisions influenced by automated processes.