Arizona AG Investigates Health Insurance Claim Denials Amid AI Concerns

Arizona Attorney General Kris Mayes is investigating potential consumer protection violations by health insurance providers following numerous complaints about claim denials and access barriers to necessary medical treatments.

At a recent town hall meeting in Gilbert, patients and healthcare providers shared experiences highlighting systemic issues such as high rates of in-network claim denials in Arizona, which exceeded the national average at 21% in 2023. Many patients reported being forced to pay out-of-pocket expenses or forgo care altogether due to denied claims, resulting in significant financial hardship and medical debt. Providers described extensive administrative burdens, including repeated appeals against denials and challenges navigating AI-driven claim processing systems, which delay patient care and consume valuable clinical time. Specific case studies included denial of coverage for microsurgeries in breast cancer reconstruction and difficulties obtaining approvals for rare disease medications, illustrating gaps in insurance benefits and approval processes.

The appeals process was criticized for its lengthy delays and reliance on proof requirements that do not always align with medical standards, further exacerbating patient care challenges. Providers noted an increase in automated denial systems, suspected to be AI programs, which frequently omit or reject claims without proper review, compounding the administrative complexity. Attorney General Mayes noted that these practices may violate the Arizona Consumer Fraud Act, which prohibits deceptive and unfair business practices, and confirmed that her office has initiated an investigation with potential legal action forthcoming.

She also conveyed intentions to coordinate with attorneys general in other states to address the impact of AI on insurance claim denials nationwide. This inquiry underscores a growing regulatory focus on insurance industry accountability and the need for transparency and fairness in claims adjudication processes, highlighting the intersection of technology, compliance, and patient rights within the healthcare insurance market.