AI-GENERATED DENIALS: MEDICAL NECESSITY IN MEDICARE ADVANTAGE TODAY

Medicare Advantage insurers hold vast power over access to care for Medicare beneficiaries enrolled in their plans. Among other things, these insurers make the all-important determination as to whether care is “medically necessary” and thus warrants coverage under Medicare. Recently, these insurers have turned to artificial intelligence to help with these determinations. This trend has yielded concerning results, exacerbating both inaccuracy and opacity in the coverage determination process. This Note describes the current state of determinations. Taking an outcomes-focused approach, it argues that the government must demand greater information sharing from Medicare Advantage insurers and enhance beneficiaries’ access to the appeals process. Such reforms are an important first step in ensuring beneficiaries have access to the care they are entitled to.

The full text of this Note can be found by clicking the PDF link to the left.

* J.D. Candidate 2026, Columbia Law School. Thank you to Professor John Jacobi for his invaluable support throughout this process; Peter Travitsky, Rebecca Wallach, and the team at New York Legal Assistance Group for their commitment to protecting and expanding access to necessary care; and the entire staff of the Columbia Law Review for their great editorial work and friendship.

Introduction

On December 28, 2023, Carol Clemens received an alarming notice: Only ten days after she had entered a skilled nursing facility following a life-threatening collapse, her health insurance company was refusing to pay for her continued stay. 1 First Amended Class Action Complaint at 24–25, Estate of Lokken v. UnitedHealth Grp., Inc., No. 0:23-cv-03514-JRT-DTS (D. Minn. filed Apr. 5, 2024), 2024 WL 2853368 [hereinafter Lokken Amended Complaint]. Given that Clemens was unable to eat solid foods, speak more than a few words at a time, or walk without assistance, she immediately appealed the decision, asking the insurer to reconsider letting her finish the rehabilitation program. 2 Id. at 25. Clemens’s doctor had prescribed a stay until at least January 18, 2024. 3 Id. The insurer, however, was not convinced. Just one day after Clemens submitted her appeal, the company denied the request, stating that a continued stay was “not medically necessary.” 4 Id. With no one to pay for her stay, Clemens returned home on January 3. 5 Id. Just three days later, no longer having access to the supervision of the skilled nursing facility staff, Clemens fell again, this time resulting in a “traumatic subarachnoid hemorrhage . . . [and] severe brain bleed.” 6 Id. at 26. She needed to be readmitted to the hospital, where she spent over two weeks recovering before returning to the skilled nursing facility to restart her rehabilitation, this time with a traumatic head injury. 7 Id. The devastating health consequences that Clemens has faced due to this denial are further compounded by financial consequences. At the time of filing, Clemens owed over sixteen thousand dollars in out-of-pocket expenses for care that her insurer would not cover. See id. at 27.

Clemens is not alone in her experience. Clemens serves as one of multiple plaintiffs in a class action suit filed in Minnesota against insurance giant UnitedHealth Group that makes multiple claims related to Medicare Advantage plans incorrectly denying coverage to aging adults. 8 The lawsuit names UnitedHealth Group and two of its subsidiaries—UnitedHealthcare and naviHealth—as defendants. Id. at 8–9. There is a similar lawsuit in Kentucky against Humana. See Class Action Complaint at 1, Barrows v. Humana, Inc., No. 3:23-cv-00654-RGJ (W.D. Ky. filed Apr. 22, 2024), 2024 WL 4132639 [hereinafter Barrows Complaint] (“Humana employs [AI] to summarily deny elderly patients care owed to them under Medicare Advantage Plans on false pretenses.”). Another lawsuit in California makes similar claims against Cigna, although it involves Cigna’s employer-sponsored plans rather than its Medicare Advantage plans. See Third Amended Class Action Complaint at 1, Kisting-Leung v. Cigna Corp., No. 2:23-cv-01477-DAD-CSK (E.D. Cal. filed June 14, 2024) [hereinafter Kisting-Leung Third Amended Complaint] (“This action arises from Cigna’s illegal scheme to systematically, wrongfully, and automatically deny its insureds the thorough, individualized physician review of claims guaranteed to them and, ultimately, the payments for necessary medical procedures owed to them under Cigna’s health insurance policies.”). 29% of all Medicare Advantage beneficiaries are enrolled in a UnitedHealthcare plan, 18% are enrolled in a Humana plan, and 2% are enrolled in a Cigna plan. Meredith Freed, Jeannie Fuglesten Biniek, Anthony Damico & Tricia Neuman, Medicare Advantage in 2024: Enrollment Update and Key Trends, KFF (Aug. 8, 2024), https://www.kff.org/
medicare/issue-brief/medicare-advantage-in-2024-enrollment-update-and-key-trends/ [https://perma.cc/8XMS-8URP]. How did anyone seeing the facts of Clemens’s case—her inability to eat, talk, and walk—determine that continued rehabilitation was “not medically necessary?” Well, Clemens claims, no one did. As the plaintiffs allege, UnitedHealth Group is not relying on human expertise to make these determinations but is instead deploying “artificial intelligence (AI) in place of real medical professionals[,] . . . overriding . . . physicians’ determinations as to medically necessary care.” 9 Lokken Amended Complaint, supra note 1, at 2.

The Minnesota lawsuit is not the first time that Medicare Advantage insurers have been accused of inappropriately deploying AI to make medical necessity determinations. In 2023, journalists Casey Ross and Bob Herman released a four-part investigative series about Medicare Advantage insurers’ widespread use of algorithms to deny care to vulnerable seniors. 10 Casey Ross & Bob Herman, Denied by AI: How Medicare Advantage Plans Use Algorithms to Cut Off Care for Seniors in Need, STAT (Mar. 13, 2023), https://www.statnews.com/2023/03/13/medicare-advantage-plans-denial-artificial-intelligence/ (on file with the Columbia Law Review) [hereinafter Ross & Herman, Denied by AI]. After the series, over fifty members of Congress wrote to the Centers for Medicare and Medicaid Services (CMS), urging increased oversight of Medicare Advantage plans and stating that the insurers “continue to use AI tools to erroneously deny care and contradict provider assessment findings.” 11 Letter from Rep. Judy Chu et al. to Chiquita Brooks-LaSure, Adm’r, Ctrs. for Medicare & Medicaid Servs. 1 (June 25, 2024), https://chu.house.gov/sites/evo-subsites/chu.house.gov/files/evo-media-document/Final%20Chu-Nadler-Warren%20Letter%20to%20CMS%20to%20Increase%20Oversight%20of%20AI%20in%20Medicare%20Advantage%20Coverage%20Decisions%2006.25.2024.pdf [https://perma.cc/WTX8-BEEW]. The Senate Permanent Subcommittee on Investigations investigated the nation’s three largest Medicare Advantage insurers—UnitedHealthcare, Humana, and CVS—and concluded that more intervention was necessary. 12 See Majority Staff of S. Permanent Subcomm. on Investigations, 118th Cong., Refusal of Recovery: How Medicare Advantage Insurers Have Denied Patients Access to Post-Acute Care 4, 47–52 (2024), https://www.hsgac.senate.gov/wp-content/uploads/2024.10.17-PSI-Majority-Staff-Report-on-Medicare-Advantage.pdf (on file with the Columbia Law Review). While CMS promulgated a new rule in 2023 to address some of the concerns about AI-produced medical necessity determinations, 13 See infra section II.B. some claim the rule is not enough. 14 See, e.g., Majority Staff of S. Permanent Subcomm. on Investigations, supra note 12, at 51–52 (“CMS has not provided sufficiently specific guidance on separating the use of predictive technologies from patient determinations regarding post-acute care.”); Jennifer D. Oliva, Regulating Healthcare Coverage Algorithms, 100 Ind. L.J. 1861, 1878 (2025) (“While CMS was well-intentioned in issuing this rule, the agency left numerous unanswered questions on the table insofar as insurer implementation and use of [utilization management] algorithms are concerned.”).

This Note explores the current state of coverage determinations in Medicare Advantage. It views insurers’ use of AI—and the harmful effects that accompany such use—as the latest development in a Medicare Advantage program that has been plagued for decades with inaccuracy and opacity. To combat this problem, CMS should enhance information sharing about denials while also increasing meaningful access to the appeals process for individual beneficiaries. Not only will such mechanisms improve access to care, but they will also reflect an important return of power and autonomy to beneficiaries, enabling the individuals most affected by determinations to take control of their own coverage and care.

The Note proceeds in three Parts. Part I explores the concept of medical necessity in Medicare, asking what it is and who decides it. Part II outlines the problems present in the coverage determination process today, noting the high rates of inaccuracy and opacity in determinations. It also summarizes CMS’s most recent attempt to combat these problems, concluding that more is needed. Part III charts a path forward, presenting two important accountability mechanisms that CMS can enact to enhance insurer accountability.