A class-action lawsuit filed Tuesday alleges that Minnetonka-based UnitedHealth Group is using a faulty artificial intelligence algorithm to wrongly deny coverage to Medicare patients who need rehabilitative care after hospitalization.
The complaint was filed in U.S. District Court in Minnesota after news site STAT published an investigation into the company’s use of the technology.
The lead plaintiffs are the families of two patients who lived in north-central Wisconsin, about three hours east of the Twin Cities, and paid large bills out of pocket after being denied post-acute care.
UnitedHealth Group said it will mount a vigorous defense against the lawsuit, saying the complaint has “no merit.”
The lawsuit comes amid signs of growing consumer and government suspicion that health insurers often refuse to pay for medically necessary services.
“This putative class action arises out of the defendants’ unlawful deployment of artificial intelligence (AI) in lieu of real medical professionals to unjustifiably deny elderly patients the care owed to them under Medicare Advantage plans by overriding their treating physicians’ decisions about medically necessary care at based on an AI model that the defendants know has a 90% error rate,” the lawsuit says.
Minnetonka-based UnitedHealth Group operates UnitedHealthcare, one of the nation’s largest health insurers. The company said the technology described in the lawsuit is not used to determine coverage.
“The tool is used as a guide to help us inform providers, families and other caregivers about what kind of help and care a patient may need both in the facility and after returning home.” Coverage decisions are based on [federal] coverage criteria and terms of the member’s plan,” UnitedHealth said in a statement.
The company is the nation’s largest seller of Medicare Advantage coverage, the health plans that allow it seniors to receive their state-funded benefits through a private insurer.
The lawsuit alleges that UnitedHealth’s Medicare plans refused to pay claims from the patients’ medical caregivers, forcing up to $70,000 out of pocket for the plaintiffs to receive continued care.
UnitedHealth Group is limiting its workers’ ability to deviate from AI projections, the lawsuit alleges. Citing a newspaper article, the complaint says employees who don’t follow the model are disciplined and fired, regardless of whether patients need more care.
“The fraudulent scheme provides the defendants with a clear financial gain in the form of policy premiums without paying for the promised care, while seniors across the country are prematurely kicked out of nursing homes or forced to deplete family savings to continue receiving necessary medical care, all because The AI model ‘disagrees’ with the decisions of their actual doctors,” the lawsuit states.
UnitedHealth Group continues to use a flawed AI model, the lawsuit says, because so few patients typically appeal health insurance denials.
The plaintiffs named in the lawsuit tried to appeal the company’s decisions, but ended up paying out of pocket. In other cases, patients “forgo the remainder of their prescribed post-acute care,” the complaint says.
According to the lawsuit, UnitedHealth Group uses a model known as “nH Predict” to project how long it should take for patients to recover in facilities such as nursing homes and other post-acute settings.
The complaint includes a sample report produced by NaviHealth, a Tennessee-based company that UnitedHealth Group bought in May 2020. It evaluated a patient’s mobility, activity level and cognitive scores to generate an expected length of stay in a skilled nursing facility.
“This report has been submitted to your patient’s health plan for consideration in approving care and treatment,” the report concluded.
Plaintiffs allege in the lawsuit that UnitedHealth “bank[s] about the damaged state of patients, the lack of knowledge and the lack of resources to appeal wrong decisions based on AI.”
In July, the U.S. Department of Labor sued a subsidiary of UnitedHealth Group that runs employer health plans over allegations that the company wrongly denied thousands of claims by health workers for emergency room services and drug screenings. The company defended its practices, saying the complaint related to administrative processes that no longer exist.
This month, Nebraska regulators fined Bloomington-based Bright Health $1 million for alleged claims processing errors, including more than 100 denials of health insurance coverage for newborn medical care.
Last year, the Office of Inspector General at the U.S. Department of Health and Human Services reviewed a random sample of prior authorization claims processed by Medicare Advantage plans and found that about 13% of the denials actually met the coverage rules, meaning they likely would have been paid for the original Medicare.
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