Proposed legislation would require human oversight for insurance denials and hospital billing driven by artificial intelligence.
By BC News Staff Writet
North Carolina lawmakers are advancing legislation that would place new limits on how artificial intelligence can be used in healthcare, citing concerns about rising costs, opaque algorithms, and the potential for automated systems to deny medically necessary care.
House Bill 565, now moving through committee, focuses on two fast‑growing uses of AI in the healthcare system: insurance claim reviews and hospital billing practices. Legislators say both areas have seen rapid adoption of automated tools with little transparency for patients.
At the center of the proposal is a requirement that AI cannot be the sole basis for denying a health insurance claim.
Any denial flagged by an algorithm would need to be reviewed and confirmed by a qualified human reviewer before it is issued to a patient.
Lawmakers say the safeguard is necessary to prevent automated systems from rejecting care without proper clinical context.
“We do not want robots or computers to deny care to sick people,” Sen. Amy Galey (R‑Alamance) said during a recent committee discussion, emphasizing that AI should support, not replace human judgment.
The bill also targets the use of AI in medical coding and billing, where some hospitals and software vendors have adopted tools that automatically select higher‑paying billing codes. Critics argue the practice, known as “upcoding,” can inflate costs for patients, insurers, and Medicaid without reflecting any change in the actual care provided.
Under the proposal, any AI‑generated billing code would need to be verified by the treating provider and supported by the medical record. Hospitals would also be required to disclose when AI tools are used in the billing process.
Supporters of the legislation say the guardrails are necessary as North Carolina continues to grapple with some of the highest healthcare costs in the region. They argue that without oversight, AI could accelerate cost increases and reduce transparency for patients.
The bill is part of a broader statewide effort to regulate artificial intelligence. North Carolina has already established an AI governance framework for state agencies, and lawmakers are considering additional measures related to consumer protection, deepfakes, and public‑sector use of automated tools.
HB 565 is expected to see further debate in the coming weeks as legislators refine the scope of the proposed restrictions and gather input from insurers, hospitals, and patient advocates.
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