AI CHALLENGES IN INSURANCE

Top 3 concerns for health insurers in 2026: defending ai-driven decisions, managing regulatory risk, controlling litigation and fraud exposure

The legal landscape for AI-enabled decisions is rapidly evolving from voluntary guidelines to binding, sector-specific regulations, driven by concerns over bias, transparency, and accountability. While federal, comprehensive regulation remains limited, a surge in state-level legislation creates a patchwork of compliance requirements for automated decision-making technologies (ADMT) in high-stakes areas like hiring, health care, and finance.

1. AI, algorithms and coverage determinations

Insurers are rapidly expanding use of AI and predictive models for utilization management, claims triage, fraud detection, and benefit determinations, but are already facing high‑profile class actions alleging wrongful denial patterns when algorithms “supplant” individualized medical review.

Use medical legal analysis to:

• Trace how algorithmic criteria map (or fail to map) to clinical guidelines, coverage, policies, statutory “medical necessity” standards, building defensible documentation or identifying high-risk practices.
• Develop case-level narratives that reconcile medical records, plan language, and AI recommendations, supporting expert opinions on reasonableness, standard of care, and non-discrimination in contest denials.

By 2026, Medicare Advantage plans face margin compression, plan exits, benefit tightening, and more enrollees impacted by plan terminations and consolidations, while Medicaid margins erode amid adverse selection and policy‑driven disenrollment.

Use medical legal analysis to:

•  Audit prior authorization, coverage criteria, and appeals handling against evolving CMS MA rules (especially around utilization management, internal coverage criteria, and appeals protections that remain in flux), flagging patterns likely to draw enforcement or class actions.

• Prepare evidence‑rich files for contested MA or Medicaid decisions (e.g., post‑acute length of stay, SNF/IRF coverage, step therapy) that tie clinical facts to regulatory language and contract terms, improving defensibility in hearings and negotiations.

Insurers expect continued medical cost inflation and utilization growth through 2026, with carriers turning to aggressive cost containment, tighter networks, and anti‑fraud programs that can spark disputes with providers and members

Use medical legal analysis to:

• Systematically review large volumes of claims and medical records in dispute (e.g., overcoding, medically unnecessary services, out‑of‑network billing), synthesizing clinical timelines and guideline comparisons that support or refute fraud, waste, and abuse allegations.

• Feed structured, outcomes‑oriented data (e.g., patterns of adverse determinations by service line or provider type) into litigation analytics programs so payers can set reserves, select defense strategies, and prioritize settlements more strategically.

MOBILITY & FALLS

Focus on mobility in senior living

Mobility is a critical indicator of health and quality of life.  Senior living communities are increasingly turning to technology to monitor residents, enhance independence, and improve functionality—while also reducing risks and claims related to falls.  A recent McKnights webinar gathered industry experts to discuss how artificial intelligence (AI), mobility data, and robotics are reshaping the senior living sector.

Financial Implications of Reduced Mobility

Falls remain one of the leading causes of loss in senior living and long-term care communities.  Over the past decade, average claim values have doubled.  Because insurers review fall-related patterns over 12–18 months, facilities that demonstrate measurable improvements in fall prevention, particularly through real-time data, can benefit from lower premiums.

Section GG of the Minimum Data Set (MDS) highlights the importance of gait and mobility in overall health. While often used by plaintiffs to argue negligence, it can also serve as a strong defense tool when documentation is thorough.

EMPLOYEE SPOTLIGHT

Grace Jindra

Manager of Health Information Management

Grace began her career at the Cleveland Clinic holding various positions from utilization review to supervisory and managerial roles. She started with Excelas as a consultant and currently oversees the operations of Provider of Care, Quality Review Specialists, and guides company HIPAA compliance.

Outside of work, Grace enjoys spending time with her family and friends. She loves attending her grandson’s football, soccer, and baseball games. Grace also enjoys taking road trips, going antiquing, and researching family history on Ancestry.

Her depth of experience and steady leadership make a real impact at Excelas. She shares regularly with the Excelas team her passion for family and travel.

You can always read all our newsletters online!

Excelas helps organizations respond accurately and quickly to claims and litigation brought against them

Partnering with attorneys, health care organizations, and insurance companies since 1995, Excelas provides medical legal analyses and tools for building winning defense strategies. When expertise, accuracy, reliability, and on-time delivery count, you can count on Excelas.