Utilization Management
The review of health care service use to control cost and quality. AI is widely used here and is now a major focus of state and federal insurance oversight.
Utilization management is the process health insurers use to evaluate the medical necessity, efficiency, and appropriateness of health care services. It includes prior authorization, concurrent review, and retrospective review of claims. According to the NAIC, 56% of responding health insurers use AI or machine learning for utilization management.
AI can help identify high-cost cases, flag fraud, and suggest care paths. But it can also be used to deny or delay care in ways that are hard for patients and providers to challenge. Regulators increasingly require that utilization-management AI be documented, tested for bias, and subject to human clinical oversight.
California’s SB 1120 and the NAIC evaluation tool both treat AI-influenced utilization decisions as high-risk. See our guide to AI in health insurance governance.