Health Plan Weekly

A California law that went into effect on Jan. 1 places stricter restrictions on payers’ use of artificial intelligence (AI) in coverage decisions, continuing a trend that the Biden administration and some states have looked at implementing. Two health care attorneys tell AIS Health, a division of MMIT, that the impact of the California law on health plans depends on guidance from the state that could come in the next few months. They add that they expect plans across the country to pay close attention to California’s implementation of the law because other states often follow California’s lead when it comes to health care regulation.  

The law, known as the Physicians Make Decisions Act or SB 1120, requires that payers have physicians or other licensed providers make decisions about the medical necessity of treatments rather than relying solely on AI, algorithms or other software tools. It also mandates that the AI or other tools used by insurers must meet certain standards such as being fair and equitable and base decisions on individuals’ specific conditions and medical history and providers’ input.  

CVS Health Corp.-owned Aetna recently filed a lawsuit alleging that the largest radiology provider company in the U.S. and one of the practices it owns engaged in a “multi-phase health care fraud scheme.” Aetna claims Radiology Partners, Inc. overbilled the insurer tens of millions of dollars, drove up costs for patients and plan sponsors and took advantage of a provision of the No Surprises Act (NSA) for settling out-of-network disputes.  

But a Radiology Partners spokesperson tells AIS Health that the company and Mori, Bean and Brooks, Inc. (MBB) “strongly dispute Aetna’s allegations and stand by the integrity of its owned and affiliated practices, which comply with all applicable health care laws and regulations and ordinary business practices.” MBB is a Jacksonville, Florida-based practice that Radiology Partners acquired in 2018. 

A group of shareholders has asked UnitedHealth Group to compile a report on how delays and denials of claims threaten the company. “Shareholders recommend the report evaluate how company practices impact access to healthcare and patient outcomes, including analyses of how often prior authorization requirements or denials of coverage lead to delay or abandonment of medical treatment and serious adverse events for patients,” they wrote in the filing. While the practices may increase short-term revenue, they can bring long-term harm to the brand and threaten investor portfolios by increasing consumer debt, according to the filing, which was led by the Sisters of the Holy Names of Jesus and Mary. 

UnitedHealth and Amedisys have ended a deal to sell medical centers to VitalCaring Group, The Wall Street Journal reported. The move comes after the Dept. of Justice (DOJ) filed an antitrust lawsuit to stop UnitedHealth’s proposed acquisition of Amedisys. The deal with VitalCaring was meant to ease some of the antitrust concerns raised in the lawsuit. While no reason was given for ending the deal, the DOJ noted in its suit to block the Amedisys acquisition that VitalCaring was “unlikely to replace the competition that would be lost from the merger.”  

In 2024, U.S. health insurers’ Medicare and Medicaid businesses began to falter after experiencing years of growth and profitability amid the country’s increasing reliance on private companies to administer the two government health care programs. Experts at credit-rating firms predict that some of those headwinds are likely to ease this year, but they probably won’t go away entirely. Meanwhile, two business lines that were safer bets for insurers last year — commercial and individual market — may face new challenges. 

“We expect the industry’s operating performance will generally improve in 2025 based on Medicare Advantage repricing and product changes, as well as select county exits,” James Sung, director at S&P Global Insurance Ratings, tells AIS Health, a division of MMIT.  

The year 2025 is unlikely to bring any big mergers and acquisitions (M&A) action between the major insurers, experts predict. But small and mid-sized companies might seek such deals between each other — or try to catch the eye of a major player for a deal. 

The reason for this is that the smaller players don’t have as much money to invest in capabilities such as patient analytics — capabilities the major insurers are using to surge further ahead, says Michael Abrams, managing partner at consulting firm Numerof & Associates. “They’re in somewhat of a bind because… the big insurance companies add capabilities…that enable them to zero in on patients with chronic diseases or borderline conditions that need special attention to manage them in an ongoing way,” he tells AIS Health, a division of MMIT. “Small to mid-sized insurance companies don’t have money to invest.”