KC-area hospital sues Blue KC, says AI-powered insurance denials ignored doctors
AdventHealth Shawnee Mission, the Merriam-based hospital, is suing Blue Cross and Blue Shield of Kansas City, accusing the insurance provider of withholding more than $2 million in payments by wrongfully denying hundreds of medical diagnoses made by its physicians.
Attorneys for the hospital said the insurance provider, also known as Blue KC, had contracted with Apixio, a firm that touts its use of artificial intelligence to review claims, to do audits of AdventHealth’s diagnoses.
The hospital’s lawsuit, originally filed in Jackson County Circuit Court and moved to U.S. District Court in Kansas City last week, pointed to more than 350 instances in which the insurance provider found medical diagnoses were “clinically invalid and unsupported.”
The lawsuit said Blue KC has repeatedly disregarded diagnosis codes submitted in Advent’s claims for reimbursement using an auditing process called “clinical validation.”
Attorneys wrote that the denials violated the contract between the two groups and violated state law and federal regulations.
“BCBSKC’s unlawful and unethical actions undermine the fundamental principle that healthcare decisions in America should be made by doctors, with the medical expertise, legal responsibility and accountability for making treatment decisions for their patients and should not be made by auditors, accountants or artificial intelligence devices,” the group’s lawsuit said.
The lawsuit seeks damages and a court order for Blue KC to pay for diagnoses documented in the medical record and stop conducting its clinical validation audits.
Representatives for both AdventHealth Shawnee Mission and Blue KC did not respond to requests for comment.
The lawsuit said Blue KC’s audits target hospital inpatient claims that include diagnoses with certain comorbidities and complications. Those diagnoses lead to higher payment rates the hospital said were commensurate with the additional resources often involved in evaluating, diagnosing and treating those conditions.
Blue KC contracts with outside vendors to perform the audits, and in 2024, shifted from using the company Cotiviti to the group Apixio, and both groups’ exclusive focus on comorbidities and complications appears “designed for the sole purpose of BCBSKC escaping responsibility” for full payment, the lawsuit said.
Use of AI?
The lawsuit said neither Blue KC nor the two vendors had disclosed the qualifications of the personnel setting aside the diagnoses made by AdventHealth’s physicians or the extent to which artificial intelligence was used in their processes.
Apixio markets itself as a leader in “providing connected AI solutions” in health care and offers “AI-powered clinical chart review solutions and services,” according to the group’s website.
The group’s marketing suggests a “staggering 60% of the hospital stays it reviews include clinically invalid medical diagnoses,” the lawsuit said. “In other words, Apixio opines for its clients that licensed physicians erroneously diagnose patients in 60% of hospital inpatient stays Apixio reviews.”
The group also markets its “hasty reviews as a selling point, stating in its marketing materials that it ‘effortlessly conducts complex claims reviews in minutes, not days, with the support of an integrated platform that harnesses … AI-driven automated workflows,’” the lawsuit said.
The hospital’s appeals are often denied instantly, even in high-dollar, complex appeals that have numerous pages, the lawsuit said.
“Decisions on Advent’s appeals rarely reflect a meaningful analysis and generally ignore the factual and legal grounds set forth in Advent’s appeals, almost never involve any human contact or discussion between the parties,” attorneys wrote. “Neither Apixio nor Cotiviti have discussed their new medical diagnoses with the treating professionals before usurping a medical diagnosis with their own opinion.”
