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Providers tell lawmakers insurers are using automated tools to deny or downcode claims; insurers defend oversight and cite reform commitments
Summary
Hospitals, clinics and provider associations told a Senate committee that commercial payers increasingly use automated tools to downcode or deny claims without record review—straining small providers—while insurers and trade groups emphasized prior‑authorization reforms and fraud prevention.
Providers from a broad range of settings told the Senate Interim Committee on Health that automated claims review and utilization‑management practices have recently intensified administrative burdens and delayed payments.
Maggie Hudson, CEO of Santiam Hospital & Clinics, said multiple commercial payers in their market began using an AI tool identified as Optum’s Emergency Department Claim Analyzer to automatically deny or downcode high‑acuity emergency department claims without medical‑record review. Hudson said Santiam appealed more than 300 ED claims in the last 18 months and that, in her organization’s experience, overturned appeals are common but lengthy to resolve. "It is never acceptable to deny or downcode a claim without the review of the medical record first," Hudson said.
Cassandra Posvar Martinez (revenue and reimbursement) added that denials pause prompt‑pay clocks, force expensive appeals, and sometimes incur appeal filing fees (she said some carriers charge $50 to file an appeal). Small independent providers testified similarly: Sasha Kolbeck (physical therapy) and Zora Campbell (chiropractic) described delayed payments, missing legally required interest on late payments and unexplained 'under review' flags that add months of uncertainty and cash‑flow risk.
Courtney Dresser of the Oregon Medical Association said AI and batching of claims for automated downcoding rose after 2021 coding changes and urged legislative and regulatory responses to balance fraud prevention with timely payment. Jesse O’Brien of the Division of Financial Regulation (DCBS) reviewed relevant Oregon statutes and regulations, including prompt‑pay requirements (clean claims to be paid or denied within 30 days under cited ORS language), unfair claim settlement practices (ORS 746.230) and external review processes. O’Brien described DFR’s complaint process and a new pathway for providers to submit complaints.
Insurer representatives pushed back on characterization of the problem as universal. Peter Brown (AHIP) and Maryann Cooper (Regence) said plans have made voluntary commitments to streamline and standardize prior authorization, and Regence said it pays the great majority of claims as billed and is investing in provider‑facing administrative tools. They also framed utilization review as an important check against fraud and unsound billing.
What’s next: Providers urged committee oversight and potential legislative fixes, including stronger enforcement of prompt‑pay rules, clearer rules for AI use in claim adjudication, and remedies for interest or restitution when statutory prompt‑pay requirements are not met. DFR invited providers to submit complaints through its updated process.
