How a N.C.-based company uses AI to help appeal health insurance claim denials

Neal Shah is no stranger to health insurance claim denials. He first dealt with them while managing his grandfather’s end-of-life care. Then again while his wife went through cancer treatment.

As CEO of CareYaya, a Triangle-based health technologies company that matches college students entering health care fields with families in need of caregivers, Shah continued to see the impact of claim denials. He heard about them from students and older adults alike.

“It’s affecting young people. It’s affecting middle-aged people. It’s affecting older people,” Shah said. “The problem is bigger than I thought from my own personal experiences.”

That’s why Shah, Gavry Eshet and Saraswati Sridhar co-founded Counterforce Health, a free artificial intelligence system that helps patients fight insurance claim denials. One AI writes appeal letters disputing the denials, and another calls the insurance companies to continue pursuing the appeal.

“The end game is reducing the patient burden fully,” Shah said. “Because both letter writing and phone calling are just time-wasting. Going through these processes with insurance is an enormous amount of stress on either the person who’s sick or their loved one.”

Since Counterforce Health’s first beta went live in January, Shah said thousands of people have used the letter generator to help appeal their claim denials. Three small clinics also regularly use it to help with their clients’ denials.

Health insurance companies deny claims for a handful of reasons. The 2024 Revenue Cycle Denials Index found that service coding errors and lack of eligibility for a service were among the most common. About 7% were because the insurance company deemed the service medically unnecessary. 

According to an analysis from KFF, an independent health policy and research organization, 20% of all claims were denied by insurance sold on HealthCare.gov in 2023. The Optum 2024 Revenue Cycle Denials Index, a study of 124 million claims from over 1,400 hospitals nationwide, found the rate of claim denials from all insurance has increased since 2016, going from 9% to 12% in 2023.

The increase is linked to insurance companies’ use of algorithms and AI to deny claims. ProPublica found that Cigna, one of the country’s largest private health insurance companies, created an algorithm that let it deny over 30,000 claims in just two months in 2022. A class action lawsuit against UnitedHealth alleges that the company’s AI, called nH Predict, prematurely terminated care for elderly Medicare patients. The lawsuit was filed in 2023, a little less than a year before the killing of then-UnitedHealth CEO Brian Thompson, which brought about nationwide discussions of denials by insurance giants. 

Despite high denial rates and appeal rights (which vary by insurer and state), KFF found that less than 1% of people insured by insurance sold on HealthCare.gov appealed their claim denial. Another KFF analysis found that most people with denied claims don’t know they can appeal.

Shah hopes Counterforce Health will increase appeal rates and help people succeed in getting their claims paid.

“My view was, if there’s any symmetrical usage of weaponry, where AI is a new weapon, and no one’s building any tools for the other side, I was like, ‘We can do that,’’’ Shah said.

Creating the AI

Counterforce Health founders trained the AI using health care service code databases, external review databases and legal databases of lawsuits against insurers for denied claims. 

The health care code databases trained the AI to identify the proper code attached to services. 

The external review databases are compiled lists of the processes and rulings for when people undergo external review, which is when they appeal a claim denial to a third-party independent review organization. The IRO uses medical and insurance law experts to determine whether to uphold the claim denial. In North Carolina, residents can request external review for free online through Smart NC, part of the state’s Department of Insurance. 

The last sets were pulled from legal filings of lawsuits against insurers for claim denials, which follow unsuccessful appeals and external review.

Put together, the databases created an AI that lets users generate appeal letters in under a minute based on common denials like a miscoded surgery claim or using their own uploaded coverage policy, medical records and denial letter. It’s backed by health leaders like Dr. David Casarett, section chief of Duke Palliative Care, and Erin E. Kent, associate professor and associate chair for research in health policy and management at the UNC-Chapel Hill Gillings School of Global Public Health.

Shah said the AI has a 0% hallucination rate — when an AI makes up information. The Counterforce Health team also made the AI cite its facts in the generated appeal letters to ensure accuracy.

Based on his experience drafting appeal letters for his grandfather and wife, Shah said Counterforce Health’s AI saves patients and their families hours of researching medical and insurance jargon, finding the right citations and writing the letter. 

“The letter isn’t where the game ends,” Shah said. “You’re also spending a lot of time on the phone following up, chasing down what’s the status of this, asking to call someone, and then saying, ‘Hey, I need this covered. I haven’t received a response.’”

That’s where Maxwell comes in. Maxwell, a voice AI, can call the user’s insurance company to follow up on the appeal on their behalf. The Counterforce Health team and other beta testers are calling and speaking with Maxwell to improve it.

“We’re working through the kinks,” Shah said. “We want to ensure the accuracy is sky high before people turn to it to call insurers on their behalf, and that’s kind of a work in progress over the next couple of months.”

Bringing insurance companies to heel

Shah said the lack of efforts to address claim denials from government officials also pushed him and the Counterforce Health team to develop their AI. He said democratizing the same types of AI that insurance companies use to deny claims gives people a fighting chance at accessing health care. 

That’s why Counterforce Health is free for users. CareYaya’s impact fund pays for the few cents it costs to generate each appeal letter and the $1.50 per 10 minutes it costs to use Maxwell.

“The only change is going to happen from grassroots,” Shah said. “People have got to fight for themselves, and people have to develop tools to better equip people to fight.”

There are efforts in the N.C. House to rein in insurance companies. In March, four Republican representatives introduced HB434, which would reform prior authorization in the state. It’s an effort the North Carolina Medical Society is supporting.

Prior authorization is when a physician must receive approval for a service from the patient’s insurance company before providing it. According to a survey by the American Medical Association, 23% of physicians reported that prior authorization led to a patient’s hospitalization. The majority of the 1,000 physicians surveyed were concerned that insurers’ use of AI will increase the number of prior authorization denials.

If passed, HB434 would require, among other things, that health insurers discuss the medical necessity of a service with a physician before issuing a prior authorization denial. It also outlines timelines for these discussions to ensure timely care is provided.

“The concept of this is very simple,” Dr. Grant Campbell, retired U.S. Army lieutenant colonel and N.C. House representative for District 83, who is a primary sponsor of the bill, said at a press conference on March 18. “This bill is going to allow physicians to be the ones to make medical decisions for their patients.”

CityView Reporter Morgan Casey is a corps member with Report for America, a national service program that places journalists into local newsrooms. Morgan’s reporting focuses on health care issues in and around Cumberland County and can be supported through the CityView News Fund.