North Carolina senators are considering House Bill 565 to restrict how artificial intelligence can be used to deny health insurance claims and generate hospital billing codes without physician oversight.
Senator Amy Galey introduced a committee substitute prohibiting insurers from basing claim denials solely on AI decisions and requiring human review when automated systems reject coverage. Galey told the Senate Health Committee that sick patients should not have care blocked by algorithms alone.
The bill also targets ambient AI tools in clinical settings that listen to doctor-patient conversations and may recommend higher-paying diagnosis codes, a practice critics call upcoding. Providers would need to confirm that AI-suggested codes match medical records before billing.
Senator Gale Adcock, a nurse practitioner, questioned whether new rules were necessary because upcoding is already illegal. The North Carolina Healthcare Association said it would work with lawmakers to refine regulations as AI adoption accelerates in hospitals and insurers.
House Bill 565 moved through the Senate Health Committee in May 2026 as North Carolina Republicans sought guardrails on AI in medicine. Senator Wren Murdock said the state had not matched other states’ AI legislation and wanted healthcare stakeholders at the table. Galey cited evidence that ambient documentation tools may recommend lucrative billing codes that inflate costs for Medicaid and the state employee health plan.
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Sources:
https://dailycuratednews.substack.com/p/news-headlines-may-22-2026