Mental Health Providers Deploy AI to Counter Insurer Claim Denials

Mental health providers say they're increasingly turning to artificial intelligence tools to fight what they describe as automated insurance claim denials — setting up what one technology founder calls a "battle of AIs" in healthcare administration.

Scott Horowitz, clinical manager at Ellie Mental Health of Fort Washington in Montgomery County, Pennsylvania, told abc27 News that health insurers appear focused on restricting payments rather than providing care. "It actually feels more quite the opposite: that their task is to restrict to pay as little as possible at the end of the day for patient care while taking high premiums," Horowitz said.

The AI arms race in claims processing

Providers say artificial intelligence has amplified insurers' ability to deny claims at scale. "The advent of AI, or blooming of the AI industry, has in a lot of ways just created a new and very powerful tool for them to better achieve that aim," Horowitz said.

In response, companies like Toronto-based Klarify have emerged to offer AI-powered services specifically for therapists. The platform helps providers craft claims documentation and automatically generates appeals when claims are rejected.

Moody Abdul, Klarify's founder, framed the dynamic bluntly: "It will basically be battle of AIs, as it is, ironically."

The documentation challenge

Mental health providers face a particular documentation burden. They must demonstrate "medical necessity" to satisfy insurance requirements while protecting patient confidentiality — a balance Horowitz described as requiring "a lot of effort."

AI tools like Klarify help therapists use what Horowitz called the "right terminology that meets exactly what they're looking for." The goal is to reduce initial denials by meeting insurer requirements, but the systems also generate appeals automatically when claims are rejected.

Horowitz said such platforms have proliferated over the past two years as providers seek leverage against large insurance companies.

Why it matters

The emergence of AI-versus-AI dynamics in healthcare administration signals a fundamental shift in how medical claims are processed and contested. As automation scales up both denial and appeal processes, the underlying question of whether technology serves patients or profit margins becomes harder to answer — and the human judgment that once mediated these decisions risks being automated away entirely.

Insurer perspective

The Insurance Federation of Pennsylvania, which represents most health insurers operating in the state, did not respond to abc27's request for comment. Health insurers facing similar allegations have previously stated they use AI and other tools to control costs and pass savings to subscribers through lower premiums.

The details were first reported by abc27 News in Harrisburg.