The future of healthcare compliance is rapidly evolving, with the emergence of advanced auditing capabilities that extend beyond traditional oversight. In 2023, the Biden administration signed the “Executive Order on Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.”
EO 14110 outlined the federal government’s approach to responsible AI deployment across many sectors, including healthcare. Under Biden’s order, the Department of Health and Human Services (HHS) created an AI task force and released a strategic plan. Its purpose? To seek to balance the promotion of AI innovation with the mitigation of its potential risks. It aimed to establish standards for AI safety and security, protect privacy, advance equity, and ensure responsible use of AI across industries.
The EO directly impacts healthcare audits by introducing a framework for the responsible implementation of AI-driven auditing tools. As healthcare audits increasingly leverage AI for fraud detection, claims analysis, and compliance monitoring, the EO’s emphasis on safety, security, and fairness becomes paramount.
Specifically, it requires that AI algorithms used in audits be rigorously tested for bias and accuracy, ensuring they do not perpetuate existing health disparities or unfairly target specific demographics. The order’s focus on transparency and explainability also mandates that healthcare providers and insurers understand how AI systems arrive at audit conclusions, promoting accountability and trust.
This directive to protect privacy is crucial in healthcare audits, where sensitive patient data is frequently processed. By establishing data security and privacy guidelines, the executive order ensures that AI-powered audits adhere to legal and ethical standards, safeguarding patient information while enhancing the efficiency and effectiveness of compliance oversight.
President Trump has rescinded this executive order. So what does that mean for the healthcare industry now?
The current situation
The president has appointed a new special advisor for AI and crypto, David Sacks, instructing him to develop an AI action plan within 180 days. The new executive order, “Removing Barriers to American AI Innovation,” argues that the Biden administration’s previous order impeded progress by imposing “unnecessary government control over the development of AI.”
In February 2025, the Department of Government Efficiency (DOGE) began to audit U.S. healthcare. It was granted access to essential payment and contracting systems within the Health and Human Services’ Centers for Medicare and Medicaid Services (CMS). This access aims to identify potential efficiency improvements and detect fraudulent activities and resource misuse. However, privacy advocates have raised concerns about potential privacy implications, given that CMS provides healthcare coverage to 160 million Americans through Medicare, Medicaid, and the Children’s Health Insurance Program. CMS represents a logical focus for DOGE’s efforts due to its 6,700+ employees and $1.5 trillion budget — approximately 22% of federal spending.
DOGE is implementing AI-driven audits to strengthen fraud, waste, and abuse oversight. Private equity-backed healthcare practices may face increased security due to their aggressive growth models and revenue-focused strategies.
The AI audit revolution
AI Technology transforms the audit landscape by enabling unprecedented analytical capabilities. Systems can now instantly examine millions of claims to identify documentation deficiencies, coding errors, and billing irregularities. This technological leap requires leadership to adopt a forward-thinking approach, aligning compliance initiatives with broader organizational objectives.
AI-powered audits extend beyond mere regulatory compliance, presenting a significant business challenge with direct financial and operational challenges. To navigate this new environment successfully, healthcare organizations must ensure alignment between compliance functions, operational processes, and financial goals.
AI Applications in Healthcare Auditing
With improved data interoperability through standards mandated by the 21st Century Cures Act, AI systems will gain access to more comprehensive patient histories, enabling them to perform increasingly sophisticated auditing functions. Some organizations are already developing platforms that examine patient charts to identify coding and documentation considerations.
The next evolution will include more precise auditing of documentation completeness across multiple care settings, enhanced verification of coding accuracy based on complete medical histories, improved billing compliance checks using integrated datasets, and automated evaluation of evidence-based practice adherence. Dr. Robison noted in an interview with Healthicity that these systems will eventually allow providers to “harvest that metadata and give clinicians and hospitals insight to how evidence-based practices and coding is being applied to their patient population.”
Key Considerations for AI-Powered Audits
The success of AI-powered healthcare audits hinges on several critical factors that organizations must address. First, data completeness remains paramount. Dr. Robison says, “For artificial intelligence to be useful in the healthcare space or any space that’s deployed to, it’s really reliant on accurate complete data and without that you’re going to get useless information.” He identifiesIBM Watson’s failure in healthcare as stemming from incomplete data access, resulting in “false assertions and false assumptions.”
Second, transparency in decision-making processes is essential. Think of it as a difference between “white box versus black box algorithm[s]… we have to be able to understand why a suggestion was made or why a process is automated. If we can’t, we can’t trust it.” Unlike acceptable uncertainty in generating clouds for a photograph, healthcare decisions demand precise explanations for AI recommendations.
Strategic action plan to prepare for AI-driven audits
AI-driven audits are transforming healthcare compliance with unprecedented speed and precision. Organizations integrating compliance considerations into their strategic planning now will gain significant advantages: reduced regulatory exposure, enhanced reputation protection, and a stronger foundation for long-term success.
- Elevate compliance to a strategic priority
- Get the board involved by including compliance as a standing agenda item in meetings and include quarterly metrics reporting.
- Form a compliance committee with representatives from the operations, finance, clinical, and IT departments.
- Allocate budget and staffing based on identified risk areas, particularly those vulnerable to AI detection.
- Incorporate compliance KPIs into executive performance evaluation and compensation structures.
- Communicate compliance priorities regularly through leadership messaging and company-wide training programs.
- Implement proactive internal audit practices
- Conduct focused internal reviews of high-risk areas like upcoding, medical necessity documentation, and timed services.
- Implement random sampling methodologies that mirror government audit approaches.
- Simulate AI-driven reviews by analyzing practice data patterns across multiple dimensions.
- Develop clinical documentation improvement programs specifically addressing AI-detectable deficiencies.
- Establish systems to monitor remediation efforts and verify the effectiveness of corrective actions.
- Embrace technological solutions
- Use predictive analytics, deploying systems that identify unusual billing patterns before claims submission.
- Implement automated flags for documentation inconsistencies at the point of care to get alerts in real-time.
- Use advanced tools to verify patient eligibility and avoid improper or inaccurate payments.
- Invest in coding validation systems software that cross-references clinical documentation with billing codes.
- Use data visualization tools that highlight compliance trends and potential risk areas for leadership review.
- Seek expert guidance
- Engage specialized attorneys with healthcare fraud expertise to review compliance programs and high-risk areas.
- Partner with industry experts who understand AI capabilities and healthcare compliance requirements.
- Participate in industry groups that share best practices for responding to AI-powered audits.
- Proactively communicate with regulatory bodies to understand audit priorities and engagement areas.
- Support staff in obtaining relevant compliance certifications to build internal expertise.
The economics are clear — proactive investment in compliance infrastructure delivers superior ROI compared to the costly consequences of reactive crisis management. By building robust compliance systems today, you position your organization to navigate regulatory challenges confidently while your competitors adapt. The question isn’t whether your organization will face AI-powered scrutiny but how prepared you’ll be when it arrives.
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