Why AI Adoption Creates New Compliance Questions for Physicians

Artificial intelligence seems to be everywhere. This is no less true in clinical practice. Physicians need to understand that while there are many benefits to AI integration in healthcare, there are also potential limitations and compliance issues. New York has strict regulatory laws around health care and data privacy, all of which are implicated when using AI. 

The medical transaction attorneys at Daniels, Porco & Lusardi, LLP can help you navigate this new landscape. The law and the technology both continue to change, and you need to be ready for the compliance challenges it presents. 

AI Is Changing Clinical Practice

AI tools are evolving faster than the regulatory frameworks that govern them. New York physicians must navigate a landscape where:

• The Corporate Practice of Medicine (CPOM) doctrine restricts who can influence clinical judgment
• HIPAA and state privacy laws impose strict limits on data use and disclosure
• Billing and documentation rules require accuracy and physician oversight
• Professional liability standards still assume human decision-making

When AI enters the picture, each of these areas becomes more complicated. Physicians remain responsible for clinical decisions, even when those decisions are informed or influenced by AI.

CPOM and the Risk of Improper Influence

New York’s CPOM doctrine prohibits non-physicians from controlling or directing medical decision-making. AI tools developed, owned, or managed by non-physician entities can raise questions such as:

• Does the AI tool recommend treatment pathways that could be viewed as directing care?
• Does the vendor have access to clinical data that allows it to shape medical decisions?
• Are MSO-provided AI tools crossing the line from administrative support into clinical influence?

Practices must ensure that AI tools support, not replace, physician decision-making.

Data Privacy and Ownership

AI systems rely on large volumes of data. For New York physicians, this raises several compliance questions:

• What data is available to the AI vendor?
• Where is the data stored?
• Who has access to the data?
• Does the vendor use that data to train its models?
• Is the AI open or closed?
• Is the data de-identified to protect patient information?

HIPAA allows certain data uses, if it is properly protected. Many AI vendors are not compliant, however, and could put your patient data at risk. This creates compliance issues for your practice if you’re not careful. 

Documentation and Billing Risks With AI-Generated Notes

AI-powered documentation tools promise to reduce administrative burden, but they also introduce new compliance challenges. Common issues include:

• Over-documentation or “note bloat” that inflates the record
• Inaccurate or fabricated details inserted by generative AI
• Misalignment between the physician’s actual encounter and the AI-generated note
• Coding suggestions that may not meet payer requirements

Who Is Responsible When AI Gets It Wrong?

AI tools are far from perfect. If an AI recommends a certain treatment, or its results in delayed diagnosis or misdiagnosis, this creates other questions, such as:

• Did the physician rely too heavily on the AI output?
• Was the AI tool properly validated before use?
• Were patients informed that AI was part of their care?
• Does the malpractice carrier cover AI-related claims?

New York physicians must treat AI as an assistive tool, not a decision-maker. The physician is ultimately responsible for the patient’s care, and could face malpractice claims for improper reliance on AI.

Contracting With AI Vendors: Hidden Compliance Traps

Vendor agreements often contain provisions that create compliance risks, including:

• Broad data-use rights that conflict with HIPAA
• Indemnification clauses that shift liability to the practice
• Lack of transparency around model training and accuracy
• Terms that allow vendors to change algorithms without notice

Practical Steps for New York Physicians Adopting AI

To reduce compliance risk, practices should:

• Conduct a regulatory review of each AI tool before implementation
• Ensure AI outputs are always subject to physician oversight
• Review vendor contracts for data-use, indemnification, and CPOM issues
• Train staff on appropriate use and limitations of AI tools
• Document validation, testing, and quality-assurance processes
• Maintain transparency with patients when AI is used in care

AI can be a powerful asset, but only when implemented with a clear understanding of New York’s regulatory environment.

Stay Compliant When Adopting AI Into Your Practice

Physicians have many compliance concerns to think about, and AI is now adding to that list. The right attorney stays on top of the law and helps guide you through that compliance journey.

The attorneys at Daniels, Porco & Lusardi, LLP are ready to help. Contact us today for a consultation.