CMS Clarifies Permissible Use of AI in Medicare Advantage – Posts FAQs

Regarding inpatient admissions, algorithms or artificial intelligence alone cannot be used by Medicare Advantage (MA) insurers as the basis to deny admission or downgrade to an observation stay; a patient’s circumstances must be considered against the permissible applicable Medicare coverage criteria under which MA operates.

The Centers for Medicare and Medicaid Services also clarified in its February 6, 2024 memo to MA organizations its rules for algorithm and artificial intelligence models and the difference between the two complementary technologies. The agency also expressed concern that algorithms and many new artificial intelligence technologies can exacerbate discrimination and bias.

Explaining AI as “a machine-based system that can — for a given set of human-defined objectives — make predictions, recommendations or decisions influencing real or virtual environments,” and algorithms as a technology that “can imply a decisional flow chart of a series of if-then statements.”

Inside Health Policy interviewed Jeff Davis, Health Policy director at McDermott+Consulting,

I think the FAQ really says that you can still use algorithms, you can still use AI, but you can’t use it as the basis for denying payment. And I think that’s the key there is that you can still use the algorithms, it’s just how you use them.

Last year three giants Cigna, Humana and UnitedHealthcare faced lawsuits for allegedly using AI to wrongfully deny claims.

According to Health Leaders Media, during a recent legislative hearing, Senator Elizabeth Warren called out MA insurers for wrongfully using AI to profit off of deny claims.

Without significant guardrails in place, these (AI) algorithms will continue to harm patients while padding the private insurers’ profits

The CY 2024 final rule adopted several provisions applicable to MA beginning January 1, 2024, on the use of prior authorization:

• Prior authorization may only be used by MA coordinated care plans to confirm the presence of diagnoses or other medical criteria, to ensure that the furnishing of a service or benefit is medically necessary or, for supplemental benefits, clinically appropriate (§ 422.138(b)). Therefore, prior authorization should not function to delay or discourage care.
• For MA coordinated care plans, approval of a prior authorization request for a course of treatment must be valid for as long as medically reasonable and necessary to avoid disruptions in care in accordance with applicable coverage criteria, the patient’s medical history, and the treating provider’s recommendation. Further, MA coordinated care plans must provide a minimum 90-day transition period for new enrollees, during which the new MA plan may not require prior authorization for any active course of treatment, even if the course of treatment was for a service that commenced with an out-of-network provider (§ 422.112(b)(8)).
• To ensure prior authorization is being used appropriately, all MA plans must establish a Utilization Management Committee to annually review utilization management policies and ensure consistency with Traditional Medicare’s national and local coverage decisions and guidelines (§ 422.137).