A new federal pilot program launching in Ohio will use artificial intelligence to screen the necessity of certain medical treatments for traditional Medicare beneficiaries. The initiative, managed by the Centers for Medicare and Medicaid Services (CMS), aims to reduce waste and fraud but has prompted concerns from physician and patient advocacy groups about potential delays in care.
Key Takeaways
- A pilot program in Ohio will use AI to pre-approve about 17 medical procedures for traditional Medicare patients.
- The goal is to combat waste, fraud, and abuse in the government-run insurance program.
- Physician groups and patient advocates worry the system could create care delays and administrative burdens.
- The program is limited to specific outpatient services and excludes emergency or inpatient care.
New Medicare Program Uses AI for Pre-Approval
Ohio is one of six states selected for a new federal initiative that introduces a prior authorization process for traditional Medicare. This program will use artificial intelligence to help determine if specific medical services are necessary before Medicare agrees to pay for them.
The initiative targets the government-run insurance plan for individuals 65 and older and many younger people with disabilities. In Ohio, approximately 1.1 million residents rely on traditional Medicare for their health coverage.
This pre-approval process, known as prior authorization, is already common in private insurance and many privatized Medicare Advantage plans. However, it has been used far less frequently in the traditional Medicare system.
What is Prior Authorization?
Prior authorization is a process used by health insurance companies to determine if they will cover the cost of a prescribed procedure, service, or medication. Healthcare providers must submit a request for approval before rendering the service to ensure they will be reimbursed. The goal is to control costs and prevent unnecessary treatments.
How the AI Screening Process Works
The pilot program, officially named the Wasteful and Inappropriate Service Reduction (WISeR) model, focuses on a specific list of medical services. The federal government has identified these procedures as being particularly susceptible to improper use or billing.
Targeted Medical Services
The program will require prior authorization for about 17 outpatient medical procedures. These include:
- Epidural injections for pain management
- Certain skin substitute treatments
- Procedures for treating impotence
- A specific therapy for Parkinson’s Disease
Federal audits in recent years have highlighted concerns about the rising use of skin substitutes and improper payments for epidural steroid injections within the Medicare system, prompting their inclusion in this program.
The Approval Workflow
When a physician determines a patient needs one of the targeted treatments, they must first submit a request for approval to a company contracted by the government. These companies will use AI to assist in the initial review, with the goal of making the process faster and more accurate.
However, a crucial safeguard is in place: only licensed clinicians can make the final decision to deny a request. While doctors can proceed with treatment without approval, they risk not being paid by Medicare if the service is later deemed unnecessary.
Financial Incentives and Penalties
According to CMS, the companies managing the AI review will receive a percentage of the savings generated by the program. To discourage wrongful denials, these companies will also face financial penalties for what the agency terms “inappropriate denials” of care.
The WISeR model specifically excludes inpatient hospital services, emergency procedures, and any services that would pose a “substantial risk to patients if significantly delayed.”
Doctors and Patients Voice Concerns Over Delays
Despite the program's stated goals, several advocacy groups have expressed significant reservations. The primary concerns revolve around the potential for delayed medical care and increased administrative workload for healthcare providers.
Todd Baker, CEO of the Ohio State Medical Association, highlighted the historical issues with prior authorization in the private sector. He noted that what began as a tool for high-cost procedures has expanded to cover minor treatments, creating significant overhead for medical practices.
“We are really concerned, based upon the history of what we’ve experienced with prior [authorization],” Baker stated. “It creates significant administrative burden. It potentially creates risks of care delay.”
Patient advocates share these worries. Charlotte Rudolph, executive director of the healthcare advocacy group UHCAN Ohio, is concerned that the process could add stress for older adults, particularly those requiring pain management.
“If the AI is programmed to deny first, and then refer it to a human reviewer, then that’s automatically going to cause a delay … in the care,” Rudolph explained. She added that navigating the appeals process for a denied claim can be confusing and stressful for many Medicare beneficiaries.
Debate Over Program Impact and Oversight
While some groups are alarmed, others believe the program's limited scope will prevent widespread disruption. Brian C. Moore, owner of the Ohio Medicare Plan insurance agency, anticipates a minimal effect on most beneficiaries.
“I anticipate that it will affect a very small amount or percentage of Ohio Medicare beneficiaries,” Moore said. “The only people that should be concerned, again, are people that may be subject to one of these 17 types of outpatient services.”
Experts in healthcare finance acknowledge the need to address wasteful spending but question the program's design. J.B. Silvers, a professor emeritus of healthcare finance at Case Western Reserve University, noted that geographic variations in medical procedures demonstrate a need for oversight.
However, Silvers expressed skepticism about the WISeR model, calling it a “pretty ham-handed way to handle it.” A key concern for him is the financial incentive for the review companies to deny procedures, which he believes creates a conflict of interest.
“When the insurance company is the one making the decisions, it’s an outside police force checking you out, and that makes it a controversial situation,” Silvers commented. He suggested that oversight from an independent physician panel without a financial stake would be a preferable approach.
