CMS Issues Clarification: AI Use in Health Coverage Decisions Restricted for Medicare Advantage Plans
In a recent memo addressed to all Medicare Advantage insurers, the Centers for Medicare & Medicaid Services (CMS) emphasized that health insurance companies are prohibited from employing algorithms or artificial intelligence (AI) to determine care or deny coverage to members on Medicare Advantage plans.
This clarification follows lawsuits alleging that UnitedHealth and Humana utilized a flawed AI-powered tool called nH Predict to deny care to elderly patients on Medicare Advantage plans. The lawsuits claim that nH Predict provides inaccurate estimates for post-acute care needs, leading to wrongful coverage denials despite physician recommendations and Medicare coverage rules.
CMS stated that coverage decisions must be based on individual patient circumstances rather than algorithms relying on broader datasets. The agency provided a hypothetical scenario mirroring the circumstances outlined in the lawsuits, emphasizing that AI predictions alone cannot justify terminating post-acute care services.
Insurers must reassess each patient’s condition and adhere to publicly posted coverage criteria before denying healthcare. CMS highlighted the importance of providing detailed explanations for coverage denials, addressing concerns raised by patients who received insufficient explanations from insurers.
While acknowledging the potential utility of AI tools in evaluating coverage, CMS emphasized their role as checks to ensure compliance with coverage criteria. The agency cautioned against using AI to alter coverage criteria over time or introduce hidden criteria.
CMS expressed concerns about the potential reinforcement of discrimination and biases by AI tools, urging insurers to prevent bias perpetuation or introduction. The agency warned of increased audit activities and monitoring to ensure compliance with Medicare laws, with non-compliance carrying penalties ranging from warning letters to enrollment sanctions.
The memo serves as a clear directive on the use of AI in Medicare Advantage coverage decisions, underlining CMS’s commitment to safeguarding patient care and rights within the program.
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