AI Pilot Program to Reshape Medicare Authorizations in 2024

Beginning in 2024, the federal government will implement a pilot program employing artificial intelligence to determine whether Medicare patients in six states require prior authorization for specific treatments. The initiative, launched by the Centers for Medicare and Medicaid Services (CMS), aims to reduce waste and unnecessary procedures within the Medicare system. The program, known as the WISeR Model, will evaluate prior authorization requests through private third-party companies.

The selected states for this pilot program are Washington, New Jersey, Ohio, Oklahoma, Texas, and Arizona. This new requirement is set to commence at the beginning of next year and will continue through 2031. Dr. Mehmet Oz, CMS Administrator, emphasized the program’s goal of combating fraud and waste within Medicare, stating, “Combining the speed of technology and the experienced clinicians, this new model helps bring Medicare into the 21st century.”

Traditionally, Medicare operates on a fee-for-service model, where providers receive a flat fee for services rendered. In contrast, many private insurance companies already mandate prior approval for various procedures. Under the WISeR Model, private companies will be compensated based on the savings they achieve for Medicare, raising concerns among experts about potential incentives to deny necessary care.

Jeannie Fuglesten Biniek, a Medicare policy expert with the Kaiser Family Foundation, noted that the program might encourage companies to deny requests, stating, “It essentially incentivizes them to deny requests. How that will go raises some concerns.” Should the pilot prove successful, prior authorization could become standard in traditional Medicare, fundamentally altering its structure.

The implementation of AI for prior authorization decisions is not unprecedented, as many private insurers have adopted similar technologies. However, Fuglesten Biniek warned of the lack of transparency surrounding AI usage, despite its potential to enhance decision-making speed and accuracy. Any appeals against AI-driven decisions will be handled by personnel from the private companies involved.

The WISeR Model will require prior authorization for 16 procedures deemed “potentially low value” by CMS, which could be safely delayed without adverse effects on patients. These include treatments for conditions such as Parkinson’s disease, epilepsy, and pain management procedures. CMS has not clarified the criteria for categorizing these treatments as low value or the rationale behind selecting the specific states for participation. Furthermore, the program excludes any inpatient or emergency services.

Fuglesten Biniek expressed skepticism, saying, “If you can prevent the use of unnecessary services, that would be a net gain for both the patient and Medicare. But CMS hasn’t really drilled down into the evidence for these specific services.”

The American Medical Association (AMA) has urged the government to postpone the program’s implementation until adequate safeguards are established to prevent disruptions to patient care. In a formal letter, the AMA stated, “Prior authorization has consistently been identified by physicians as one of the most burdensome and disruptive administrative requirements.” They warned that introducing such protocols into traditional Medicare could lead to unnecessary delays and increased costs for healthcare providers.

Concerns about the program have also been voiced by members of Congress, including Rep. Susan Delbene of Washington. A letter signed by 17 Congressional Democrats criticized the WISeR Model, asserting it could replace medical judgment with algorithms designed to minimize care. They warned, “In practice, WISeR will likely limit beneficiaries’ access to care.”

Recently, the House appropriations committee voted to amend a government funding bill, removing financial support for the WISeR program. Should this funding bill pass, CMS may need to seek alternative revenue sources to continue the initiative. The amendment received bipartisan approval without a recorded vote, highlighting the widespread concern regarding the program’s potential impact on patient care and the healthcare workforce.

As the implementation date approaches, the effectiveness and implications of the WISeR Model will be closely watched by stakeholders across the healthcare landscape.