Private health insurers have long used “prior authorization” to decide if they’ll cover certain treatments. They often try to deny claims, sometimes with the help of AI tools. But Medicare, which is government-backed, usually steps in to cover what private companies won’t, and it doesn’t have the same complicated process. Now, that might be about to change.

Medicare Tests AI for Claim Decisions

The Centers for Medicare and Medicaid Services (CMS) announced it will experiment with AI to review claims. This new program, called WISeR, aims to cut wasteful spending by using AI models to flag claims for review. The idea is to automatically identify procedures that are considered low-value or unnecessary, like certain steroid injections for pain relief.

What’s interesting is that the AI companies involved in this pilot will be paid based on the savings they generate. If the AI successfully blocks claims that would have cost Medicare money, those companies get a cut of the savings. Experts warn that this creates a strong incentive for these companies to deny claims, possibly more than what’s fair or appropriate.

Limited Rollout and Potential Risks

The program will start in January and will only operate in six states: New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington. It will focus on about a dozen procedures that are seen as wasteful, and won’t be used for emergency or hospital stays, according to officials. Still, many experts worry about where this could lead.

Some say it’s a slippery slope. If AI models are used to decide on routine procedures, will they eventually be trusted to review more serious cases? Critics point out that, historically, AI in health insurance has been prone to errors and biases. For example, a 2023 investigation found that some AI systems used by private insurers wrongly rejected claims or were biased against women. These models can make mistakes based on tiny errors or biased data, which raises concerns about fairness and accuracy.

However, officials insist that final decisions on claim denials will be made by licensed human clinicians, not machines. They also say there will be penalties if the AI makes wrongful rejections. But experience shows that AI systems can sometimes be manipulated or give flawed judgments, especially if they’re incentivized to maximize claim denials.

In the private insurance world, there’s evidence that AI is often used to automatically examine claims, with humans only reviewing the final decisions. Unfortunately, some of these algorithms have high error rates or exhibit bias, raising questions about how objective and fair AI-driven decisions actually are.

Research has shown that AI models can be influenced by small errors, like typos, leading to unjust denial of care. There’s also concern about gender bias, where women might be told to seek less care than men based on flawed data. As AI takes on a bigger role in healthcare decisions, these issues could become more widespread.

While the hope is that AI will make healthcare more efficient and reduce waste, the reality is that these systems are still imperfect. If they’re used to decide who gets treatment and who doesn’t, there’s a risk of unfair denial and reduced access to care, especially if the companies that develop these AI tools profit from rejecting claims.

In the end, this move toward AI in Medicare claim reviews highlights the ongoing tension between efficiency and fairness in healthcare. As these technologies develop, it’s crucial to keep a close eye on how they’re used and ensure they serve patients fairly, not just cost-cutting goals.

Inspired by

• https://futurism.com/medicare-pay-ai-companies

Sources

• gmpg.org
• cms.gov
• nytimes.com
• propublica.org