Algorithms and artificial intelligence-powered software tools can be used to support Medicare Advantage plans in making coverage decisions for members, but payers are still bound by CMS' internal benefits requirements and nondiscrimination rules under the ACA, the agency said in guidance to insurers regarding its final 2024 MA rule.
"We are concerned that algorithms and many new artificial intelligence technologies can exacerbate discrimination and bias," the agency wrote Feb. 6. "MA organizations should, prior to implementing an algorithm or software tool, ensure that the tool is not perpetuating or exacerbating existing bias, or introducing new biases."
The guidance comes as scrutiny of payers' use of AI increased in 2023. UnitedHealthcare, Humana and Cigna are facing lawsuits alleging they used AI tools or algorithms to wrongfully deny care to Medicare Advantage members.
Four key takeaways:
1. Because of how rapidly software technologies are evolving and overlapping definitions, CMS clarified its perspective on the difference between algorithms and artificial intelligence. Algorithms "can imply a decisional flow chart of a series of if-then statements," while AI is a "machine-based system that can — for a given set of human-defined objectives — make predictions, recommendations or decisions influencing real or virtual environments.
2. Payers can use algorithms to support coverage decisions, but it is their responsibility to ensure that an algorithm or an AI-based tool is compliant with the agency's coverage decision requirements. For example, MA carriers must base coverage decisions on an individual member's medical history, physician recommendations or clinical notes, not on a larger data set.
3. Algorithms can be used only to help predict length of stay for post-acute services and not as the basis for terminating coverage. Terminating coverage can be determined only by first reexamining a member prior to the termination notice. For inpatient admissions, algorithms and artificial intelligence alone cannot be used as the reason to deny admission or downgrade to an observation stay.
4. MA organizations may deny coverage for basic benefits only for reasons such as network limitations or noncompliance with prior authorization rules. Algorithms should be used only to ensure compliance with internal coverage criteria. AI cannot be used to shift coverage criteria over time, and predictive algorithms cannot apply internal coverage criteria that are not public.