CMS: MA insurers can’t use algorithms to deny care

The Centers for Medicare and Medicaid Services sent a memo to all Medicare Advantage carriers recently, clarifying that MA insurers are not allowed to use algorithms or artificial intelligence-powered tools as basis for denying care or coverage.

Algorithms and AI tools can be used only to support coverage decisions, and insurers must ensure that the tools they are using comply with the CMS' coverage decision requirements, the agency said.

CMS issued the guidance as a follow-up to its April 2023 final rule that included requirements and clarifications relating to Medicare Advantage coverage criteria for basic benefits, use of prior authorization, and the annual review of usage management tools. Since the rule was issued, CMS has received questions about how the agency expects Medicare Advantage plans to comply with it, a CMS spokesperson told InsuranceNewsNet.

Medicare Advantage organizations must make medical necessity determinations based on all of the following:

• Coverage and benefit criteria. MA insurers may not deny coverage for basic benefits based on coverage criteria. When Medicare coverage criteria are not fully established, MA organizations may create publicly accessible internal coverage criteria that are based on current evidence in widely used treatment guidelines or clinical literature.
• Whether the items and services are “reasonable and necessary.”
• The patient’s medical history, including diagnoses, conditions, functional status, as well as physician recommendations and clinical notes.
• Where appropriate, involvement of the organization’s medical director.

 “An algorithm or software tool can be used to assist MA plans in making coverage determinations, but it is the responsibility of the MA organization to ensure that the algorithm or artificial intelligence complies with all applicable rules for how coverage determinations by MA organizations are made,” the guidance states.

For example, Medicare Advantage insurers must base a coverage decision based on the individual patient’s circumstances, so an algorithm that determines coverage based on a larger data set instead of the individual patient's medical history, the physician’s recommendations or clinical notes would not be compliant with guidance.

In making a decision on whether to terminate a patient’s post-acute care services, CMS said an algorithm or software tool can be used to assist providers or MA plans in predicting a potential length of stay, but that prediction alone cannot be used as the basis to terminate post-acute care services. For those services to be terminated, the patient must no longer meet the level of care requirements needed for the post-acute care at the time the services are being terminated, which can only be determined by re-assessing the individual patient’s condition prior to issuing the notice of termination of services.

Additionally, for inpatient admissions, algorithms or artificial intelligence alone cannot be used as the basis to deny admission or downgrade to an observation stay; the patient’s individual circumstances must be considered against the permissible applicable coverage criteria.

Medicare Advantage plans cannot deny a patient’s admission from an acute care hospital to a post-acute care facility if the patient meets all applicable Medicare coverage criteria for admission into that type of facility. In its guidance, CMS reiterates that Medicare Advantage may deny a request for Medicare covered post-acute care services in a particular setting only if the Medicare Advantage organization determines that the traditional Medicare coverage criteria or internal coverage criteria for the services cannot be satisfied in that particular setting. However, MA plans are permitted to offer coverage of alternatives to Medicare covered post-acute care services in a particular setting and an enrollee is permitted to elect different treatment.

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.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on X @INNsusan.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.