Medicare to Implement AI in Treatment Approval Process
Medicare is set to incorporate artificial intelligence (AI) into its decision-making processes. The goal is to see if algorithms can effectively determine which treatments will be covered under this major public health program.
Beginning in 2026, federal pilots will explore whether AI can streamline advance approvals and cut down on waste. This initiative could significantly change how millions of Americans access healthcare.
There’s a new initiative known as a “wasteful and inappropriate service reduction model” being rolled out, which will affect 17 outpatient procedures across six states. The Centers for Medicare and Medicaid Services (CMS) has noted that while AI will aid in identifying flags for rejections, it’s ultimately physicians who will make the final call. Proponents of this program hope it will help cut unnecessary spending, estimating that doctors currently spend about 13 hours weekly dealing with approval paperwork. However, critics, including the American Medical Association, have expressed concern that AI could lead to greater denial rates and harmful delays. The pilot programs will take place in states like Arizona, Ohio, and Texas.
Shift from Private to Public Insurance
Private health insurers are already using automated tools to manage permission requests, ensuring that treatments can only proceed once approved by a physician. By adopting similar AI tools, Medicare is indicating that these technologies will soon become standard for managing care coverage. This expected shift could set new norms in how care decisions are made for over 67 million beneficiaries.
CMS aims to eliminate wasteful spending, which amounts to billions annually for services that offer little medical value, such as unnecessary imaging or questionable procedures. According to the AMA, doctors handle an average of 39 pre-authorizations weekly, taking up more than 13 hours of staff time. This process has been linked to burnout, with many physicians even hiring additional staff just to manage these approvals. If AI can filter out straightforward cases, doctors might focus on more complex requests.
Oracle Health is reportedly using AI to ease administrative tasks within the U.S. healthcare system, including billing and approvals. Hypothetically, as Cyrus Nikou of ATAR Capital mentioned, AI’s potential could extend to improving operational efficiencies in patient care coordination, outcome forecasting, personalized treatment planning, and engagement.
Doctors Express Concerns
Many doctors remain doubtful that the efficiency brought by AI will surpass the associated risks. A survey from the AMA pointed out that 61% of physicians believe AI’s implementation by insurers actually worsens denial rates. Notably, 93% reported that care requiring prior approval has been delayed, with 29% citing serious complications that resulted from these delays.
The specific algorithms used by insurance companies often lack transparency, leaving doctors and patients puzzled over why certain requests are turned down. Yet, leading insurers have pledged to enhance the approval process to address these frustrations. Reports indicate that health plans are aiming to standardize submissions by 2027 and provide quicker responses to most requests.
Alfred Olivares from HTEC has cautioned that while AI technology is advancing, there’s still inconsistency in its adoption. Stakeholders need to navigate issues of trust, usability, and long-term effectiveness. He noted that if AI tools aren’t integrated into workflows aligned with clinical goals, they might create confusion rather than clarity—highlighting the need for a more seamless system for better patient outcomes.
