CMS Bans Medicare Advantage Insurers From Using AI to Deny Care

CMS Bans Medicare Advantage Insurers From Using AI to Deny Care

The Centers for Medicare & Medicaid Services (CMS) has issued strict new guidance prohibiting Medicare Advantage insurers from leveraging artificial intelligence and algorithms to unilaterally determine or deny patient care. The directive arrives amidst lawsuits alleging that leading insurers Humana and UnitedHealth subsidiary NaviHealth utilized a flawed AI tool called nH Predict to systematically curb coverage for elderly Medicare Advantage members.

In an FAQ memo sent to all Medicare Advantage providers, CMS clearly states that "an algorithm that determines coverage based on a larger dataset instead of the individual patient’s medical history, the physician’s recommendations, or clinical notes would not be compliant." Algorithms and AI may only be applied to "ensure fidelity" with established coverage criteria and cannot override case-by-case clinical judgments.

CMS worries that AI could perpetuate discrimination or fail to account for unique patient needs. Their explicit example matches circumstances alleged in recent legal complaints: "In an example involving a decision to terminate post-acute care services, 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."

Multiple lawsuits claim UnitedHealth and Humana subsidiary NaviHealth utilized the nH Predict software to severely limit skilled nursing and rehab coverage for Medicare Advantage members to averages of 14 days, contravening both medical advice and Medicare’s 100 day coverage minimum. Former employees allege the tool fails to properly account for individual patient factors and that disciplining staff for deviating from its harsh estimates is commonplace.

CMS’s directives now clearly forbid these alleged practices, mandating that coverage termination or denial "can only be determined by re-assessing the individual patient’s condition." Insurers must supply "specific and detailed" rationales grounded in precise coverage criteria. AI is prohibited from modifying or subverting publicly accessible guidelines.

Rather than debating definitions of artificial intelligence, CMS casts a wide net, cautioning against both "predictive algorithms" and "machine-based systems that...influence real or virtual environments" alike. MA plans are instructed to vigilantly ensure all software tools align with discrimination statutes and coverage parity principles.

CMS further warns that enhanced audits and oversight actions will monitor MA insurer compliance with lately clarified regulations. With language implying the agency’s knowledge of ongoing violations in this sphere, CMS threatens non-compliant providers with penalties including warning letters, corrective action plans, fines, and potential enrollment sanctions.

Time will tell if these forceful new regulatory guardrails succeed in protecting Medicare Advantage members from overreach and bias perpetuated by imperfect AI systems. At minimum, CMS has drawn a clear line - an algorithm may support but never supplant careful patient-centered clinical decision making.

Chris McKay is the founder and chief editor of Maginative. His thought leadership in AI literacy and strategic AI adoption has been recognized by top academic institutions, media, and global brands.

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