A new pilot program launching in Ohio next year will use artificial intelligence to screen whether or not certain health care treatments are a necessity for Medicare recipients. 

The technology’s recommendation will impact whether or not the cost of the treatment is paid for by Medicare.

The pilot program is focused on traditional Medicare — the government-run insurance program for people 65 and older as well as for many younger people with disabilities. Many of the plans offered by Medicare Advantage, Medicare’s privatized sister program, already employ a similar process, commonly called prior authorization. So do private insurance companies. 

But prior authorization has historically been used far less frequently in traditional Medicare, which about 1.1 million people in Ohio rely on. 

Ohio is one of six states that’s part of the pilot program aimed at using the technology to target waste, fraud and abuse. Some patient and physician advocacy groups worry that the extra layer of authorization will lead to delays in care for patients and burden providers with unneeded paperwork. 

“We are really concerned, based upon the history of what we’ve experienced with prior [authorization],” said Todd Baker, Chief Executive Officer of the Ohio State Medical Association, which represents the state’s physicians. “It creates significant administrative burden. It potentially creates risks of care delay.”

Others argue the program is too narrow in scope to have much of an impact on patients.

“I anticipate that it will affect a very small amount or percentage of Ohio Medicare beneficiaries,” said Brian C. Moore, owner of Ohio Medicare Plan, a licensed insurance agency that specializes in providing expertise and enrollment support for Medicare plans. 

The pilot program is a federal initiative of the Centers for Medicare and Medicaid Services. The Ohio Department of Insurance was not involved in the process to bring it to the state, a spokesperson for the agency wrote in an email.

How the prior authorization program works

About seventeen medical procedures will require prior authorization under the new program – ranging from epidurals for pain management, treatment of impotence, skin substitutes and a type of treatment for Parkinson’s Disease. The federal government identified the treatments as particularly vulnerable to waste, abuse or inappropriate use. In the past three years, federal audits have raised concerns about the growing use of skin substitutes and improper payments for epidural steroids in the Medicare program.

When a Medicare patient needs one of these treatments, doctors will first request approval from artificial intelligence companies the government plans to hire. The program, called the Wasteful and Inappropriate Service Reduction (WISeR) model, is technically voluntary. But if doctors don’t wait to receive a thumbs-up from the AI company to proceed with treatment, they risk not getting reimbursed for their work. 

Technology like AI can assist in reviewing doctors’ requests, and the government hopes it will be faster and more accurate. But licensed clinicians must make the final decision on whether to deny a doctor’s prior authorization request.  

The program is meant to prevent Medicare from spending money on procedures that provide little to no clinical benefit, the CMS said. The AI companies will receive a percentage of the savings the program generates, the CMS said. But the companies will be financially penalized for “inappropriate denials” of healthcare, it added.

Inpatient-only services and emergency services are not included in the program, nor are services that would pose a “substantial risk to patients if significantly delayed,” the CMS said. 

Doctors, patients and hospitals concerned about more red tape

When prior authorization in the insurance market began, Baker said it targeted high-dollar medical procedures and drugs. 

Over time, though, doctors have seen the process creep into more and more corners of health care, he said. That adds paperwork – which equals cost – for medical providers. 

“Most systems are now prior authorizing procedures that are $30, $50. Drugs like Z-Paks and other sorts of things,” Baker said, referring to a common antibiotic that can treat strep throat. “…So we’ve gone from this very specific, high-cost, low-frequency procedure focus to almost the entire continuum of procedures and drugs.”

That’s why OSMA is concerned about the WISeR program, he said. Even though the program starts with a focus on a smaller subset of medical services, he said it could crack open the door to making prior authorization more common in the traditional Medicare program.

Patients have similar worries about the WISeR program. The process to get prior authorization doesn’t just take providers’ money and time – it takes patients’ time, too, said Charlotte Rudolph, the executive director for UHCAN Ohio, a healthcare advocacy organization that helps patients navigate insurance.

“If the AI is programmed to deny first, and then refer it to a human reviewer, then that’s automatically going to cause a delay … in the care,” Rudolph said.

She’s especially concerned about the inclusion of pain management treatments like steroid injections in the program. Rudolph said she knows a lot of people with chronic pain who receive them. For older adults on Medicare, a new process to receive their medication is likely to be stressful, she said.

“They struggle with change,” Rudolph said. “… So if now there’s a delay, let’s say, in them receiving a steroid injection for their excruciating pain, they’re going to want to know why.”

Under the WISeR program, patients will have the opportunity to appeal when their care is denied, just like Medicare Advantage patients can. But Rudolph said appeals can also be stressful and confusing for Medicare patients to navigate.

The Ohio Hospital Association did not take a stance for or against the program. In a statement, it said it wants to ensure prior authorization requirements don’t “create inappropriate barriers to patient care or administrative burden for providers.” It pointed to a 2023 survey by the American Hospital Association that found 95% of hospitals say staff are spending more time seeking prior authorization approval.

Some see need for oversight – but how? 

Others who study and work in the insurance industry understand the need to focus on eliminating wasteful medical spending – but debate whether the new program will work.  

J.B. Silvers, a professor of healthcare finance emeritus at Case Western Reserve University, said studies have shown that there can be major deviations in how often certain medical treatments are performed depending on where you live in the country. For example, Elyria was highlighted in a 2006 New York Times article after a Dartmouth research group found doctors there performed an abnormally high rate of angioplasties, a minimally invasive but pricey procedure that treats heart issues. 

So he said efforts to improve oversight of how and whether doctors perform expensive procedures can be worthwhile. But he’s skeptical that WISeR is the way to do it.

“The trouble is, this is just a pretty ham-handed way to handle it,” said Silvers, who also worked as the president and CEO of an insurance company in the late ’90s.

One of his concerns is that the AI companies will have a financial incentive to deny procedures. Preferably, oversight would come from an independent set of fellow physicians who don’t have a financial incentive, he added.  

“When the insurance company is the one making the decisions, it’s an outside police force checking you out, and that makes it a controversial situation,” Silvers said. 

Silvers did say that using artificial intelligence could broaden the pool of data and information that companies draw on when deciding whether or not to approve a medical procedure. 

Others, like Moore, the owner of the Ohio Medicare Plan insurance agency, say they see the need to streamline the Medicare system as a way to ensure its longevity. Moore isn’t worried about the WISeR program drastically changing healthcare for Ohio Medicare recipients.

“The only people that should be concerned, again, are people that may be subject to one of these 17 types of outpatient services,” Moore said. “But again, they’re very limited.”

In his role as a Certified Medicare Insurance Planner, Moore works with residents turning 65 as they decide what insurance they want. Part of that is deciding between traditional Medicare or Medicare Advantage. Moore said people making this decision are often concerned about prior authorization if they decide to use Medicare Advantage.  

But once his clients do choose Advantage plans, Moore said he doesn’t hear from them about prior authorization issues.  

“If there was a concern or it was an issue, I would hear about it. Because my clients – which is in the thousands – would be calling me saying, ‘Brian I need prior auth. Brian, I’m mad about this. Brian, I didn’t get services,’” Moore said. “Well, guess what? I can’t remember the last time I’ve had one of those calls. Not one.”