Beginning next year, in a pilot program being tested in six states – including Washington State, home to Life Point Law and AgingOptions – people enrolled in traditional Medicare will be faced with the requirement to get advanced approval, called prior authorization, for some procedures. Federal officials will contract with private firms who will use tools driven by artificial intelligence to screen requests and either approve or deny treatment. 

Officials at CMS – the Centers for Medicare and Medicaid Services – claim that the six-year pilot project is designed to weed out fraud and abuse, and is focused on tests and procedures with dubious health outcomes. Opponents of the plan worry that the end result will be to make traditional Medicare plans more like Medicare Advantage plans, which are regularly criticized for their burdensome prior authorization requirements, often leading to denial of care. 

We read about this surprise development (a surprise to us at the Blog, at any rate) in an article published this week by the New York Times. Reporters Reed Abelson and Teddy Rosenbluth collaborated on the article. (Please note that a subscription may be required to read the report online.) 

Many Choose Higher-Cost Medicare Plans to Avoid Insurance Battles 

In their New York Times article, Abelson and Rosenbluth introduce us to 74-year-old retiree Frances Ayres as a typical Medicare beneficiary. Faced with a choice when picking health insurance, says the Times, Ayres could “pay more for traditional Medicare, or opt for a plan offered by a private insurer and risk drawn-out fights over coverage.” She chose the former. 

The issue pits Medicare Advantage plans against traditional Medicare plans. Under Medicare Advantage, says the article, “[p]rivate insurers often require a cumbersome review process that frequently results in the denial or delay of essential treatments that are readily covered by traditional Medicare. This practice, known as prior authorization, has drawn public scrutiny, which intensified after the murder of a UnitedHealthcare executive last December.” 

Could Prior Authorization Be Coming to Traditional Medicare? 

According to the New York Times, many enrollees have done what Ms. Ayres did. Because “she wanted to avoid the hassle” of prior authorization requirements under Medicare Advantage – private insurance plans financed by the federal government – she chose the traditional route. “Now,” say the reporters, “she is concerned she will face those denials anyway.” 

Abelson and Rosenbluth write, “The Centers for Medicare and Medicaid Services plans to begin a pilot program that would involve a similar review process for traditional Medicare, the federal insurance program for people 65 and older as well as for many younger people with disabilities.” The pilot program was announced by CMS in a late-June press release. 

“People enrolled in traditional Medicare who live in Arizona, New Jersey, Ohio, Oklahoma, Texas and Washington State will be included in the experiment, which is expected to start in January and last for six years,” the New York Times reports. 

Private Firms Will Use Artificial Intelligence to Screen Coverage 

In their article, Abelson and Rosenbluth describe how the program will work. 

“The federal government plans to hire private companies to use artificial intelligence to determine whether patients would be covered for some procedures, like certain spine surgeries or steroid injections,” they write. The reporters also note that similar AI-based algorithms used by insurers have been the subject of several high-profile lawsuits accusing firms, including UnitedHealthcare, of employing AI technology to “swiftly deny large batches of claims and cut patients off from care in rehabilitation facilities.” 

Contractors Will Have Financial Incentive to Deny Coverage 

Opponents of the plan are already concerned that contracting companies will make decisions based on profit, not medical need. 

“The AI companies selected to oversee the program would have a strong financial incentive to deny claims,” warns the New York Times. “Medicare plans to pay them a share of the savings generated from rejections.” 

Initially, say the reporters, the prior authorization screening tool will “focus narrowly on about a dozen procedures, which it has determined to be costly and of little to no benefit to patients. Those procedures include devices for incontinence control, cervical fusion, certain steroid injections for pain management, select nerve stimulators and the diagnosis and treatment of impotence.” 

CMS: Hospital Stays and Emergency Care Will Not be Reviewed 

“Abe Sutton, the director of the Center for Medicare and Medicaid Innovation, said that the government would not review emergency services or hospital stays,” says the article. Instead, he says the focus is on practices that were particularly expensive or potentially harmful to patients. Sutton added that CMS may add or subtract to the list of treatments it has slated for review depending on what treatments it finds are being overused.  

Opponents Call the Program “Back Door to Privatization” 

Opponents of the plan are worried that this test program will open the door to a radical change in the nature of Medicare. “[W]hile experts agree that wasteful spending exists,” Abelson and Rosenbluth write, “they worry that the pilot program may pave the way for traditional Medicare to adopt some of the most unpopular practices of private insurers.” 

The reporters note that many Democratic lawmakers have voice their opposition to the new CMS program, officially called the Wasteful and Inappropriate Service Reduction Model. They are joined by former Medicare officials, physician groups, and many patients. “I think it’s the back door into privatizing traditional Medicare,” Ms. Ayres told the Times. 

Financial Incentives Pit Insurers Against Clinicians 

The New York Times reporters spoke with Dr. Vinay Rathi, an Ohio surgeon and an expert in Medicare payment policy. Rathi “warned that the experiment could recreate the same hurdles that exist with Medicare Advantage, where people enroll in private plans. ‘It’s basically the same set of financial incentives that has created issues in Medicare Advantage and drawn so much scrutiny,’ he said.”  

The incentive model puts insurers – or, in this case, CMS – directly at odds with clinicians. 

Artificial Intelligence Models Scan Records to Make Recommendations 

As noted above, many private insurers already use artificial intelligence tools to approve or deny claims. 

“Typically,” says the New York Times, “these AI models scan a patient’s records to determine if a requested procedure meets an insurer’s criteria. For instance, before authorizing back surgery, the system might search for proof that a patient first tried physical therapy or received an MRI showing a bulging disc.”  

The article adds, “Insurers defend these tactics as being effective in reducing inappropriate care, such as by preventing someone from getting back surgery at tremendous cost instead of another treatment that would work just as well.” 

Companies say they use human employees the final stages of the review process. In a similar vein, CMS says any denials would be done by “an appropriately licensed human clinician, not a machine.” CMS claims that contractors making “inappropriate decisions” regarding care could be penalized. 

Applying the Worst Feature of MA to Traditional Medicare  

Because they offer the concept of simplicity and extra benefits with lower premiums, Medicare Advantage plans have become America’s most popular Medicare option. But there’s a catch. 

“Private plans under Medicare Advantage have become increasingly popular,” Abelson and Rosenbluth write, “with a little more than half of older Americans and people with disabilities eligible for the program and some 34 million enrolled. But many, like Ms. Ayres, are willing to forgo some of the additional benefits the private plans offer, like dental checkups and gym memberships, to avoid having to jump through numerous hoops to get care.” 

Neil Patil, a senior fellow at Georgetown and a former senior analyst at Medicare, finds the action by CMS baffling. He told the New York Times, “It’s really surprising that we are taking the most unpopular part of Medicare Advantage and applying it to traditional Medicare.”  

In a mid-July letter to CMS, the American Medical Association called prior authorization “one of the most burdensome and disruptive administrative requirements they face in providing quality care to patients.” The letter cites the patient appeal process, which, while often successful, creates potentially dangerous delay in providing care. Many patients never appeal. 

Doctors and Patients Fear CMS Is on a “Slippery Slope” 

Ohio physician Dr. Rathi shares the concern of many that CMS may start with questionable procedures – “low-hanging fruit,” he calls them – only to expand the list of services requiring prior authorization if the program leads to real savings. 

“You’re kind of left to wonder, well, where does this lead next?” Rathi told the New York Times. “You could be running into a slippery slope.” 

Unfortunately, the article adds, insurers won’t reveal exactly how they make their decisions regarding prior authorization, leading to confused patients and frustrated physicians. 

Prior Authorization Contractors: a New Type of “Bounty Hunter” 

The final point in the New York Times article concerns the identity of the contractors who will be using AI tools to approve or deny requests for prior authorization. According to the article. An HHS spokesman declined to identify which companies had submitted applications for the contract. 

“Contractors hired by the government are supposed to watch over payments to ward against inappropriate or wasteful coverage,” say Abelson and Rosenbluth. “Those reviews generally happened after someone had received a treatment, though the Biden administration instituted a modest pre-approval program that did not use AI.” 

The issue, says the article, is money. “The new model relies on an additional set of private companies for traditional Medicare that have a very clear incentive to deny care,” the Times concludes. 

David Lipschutz of the Center for Medicare Advocacy, a strong opponent of the plan, says these companies represent “a whole new bounty hunter.” CMA has urged government officials to abandon the pilot program. 

Here at the Blog, we’ll keep you informed about this developing story. 

Rajiv Nagaich – Your Retirement Planning Coach and Guide 

The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public. Retirement: Dream or Disaster joins Rajiv’s ground-breaking DVD series and workbook, Master Your Future, as a powerful planning tool in your retirement toolbox. As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.  

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read. 

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more. 

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.  

Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important message. And remember, Age On, everyone! 

(originally reported at www.nytimes.com)