CMS Addresses Use of AI by Medicare Advantage Plans

In a Feb. 6 FAQ memo, the Centers for Medicare & Medicaid Services (CMS) clarified that Medicare Advantage organizations may use algorithms, artificial intelligence, and related technologies to assist in making coverage determinations, but these technologies may not override standards related to medical necessity and other applicable rules for how coverage determinations by Medicare Advantage organizations are made. The FAQ states that “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.” For example, insurers may not use AI to determine whether to cover an inpatient hospital admission without considering factors specific to each patient. The memo also clarifies other policies, including use of prior authorization, utilization management tools, and basic benefits that were finalized in the Medicare Advantage Contract Year 2024 final rule.