Reimbursement

In a recent memo, the Biden administration clarified restrictions on the use of artificial intelligence in Medicare Advantage coverage decisions. Congress may also eventually weigh in on AI use in federal health insurance programs: The Senate Finance Committee on Feb. 8 held a hearing in which senators indicated they may tighten the rules on payer and provider use of AI, particularly in Medicare and Medicaid.

In its Feb. 6 memo, CMS sought to address questions it received after finalizing a rule last April that made technical changes to the MA program. The frequently asked questions (FAQ) document confirmed that “an algorithm or software tool can be used to assist MA plans in making coverage determinations,” but it also emphasized that plans must base coverage decisions “on the individual patient’s circumstances.” According to one D.C. insider, the rule may force plans to move faster to curb misuse of AI and algorithms in decision making.

Fixes for the beleaguered arbitration process set up as part of the No Surprises Act (NSA) have begun to circulate in recent months as the health care sector grapples with a daunting backlog of unresolved Independent Dispute Resolution (IDR) cases. Policy experts say that modest tweaks should fix most problems, despite denouncements of IDR from providers and some members of Congress, and they point out that the NSA seems to have achieved its primary goal of protecting patients from exorbitant, unexpected bills for out-of-network emergency care.

Still, there are problems with IDR in its current form, which is made clear by the large and growing backlog of undecided cases. According to a December report from the Government Accountability Office (GAO), parties submitted nearly 490,000 disputes between April 2022 and June 2023, closing only 38.6% of those cases. That means about 300,000 cases are still unresolved.

Although a “healthy minority” of states have the authority to conduct enhanced reviews of proposed premium rates — in which they evaluate the rates that health insurers negotiate with providers — just a small handful are doing so, according to a new analysis.

A variety of barriers are preventing state regulators from fully flexing their rate-review muscles, including industry opposition, according to one of the researchers who produced the analysis. And although that opposition historically has included insurers, there’s an argument to be made that the sector should change its tune.

“I think the health plans should embrace this kind of regulation, because when you look at the hospital sector and how increasingly consolidated it is, and how so many hospitals and health systems are using their market power to demand ever-higher reimbursement rates in the commercial market…health plans are really powerless to push back, because these hospitals are must-have participating providers” in health plan networks, says Sabrina Corlette, co-director of Georgetown University’s Center on Health Insurance Reforms (CHIR).

Self-funded health plans backed by large employers are expanding the amount and quality of behavioral health benefits available to their members, but a new report prepared by Milliman Inc. shows that those plans’ members will likely have a hard time using those benefits due to provider shortages. One expert says that to overcome entrenched, structural problems in behavioral health access, plan sponsors must employ creative solutions and be willing to boost reimbursement to behavioral health providers.

The Dec. 13 Milliman report indicates there is high demand and poor access to mental health care across the country, confirming what other research and anecdotal evidence has shown in recent years. Public health data compiled by the Centers for Disease Control and Prevention’s National Center for Health Statistics and analyzed by Milliman confirm that the most dire outcomes of untreated behavioral health conditions, deaths by suicide and overdose, respectively increased by 32% and 376% between 2001 and 2021.

The Lower Costs, More Transparency Act (H.R. 5378), which the U.S. House of Representatives passed on Dec. 11, contains several provisions that would impact health insurance companies such as the requirement that negotiated rates between payers and providers become public. Meanwhile, U.S. Sen. Mike Braun (R-Ind.) has proposed similar legislation that would amend the Public Health Service Act and provide for more health care price transparency.

Taken together with the implementation two years ago of transparency regulations for hospitals and insurers, the bills indicate “there’s a broad recognition that we’ve already moved forward in starting to make this data public, so let’s just improve that in a way that works,” according to Dania Palanker, assistant research professor at Georgetown University’s Center on Health Insurance Reforms.

While lawmakers continue to point fingers at risk adjustment and coding practices in Medicare Advantage for increasing plan payments relative to traditional fee-for-service (FFS) Medicare, a new analysis published in JAMA puts a spotlight on the “intended payment differences” created by the quartile structure currently used to set MA payment benchmarks. The Medicare Payment Advisory Commission (MedPAC) has previously recommended replacing the four-tiered system and “rebalancing” MA pay. Researchers now estimate that this system has generated an additional $46.7 billion in additional payments to MA plans, which could fuel the desire of progressive lawmakers to overhaul how MA plans are paid.

Established by the Affordable Care Act, the quartile system pays plans more for serving counties with the lowest FFS spending by applying a statutorily determined percentage to the per capita FFS estimates of spending for each county. The adjustments range from 95% for the highest-spending counties to 115% for the lowest-spending counties. Benchmarks are calculated before plans submit their bids and are also adjusted based on a plan’s Star Rating.

The outpatient prices Medicaid managed care insurers pay to hospitals vary considerably based on geography and type of service, according to a cross-sectional study published on Nov. 28 in JAMA Network Open. The authors examined publicly available data and noted the results suggest the prices could affect government health expenditures and access to care for Medicaid members.

However, Jeffrey Marr, a Ph.D. candidate at Johns Hopkins University and the study’s lead author, acknowledges the analysis “raises more questions than it answers” in part because the researchers could not determine the reasons for the variation. Two health care insiders tell AIS Health, a division of MMIT, that the study reinforces there are still questions related to the usefulness of the hospital price transparency rule that went into effect in 2021 and the various definitions for prices.

During UnitedHealth Group’s annual Investor Day, analysts focused largely on looming challenges for the firm’s Medicare Advantage business. Yet the company’s executives also revealed some intriguing details about new benefit designs gaining traction in the company’s commercial insurance book of business.

In reviewing the updated 2024 financial estimates that UnitedHealth released before its Nov. 29 Investor Day, Wells Fargo analyst Stephen Baxter advised investors that “we see higher-than-expected MLR [medical loss ratio] and more modest MA membership growth as items to pick at.”

In 2024, managed care organizations will have to manage more complex care coordination requirements and compliance with ambitious equity goals in many states — even as Medicaid programs have been forced to step up reimbursement rates across many care categories. That’s according to the 2023 edition of KFF's annual survey of state Medicaid officials, which was released on Nov. 14.

The overwhelming majority of states are increasing Medicaid reimbursement rates across many care categories. Forty-eight states increased rates for at least one care category in 2023, and 47 will do the same in 2024. Only 21 states implemented at least one rate restriction in 2023, and 19 expect to do so in 2024.

That means total state spending for the safety net health insurance program is likely to increase, despite the ongoing reduction in total enrollment due to the return of eligibility redeterminations. Medicaid spending per enrollee is likely to increase in 2024, KFF found, while total Medicaid spending growth in the surveyed states will likely be 8.3% in 2023, down from 9.8% in 2022.

In a proposed class action lawsuit filed in the U.S. District Court of Minnesota, UnitedHealth Group and its subsidiary, NaviHealth, are accused of using an artificial intelligence algorithm with a known error rate of 90% to systematically deny Medicare Advantage enrollees’ care. The lawsuit, filed by the estates of two deceased patients who were enrolled in a UnitedHealthcare MA plan and “on behalf of all others similarly situated,” alleges that the insurer continued to use its AI model to “wrongfully deny” and override physicians’ recommendations for post-acute care “because they know that only a tiny minority of policyholders (roughly 0.2%) will appeal claims, and the vast majority will either pay out-of-pocket costs or forgo the remainer of their prescribed post-acute care,” according to the complaint posted by STAT. The complaint follows and cites a STAT investigation of internal documents showing that NaviHealth employees were pressured to keep MA patients’ skilled nursing facility stays to targets developed by the nH Predict algorithm, or they would face disciplinary action. In a statement provided to STAT, UnitedHealth asserted that the NaviHealth tool is “used as a guide” but does not make coverage determinations.