The Contract Year 2026 Policy and Technical Changes (CMS-4208-P) proposed by the Centers for Medicare & Medicaid Services (CMS) outlines significant updates aimed at improving the Medicare Advantage (MA) Program, Medicare Prescription Drug Benefit Program (Part D), Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly (PACE). This comprehensive proposal includes numerous initiatives to enhance equity, transparency, and patient outcomes, with a particular focus on the evolving role of Artificial Intelligence (AI) in healthcare.
AI in Medicare Programs: Opportunities and Risks
As AI becomes increasingly integrated into healthcare systems, it has the potential to revolutionize care delivery by improving diagnostics, enabling personalized medicine, and streamlining administrative processes. However, CMS recognizes that these advancements come with risks, particularly regarding fairness and equity.
1. Addressing Bias in AI Algorithms
AI systems often rely on historical healthcare data, which may include biases resulting from disparities in treatment or systemic inequities. CMS is proactively addressing this issue by proposing guidelines to ensure that AI tools used in MA and Part D programs are transparent, ethical, and do not perpetuate discriminatory practices. For instance:
- Training AI on Diverse Datasets: CMS encourages the use of comprehensive datasets that represent diverse populations to reduce biases in algorithmic outcomes.
- Accountability and Transparency: Plans must demonstrate how AI tools support equitable care and disclose how these systems operate.
2. Ensuring Equitable Access to AI-driven Care
CMS emphasizes that AI should enhance, not hinder, access to healthcare. To that end:
- Safeguards Against Discrimination: Proposed policies require Medicare Advantage plans to ensure that AI-driven decisions—such as those involved in clinical recommendations or resource allocation—do not result in unequal treatment.
- Equity in Implementation: AI technologies must undergo rigorous testing and review to ensure they align with CMS’s broader goals of reducing health disparities among Medicare beneficiaries.
AI in Prior Authorization and Utilization Management
One of the critical areas where AI is being utilized is in prior authorization and utilization management processes within MA plans. While AI can improve efficiency by automating these processes, concerns remain about its potential to create barriers to care.
1. Enhancing Prior Authorization Practices
CMS has observed high rates of overturned denials during appeals, indicating flaws in initial decision-making processes. AI is often used to support these decisions, and the new rule proposes:
- Guardrails for AI in Prior Authorization: Plans must establish transparent criteria for coverage decisions, ensuring that AI algorithms are not disproportionately denying necessary care.
- Human Oversight: CMS mandates that human clinicians remain actively involved in decision-making, especially in complex or nuanced cases where AI may lack contextual understanding.
2. Defining “Internal Coverage Criteria”
CMS aims to clarify how MA plans use internal coverage criteria—standards set by plans that may differ from CMS or national guidelines. Any AI tools used must adhere to these clarified definitions to prevent inconsistencies in care delivery.
Broad Policy Enhancements Beyond AI
In addition to addressing AI, the proposed rule includes other updates to strengthen Medicare programs:
- Quality Measures Alignment: CMS proposes aligning quality metrics across Medicare programs to improve consistency and transparency in performance evaluations.
- Improved Beneficiary Protections: New policies aim to streamline appeals processes, enhance communication with beneficiaries, and reduce administrative burdens on patients and providers.
Encouraging Public Participation
CMS invites all stakeholders, including healthcare professionals, technology developers, patient advocacy groups, and beneficiaries, to provide feedback on the proposed rule. Comments can be submitted until January 27, 2025, and CMS will incorporate this feedback to refine the final policies.
The proposed policies mark a significant step toward ensuring that technological advancements in healthcare benefit all Medicare beneficiaries. By addressing the potential risks associated with AI and enhancing transparency in decision-making processes, CMS aims to create a healthcare ecosystem where innovation and equity coexist.
This rule is part of CMS’s broader strategy to modernize healthcare delivery and prepare for a future where AI and other advanced technologies play a central role in improving outcomes. As these tools become more prevalent, establishing ethical guidelines now will be crucial to achieving sustainable and equitable healthcare improvements.
If you’d like to explore the official documentation or provide comments, visit the CMS Fact Sheet.
