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Artificial intelligence has the potential to become a major force in healthcare. The technology is evolving at a breakneck pace and both payers and providers are exploring potential apply cases, with one survey conducted in November showing that 73% of organizations plan to increasing your financial obligations to technology. However, since AI is so up-to-date, there are still a few knots to untangle.
One of the biggest nodes is reimbursement – specifically reimbursement for up-to-date AI-based devices and processes. Reimbursement is critical to improving access to advanced tools, but even for FDA-approved devices, the path to reimbursement for these technologies is unclear and snail-paced.
This, said Dr. Brit Berry-Pusey, could make it more challenging to adopt the latest AI devices.
Berry-Pusey is the chief operating officer of AI-powered cancer mapping startup Avenda Health. While Avenda managed to secure Medicare reimbursement for its products, it wasn’t an effortless journey as it was only the fifth artificial intelligence startup to achieve this milestone.
Currently, under the way the up-to-date device approval process is organized, it can take a full seven years from FDA approval to final reimbursement determination.
“The FDA has learned a lot about how to regulate products, and the government has learned how to pay for AI products,” Berry-Pusey said. “Unfortunately, the way reimbursement is set in the US discourages new technologies. If you’re really pushing the boundaries and creating something innovative, that means you have to start from scratch from a cost recovery standpoint.”
This can be a long process. The company starts by submitting an application, and applications are only accepted for four windows a year. It then moves on to a review where the panel votes yes or no on the product; after a “yes” vote, it takes about a year for the code to come into force. The company then goes through the payment process and all other information that needs to be submitted to the Centers for Medicare and Medicaid Services. Without a clear deadline, a company won’t know exactly when to expect a response from CMS.
This hypothetical AI company may get a provisional code for its product, but there is a ponderous burden of evidence that the technology works, even if the FDA has already given the green featherlight.
Providing additional evidence can be a challenge for startups and smaller players, Berry-Pusey said.
“It’s a lot of nuance and a lot of complications that don’t benefit people,” she said. “It can be challenging. It’s not effortless for petite businesses.”
Berry-Pusey is hopeful that things will improve, both because of AI’s potential to facilitate patients and because the industry is rapidly moving toward adopting the technology and increasing investment.
READY TO GROW
Last month’s Define Ventures survey detailed how true this is and found that three-quarters of health system leaders and insurance company executives they plan to invest more in artificial intelligence in the future.
Additionally, 73% of organizations have created governance structures that can align AI incentives with organizational values. The main areas of focus for these governance committees include identifying and prioritizing apply cases (91%), establishing ethics and security guidelines (87%), and establishing data policies (84%).
Both payers and providers see AI as a transformative force in healthcare, with 54% expressing confidence in its potential to transform the patient and physician experience over the next few years.
Thirty-three percent believe AI will lower health care costs, 9% believe it will improve quality of care, and 4% believe it will improve access. This helps explain why 76% of them are creating AI pilots that focus on small-scale projects to test the impact of AI before deciding to adopt it more broadly. Another 71% are in the process of identifying specific apply cases, indicating that while AI shows potential, leaders are still consciously considering its implementation.
At the same time, according to a study by Bain & Company and KLAS Research, three-quarters of US healthcare providers and payers increased their IT spending last year, with the main areas of investment being artificial intelligence, cybersecurity and IT infrastructure.
The report shows that AI implementation is gaining momentum, with 15% of providers and 25% of payers reporting an established AI strategy in 2024.
One application of AI in healthcare that has begun to emerge is to improve revenue cycle efficiency. September Guide analysis showed that almost half of healthcare leaders reported net collection efficiency of 93% or less, representing a significant opportunity to improve performance. Executives said their top priority for revenue cycle investments over the next 12 months is technologies such as artificial intelligence, automation and machine learning, although they were concerned about cybersecurity and the potential for ransomware attacks.
Statistics provided by TruBridge, an IT consultant and service provider, at the 2023 HFMA Annual Conference in Nashville showed that Potential savings of $9.8 billion through AI-powered automation in the revenue cycle. Nine percent of all applications are rejected in error or as a result of denial of prior authorization; 23.9% of refusals are due to eligibility issues.
Seventy-five percent of hospitals are working on an artificial intelligence strategy to address revenue cycle challenges, said Patrick Murphy, CEO of TruBridge and former CFO of an Alabama health system.
In March, the Congressional Budget Office looked at artificial intelligence and machine learning in health care and found that: the evidence for the usefulness of this technology is mixedespecially when it comes to costs.
CBO found that the practical application of these technologies remains inconsistent at this early stage. It said more empirical evidence would be needed before determining the overall impact on issues such as health care spending.
Still, AI adoption is gaining ground, with 15% of providers and 25% of payers reporting established artificial intelligence strategy in 2024, discovered Bain & Company and KLAS Research in September.
Major players in the healthcare industry are getting in on the action. This year only, Cleveland Clinic and the Novo Nordisk Foundation fired Cleveland Clinic-Denmark: Quantum-AI Biomedical Frontiers Fellowship program, which aims to integrate quantum technologies and artificial intelligence into biomedical research and patient care.
Meanwhile, Minnesota-based Mayo Clinic is launching a up-to-date one $10 Million Artificial Intelligence Education Program that will train staff and medical professionals to ethically implement the best artificial intelligence technology for patients as Up-to-date York’s Mount Sinai Health System opens Hamilton and Amabel James Center for Artificial Intelligence and Human Healthwhich deals with research and development of AI tools and technologies.
It is clear that the healthcare industry is banking on this technology. However, Berry-Pusey hopes that it will soon be easier for startups to innovate and enter the space.
FUTURE
Berry-Pusey said there are several different proposals for improving the reimbursement scenario for AI companies. One that floated a few years ago but didn’t pass gave special designation to groundbreaking devices. It would provide transient reimbursement for up to three years to facilitate products gather additional data and complete required standard processes.
According to Berry-Pusey, these were technologies that had already been approved by the FDA and had been proven to be safe and sound.
Another similar path has been proposed, but it would be restricted to five technologies per year and would not be of much facilitate to startups, Berry-Pusey said. So the reimbursement picture for AI startups is stuck in a strange state of limbo.
“I’m hearing rumors that Congress is considering something similar to the original proposal,” Berry-Pusey said. “Anything we can do to ensure patients have access to technology would be very beneficial, because unfortunately challenges around reimbursement contribute to inequities. Only patients who can pay out of pocket have access to the technology. Even patients who have great insurance or are covered by Medicare or private care don’t have access to technology unless they have access to cash.
According to Berry-Pusey, challenges or cost recovery will hinder some innovations in this space. Innovation still exists, but it may not be as quick and enticing as it could be if there was a clearer path, she added.
Still, helping others is a huge motivation and there are still companies like hers that are willing to face the challenges.
“It’s a really exciting time,” Berry-Pusey said. “I hope that more and more people who have the power and ability to change some of the obstacles we currently face will see the value and improve the process and the system.”
is the editor of Healthcare Finance News.
E-mail: jlagasse@himss.org
Healthcare finance news includes: HIMSS Media publication.