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Artificial intelligence is poised to become a major force in healthcare. The technology is developing at breakneck speed, and payers and providers are examining potential use cases. A November survey shows that 73% of organizations are considering doing so. increase their financial commitments to technology. But because AI is so new, there are still some knots to untangle.
One of the biggest nodes is refund – specifically, reimbursement for new 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 slow.
This, said Dr Brit Berry-Pusey, can hinder the adoption of the latest AI devices.
Berry-Pusey is the chief operating officer of start-up Avenda Health, which specializes in AI cancer mapping. Although Avenda was successful in getting its products reimbursed by Medicare, it was not an easy journey, as it was only the fifth AI startup to reach this milestone.
Currently, depending on how the approval process for new devices is set up, it can take a full seven years from FDA customs clearance and reimbursement time are definitively established.
“The FDA has learned a lot about how to regulate products, and the government has learned about how to fund AI products,” Berry-Pusey said. “Unfortunately, the way reimbursement is set up in the United States discourages new technologies. If you really push the boundaries and create something new, that means you have to start from scratch from a reimbursement perspective.”
This can be a long process. A company begins by submitting an application, with applications only accepted during four windows per year. It then heads to a review, during which a panel votes yes or no on the product; after a positive vote, it takes about a year for the code to come into force. Next, the company follows the payment process and all other information that must be submitted to the Centers for Medicare and Medicaid Services. Without a clear timeline, the company will not know exactly when it can expect a response from CMS.
This hypothetical AI company can get a temporary code for its product, but there is a heavy burden of proof that the technology works, even if the FDA has already given the green light.
Providing additional evidence can be difficult for startups and smaller players, Berry-Pusey said.
“It’s a lot of nuance and a lot of complications, and it doesn’t benefit people,” she said. “It can be a challenge. It’s not easy for small businesses.”
Berry-Pusey hopes the situation will improve, both because of AI’s potential to help patients and because the industry is rapidly moving toward adopting the technology — and increasing its investments.
READY TO GROW
A Define Ventures survey last month detailed the extent to which this is true, finding that three-quarters of health system and insurance executives plan to invest more in AI in the future.
Additionally, 73% of organizations have established governance structures that can align AI incentives with organizational values. The main focus areas of these governance committees include identifying and prioritizing use cases (91%), establishing ethics and security guidelines (87%), and defining data policies (84%).
Payers and providers both view AI as a transformative force in healthcare, with 54% expressing confidence in its potential to reshape the patient and clinician experience over the next few years. years.
Thirty-three percent think it will reduce health care costs, 9% think it will improve the quality of care, and 4% think it will improve access. This partly explains why 76% of them are implementing AI pilot programs focused on small-scale projects to validate the impact of AI before committing to broader adoption. 71% of them are in the process of identifying specific use cases, indicating that while AI shows potential, executives are still considering its implementation.
At the same time, three-quarters of U.S. healthcare providers and payers increased their IT spending last year, with artificial intelligence, cybersecurity and IT infrastructure among the top areas of investment, according to a study by Bain & Company and KLAS Research.
AI adoption is gaining traction, with 15% of providers and 25% of payers reporting having an established AI strategy in 2024, the report said.
One use case for AI in healthcare that has started to emerge is improving revenue cycle performance. A guide to September analysis showed that nearly half of healthcare leaders reported a net collection yield of 93% or less, representing a significant opportunity to improve performance. Executives said their biggest revenue cycle investment priority over the next 12 months is technology, such as AI, automation and machine learning, although they are concerned by cybersecurity and the potential for ransomware attacks.
Statistics provided by TruBridge, IT consultant and service provider, at HFMA annual conference in Nashville in 2023 revealed that there were $9.8 billion in potential savings through AI-driven automation in the revenue cycle. Nine percent of all claims are rejected in error or as a result of a denial of prior authorization; 23.9% of refusals are due to eligibility problems.
Seventy-five percent of hospitals are working on an AI strategy to address revenue cycle challenges, said Patrick Murphy, chief executive of TruBridge and former CFO of a health system in Alabama.
In March, the Congressional Budget Office looked into AI and machine learning in healthcare and determined that evidence on the technology’s usefulness is mixedparticularly with regard to costs.
The practical application of these technologies is still inconsistent at this nascent stage, OC determined. He said he would need more empirical evidence before determining the overall effect on things like health care spending.
Despite this, AI adoption is gaining ground, with 15% of providers and 25% of payers reporting established AI strategy in 2024, founded Bain & Company and KLAS Research in September.
The main players in the health sector are mobilizing. Just this year, Cleveland Clinic and the Novo Nordisk Foundation spear the Cleveland Clinic-Denmark: Quantum-AI Biomedical Frontiers Fellowship Program, dedicated to the integration of quantum technologies and AI in biomedical research and patient care.
Meanwhile, based in Minnesota Mayo Clinic launches a new $10 million artificial intelligence education program which will train staff and healthcare professionals to deploy the best AI technology, ethically, for patients, while the Mount Sinai Health System in New York opens the Hamilton and Amabel James Center for Artificial Intelligence and Human Healthwhich is dedicated to the research and development of AI tools and technologies.
Clearly, the healthcare industry relies on technology. But Berry-Pusey hopes it will soon be easier for startups to innovate and establish themselves in this field.
THE FUTURE
There are different proposals to improve the reimbursement scenario for AI companies, Berry-Pusey said. The one that was launched several years ago, but not adopted, would have given a special designation to the revolutionary devices. It would have provided a temporary refund of up to three years to help products accumulate additional data and follow required standard processes.
According to Berry-Pusey, these would be technologies already approved by the FDA and whose safety has been demonstrated.
Another similar path has been proposed, but it would be limited to five technologies per year and would not be of much help to startups, Berry-Pusey said. So the reimbursement situation 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 extremely beneficial, because unfortunately, reimbursement challenges contribute to inequities. The only patients who have access are those who can pay from my pocket. Even patients who have good 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 reimbursement will hinder some innovation in this area. There is still innovation happening, but it may not be as rapid or as attractive as it could be if there was a clearer path, she said.
Still, helping others is a great motivation, and there are still businesses like his that are ready to take on the challenges.
“It’s a really, really exciting time,” Berry-Pusey said. “I hope that more and more people who have the power and ability to overcome some of the obstacles we currently face will see the value and improve the process and the system.”
Jeff Lagasse is editor-in-chief of Healthcare Finance News.
E-mail: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.