HHS takes first stab at AI regs

Dec 14, 2023

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A doctor looks at an x-ray on a screen using AI technology

HHS has developed new transparency rules for artificial intelligence-aided software used by clinicians. | Damien Meyer/AFP via Getty Images

WHAT YOU NEED TO KNOW ABOUT AI RULES — HHS finalized sweeping new regulations requiring more transparency on artificial intelligence used in clinical settings to help providers avert potential risk, Ben reports.

The regulations will apply to clinicians who use decision-support software that’s HHS-certified. The overwhelming majority of hospitals and doctor’s offices nationwide use such software.

The regulations, from the Office of the National Coordinator for Health IT, fulfill requirements under President Joe Biden’s recent AI executive order and offer clarity on how algorithms work.

Here are five takeaways from the final rule:

1. They have a market-based approach.
ONC head Micky Tripathi said at a House Energy and Commerce hearing Wednesday that he hopes transparency and market forces will incentivize good AI practices. “We believe there will be a race to the top,” Tripathi said, arguing providers will be able to compare AI tools and exercise caution.

2. They leave decisions up to clinicians.
The regulations leave it up to users to judge their quality. Clinicians will have a “learning curve” to evaluate whether algorithms are trustworthy, ONC official Jeffery Smith said. However, he said the regulations allow leeway on how the information is presented to clinicians.

3. They’ll reveal lots of information.
AI tool makers must disclose information on how the software works and was developed. Software developers must let customers know how representative the AI’s training data is, how they attempted to mitigate bias and how the software was externally validated. Also, they’ll have to reveal how they monitor performance over time.

4. They don’t apply to in-house AI.
The rules don’t apply to AI tools that health systems have crafted, a practice that’s become common, though ONC officials said more transparency is welcome.

5. The Biden administration is ahead of Congress.
Congress is far from big legislation on AI in health care, with key lawmakers previously telling POLITICO that they’re still learning more about the technology.

ONC’s rules will go into effect by the end of 2024. The FDA also began regulating AI, and ONC said it worked with the agency to align regulations to reduce the burden for developers.

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A message from PhRMA:

Middlemen like PBMs are charging fees tied to the price of medicines, which means they make more money when the price of a medicine goes up. This business model allows PBM profits to soar and can lead to higher costs for patients. It’s time to lower costs by holding middlemen accountable.

SURPRISE BILLING

David White, who after kidney surgery got hit with a lot of extra charges, sits for a portrait with some of his medical bill charges.

Regulators have received nearly half a million requests to resolve disputes between health providers and insurers over surprise medical bills between April 2022 and June 2023. | Jacquelyn Martin/AP

SURPRISE BILLING OVERLOAD — In a new report, the Government Accountability Office reveals the number of disputes between providers and insurers over so-called surprise medical bill payments — and it’s massive, POLITICO’s Megan R. Wilson reports.

Regulators received nearly 490,000 payment-dispute requests from April 2022 through June 2023 — about 20 times more than they estimated.

The disputes stem from the No Surprises Act, which bans providers from hitting patients with high-cost medical bills if they unwittingly receive care from out-of-network doctors or hospitals. If providers and insurance companies can’t agree on how much insurers will pay, the dispute goes to an independent resolution process.

Services provided in emergency rooms prompted the highest percentage of dispute resolution requests — 73 percent of the disputes in the second quarter of 2023, according to the most recent data available. Inpatient hospital stays triggered 16 percent of the dispute requests.

The GAO report found that, in the first half of this year, providers prevailed in 77 percent of disputes in which a payment determination was reached.

Both providers and insurers told GAO they believe the process — which has drawn several legal challenges — is flawed, open to bias and marred by a lack of consistency in the decisions arbitrators hand down. They’re also pointing fingers at each other as the drivers of the complaints.

According to the GAO report, 61 percent of the disputes remained unresolved as of June 2023.

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VETERANS' HEALTH

VA SUPPLIES MISMANAGED — A Denver-based logistics center operated by the Department of Veterans Affairs failed to keep track of millions of dollars worth of supplies for VA hospitals and patients, a VA Office of Inspector General audit has found.

According to the audit, the center’s inventory records didn’t match up with the supplies on hand. Additionally, the center didn’t have a good system for protecting inventory data — with its software system having security vulnerabilities and a lack of transparency.

Why it matters: The OIG report said the lack of oversight over the center’s VA-owned goods — including sleep apnea supplies, nebulizers and iPhones — means a failure in its mission to quickly get supplies to patients and their families.

According to the report, the VA agreed with 11 recommendations from the OIG to improve inventory management, including properly recording all sleep apnea supplies, developing formal training for staff and conducting an independent, multiyear audit of the center.

A message from PhRMA:

PHARMA WATCH

CMS WARNS PBMS, INSURERS ON REIMBURSEMENT — CMS is calling out pharmacy benefit managers and insurers to ensure independent pharmacies are adequately reimbursed for administering vaccines and other drugs.

The agency sent a letter on Wednesday surrounding concerns about the sustainability of independent and small pharmacies. The letter comes a day after the House passed a major health care package that included reforms to PBMs, which are third-party groups that negotiate prescription drug prices for health insurers.

CMS worries that PBMs and Medicaid managed care plans are reimbursing pharmacies too low for some vaccine administrations.

“CMS is very concerned about payment practices that may impede access to recommended vaccinations, and it is imperative that plans and PBMs take immediate steps to ensure adequate payment for and access to vaccines,” the letter said.

It also warned PBMs and plans of anticompetitive behavior of steering patients toward their own pharmacies. CMS said it’s closely monitoring compliance with any network adequacy standards and other requirements.

“We urge plans and PBMs to engage in sustainable and fair practices with all pharmacies — not just pharmacies owned by PBMs,” the letter said.

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Health Costs

HEALTH CARE SPENDING INCREASES 4.1 PERCENT — National health care spending rose between 2021 and 2022 — reaching $4.5 trillion, or an increase of 4.1 percent, according to an analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services published Wednesday in Health Affairs.

The growth reflects a return to pre-pandemic levels: From 2016 to 2019, the average annual growth was 4.4 percent. The share of the overall U.S. economy devoted to health care in 2022 was lower for the second year at 17.3 percent, down from 19.5 percent in 2020.

The 2022 growth in health care spending was faster than the 3.2 percent growth in 2021 but much slower than the 10.6 percent growth during the height of the Covid pandemic in 2020.

Strong growth in Medicaid and private insurance spending in 2022 was offset by continued declines in supplemental funding the federal government provided in response to the pandemic, according to the analysis.

“This pattern reflects the volatility tied to the Covid-19 pandemic and the significant response by the federal government,” Micah Hartman, a statistician in the CMS Office of the Actuary and the lead author of the Health Affairs analysis, said during a press briefing Wednesday.

The insured share of the population reached a historic high in 2022 at 92 percent. The number of uninsured people fell by about 1.9 million, while Medicaid enrollment increased by 6.1 million, marketplace enrollment increased by 1.7 million and employer-sponsored insurance enrollment increased by 1.5 million.

Names in the News

Maria Ghazal has been selected as president and CEO of the Healthcare Leadership Council. She previously was senior vice president and counsel at Business Roundtable.

Adam Broder has joined the Federation of American Hospitals as its senior vice president, executive affairs. He previously was managing director in public affairs at FTI Consulting.

WHAT WE'RE READING

POLITICO’s Josh Gerstein and Alice Miranda Ollstein report on SCOTUS’ plans to decide on the abortion pill.

POLITICO’s Arek Sarkissian reports on a trial in Florida over gender-affirming care.

Bloomberg reports that hospitals are being hit with “out-of-control” costs.

A message from PhRMA: