Making Sense of the ‘Rainfall’ of Health Policy Rules and Regulations in 2024, Part 1: AI, Utilization Management, and Interoperability

From artificial intelligence (AI) to private equity’s role in the healthcare industry, new federal regulations and private sector activities are developing at a fast pace in 2024.  

“We are seeing a rainfall of regulations right now,” says Julie Barnes, JD, Founder and CEO, Maverick Health Policy. “Regulations always become more common in a presidential election year.” 

To help healthcare leaders track and better understand those rules and regulations, Barnes and Maverick Health Policy Director Eric Schiavone, MPH, shared their insights during a Medecision webinar, Updates from Inside the Beltway: Analyzing Health Policy and Trends in an Election Year, on April 9, 2024.

This article, the first in a two-part series, examines what the Washington, D.C.-based advisors shared about AI, utilization management (UM), and interoperability.

Artificial Intelligence: Public and Private Developments
In late October of 2023, the White House issued an Executive Order on AI to advance the safety, security, privacy, and equity of AI, including for healthcare. Now, during the first part of 2024, several federal agencies, states, and private enterprises have made notable moves in the AI realm. 

Update on White House AI Executive Order

At the end of April, to meet the requirements of the AI EO, the U.S. Department of Health and Human Services (HHS) issued the Section 1557 Final Rule, wherein HHS updated the Affordable Care Act’s nondiscrimination protections to clarify that the principles apply to the use of AI, clinical algorithms, predictive analytics, and other tools. Schiavone says that the rule applies to any clinical decision support tool used at the patient level, tools used at a group or population level with respect to healthcare administration decisions, such as treatment protocols, and tools used for prior authorization of medical necessity analysis. 

HHS also published a plan for promoting responsible use of AI by State, Tribal, Local, and Territorial (STLTs) Governments in public benefit administration. The plan provides recommendations to STLTs for selecting, designing, governing, and ultimately managing AI in administering public health benefits, including Medicaid, CHIP, and state marketplaces.

“Since the plan consists of mostly voluntary recommendations, the plan primarily serves to signal that there will be scrutiny and rulemaking to ensure that AI does not lead to disparities,” Schiavone says. 

Other federal agencies decided to join the party of scrutinizing AI in healthcare. The Department of Justice said it will scrutinize the healthcare industry’s use of AI – specifically that which is embedded in patient records, like clinical decision support. The DOJ is specifically looking into AI’s role in facilitating violations to kickbacks and false claims.

In a similar move of scrutinizing when algorithms tell humans to take actions, in February CMS warned health plans that, to be compliant with federal regulations, any algorithms used to determine coverage must be based on an individual’s medical history or a physician’s recommendations or clinical notes – not a larger data set.  

Despite these activities, state governments do not believe the federal government is moving quickly enough to regulate AI. So, Alaska, Colorado, Connecticut, Georgia, Texas, and Virginia are undertaking initiatives to address AI because of that federal inaction. 

Private sector players are also joining forces to help educate Congress, notably the Coalition for Health AI (CHAI). According to its newly appointed CEO, CHAI expects to facilitate a nationwide health AI assurance labs network, reaching approximately 30 labs this year, that will apply best practices for testing health AI models and disseminate those widely.

Further, Microsoft and several health systems launched TRAIN (Trustworthy & Responsible AI Network) to develop AI principles that improve the quality, safety, and trustworthiness of AI. And the Consumer Technology Association (CTA) convened healthcare stakeholders — AHIP, CHAI, Digital Medicine Society, BCBSA, and others — to educate Congress about health AI. 

 

Utilization Management: Increased Scrutiny Causing Unfavorable Conditions 

The major UM storyline of 2023 involved large, national payers using algorithms to deny necessary care. The scrutiny that narrative drew led many health plans to reduce their prior authorization codes and update their requirements, Schiavone says. 

In 2024, the scrutiny continues. The CMS Contract Year 2025 Medicare Advantage and Part D Final Rule requires Medicare Advantage plans to have UM committees with at least one member who brings health equity expertise. Plans also must conduct an annual health equity analysis of prior authorization policies to “identify any disproportionate delay or denial of access to needed care for enrollees who have a disability or limited income and resources,” according to CMS. 

“That scrutiny is leading to some pretty unfavorable market conditions,” Schiavone says. 

As a result, some health plans have had to layoff sizable numbers of clinical review coordinators, client service account managers, and provider relations representatives — all the people who would otherwise be employed if there was a healthy business for utilization management review.

 

Interoperability: Moving Behavioral Health into the Front Seat
It is well-known that CMS finalized the Interoperability and Improving Prior Authorization Final Rule in January 2024, which will fundamentally change how health plans interact with health providers on coverage requests. The rule requires three new APIs: the Prior Authorization API, the Payer-to-Payer API, and the Provider Access API. 

What has been discussed less in the interoperability conversations is how behavioral health is now taking a front seat in health IT. The Substance Abuse and Mental Health Services Administration (SAMHSA) and the Office of the National Coordinator for Health IT (ONC) launched the Behavioral Health Information Technology Initiative to invest more than $20 million over the next three years to support the HHS roadmap for behavioral health integration.

“That initiative is going to identify and pilot a set of behavioral health data elements,” Schiavone says. “Ultimately, SAMHSA and ONC are working to improve the effectiveness and reduce the cost of data capture, use, and exchange for behavioral healthcare providers.” 

Agencies are Doubling Down on FHIR and APIs

ONC also released a draft of its 2024-2030 Federal Health IT Strategic Plan, which primarily focuses on using technology to improve health outcomes. Part of that is ensuring access to algorithmic transparency data and interoperability, and decreasing health disparities. 

Additionally, ONC issued version 2 of the Trusted Exchange Framework and Common Agreement (TEFCA), which includes updates that require all Qualified Health Information Networks (QHINs) participating in TEFCA to support FHIR APIs for data exchange. 

Part 2 of this series focuses on digital health, cybersecurity, data privacy, private equity (PE) and merger and acquisition activity.

 

Watch Playback

Read the article reporting on the previous webinar in our monthly series, Rethinking Care Management: Lessons from Banner|Aetna, Elevance, and Medecision, on the Medecision blog. Watch our entire webinar series here.

 

Acknowledgments

We extend our thanks to Maverick Health Policy’s Julie Barnes and Eric Schiavone. Their expertise and insight have been critical in our effort to turn complex federal policy into practical, innovative solutions, helping Medecision’s customers confidently navigate the ever-changing healthcare landscape.