When health care is decided by algorithms, who wins?

I start with a personal story. My mother was a public school teacher in New York for many years. When she joined the school system, part of the deal was that when she retired, many of the costs of her traditional health insurance plans would be subsidized by her union and the city. So far, so good. However, now the city, in order to save money, is moving all of its retirees, including public school teachers, to a Medicare Advantage plan.

(If you don’t know what Medicare is, or the difference between traditional Medicare and Medicare Advantage, don’t worry — a lot of people don’t. I’ll explain in a moment.)

Retired NYC employees have switched to a Medicare Advantage plan — and many aren’t happy with it. Image: Erik McGregor/LightRocket via Getty Images

Many of the city’s retirees are unhappy with this change – and, in fact, have been fighting it in court for the past few years. For what? Because, among other things, Advantage plans give health insurance companies far more power to deny coverage — and those denials are based on predictive algorithmic tools rather than medical personnel.

So what is Medicare?

To understand Medicare Advantage, it can help to know a bit of background. (Stay with me, I hope that’s something you’ll need to know eventually.) and were generally considered too risky by private insurers. It was funded by taxes taken from employees’ paychecks and matched by employers. And with the current atmospheric increases in the price of health care, it has become a necessity for most seniors today.

Like all government programs, Medicare is complicated to say the least. Do you think you have trouble doing your annual taxes? Try to figure out how to deal with Medicare. There is Medicare A, which manages hospitalization, Medicare B, which manages payments to doctors (and has an annual fee), Medicare D, which manages drugs (and is also not free) and several others paid alphabet Medicare programs. But even with all the complications and extra costs, Medicare means that, if you’re lucky enough to last past 65, you should be able to afford to go to a doctor and get treatment.

Glassy eyes again? Wait – now we’ll get into Medicare Advantage and its algorithms.

As you can imagine, health insurance companies don’t like traditional health insurance. Although they manage Medicare B and other fee-based aspects of the program, they are limited by government regulations and rules on how much they can charge for services and their power over physician care recommendations. So in 1997, Medicare Advantage (also known as Medicare Part C) was created.

Medicare Advantage means that a private insurance company controls all parts of your Medicare benefits – the hospital part, the doctor part, the drug part, and all the other parts. Advantage has, well, advantages, at least initially – it costs you less than government programs, is easier to manage (because it’s a single entity), and it has all these really cool ads showing active, carefree gray hair people play golf, go on vacation, hug their grandkids – oh so glad they’ve turned the responsibility for their health care over to Big Health Insurance, Inc.

However, since an insurance company that administers your Medicare Advantage program has more control over payments, it may require you — and your doctors — to get pre-approved for just about anything except a checkup. And since the fewer procedures he has to pay for, the more profit he can keep, there is a strong incentive to refuse as many procedures as possible.

Who decides what care you need?

According to a recent report in the medical journal Stat, insurance companies have used these algorithmic tools — rather than doctors or other medically trained people — to determine whether patients enrolled in their Medicare Advantage programs are deserving of care. These tools are used, according to the report, “to determine the precise moment when they can stop payment for a patient’s treatment. The ensuing denials spark heated disputes between doctors and insurers, often delaying the treatment of seriously ill patients who are neither aware of the algorithms nor able to question their calculations. Because appeals challenging these denials can take months or even years to go through the necessary steps, some of these appeals may outlast the patient. Which certainly saves money.

And the ads for these tools aren’t shy about what they’re supposed to do. A brochure for nH Predict, one of the products used for this purpose, states: “Using the nH Predict tool, case managers now first determine whether lower levels of care can meet clinical needs patients and then recommend higher levels of care on an individual basis when medically necessary.

However, it now appears that the case managers mentioned in this quote apparently save time by skipping over the “individual” part and taking the tool’s recommendations at face value. Last year, the Center for Medicare Advocacy released a special report that stated, “Although most AI-based decision tools claim to offer only recommendations that are not intended to substitute for clinical judgment or medical or health insurance law, in the Center’s experience, users often implement tool recommendations without critical consideration of their impact on patients.

In other words, if your doctor thinks you need a procedure to, say, prevent you from having a stroke, and your insurance company’s algorithmic tool pops up saying you don’t don’t need this procedure (and therefore the insurance company may refuse payment for it), you have several choices. You can pay for the procedure, go into serious debt, and hope that you and your doctor can successfully challenge those denials. Or if you can’t afford to pay yourself, you can wait and hope your appeals are heard before you suffer that stroke.

Or there’s always GoFundMe.

It is not easy to take care of an elderly person or a relative. It will get worse if, when my mother needs medical attention in the future, I (and her doctor) have to fight an algorithm to find out if she deserves the prescribed care. I can’t wait to be there. And I’m not the only one facing this problem. There are many, many people whose parents are in Advantage plans who might one day be told that, according to the judgment of some unnamed statistical tool, the treatment their parents’ doctor says is needed — does not is not.

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