Health Plan Weekly

With artificial intelligence and big data tools proliferating across the health insurance sector — and lawmakers struggling to keep pace with AI's rapid development — regulators are developing rules and procedures that will govern their approach to insurance AI in the years to come. According to experts, a draft regulatory letter and comments by top state insurance officials indicate that regulators will hold insurers accountable for any AI-driven missteps — which could include exacerbating health disparities, or problems with clinical review and prior authorization — even if the AI tools driving the decision are designed and maintained by third-party vendors. 

The model regulatory letter says that “insurers are expected to adopt practices, including governance frameworks and risk management protocols, that are designed to assure that the use of AI Systems does not result in: 1) unfair trade practices…or 2) unfair claims settlement practices.” The letter was developed by insurance regulators from multiple states collaborating as part of the National Association of Insurance Commissioners (NAIC) and does not carry any legal force unless issued by a given state insurance regulator. 

Fixed indemnity insurance plans — which pay a set amount when a policyholder is hospitalized or has another major medical event — are facing heightened scrutiny amid concerns that people who buy these policies mistakenly believe that they’re comprehensive health insurance.  

The health insurance industry’s largest trade group, however, argues that fixed indemnity products play an important role in the marketplace and that newly proposed restrictions on those plans will have costly consequences. 

“Every American deserves access to affordable, comprehensive, high-quality coverage and care. But the costs associated with getting sick or recovering from an injury continue to escalate year after year,” AHIP says in an Aug. 14 post on the group’s website. Fixed indemnity products address that problem by “helping cover out-of-pocket costs for specified services and other expenses during a time of serious illness, or following an injury,” the post states.  

When the Biden administration celebrated the one-year anniversary of the Inflation Reduction Act on Aug. 16, the focus — from a health care perspective — was largely on the IRA’s unprecedented drug pricing reforms. While those provisions are important to the health insurance industry, the sector has also seen an overwhelmingly positive impact from the law’s extension of beefed-up subsidies for Affordable Care Act exchange enrollees. 

“We at ACHP and all of our members worked incredibly hard to get the health care provisions of the Inflation Reduction Act passed,” Alliance of Community Health Plans (ACHP) President and CEO Ceci Connolly tells AIS Health, a division of MMIT. “Potentially the most significant health care provision in that act was the extension of the enhanced subsidies for working Americans to buy coverage and care on the individual exchange.” 

Vermont’s all-payer accountable care organization (ACO), OneCare Vermont (OCV), has reduced Medicare costs but has had minimal impact on the state's Medicaid and commercial segments, a new report commissioned by CMS says. However, the state’s largest carrier — nonprofit commercial insurer Blue Cross and Blue Shield of Vermont (BCBSVT) — withdrew from the program at the end of the 2022 plan year and does not currently plan to return. 

The report, prepared by NORC at the University of Chicago on behalf of the CMS Center for Medicare and Medicaid Innovation (CMMI), focused most of its cost and quality improvement analysis on Medicare. The report did not make any quantitative assessments of OneCare Vermont’s impact on the commercial market. NORC found that the ACO reduced gross spending for Medicare enrollees by $686.40 per member per year, or 6.2% per year, during the first four years of implementation, resulting in a $124.9 million net reduction of Medicare spending during those years, a drop of 5.7%. However, quality improvement and utilization assessments were more difficult to make due to the COVID-19 pandemic, which distorted utilization patterns during 2020 and 2021.