Usefulness of AI in healthcare 'mixed,' says CBO

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Answering a series of questions from lawmakers, the Congressional Budget Office addressed artificial intelligence and machine learning in healthcare, determining that the evidence on the usefulness of the technology is mixed, particularly when it comes to costs, according to the report released on March 22.

AI and ML tools might affect healthcare costs in the future in many ways, CBO said, including by detecting illness earlier or identifying patients who might benefit from preventive interventions. But while some uses of those tools might reduce costs by preventing the need for costlier care or eliminating unnecessary care, others might increase costs by spurring the development of expensive new technologies with meaningful health benefits, or by identifying additional patients who might benefit from certain medical services.

The practical application of these technologies is still inconsistent at this nascent phase – showing usefulness in predicting cancer mortality, but falling short when predicting heart failure outcomes. CBO said it will need to see more empirical evidence before determining the overall effect on healthcare spending.

The CBO addressed a number of lawmakers' questions, which covered healthcare costs and transparency, provider consolidation, and health insurance.

WHAT'S THE IMPACT?

Responding to a question about consolidation among healthcare providers, CBO said its baseline projections of Medicare spending and spending on commercial health insurance reflect the trend of more services being provided in hospital outpatient departments (HOPDs), rather than physicians' offices. That long-standing trend has occurred partly because the vertical integration of hospitals and physicians has increased, and partly because more independent physicians have chosen to provide more care in HOPDs.

Larger payments from both commercial insurers and Medicare for similar services provided in HOPDs (as opposed to physicians' offices) are an important factor driving such changes, but they're not the only factor, CBO said: Providers may also consolidate to increase their bargaining power during contract negotiations with private insurers, to control referral patterns or to pool fixed administrative or technology costs, among other reasons. Some physicians may also prefer being employed by a hospital because that setting offers more predictable schedules, a team-based environment and less financial risk than private practice.

While evidence supports the idea that payment policies contribute to increased consolidation and increased billing in higher-priced settings, it's not clear that payment reductions would reverse those tendencies in the market, CBO said.

In regards to price transparency, the agency said it's helpful for insurers and employers who are contracting with providers, and can also be helpful to consumers. A lack of transparency, in CBO's view, reduces the pressure on providers to compete.

But a review of the evidence suggests that the potential for transparency to reduce prices is limited for many reasons: Very few consumers make use of transparency tools when they are made available to them; the information provided in recent transparency regulations is often very difficult for consumers to use and not tailored to their plan; providers face limited competition, so consumers' ability to shop for different services in some markets is curtailed; insurance makes consumers less sensitive to price information; healthcare is complicated, so patients and employers who particularly value quality may disregard price information; and finally, the exclusion of employment-based health insurance premiums from federal income and payroll taxes blunts employers' and individuals' responses to price information.

THE LARGER TREND

CBO estimates that some provisions of the Lower Costs, More Transparency Act would reduce prices by a small amount. Section 204, which would require a separate provider identification number for off-campus hospital outpatient departments, would assist insurers who have a policy of not paying for facility fees for off-campus providers and might also encourage more private health insurers to adopt such a policy. 

Providing insurers with more information about when they are being charged those fees would help them avoid paying them, resulting in savings for consumers, CBO said.

CBO has yet to see evidence that the underlying regulations have reduced premiums for private health insurance, so the agency has not estimated an effect from the incremental policy changes.
 

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.