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The Centers for Medicare and Medicaid Services (CMS) has issued new guidelines restricting the use of artificial intelligence (AI) in determining Medicare coverage. This move aims to protect Medicare Advantage (MA) plan beneficiaries from potential bias and discrimination.

Key Points:

  • CMS prohibits health insurers from solely relying on AI or algorithmic systems for patient care, coverage decisions, or shifting coverage criteria over time.
  • AI is defined as a machine-based system that makes predictions, recommendations, or decisions based on human-defined objectives.
  • Insurers are warned against using algorithms that determine coverage based on large data sets instead of individual patient history, physician recommendations, or clinical notes.
  • Recent lawsuits against Humana and UnitedHealth highlighted concerns about AI models overriding physician recommendations and disproportionately harming elderly beneficiaries.
  • CMS emphasizes that algorithms can assist MA plans in making coverage determinations, but the responsibility lies with the MA organization to ensure compliance with applicable rules.
  • Inpatient admissions cannot be denied or downgraded to observation stays based solely on algorithms or AI; individual circumstances must be considered.


  • Medicare Advantage is an additional federal insurance option provided by contracted, Medicare-approved private companies.
  • Concerns about the use of AI and algorithmic software in guiding coverage decisions led to an open letter from House of Representatives members to CMS in November 2023.
  • Medical and insurance associations have explored the potential of AI in healthcare, including enhanced tools for finding and purchasing health plans, predicting patient health outcomes, and expediting payments and services.

Concerns and Scrutiny:

  • Unavoidable bias and inconsistency in AI systems have raised concerns among observers, leading to calls for increased scrutiny.
  • CMS expresses concern that algorithms and AI technologies can exacerbate discrimination and bias, violating the nondiscrimination requirements of the Affordable Care Act.
  • MA organizations are urged to ensure that algorithms or software tools do not perpetuate or exacerbate existing bias or introduce new biases before implementation.


The new CMS guidelines aim to strike a balance between the potential benefits of AI in healthcare and the need to protect patients from bias and discrimination. Insurers must carefully consider the ethical implications of AI use and ensure compliance with applicable regulations to provide fair and equitable coverage decisions.