Medicare pilot program in Arizona sparks privatization concerns

A new Medicare pilot program is rolling out in Arizona and five other states, introducing prior authorization requirements for traditional coverage.

The plan, called the Wasteful and Inappropriate Service Reduction Model, is sparking controversy, with critics warning it could be a step toward privatizing Medicare. The six-year pilot will begin in January and has already drawn opposition from lawmakers, former officials, and physician groups.

Dr. Swapna Reddy from ASU’s College of Health Solutions joined “Arizona Horizon” to explain what the program could mean for Medicare patients in Arizona.

The program, beginning in January, would require Medicare recipients to obtain prior authorization before 16 treatments, all of which are along the lines of nerve and pain management. The reason prior authorization is required for these 16 treatments is because there is evidence showing there is high waste for some of these procedures.

“There is a history of some waste, there is a history of some abuse, there is a history of some fraud in the health care system… and this is an attempt at solving that problem,” Reddy said.

For insurers, it is projected that if this program were to go into full effect it would save 5-7% in costs annually. On the other hand, providers and healthcare systems would say that the new program would increase their costs exponentially in administrative fees just to keep up with prior authorizations.

“This is somewhat unprecedented, we really have not had a system like this from an approach like this, especially with traditional Medicare, we don’t really touch traditional Medicare,” Reddy said.

Changing the design of Medicare is not the only untraditional aspect of this program, but so is its use of Artificial Intelligence. According to Reddy, AI will be used to evaluate any requests submitted for a procedure that falls into the group of 16 in this program; however, AI will not make the final decision.

There will also be a profit-sharing arrangement for the companies that will be contracted for the AI review based on how much money they save the federal government.