Who should pay for technological advancements such as artificial intelligence in the healthcare industry is a thorny question. When considering AI-enabled software, it all depends on what the software does and the benefits of using it. Beyond directly treating patients, there are many use cases for AI-enabled software, including inventory management, nurse scheduling, and drug discovery — just to name a few. It’s clear who pays for these types of software programs: Pharmaceutical companies might pay for drug discovery and hospitals, or clinic operations might pay for inventory management and nurse scheduling. When dealing with FDA-approved and/or HIPAA-compliant software for direct patient care, “who should pay” becomes a tricky question.
Medicare and Private Payer Reimbursement
BrainCheck’s artificial intelligence software moves dementia screening exams from expensive, scarce specialist clinics to more accessible and universal primary care clinics. They have digitized standard dementia screening exams into a gamified app, which is typically administered by medical assistants in primary care clinics. The digital test takes 5-10 minutes for patients to complete and, in addition to detecting early signs of dementia, provides indicators of someone’s brain health. Just like blood tests, the BrainCheck test can be done annually or semi-annually and compared over time. This is important for disease trajectories and whether certain medical interventions are effective, such as drug efficacy.
About 60% of dementia cases go undiagnosed, and Fingers Group for the Prevention of Cognitive Impairment and Dementia worldwide states that 40% of dementia cases can be prevented by changing lifestyle behaviours. Unfortunately, many people don’t make an appointment with a neurologist until their memory loss begins to affect their daily lives. There are a number of reasons for this, including months-long waiting lists for neurologists, more expensive than primary care, and scarcity enough that people in rural areas may not be able to travel easily. Neurology appointments are also additional medical appointments for the patient, which is important. In addition to the annual physical at the primary care clinic, it is difficult for everyone to attend all of the recommended annual health checks, including eye, gynecology, dermatology, colonoscopy and mammograms. How many people have the time, transportation, money and ability to see more doctors in order to make new neurology clinics suitable for dementia screening? All of these barriers mean that early dementia progresses to the point where lifestyle behavior changes and even drug interventions are of no help.
Because BrainCheck is able to move dementia screening from neurology clinics to primary care offices, patients can be screened in an easier way. It also creates a new revenue stream for primary care clinics. Most importantly, early detection of cognitive decline in primary care clinics can have a significant positive impact on individual patients.
The Dementia Screening and Cognitive Care Platform is reimbursed by Medicare under CPT codes 96138, 96132 and 99483. BrainCheck found that most major payers pay for the software for people under Medicare age when medically necessary. People with dementia using a value-based insurance plan, such as Medicare Advantage risk adjustment, had a risk-adjusted $3,200 to $4,200 per patient per year, reflecting the higher cost of care associated with dementia.
Medicare’s new tech add-on payments
An example of a new type of coverage is a company in the neurostroke space called Viz.ai. Viz.ai has demonstrated that it can be used to rapidly detect a specific type of costly and devastating stroke known as large vessel occlusion or LVO stroke. The software is now reimbursed by Medicare as a “new technology add-on payment” for use in emergency rooms to help diagnose suspected LVO cases. Medicare covers it for a reason. Artificial intelligence software has been shown to improve patient outcomes by catching LVO strokes earlier than without software. Their FDA-approved Viz LVO software is already used in hospitals, and a 2020 peer-reviewed study published in Interventional Cardiology showed that when identifying LVO strokes in 2,544 consecutive patients from 139 U.S. hospitals, its The sensitivity was 96% and the specificity was 94%. When dealing with an LVO stroke, those few minutes matter — AI software like Viz.ai can make the difference between life, disabled life, and death. This type of software is a win-win for patients, hospitals and Medicare. Patients are diagnosed faster – which leads to faster, more targeted treatment – and this faster treatment leads to better patient outcomes. LVO strokes are eligible for thrombectomy, a surgical procedure to remove a blood clot from a vein or artery. The reimbursement rate for thrombectomy is much higher than for medically managed stroke, which is the default stroke treatment. Patients get significantly better outcomes from faster diagnosis and more aggressive surgical treatment, and the hospital or clinic is reimbursed more by Medicare. Better patient outcomes cost less Medicare in the long run.
To be eligible for the New Technology Additional Payment, a technology application must meet three criteria: the technology must be less than three years old; it must be undercovered, and the technology must show substantial clinical improvement over other existing products.
Prescription digital therapy, also known as PDT, is a relatively newcomer to healthcare. These are usually apps available by prescription and they use CBT, cognitive behavioral therapy, which is the gold standard when it comes to behavior change. Pear Therapeutics had the first FDA-approved PDT in 2017, and several other prescription digital therapies have received FDA approval in the past 5 years. Pear’s first three clear-number treatments focus on addiction and insomnia, both of which are excellent candidates for CBT.
In February 2022, CMS developed reimbursement codes for prescription digital behavioral therapy for the Pear Therapeutics app. This is a huge milestone for Prescription Digital Therapeutics and a signal of the staying power of this novel therapy. In addition to some employer formularies, the apps are included in some employer health plans, which have much larger budgets than health.
Chronic disease management platform companies like Omada and Livongo that focus on managing chronic conditions are often paid for by employers or health plans at zero cost to patients. Chronic disease management includes difficult-to-manage diseases such as high blood pressure and diabetes. Employers know that by helping employees manage their health, they can reduce healthcare costs while increasing employee productivity. Major health plans also know that helping a patient manage an expensive chronic condition, such as diabetes, can reduce the cost of treating that patient. Omada does have some self-pay customers who are not covered by employer insurance plans, which cost $520 for 4 months, then $20 per month.
The question of who pays for technological advancement is a thorny one that will continue to change over time as more innovation intersects with healthcare.
Robin Farmanfarmaian is a professional speaker and entrepreneur in Silicon Valley, working on cutting-edge technologies with the potential to impact 100 million or more people. Robin has worked on more than 20 early-stage biotech and healthcare startups, from curing cancer to medical devices and digital health. She has presented more than 180 presentations in 15 countries, introducing audiences to many aspects of technology that intersects with healthcare, including artificial intelligence and the transformation of delivering healthcare to patients’ homes. She is the author of 4 books, including The Patient as CEO: How Technology Empowers Healthcare Consumers and most recently, How Artificial Intelligence is Democratizing Healthcare: The Rise of Digital Health.