From Fax Machines to AI: Health Agencies Accelerate Modernization

Federal health leaders are pushing an aggressive modernization agenda centered on interoperability, AI-assisted care, digital infrastructure upgrades and real-time data exchange, with top officials arguing that outdated systems are slowing care delivery and driving billions of dollars in waste across the healthcare system. 

Tom Engels, administrator of the Health Resources and Services Administration, and Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, outlined their vision for improving federal healthcare operations Wednesday at Axios’ Future of Health Summit in Washington, D.C. Their plans include replacing legacy transplant systems, automating prior authorization workflows and deploying AI tools in rural healthcare settings. 

Modernizing the Nation’s Organ Transplant System

One of the government’s largest ongoing modernization efforts is underway in the nation’s organ transplant system. Engels said the agency is rebuilding key portions of the Organ Procurement and Transplantation Network after years of operational concerns and growing scrutiny over oversight failures. He said the current transplant IT environment is a fragmented “patchwork system,” built incrementally over many years.  

“One of the biggest things that we have to do is we need a new IT system that manages all of the organ transplants across the country,” he said. “We want to develop a strong IT system that manages the entire system, but we want to do it with integrity, keeping kept in mind we can’t simply build a system and hope it works. We need to have a system that’s ready to go, that moves in parallel with the current system, and then when we all feel that we’re ready for it, we can cut over to it.” 

Engels said that HRSA also wants to launch a real-time organ tracking system. 

“You can order something through Amazon and know exactly where it’s at through the entire process. But not all the organ procurement organizations have that type of the system in place. We want that across the country,” he said.  

Building a Network of Industry Partners

The modernization effort coincides with broader changes at HRSA, including a shift toward multiple technology vendors after years of relying heavily on a single contractor. The agency has also launched an anonymous reporting tipline intended to surface operational concerns and improve oversight at organ procurement organizations. 

At CMS, Oz outlined a separate modernization effort focused on eliminating inefficiencies in prior authorization, a process he described as “the single most disliked part of the healthcare system.” 

CMS is tackling the prior authorization problem from a few different angles. First, Oz said he and Health and Human Services Secretary Robert Kennedy convened insurance industry leaders last summer to encourage major insurance companies to remove prior authorization requirements for some treatments.  

Second, Oz said CMS has commitments from 29 “partners” that include insurers, major hospitals, electronic health record vendors and health information exchanges to create a more automated and interoperable prior authorization system. The goal is to reduce manual paperwork and allow insurers to retrieve clinical information directly from provider systems when evaluating requests. 

“50% of the responses to prior auth questions are sent back by fax. Very inefficient,” he said. “Often it’s delayed, it’s lost, it’s confusing, it doesn’t get correlated right, it doesn’t get changed back and forth. You take scans of fax pages. It’s just dumb.” 

Under the proposed model, insurers would automatically query electronic medical records for relevant clinical information, reducing delays for physicians and patients while lowering administrative costs. 

Expanding AI in Federal Healthcare

CMS is also exploring broader uses of AI inside federal healthcare programs, particularly in underserved and rural communities where provider shortages remain a challenge. 

Oz pointed to “physician extender uses of AI” to help manage routine prescription renewals and assist with patient screening. In some cases, AI systems may be used to conduct preliminary assessments before escalating patients to human clinicians. 

“We want a human in the loop, but there’s some tasks in some places where that’s getting hard. So if you want mental health services in rural America … the choice is: you want AI as a screening tool to get you into the system or you want nothing because that’s the options,” he said.  

The administration’s Rural Health Transformation Fund is expected to play a major role in those efforts. The $50 billion initiative includes investments aimed at helping hospitals modernize data infrastructure, improve interoperability and deploy digital health tools. 

Together, the initiatives reflect a broader shift inside HHS toward modernized digital infrastructure, interoperability standards and AI-enabled workflows as federal agencies attempt to improve healthcare delivery while controlling rising costs.