CMS Launches AI-Driven Prior Authorization Model for Traditional Medicare in 2026

The Centers for Medicare and Medicaid Services (CMS) plan to launch the Wasteful and Inappropriate Service Reduction (WISeR) Model in Medicare by 2026. This six-year demonstration project will allow for-profit contractors to use artificial intelligence (AI) tools to manage treatment protocols for traditional Medicare beneficiaries, including elderly and disabled individuals. The WISeR model is an extension of policies common in Medicare Advantage, where prior authorization is widely used, contrasting with traditional Medicare's limited prior authorization application. Medicare Advantage plans, covering 54% of eligible beneficiaries, rely heavily on prior authorization to control utilization, often requiring pre-approval for numerous procedures and medications. By contrast, traditional Medicare uses prior authorization sparingly, focusing on a limited set of outpatient services and certain durable medical equipment. The WISeR model aims to integrate machine learning with human clinical review to streamline authorization processes while controlling costs, although it has raised concerns about the potential for care delays or denial of services. CMS intends to begin WISeR in six states: New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington. The financial model proposed involves vendors sharing in the savings from reduced expenditures, a structure that has attracted scrutiny from healthcare policy advocates. Legislative efforts to block or regulate WISeR have been introduced, reflecting ongoing debate about the balance between cost containment and access to care. Across healthcare markets, prior authorization processes have led to millions of denials, often resulting in administrative complexity and delays for patients and providers. Medicare Advantage plans have increasingly adopted AI to assess care appropriateness and have pledged improvements in authorization protocols, including aims for faster decisions and standardized electronic processes. CMS leadership has signaled potential regulatory actions to enforce improvement in these areas. The origins of prior authorization were rooted in ensuring appropriate medication use, especially for safety concerns such as drug interactions or precision medicine markers. When effectively applied, prior authorization can encourage cost-effective prescribing and reduce overutilization. However, excessive or poorly managed prior authorization can increase administrative burdens, delay necessary care, and potentially worsen outcomes, raising questions about its overall impact on cost savings. Data from Medicare Advantage indicate a high rate of appeal success for denied services, suggesting significant issues with initial authorization decisions. This highlights ongoing challenges to striking a balance between utilizing technology-driven tools like AI to improve efficiency and maintaining patient access and clinical judgment. The WISeR model represents a significant evolution in how traditional Medicare may integrate these utilization management strategies moving forward.