CMS Launches AI-Driven Prior Authorization Pilot in Traditional Medicare

The Centers for Medicare & Medicaid Services (CMS) is set to launch the Wasteful and Inappropriate Services Reduction (WISeR) Model in January, a pilot program that introduces AI-powered prior authorization for certain medical services within traditional Medicare across six states: Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington. Scheduled through 2031, this initiative aims to minimize approvals for services deemed vulnerable to fraud, waste, or inappropriate use, including specific procedures like knee arthroscopy for osteoarthritis and select nerve stimulation treatments. Prior authorization is a process requiring healthcare providers to obtain insurer approval before delivering certain medical treatments. Traditionally common in private insurance and Medicare Advantage plans, prior authorization has faced criticism due to delays in care and administrative burdens on healthcare providers. The WISeR program marks the first significant use of prior authorizations in traditional Medicare. CMS will compensate participating private companies based on cost savings achieved by denying unnecessary or non-covered services. Licensed clinicians, not AI alone, will make final coverage decisions. The program also includes incentives for timely and accurate adjudications to reduce administrative delays and appeals. Medical professionals and patient advocates express concern that the WISeR program may introduce barriers to care, citing experiences with existing prior authorization processes that often cause delays and increased administrative workload. More than 25% of physicians report serious patient issues linked to prior authorization delays, including hospitalizations. The program targets services identified as low-value or prone to overuse, which CMS states contribute to increased patient costs and potential harm. Medicare spending on such low-benefit services reached up to $5.8 billion in 2022, highlighting fiscal pressures to curb wasteful expenditures. Some legislators and medical associations in affected states have introduced bills to repeal the WISeR model, advocating for further evaluation and stakeholder engagement before expanding prior authorization in traditional Medicare. However, political dynamics may influence the likelihood of repeal legislation advancing. Physician groups warn the program will shift added administrative burdens particularly to specialties heavily impacted by the new rules, such as orthopedics, neurology, and urology, potentially lengthening patient wait times for care. CMS has procured six private technology companies, some with backing from major insurers, to implement the AI-powered prior authorization system. Concerns persist about potential conflicts of interest, given these companies' financial incentives to deny services. CMS assures oversight through clinician final decision-making and performance metrics that include provider satisfaction and processing times to mitigate adverse impacts. However, healthcare providers remain cautious about the implications for patient access and care quality. This pilot program reflects ongoing efforts to harness technology for cost-containment in Medicare, balancing fraud prevention and waste reduction against risks of access barriers and administrative strain. Monitoring and evaluation will be critical to assess the program's impact on healthcare delivery for Medicare beneficiaries.