CMS Launches AI-Powered Prior Authorization Pilot in Traditional Medicare

The Centers for Medicare & Medicaid Services (CMS) is launching an AI-driven pilot program called the Wasteful and Inappropriate Services Reduction (WISeR) Model. Starting January, this initiative will test AI-powered prior authorization for certain medical services in traditional Medicare across six states: Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington, continuing through 2031. Prior authorization, common in private insurance and Medicare Advantage plans, requires approval for medical procedures before they proceed. The WISeR Model extends this process into traditional Medicare for services identified as vulnerable to fraud, waste, or inappropriate use, including knee arthroscopy for osteoarthritis, nerve stimulation services, and certain prescriptions. The program financially incentivizes private companies to save Medicare money by denying approvals for unnecessary or non-covered services. CMS has emphasized that licensed clinicians, not AI alone, will make final coverage decisions. Additionally, companies are encouraged to ensure timely and accurate authorization determinations to avoid appeals. CMS aims to reduce expenses on low-value services, which cost Medicare billions annually and can cause physical or psychological harm. This expansion of prior authorization into traditional Medicare raises concerns among physicians and patient advocates. Physicians report prior authorization burdens their practice with administrative hurdles, delays, and denials that can affect patient care quality. Historical data indicates prior authorization issues have led to serious adverse patient outcomes, including hospitalizations. Some investigations have revealed denials even when requests met Medicare requirements. Supporters argue that rising Medicare spending necessitates cost control measures like WISeR, highlighting Medicare as the largest healthcare purchaser with projected spending doubling over the next decade. In 2022 alone, Medicare spent approximately $5.8 billion on services with minimal patient benefit. Opposition to WISeR has led to legislative efforts to repeal or pause the program, citing its potential to add red tape and delay care. Physician groups in affected states advocate for more stakeholder input and preparation time before program expansion. Some argue that the program will disproportionately increase administrative tasks in specialties with high volumes of targeted services, such as orthopedics and neurology, further delaying patient access. Medicare recipients, considered a vulnerable group, may experience new barriers to care due to prior authorization requirements. Past issues with prior authorization in Medicare Advantage plans exacerbate these concerns, including dedicated staff in medical practices for managing authorizations and denials. Some physicians note that while prior authorization can delay or deny care, others appreciate the certainty of pre-approved procedures to avoid reimbursement issues. The pilot involves six private tech companies, some backed by venture capital investments linked to major insurers like Blue Cross Blue Shield, UnitedHealthcare, and Kaiser Permanente. Financial incentives tied to denial rates raise questions about the safeguards against profit-driven denial practices. CMS has committed to evaluating provider satisfaction and processing times as part of vendor payments. The development of AI-powered prior authorization is occurring amid broad bipartisan scrutiny of prior authorization practices across states and Congress. Over recent years, many states have enacted legislation regulating AI use and prior authorization in healthcare. Despite criticism, the WISeR program represents a federal effort to integrate AI and prior authorization to curb Medicare fraud and spending waste. CMS engagement with medical associations and lawmakers has included meetings and communications, but opposition remains strong with calls for program delay or repeal. The future of WISeR will depend on balancing cost containment with ensuring timely patient access and minimizing administrative burdens, an ongoing challenge in healthcare policy and insurance markets.