CMS Launches AI-Powered Prior Authorization Pilot in Medicare to Reduce Waste

The Centers for Medicare & Medicaid Services (CMS) will launch the Wasteful and Inappropriate Services Reduction (WISeR) Model in January to pilot AI-driven prior authorization for certain medical services in traditional Medicare. This six-state initiative includes Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington and will run through 2031. The program targets specific services vulnerable to overuse and waste, such as knee arthroscopy, skin and tissue substitutes, nerve stimulation services, and incontinence control devices. Private companies will use AI to review prior authorization requests and are financially incentivized to deny approvals for services deemed unnecessary or non-covered by Medicare rules. This approach represents an extension of prior authorization processes common in Medicare Advantage plans and private insurance into traditional Medicare, which has traditionally lacked such administrative hurdles. Prior authorization is a contentious practice criticized for causing delays, administrative burdens, and occasionally denial of medically necessary care. Physicians report significant time spent on denial appeals, detracting from patient care. There are concerns that the WISeR program will impose new barriers to care for vulnerable Medicare beneficiaries. CMS maintains that final coverage decisions will be made by licensed clinicians and that companies are incentivized to make timely and accurate decisions without escalating appeals. Despite this, physician groups and advocacy organizations express concerns that prior authorization will increase wait times and administrative burdens, particularly in specialties frequently using services covered by the program, such as orthopedics, urology, and neurology. Opposition to the WISeR program has prompted congressional efforts to repeal it, with bipartisan legislative activity focusing on regulating prior authorization and the use of AI in healthcare. Many states have enacted laws to manage prior authorization burdens and AI implementation in medical decision-making. The financial incentives for private companies operating the program raise questions about potential denial of care driven by profit motives. CMS has selected six private technology companies to run the AI pilots, some with venture backing from major health insurers. This affiliation intensifies scrutiny over conflict of interest and oversight. CMS argues the program aims to reduce wasteful spending in Medicare, which reached $5.8 billion in 2022 for low-value services. Pilot program monitoring will include metrics such as provider satisfaction and turnaround times. Overall, the WISeR model introduces AI-powered prior authorization to traditional Medicare with goals of curbing unnecessary spending but faces resistance due to concerns about increased administrative tasks, delays in care, and potential adverse outcomes for older patients. Stakeholders recommend caution and further refinement, emphasizing the need for adequate safeguards and clear accountability protocols.