CMS and Insurers Launch AI-Driven Medicare Prior Authorization Reforms
The Centers for Medicare & Medicaid Services (CMS) is introducing the Wasteful and Inappropriate Service Reduction Model (WISeR), set to launch on January 1, 2026, in five states to reform Medicare prior authorization processes. The model utilizes artificial intelligence and advanced technologies through partnerships with AI-capable firms to identify and reduce fraud, waste, and abuse in Medicare services.
Key items targeted under WISeR include skin and tissue substitutes, electrical nerve stimulators, and knee arthroscopy for osteoarthritis. These technologies will analyze prior authorization requests by gathering clinical documentation to verify the necessity and coverage compliance before services are approved. While AI assists in the review, final service denial decisions rest with clinicians employed by WISeR partners. WISeR excludes inpatient-only services, emergency services, and those that cannot be delayed without risking patient safety and does not alter Medicare coverage or payments nor affect Medicare Advantage enrollees.
The initiative is designed to shorten review times and enhance administrative efficiency, with the CMS estimating potential savings of billions in federal funds if the model succeeds. Incentive payments to WISeR partners will be tied to reductions in spending on medically unnecessary or non-covered services. Concurrently, dozens of major U.S. health insurers have pledged improvements to their prior authorization processes for commercial, Medicare Advantage, and Medicaid managed care plans starting in 2026. These voluntary reforms encompass six major commitments aimed at reducing administrative burdens, speeding care decisions, increasing transparency, and expanding patient access to necessary care.
The insurer-led initiatives will be phased in fully by January 1, 2027, and focus on mitigating the issue of denied authorizations for covered and necessary care, impacting providers and patients nationwide. Collaboration between private payers, CMS, and the Department of Health and Human Services underscores a broader effort to streamline prior authorization and reduce inefficiencies across health services. These regulatory and market changes signal significant transformations in payer-provider interactions, compliance requirements, and the use of AI-driven processes in healthcare administration.