Medicare Launches AI-Driven Prior Authorization Pilot to Cut Waste

The Trump administration announced a Medicare pilot program launching January 1, 2026, introducing AI-driven prior authorization to reduce wasteful and low-value services in Medicare. This program, named WISeR (Wasteful and Inappropriate Service Reduction), will operate through 2031 in Arizona, Ohio, Oklahoma, New Jersey, Texas, and Washington. Traditionally, Medicare has limited use of prior authorization compared to private insurers, but this pilot aims to leverage AI to improve cost-efficiency by screening services vulnerable to fraud and waste, such as skin substitutes, nerve stimulator implants, and knee arthroscopy. The initiative follows a voluntary private insurer effort to streamline prior authorization processes, which are criticized for causing significant delays in care.

The pilot raises ongoing concerns about prior authorization practices, particularly the potential for AI to increase denials of medically necessary care. Medicare officials emphasize that all AI-based denials will undergo review by qualified clinicians and that vendors will not be financially incentivized to deny services. However, experts warn that the program's reliance on shared savings arrangements could create financial incentives to withhold care. Critics highlight the subjective nature of the approval criteria and question the transparency and accountability measures for the AI system.

AI-assisted prior authorization is seen as a double-edged sword: it could streamline inefficient processes but also risks exacerbating barriers to care if algorithms are poorly designed or insufficiently overseen. Research indicates that private insurers use AI and prior authorization extensively to control costs, with higher denial rates for expensive services. Physicians report concerns about AI increasing prior authorization denials and worsening patient outcomes.

Congressional lawmakers from both parties have expressed wariness about the pilot. Some members have called for halting funding or demanding greater clarity on safeguards to prevent care denial. Independent experts point to a regulatory gap in oversight of AI systems in insurance and advocate for rigorous evaluation of such pilots before broader implementation.

The Medicare pilot represents a significant development in integrating AI into federal health insurance administration. Its outcomes could influence broader Medicare policy and private insurance practices concerning prior authorization and AI deployment. Key considerations include the balance between cost containment and ensuring timely patient access, the integrity of clinical review, and clear accountability for AI-driven decisions.

This program is part of a broader trend toward incorporating technological tools in insurance operations, with emphasis on transparency, clinician involvement, and patient protections. However, its success depends on reconciling cost savings goals with maintaining quality of care and avoiding delays or denial of necessary treatments.

In summary, Medicare's WISeR pilot marks a controversial but pivotal test of AI in prior authorization, spotlighting critical issues in insurance cost control, regulatory oversight, and the evolving role of AI in health care reimbursement. The pilot's execution and outcomes will be closely watched by insurers, providers, policymakers, and patient advocates concerned about the future landscape of medical authorization processes.