The Trump Administration’s Plan to Use AI for Medicare Prior Authorization Denials
The government is set to partner with private companies to automate prior authorizations (PAs) in Traditional Medicare. This new approach involves contracts with companies that use artificial intelligence (AI) to review and potentially deny Medicare coverage requests, raising concerns about incentives and the impact on patient care.
Introducing the WISeR Model
On June 27, the Centers for Medicare and Medicaid Services’ (CMS) Innovation Center announced the Wasteful and Inappropriate Service Reduction (WISeR) Model, running from 2026 to 2031. Its stated goal is to reduce wasteful Medicare spending, citing that taxpayers funded $5.8 billion in low-value care in 2022. Low-value care refers to treatments that offer little clinical benefit or where risks outweigh benefits.
The WISeR model contracts companies experienced in prior authorization, particularly those using AI-enhanced technologies, to review medical necessity. Although clinicians will validate AI recommendations, this marks a significant expansion of prior authorizations within Traditional Medicare, beyond its current limited scope.
Concerns About Prior Authorizations and AI in Medicare
- Delays and Denials: Prior authorizations already cause delays and denials in Medicare Advantage and private insurance. A 2024 American Medical Association survey found 93% of physicians reported PAs delay access to care, with many patients abandoning recommended treatments.
- Administrative Burden: Physicians spend an extra 13 hours weekly on PAs, with 40% of practices dedicating staff solely to this task. This adds to the high administrative costs in U.S. healthcare, which already exceed those of other developed countries.
- Improper Denials: A 2022 Government Accountability Office report found 13% of PA denials in Medicare Advantage were improper. Given low appeal rates, many patients likely face unjustified care denials.
- Incentivizing Denials: WISeR contracts reward companies with a share of savings from denied low-value care. This creates a profit motive to deny as many claims as possible, potentially at the expense of patient access.
- Unproven AI Reliability: AI models have shown issues with accuracy and bias. Reports indicate AI struggles to verify facts correctly, raising doubts about its role in life-impacting healthcare decisions.
Financial and Policy Context
Addressing wasteful Medicare spending is valid, but the focus on PAs ignores larger sources of inefficiency. Medicare Advantage overpayments are estimated at $84 billion in 2025 alone, with projections reaching $1.2 trillion over the next decade. Efforts to curb these overpayments, such as cracking down on upcoding, have faced resistance despite their potential to save far more than PA reductions.
Powerful insurance companies behind Medicare Advantage spend heavily on lobbying to protect their profits. This raises questions about whether policies like WISeR prioritize cost-saving or protecting industry interests.
What This Means for Insurance Professionals
For those working in insurance, these changes signal a shift toward greater automation in claims management, with AI playing a growing role. However, the risks of increased denials, administrative complexity, and questionable AI reliability mean careful oversight and advocacy will be crucial.
Understanding the incentives tied to AI-driven reviews and prior authorizations will help professionals anticipate challenges and develop strategies to ensure fair patient access while controlling costs.
Ultimately, reducing waste in healthcare spending requires addressing the largest inefficiencies and avoiding policies that may inadvertently raise costs or restrict care.
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