Over 6 million Americans on Medicare will now need to get prior authorization from AI for these 17 procedures

By Jessica Hall

A six-state pilot program will target 'wasteful care' under Medicare

Medicare programs in six states will face prior authorizations under a new pilot program.

Traditional Medicare in six states will soon feel more like privatized Medicare Advantage, using prior authorizations to determine what care can be covered for older adults.

Starting in January, about 6.4 million Americans enrolled in traditional Medicare in New Jersey, Ohio, Oklahoma, Texas, Arizona and Washington state will be part of a pilot program using artificial intelligence for prior authorizations. The program - known as the Wasteful and Inappropriate Service Reduction (WISeR) model - will require additional approvals for 17 different medical procedures.

Prior authorization means getting approval before an insurer will pay for a medical service or drug. Traditional Medicare currently has fewer prior-authorization requirements than Medicare Advantage, which is the private-plan alternative to Medicare.

In 2023, there were nearly two prior-authorization determinations per Medicare Advantage enrollee, on average, compared with about one prior-authorization review submitted per 100 traditional Medicare beneficiaries - a rate of about 0.01 per person, according to KFF, a nonpartisan health-policy organization.

The WISeR program is part of the Trump administration's efforts to cut what it calls waste, fraud and abuse in government. The program, however, has drawn the ire of physicians and Democratic legislators who say the program could delay or deny care for vulnerable patients.

In December, a bill sponsored by Democratic senators including Patty Murray of Washington, Ron Wyden of Oregon and Kirsten Gillibrand of New York sought to block the WISeR program from being implemented. It followed a similar Democratic effort in the House of Representatives that was introduced in November.

"We already know that prior authorization creates major burdens and delays for patients and providers, and expanding it to Traditional Medicare will just force seniors to wait longer and navigate mountains of paperwork to get the care their doctor says they need," Murray said in a statement. "Make no mistake: this is a backdoor effort to privatize Medicare and cut benefits."

The WISeR program will focus on 17 specific medical services in the first year of the six-year pilot program. Examples include skin and tissue substitutes, electrical nerve-stimulator implants and knee arthroscopy for osteoarthritis. Those procedures are done on an outpatient basis. The program will exclude inpatient-only services, emergency services and services that would pose a substantial risk to patients if significantly delayed, the Centers for Medicare & Medicaid Services said.

"We believe the current design of this pilot risks unintended consequences including delayed care, reduced access, and increased burdens on both patients and physicians," the heads of the medical associations in the six participating states said in a November letter to Mehmet Oz, the CMS administrator.

The procedures will be reviewed by AI for coverage determinations, although final decisions will be made by people, CMS said. The companies contracted to carry out the review process will receive payments when they reduce costs and will be penalized for inappropriate denials, according to CMS.

Six technology companies - some of them backed by insurance companies - were selected to conduct the AI-driven prior authorizations. For example, Humata Health, which will run Oklahoma's program, is backed by investors such as the Blue Venture Fund, the venture-capital arm of most Blue Cross Blue Shield companies. Meanwhile, investors in Innovaccer, the healthcare-data company that will run Ohio's program, include Kaiser Permanente. The other companies involved in the pilot program are Cohere Health, Genzeon, Virtix Health and Zyter TruCare.

In announcing the prior-authorization program in June, CMS said "wasteful care, including services that provide little to no clinical benefit, not only increase costs, but also put patients at risk." Waste in healthcare represents up to 25% of healthcare spending in the U.S., CMS said.

The Medicare Payment Advisory Commission, a nonpartisan agency that advises the U.S. Congress, estimated that up to $5.8 billion in Medicare spending in 2022 alone was spent on services with minimal benefit.

"Low-value services, such as those of focus in WISeR, offer patients minimal benefit and, in some cases, can result in physical harm and psychological stress," Abe Sutton, director of the CMS Innovation Center, said in a statement. "They also increase patient costs, while inflating health care spending."

-Jessica Hall

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01-02-26 1243ET