Private Insurers Use AI for Care Decisions — Medicare Is Next

Artificial intelligence is moving into a space where it can decide whether patients get access to certain treatments. A new pilot program announced by the Trump administration will use AI to make prior authorization decisions for Medicare. While private insurers have relied on similar tools for years, this marks a major shift for traditional Medicare, which historically avoided such practices.

The plan, scheduled to start January 1 in Arizona, Ohio, Oklahoma, New Jersey, Texas, and Washington, has sparked debate among physicians, lawmakers, and policy experts.

What the Pilot Program Means

The initiative, called WISeR—short for Wasteful and Inappropriate Service Reduction—will test whether AI can help cut costs by reducing procedures seen as low-value. These include skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy. Federal officials argue these services are particularly vulnerable to fraud and waste.

Freepik | WISeR will use AI to curb spending on low-value, fraud-vulnerable services.

Key points of the program:

– Services considered emergencies or high-risk if delayed will not fall under AI review.
– No request will be denied without a review by a human clinician, according to CMS spokesperson Alexx Pons.
– Vendors are prohibited from being paid based on denial rates, though savings are built into their contracts.

The program runs through 2031 and is part of the government’s effort to protect both patients and Medicare funds.

Growing Criticism of Prior Authorization

Prior authorization has long been unpopular. Patients and doctors argue it slows care, denies necessary treatments, and erodes trust in the health system. Rep. Greg Murphy, a Republican from North Carolina and practicing urologist, called insurers’ approach “delay-or-deny tactics” that can cause irreparable harm.

A July KFF poll revealed nearly three-quarters of respondents consider prior authorization a major problem. Even Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, admitted it “significantly delayed” care and damaged public confidence.

Still, the administration’s decision appears contradictory. Just days before announcing the Medicare pilot, it unveiled a separate effort to push private insurers to scale back prior authorization. “They’re talking out of both sides of their mouth,” said Rep. Suzan DelBene, a Democrat from Washington.

AI Raises New Concerns

AI is already used by private insurers, often sparking lawsuits and investigations. Critics argue algorithms can be biased against costly treatments, ignoring doctors’ recommendations and patients’ unique needs.

1. A 2023 ProPublica report found Cigna doctors reviewed cases in an average of 1.2 seconds, raising doubts about “meaningful human review.”
2. Class-action lawsuits have accused insurers of using faulty AI to wrongfully deny care.
3. A survey from the American Medical Association found 61% of physicians believe AI is increasing prior authorization denials and harming patients.

Policy researchers caution that insurers may lean on AI when high-cost care is involved, knowing appeals take time and some patients might not survive the process. Jennifer Oliva, a law professor at Indiana University, described this as making access to expensive services “very, very difficult.”

How the Government Defends the Plan

Freepik | By tackling backlogs and fraud, AI aims to make prior authorization decisions much faster.

CMS insists the AI pilot will have strict oversight to ensure compliance with Medicare rules and patient protections. Pons emphasized that automated tools will support—not replace—clinical decision-making. Officials argue that safeguards like human clinician review and transparency requirements will prevent abuse.

Supporters say AI could speed up prior authorization decisions by reducing administrative backlogs. Insurers also claim it cuts down on fraud, waste, and human error. Still, skepticism remains about whether vendors’ financial incentives to save money might overshadow patient needs.

Political and Medical Pushback

Lawmakers across both parties have expressed doubts. Rep. Lois Frankel of Florida proposed blocking funding for the pilot in the 2026 budget, citing risks of overreach. Dr. Vinay Rathi, a policy researcher at Ohio State University, called the plan “not fully fleshed out,” relying on vague and subjective measures that contractors will assess themselves.

Even supporters like Rep. Murphy remain cautious. While acknowledging AI’s permanence in health care, he stressed: “I will always, always err on the side that doctors know what’s best for their patients.”

The Future of AI in Medicare

The WISeR pilot program highlights a turning point for Medicare. By adopting AI in prior authorization, the government hopes to cut waste and safeguard resources, but it also risks worsening delays, denials, and patient harm.

With conflicting political signals, unresolved legal concerns, and deep skepticism from medical professionals, the experiment raises a central question: will AI make Medicare more efficient, or will it repeat the same problems already seen with private insurers?