Medicare launches AI review tool for prior authorization in six states starting January 1

Medicare Expands Prior Authorization With AI-Powered Review Tool

The Centers for Medicare & Medicaid Services (CMS) is launching a major shift in how it manages healthcare spending, introducing AI review tools to evaluate prior authorization requests for specific medical services. Starting January 1, 2026, the Wasteful and Inappropriate Service Reduction (WISeR) Model will require doctors in New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington to obtain extra approval before Medicare pays for certain outpatient services and procedures2

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. This marks a significant departure from traditional fee-for-service Medicare, which historically required minimal prior authorization—approximately 400,000 determinations in 2023 compared to nearly 50 million in Medicare Advantage1

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Targeting Low-Value Services to Reduce Fraud, Waste, and Abuse

The pilot program focuses on 17 specific items and services that CMS has identified as high-risk for fraud or offering little clinical benefit. These include nerve stimulators, epidural steroid injections for pain management, skin substitutes for lower extremity wounds, deep brain stimulation for Parkinson's disease, arthroscopic procedures for knee osteoarthritis, and impotence treatment1

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. CMS contends these services may impose physical, financial, or emotional harm on patients while contributing to wasteful spending. Evidence suggests Medicare may have spent as much as $5.8 billion on low-value services in 2022, with the program projected to face funding shortfalls by 20332

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AI Tech Vendors and Machine Learning Drive the Prior Authorization Process

CMS has contracted with six tech vendors—Cohere Health, Genzeon, Humata Health, Innovaccer, Virtix Health, and Zyter—to administer reviews in participating states. Each company will use machine learning and AI to expedite prior authorization reviews, with promises to deliver responses within 72 hours or less1

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. While AI will streamline initial reviews, payment denials must still undergo human clinician review, according to CMS guidelines2

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. Providers who demonstrate compliance records may receive a gold card exemption, allowing them to bypass the full WISeR review process1

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Administrative Burdens and Concerns Over Potential Care Delays

The American Medical Association (AMA) has expressed significant concerns about the program's implementation, noting that basic information about how to submit prior authorization requests remains unclear just days before the January 1 launch date2

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. Medical association presidents from the six affected states wrote to CMS in November warning that "the prior authorization pilot risks creating barriers to care, undermining patient outcomes, and imposing unsustainable administrative demands on practices"2

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. The American Hospital Association has pressed for at least a six-month delay, saying member facilities haven't had sufficient time to understand and test new procedures2

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Controversial Payment Structure Raises Red Flags

One major concern centers on how tech vendors will be compensated. The companies managing prior authorization will receive payment based on a percentage of money saved by preventing unnecessary medical care, creating what critics see as a perverse incentive structure. "The more you deny, the more you get reimbursed," health policy consultant David Introcaso told Stat. "I mean, a third grader could see how that's a problem"2

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. CMS has attempted to address these concerns by implementing a rigorous audit process and stating that vendor participants will be "financially penalized" if they inappropriately deny claims2

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What Healthcare Providers Should Watch

Providers can choose between two pathways: submit a prior authorization request in advance for required services, or proceed without authorization and have claims routed through post-service, prepayment medical review. Those who skip prior authorization risk not getting paid2

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. The WISeR Model is scheduled to run through 2031 as a pilot program through the CMS Innovation Center, and its outcomes could determine whether the process expands nationwide1

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. The Washington State Medical Association is encouraging physicians to share feedback on their experiences to "press for accountability and reform"2

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. Jeremy Friese, CEO of Humata and one of the participating vendors, maintains that "the current prior authorization process frankly doesn't work for anybody, not providers or payers, and it just needs to be done differently"2

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. This represents the first step in reimagining how Medicare manages healthcare spending and utilization in an era of mounting fiscal pressure.