AI Will Soon Have a Say in Approving or Denying Medicare Treatments

Yves here. This depressing article makes clear that the intent in deploying AI to Medicare claims processing is to deny more claims. Since this scheme is to be launched as a pilot, it’s not yet clear how it will operate, but it appears it will regularly require prior authorization, which is a way to deny or delay treatment, particularly for big ticket items like surgeries.

An additional motive may be to get more retirees to switch from traditional Medicare to Medicare Advantage. As we and others have pointed out, Medicare Advantage is effectively the second tier in a two-tier system, often with lower or no premiums due to less coverage, often via narrow networks.

Yes, they really do want to kill us.

By Lauren Sausser/a> and Darius Tahir. Originally published at KFF Health News

Taking a page from the private insurance industry’s playbook, the Trump administration will launch a program next year to find out how much money an artificial intelligence algorithm could save the federal government by denying care to Medicare patients.

The pilot program, designed to weed out wasteful, “low-value” services, amounts to a federal expansion of an unpopular process called prior authorization, which requires patients or someone on their medical team to seek insurance approval before proceeding with certain procedures, tests, and prescriptions. It will affect Medicare patients, and the doctors and hospitals who care for them, in Arizona, Ohio, Oklahoma, New Jersey, Texas, and Washington, starting Jan. 1 and running through 2031.

The move has raised eyebrows among politicians and policy experts. The traditional version of Medicare, which covers adults 65 and older and some people with disabilities, has mostly eschewed prior authorization. Still, it is widely used by private insurers, especially in the Medicare Advantage market.

And the timing was surprising: The pilot was announced in late June, just days after the Trump administration unveiled a voluntary effort by private health insurers to revamp and reduce their own use of prior authorization, which causes care to be “significantly delayed,” said Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services.

“It erodes public trust in the health care system,” Oz told the media. “It’s something that we can’t tolerate in this administration.”

But some critics, like Vinay Rathi, an Ohio State University doctor and policy researcher, have accused the Trump administration of sending mixed messages.

On one hand, the federal government wants to borrow cost-cutting measures used by private insurance, he said. “On the other, it slaps them on the wrist.”

Administration officials are “talking out of both sides of their mouth,” said Rep. Suzan DelBene, a Washington Democrat. “It’s hugely concerning.”

Patients, doctors, and other lawmakers have also been critical of what they see as delay-or-deny tactics, which can slow down or block access to care, causing irreparable harm and even death.

“Insurance companies have put it in their mantra that they will take patients’ money and then do their damnedest to deny giving it to the people who deliver care,” said Rep. Greg Murphy, a North Carolina Republican and a urologist. “That goes on in every insurance company boardroom.”

Insurers have long argued that prior authorization reduces fraud and wasteful spending, as well as prevents potential harm. Public displeasure with insurance denials dominated the news in December, when the shooting death of UnitedHealthcare’s CEO led many to anoint his alleged killer as a folk hero.

And the public broadly dislikes the practice: Nearly three-quarters of respondents thought prior authorization was a “major” problem in a July poll published by KFF, a health information nonprofit that includes KFF Health News.

Indeed, Oz said during his June press conference that “violence in the streets” prompted the Trump administration to take on the issue of prior authorization reform in the private insurance industry.

Still, the administration is expanding the use of prior authorization in Medicare. CMS spokesperson Alexx Pons said both initiatives “serve the same goal of protecting patients and Medicare dollars.”

Unanswered Questions

The pilot program, WISeR — short for “Wasteful and Inappropriate Service Reduction” — will test the use of an AI algorithm in making prior authorization decisions for some Medicare services, including skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy.

The federal government says such procedures are particularly vulnerable to “fraud, waste, and abuse” and could be held in check by prior authorization.

Other procedures may be added to the list. But services that are inpatient-only, emergency, or “would pose a substantial risk to patients if significantly delayed” would not be subject to the AI model’s assessment, according to the federal announcement.

While the use of AI in health insurance isn’t new, Medicare has been slow to adopt the private-sector tools. Medicare has historically used prior authorization in a limited way, with contractors who aren’t incentivized to deny services. But experts who have studied the plan believe the federal pilot could change that.

Pons told KFF Health News that no Medicare request will be denied before being reviewed by a “qualified human clinician,” and that vendors “are prohibited from compensation arrangements tied to denial rates.” While the government says vendors will be rewarded for savings, Pons said multiple safeguards will “remove any incentive to deny medically appropriate care.”

“Shared savings arrangements mean that vendors financially benefit when less care is delivered,” a structure that can create a powerful incentive for companies to deny medically necessary care, said Jennifer Brackeen, senior director of government affairs for the Washington State Hospital Association.

And doctors and policy experts say that’s only one concern.

Rathi said the plan “is not fully fleshed out” and relies on “messy and subjective” measures. The model, he said, ultimately depends on contractors to assess their own results, a choice that makes the results potentially suspect.

“I’m not sure they know, even, how they’re going to figure out whether this is helping or hurting patients,” he said.

Pons said the use of AI in the Medicare pilot will be “subject to strict oversight to ensure transparency, accountability, and alignment with Medicare rules and patient protection.”

“CMS remains committed to ensuring that automated tools support, not replace, clinically sound decision-making,” he said.

Experts agree that AI is theoretically capable of expediting what has been a cumbersome process marked by delays and denials that can harm patients’ health. Health insurers have argued that AI eliminates human error and bias and will save the health care system money. These companies have also insisted that humans, not computers, are ultimately reviewing coverage decisions.

But some scholars are doubtful that’s routinely happening.

“I think that there’s also probably a little bit of ambiguity over what constitutes ‘meaningful human review,’” said Amy Killelea, an assistant research professor at the Center on Health Insurance Reforms at Georgetown University.

A 2023 report published by ProPublica found that, over a two-month period, doctors at Cigna who reviewed requests for payment spent an average of only 1.2 seconds on each case.

Cigna spokesperson Justine Sessions told KFF Health News that the company does not use AI to deny care or claims. The ProPublica investigation referenced a “simple software-driven process that helped accelerate payments to clinicians for common, relatively low-cost tests and treatments, and it is not powered by AI,” Sessions said. “It was not used for prior authorizations.”

And yet class-action lawsuits filed against major health insurers have alleged that flawed AI models undermine doctor recommendations and fail to take patients’ unique needs into account, forcing some people to shoulder the financial burden of their care.

Meanwhile, a survey of physicians published by the American Medical Association in February found that 61% think AI is “increasing prior authorization denials, exacerbating avoidable patient harms and escalating unnecessary waste now and into the future.”

Chris Bond, a spokesperson for the insurers’ trade group AHIP, told KFF Health News that the organization is “zeroed in” on implementing the commitments made to the government. Those include reducing the scope of prior authorization and making sure that communications with patients about denials and appeals are easy to understand.

‘This Is a Pilot’

The Medicare pilot program underscores ongoing concerns about prior authorization and raises new ones.

While private health insurers have been opaque about how they use AI and the extent to which they use prior authorization, policy researchers believe these algorithms are often programmed to automatically deny high-cost care.

“The more expensive it is, the more likely it is to be denied,” said Jennifer Oliva, a professor at the Maurer School of Law at Indiana University-Bloomington, whose work focuses on AI regulation and health coverage.

Oliva explained in a recent paper for the Indiana Law Journal that when a patient is expected to die within a few years, health insurers are “motivated to rely on the algorithm.” As time passes and the patient or their provider is forced to appeal a denial, the chance of the patient dying during that process increases. The longer an appeal, the less likely the health insurer is to pay the claim, Oliva said.

“The No. 1 thing to do is make it very, very difficult for people to get high-cost services,” she said.

As the use of AI by health insurers is poised to grow, insurance company algorithms amount to a “regulatory blind spot” and demand more scrutiny, said Carmel Shachar, a faculty director at Harvard Law School’s Center for Health Law and Policy Innovation.

The WISeR pilot is “an interesting step” toward using AI to ensure that Medicare dollars are purchasing high-quality health care, she said. But the lack of details makes it difficult to determine whether it will work.

Politicians are grappling with some of the same questions.

“How is this being tested in the first place? How are you going to make sure that it is working and not denying care or producing higher rates of care denial?” asked DelBene, who signed an August letter to Oz with other Democrats demanding answers about the AI program. But Democrats aren’t the only ones worried.

Murphy, who co-chairs the House GOP Doctors Caucus, acknowledged that many physicians are concerned the WISeR pilot could overreach into their practice of medicine if the AI algorithm denies doctor-recommended care.

Meanwhile, House members of both parties recently supported a measure proposed by Rep. Lois Frankel, a Florida Democrat, to block funding for the pilot in the fiscal 2026 budget of the Department of Health and Human Services.

AI in health care is here to stay, Murphy said, but it remains to be seen whether the WISeR pilot will save Medicare money or contribute to the problems already posed by prior authorization.

“This is a pilot, and I’m open to see what’s going to happen with this,” Murphy said, “but I will always, always err on the side that doctors know what’s best for their patients.”

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20 comments

  1. AG

    This entire line of thinking is just very very sick. (“fascism” where are you when we need you?)

    A bit related perhaps:
    A couple of years ago a distant colleague published a book argueing in favour of blockchain picturing it as the salvation. (Is it possible that by now nobody speaks about it any more?). Anyhow. Besides the colleague painted the use of AI for assessing and organising social welfare in rosy colours. This being 6 years ago I already had a bad feeling. So the worst is socially “progressives”, themselves well-to-do individuals, endeavouring into these schemes apparently not recognizing the forest from that one tree. And why this is happening over and over with well-meaning people is seriously puzzling.

    Reply
  2. ambrit

    I can see the imminent opening of Chapter Houses of the Confraternity of Saint Luigi the Adjuster in those “pilot program” afflicted states.
    Waiting for the first public example of “engraved” shell casings sporting the phrase; “First do no harm.”
    This is a basic Social Contract issue. As history teaches, the breakdown of a formerly robust Social Contract usually precedes a “vigourous” adjustment to the social hierarchy.

    Reply
    1. JBird4049

      >>>I can see the imminent opening of Chapter Houses of the Confraternity of Saint Luigi the Adjuster in those “pilot program” afflicted states.

      I understand that you are likely speaking in hyperbole, but as I was reading the first paragraphs of this post, an image of Saint Luigi did flash in my mind and a thought that there are going to be more Luigis. Having spontaneous chapters of an American order of Luigi rather like Saint Francis of Assisi arose would be unsurprising. Americans used to be known for being self organizing and political. Add the increasing nihilism in our nation to what was a deep cultural trait of self organizing and reformist, I would be completely unshocked.

      And just speculating here, I expect something like the nihilism of assassination and the American tendency to organize and protest to combine into some kind of large movement without centralizing leadership as a means to express the despair and rage in the American nation that will deny the police state an easy way to destroy or control pesky organizations and movements like the Black Panthers or MLK’s efforts.

      Luigi the Adjuster is a cultural expression of America under stress. Or Santa Muerte is for Mexico and Saint Francis of Assisi for Italians although all three come from different situations. They are still revealing of what composes their culture. Interestingly, despite the deep strain of violence in the American nation, often it is occluded by the peaceful, often messianic, American strain of reformism especially when dealing only with what is happening inside the nation; however, if peaceful change, especially if peaceful conversation, is blocked, the violence, which is always simmering below the surface, comes out.

      Using AI to block the use of Medicare can be seen as another way to block reforms. Strangely, the ones doing the blocking of expression for reform, never mind actual reform, by Americans seem the most surprised when it all blows up; the surprised ones usually do over react, which always invites more violence.

      No joking here. I expect some version of Saint Luigi’s chapter houses to be followed by the government’s freakout. And to think that the American “healthcare” system is universally hated by the bottom ninety percent of Americans regardless of ideology, which shows how messed up the whole country is.

      Reply
  3. Cas

    If the Trump administration were serious about curbing Medicare waste, it would hire more government investigators to ferret out fraudalent claims by doctors and medical clinics. Instead, they keep looking for ways to spend government money on AI to serve the tech businesses that are today’s leeches (aka pigs at the trough) on the administration.
    Here’s a press release from June 2025 announcing criminal charges against 324 defendants for $14.6 billion in false claims.
    https://www.justice.gov/opa/pr/national-health-care-fraud-takedown-results-324-defendants-charged-connection-over-146

    Reply
  4. Carla

    OBoyOBoy — in Ohio, we’re in a pilot program for this great improvement in seniors’ healthcare coverage (and of course coverage ain’t healthcare, there’s the first category error).

    Headline: Your doctor says you need pain treatment, but Medicare’s AI might disagree

    cleveland.com Sep. 14, 2025
    https://archive.ph/DE2dQ

    Reply
  5. IM Doc

    If they are going to use AI – it is probably much more cost effective to use it to go after those who are cheating. Surely, as stupid as AI seems to be it can probably catch these fraudsters. The humans sure seem unable to do so.

    The last big story I heard about a few months ago was an internist who had been billing between 400-600K a month for services. It was aligned with some kind of home health fraud. The 400-600K a month had been going on for 4 years – and Medicare was just paying it out every month.

    To put that in perspective, in the very busiest months, my personal billing, an internist in the 95% percentile, is about 40K for Medicare.

    So hopefully you can see that the fraudster was charging and billing and receiving literally orders of magnitude more than a very busy internist, and no one caught this for 4 years. You hear these stories in medicine literally all the time. Many if not most of these fraudulent companies and doctors are foreign medical graduates and foreign nurses and foreign home health companies. I personally field 5-10 signature requests a month for durable medical equipment on my elderly patients often for thousands and thousands of dollars. Regarding things the patients have no need of, and things that have never been ordered. (This has slowed down a lot – for the first time in my life since January, there does seem to be some attention to this kind of fraud in CMS.) Most MDs do not even look at stuff, they are so overwhelmed with papers needing signatures, they have their staff pile the 30 daily documents on the desk and they just sign them. I have often wondered if there is much more to these stories than we all realize. The whole point may actually be the skim going to some of these foreign countries in this form and not a direct handout. We are literally talking tens if not hundreds of millions in some of these capers.

    Since the humans cannot seem to cope with this, maybe they can give this task of looking for billing anomalies in huge datasets to AI. I can guarantee that much much more will be saved rather than doing pre-auths on 90 year old little old ladies.

    This is a bipartisan situation. Absolutely no one is minding the store on these billings. The funds are just sent automatically, and it does not appear that anyone is paying attention.

    Reply
    1. Yves Smith Post author

      This is not how the article depicts it will be used. It is quite clear the intent is to use it significantly if not entirely for pre-authorizations for bigger ticket items. As in a large if not the main focus will be on the patient procedure (denial/delay of care) and not much on providers.

      I don’t know why you are on board with using AI to deny care when have cited experts as well as have had readers provide their own accounts how often AI performs badly on much less high stake matters.

      Reply
      1. IM Doc

        Oh I am not OK with denying care at all. I think you have completely misunderstood what I am saying.

        I am saying if they are going to use it, they should be using it to identify these fraudsters. Surely, how these “providers” bill has got to throw off all kinds of mathematical and statistical red flags. Their billing has absolutely nothing to do with care at all. They make stuff up out of thin air, using patient’s IDs to bill stuff that never happens. If AI can somehow be used to ID these types of patterns there is much more money to be saved than going after someone’s meds or surgery.

        Reply
        1. Yves Smith Post author

          That is not what the article about how it will be used said.

          I don’t know why you are making up uses. This is what the article said:

          The pilot program, designed to weed out wasteful, “low-value” services to a federal expansion of an unpopular process called prior authorization, which requires patients or someone on their medical team to seek insurance approval before proceeding with certain procedures, tests, and prescriptions…

          The pilot program, WISeR — short for “Wasteful and Inappropriate Service Reduction” — will test the use of an AI algorithm in making prior authorization decisions for some Medicare services, including skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy.

          It is intended to deny or limit care. It is focused on prospective patient services, and not past provider patterns.

          Reply
      1. Daniel Dropkin

        IM Doc proclaimed on this site that he was going to vote for Trump. A few weeks ago he said that there was no way he was going to vote for a democrat in the next presidential election.

        Reply
      2. Al

        I’m surprised as well. Most internists I’ve meet lean Democrat. Surgeons on the other hand are different story. Perhaps he is a high earner or is on some right leaning advisory board.

        Reply
  6. ciroc

    If a patient receives unnecessary or wasteful treatment, the responsibility lies with the physician, not the patient. The AMA would swiftly support Medicare for All if doctors were held accountable for some of the costs when insurance coverage is denied.

    Reply
    1. Yves Smith Post author

      That’s not how it works. Most of what this scheme seems intended to do is deny or delay treatments. This is what private medical insurers do now, and insurers do generally, it try to deny or underpay claims.

      If this is a fairly big cost. the patient won’t get care.

      If the patient get care. he has to pay the bill if Medicare does not cover it. This is how you get medical bankruptcies.

      Reply
  7. leapfrog

    The 2023 UnitedHealthcare lawsuit also claims that the company knows its AI tool has a 90 percent error rate yet continues to use it to systematically deny claims. classaction.org.

    Reply
  8. skippy

    I am surprised by some of the above comments.

    Not that America has not had ludicrous high levels of corruption and fraud since, day one [GW ripping off farmers of promised land/he took it] , but, post FDR anti corruption/fraud/guardrails the evidence was clear e.g. stable society with uplift for all i.e. continuity.

    So whilst some think AI [lmmao] like days of old on NC where meta data free market[tm] sorts and econ libertarians proselytized that it would enable ***them*** too create the perfect society [if not give them predictive/time travel powers] by any means necessary – gleeful wild abandon. Post abandonment of any notion of a society via neoliberal market/corporatism framework going back to Carbide Union/Exxon Valdez etc everything else rolled out is just more of the same with ratchet effect.

    Heck in this case I remember the old Moore show The Awful Truth on HBO, husband, father, hard worker, no crim record, most productive years denied an organ transplant by insurance company. Seems the contract stated in the front that he was covered and in the back it was at the discretion of the insurance comp. Hilarity issued, comp was not pleased and having its expensive PR/Marketing take a black eye and at the end of the day he got it done. Moving forward we have the de-funding of Gov oversight, endless privatization, income expectations of absentee investors protected by unwashed 401K fears, et al – short list.

    Best for last as Heritage, Rommney, Obama, ACA[lmmao] care paired with E medical records, sold as consumer[tm] ***choice*** and increasing ownership of medical anything by Private Equity is just rent extraction and service is a factor of a corp balance sheet – you are just a +/- cash flow identity and nothing more.

    Hence the idea that AI would ever be used to weed out the corrupt/fraudulent is a nice bedtime story for those with hope …..

    Reply
  9. Nevermore

    The form of the destructor has been chosen.

    All my boomer life I heard that “Medicare is not going to be there for you”

    Now we know what “not being there” is going to look like.

    Reply

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