CMS releases FAQ on AI-powered prior auth pilot program

Medicare officials released guidance Tuesday addressing provider concerns about a pilot program that will introduce artificial intelligence-assisted prior authorization to traditional Medicare for the first time.

The frequently asked questions document details the Wasteful and Inappropriate Service Reduction program, or WISeR, launching Jan. 1, 2026, in Arizona, New Jersey, Ohio, Oklahoma, Texas and Washington. The six-year pilot will require prior approval for 17 medical services that federal officials say show patterns of overuse.

Providers treating Medicare patients in those states will need authorization for procedures including skin substitutes, spinal interventions and knee surgeries before receiving payment.

The guidance addresses industry concerns about algorithm-driven medical decisions. Officials emphasized that licensed physicians, not computers, will make final coverage determinations. The requirement responds to growing unease about automated healthcare decisions following a Senate investigation that found major Medicare Advantage insurers used AI to systematically deny care to elderly patients.

The timing has drawn criticism. Days before announcing WISeR, federal officials secured voluntary commitments from major insurers to reduce prior authorization burdens.

Medicare will contract with technology companies that have managed similar programs for Medicare Advantage plans — the same industry the Senate found was using AI to deny care. Contractors will be paid based on how much they help Medicare avoid paying for services deemed inappropriate.

The Senate investigation documented how UnitedHealthcare increased post-acute care denials from 10.9% to 22.7% between 2020 and 2022 after implementing AI systems. CVS used AI to target cases likely to be denied, generating $660 million in savings primarily from rejected hospital admissions.

The guidance outlines two options for providers: request approval before providing services or proceed without authorization and face automatic claim reviews. Legal experts say the second option forces participation because unauthorized services trigger intensive scrutiny.

Providers choosing prior authorization can submit requests directly to technology contractors or through Medicare intermediaries. The document promises unlimited resubmission opportunities and peer-to-peer consultations for rejected requests.

Standard Medicare appeals procedures remain available, officials said. Rejected authorization requests don’t prevent doctors from treating patients and billing, though such claims likely face denials and lengthy appeals.

High-performing providers could earn exemptions under the program. According to federal regulations, practices achieving 90% approval rates during assessments would qualify for streamlined processing.

Industry groups worry about importing Medicare Advantage approval obstacles to traditional Medicare.

The program launches amid federal efforts to combat healthcare fraud. The Justice Department recently charged more than 300 defendants with Medicare and Medicaid fraud schemes.

Medicare defends the pilot by citing research showing unnecessary care accounts for roughly 25% of healthcare spending. The Medicare Payment Advisory Commission estimates Medicare spent $5.8 billion in 2022 on services with minimal benefit.

Hospital inpatient services, emergency treatments and procedures that could harm patients if delayed remain exempt. Officials said patients retain full choice over healthcare providers.

The guidance represents the most detailed explanation of WISeR’s operations to date, though implementation specifics remain unclear.