September 25, 2025
KFF Well being Information: AI Will Quickly Have a Say in Approving or Denying Medicare Therapies
Taking a web page from the non-public insurance coverage trade’s playbook, the Trump administration will launch a program subsequent 12 months to learn how a lot cash a synthetic intelligence algorithm might save the federal authorities by denying care to Medicare sufferers.
The pilot program, designed to weed out wasteful, “low-value” companies, quantities to a federal enlargement of an unpopular course of referred to as prior authorization, which requires sufferers or somebody on their medical workforce to hunt insurance coverage approval earlier than continuing with sure procedures, assessments, and prescriptions. It’ll have an effect on Medicare sufferers, and the medical doctors and hospitals who look after them, in Arizona, Ohio, Oklahoma, New Jersey, Texas, and Washington, beginning Jan. 1 and working by way of 2031.
The transfer has raised eyebrows amongst politicians and coverage consultants. The normal model of Medicare, which covers adults 65 and older and a few folks with disabilities, has largely eschewed prior authorization. Nonetheless, it’s extensively utilized by non-public insurers, particularly within the Medicare Benefit market.
And the timing was shocking: The pilot was introduced in late June, simply days after the Trump administration unveiled a voluntary effort by non-public well being insurers to revamp and scale back their very own use of prior authorization, which causes care to be “considerably delayed,” stated Mehmet Oz, administrator of the Facilities for Medicare & Medicaid Providers.
“It erodes public belief within the well being care system,” Oz informed the media. “It’s one thing that we are able to’t tolerate on this administration.”
However some critics, like Vinay Rathi, an Ohio State College physician and coverage researcher, have accused the Trump administration of sending combined messages.
On one hand, the federal authorities desires to borrow cost-cutting measures utilized by non-public insurance coverage, he stated. “On the opposite, it slaps them on the wrist.”
Administration officers are “speaking out of each side of their mouth,” stated Rep. Suzan DelBene, a Washington Democrat. “It’s vastly regarding.”
Sufferers, medical doctors, and different lawmakers have additionally been vital of what they see as delay-or-deny ways, which might decelerate or block entry to care, inflicting irreparable hurt and even demise.
“Insurance coverage firms have put it of their mantra that they are going to take sufferers’ cash after which do their damnedest to disclaim giving it to the individuals who ship care,” stated Rep. Greg Murphy, a North Carolina Republican and a urologist. “That goes on in each insurance coverage firm boardroom.”
Insurers have lengthy argued that prior authorization reduces fraud and wasteful spending, in addition to prevents potential hurt. Public displeasure with insurance coverage denials dominated the information in December, when the taking pictures demise of UnitedHealthcare’s CEO led many to anoint his alleged killer as a folks hero.
And the general public broadly dislikes the follow: Almost three-quarters of respondents thought prior authorization was a “main” drawback in a July ballot printed by KFF, a well being info nonprofit that features KFF Well being Information.
Certainly, Oz stated throughout his June press convention that “violence within the streets” prompted the Trump administration to tackle the problem of prior authorization reform within the non-public insurance coverage trade.
Nonetheless, the administration is increasing using prior authorization in Medicare. CMS spokesperson Alexx Pons stated each initiatives “serve the identical aim of defending sufferers and Medicare {dollars}.”
Unanswered Questions
The pilot program, WISeR — quick for “Wasteful and Inappropriate Service Discount” — will check using an AI algorithm in making prior authorization selections for some Medicare companies, together with pores and skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy.
The federal authorities says such procedures are notably susceptible to “fraud, waste, and abuse” and might be held in examine by prior authorization.
Different procedures could also be added to the checklist. However companies which are inpatient-only, emergency, or “would pose a considerable danger to sufferers if considerably delayed” wouldn’t be topic to the AI mannequin’s evaluation, in accordance with the federal announcement.
Whereas using AI in medical insurance isn’t new, Medicare has been gradual to undertake the private-sector instruments. Medicare has traditionally used prior authorization in a restricted means, with contractors who aren’t incentivized to disclaim companies. However consultants who’ve studied the plan consider the federal pilot might change that.
Pons informed KFF Well being Information that no Medicare request shall be denied earlier than being reviewed by a “certified human clinician,” and that distributors “are prohibited from compensation preparations tied to denial charges.” Whereas the federal government says distributors shall be rewarded for financial savings, Pons stated a number of safeguards will “take away any incentive to disclaim medically acceptable care.”
“Shared financial savings preparations imply that distributors financially profit when much less care is delivered,” a construction that may create a strong incentive for firms to disclaim medically mandatory care, stated Jennifer Brackeen, senior director of presidency affairs for the Washington State Hospital Affiliation.
And medical doctors and coverage consultants say that’s just one concern.
Rathi stated the plan “shouldn’t be absolutely fleshed out” and depends on “messy and subjective” measures. The mannequin, he stated, finally is determined by contractors to evaluate their very own outcomes, a alternative that makes the outcomes doubtlessly suspect.
“I’m unsure they know, even, how they’re going to determine whether or not that is serving to or hurting sufferers,” he stated.
Pons stated using AI within the Medicare pilot shall be “topic to strict oversight to make sure transparency, accountability, and alignment with Medicare guidelines and affected person safety.”
“CMS stays dedicated to making sure that automated instruments assist, not substitute, clinically sound decision-making,” he stated.
Specialists agree that AI is theoretically able to expediting what has been a cumbersome course of marked by delays and denials that may hurt sufferers’ well being. Well being insurers have argued that AI eliminates human error and bias and can save the well being care system cash. These firms have additionally insisted that people, not computer systems, are finally reviewing protection selections.
However some students are uncertain that’s routinely occurring.
“I feel that there’s additionally in all probability a bit of little bit of ambiguity over what constitutes ‘significant human overview,’” stated Amy Killelea, an assistant analysis professor on the Heart on Well being Insurance coverage Reforms at Georgetown College.
A 2023 report printed by ProPublica discovered that, over a two-month interval, medical doctors at Cigna who reviewed requests for cost spent a median of just one.2 seconds on every case.
Cigna spokesperson Justine Classes informed KFF Well being Information that the corporate doesn’t use AI to disclaim care or claims. The ProPublica investigation referenced a “easy software-driven course of that helped speed up funds to clinicians for frequent, comparatively low-cost assessments and coverings, and it’s not powered by AI,” Classes stated. “It was not used for prior authorizations.”
And but class-action lawsuits filed in opposition to main well being insurers have alleged that flawed AI fashions undermine physician suggestions and fail to take sufferers’ distinctive wants under consideration, forcing some folks to shoulder the monetary burden of their care.
In the meantime, a survey of physicians printed by the American Medical Affiliation in February discovered that 61% suppose AI is “rising prior authorization denials, exacerbating avoidable affected person harms and escalating pointless waste now and into the long run.”
Chris Bond, a spokesperson for the insurers’ commerce group AHIP, informed KFF Well being Information that the group is “zeroed in” on implementing the commitments made to the federal government. These embody decreasing the scope of prior authorization and ensuring that communications with sufferers about denials and appeals are straightforward to know.
‘This Is a Pilot’
The Medicare pilot program underscores ongoing issues about prior authorization and raises new ones.
Whereas non-public well being insurers have been opaque about how they use AI and the extent to which they use prior authorization, coverage researchers consider these algorithms are sometimes programmed to routinely deny high-cost care.
“The costlier it’s, the extra seemingly it’s to be denied,” stated Jennifer Oliva, a professor on the Maurer Faculty of Legislation at Indiana College-Bloomington, whose work focuses on AI regulation and well being protection.
Oliva defined in a current paper for the Indiana Legislation Journal that when a affected person is predicted to die inside just a few years, well being insurers are “motivated to depend on the algorithm.” As time passes and the affected person or their supplier is compelled to enchantment a denial, the possibility of the affected person dying throughout that course of will increase. The longer an enchantment, the much less seemingly the well being insurer is to pay the declare, Oliva stated.
“The No. 1 factor to do is make it very, very tough for folks to get high-cost companies,” she stated.
As using AI by well being insurers is poised to develop, insurance coverage firm algorithms quantity to a “regulatory blind spot” and demand extra scrutiny, stated Carmel Shachar, a college director at Harvard Legislation Faculty’s Heart for Well being Legislation and Coverage Innovation.
The WISeR pilot is “an fascinating step” towards utilizing AI to make sure that Medicare {dollars} are buying high-quality well being care, she stated. However the lack of particulars makes it tough to find out whether or not it’ll work.
Politicians are grappling with among the similar questions.
“How is that this being examined within the first place? How are you going to ensure that it’s working and never denying care or producing greater charges of care denial?” requested DelBene, who signed an August letter to Oz with different Democrats demanding solutions in regards to the AI program. However Democrats aren’t the one ones anxious.
Murphy, who co-chairs the Home GOP Medical doctors Caucus, acknowledged that many physicians are involved the WISeR pilot might overreach into their follow of drugs if the AI algorithm denies doctor-recommended care.
In the meantime, Home members of each events just lately supported a measure proposed by Rep. Lois Frankel, a Florida Democrat, to dam funding for the pilot within the fiscal 2026 finances of the Division of Well being and Human Providers.
AI in well being care is right here to remain, Murphy stated, however it stays to be seen whether or not the WISeR pilot will save Medicare cash or contribute to the issues already posed by prior authorization.
“This can be a pilot, and I’m open to see what’s going to occur with this,” Murphy stated, “however I’ll all the time, all the time err on the facet that medical doctors know what’s finest for his or her sufferers.”
By Lauren Sausser and Darius Tahir
KFF Well being Information is a nationwide newsroom that produces in-depth journalism about well being points and is likely one of the core working packages at KFF—an unbiased supply of well being coverage analysis, polling, and journalism. Study extra about KFF.
