Pilot program aims to cut waste in Medicare with AI, but critics fear it could delay care

Beginning next year, the federal government will begin using artificial intelligence to determine whether Medicare patients in Washington need prior authorization to receive certain treatments.

The new requirement is part of a pilot program from the Centers for Medicare and Medicaid Services that aims to cut costs and prevent unneeded procedures. The WISeR Model program will evaluate these prior authorization requests through private third-party companies.

Six states were chosen by CMS to participate in the pilot program: Washington, New Jersey, Ohio, Oklahoma, Texas and Arizona. The new requirements start at the beginning of next year and will run through 2031.

“CMS is committed to crushing fraud, waste, and abuse, and the WISeR Model will help root out waste in Original Medicare,” CMS Administrator Dr. Mehmet Oz said in a statement. “Combining the speed of technology and the experienced clinicians, this new model helps bring Medicare into the 21st century by testing a streamlined prior authorization process, while protecting Medicare beneficiaries from being given unnecessary and often costly procedures.”

While many private insurance companies require prior approval of many procedures, Medicare typically does not, outside of those using Medicare Advantage insurance.

Instead, traditional Medicare uses a fee-for-service model in which providers are paid a flat fee for a given procedure.

The private companies hired to evaluate prior authorizations will be further compensated based on much money they are able to save Medicare. This may incentivize companies to deny claims by Medicare users, said Kaiser Family Foundation Medicare policy expert Jeannie Fuglesten Biniek.

“It essentially incentivizes them to deny requests. How that will go raises some concerns,” she said.

Should the pilot program be deemed successful by the federal government, the requirement of prior authorization could be made standard across traditional Medicare. In their announcement of the WISeR model, CMS suggested Medicare’s current model has an “inherent incentive” toward “unnecessary or inappropriate treatment.”

Fuglesten Biniek said such a sweeping shift to prior authorization would “fundamentally change” Medicare.

Use of AI in prior authorization decisions is not new. Many private insurances have introduced the technology to make these approval decisions, but their use is “not without controversy,” said Fuglesten Biniek.

“There’s some concern about transparency when AI is used. But the potential is there for AI to improve the speed and accuracy of these types of decisions,” she said.

Any appeals made to the AI-driven coverage decisions will be reviewed by people at the private company.

The program will only require prior authorization for 16 procedures or treatments that CMS considers to be “potentially low value” to patients and would not have negative consequences if delayed. They include several nerve stimulation devices used for pain relief, Parkinson’s disease treatment, epilepsy and sleep apnea; epidural steroid injections for pain management; a specific kind of surgery for a vertebral compression fracture; a specific kind of knee surgery related to arthritis; treatments for cervical fusion; incontinence control devices; treatment of impotence; and several procedures using bioengineered skin or tissue substitutes for lower-extremity wounds

CMS has not indicated why these treatments are considered potentially low value or why the six states were chosen to participate. The program does not include any inpatient or emergency services.

“If you can prevent the use of unnecessary services, that would be a net gain for both the patient not getting a service they don’t need and Medicare in not spending money. But CMS hasn’t really drilled down into the evidence for these specific services,” Fuglesten Biniek said.

The American Medical Association has called on the federal government to pause implementation of the program until safeguards can be put in place to ensure WISeR does not impede care.

“Prior authorization has consistently been identified by physicians as one of the most burdensome and disruptive administrative requirements they face in providing quality care to patients,” reads a letter from the AMA. “The introduction of such protocols in traditional Medicare only risks creating unnecessary delays in patient care, increasing practice expenses, and diverting time and resources away from direct patient care.”

The AMA also requested that Medicare officials explain what data is used to train AI and to put safeguards in place so the companies making these decisions are not incentivized to deny claims.

Similar concerns were raised by several congressional Democrats, including Rep. Susan Delbene of Washington.

In a letter to the agency, 17 members of Congress said the WISeR program would replace a “doctor’s medical knowledge with an algorithm designed to maximize care denial.”

“In practice WISeR will likely limit beneficiaries’ access to care, increase burden on our already overburdened health care work force, and create perverse incentives to put profit over patients,” the letter reads.

Last week, the House appropriations committee amended a government funding bill to strip money set aside for the program. If the funding bill is passed into law, CMS may continue the program through other revenue streams, Fuglesten Biniek noted.

The amendment to strip funding for the program was approved with bipartisan support without a recorded vote.