Medicare's AI-Powered Prior Authorization Pilot Stumbles in Six States

A federal experiment to bring prior authorization to traditional Medicare is generating significant friction just months after launch. The Wasteful and Inappropriate Service Reduction Model, or WISeR, began in January across six states—Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington—requiring preapproval for 13 medical services the government considers prone to fraud or misuse.

The program marks a sharp departure for Medicare, which historically avoided the prior authorization requirements common in private insurance. Now, patients like Bill Curry, an Oklahoma cattle rancher who drives 2½ hours for quarterly epidural injections, face unexpected approval hurdles and additional trips for paperwork he never needed before.

Why it matters

This pilot represents Medicare's first large-scale deployment of AI-driven prior authorization, affecting millions of beneficiaries in the test states. If deemed successful, the program could expand nationwide and to additional procedures, fundamentally changing how traditional Medicare operates. The early implementation problems also reveal the challenges of rapidly deploying AI systems in healthcare administration—a cautionary tale as both public and private insurers increasingly turn to automation.

A rushed rollout creates confusion

The program moved from announcement in June 2024 to launch in mid-January—"quicker than normal" for federal initiatives, according to Todd Baker, former CEO of the Ohio State Medical Association. Doctors received little preparation time, and technology vendors acknowledged they were still adding features to their systems through the spring.

The 13 services subject to review include epidural injections, kyphoplasty for spinal fractures, and skin substitutes—all flagged by federal auditors for suspected overuse or fraud. Medicare spending on skin substitutes alone surged nearly 700% over two years, raising red-flag concerns from the Department of Health and Human Services inspector general.

Payment delays and potential AI errors

While the Centers for Medicare & Medicaid Services promises 72-hour decisions, the reality has been messier. The University of Washington medical system had nearly 100 patients waiting for epidural injections due to WISeR delays as of April, according to a report from Sen. Maria Cantwell's office.

Payment problems have compounded the authorization issues. James Webb, a Tulsa radiologist, reports six- to eight-week payment delays instead of the standard 15 days. Phoenix pain management physician Jerry Sobel said he hadn't been paid for nine epidurals as of May. Arizona contractor Zyter acknowledged a large payment backlog stretching to January during an April webinar.

Doctors also suspect AI hallucinations are causing erroneous denials. One Arizona physician received a denial citing the wrong spinal region. Webb documented four times that a patient lacked numbness, yet the system denied the procedure based on numbness being present—a contradiction that suggests automated processing errors.

The human cost

Jennifer Valle, who handles precertification at an Oklahoma radiology practice, describes "nitpicking" from reviewers and instances where submitted imaging is overlooked, prompting requests for files already in the system. New Jersey physician Dorota Gribbin reported that by the time authorization arrived for one patient's back pain procedure, the patient had already sought more expensive hospital care.

Abe Sutton, director of the Center for Medicare and Medicaid Innovation, acknowledged in a statement that "the percentage of providers committing waste, fraud, and abuse is small." He said the program aims to reduce inappropriate care without delaying appropriate care, though he did not address specific implementation problems.

The increased denials are also raising government costs, as more appeals flow to Medicare's administrative contractors—entities the government pays to handle disputes.

Mary Clarke, a family physician in Stillwater, Oklahoma, believes expansion is inevitable: "Everybody knows that if this pilot project works, it will be prior auth for basically all procedures." Sutton said there are "currently no changes" planned for the service list but that CMS continues assessing whether changes are warranted.

These details were first reported by KFF Health News.