Medicare’s AI pilot sparks deny-faster fears
WASHINGTON, UNITED STATES — A Centers for Medicare and Medicaid Services (CMS) pilot program that uses artificial intelligence (AI) to evaluate Medicare claims is raising concerns that the technology will accelerate care denials rather than improve access to it.
WISeR vendors profit from averted expenditures
According to a report from Undark, the pilot, called the Wasteful and Inappropriate Service Reduction (WISeR) Model, runs through December 2031 across six states and targets skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis.
Vendors earn revenue based on ‘averted expenditures,’ creating a direct financial incentive to reject care requests. Researcher Zena Wolf of the Center for Health & Democracy cited investigations showing WISeR had already caused delays and denials in pilot states.
“AI should be used to make appropriate care easier to approve, not necessary care easier to deny,” said Camm Epstein, a health policy analyst.
Prior authorization (PA) denials in Medicare Advantage (MA) were overturned 81% of the time upon appeal in 2024, suggesting that AI-accelerated denial processes could compound a system already prone to wrongful rejections.
Physicians fear AI worsens denial rates
Roughly 55% of Medicare-eligible seniors and disabled individuals are enrolled in MA, where insurers issue millions of full or partial claim denials annually. A 2022 Department of Health and Human Services (HHS) memo found that more than 1 in 10 denials occurred even when beneficiaries met coverage rules.
CMS Administrator Mehmet Oz has warned private insurers to reduce prior authorization burdens or face federal regulation. Health plans have pledged to standardize electronic PA requests by 2027 and limit AI or algorithmic review to non-medical-necessity decisions only.
Dr. Jared Dashevsky, a physician and founder of Healthcare Huddle, warned that AI risks ‘automating a broken system rather than fixing it.’
Sixty-one percent of physicians in a 2025 American Medical Association (AMA) (ama-assn.org) survey said they worry AI will worsen coverage denials, while over 25% of patients who faced denials reported health deterioration after being turned down.
For healthcare outsourcing providers, the WISeR debate underscores the stakes in prior authorization workflows. Offshore teams supporting PA processing, clinical documentation review, and appeals management sit at the center of the functions WISeR is designed to automate — and the center of the concerns it is generating.
Outsourcing firms that build human-in-the-loop review into AI-assisted PA workflows are positioned to address both the efficiency demands and the safety concerns that regulators and physicians are raising. The WISeR pilot will test whether AI in Medicare can thread that needle.
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Disclosure: Outsource Accelerator uses AI tools in the backend of its editorial workflow. Every article is reviewed and verified by a human editor before publication.
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