Medicare to Pay AI Companies a Portion of Automatically Rejected Claims

Private health insurers have long required “prior authorization” for treatments, often using AI models to deny claims. Unlike private insurers, Medicare traditionally covers treatments more readily, but this might change. The Centers for Medicare and Medicaid Services plans to use AI for claim screenings under a new program called the Wasteful and Inappropriate Service Reduction model (WISeR). According to the New York Times, AI companies will receive a share of the money saved by denying healthcare, which could amount to billions over six years. David A. Lipschutz, co-director of the Center for Medicare Advocacy, called this a move to incentivize claim denials. Starting in January, the program will be tested in six states: New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington. It will target select procedures deemed wasteful, excluding emergency services and hospital stays. Experts like Vinay Rathi, an Ohio surgeon, warn of a potential slippery slope. Officials say a licensed human clinician will make the final decisions on denials, with penalties for wrongful rejections. However, previous practices by private insurers, like Cigna and United Healthcare, suggest human oversight might not prevent abuse. Concerns also include potential AI model errors and biases, like incorrectly advising against medical care due to document typos or gender bias. The program draws skepticism about AI’s objectivity in healthcare decisions and its impact on patients’ access.