Medicare's AI Prior Authorization Pilot Left Patients Waiting

Back in January, Medicare launched an AI prior authorization pilot that lets private companies decide whether patients get approval for certain procedures. This week, about 1,000 pages of federal records pried loose by a lawsuit showed how that rollout actually went: one vendor told the government its software was not ready, one patient's request sat unanswered for 83 days, and two vendors denied more than 20,000 requests in the program's first three months.

The pilot is called WISeR, short for the Wasteful and Inappropriate Service Reduction model. It runs in six states, Arizona, New Jersey, Ohio, Oklahoma, Texas and Washington, and applies to Original Medicare rather than Medicare Advantage. The procedures on the list include epidural steroid injections for pain, implanted nerve stimulators, skin substitutes and vertebral augmentation. CMS says a qualified human clinician must review every denial, and the pilot is scheduled to run through 2031.

The records were obtained by the Electronic Frontier Foundation, which sued the Centers for Medicare and Medicaid Services in March under the Freedom of Information Act and published the documents on Sept. 8. The most damning detail is that a vendor warned CMS before launch that expecting a working product on the agency's timeline was unrealistic. CMS launched the program anyway in January 2026, a story first reported by STAT.

About a month before launch, Innovaccer, the vendor handling requests in Ohio, told CMS it planned to go live with software that lacked full functionality and had not been fully tested. The company blamed changing requirements, unclear governance processes and a lack of time for end-to-end testing with the medical community. It said it would automatically approve requests until the full system was ready, since CMS had decided not to delay the start date. An April 2026 status report showed some features were still unfinished months into the program.

What patients and doctors reported

The provider feedback in the records is blunt. One respondent wrote that patients were "calling our offices crying in pain" because procedures were delayed while approvals were pending. Another described watching three patients cry at the bedside while waiting to hear about a kyphoplasty procedure. A third reported waiting more than a month and a half just for a tracking number to be generated while patients' surgeries were canceled.

These are provider accounts submitted to CMS, not verified medical records, and they describe one vendor in one state. But they match reporting about Medicare patients left waiting in pain for approvals, as MedicalDaily's coverage of the records release noted.

Virtix Health, which handled requests in Washington state, denied more requests than it approved during its first three months, and CMS required it to file a corrective action plan. CMS told MarketWatch that Virtix's turnaround times have since improved and are on track to meet the model's 72-hour requirement, with the corrective action plan closing Aug. 14, according to MarketWatch's reporting.

The money behind the denials

The money explains the delays. The records confirm vendors are paid for the requests they deny, except when a denial is reversed on appeal, and they can keep up to 20 percent of the savings from services they block. CMS ties vendor payments to quality scores that factor in timeliness and accuracy, but a low score cuts payments by only 5 to 10 percent.

Miranda Yaver, a health policy professor at the University of Pittsburgh who wrote a book about insurance denials, told MarketWatch the setup was no accident: "The financial incentive to deny coverage is a dramatic manifestation of profit-seeking. Some denials are appropriate. Many are not." She called the pilot's report card "pretty unimpressive," adding, "We all could have foreseen that this wasn't going to go great."

CMS pushed back in a statement to MarketWatch: "CMS closely monitors the implementation of all models, including system performance and denial patterns, and is actively addressing issues as they arise." Abe Sutton, who leads the CMS Innovation Center, had previously said contractors are rewarded for getting "the determination right," not for denying claims.

Why this matters beyond Medicare

The timing is hard to miss. The New York Times reported Sept. 14 that the Trump administration is accelerating a push to weave AI into medical care across the Department of Health and Human Services, with some officials worried the change is moving too fast on thin evidence of safety. WISeR is the first large-scale test of that vision, an AI prior authorization system running inside traditional Medicare, and the records read like a preview of what happens when AI systems are deployed before they are ready. Regulators are clearly still figuring out how to set guardrails, as California's AI kill switch regulation showed.

The story extends beyond Medicare. If you have ever fought an insurance company over a denied claim, you know the playbook. AI is already creeping into coverage decisions everywhere, and the incentives here are a preview of the version that shows up in your own insurance app. We have seen what happens when AI systems go off-script, like when Google's Gemini AI hacked three real companies by accident.

There is also a question of where this goes next. A June 2025 planning document in the release lists services that could be added to WISeR in future years, including air ambulance transport, cancer treatment and MRI scans. That document lists possibilities, not decisions. Meanwhile, some members of Congress have asked House appropriators to block the model in the fiscal 2027 spending bill. EFF says CMS is still producing documents in the FOIA lawsuit, so more of the story is coming.