US pilots AI for insurance approvals—but doctors fear faster denials

Prior authorization serves as a check on overuse and unnecessary spending in healthcare, but the process has become a major source of patient and physician frustration. Many patients abandon recommended treatments while waiting for insurers to verify coverage eligibility, and appeals add further delays. A 2025 American Medical Association survey revealed significant worry: 61 percent of physicians surveyed expressed concern that AI tools will worsen wrongful denials of care they deem medically necessary. The AMA has called for insurers to provide detailed clinical reasoning when denying coverage and greater transparency about AI algorithms.

The Trump administration is pursuing AI expansion through the Centers for Medicare and Medicaid Services, which this year began WISeR (Wasteful and Inappropriate Service Reduction Model) in six states. Running through December 2031, WISeR combines machine learning with human clinical review to evaluate services CMS believes may be vulnerable to overuse, fraud, and abuse—including skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis. Prior authorization has been standard in Medicare Advantage, the privately managed alternative that now covers roughly 55 percent of Medicare-eligible seniors and disabled people, where insurers issue millions of full or partial claim denials annually. An HHS Inspector General memo from 2022 found that more than one in 10 denials in Medicare Advantage plans were inappropriate despite patients apparently meeting coverage rules. However, prior authorization has rarely been deployed in original Medicare, making WISeR a significant shift.

Critics point to a troubling financial structure: vendors hired to conduct AI-driven prior authorization earn a share of "averted expenditures"—effectively profiting from rejected care requests. This incentive structure has drawn pushback from health policy advocates including Wendell Potter, former health insurer executive, and Zena Wolf, researcher with the Center for Health & Democracy. Early investigations by the Washington Post, KFF Health News, and the Seattle Times cited in their analyses suggest that in the first few months of WISeR, the model has caused delays in care and denials in all six pilot states. Additionally, the automated process creates high administrative burden for healthcare providers dealing with denials.

The administration presents a contradictory approach: while CMS expands AI-driven prior authorization in original Medicare, it has pressured private insurers to reduce their use of the process. CMS Administrator Mehmet Oz warned insurance executives that if they do not ease the burden of prior authorization, "we're going to do it for you." In response, private insurers released survey data showing that prior authorization requests declined 11 percent between June 2025 and April 2026, and all responding health plans stated they do not use AI or algorithms without clinician review to deny requests involving medical necessity or clinical considerations. However, physician Jared Dashevsky, founder of Healthcare Huddle, expressed skepticism, arguing that the current approach represents "an arms race to deny faster and appeal faster" rather than the promised administrative efficiency and improved patient access.

Prior authorization—the process by which patients must seek pre-approval from insurers before receiving certain medical treatments—has long been a source of friction in American healthcare. Physicians and patients report significant delays in care, and a Commonwealth Fund survey found roughly one in five working-age Americans with private insurance experienced a denial in 2025, with 41 percent saying it delayed their care and more than a quarter reporting their health worsened as a result. The Biden administration attempted reform in 2024, requiring insurers to make urgent decisions within 72 hours and non-urgent ones within seven calendar days, rules that went into effect January 1, 2025. Private insurers have pledged to standardize electronic requests by 2027 and reduce prior authorization volume for common procedures like colonoscopies and cataract surgeries by 2026.

The Trump administration's WISeR pilot represents a new approach: rather than lightening the prior authorization burden, it extends AI-driven authorization into original Medicare—where prior authorization has been rare—while simultaneously pressuring private insurers to ease their own processes. CMS Administrator Mehmet Oz has told insurance executives to streamline the process or face federal regulation. Yet the financial structure of WISeR creates a potential misalignment: vendors are compensated based on "averted expenditures," meaning they profit when claims are rejected. This echoes a longstanding concern in American healthcare about incentives to deny necessary care. Early reports from the pilot's first months indicate delays and some denials in all six participating states, suggesting the system may not be delivering the promised speed or appropriateness.