AI is coming to Medicare claims

Artificial intelligence can process a prior authorization request in mere seconds, cross-referencing thousands of variables without fatigue. However, AI cannot offer empathy or explain to a 71-year-old retiree that a denial letter is a starting position, not a final verdict.

As AI-driven claims processing becomes the new standard, licensed agents’ roles evolve from enrollment professionals to healthcare navigators.

The architecture of WISeR

Launched Jan. 1, the Wasteful and Inappropriate Service Reduction (WISeR) Model is a six-year pilot program of the Centers for Medicare and Medicaid Services that runs through 2031. It uses AI and machine learning to manage prior authorizations for 17 procedures across six states: Arizona, New Jersey, Ohio, Oklahoma, Texas and Washington. About 6.4 million traditional Medicare beneficiaries now fall within its scope.

The risks of the WISeR algorithmic review

The CMS estimates $5.8 billion in Medicare spending in 2022, with services funded that have little or no clinical benefit. While the WISeR model aims to curb fraud, such as the 2,000% surge in skin substitute spending, it introduces two significant risks.

1.       Profit-driven incentives: The incentive structure for the technology companies administering WISeR (such as Cohere Health, Genzeon Corporation, Humata Health, Innovaccer) is optimized for savings rather than clinical accuracy. Vendors are often paid a percentage of the costs associated with the services they deny. This "percentage-of-savings" model creates built-in pressure to increase denial rates, which no contract language can fully neutralize.

2.       Quiet algorithmic bias: AI systems are only as reliable as the data used to train them. When that data is incomplete or historically skewed, errors result. These systems often produce disparate outcomes and higher denial rates for marginalized populations, a trend that is frequently masked by broad approval/denial statistics. There is also a lack of transparency, as currently, there’s no federal mandate requiring insurers to disclose when an algorithm influences a denial. This allows bias to operate without public or regulatory oversight.

The combination of profit-aligned incentives and a lack of transparency makes the appeals process and your role as an advocate an effective safety net for Medicare beneficiaries.

Health economists studying WISeR's opening weeks concluded that existing evidence indicates that AI-aided prior authorization yields higher denial rates and greater reductions in healthcare utilization than human-only review. Three months in, early field reports from providers and patients in pilot states are discouraging.

The 80/20 problem: A crisis of under-appealing

Research from the American Medical Association shows that AI-assisted reviews result in denial rates up to 16 times higher than those from human-only reviews. Despite this, a massive "appeal gap" exists: Medicare Advantage insurers made 53 million prior authorization determinations in 2024, denying 7.7% of them.

• The success rate: In 2024, 7% of appealed Medicare Advantage denials were overturned.
• The reality: Only 5% of denials (roughly one in nine) are ever challenged.

Most beneficiaries accept a machine's "no" as final because they do not understand their appeal rights. This structural failure creates a vital opportunity for professional intervention.

Understanding overturn rates

Not all denials are equal, and knowing these patterns allows professionals to set realistic expectations before a client even receives a denial letter.

Overturn rates by service type:

• Hospital discharge decisions: ~80% overturn rate
• Durable medical equipment: 63.9% overturn rate
• Ambulance transport: 26.3% overturn rate
• Outpatient services: as low as 22.2%

Mastering the appeals framework

With the implementation of the WISeR protocols, understanding the mechanics of appeals is a critical component of client advocacy. Beneficiaries have 120 days from the date of the denial notice to file. Appeals backed by clinical documentation, physician statements, treatment history, medically necessary and peer-reviewed evidence succeed 82% of the time. While most cases are resolved at Level 1, knowing the escalation path is vital.

• Level 1: Redetermination: Standard (60 days) or expedited (72 hours)
• Level 2: Reconsideration: Independent review entity (no plan affiliation)
• Level 3: Administrative law judge hearing: Disputed amount exceeds $190
• Level 4: Medicare appeals council: Departmental escalation
• Level 5: Federal District Court: Final recourse when the dispute exceeds $1,760

The likelihood of a successful appeal depends heavily on the service type and the specific insurer. Overturn rates also vary dramatically by insurer, in some cases by nearly a factor of two. As of March 31, CMS mandates that all impacted payers publicly post prior authorization metrics. Use these approval and denial rates during annual enrollment period to weigh plan recommendations as heavily as premiums and formularies.

Strategic action: The WISeR readiness review

Roughly 34% of insured Americans rank prior authorization as their single biggest health care burden, above premiums, deductibles and copays.

Meanwhile, the appeal burden is increasingly falling on Medicare Advantage enrollees. Data from Quality Improvement Organizations shows that 93% of all skilled nursing facility coverage appeals come from MA members, despite MA representing roughly half the Medicare market. According to the Commonwealth Fund, the rate of Medicare Advantage appeals per enrollee has nearly doubled since 2016, with inpatient hospital appeals nearly tripling in volume. The system is not working for beneficiaries navigating it alone.

Many beneficiaries in WISeR pilot states chose traditional Medicare specifically to escape the prior authorization complexity embedded in Medicare Advantage. The AEP conversation is no longer sufficient on its own and requires you to build a proactive WISeR readiness review checklist before a client schedules a procedure.

• Identify "gold-card" providers: Know which of your clients' doctors maintain a 90%+ approval rate, exempting them from AI-driven reviews.
• Targeted service categories: Familiarize yourself with the 17 service categories most scrutinized under WISeR.
• Proactive documentation: Build documentation checklists for high-risk procedures before the claim is submitted.
• Master the timeline: Understand the 72-hour expedited window to provide immediate relief for urgent medical needs.

AI for efficiency. Humans for advocacy

AI is a decision-support tool, not a decision-maker. In a system optimized for savings over care accuracy, human oversight is the only thing standing between a beneficiary and a preventable medical crisis.

As CMS considers national expansion for WISeR, the question isn't whether algorithms will review claims, but who will advocate for the person on the other side of the screen.

That person should be you.

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Jason Mack is the vice president of applied AI, enterprise data and analytics for AmeriLife. Contact him at [email protected].