The Centers for Medicare and Medicaid Services (CMS) has unveiled a pilot program that will introduce artificial intelligence (AI) into the process of determining which medical services are covered under Medicare. The program, scheduled to launch next year in six states, will apply prior authorization requirements to some services in Original Medicare, a change from the program’s traditional structure. The initiative is being presented as a way to reduce unnecessary spending, but it has already raised concerns about patient access and the role of automation in healthcare decision-making.
How the Pilot Will Work
According to a CMS press release, the new program is designed to “target wasteful, inappropriate services in Original Medicare.” The agency plans to use AI software to help assess whether proposed medical treatments represent appropriate use of federal funds. While prior authorization has long been common in Medicare Advantage and private insurance, its introduction into Original Medicare marks a significant departure from past practice.
Prior authorization requires doctors and hospitals to obtain approval before performing certain procedures or treatments. Under this pilot, AI algorithms will review cases and assist in deciding which claims should be covered. CMS says the technology will help standardize decision-making and ensure consistency across different providers and states, while also aiming to save taxpayer dollars by reducing unnecessary services.
The program will not affect all Medicare participants immediately. It is limited to six states in its initial rollout and will apply only to selected services. However, the outcome of the pilot could determine whether the model expands nationwide, making it one of the most closely watched developments in Medicare policy in recent years.
Questions Around Oversight and Fairness
The New York Times reported that algorithms used in healthcare coverage decisions have been the subject of lawsuits, often centered on claims that automated systems incentivize the denial of care. Critics argue that companies providing the technology may benefit financially from rejecting claims, raising ethical concerns about conflicts of interest. Some advocacy groups have already described the pilot as a form of “AI death panels,” highlighting fears that technology could replace nuanced medical judgment with automated cost-cutting.
Healthcare policy experts point out that decisions about what is “appropriate” care are not always straightforward. Older adults and people with disabilities, the main groups covered by Medicare, often require complex and individualized treatment plans. There are concerns that AI-driven prior authorization could introduce new barriers, forcing patients to go through lengthy appeals when care is denied.
While CMS has framed the program as a modernization effort, the debate underscores a broader question about how much responsibility should be delegated to algorithms in making life-altering healthcare decisions. The agency has not disclosed the specific vendors providing the AI tools, leaving additional questions about transparency and accountability unanswered.
Reactions and What Comes Next
In its announcement, CMS emphasized the potential for the pilot to streamline operations and reduce wasteful spending. The agency stated that the use of AI will allow Medicare to focus resources on effective treatments and prevent unnecessary costs. Supporters of the plan argue that careful implementation could improve efficiency without harming patient care, but the rollout will be closely monitored by lawmakers, medical professionals, and patient advocacy groups.
The move also highlights the growing similarities between Medicare Advantage and Original Medicare. While private Advantage plans have relied heavily on prior authorization, beneficiaries in the government-run program have largely avoided those requirements. Introducing the same system into Original Medicare represents a notable policy shift that could affect millions of Americans if expanded.
As the pilot begins in 2025, CMS will face pressure to prove that AI-based prior authorization can operate fairly, effectively, and without undermining patient access to care. Whether the program achieves those goals or sparks further legal and political battles will likely shape the future of AI in federal healthcare programs.