Medicare's AI Review Pilot Flagged Its Own Contractors Within Weeks

The Wasteful and Inappropriate Service Reduction Model — WISeR — went live January 1 in Arizona, New Jersey, Ohio, Oklahoma, Texas and Washington, requiring advance approval for more than a dozen procedures that traditional Medicare used to pay without a pre-check. Private technology companies run the reviews, and CMS explicitly invited them to deploy tools like artificial intelligence and machine learning in its request for applications. Letters CMS sent between January and March, made public October 27 through a federal public-records lawsuit, show regulators confronting four of the six contractors over backlogs, missing paperwork and denial patterns the agency questioned.

The Ohio contractor drew the sharpest language. Innovaccer's portal was due January 5, got an extension to February 5, and a February 20 performance notice said it still wasn't operational — CMS demanded a corrective-action plan and warned that missed deadlines would 'result in payments being withheld.' Genzeon, in New Jersey, was told February 6 that 459 cases were awaiting decision letters, some 23 days old, against a three-day standard. Zyter, in Arizona, was notified February 27 that no determination letters had gone out at all, and Virtix Health, in Washington, was cited March 17 for blank or incomplete letters and 'denial patterns that raise questions.'

Genzeon said it took 'full responsibility' and had resolved most of its backlog causes. Zyter blamed a 'compressed onboarding timeline' after joining about a month late, saying the issues 'were technical in nature and did not affect the clinical review process.' The release includes no written replies from Virtix or Innovaccer.

What makes WISeR unusual is how the contractors get paid: a 'percentage of the savings directly attributed to their model participation,' which the Government Accountability Office described as a share of 'averted expenses,' rather than the cost-of-review fees paid to normal Medicare claims processors. CMS built in safeguards — a human clinician must review every denial, and a contractor forfeits payment on a case a patient wins on appeal. In May, the GAO concluded the document launching WISeR 'effectively transfers decision-making authority for certain Medicare reimbursement claims' to the companies and should have gone to Congress first.

The clearest glimpse of patient impact comes from Washington state, where an April survey of 16 hospitals by the Washington State Hospital Association, released in a report by Senator Maria Cantwell, found procedures once approved in about two weeks taking four to eight weeks, with hospitals adding staff to handle paperwork. CMS has said it may add more companies, regions and services in future years; the pilot is scheduled to run through December 31, 2031.

The program is also on political borrowed time. In July, the Senate voted 46-50 along party lines against taking up Senator Ron Wyden's resolution to repeal WISeR, and a House Appropriations bill that would have barred federal money for the program or anything like it stalled earlier. The stopgap spending law keeping WISeR alive expires December 11, lawmakers returned Monday, and Democrats take both chambers January 3.