Medicare Is Letting AI Say No — and the Companies Doing It Get Paid for Denials

Here’s a business model I’d never have believed if I hadn’t read the contract.

Medicare hires a private tech company to review whether your procedure should be covered. The company uses artificial intelligence to help decide. And the company gets paid a cut of the money Medicare doesn’t spend.

Say no, get paid. Say yes, get nothing.

I’ve been writing about money for more than 35 years, and I’ve watched a lot of companies build incentives that work against the customer. Usually you have to dig to find them. This one is written down in a federal payment methodology document.

How a denial turns into a payday

The program is called the Wasteful and Inappropriate Service Reduction model, or WISeR. It launched Jan. 1, 2026, and runs through 2031.

It applies only to Original Medicare, not Medicare Advantage, and only in six states: Arizona, New Jersey, Ohio, Oklahoma, Texas and Washington.

If you live in one of those states and your doctor wants to perform one of a short list of outpatient procedures, a private contractor now has to approve it first. We covered the setup when it was announced in “17 Services That Medicare Wants People to Stop Using.”

Here’s the part that got less attention. According to CMS’s WISeR payment methodology, contractors earn money on requests they refuse, as long as the refusal isn’t later overturned.

CMS calls the refusals “non-affirmations.” You’d call them denials.

The agency’s answer to the obvious conflict is a quality score. Contractors that are slow or inaccurate get paid less.

How much less? Documents released this month show the penalty tops out somewhere in the range of 5% to 10%.

That’s the guardrail. A 10% haircut on revenue you earned by turning down somebody’s spinal injection.

What a thousand pages of federal records revealed

On Sept. 8, the Electronic Frontier Foundation published roughly 1,000 pages of CMS records it obtained by suing the government under the Freedom of Information Act.

They aren’t flattering.

CMS tells contractors to answer a prior authorization request within 72 hours. Internal status reports show large numbers of requests blowing past that. One sat unanswered for 83 days.

Two contractors alone refused more than 20,000 requests in the program’s first three months. One of them, Virtix, turned down more requests than it approved, and CMS made it file a corrective action plan.

Then there’s the launch itself. About a month before the start date, the contractor handling Ohio told CMS its software wasn’t finished or fully tested.

Its solution was to automatically approve everything until it caught up. CMS launched on schedule anyway.

Doctors who filled out a CMS feedback form in March described patients in real pain waiting weeks for answers, surgeries canceled, and no one on the other end of the line.

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The appeal trap nobody explains

Now the part that will cost you money if you don’t know it.

When a WISeR contractor refuses your doctor’s request, that refusal is not itself appealable. There’s no form to file, no hearing to request.

What your doctor can do is resubmit, as many times as needed, and ask for a peer-to-peer review with a clinician on the contractor’s side.

Real Medicare appeal rights don’t kick in until a claim is actually submitted and denied. At that point you get the full process, starting with a redetermination request, and you have 120 days from your Medicare Summary Notice to start.

So the order matters. If your doctor gives up at the refusal stage and cancels the procedure, there’s nothing to appeal. Nothing was ever billed.

Watch for one more document. If your provider expects Medicare to refuse payment, you may be asked to sign an Advance Beneficiary Notice.

Sign it and you’re agreeing to pay out of pocket if Medicare says no. Read it before you sign, and ask what the procedure actually costs.

What to do if you’re in one of the six states

First, find out whether this touches you at all. It only applies to Original Medicare, and only to a specific list of outpatient services that has already changed once. CMS delayed two of them in April.

Emergency care and inpatient hospital stays are excluded.

So when your doctor schedules something, ask one question: Does this procedure require prior authorization under the WISeR model?

If the answer is yes, ask three more:

1. When was the request submitted?
2. Has the contractor responded?
3. If it was refused, are you resubmitting with more documentation or requesting a peer-to-peer review?

Write down dates and reference numbers every time. A paper trail is what turns “we’re still waiting” into a complaint somebody has to answer.

If you’re stuck, your state’s free State Health Insurance Assistance Program counselors handle exactly this. So does 1-800-MEDICARE.

And if a claim does get denied, don’t walk away. Most people never appeal, which is precisely why the system works the way it does. Learn more in “7 Steps to Take When Your Medical Insurance Claim Is Denied.”

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Where this is headed

A CMS planning document from June 2025, also in the released records, lists services the agency could fold into the program in later years.

Among the ideas: MRI scans, cancer treatment and air ambulance transport.

CMS notes in that document that some of these would require decisions on a more urgent basis. Think about what “urgent” means when the current program has a request sitting untouched for 83 days.

Six states are the test. If it looks like it saves money, it spreads.

Traditional Medicare’s single best feature was always that it didn’t make you ask permission. That feature is now an experiment, and the people running the experiment get paid when the answer is no.