Venture Capital-Backed Companies to Pilot Medicare's AI Experiment

Venture capital-backed tech companies will pilot Medicare's new AI experiment, called the Wasteful and Inappropriate Services Reduction, or WISeR Model, starting in January 2024. This program will allow private companies to use artificial intelligence to review requests from seniors for certain medical care and will incentivize these companies to deny approvals.

The pilot will be conducted in six states: Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington, and is set to run until 2031. The initiative incorporates prior authorization, a common feature of private insurance that requires approval before patients receive certain medical services.

The Centers for Medicare & Medicaid Services, or CMS, has identified specific services vulnerable to fraud and abuse, including knee arthroscopy for knee osteoarthritis and incontinence control devices.

Companies participating in the program will receive payments based on the savings they generate for Medicare by denying unnecessary services. Concerns have been raised by physicians and patient advocates, who argue that prior authorization can create barriers to essential care and lead to negative health outcomes.

Dr. Bindu Nayak, an endocrinologist in Wenatchee, Washington, noted that many Medicare patients may now face prior authorization when they previously did not. A bipartisan effort in Congress is underway to repeal the WISeR model, with representatives from Ohio and Washington introducing a bill to halt the program.

The bill is currently in committee and is supported by physician and hospital groups in the affected states. CMS announced in November that it has selected six private tech companies, including Humata Health Inc. and Innovaccer Inc., to pilot the AI programs.

Notably, some of these companies are backed by venture capital funds linked to major insurance companies, raising concerns about potential profit-driven denials of care. Critics emphasize the need for safeguards to prevent profit incentives from compromising patient care, while supporters argue that the program is necessary to control rising Medicare costs.

According to the Medicare Payment Advisory Commission, Medicare spending is expected to double in the next decade, potentially reaching $5.8 billion on low-value services in 2022 alone. As the program prepares to launch, stakeholders express apprehension over the administrative burdens it may impose on healthcare providers and the impact on patient care.