New Jersey Medicare Patients Face AI-Driven Prior Authorization Starting January

New Jersey seniors enrolled in traditional Medicare are set to experience a major shift in how certain medical procedures are approved, as the federal government rolls out a new artificial intelligence–driven prior-authorization system that brings traditional Medicare closer to the structure of privatized Medicare Advantage plans.

Beginning in January, New Jersey will be one of six states participating in a federal pilot program that uses AI to determine whether specific medical services should be covered before care is delivered.

The initiative, known as the Wasteful and Inappropriate Service Reduction (WISeR) model, will affect an estimated 6.4 million traditional Medicare beneficiaries nationwide, including a significant population in New Jersey.

The program is overseen by the Centers for Medicare & Medicaid Services, which says artificial intelligence will be used to screen requests for certain outpatient procedures and flag cases that require additional scrutiny.

While CMS has emphasized that final decisions will be made by human reviewers, AI systems will play a central role in deciding which claims require prior authorization in the first place.

Under WISeR, doctors treating Medicare patients in New Jersey may need to obtain approval before performing any of 17 designated outpatient procedures, including knee arthroscopy for osteoarthritis, electrical nerve-stimulator implants, and certain skin and tissue substitute treatments. Prior authorization means Medicare will not pay for the service unless approval is granted in advance.

Traditional Medicare has historically relied very little on prior authorization, distinguishing it from Medicare Advantage, which is run by private insurers.

According to KFF, Medicare Advantage enrollees averaged nearly two prior-authorization determinations per person in 2023, while traditional Medicare beneficiaries averaged roughly one prior-authorization review per 100 enrollees.

The WISeR program is part of the Trump administration’s broader push to reduce what it describes as waste, fraud, and abuse in federal healthcare spending. CMS has said that wasteful or low-value care may account for as much as 25% of U.S. healthcare spending, exposing patients to unnecessary procedures while driving up costs.

To administer the AI-based reviews, CMS selected six private technology companies: Cohere Health, Genzeon, Virtix Health, Zyter TruCare, Humata Health, and Innovaccer. Some of the companies are backed by major health insurers or healthcare systems, a fact that has drawn scrutiny from critics. CMS says the contractors will be financially rewarded for reducing unnecessary spending and penalized for inappropriate denials of care.

CMS has stressed that the pilot excludes emergency services, inpatient-only procedures, and treatments that would pose serious risk if delayed, and that AI will be used to target services deemed “low value” rather than medically necessary care.

Physicians and Democratic lawmakers, however, argue that relying on artificial intelligence to gatekeep care introduces new risks for seniors—particularly in a state like New Jersey, where Medicare enrollment is high and provider networks are already strained.

In December, Democratic senators including Patty Murray, Ron Wyden, and Kirsten Gillibrand introduced legislation to block the WISeR program, following a similar effort in the House.

“We already know that prior authorization creates major burdens and delays,” Murray said in a statement, warning that expanding AI-driven approvals into traditional Medicare could force seniors to wait longer for care their doctors believe is necessary.

Medical associations representing physicians in the six participating states sent a joint letter in November to CMS Administrator Mehmet Oz, cautioning that AI-based authorization could lead to delayed treatment, reduced access, and increased administrative burdens for providers.

CMS officials counter that the program is designed to prevent unnecessary or harmful procedures. The Medicare Payment Advisory Commission has estimated that $5.8 billion in Medicare spending in 2022 went toward services offering minimal benefit.

For New Jersey seniors and healthcare providers, the WISeR rollout represents a fundamental change: for the first time, artificial intelligence will play a frontline role in deciding what care traditional Medicare will even consider covering, marking a significant evolution in the program’s operation and oversight.