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Delay, Deny, Depose — Private AI is coming for Medicare [1]
['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.']
Date: 2025-09-07
The A.I. companies selected to oversee the program would have a strong financial incentive to deny claims — Reed Abelson and Teddy Rosenbluth, Reporters, the New York Times
Picture this. You are 73, and Medicare is your health insurance provider. You are in good health, and conscientious about getting regular doctors’ exams and keeping up on immunizations. Your only problem is your left knee, which becomes so painful after even a short walk that you often need to take prescription drugs just to sleep.
Your regular doctor refers you to an orthopedic surgeon who tells you that your knee is so worn out that it can only be fixed by knee replacement surgery. A second orthopedist confirms the opinion. Your pre-operative claim is submitted to Medicare for what has has until now been a routine prior authorization approval. It is denied.
“Why?” you ask.
It turns out that it has been determined that you might not need the surgery, which typically cost $10,00 to $30,000. It is instead recommended that you take a course of 12 physical therapy sessions, which cost Medicare an average of $120 or less per session.
“Who made this determination?” you ask.
You then learn that it was an Artificial Intelligence (AI) program owned and operated by a private contractor working for Medicare. And that the contractor gets a percentage of the money saved by each service denial, giving it a strong incentive to deny services.
Is this a dystopian fantasy? Scaremongering?
Actually, Medicare is now in the process of implementing a trial version of just such a program in six states, beginning in January, 2026. The program will be run by the Centers for Medicare and Medicaid Services (CMS), the branch of the U.S. Department of Health and Human Services that manages Medicare.
The pilot program, announced in a June 27 press release by President Trump’s recently appointed CMS Director Dr. Mehmet Oz (yes, that Doctor Oz), promises to “leverage advanced technologies [Including AI] to protect Medicare beneficiaries (and) federal taxpayers from unnecessary services, fraud, waste and abuse.” (The phrase “fraud, waste and abuse” is used three times in the short press release.)
Private contractors, as yet unnamed, will be hired to implement the program. “[The contractors’] payments will be adjusted based on their performance against established quality and process measures…” the press release states. In other words, the more procedures they can deny, compared to Medicare’s current small denial rate, the more money they’ll make.
The press release is careful to emphasize that “licensed clinicians” will make the “final” decision to deny service — after AI, owned and programmed by the company, makes the preliminary decision which the clinician would have to override. However, it does not mention that those clinicians, who might or might not have expertise in the type of procedure being reviewed, likely will be hirelings of the company conducting the reviews. Nor does it mention whether they will be paid a salary or paid on a per-denial-issued basis.
The initial list of 15 procedures that will be scrutinized under the new program includes deep brain simulation for Parkinson’s Disease tremors, cervical fusion and other spine surgeries and treatments and arthroscopy for knee arthritis. Depending on the program’s efficacy, other procedures could be added in the future.
There is general agreement that inefficiencies and sometimes outright fraud have run up Medicare expenditures. Most of these abuses are committed by companies that overcharge, and sometime even double bill for services. It might make sense for the government to hire outside companies to scrutinize Medicare services for this type of malfeasance.
But to fix that problem by using AI as a tool to override a procedure recommended by your physicians could make Medicare, like many private insurers, more concerned with its bottom line than with your health.
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