New Jersey residents signing up for Medicare could find themselves in the middle of a federal pilot program that has artificial intelligence helping to decide which medical procedures will be covered by the insurer.
Open enrollment for Medicare began on Wednesday, which means seniors nationwide are weighing the tradeoffs between the traditional, government-run version of Medicare and a multitude of privately run Medicare Advantage plans. But in New Jersey and five other states, traditional Medicare will come with a new AI twist in 2026.
The Trump administration is launching a five-year pilot program that aims to save money by subjecting some medical services to greater scrutiny before agreeing to pay for them. AI will be used to help determine whether Medicare will cover certain procedures when they’re ordered by doctors, according to the federal Centers for Medicare and Medicaid Services.
The extra layer of review, known as “prior authorization,” is a common feature of Medicare Advantage plans, which have come under federal scrutiny in recent years for using the tool to delay or deny care — sometimes with the help of AI. But policy experts say prior authorization has rarely been used in traditional Medicare, until now.
“This could be considered a big change for traditional Medicare,” said Tricia Neuman, executive director of the Medicare program at the health policy nonprofit KFF. “Traditional Medicare generally operates by letting physicians make decisions about the services their patients get.”
Arizona, Ohio, Oklahoma, Texas and Washington will also be included in the pilot.
Federal health officials say the pilot, known as the Wasteful and Inappropriate Service Reduction Model, or WISeR, is designed to protect taxpayers from wasting money on high-cost, low-value services that further drive up spending in the trillion-dollar insurance program.
But the Medicare experiment is facing pushback from health care providers and lawmakers in New Jersey and other parts of the country who worry it will create new hurdles for patients and doctors, and who say the model includes a financial incentive to reject requests for coverage.
The Trump administration is soliciting companies to administer the program that have the ability to use AI and other technologies to make coverage determinations, including insurance companies that already operate Medicare Advantage plans, according to a request for applications issued in June.
The RFA says payments to these companies will be based on “demonstrated reductions in spending” for services that are deemed medically unnecessary or aren’t covered.
In a July letter, Rep. Alexandria Ocasio-Cortez, a New York Democrat, and other congressmembers urged the Centers for Medicare and Medicaid Services to “immediately halt” the pilot, noting that AI-fueled prior authorization programs are already creating legal problems for for-profit insurance companies. Cigna, Humana and UnitedHealthcare are all facing class-action lawsuits over their use of AI algorithms to deny patient care.
Emily Hilliard, a spokesperson for the U.S. Department of Health and Human Services, said in a statement that the pilot will take a “careful, evidence-based approach” to reviewing coverage for a select set of services and “is not designed to replicate Medicare Advantage prior authorization policies.”
Medicare Advantage plans, which have exploded in popularity in recent years, tend to entice seniors by offering a broader set of services than traditional Medicare without requiring the purchase of a supplemental Medigap plan. But their use of prior authorization has, in some cases, led doctors to stop accepting them.
“One of the biggest causes of physician burnout is the paperwork associated with prior authorization,” said Joshua Bengal, the director of government relations for the Medical Society of New Jersey.
Doctors are starting to find ways around that paperwork, though. Bengal and other policy experts said it’s likely that as Medicare and other insurance providers increasingly use AI to make coverage determinations, it will become more common for doctors to use their own AI tools to appeal those decisions.
“So you actually have two AI systems that are submitting communications back and forth to each other, and that's what I am concerned about,” Bengal said.
Hilliard said any denial of coverage by AI would be reviewed by a human clinician.
“Any use of AI would be subject to strict oversight to ensure transparency, accountability, and alignment with Medicare rules and patient protection,” Hilliard said.
The list of services that will be subject to extra scrutiny in the pilot is currently limited and includes some procedures that policy experts agree may not always be cost-effective. For instance, pricey bandages made from bits of placenta, known as “skin substitutes,” are now being widely used — often on patients who don’t need them, the New York Times found.
But Neuman said the federal government can use other approaches to keep costs down, including working with “outlier” physicians who appear to be overusing procedures that are not cost-effective.
