Federal AI Program Denies Medicare Claims; Lawsuit Filed Against CMS
A pilot program using artificial intelligence to adjudicate Medicare coverage decisions has drawn legal challenge within months of launch, raising questions about due process protections for...
The Centers for Medicare and Medicaid Services (CMS) is piloting an artificial intelligence system to assist in approving or denying healthcare claims for Medicare recipients, and a lawsuit has been filed against the agency following the program's January 2026 launch, according to reporting by the New York Post.
The program is named the Wasteful and Inappropriate Service Reduction program, referred to internally as WISeR. CMS has deployed AI models at select clinics operating in Texas, New Jersey, Oklahoma, Ohio, Washington, and Arizona, according to the same report. The agency has not publicly released the full technical specifications or training data underlying the WISeR models as of the date of this article.
Medicare is a federal entitlement program administered by CMS under the Department of Health and Human Services. It covers approximately 67 million Americans, the majority of whom are adults aged 65 and older, according to CMS enrollment data published on CMS.gov. Any systematic change to how coverage determinations are made carries direct implications for that population.
The legal challenge was filed after the program launched in January 2026. The identity of the plaintiffs, the specific court in which the suit was filed, and the precise legal claims asserted were not specified in the available source material. The court docket, once identified, would be the primary public record confirming the case number, jurisdiction, causes of action, and any preliminary rulings.
AI-assisted claims adjudication is not new to the private insurance sector. Several major Medicare Advantage insurers have faced litigation and congressional scrutiny over the use of algorithmic tools to deny post-acute care claims. In 2023, a class-action suit filed in the U.S. District Court for the District of Minnesota alleged that UnitedHealth Group used an AI model called nH Predict to override physician recommendations at a high rate. That litigation record provides a legal and procedural precedent against which the WISeR program's design may be measured in court.
For the federal government to deploy a comparable system directly within traditional Medicare, which operates under statutory and regulatory due process requirements codified in Title XVIII of the Social Security Act, raises distinct legal questions. Beneficiaries denied coverage under Medicare have appeal rights established by federal regulation at 42 C.F.R. Part 405. Whether an AI-generated denial satisfies the agency's obligation to provide a reasoned explanation is among the questions the litigation is expected to address.
Congress has shown bipartisan interest in AI use in healthcare coverage decisions. The Improving Seniors' Timely Access to Care Act, which passed the House unanimously in 2022 before stalling in the Senate, sought to restrict prior authorization practices in Medicare Advantage. Whether members of the relevant oversight committees, including the Senate Finance Committee and the House Energy and Commerce Committee, have requested documentation from CMS regarding WISeR is not confirmed in available public records. Committee correspondence and any formal document requests would be accessible through congressional disclosure channels.
The Biden administration took steps to restrict AI-driven prior authorization through a January 2024 final rule applicable to Medicare Advantage plans. Whether that rule applies to the WISeR program operating within traditional Medicare fee-for-service is not addressed in the available source material. The applicable regulatory text would be the determinative public record on that question.
CMS has not issued a public statement describing the WISeR program's error rate, appeal overturn rate, or the criteria used to select the six pilot states. Those metrics, if collected, would be subject to disclosure under the Freedom of Information Act. No FOIA responses or Inspector General reviews of the program have been identified in publicly available records as of this writing.
The story previously reported by The Congressional Times on AI regulatory activity at the state level, including New Mexico AG Torrez's AI regulatory inquiry after a Meta settlement, illustrates a parallel pattern in which federal inaction on AI governance has prompted independent state and legal responses.
What remains unknown is the full text of the lawsuit against CMS, the court and docket number, whether any preliminary injunction has been sought or granted, and the specific clinical categories in which WISeR has issued denials. The federal court docket for the relevant district, CMS administrative records, and any forthcoming OIG audit would be the primary documents needed to complete the public record on this program.