Is Medicare Adopting the Worst Habits of Private Insurance?

For years, private health insurers have relied on long, opaque review processes that often delay or outright deny essential medical treatments. Many of these services—routine procedures, specialist care, or follow-up treatments—are typically covered without issue under traditional Medicare.

This system, known as prior authorization, has expanded steadily in recent years and drew renewed national attention after the killing of a UnitedHealthcare executive last December.

Now, a similar approach may be coming to traditional Medicare itself.

A New Pilot for Traditional Medicare

The Centers for Medicare & Medicaid Services (CMS) plans to launch a pilot program that would introduce prior authorization into traditional Medicare—the federal insurance program that covers people aged 65 and older, along with millions of younger Americans with disabilities. The experiment is scheduled to begin in January 2026 in six states.

Under the proposal, CMS would hire private companies to use artificial intelligence to help decide whether Medicare should cover certain medical procedures. These include treatments such as specific spine surgeries and steroid injections.

If that sounds familiar, it’s because private insurers already use similar A.I. tools—and not without controversy.

Lessons From Private Insurance

Algorithms used by private insurance companies have been at the center of several high-profile lawsuits. In those cases, patients and families alleged that automated systems were used to deny large volumes of claims quickly, sometimes cutting people off from rehabilitation or long-term care with little human review.

Critics worry Medicare could be headed down the same path.

The private companies selected to run the pilot would receive a share of the money Medicare saves when claims are denied. That structure, experts say, creates a clear financial incentive to reject care—even when medical need is debatable.

CMS officials say the A.I. screening tool would be limited to about a dozen procedures that the agency considers expensive and of little or no benefit to patients.

Growing Pushback

While few disagree that wasteful spending exists in the healthcare system, many experts fear this pilot could open the door for traditional Medicare to adopt some of the most unpopular practices of private insurers.

The program—officially called the Wasteful and Inappropriate Service Reduction Model—is already facing opposition from Democratic lawmakers, former Medicare officials, physician groups, and patient advocates.

The American Medical Association, for example, has warned that doctors see prior authorization as “one of the most burdensome and disruptive administrative requirements they face in providing quality care to patients.”

Where the Pilot Will Roll Out

If implemented as planned, the experiment would affect people enrolled in traditional Medicare in:

Arizona
New Jersey
Ohio
Oklahoma
Texas
Washington State

The pilot is expected to begin in January 2026 and run for six years.

Typically, A.I. models like these analyze a patient’s medical records to determine whether a requested treatment meets preset coverage criteria. Critics argue that such systems often struggle to account for individual circumstances—especially in complex or borderline cases.

The Broader Context

At the same time, Medicare is under real pressure to control costs. Earlier this year, the agency faced scrutiny for spending billions of dollars on costly “skin substitutes” that some experts say provide questionable benefit. Under the new pilot, patients would need prior authorization before receiving those products.

Currently, Medicare already relies on contractors to monitor payments and flag inappropriate or wasteful billing—but those reviews usually happen after care has been delivered.

The new model would add another layer of private oversight before treatment occurs—placing more power in the hands of companies that profit when care is denied.

What Comes Next

Private Medicare Advantage plans—run by insurers rather than the government—have already embraced prior authorization. They now cover more than half of eligible Americans, about 34 million people in total.

Whether traditional Medicare follows the same path may shape the future of healthcare access for millions.

For patients and doctors alike, the key question remains: can Medicare reduce waste without sacrificing timely, medically necessary care?