Here are 3 ways AI is being used with Medicare

Modern Healthcare – Tuesday, December 30, 2025
By Bridget Early

Federal health agencies made artificial intelligence a priority in the first year of President Donald Trump’s second term.

Since taking office in January, Trump’s executive orders, an array of Centers for Medicare and Medicaid Services payment models and numerous other directives have prioritized usage of AI across healthcare. At various events throughout the year, CMS Administrator Dr. Mehmet Oz has said AI will improve the efficiency and oversight of federal health programs.

In 2026, the Health and Human Services Department will keep expanding its AI focus. In mid-December, the agency released a request for information on how it can incorporate AI into clinical care, regulation, reimbursement and research.

The administration’s interest in AI fits into its larger goal of improving health technology infrastructure, streamlining health data interoperability and increasing the use of technology in healthcare.

Here are three ways CMS is using AI.

1. Payment models

CMS is leveraging AI as a tool as it experiments with payment and care delivery strategies.

The Center for Medicare and Medicaid Innovation announced a new Medicare payment model in December, called the Advancing Chronic Care with Effective, Scalable Solutions, or ACCESS Model. The model will reimburse providers for using AI, telehealth, wearables and other digital health technologies to improve outcomes and lower costs for chronic disease patients.

“There hasn’t historically been a very clear pathway for AI tools, diagnostics, therapeutics, things that are covered and reimbursed and paid for separately, to have a clear pathway in Medicare,” said Jared Augenstein, a senior managing director at the consulting company Manatt Health. “This administration, this HHS and CMS in particular, are very focused on finding ways to improve coverage and payment for high-value AI services.”

In June, CMMI released the Wasteful and Inappropriate Service Reduction, or WISeR model, a new fee-for-service Medicare payment demonstration testing AI-driven prior authorizations.

CMS contends the model will counter waste, fraud and abuse from insurers, while ensuring patients maintain access to care. WISeR could save Medicare as much as $3 billion by 2031, CMMI Director Abe Sutton said following the model’s release. The industry has worried the model lacks sufficient guardrails for AI determinations on prior authorization requests.

“No one believes that the current prior authorization process works for anyone,” Augenstein said. “What WISeR is trying to do is say, ‘We have this amazing new technology in AI — can we deploy that in cases where we have prior auth, make it faster, get to the right answer, the accurate answer more quickly?’”

2. Search improvements

In August, CMS announced a new, AI-powered search tool to help patients find prescription drugs covered under Medicare Part D as part of a broader announcement about updates to the Medicare Plan Finder.

The search tool is meant to improve Medicare beneficiaries’ ability to find out-of-pocket costs at in-network and out-of-network pharmacies. The search will use an enrollee’s data from CMS systems to generate personalized cost comparisons across pharmacies in their area, CMS said in August. A spokesperson for the agency said the search tool is still in testing but declined to offer a specific timeline for when it would go live.

The search function could prove highly useful, but CMS will need to be careful about how it implements the tool, accounting for factors like prior authorizations, rebates and discounts, said Melissa Wong, a partner at the law and lobbying firm Holland & Knight.

Janelle Gingold, a director in the consulting firm ATI Advisory’s provider strategy and care transformation practice, said she is watching how the AI tool is adopted by third-party organizations that help beneficiaries navigate their plan options.

“This new tool aligns with a broader shift we’re witnessing in the drug space and with CMS generally right now, toward providing consumers with more information and purchasing power,” Gingold said.

3. AI at the agency

CMS is also using AI internally.

In May, the agency began a process of using AI to identify “duplicative or wasteful” regulations, a spokesperson said at the time. The administration has repeatedly prioritized scrapping regulations in an effort to reduce regulatory burden.

CMS has also established a custom internal generative AI chatbot called CMS Chat, a general-purpose AI program that CMS employees can use for a range of tasks, such as editing and reviewing documents. It is also offering AI trainings and workforce development opportunities to its employees, according to a 2025 CMS AI playbook released in September.

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