AI Is Now on Both Sides of Prior Authorization. Here's What Changes October 1.

On July 16, 2026, the Senate rejected, 46–50, a motion to proceed to a Congressional Review Act resolution that would have disapproved the WISeR rule (Healthcare Dive, 2026). On October 1, Alabama's new law on AI in prior authorization takes effect. Under it, any decision to deny, delay, or modify a prior authorization request based on medical necessity must be made or reviewed by a licensed physician or qualified health care professional.

Taken together, the two show where prior authorization is heading. AI is becoming a routine part of how requests get reviewed, and lawmakers are limiting what it can decide on its own. Providers and billing companies use AI as well, to submit requests, check status, and follow up. Increasingly, both sides of a prior authorization involve automation.

The Payer Side: WISeR and Medicare Advantage

WISeR, the Wasteful and Inappropriate Service Reduction model, runs from January 1, 2026 through December 31, 2031 in six states: Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington. It adds prior authorization to selected services in traditional Medicare, including skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis (CMS).

Providers in those states should know how it works. CMS contracts with technology companies that use AI, machine learning, and automated decision logic to review requests. Those participants "receive a percentage of the expenditures associated with averted wasteful, inappropriate care as a result of their reviews" (CMS). Recommendations for non-payment must be "determined by appropriately licensed clinicians," and providers can either submit a prior authorization request or go through post-service, pre-payment review.

The Senate vote split along party lines. Sen. Ron Wyden (D-Ore.) backed repeal. Sen. Mike Crapo (R-Idaho) argued that "ending this pilot program prematurely will deprive CMS of a useful tool" (Healthcare Dive, 2026).

Medicare Advantage plans also rely on outside review contractors. In June 2026, the HHS Office of Inspector General found that high denial rates for long-term care hospital and inpatient rehab requests "were driven by contractors that denied prior authorization requests on behalf of" Medicare Advantage organizations, and many of those denials were later overturned on appeal (OIG, 2026).

The State Response: Human Review and AI Transparency Rules Are Expanding

States passed a wave of laws in 2026 governing how insurers may use AI in utilization review, prior authorization, and related coverage or payment decisions. While requirements vary by state, many mandate human clinician involvement for adverse determinations or require insurers to disclose their use of AI tools.

Source: Holland & Knight, May 2026. Check each statute's scope, such as which plan types it covers, before relying on it.

*Some sections take effect January 1, 2027.

Physicians have pushed for this. In the AMA's 2026 survey, only 24 percent of physicians said prior authorization reviews are consistently conducted by appropriately qualified clinicians (AMA, 2026).

What This Means for Revenue Cycle Teams

Human review keeps clinical escalation in the workflow

When human clinicians are required to make or approve adverse decisions, peer-to-peer discussions, reconsiderations, clarifications, and exception handling remain inherently human workflows. Automation on the payer side can speed up approvals, but revenue cycle teams still need to manage complex follow-up and clinical dialogue.

You have more information to ask for

Since January 1, 2026, payers covered by the CMS Interoperability and Prior Authorization Final Rule must give a specific reason for every denied prior authorization subject to the rule, excluding drugs. In states like Utah, laws also require insurers to disclose whether they use AI in their review process. Capturing specific denial reasons and knowing payer review policies helps you determine which denials to challenge.

Records matter more

If you believe a denial skipped the required human review, you need evidence: when you called, who you spoke with, the reference number, and what you were told. Handwritten notes won't hold up well.

Know your states

A group operating in Texas and Ohio may deal with WISeR in traditional Medicare, contractor reviews in Medicare Advantage, and state rules for commercial plans at the same time. Map which rules apply to which payers and service lines.

Hold Your Own AI to the Same Standard

If payers are expected to be transparent about how AI affects a decision, providers and billing companies should expect the same of their own tools. Before any AI system works your payer calls or portals, ask four questions.

1. Does it record every interaction with a recording, transcript, and timestamps, in addition to a summary?
2. Does it hand off to a person when a call goes off script?
3. Does it return denial reasons, reference numbers, and next steps as structured fields your team can act on?
4. Is it HIPAA compliant, with a signed BAA and SOC 2 Type II certification?

SuperDial's voice AI agents follow deterministic call flows, hand off to people when needed, and return structured results with recordings, transcripts, and a complete audit trail. SuperDial is HIPAA compliant and SOC 2 Type II certified. We've also written about why some payers reject AI calls and how SuperDial's calls get through and what HIPAA compliant AI in RCM requires.

Before October 1

• List the payers and states in your mix that fall under WISeR or a state AI law.
• Add "specific denial reason" as a required field on every prior authorization denial, and track payer AI disclosure policies where relevant.
• Confirm your team logs call reference numbers and rep names on every payer interaction.
• Review how any AI vendor you use documents its work.

Then run a pilot on a real prior authorization workflow. Bring a representative batch of requests, define the output you need, and measure results with your own payer mix in 30 to 90 days.

Sources

1. Healthcare Dive. "Senate Republicans block Medicare AI prior authorization pilot repeal." July 17, 2026. https://www.healthcaredive.com/news/senate-republicans-block-medicare-ai-prior-authorization-pilot-repeal-wiser/825523/
2. CMS Innovation Center. "Wasteful and Inappropriate Service Reduction (WISeR) Model." https://www.cms.gov/priorities/innovation/innovation-models/wiser
3. HHS Office of Inspector General. "The Three Largest Medicare Advantage Organizations Denied Requests for Long-Term Acute Care and Inpatient Rehabilitation at Some of the Highest Rates" (OEI-09-24-00330). June 8, 2026. https://oig.hhs.gov/reports/all/2026/the-three-largest-medicare-advantage-organizations-denied-requests-for-long-term-acute-care-and-inpatient-rehabilitation-at-some-of-the-highest-rates/
4. Holland & Knight. "States Continue Efforts to Regulate AI in Healthcare: A Review of Legislation Passed in 2026." May 26, 2026. https://www.hklaw.com/en/insights/publications/2026/05/states-continue-efforts-to-regulate-ai-in-healthcare
5. State Statutes: Maryland HB 1563 (2026); Indiana HB 1271 (2026); Alabama SB 63 (2026); Georgia SB 444 (2026); Utah SB 319 (2026); Washington SB 5395 (2026).
6. American Medical Association. "AMA survey: Prior authorization reform pledge falls short for physicians." May 13, 2026. https://www.ama-assn.org/press-center/ama-press-releases/ama-survey-prior-authorization-reform-pledge-falls-short-physicians‍
7. CMS. "CMS Interoperability and Prior Authorization Final Rule (CMS-0057-F)" fact sheet. January 17, 2024. https://www.cms.gov/newsroom/fact-sheets/cms-interoperability-and-prior-authorization-final-rule-cms-0057-f