Private companies reviewing Medicare treatment requests under a Trump administration programme can receive payments when their decisions result in care being denied, according to federal documents.

Under the Wasteful and Inappropriate Service Reduction (WISeR) pilot, contractors can receive 25 per cent of the estimated Medicare spending avoided following an eligible denial. The payment structure has drawn scrutiny after government actuaries warned that participants would have 'an incentive to deny as many claims as possible'.

The concerns are not merely theoretical. One contractor denied more requests than it approved during a reporting period, while healthcare providers have described patients waiting weeks or months for decisions, including people left crying in pain.

How Companies Can Be Paid When Care Is Denied

WISeR launched in January in New Jersey, Ohio, Oklahoma, Texas, Arizona and Washington and is scheduled to run until the end of 2031. The programme uses artificial intelligence and machine learning as part of a new prior-authorisation system for selected services under Medicare. The stated aim is to reduce fraud, waste and abuse.

Around a dozen types of care are currently covered, including epidural steroid injections for pain, cervical fusions, nerve stimulation and skin substitutes for wounds.

But it is the way private contractors are paid that has attracted particular attention.

According to a report from Ars Technica, CMS planning documents describe a system in which participating companies are compensated through a share of 'averted expenditures'.

The documents say that after an eligible request for care is denied, the Centers for Medicare & Medicaid Services (CMS) determines a regional benchmark for what that care would have cost. The contractor can then receive 25 per cent of the amount Medicare avoided spending.

There are safeguards. Payments can be adjusted according to a company's performance, and contractors are not paid when a denial is successfully appealed and overturned.

However, a CMS Office of the Actuary memo cited during a Senate hearing warned that the model creates 'an incentive to deny as many claims as possible'.

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Contractor Denied More Requests Than It Approved

The warning comes against figures showing a high denial rate from at least one contractor.

A weekly report dated 30 March showed Virtix Health, which operates in Washington state, had reviewed 6,096 prior-authorisation requests. It approved 2,863 and denied 3,233, meaning 53 per cent were rejected.

CMS later placed Virtix on a Corrective Action Plan after the company failed to meet the programme's 72-hour decision window.

Virtix said the plan ended on 14 August and that it had since reduced its average turnaround time for prior authorisations to 1.18 days. The company also said WISeR relies on established CMS coverage rules when assessing whether requested procedures are medically appropriate.

The programme also uses an Aggregate Quality Score to adjust contractor payments. According to Ars Technica, companies scoring between 85 and 100 per cent can receive the full available payment. Those scoring between 60 and 84 per cent receive 95 per cent of it, while those scoring below 60 per cent receive 90 per cent.

Patients Left Waiting in Pain

Meanwhile, healthcare providers have reported serious delays.

WISeR is intended to return prior-authorisation decisions within 72 hours, but documents obtained by the Electronic Frontier Foundation show some cases took weeks or months. One request remained pending after 83 days, while a provider reported that a patient's surgery was postponed for almost two months amid a lack of communication.

An Ohio provider described three patients awaiting procedures for painful spinal compression fractures who were crying while waiting for approval. The provider said doctors' offices struggled to reach anyone for answers and described the situation as 'a disgrace to the human race'.

Innovaccer, the contractor involved, later said its technology was fully operational and that it had worked with partners to improve the programme since its launch.

Programme Could Expand Further

Despite the criticism, WISeR could eventually cover considerably more medical care.

Senator Patty Murray, a Washington Democrat who has challenged the programme, said she understood CMS planned to expand it to oncology. Federal documents also list potential additions including air ambulance transport, advanced imaging such as MRIs, cardiac catheterisation, pacemakers, implantable cardioverter defibrillators and genetic and molecular laboratory tests.

Representative Suzan DelBene, another Washington Democrat, has sought further documents about WISeR, but Republicans voted down an effort to obtain them. Separately, the Government Accountability Office concluded in May that the administration had not followed required congressional notification procedures when establishing the programme.

Murray has vowed to oppose its expansion, saying she had heard from seniors who spent weeks in pain while doctors sought approval for their care. 'I am going to do everything I can to stop this,' she said. 'It is really hurting patients.'

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