What happened
The US House of Representatives Appropriations Committee approved FY2027 appropriations legislation (reported June 22, 2026) that, if enacted, would bar Health and Human Services federal funding from implementing any model that applies prior authorization in traditional Medicare — specifically targeting the CMS WISeR (Wasteful and Inappropriate Service Reduction) Model. WISeR, launched in 6 states (Arizona, New Jersey, Ohio, Oklahoma, Texas, Washington) in early 2026, uses AI to review authorisation requests for services deemed vulnerable to fraud, waste, and abuse. The provision was supported by 35 physician organisations. Separately, the Modern Healthcare analysis published June 23 confirms a broader state-level surge in healthcare AI regulation across the US, with multiple states enacting or advancing AI prior-authorisation and transparency laws.
Why it matters
If enacted, this would be the first federal legislative rollback of a live AI deployment in healthcare — directly restricting CMS's ability to use AI for Medicare prior authorisation. It reflects growing Congressional and physician-community concern about AI-driven denial incentives in healthcare. The broader state-level surge in healthcare AI laws (Vermont, Arizona, Rhode Island, California) is creating a fragmented multi-jurisdiction compliance environment for health insurers and health-tech vendors deploying AI in clinical or insurance contexts.
Action needed
Health insurers and AI vendors with Medicare prior-authorisation products should monitor FY2027 appropriations process closely — the provision is committee-approved but must still pass full House and Senate. Assess exposure if WISeR is defunded. Track state-level AI healthcare bills (Vermont chatbot ban signed; Arizona chatbot safety/deepfake bills transmitted to governor; Rhode Island and California bills advancing).