We Investigated Medicare's New AI Denial Scheme

**TL;DR: An investigative journalist followed a utility bill from Chennai, India, to uncover the private equity capital behind an AI company that denies Medicare patients' treatment claims — and revealed how the WISeR pilot program is bringing prior authorization from private insurance into traditional Medicare.** ## A Utility Bill from India I kept trying to figure out: how exactly is AI affecting the American healthcare system? I never expected the answer to show up on a utility bill from India. The address on that bill was in the United States, and tracing it led to a company commissioned by the federal government — a company using artificial intelligence and machine learning, claiming to improve the American healthcare system. Elon Musk painted this vision: > When you have superintelligence, it means everyone on Earth can get better healthcare than everyone here — including me. That is the future we were promised. But what does AI's actual role in healthcare look like today? In January, the government launched a program using AI to assist in making medical decisions for hundreds of thousands of patients. The feedback from patients and families was: "AI clearly didn't read the medical records" and "Maybe I could be walking on my own right now instead of with a cane." When I began investigating, I realized just how little the public knows about this program. There is scarce public information about these companies, CMS's contracts, and the algorithms they use. When I tried to find out who built the systems making these decisions, I found a maze of companies — some barely existing shells — and the investors behind them who profit regardless of patient outcomes. ## Seven Weeks of Waiting: Michael's Story This ultimately led me to Washington State. Michael Edgerly lives there with his wife, Carel. He hasn't been to his own backyard in roughly six months. "I can't walk. I have peripheral neuropathy caused by diabetes, probably from Agent Orange exposure during Vietnam." Michael also suffers from severe back pain. In early 2026, after multiple surgeries, his doctor said it was time to find other ways to manage the pain. Carel said: "He applied for a steroid injection to relieve pain while we tried to figure out what was causing it and whether there might be a cure." Nearly three weeks later, the procedure was denied. The denial letter simply stated: "This decision is not upheld" — that's the boilerplate language they use. The reason for the denial was something anyone familiar with private insurance knows all too well: **prior authorization** — meaning your doctor must get approval from the insurance company before providing treatment. But Michael isn't on private insurance. He's on Medicare, and before this, denial letters like this would never have ended up in his mailbox. ## WISeR: Bringing Prior Authorization to Traditional Medicare Researcher Zena Wolf explained the program: > WISeR stands for the Waste, Fraud, and Abuse Reduction Model. It's a pilot program spanning six states that extends prior authorization to over a dozen procedures in traditional Medicare. But the prior authorization isn't done by Medicare itself — it's outsourced to AI companies. **These companies can receive up to 25% of the cost savings the program generates as payment** — effectively creating a financial incentive for these AI companies to intervene in patient care. So why push the most disliked part of healthcare into a system that never really had it? The official rationale is combating fraud. One official said: "We found that certain categories of procedures were ripping off patients, and these procedures weren't benefiting them." Medicare fraud is indeed a real problem. But nine months in, Michael's experience is not an outlier. Zena Wolf pointed out: "Across all six states, providers are saying their patients are being harmed by this program, forced to wait." In the first three months, two vendors denied nearly 6,000 applications. In Washington State, more prior authorization requests were denied than approved. Michael's doctor resubmitted the application and it was eventually approved — from the original prescription, he waited seven weeks to finally get the injection. Carel said: "You can't do anything for seven weeks. Your body starts deteriorating within two days. The pain clinic said when they started submitting these requests, the denial rate was 100%. Anytime you see a 100% denial rate, something is definitely wrong." ## The Company Maze: From Arizona to Texas to Chennai I wanted to know: when a claim is denied, which company is profiting? There's very little public information about these companies. The company handling the authorization decisions is **Virtix**, based in Texas, using an AI model. Its LinkedIn lists Texas, but NPR and local media placed it in Arizona. To figure out which company was profiting, the answer started with the state of incorporation, because those filings are public. - **Arizona filings**: Founded in 2018, Virtix is a subsidiary of **MES Holdings**, which was dissolved in 2025. - **Texas filings**: Virtix Health registered in Texas in 2024, with a parent organization called **Coding Solutions Acquisition II, LLC** — a name that typically indicates a holding company or acquisition vehicle. - **Delaware**: Another holding company, or a dead end. - **Patent and trademark records**: Pointed to a Minneapolis address with a new name — **Coding Solutions Topco Incorporated**. Searching that name surfaced a press release: **Virtix Health Software Solutions Private Limited**. Government records provided an address — in Chennai, India. So we sent a team to investigate. Team member Aparna described it: "Thyagaraya Nagar is basically one of the busiest commercial complexes in Chennai. At night, all that's left is the metro construction." They had a hard time finding the exact room number, possibly because there was construction everywhere. But I had a utility bill. The account holder, S. Sandeep, runs a company that serves as a corporate filings agent — this is common practice. His signature also appeared on subsidiary documents for a company called **CorroHealth**, which had two roadside office locations in Chennai that our team found easily. The evidence chain is clear: - Three of Virtix India's four directors also sit on the board of CorroHealth India; - Virtix's mailing address in Texas is CorroHealth's headquarters. All evidence points to CorroHealth and Virtix being essentially the same company. ## Revenue Cycle Management: What AI Is Really Doing As I dug deeper into CorroHealth's business, I began to see how AI is reshaping today's American healthcare system. CorroHealth's website claims they "bridge the gap between clinical documentation and patient care." I initially thought prior authorization was CorroHealth's or Virtix's core business. I was wrong — it's just a small part of it. What CorroHealth is involved in is what the industry calls **revenue cycle management**: the entire body of paperwork from when you walk into a doctor's office to when someone receives payment. Some of that paperwork is obviously necessary, but it's becoming increasingly valuable, and nothing in it is worth more than your medical records. After a visit, your medical records are read twice. Your healthcare provider wants to find every billable diagnosis, while your insurer only wants to pay for what it considers necessary. Virtix's president said: "We offer tailored solutions for both payers and providers." In other words, Virtix or CorroHealth stands on both sides of this contest. There's nothing inherently wrong with the contest itself: providers should be compensated for everything they do, and insurers should pay only for medically necessary items. But sometimes "finding every diagnosis" turns into "inventing diagnoses." ## Upcoding and the "War of the Bots" Zena Wolf explained the mechanics: > Upcoding is something we frequently see in Medicare Advantage. Private companies receive a fixed capitation payment for each patient they enroll. If they add additional diagnoses, they can extract more money from those patients. One estimate found that upcoding in Medicare Advantage will cost the federal government approximately **$500 billion** over the next decade. The five largest insurers have all been accused of fraud, and insurance industry research found that similar practices by providers have cost the system $1 billion in just two years. As far as I know, Virtix or CorroHealth has not been implicated, but they do sell this type of service. Virtix's president said in promotional materials: > We have over 13,000 dedicated staff doing this work, and we see every day how clinical complexity is being persistently undercoded. Most of those 13,000 people are overseas — where labor is cheap. In fact, **five of the six WISeR vendors have offshore operations**. But this may be changing. AI is a powerful way to scale up the practice: finding more diagnosis codes, uncovering more symptoms in medical records. Virtix's president proclaimed: > Agentic AI is the next major leap in healthcare technology. Unlike traditional AI, it doesn't just analyze data — it takes action. I think I've found part of the answer to what AI is currently doing to the American healthcare system. Yes, someday it may help cure cancer, develop personalized medicine, and make everything cheaper. I hope that day comes. But for now, it doesn't seem to be moving toward improving patient care — it's aimed at paperwork, and at fighting over who pays. One report found no evidence that using AI this way saves the healthcare system money. In fact, the report identified the opposite as the key risk: providers investing in AI to generate more bills, driving up system-wide inflation. And on prior authorization, both sides are pounding each other with ever-increasing paperwork — what insiders call the **"war of the bots."** That's bad news for the system, but if you're selling bots, it's good news. ## Who Controls All of This: Private Equity Filings for CorroHealth's Indian subsidiary show **annual revenue of $130 million** — and the WISeR program hadn't even launched yet. So who's running all of this? The paper trail that started in Arizona ultimately led to: **Patient Square Capital** and the **Carlyle Group** — private equity. So the more patient care they intervene on or deny, the more profit they stand to make. ## WISeR Has Nothing to Do with Real Fraud What surprised me most was learning that WISeR has virtually nothing to do with the real fraud we've been discussing. I do believe fraud exists, and it's good that the government is cracking down. Take skin substitutes as an example: some companies colluded with providers to manipulate Medicare rules, inflating costs by billions of dollars in just a few years. But Zena Wolf noted a key distinction: > The government actually implemented a corrective measure on the exact same day it launched WISeR. Reining in those skyrocketing costs is genuinely worthwhile. But it wasn't done through prior authorization — you know, it was done through audits, through what CMS has always done and should continue doing, perhaps even with the help of AI. So WISeR can't effectively combat fraud, there's no evidence it saves money, and one company has denied more than half of all requests — and at the end of that trail is private equity. I put a wide range of questions to Virtix, CorroHealth, Patient Square Capital, and the Carlyle Group: How does your AI work? Who owns it? What role does India play? None of it seemed illegal, but were they aware of the conflict of interest in their business model? Despite multiple requests for comment, they never responded. ## Congress Pushes Back But Congress has been pushing too. Zena Wolf said: "More and more people are acknowledging that WISeR isn't working." - **In May**, the Government Accountability Office (GAO) found that the program should have been submitted to Congress for review — and it wasn't. - **Senate Democrats** tried to use this as grounds to terminate the program, but the vote fell along party lines and failed. - **In June**, more than 60 members of Congress called to end the program. Then, 30 members demanded an actual progress update from the government. Congress has several avenues to terminate the model: two bills in the House and one in the Senate would all end it outright; there's also a spending rider to cut funding for the model, which has already received unanimous agreement in a closed-door session. ## The Trojan Horse and What Comes Next This raises the question: why does the government keep pushing forward? When we hear the voices of patients struggling in pain because of WISeR, one truly important point emerges — WISeR isn't even solving a problem. It's more like a **Trojan horse**, allowing corporate healthcare into traditional Medicare, allowing AI companies into traditional Medicare. The Trump administration plans to expand the program to cover more services — including ambulances, MRIs, and cancer treatment — and then bring AI into the entire system, from diagnosis to treatment. ## Michael's Choice In early summer, Michael underwent a week-long trial of a spinal cord stimulator. As far as his pain was concerned, the improvement was night and day. His doctor wanted to implant the device, but there was a problem: it's on the WISeR list, so it would certainly be denied. Since he could get it through the Department of Veterans Affairs (VA), they said: "Then we'll go through the VA." **The VA approved it within days.** The surgery is scheduled for later this year. Michael said: "I'm looking forward to after the implant — maybe I can stand up, walk with a cane. I absolutely will not give up. Even if it means being in a wheelchair, I won't give up." Source: We Investigated Medicare's New AI Denial Scheme — PerAsperaAdMars (https://www.youtube.com/watch?v=ZnuegvWjVN8)