The Centers for Medicare and Medicaid Services (“CMS”) recently announced the first six participating states in the Wasteful and Inappropriate Service Reduction (“WISeR”) Model that will begin on January 1, 2026: Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington.[1] As its hallmark objective, the Model aims to refine prior authorization processes for traditional fee-for-service Medicare through the use of enhanced technologies, such as artificial intelligence (“AI”), to reduce the performance of, and payment for, services that are deemed to be “low value.” Model participants will receive a percentage of the savings associated with avoided “wasteful, inappropriate care” as a result of their reviews.

Technology and AI in Prior Authorization

Perhaps most significantly, the Model requires that participants use “enhanced” technologies to facilitate prior authorization processes for a specific set of items and services covered by traditional Medicare (e.g., skin and tissue substitutes, knee arthroscopy for knee osteoarthritis, etc.).[2] In particular, the Model requires the use of approved technologies to complete prior authorization reviews to assess whether services are medically necessary or otherwise appropriate from a clinical perspective.[3] In accessing the operative technologies, CMS has signaled that it will engage private parties to develop and license the tools necessary to facilitate the hallmark “technology-enabled” prior authorization processes.[4]

Payment Changes

Model participants will receive payments based on their ability to reduce utilization of unnecessary services and spending.[5] Participants will be entitled to payment of a percentage of the Medicare program’s reduced expenditures or savings for the covered items/services, provided that the reduction/savings can be directly attributed to the prior authorization review process.[6] Reductions/savings will be calculated based on the requests that were not paid multiplied by the average payments for historical regional claims submitted for the applicable item/service during a fixed window.[7]

Participants will only receive payments for prior authorization denials that are not re-submitted and affirmed within one hundred twenty (120) days following the initial authorization request.[8] CMS clarified that payments for non-affirmations will be withheld for a period up to one (1) year if the associated authorization is resubmitted, to ensure that the non-affirmation is upheld.[9] Where a provider/supplier performs and bills for a non-affirmed item/service and is successful in appealing a denial, CMS has indicated that the corresponding payment associated with that claim will be clawed back from the Model participant.[10] Separately, CMS indicated that payments will be subject to annual adjustments based on quality metrics.[11]

Providers and suppliers will continue to be paid for covered items and services based on the applicable Medicare payment methodology or fee schedule amounts for those services. But prior to payment, providers and suppliers will have the option to either submit a prior authorization request to directly to the Model participant or to their Medicare Administrative Contractor (“MAC”) for the selected items and services (which would then route the request to the Model participant). Providers and suppliers that elect not to submit a prior authorization request will be required to complete a post-service, pre-payment review where the Model participant or MAC could request additional documentation related to the medical necessity of those items and services. Providers and suppliers may submit any prior authorization requests that are not affirmed by the Model participant to the MAC with a detailed rationale, and if the prior authorization request is still not affirmed and the provider or supplier elects to go forward with the service without authorization, the provider or supplier may eventually appeal Medicare’s denial of payment for the service through the standard Medicare claim appeal process. Providers and suppliers with demonstrated records of compliance may receive a “gold card” exemption from the WISeR review process in the future.

Data Reporting and Sharing

Data collection will be key in determining whether the Model causes appreciable cost reductions and increased efficiencies. To effectuate such data collection, CMS has indicated that it will develop data sharing policies to govern data sharing between the Model participants, the MAC, providers, and suppliers, among others. Where patient information is involved, there are always concerns for security. Recognizing these concerns, participants in the Model will be required to:

Maintain access to the federal Risk and Authorization Management Program workflows;
Adhere to the Federal Information Security Management Act regulations;
Comply with the CMS Information Systems Security & Privacy Policy;
Implement the CMS Acceptable Risk Safeguards;
Follow the CMS Authority to Operate guidelines; and
Execute Business Associate Agreements with MACs.[12]

CMS has indicated that providers and suppliers will receive access to certain data from model participants and MACs.[13] In addition, CMS will require that participants collect and report certain data metrics to facilitate evaluation of the Model, particularly with respect to prior authorization processes.[14]

Industry Response

This initiative marks a significant change as most traditional Medicare benefits (i.e., not benefits offered by Medicare Advantage plans), have not historically required prior authorization. Some industry participants are expressing concerns about the expansion of prior authorization requirements, particularly with respect to the use of AI in prior authorization decisions. On one hand, there have been a number of class action lawsuits raising allegations that plans and payors in the Medicare Advantage space have used AI to inappropriately delay or deny care through prior authorization processes. On the other hand, some advocates contend that use of prior authorization, in combination with the potential efficiencies of AI, could help to reduce costs and avoid medically unnecessary care. CMS has signaled that it will take steps to monitor the performance of the Model participants to safeguard against abuse of the prior authorization process.

Looking Ahead

The WISeR Model is currently in a pilot stage, and will only be implemented in the six (6) states noted above beginning on January 1, 2026 and ending December 31, 2031.[15] The Model’s performance, both in terms of successes and failures, will likely inform CMS’s consideration of future models as well as refine existing models.

FOOTNOTES

[1] CMS Launches New Model to Target Wasteful, Inappropriate Services in Original Medicare, https://www.cms.gov/newsroom/press-releases/cms-launches-new-model-target-wasteful-inappropriate-services-original-medicare (last visited November 23, 2025).

[2] Wasteful and Inappropriate Service Reduction (WISeR) Model, Request for Applications, June 26, 2025 (“RFA”), at p. 20, available at https://www.cms.gov/files/document/wiser-model-rfa.pdf (last visited November 23, 2025).

[3] Id. at 3.

[4] Id. at pp. 7-9.

[5] Id. at p. 23.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id. at p. 24.

[13] Id. at pp. 24-25.

[14] Id. at pp. 25.

[15] Id. at p. 3.