The Hubert H. Humphrey building in Washington, D.C., headquarters for the U.S. Department of Health and Human Services. Public domain photo by Carol M. Highsmith

With all the news about the budget bill, a June 27 press release from the Centers for Medicare and Medicaid Services may have slipped under your radar. The agency touts a new Center for Medicare and Medicaid Innovation pilot program that imposes a prior authorization requirement on several procedures they say will “protect Medicare beneficiaries, federal taxpayers from unnecessary services, fraud, waste and abuse.” 

The program, Wasteful and Inappropriate Services Reduction or WISeR, will contract with external vendors who will use artificial intelligence to make these determinations — although final determination of denials will fall to a licensed clinician. However, these contractors will receive payments “based on their ability to reduce unnecessary or non-covered services and lower spending in Original Medicare.” In other words, they get paid based on services not provided.

Why this matters

This approach potentially opens up the claims process to fraud and abuse, the very thing CMS said it is trying to combat, and happening at the same time that CMS is touting a crackdown on prior authorization under Medicare Advantage plans. Journalists covering CMS and payments should keep this initiative on their radars to track any real cost savings versus denials, delays in care, and whether some doctors or health systems may stop accepting Medicare patients. 

Journalists need to hold CMS accountable for transparency in the program, especially when it comes to delayed access to care, according to Gretchen Jacobson, vice president of Medicare at the Commonwealth Fund. “It’ll be important to have timely data as this moves along and not just reported at the end of the pilot.”

The primary concern about prior authorization is that it leads to delays in care, according to Jacobson. Delays in care matter because they can lead to poorer health outcomes and higher costs for both patients and the Medicare program.

“Delays can also lead people to get frustrated and to end up paying out of pocket for the care that ought to be covered,” she said.

WISeR will launch in a handful of states beginning January 1, 2026:  

  • Arizona
  • New Jersey
  • Ohio
  • Oklahoma
  • Texas
  • Washington

This program only covers a narrow range of Medicare-covered services, and is only being rolled out in a handful of states, but there is potential for it to grow if successful, according to Juliette Cubanski, deputy director, program on Medicare policy at KFF. “These innovation center models can potentially be expanded nationwide and made mandatory if they actually meet their targets.” 

One of the appeals of traditional Medicare is more unfettered access to providers and Medicare-covered services because there aren’t the same types of prior authorization hurdles that beneficiaries or providers must overcome to get care, Cubanski explained. 

If this model gains traction and leads to a more expansive list of services that might be subject to prior authorization in future years, “that chips away at a feature of traditional Medicare that is very appealing to beneficiaries and also to providers.”

How the WISeR model works

“For each selected service, participants will receive a percentage of the reduction in savings that can be attributed to their reduction of wasteful or inappropriate,” according to a CMS Fact sheet. “Participants” refers to the contracted vendors who will use AI to authorize or deny coverage. Payments will be adjusted based on performance against established quality and process measures, including supporting faster decision-making for providers and suppliers and improving provider, supplier, and beneficiary experience with the prior authorization process.

Prior authorization could reassure a provider or health system that they will be paid before submitting a final Medicare claim, rather than risking a denial from Medicare after a procedure is performed. And, there are safeguards in place, such as what CMS calls “non-affirmations” being reviewed by a trained person, and that these specific services are associated with low-value care, Cubanski noted.

“But there’s not a lot of transparency in much of this, and that’s been one of the concerns that people have had with prior authorization and Medicare Advantage and the use of these algorithms,” she said. “Machine-driven algorithms are not very person-centered.”

The 6-year pilot will initially target a few flagged procedures, including skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis, all performed as outpatient procedures. There are no current plans to target any inpatient services or services that would pose a “substantial risk” to patients if delayed, although a successful pilot could change that approach.

The WISeR Model will not change Medicare coverage or payment criteria, and beneficiaries are still free to seek care from a provider of their choice, according to CMS. However, participation in the program is mandatory for clinicians in the pilot states. Providers and suppliers in the assigned regions will have a choice of submitting prior authorization requests for selected items and services, or their claims will be subject to pre-payment medical review. 

Prior authorization might be appropriate at times, and maybe we can strike a balance somewhere, Cubanski said, but “I find it a little ironic that on the one hand, CMS is rolling out this model to add prior authorization in traditional Medicare just a few days after they had the splashier press conference saying we’re going to roll it back.”

Resources