On July 1, 2025, CMS published a notice in the Federal Register announcing a new six-year Center for Medicare and Medicaid Innovation (Innovation Center) model. Labeled the “Wasteful and Inappropriate Service Reduction” (WISeR) Model, this new Innovation Center model is focused on reducing fraud, waste and abuse (FWA) in the Medicare fee-for service (FFS) program via the implementation of “technology enabled prior authorization” processes for select items and services (Covered Services). The Covered Services are detailed below. Notably, in designing such model, CMS is looking to the utilization management tools and processes used by Medicare Advantage organizations in connection with prior authorization.
This development is noteworthy given that CMS has focused considerable resources in the last few years trying to fix what it has labeled a “broken” prior authorization system in Medicare Advantage (MA) and other contexts.1 Equally striking is the fact that participants in the WISeR Model—i.e., companies that would manage the model’s prior authorization processes (Model Participants)—would be paid based on a share of “averted expenditures.” The WISeR Model is scheduled to be implemented quickly, with responses to the Request for Applications (RFA) due July 25, 2025 and model deployment scheduled to occur effective January 1, 2026.
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The WISeR Model aims to reduce costs for Covered Services through the use of “enhanced technologies,” including the artificial intelligence (AI), machine learning, and algorithmic decision logic being used by MA organizations (MAOs) to “streamline and improve detection of FWA.”2 In the RFA, CMS asserts that the extensive utilization management techniques deployed by MAOs “are likely key contributors to [MA] beneficiaries receiving 9.2 percent fewer low-value care services” than Medicare FFS beneficiaries.
The WISeR Model will expand the handful of existing prior authorization initiatives currently found in the Medicare FFS program, which CMS asserts have accomplished “significant reductions in amounts paid by CMS” with “no adverse effect” on quality or access to care.3 Looking to the MA program as an example, CMS aims to evaluate how to “efficiently, accurately and appropriately ensure select services are provided and paid for based on clinical and evidence-based guidelines.”
MODEL DESCRIPTION
CMS’s Vision
CMS anticipates that the WISeR Model will (1) identify when Covered Services are “medically unnecessary,” (2) support providers and suppliers in “navigating beneficiaries toward more clinically appropriate or higher value care when appropriate,” and (3) “streamline the prior authorization process for providers and suppliers.” The WISeR Model processes are also intended to help ensure that claims for Covered Services comply with existing Medicare documentation, coverage, payment and coding requirements. CMS asserts that, in general, the WISeR Model will require the same information and clinical documentation that is already required to support Medicare FFS payment, but earlier in the delivery/payment continuum.
Through the WISeR Model, the Innovation Center will test (1) the speed and accuracy of new technology-assisted decision-making, (2) Model Participants’ ability to “help patients navigate away from low value or potentially unsafe treatments and towards clinically appropriate higher value care through provider/supplier education,” (3) the novel payment approach proposed (discussed further below), and (4) the potential alignment with MA in terms of standardization, predictability, and transparency.
Time Frame; Model Participants
CMS plans to implement the WISeR Model in two three-year agreement periods, using companies that “apply emerging technologies to clinical and claims processing solutions and have experience implementing technology-enhanced prior authorization with other payers, including MA plans.” As noted, companies looking to participate in the WISeR Model must submit an application to CMS by July 25, 2025 and the model is scheduled to launch on January 1, 2026. CMS has announced it will be holding an information session on the WISeR Model on Thursday, July 17, 2025 and has posted FAQs and additional information here.
Geographic Areas
The WISeR Model will be tested in the following states in select Medicare Administrative Contractor (MAC) jurisdictions: New Jersey (MAC Jurisdiction L), Ohio (MAC Jurisdiction 15), Oklahoma and Texas (MAC Jurisdiction H), and Arizona and Washington (MAC Jurisdiction F).
Payment
Under the WISeR Model,Model Participants will be compensated based on a share of “averted expenditures.” While no details are provided in the Federal Register announcement, the RFA explains that, for each Covered Service, the Model Participant “will receive a percentage of the reduction in expenditures, or savings, which can be directly attributed to the prior authorization review process in their applicable region.” These “savings,” in turn, will be calculated “from requests that did not result in a paid claim (i.e., non-affirmations not followed by an affirmed resubmission or a successfully appealed claim denial), multiplied by the average claim level payments for historical regional claims submitted [for the Covered Service] during the prior 12 months (adjusted for performance year pricing).” The use of total claim payments in the savings calculation (as opposed to claim-line payments for the Covered Service based on eligible CPT®/HCPCS codes) is intended to accurately depict the total revenue impact, including secondary or add-on services that are regularly billed and reimbursed along with the primary procedure or service codes. Adjustments will be made to reflect the fact that a portion of the savings attributed to Model Participants would otherwise have been captured by the MACs during prepayment review or post-payment audits.
Covered Services
According to the RFA, the Covered Services for the initial performance period under the WISeR Model, and their affiliated National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs), are as follows:
- Stimulator Services
- Electrical Nerve Stimulators (NCD 160.7)
- Sacral Nerve Stimulation for Urinary Incontinence (NCD 230.18)
- Phrenic Nerve Stimulator (NCD 160.19)
- Deep Brain Stimulation for Essential Tremor and Parkinson’s Disease (NCD 160.24)
- Vagus Nerve Stimulation (NCD 160.18)
- Induced Lesions of Nerve Tracts (NCD 160.1)
- Epidural Steroid Injections for Pain Management (L39015, L39242, and L36920)4
- Percutaneous Vertebral Augmentation (PVA) for Vertebral Compression Fracture (VCF) (L34106, L38201, and L35130)5
- Cervical Fusion (L39741, L39762, and L39793) (excluding codes already included in CMS’s Outpatient Department (OPD) prior authorization process)6
- Arthroscopic Lavage and Arthroscopic Debridement for the Osteoarthritic Knee (NCD 150.9)
- Hypoglossal Nerve Stimulation for Obstructive Sleep Apnea (L38307, L38312, and L38385)7
- Incontinence Control Devices (NCD 230.10)
- Diagnosis and Treatment of Impotence (NCD 230.4)
- Percutaneous Image-Guided Lumbar Decompression for Lumbar Spinal Stenosis (NCD 150.13)
- Skin and Tissue Substitutes. Only applicable to MAC jurisdictions and states that have an active LCD in place for:
- Application of Bioengineered Skin Substitutes to Lower Extremity Chronic Non-Healing Wounds (L35041)
- Wound Application of Cellular and/or Tissue Based Products (CTPs), Lower Extremities (L36690)
The RFA includes a caveat that the above list may be subject to change, and the final list of Covered Services included in the initial performance year for WISeR will be set forth in the agreement the Model Participant signs with CMS. To the extent that CMS or the MAC make any changes to the NCDs or LCDs for Covered Services, the WISeR Model will align with those changes.
Prior Authorization Process
Under the WISeR Model, a Medicare-enrolled provider or supplier in a relevant geographic area will have the “opportunity” to submit a “voluntary” request for prior authorization for the Covered Service to either the MAC or the Model Participant, along with documentation to support Medicare coverage, as defined in the statute, regulation, NCD and/or LCD. While in theory a provider or supplier may forego the prior authorization process, in practice any claim submitted by the provider or supplier for a Covered Service will be subject to pre-payment review by a Model Participant, whether or not prior authorization is submitted to the Model Participant or MAC. Specifically:
- If the prior authorization request is submitted to the MAC, the MAC will route the request to the Model Participant for processing.
- If a provider or supplier chooses to submit a claim for a Covered Service without first submitting a prior authorization request, the claim will still be directed to a Model Participant for pre-payment medical review. After request for, and receipt of, all relevant documentation, the Model Participant will conduct a medical review, “which could include leveraging technology and clinician review,” and communicate its decision to the MAC.8 The MAC will then process the claim in accordance with the Model Participant’s decision.
Provisional Affirmation No Guarantee of Payment; Non-Affirmation Translates into Claim Denial
To be “provisionally affirmed,” the request for prior authorization must meet all applicable coverage, coding, and documentation requirements found in statutes, rules, NCDs, and LCDs for the Covered Service. A provisional affirmation is a preliminary finding that a future claim submitted to the Medicare FFS program for the Covered Service “likely meets” Medicare’s coverage, coding, and payment requirements. A provisional affirmation decision is no guarantee of payment, however, as payment remains contingent on “the applicable Medicare coverage and clinical documentation [being] met, and the claim [being] billed and submitted correctly.”
A non-affirmed prior authorization decision does not prevent a provider or supplier from submitting a claim for Covered Services, but submission of such a claim will be denied by the MAC. The provider or supplier may then appeal the claim denial with the MAC under existing appeals procedures. A provider or supplier may resubmit a prior authorization request an unlimited number of times where a denial has been received (e.g., providing additional documentation or other rationale). When resubmitting the prior authorization request, the provider or supplier will have the opportunity to request a peer-to-peer review to inform the new determination.
Gold Carding
In its Federal Register notice, CMS notes that it is exploring the implementation of ‘‘gold carding—i.e., “a process to exempt compliant providers/suppliers from the prior authorization process and expanded pre-payment review processes.” The agency has indicated that it would likely leverage and align with existing exemption policies in place for CMS’s OPD prior authorization program. Under this proposal, a provider or supplier “could be exempt from prior authorization if they achieve a prior authorization provisional affirmation threshold of 90 percent during a periodic assessment, thereby demonstrating a sufficient understanding of the requirements for submitting an accurate claim.”
IMPLICATIONS AND OPEN QUESTIONS
- The WISeR Model is striking for several reasons, not least of which is that CMS9 and Congress have been critical of the use of prior authorization in the MA context10 and prior authorization requirements are highly unpopular with providers11 and the general public. Moreover, the accuracy of prior authorization procedures is unclear.12
- Non-affirmations will lead directly to claims denials. While the provider or supplier will have the opportunity to request a peer-to-peer review of the non-affirmation decision, this process will impose additional administrative burden on providers. CMS points out that a non-affirmed prior authorization decision does not prevent the provider or supplier from furnishing the Covered Service or submitting a claim, but as a practical matter, providers and suppliers likely will be hesitant to furnish items or services that may not be paid.
- Under MA regulations, if an MAO approves the furnishing of a covered item or service through a prior authorization or pre-service determination of coverage or payment, the MAO may not deny coverage later based on the lack of medical necessity and may not reopen such a decision for any reason except for good cause.13 The WISeR Model description is not as express in this regard. Moreover, the MA regulations impose restrictions on prior authorization, including specific timeframes for decision-making (42 C.F.R. §§ 422.568(b)(1) and 422.572(a)(1)), which the RFA does not (although CMS anticipates specifying a timeframe for performance in contract).
- Under the payment methodology proposed under the WISeR Model, Model Participants will do better financially the greater the number of denials issued that result in abandonment of the treatment proposed by the provider. Compensation based on savings is generally disfavored in the utilization management context. Indeed, to prevent the incentive to deny care, some state insurance laws (e.g., New York) prohibit compensating utilization review agents based on the volume of denials. The RFA speaks generally about CMS’ intent to monitor the quality of Model Participant decision-making and adjust payment downward when audit results indicate a “high rate of improper determinations,” but no detail is provided as to service level requirements and the specific financial implications of faulty decision-making.
- Under the Biden Administration, CMS had considered imposing regulatory safeguards on the use of AI in connection with coverage determinations. The agency’s pivot toward the use of AI in the Medicare FFS context without any express limitations or additional protections (e.g., to avoid potential discrimination) is notable.
- Finally, it will be interesting to see if providers and/or suppliers likewise turn to enhanced technology (e.g., AI) to assist them in responding to these new prior authorization demands (in terms of assembling initial data submissions and/or making appeals).
- As recently as three weeks ago, CMS announced efforts to streamline and improve what it labeled the “broken” prior authorization processes used by Medicare Advantage (MA) plans and others. See, e.g., HHS, HHS Secretary Kennedy, CMS Administrator Oz Secure Industry Pledge to Fix Broken Prior Authorization System (June 23, 2025), https://www.hhs.gov/press-room/kennedy-oz-cms-secure-healthcare-industry-pledge-to-fix-prior-authorization-system.html (hereinafter “Prior Authorization Press Release”). While CMS has in the last few years imposed additional regulatory requirements in connection with the use of prior authorization in the MA context (particularly with regard to timeliness), it is notable that the RFA is general in nature and does not impose similar safeguards in the Medicare FFS context. It is possible, however, that the final contact between CMS and the Model Participants will contain such terms.
↩︎ - While the Federal Register notice does not define the term “enhanced technologies,” the RFA makes clear that CMS is looking to companies who have experience with, and can apply, AI and machine learning technology to assist in the prior authorization process.
↩︎ - As the RFA explains, under Medicare FFS, a prior authorization process is currently applied to a specific and limited set of items and services, including certain hospital outpatient department services; repetitive, scheduled non-emergent ambulance transportation; and certain durable medical equipment, prosthetics and orthotics and supplies items.
↩︎ - The LCDs listed here from the RFA differ from those listed in the Federal Register for Epidural Steroid Injections for Pain Management in that the Federal Register lists several additional codes (i.e., L33906, L39036, L39240, L38994, and L39054).
↩︎ - The LCDs listed here from the RFA differ from those listed in the Federal Register for Percutaneous Vertebral Augmentation for Vertebral Compression Fracture in that the Federal Register lists several additional codes (i.e., L33569, L34228, L34976, L38737 and L38213).
↩︎ - The LCDs listed here from the RFA differ from those listed in the Federal Register for Cervical Fusion in that the Federal Register lists several additional codes (i.e., L39799, L39770, L39758, L39773, and L39788).
↩︎ - The LCDs listed here from the RFA differ from those listed in the Federal Register for Hypoglossal Nerve Stimulation for Obstructive Sleep Apnea in that the Federal Register lists several additional codes (i.e., L38276, L38398, L38387, L38310, and L38528).
↩︎ - CMS states in the RFA that “[a] human clinician with relevant clinical expertise for selected items and services must review every non-affirmation determination, although this requirement does not apply to affirmations.” RFA, p. 14. The Prior Authorization Process Flow Chart suggests, however, that such review may occur after the initial prior authorization decision (e.g., in response to a resubmission post non-affirmation or during appeal after a claim denial). Id., p. 16.
↩︎ - During the Biden Administration, CMS finalized several rules related to the use of prior authorization in MA that were designed to improve the process and ensure MA members receive Medicare benefits consistent with the scope of the MA benefit. More recently, HHS has sought to fix the “broken prior authorization system” through voluntary pledges by insurers to streamline and improve prior authorization processes for Medicare Advantage, Medicaid managed care, health insurance marketplace and commercial plans. See Prior Authorization Press Release. Participating health insurers pledged, among other things, to “reduce the volume of medical services subject to prior authorization by January 1, 2026.”
↩︎ - Lawmakers in Congress have held hearings, requested information from the largest MA insurers, and introduced several bills to improve transparency and reform other aspects of prior authorization. That said, legislation on the use of prior authorization has not been enacted.
↩︎ - According to the latest results from the AMA’s annual nationwide survey of 1,000 practicing physicians, 94% of physicians reported that prior authorization led to delays to patients’ access to necessary care, and 78% of physicians reported that the process can at least sometimes lead to patients abandoning their physicians’ recommended course of treatment.
↩︎ - A Kaiser Family Foundation study recently found that although a small share of prior authorization denials was appealed to Medicare Advantage insurers, most of those appeals (81.7%) were partially or fully overturned in 2023. That compares to less than one-third (29%) of appeals overturned in traditional Medicare in 2022. Kaiser Family Foundation, Medicare Advantage Insurers Made Nearly 50 Million Prior Authorization Determinations in 2023 (Jan. 28, 2025).
↩︎ - 42 C.F.R. § 422.138(c) (“If the MA organization approved the furnishing of a covered item or service through a prior authorization or pre-service determination of coverage or payment, or a concurrent determination made during the enrollee’s receipt of inpatient or outpatient services, it may not deny coverage later on the basis of lack of medical necessity and may not reopen such a decision for any reason except for good cause (as provided at § 405.986 of this chapter and § 422.616) or if there is reliable evidence of fraud or similar fault per the reopening provisions at § 422.616.”). ↩︎
