The CMS Innovation Center is launching a new demonstration model—WISeR—that will expand prior authorization requirements in traditional Medicare. This article explains what the model is, how it works, and what it means for healthcare providers and Medicare beneficiaries.
Late in the afternoon on Friday, June 27, the CMS Innovation Center (Center) announced the Trump administration’s first new model, the Wasteful and Inappropriate Service Reduction (WISeR) Model. Unlike all the other healthcare payment and service delivery models the Center has sponsored over its 15-year history, WISeR will expand prior authorization requirements in traditional Medicare. The Center will pay companies handling providers’ prior authorization requests a share of the money CMS saves by avoiding improper payments.
Since 2020, the Centers for Medicare & Medicaid Services (CMS) has required prior authorization for certain hospital outpatient department (HOPD) services furnished to traditional Medicare beneficiaries, including blepharoplasty, botulinum toxin injection, rhinoplasty, panniculectomy, vein ablation, cervical fusion with disc removal, implanted spinal neurostimulators, and facet joint interventions. CMS updates the list of HOPD services subject to prior authorization as part of its annual rulemaking process.
Under this current program, providers submit requests to the Medicare Administrative Contractors (MACs), which must issue standard prior authorization decisions within seven calendar days and expedited decisions within two days. According to a report released in January 2025, the MACs approved just under 75% of the 207,000 requests they received in FY 2023. An audit found the MACs maintained a 99% accuracy rate in reviewing requests. While about 25% of the denials challenged by providers are overturned on Level I Appeal, such action is almost always the result of providers furnishing additional documentation.
The impact of these prior authorization requirements goes beyond the review of submitted claims. According to the same report, the total amount paid by Medicare for specified HOPD services has declined significantly since the MACs started processing prior authorization requests.
Rather than expanding this successful program, the Center intends to contract with “companies that apply emerging technologies to clinical and claims processing solutions and have experience and expertise managing the prior authorization process for other payers….” Through this demonstration project, the Center will evaluate whether the use of artificial intelligence (AI), machine learning, and/or algorithmic decision logic improves the prior authorization process. (As for the MACs, CMS Administrator Mehmet Oz wants to reduce their budgets by 30% while expecting them to maintain current activities, such as claims processing, provider enrollment, and the current prior authorization program.)
As part of the WISeR announcement, the Center released a Request for Applications (RFA) for model participants, i.e., companies that will use such emerging technologies in processing prior authorization requests. The RFA details how selected participants will be paid for their services:
[A] participant will receive a percentage of the reduction in expenditures, or savings, that can be directly attributed to the prior authorization review process in their applicable region. These savings 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 with the applicable item(s)/service(s) during the prior 12 months (adjusted for performance year pricing).
This contingency fee arrangement is reminiscent of the controversial Recovery Audit Contractors (RACs), the “bounty hunters” that get a cut of the amounts recovered through their post-payment reviews. WISeR contractors, however, will be incentivized to deny services ordered by physicians for Medicare beneficiaries, not just claw back monies paid after services were provided.
Like the RAC program, which started in 2005 as a demonstration project in California, Texas, and Florida, WISeR will start in six states: Arizona, Ohio, Oklahoma, New Jersey, Texas, and Washington. While each expansion of the RAC program required Congressional approval, the Center is authorized by statute to initiate and expand demonstration projects as leadership sees fit. Thus, the Center is likely to expand WISeR to other states over the next few years.
The Center also is likely to expand the list of services subject to WISeR’s prior authorization requirements. According to the RFA, the Center selected services with a higher risk of low-value care, i.e., services with little or no clinical benefit and services for which the risk of harm outweighs any potential benefit. The RFA cites a recent MedPAC report showing that Original Medicare spent between $1.9 to $5.8 billion on low-value services in 2022.
Here’s the list of selected services from the RFA, along with the applicable national or local coverage determination:
- 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, L36920)
- Percutaneous Vertebral Augmentation (PVA) for Vertebral Compression Fracture (VCF) (L34106, L38201, L35130)
- Cervical Fusion (L39741, L39762, L39793) (excluding services included in existing HOPD prior authorization program)
- Arthroscopic Lavage and Arthroscopic Debridement for the Osteoarthritic Knee (NCD 150.9)
- Hypoglossal Nerve Stimulation for Obstructive Sleep Apnea (L38307, L38312, L38385)
- 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
- 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)
Interestingly, the WISeR list includes only two of the 31 services MedPAC identified as low-value care in the report referenced in the RFA (epidural injections for back pain and arthroscopic knee surgery). According to the research cited in the MedPAC report, most low-value care falls into six categories: cardiovascular testing and procedure, preoperative testing, other surgical procedures, diagnostic and preventive testing, cancer screening, and imaging. The WISeR list includes services from only one of these categories (other surgical procedures).
Responses to the RFA are due July 25, just a month after the Center announced the model. Those companies selected as WISeR model participants will start work in 2025, with all specified services furnished to traditional Medicare beneficiaries in the six selected states subject to the new prior authorization requirements.
After promising to reduce administrative burden, CMS is apparently piling on new requirements. As providers are now experiencing with Medicare Advantage, securing prior authorization for services a physician already has identified as medically necessary is a labor-intensive process rife with “gotcha” denials that can delay needed care. The Center admits as much, noting in its discussion of a potential WISeR gold card for providers having achieved a 90% prior authorization approval rate, “100 percent compliance is not necessary as there could be unintentional or sporadic errors that could occur that are not deliberate and/or a result of issues out of the provider’s/supplier’s control.”
Following the May 13 announcement of the Center’s new strategic direction, many had hoped to see new models focused on expanding provider participation in value-based care. Instead, the Center’s initial focus is more of the same: policing fee-for-service reimbursement by adding to providers’ already overwhelming regulatory burden.
Key Takeaways
- WISeR is the Trump administration’s first CMS Innovation Center model.
- The model financially rewards companies that use AI and algorithms to reduce improper payments through prior authorization.
- Initially launching in six states and covering a specific list of services, WISeR likely will be expanded to more states and services.
- Providers will face additional administrative burdens similar to those under Medicare Advantage.
Frequently Asked Questions
Q: What is the WISeR Model?
A: WISeR (Wasteful and Inappropriate Service Reduction) is a CMS Innovation Center demonstration project that expands prior authorization requirements in traditional Medicare for the stated purpose of reducing improper payments.
Q: Which states are involved in the WISeR rollout?
A: Arizona, Ohio, Oklahoma, New Jersey, Texas, and Washington will roll out WISeR.
Q: How will companies handling prior authorization requests be paid under WISeR?
A: These companies will receive a percentage of cost savings resulting from denied or avoided claims.
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