Medicare’s New AI Payment Review Model: What Providers Need to Know
CMS announced the rollout of the WISeR (Wasteful and Inappropriate Service Reduction) model in June. It aims to use technologies like artificial intelligence (AI) to “ensure timely and appropriate Medicare payment for select items and services.” This voluntary model will run for six years, from Jan. 1, 2026, to Dec. 31, 2031. It includes technology companies with expertise in providing medical necessity recommendations using enhanced technology like AI and machine learning. The model has drawn both critics and supporters for its potential effects on providers and patients.
How does the model work?
This test model is limited in a few respects:
- The reviews will only involve original Medicare plans. Medicare Advantage will not be affected.
- Only a specific subset of items and services will be reviewed during the pilot phase. These include skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis.
- The model excludes inpatient-only services, emergency services, and services that would pose a substantial risk to patients if delayed.
- The announcement indicates participants will be required to have clinicians validate technologically driven determinations.
The WISeR model is a pre-treatment decision, in contrast to post-pay audits by unified program integrity contractors or recovery audit contractors. The prior authorization process can already be labor intensive and challenging for providers and patients. Some estimates have put the administrative and financial “prior auth” price tag for health care as high as $25 billion per year.
CMS touts the WISeR program as incorporating private sector innovations into CMS operations and a way to streamline and speed up the prior authorization process for Medicare patients. However, some have expressed concerns about how WISeR could affect provider operations and patient care.
In the private sector, similar technology models, implemented by some private sector payors and Medicare Advantage plans, have led to issues and even lawsuits.
One prominent Medicare Advantage payor’s implementation of a similar program has been plagued by lawsuits alleging their authorization tool was riddled with errors. In one such lawsuit, the plaintiffs claimed more than 90% of the denials were overturned following appeal, supporting their claim that the technology had a high error rate. And although the denials were overturned, these claims do not come without financial and administrative strain on providers.
On Oct. 17, 2024 a U.S. Senate permanent subcommittee released a 54-page report detailing its investigation of Medicare Advantage plans’ prior authorization process and the barriers it created for seniors’ access to care. The investigation revealed that the use of technologies like predictive analysis could lead to increased automatic denials for costly post-acute services, without regard to patient need or provider opinion. The committee report stated that the data obtained so far was troubling. It argued the data suggested “Medicare Advantage insurers are intentionally targeting a costly but critical area of medicine—substituting judgment about medical necessity with a calculation about financial gain.”
Similar concerns have been raised about the WISeR program. Some have argued the way companies will be compensated for their reviews could incentivize denials. The program mentions that “Model participants will receive a percentage of the savings associated with averted wasteful, inappropriate care as a result of their reviews.” History has shown, in both the public and private sector, that the use of payment models that incentivize denials increase the risk that financial pressures will override human oversight.
One aspect of the WISeR program could bring a new benefit for providers. CMS states certain “gold card” providers who demonstrate a record of achieving high affirmation rates in their authorization process may be exempt from the WISeR review process in the future. CMS noted this exemption could “reduce administrative burden” on high-performing providers and allow program participants to focus on suppliers and providers who are at higher risk of delivering unnecessary care.
How should health care providers prepare?
As CMS implements WISeR, providers and industry groups can protect their interests by:
- Engaging with CMS during the pilot phase
- Offering feedback on claims affected by WISeR reviews
- Advocating to influence future model updates
- Advocating for systems where clinician overrides do not carry a penalty
Providers should push for CMS to establish standards for WISeR contractors that require full transparency on the algorithms, including all training data, validation processes and use of bias safeguards.
For any providers affected by WISeR reviews, the provider should monitor denial and appeal data closely for trends that may indicate systemic algorithm error.
Although WISeR-type reviews have the potential to streamline administrative tasks, without safeguards, these tools can prioritize cost over care, override clinical discretion, and harm vulnerable patients. As CMS implements these programs, it is important to advocate for transparent decision-support systems with meaningful human control and ongoing oversight to safeguard patient-centered decision-making.
If you have questions about CMS’ WISeR model and other fraud, waste and abuse programs, please contact Lara Walker or any member of the Phelps health care team.
