The Centers for Medicare & Medicaid Services (CMS) recently announced the launch of the Wasteful and Inappropriate Services Reduction (WISeR) Model, a six-year model under the CMS Innovation Center aimed at reducing avoidable, non–evidence-based utilization in Original Medicare. While CMS promotes WISeR as a progressive step toward cost containment and greater efficiency in care delivery and optimization, the model raises a number of complex issues relating to provider burden, technological oversight, contractor incentives, and the potential for broader programmatic expansion.
This LawFlash examines the program’s scope and rationale, assesses the legal and financial risks for healthcare providers, and situates WISeR within the broader regulatory context of prior authorization reform and the use of artificial intelligence (AI) in healthcare claims review processes.
The WISeR Model is scheduled to operate from 2026 through 2031 and will initially apply to a limited set of services within Original Medicare. These include certain musculoskeletal procedures (such as total knee arthroplasty), outpatient spinal injections (such as epidural steroid injections), and specific categories of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). CMS has stated that it will test the WISeR Model with selected providers and services to evaluate its impact before considering broader expansion, which could result in these providers facing increased scrutiny and potential payment reductions.
Although the WISeR Model’s current scope is relatively narrow, CMS has explicitly stated that a successful demonstration could lead to a broader rollout both in terms of the range of services subject to prior authorization and, relatedly, the provider types affected. Such expansion could bring a substantial portion of Medicare services under prospective utilization review, which introduces a significant compliance challenge for providers, particularly if contractor variability, vague review criteria, and technology-driven denials persist.
Rather than managing the program internally, CMS will contract with companies specializing in enhanced technologies to process prior authorization (PA) requests required under the WISeR Model. These contractors, who will operate in assigned geographic regions, will have to utilize data analytics and predictive tools to identify patterns of potentially wasteful services and issue PA decisions prospectively (i.e., before the services are rendered) and hopefully in near-real time.
If the WISeR Model proves successful in reducing Medicare expenditures, CMS has indicated that it may broaden the WISeR Model’s scope across additional service categories. Notably, most services in Medicare are not subject to prior authorization requirements today.
The WISeR Model introduces a shared savings structure in which contractors are compensated, at least in part, based on the cost savings that result from avoided or denied services. While this payment structure is intended to promote alignment with CMS’s goals of cost containment and Medicare program integrity, it mirrors prior arrangements used in the Recovery Audit Contractor (RAC) and, to a lesser degree, Unified Program Integrity Contractor (UPIC) programs.
These earlier models have faced sustained criticism from providers due to the aggressive denial behaviors and administrative burdens those denials create. While its role will be to ensure compliance, the WISeR Model adds a layer of oversight that may complicate the billing process for many healthcare professionals and creates risk that contractors will act as modern-day bounty hunters.
WISeR contractors will also be financially incentivized to reduce service utilization, and CMS has authorized the use of predictive analytics and algorithm-driven tools in support of this goal. Importantly, however, while AI technology will support the review process, all final denials must be reviewed and approved by a licensed clinician.
This approach is consistent with recent state-level AI prohibitions on the use of fully automated medical decision-making processes. Notwithstanding this safeguard, the combined influence of automated screening and financial incentives may lead to clinically unjustified denials of care.
WISeR marks a significant shift from retrospective auditing to prospective authorization. Providers will receive an authorization determination prior to delivering the service, which introduces a potential benefit (such as avoiding post-service denials that result in uncompensated care) but also increases the risk of delays in treatment if authorization processes are slow, unclear, or inconsistent.
The administrative obligations associated with the WISeR Model are substantial and will likely require modifications to revenue cycle workflows, new training protocols for administrative and clinical staff, and heightened vigilance in tracking and responding to emerging denial trends. The financial implications could also be significant. Providers whose service mix includes high volumes of the targeted procedures are especially exposed to payment reductions.
Practices may face additional challenges due to staffing limitations and less mature compliance frameworks. Should the program expand in scope, these burdens may intensify, placing further strain on providers already operating under constrained resources.
While CMS has not formally characterized the WISeR Model as an AI initiative, the model clearly anticipates the use of automated tools and data analytics to conduct initial claim assessments. Notably, the technology and methods used in the WISeR program are not new; these practices resemble those already in use among many commercial insurers, whereby AI tools are used to conduct medical claim reviews and create greater efficiency in the prior authorization process.
The private sector’s experience with technology-driven prior authorization offers both cautionary lessons and practical insights. Commercial payors have used similar tools to flag patterns of potentially inappropriate utilization, often resulting in significant denial volumes and provider frustration due to reduced payments. To avoid some of these concerns, some private insurers have incorporated transparency requirements, physician engagement strategies, and appeal rights that could inform more balanced implementation of the WISeR Model within the Medicare framework.
In addition to these practical concerns raised by the industry, there are also numerous legal issues to consider. First, CMS has not provided clear guidance on whether WISeR contractors must disclose the algorithmic logic underlying their decisions or provide meaningful explanations for denials. Second, the agency has not committed to auditing the performance of these tools or establishing standards for accuracy and fairness. Third, several states have enacted laws mandating that a licensed physician render the final denial, creating potential variability in compliance obligations depending on where the provider is physically located.
As the WISeR Model progresses from design to implementation, healthcare providers should begin preparing now for potential participation or downstream effects. For instance, providers should consider evaluating their internal documentation practices to ensure readiness for prior authorization compliance, identifying which service lines may be affected in the future, and developing internal protocols for responding to denials and managing appeals.
For certain provider types, such as DMEPOS suppliers, the entire business model may need to be adjusted to account for this PA review. Providers might wish to engage with CMS and industry associations during the WISeR Model’s pilot phase by submitting formal feedback and coordinating advocacy efforts, which may help shape future iterations of the model and safeguard provider interests.
The WISeR Model fits within a broader regulatory trend toward digitization and real-time utilization review. CMS’s January 2024 Interoperability and Prior Authorization Final Rule mandates the use of standardized APIs for PA transactions and imposes shorter response timeframes on payors. Together, these requirements and the launch of the WISeR Model indicate that CMS intends to standardize and accelerate utilization management across the Medicare program.
The future of the WISeR Model will depend on multiple factors including the magnitude of demonstrated savings, the measurable impact on patient access, and the performance and integrity of participating contractors. If the WISeR Model is deemed successful, it could lead to national Medicare prior authorization reform. Conversely, if it replicates the provider dissatisfaction seen with RAC and UPIC programs, it may face significant resistance.
The WISeR Model represents a significant shift in CMS’s evolving approach to Medicare cost containment and utilization oversight, with a focus on reducing waste. By integrating prospective prior authorization, contractor-based review, and algorithmic decision support, the agency is testing a potentially transformative model. Whether this framework strikes an appropriate balance between efficiency and fairness remains to be seen.
As more details on the WISeR Model—which could potentially reshape the Medicare reimbursement environment—emerge, healthcare organizations and providers must take proactive steps to understand the model, prepare for its administrative demands, and advocate for transparency, clinical integrity, and patient access.
Questions on the WISeR Model or other fraud, waste, and abuse issues? Contact the authors or your Morgan Lewis attorney.
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