By: Christopher Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, MA
A Health Care Provider Defense and Compliance Firm

Medicare is about to launch one of the most significant prior authorization experiments in its history, and it will affect providers across six states as early as January. CMS has selected six technology vendors to run an artificial intelligence-driven prior authorization pilot called the Wasteful and Inappropriate Services Reduction (WISeR) model, an initiative designed to cut fraud, waste, and unnecessary services in traditional Medicare. Importantly, this is not Medicare Advantage. For the first time, traditional Medicare beneficiaries in New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington will face an AI-based gatekeeper before receiving certain services. Providers in those states should expect process changes, delays, denials, and increased documentation burden as soon as the program begins.

The timing of WISeR is especially controversial because private insurers are already facing lawsuits and congressional scrutiny over algorithmic prior authorization tools. Several House Democrats are trying to block CMS from implementing the WISeR model altogether, citing patient harm and increased red tape. Their concern is straightforward. Traditional Medicare has historically required very limited prior authorization. By introducing an AI-driven model run by outside technology companies, CMS is effectively importing the most criticized elements of Medicare Advantage into a program that was specifically designed to avoid those obstacles.

Here’s how this pilot will work. CMS selected six tech companies—Cohere, Humata, Genzeon, Zyter, Innovaccer, and Virtix Health—to run the prior authorization process in different states. Many of these vendors are not traditional utilization-management organizations or clinical entities. They are AI and data companies. And CMS will pay them based on “a share of averted expenditures.” In other words, the more services denied, the more money these vendors stand to make. Health policy experts have already called this a “textbook perverse incentive,” and you don’t need to be an attorney to see the risk. If the financial model rewards denials, providers are going to face more denials.

CMS insists the program will focus only on services with a high likelihood of fraud, waste, or low value, such as skin substitutes and certain nerve stimulation procedures. But even small categories can create large problems when algorithms sit between patients and medically necessary care. And as we’ve seen in Medicare Advantage, prior authorization requirements often go far beyond their intended scope. In 2018, the OIG found that 75% of Medicare Advantage denials were overturned on appeal, meaning the initial denial was wrong three out of four times. That’s the backdrop against which CMS is now allowing AI-driven companies—paid on denial-linked savings—to handle traditional Medicare authorizations.

Call to Action: This program is going to put significant pressure on providers clinical, administrative, compliance, and financial burdens. Before January, organizations in the affected states should be preparing aggressively. First, identify whether you provide services in the WISeR-targeted code categories. Second, assign an internal lead for managing WISeR-related authorizations, appeals, and documentation tracking. Third, tighten your documentation standards around medical necessity, especially for procedures that CMS has historically flagged as high-risk. Fourth, update your compliance plan to address AI-driven utilization review, appeal processes, and communication with patients who may experience delays. And finally, prepare your billing, scheduling, and care-coordination teams for longer turnaround times and more back-and-forth with vendors who may have limited clinical expertise.

The WISeR model is going to reshape workflows for providers, and there will be confusion, denials, and unfair decisions during the early rollout. The most successful organizations will be the ones that approach this as a compliance project rather than a routine payer process. Take this seriously, get ahead of it, and prepare now rather than waiting for January’s surprise.

If you have any questions or comments about the subject of this blog, please contact Parrella Health Law at 857.328.0382 or Chris directly at cparrella@parrellahealthlaw.com.