Traditionally, the Centers for Medicare & Medicaid Services (CMS) has relied on a “pay and chase” approach to recover monies CMS believes it may have paid to providers erroneously. CMS relies on this approach not only for collecting routine overpayments, but also when it believes evidence of fraud, waste, or abuse exists. More recently, CMS has used this approach to target providers who render medically reasonable and necessary services to patients in certain areas that CMS deems to be vulnerable to fraud such as skin and tissue substitutes, among others.[1]
I. Potentially Transformative “Pay and Chase” Alternative Emerges
Given long-standing criticism of the “pay and chase” approach, CMS just announced its Wasteful and Inappropriate Service Reduction (WISeR) Model (Model). The new Model is scheduled to operate initially for a six-year trial period (January 1, 2026 to December 31, 2031) in New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington State and it will pair CMS’s standard human clinical reviews with advanced technologies such as artificial intelligence (AI), machine learning, and algorithmic decision logic. The Model focuses on testing the implementation of prior authorization and pre-payment review for selected items and services including skin and tissue substitutes. CMS’s stated goal is to streamline medical necessity reviews earlier in the claims process to:
- Reduce inappropriate utilization, de-incentivize the use of medically unnecessary care, and lower spending in Original Medicare;
- Focus health care spending on services that will improve patient well-being and increase transparency of existing Medicare coverage policies; and
- Expedite decision making by applying commercial payer prior authorization processes that may be faster, easier, and more accurate while simultaneously easing administrative burdens for providers.
CMS will partner with companies (Contractors) who have expertise in applying these emerging technologies to clinical and claims processing solutions and managing the prior authorization process for providers/suppliers and payers.[2] These participating Contractors must also be able to exchange data with Medicare Administrative Contractors (MACs) securely. Contractors will receive a percentage of the savings that result from their reviews and that percentage will be adjusted based on the Contractor’s performance in certain metrics, including:
- Process quality: e.g., volume of requests processed, number of non-affirmations, and favorable appeal decisions;
- Provider/supplier/beneficiary experience: e.g., response timeliness, clarity of explanations; and
- Clinical quality outcomes: e.g., use of alternative services, evidence of ongoing urgent need to address the clinical issue.
The Model will not apply to Medicare Advantage and according to CMS, Medicare’s coverage and payment policies will remain unchanged.
II. WISeR, But Smarter?
At first glance, the Model appears to be a welcome change to CMS’s traditional “pay and chase” approach, but questions remain, particularly for providers in participating jurisdictions. Under the Model, a Medicare-enrolled provider has the opportunity to submit supporting medical record documentation and a prior authorization request for selected services to the MAC or a participating Contractor.[3] A provider’s decision to submit a prior authorization request and supporting documentation for these services is voluntary, but the claim will be subject to a pre-payment medical review and potentially, requests for documentation to support medical necessity if he or she does not submit a preauthorization request. The provider then receives a provisional affirmation or non-affirmed decision.
A provisional affirmation is a preliminary finding that a future claim submitted to Medicare for the service likely meets Medicare’s coverage, coding, and payment requirements. Claims for which there is an associated provisional affirmation decision will be paid in full provided that all of the applicable Medicare coverage and clinical documentation requirements are met, and the claim is billed and submitted correctly. Expedited reviews are available when the Model’s standard timeframe for making a prior authorization decision could jeopardize the life or health of a beneficiary. Such requests must, however, include a justification as to why the standard processing timeframe is inappropriate.
CMS further notes that a provider/supplier has “unlimited opportunities” to resubmit a prior authorization request if a provisional affirmation is not received as long as the provider neither renders the service nor submits a claim for reimbursement. Notably, the failure to receive a provisional affirmation, known as a non-affirmed decision, does not prevent a provider from submitting a claim for reimbursement, but the MAC would deny that claim. That denial would constitute an initial determination, which is subject to the administrative appeals process. Despite the narrow scope of this current Model, CMS leaves open the possibility of expanding the Model’s use to other areas or provider types.
III. Potential Pitfalls Abound
- Advanced Technologies in Medical Decision-Making
The use of advanced technologies such as AI in medical decision-making continues to evolve. Such evolution also gives rise to both legal and practical considerations. Unfortunately, CMS’s model does not identify or substantively address many of the most common considerations such as:
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- Common problems associated with AI (e.g., inaccuracies, biases, and reinforcement of errors;
- Overreliance on AI: which diminishes the skill, expertise, and judgment of experienced health care providers; and
- Lack of Transparency: AI “black box” algorithms pose risks if it is unclear who is responsible for AI’s outputs or if humans cannot understand how AI reached certain conclusions.
- Contractor Compensation and Provider Reimbursement
For years, CMS and the U.S. Department of Health and Human Service, Office of Inspector General (OIG) has emphasized that percentage-based compensation arrangements are highly suspect. Yet, CMS proposes to do the very thing that providers have long been cautioned against.
In addition to increasing (rather than reducing) the administrative burden for providers, the Model also compensates participating Contractors based, in part, on a percentage of savings that results from their reviews. This percentage varies, based on several factors. The exact compensation arrangements for Contractors remains unclear, but the use of AI technologies plus these financial incentives may result in unanticipated or unwarranted preauthorization denials and/or denials of medically reasonable and necessary patient care.
Lastly, a provider’s participation in the Model offers no guarantees of reimbursement. Instead, a provisional affirmation is merely a preliminary finding that a future claim “likely” meets Medicare’s coverage, coding, and payment requirements. Provisionally affirmed claims will only be paid in full if all of the applicable Medicare coverage and clinical documentation requirements are met, and the claim is billed and submitted correctly. Given this reality, it is unclear how the Model achieves CMS’s stated goal of expediting decision-making and reducing administrative burdens.
IV. What Should The Provider Do?
The potentially transformative nature of the Model cannot be understated. While the Model has the potential to drastically reduce fraud, it may also mistakenly reduce the impact and importance of providers’ clinical expertise.
So, what does this Model mean for providers? Preparation is key. Wound care specialists, dermatologists, surgeons, and others who use skin and tissue substitutes should evaluate the effectiveness of their existing compliance programs. As part of that evaluation, providers should reexamine their documentation policies, procedures, and practices to ensure compliance with the added scrutiny AI will likely bring. Additionally, providers should re-familiarize themselves with any applicable CMS guidance related to the use of these products, incorporate the same into their documentation, and establish a plan for submitting preauthorization requests and appealing non-affirmed decisions.
The stakes are high. Don’t go it alone. Partner with experience legal counsel — particularly one that uses respected and highly credentialed medical experts, as well as billing, coding, and documentation specialists — with extensive experience in handling claims involving skin and tissue substitutes as well as the other types of claims impacted by this new Model. Garfunkel Wild has a dedicated wound care group that can assist in all of these matters. They have covered this topic in depth. For more information, click here.
More information about the Model is available here:
- WISeR (Wasteful and Inappropriate Service Reduction) Model
- Federal Register Medicare Program; Implementation of Prior Authorization for Select Services for the Wasteful and Inappropriate Services Reduction (WISeR) Model
Should you have any questions regarding the above, or need help preparing for the Model, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at [email protected].
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[1] The Model applies to jurisdictions that have active skin and tissue substitute local coverage determinations (LCDs) in place (i.e., Novitas Solutions, Inc., Application of Bioengineered Skin Substitutes to Lower Extremity Chronic Non-Healing Wounds, L35041; CGS Administrators, Inc., Wound Application of Cellular and/or Tissue Based Products (CTPs), Lower Extremities, L36690).
[2] CMS is soliciting applications from Contractors interested in participating in the Model until July 25, 2025.
[3] In addition to the above-referenced skin and tissue substitute claims, the Model also applies to the following items and services with affiliated National Coverage Determinations (NCDs) or LCDs:
- 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 excluding facet joint injections (L39015, L33906, L39036, L39240, L39242, L36920, L38994, L39054)
- Percutaneous Vertebral Augmentation (PVA) for Vertebral Compression Fracture (VCF) (L33569, L34106, L34228, L38201, L34976, L35130, L38737, L38213)
- Cervical Fusion (L39741, L39799, L39770, L39758, L39762, L39793, L39773, L39788)
- Arthroscopic Lavage and Arthroscopic Debridement for the Osteoarthritic Knee (NCD 150.9)
- Hypoglossal Nerve Stimulation for Obstructive Sleep Apnea (L38276, L38307, L38398, L38387, L38310, L38312, L38385, L38528)
- Incontinence Control Devices (NCD 230.10)
- Diagnosis and Treatment of Impotence (NCD 230.4)
- Percutaneous Image-Guided Lumbar Decompression for Spinal Stenosis (NCD 150.13)
