The Centers for Medicare and Medicaid Services (CMS) recently announced it will launch a pilot program to implement prior authorization requirements in Medicare for certain services.
The Wasteful and Inappropriate Service Reduction (WISeR) Model is set to take effect in January in six states: New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington. CMS said in a news release that through the model it will partner with companies specializing in enhanced technologies to test ways, including the use of artificial intelligence (AI), to “provide an improved and expedited prior authorization process relative to Original Medicare’s existing processes, helping patients and providers avoid unnecessary or inappropriate care and safeguarding federal taxpayer dollars.”
Prior authorization is a process that requires a healthcare provider to submit a request for advanced approval of coverage to a health insurance plan or claims processor before providing certain items or services to a plan enrollee. Prior authorization typically has been associated with Medicare Advantage plans — where its use has been increasing — rather than traditional Medicare.
CMS said the pilot program will focus on “low-value” services, or services that increase patient costs while offering minimal benefit, such as skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for osteoarthritis.
Some stakeholders have raised concerns that the program will create additional burdens for providers and delay care for patients. Critics in Congress have expressed concerns that prior authorization in Medicare could limit beneficiaries’ access to care, increase administrative burdens on an already overburdened healthcare workforce, and create incentives to put profit over patients.
The use of prior authorization in Medicare Advantage has been criticized by healthcare providers, who have complained of patient care delays and a general lack of transparency about the process. In Arkansas, the average median time for Medicare Advantage plans to provide payment for inpatient stays in 2021 was 45 days.
Increased use of prior authorization requirements will affect all hospitals, but rural hospitals, which often treat disproportionate shares of Medicare and Medicaid patients, are likely to feel the greatest impact. Rural hospitals, already under financial pressure, are also bracing for Medicare funding cuts that will take effect beginning in 2026 unless Congress intervenes.
The use of AI in prior authorization processes is also a subject of controversy. In a recent survey, 61% of physicians said they are concerned that insurers’ use of AI is increasing prior authorization denials. CMS said in its news release that under the WISeR Model, “final decisions … will be made by clinicians, not machines.”
For now, the WISeR Model targets a narrow set of items and services that CMS has identified as vulnerable to fraud, waste, and abuse. It is unclear whether and when the program may be expanded to include additional services.
CMS has released answers to frequently asked questions to clarify how the pilot program will be implemented.
