Original Medicare gets prior authorization — and the reviewers get a cut of what they deny

For sixty years, Original Medicare paid the claim first and asked questions later.▸ Private Medicare Advantage plans have required prior authorization — a doctor's request for permission before Medicare will pay — for years. Traditional, fee-for-service Medicare never had. On January 1, 2026, that changed. Under a six-year pilot called WISeR ("Wasteful and Inappropriate Service Reduction"), CMS hired outside technology companies to screen claims for a short list of services in six states before paying them — and is paying those companies a cut of every dollar they keep the program from spending.

CMS didn't invent the $1.9–$5.8 billion figure it uses to justify WISeR — it borrowed it from the Medicare Payment Advisory Commission (MedPAC), the independent body that advises Congress on Medicare payment.▸ Applying 31 clinical measures of "low-value care" — services with little or no proven benefit to the patient who received them — to a full year of fee-for-service claims, MedPAC's July 2024 Data Book found that in 2022, Medicare spent between $1.9 billion (its narrower measure, 34 low-value services per 100 beneficiaries) and $5.8 billion (its broader measure, 71 services per 100 beneficiaries) on procedures that mostly shouldn't have happened.

WISeR doesn't chase all of that spending.▸ CMS narrowed the pilot to a short list of services — including knee arthroscopy, electrical nerve stimulators, and skin and tissue substitutes used on wounds like diabetic foot ulcers — chosen because they have "prior reports of fraud, waste and abuse," according to CMS's own model factsheet.

One category shows why.▸ KFF's analysis of CMS traditional Medicare claims found that the average Medicare payment for a single skin-substitute application rose 820% between 2019 and 2024 — from $2,300 to $21,200 — the largest price increase of any WISeR-listed service category over that period.

That kind of run-up — in a product category, not a patient population — is exactly the pattern a prior-authorization screen is built to catch.▸ But the number of Medicare patients it will touch is small relative to the program: KFF found that only about 1.1 million traditional Medicare beneficiaries nationwide (3.2% of everyone in fee-for-service Medicare) received a WISeR-listed service at all in 2024, and just 207,500 of them — 19.7% — lived in one of the six pilot states where the new review actually applies starting this year.

Of the 1.1 million nationwide, 86% (908,000) got some form of orthopedic pain management — knee arthroscopy, nerve stimulator implants, and similar procedures for conditions like osteoarthritis — and just 9.3% (98,000) got skin substitutes, the category with the steepest price increase.

The mechanism that makes WISeR different from ordinary Medicare auditing is how its contractors get paid.▸ Under CMS's Request for Applications, model participants don't receive a flat contract fee — they "receive a percentage of the reduction in expenditures, or savings, that can be directly attributed to" their prior-authorization reviews. In plain terms: when a company's AI-and-clinician review team turns down a claim and it stays turned down, CMS pays that company a cut of what Medicare didn't have to spend. CMS has not published the exact percentage. It has built in some counterweight — a "baseline denial rate" discount so contractors aren't credited for denials a human Medicare contractor would have made anyway, an annual quality-score adjustment that can shrink payments for poor performance, and a clawback if a denied claim is later approved on appeal — but the core structure still ties a company's revenue to how much it says no.

Providers aren't without recourse.▸ Per CMS's WISeR FAQ, participants must return most decisions within 72 hours, a denied request can be resubmitted an unlimited number of times, and CMS says it plans to launch a "gold carding" exemption sometime in 2026 for providers with a track record of clean requests. Coverage and payment rules themselves don't change — WISeR only adds a review step before payment.

Original Medicare is adopting a tool that every other part of the health system already uses — and the American Medical Association's 2025 Prior Authorization Physician Survey is the clearest record of what that tool costs where it already runs.▸ Surveying 1,000 physicians nationwide, AMA found that practices complete an average of 40 prior authorization requests per physician per week, and that physicians and their staff spend 13 hours a week completing them. Two in five physicians (40%) employ staff who work exclusively on prior authorization. Nearly a third (32%) say authorizations are "often" or "always" denied, and 74% say denials have increased over the past five years. More than a quarter (26%) report that prior authorization has led to a serious adverse event for one of their patients.

None of that survey data is specific to WISeR — it describes prior authorization as practiced today by commercial insurers and Medicare Advantage plans, not the six-state Original Medicare pilot, which is too new to have its own denial or appeal statistics yet.▸ It's the baseline WISeR is stepping into.

WISeR launched January 2026 in Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington; figures on beneficiaries, spending, and prices above are drawn from 2022–2024 data, the most recent available before the model's design was finalized, and will be superseded as CMS publishes its own model-specific results.