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By Lars Hanson
Associate News Editor
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Traditional Medicare has never paid every bill on faith. Claims must meet coverage rules, and contractors review them before and after payment. But for most procedures, doctors have not had to ask permission in advance. Prior authorization has been reserved for a short list, among them certain hospital outpatient procedures, including implanted spinal stimulators, and recurring ambulance rides.
On January 1, the list grew in six states, and so did the role of private technology. Under a federal pilot called WISeR, short for the Wasteful and Inappropriate Service Reduction Model, patients in Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington now need advance approval for more than a dozen procedures.
Private technology companies handle the reviews. The Centers for Medicare & Medicaid Services (CMS) invited them to use tools such as artificial intelligence and machine learning, according to the agency's request for applications. The companies' pay, the Government Accountability Office found, is calculated from "requests that did not result in a paid claim."
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In other words, the companies can earn a share of the savings when requests do not result in Medicare paying a claim.
Within weeks of launch, the government that hired those companies was already warning them. Letters CMS sent between January and March, made public October 27 through a federal public-records lawsuit, show regulators confronting four of the six contractors over backlogs, missing paperwork and patterns of denials that the agency questioned.
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CMS built safeguards into the program. Under its rules, a human clinician must review every denial, and a contractor loses its payment for a case when a patient wins on appeal.
What the Letters Say
The records were released to the Electronic Frontier Foundation, a digital-rights group that sued CMS in March for documents about the program. The October batch includes the agency's formal requests for information and corrective-action demands, along with the companies' replies. Read the letters here.
On February 6, CMS told Genzeon, the New Jersey contractor, that "459 cases are awaiting a decision letter," some as old as 23 days. Under its agreement, the company was supposed to issue an initial decision within three days.
On February 27, CMS wrote to Zyter, the Arizona contractor, after learning that "no prior authorization determination letters had been sent" to providers or patients. The agency said Zyter "may lack adequate processes" for handling providers' complaints.
On March 17, CMS told Virtix Health, which reviews requests in Washington, it had received multiple provider complaints. The letter cited blank or incomplete decision letters and "denial patterns that raise questions" about whether the company was following program guidance.
The Ohio contractor, Innovaccer, drew the sharpest language. Its online portal was supposed to open January 5. CMS granted an extension to February 5, but in a February 20 performance notice it wrote that the portal "was still not operational by that date." CMS demanded a corrective-action plan and warned that missing its deadlines would "result in payments being withheld."
The companies' written replies, included in the same release, largely described the trouble as the strain of a rushed start. Genzeon said it took "full responsibility" and that most causes of its backlog had been resolved. Zyter said it had joined the pilot about a month after the others, under a "compressed onboarding timeline." It said the problems "were technical in nature and did not affect the clinical review process," and that its workflows met program deadlines as of February 28. The release does not include written responses from Virtix or Innovaccer.
The letters cover the first three months of a program scheduled to run through December 31, 2031.
How the Program Works
CMS built WISeR around services it says “may be fraudulent, and wasteful, or of low-value” to patients, a list that includes epidural steroid injections, electrical nerve stimulators and, in some regions, skin substitutes for chronic wounds. In its request for applications, the agency cited an estimate that waste accounts for about 25 percent of U.S. health care spending, and noted that private Medicare Advantage plans already use AI to streamline reviews and detect fraud.
The payment design is what makes WISeR unusual. Contractors receive “a percentage of the savings directly attributed to their model participation,” the document says. The Government Accountability Office described it as a share of “averted expenses.” By contrast, the regional contractors that normally process Medicare claims are paid for the cost of their reviews. Contractors that score poorly on quality measures also see “downward adjustments” to their pay.
In May, the Government Accountability Office concluded that the document launching WISeR "effectively transfers decision-making authority for certain Medicare reimbursement claims" to the participating companies. GAO also found that CMS should have submitted it to Congress for review before it took effect.
Growing Pains or Warning Signs?
The letters show regulators doing what oversight is meant to do. They set deadlines, demanded fixes and, in Innovaccer's case, threatened to withhold pay. But they do not establish that the problems caused patients to lose medically necessary care, nor do they show how individual patients fared.
The most detailed public account of patient impact comes from Washington. In an April survey of 16 hospitals by the Washington State Hospital Association, released in a report by Senator Maria Cantwell, a Democrat, procedures once completed in about two weeks were taking four to eight weeks just to win approval. Hospitals also reported adding staff to handle the paperwork.
Newsweek contacted CMS for comment on Monday evening through its media inquiry form and will update this story with any response. Newsweek also contacted Genzeon, Zyter, Virtix Health and Innovaccer for comment.
What Comes Next
In July, the Senate voted 46-50 along party lines against taking up Senator Ron Wyden’s resolution to repeal WISeR. A month earlier, though, the Republican-led House Appropriations Committee had approved a spending bill that would bar any federal money from being used to run WISeR or any similar program in traditional Medicare. That bill stalled, and the stopgap spending law Congress passed instead left the program running.
That stopgap expires December 11. Lawmakers returned Monday, and Democrats take control of both chambers January 3. That makes the next spending bill a potential vehicle for lawmakers seeking to halt WISeR before the new Congress takes office.
The stakes could grow. CMS has said it may add more companies, regions and services in future years.
Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here. Contact Newsweek editors on this story: Steven Frank and Edward T. Cummins
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