CMS Announces Prior Authorization Model for FFS Medicare
On Friday, June 27, the Centers for Medicare and Medicaid Services (CMS) announced a new Innovation Center model to test prior authorization under fee-for-service (FFS) or Original Medicare. CMS is launching this program to address waste, fraud, and abuse in the program. The agency notes in their press release that, “The Medicare Payment Advisory Commission estimates that up to $5.8 billion in Medicare spending in 2022 alone was spent on services with minimal benefit.”
There is limited prior authorization in FFS Medicare. Several years ago, CMS launched a limited prior authorization program for select services in the hospital outpatient setting. Additionally, there is a voluntary prior authorization program for non-emergency ambulance transport, as well as limited prior authorization initiatives for durable medical equipment. In contrast, Medicare Advantage (MA) plans use prior authorization quite extensively. A report from KFF found that in 2023, 99% of beneficiaries enrolled in MA were required to obtain prior authorization for some services.
This announcement appears at odds with some recent efforts by the agency. CMS has been seeking input from stakeholders on burden reduction, and clinicians often cite prior authorization as an administrative burden. Also of note, last Monday, the Department of Health and Human Services announced that it had obtained voluntary agreement from major insurers to reduce the burdens of prior authorization on doctors and patients. While CMS seeks to reduce prior authorization by private payors, it is looking to expand it within Original Medicare.
A brief overview of the announcement is provided below.
What We Know
Model Name: Wasteful and Inappropriate Service Reduction (WISeR) Model.
Model Timeline: The following timeline has been released:
Start Date: January 1, 2026
End Date: December 31, 2031
Model Intent: The model’s intent is to address waste, fraud, and abuse. The agency will hire contractors to manage a prior authorization program for select services under Medicare FFS. The contractors will use technology, including artificial intelligence, to manage the program. The contractors will consider patient safety, existing coverage criteria, and previous reports of waste, fraud, and abuse. Applications from companies interested in participating are due by July 27.
Impacted Services: Skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis are among the services that will be subject to new prior authorization requirements. A complete list, as found in the published notice, is included at the end of this email.
How Clinicians Are Impacted: Providers and suppliers for people with Original Medicare in selected regions will have the option to submit a prior authorization request for the model’s selected items and services, or they will undergo a post-service/pre-payment medical review.
Model Described as Voluntary, But!: CMS describes the program as voluntary. While submitting a prior authorization request will be voluntary, if the provider or supplier does not submit a request, their claim will be subject to pre-payment medical review by model participants, which may involve requests for documentation to support the medical necessity of the targeted item or service.
Geographic Locations of the Model: This model will be tested in select states in select Medicare Administrative Contractor (MAC) jurisdictions. The selected MAC jurisdictions are JH, JL, JF, and J15, and the selected states are New Jersey (JL), Ohio (J15), Oklahoma and Texas (JH), and Arizona and Washington (JF).
How Companies Will Be Compensated: Companies managing the prior authorization will be rewarded based on a percentage of the savings they create by reducing “unnecessary” care. It was reported that CMMI Director Abe Sutton stated that they aim to save $3 billion by the end of the program.
Links to documents released so far are provided below, and the complete list of services impacted by the model is also available below.
Links
Press Release is Available HERE.
Notice from the Federal Register is available HERE.
Fact Sheet is available HERE.
Additional information is available HERE.
List of Impacted Services
Beginning January 1, 2026, the prior authorization process under this model will be implemented in the selected states on the following items and services with affiliated 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)
Skin and Tissue Substitutes (LCDs below) – only applicable to MAC jurisdictions and states that have an active LCD in place
Application of Bioengineered Skin Substitutes to Lower Extremity Chronic Non-Healing Wounds (L35041)
Wound Application of Cellular and/or Tissue Based Products (CTPs), Lower Extremities (L36690)
(Source: Federal Register Notice, Display copy)
For more information or to discuss, please contact:
Sheila Madhani, MA, MPH
Madhani Healthcare Consulting
smadhani@madhani-health.com/202-679-2977