The. U.S. Centers for Medicare & Medicaid Services (CMS) has introduced a new shared savings cost containment demonstration. The Wasteful and Inappropriate Service Reduction (WISeR) Model is incentivizing the utilization of technology to help improve outcomes and curb fraud, waste and abuse in Medicare reimbursement.

The WISeR Model is designed to leverage artificial intelligence (AI) and machine learning (ML) technologies alongside human clinicians’ review of certain services covered in Medicare reimbursement. The new model begins Jan. 1, 2026 and runs for six performance years until Dec. 31, 2031. The application period for participants will expire on July 25.

This is the first article of a three-part series examining the significant recent regulatory changes that could impact the hospice space, beginning with the WISeR model. Through the model, CMS will contract with companies specializing in enhanced technologies to process prior authorization requests across specific geographic regions. The demonstration is intended to identify patterns of potentially wasteful, fraudulent or abusive federal spending using AI- and ML-based predictive data analytics, said Kate Blackwell, division director at the Center for Medicare and Medicaid Innovation (CMMI).

“We’re testing a model that focuses specifically on particular services that may be subject to fraud, waste and abuse, or may be a lower value to beneficiaries in Original Medicare,” Blackwell said in a recent CMS webinar. “We’re using technology-enhanced prior authorization as the key mechanism to help providers steer beneficiaries away from these services and towards safer, higher value and more clinically appropriate alternatives.”

Unpacking the new WISeR Model

The WISeR Model is intended to help ensure that Medicare beneficiaries receive the most appropriate care that supports the best health outcomes while decreasing costs and easing administrative burden on providers and suppliers navigating the prior authorization process.

The new model is the first of its kind to incentivize the use of “cutting-edge” technology to ensure that reimbursement complies with Medicare documentation, coverage, payment and coding rules, CMS stated. The demonstration is designed to improve care navigation while encouraging safer and more evidence-based treatment best practices.

Technology companies participating in the WISeR Model intend to allow CMS to streamline the review of medical necessity for select items and services earlier in the billing claims process. Participating companies will use their AI and ML technology tools to assess Medicare coverage determinations for certain services within their assigned states. Determinations will be based on the potential for certain services to pose concerns related to patient safety if delivered inappropriately, as well to help identify Medicare items that may involve prior reports of fraud, waste and abuse.  

The WISeR Model excludes inpatient-only services, emergency services and services that would pose a substantial risk to patients if delayed. Some examples of selected items and services being examined under the model include:

• specific categories of durable medical equipment, prosthetics, orthotics and supplies (or DMEPOS)
• skin and tissue substitutes
• implantation of electrical nerve stimulators
• knee arthroscopy for knee osteoarthritis and other musculoskeletal procedures
• outpatient spinal injections such as epidural steroid injections

Significant goals of the WISeR Model include reducing inappropriate utilization, lowering Medicare spending, expediting decision-making and easing administrative burden among health care providers. The model is aimed at ensuring timely and appropriate Medicare reimbursement by decreasing spending of certain “wasteful” or “low-value” services that have “little to no clinical, evidence-based benefit,” CMS indicated.

Examining the hospice impacts

The WISeR Model does not pose any immediate change to Medicare coverage or payment policy, according to CMS. The six-year model will allow the agency to consider broader application of predictive analytics and AI technology in future policy making, the agency stated.

Among the most pressing concerns for Medicare health care providers with the model’s introduction is the risk of facing increased scrutiny alongside potential payment reductions, according to Sydney Menack, associate at Morgan Lewis, and Jacob Harper, partner at the law firm.

While the new WISeR Model is designed to improve cost containment and Medicare program integrity, it mirrors prior arrangements used in the Recovery Audit Contractor (RAC) processes and Unified Program Integrity Contractor (UPIC) programs, Menack and Harper indicated.

UPICs and RACs are among the most common types of audits faced by hospices. Recent years have brought increased auditing activity in the hospice space, with providers navigating multiple audits simultaneously alongside steeper impacts such as increased financial costs and administrative burden.

The WISeR Model has the potential to negatively affect the financial sustainability of hospices and other health care providers, Harper and Menack indicated.

“These earlier models have faced sustained criticism from providers due to the aggressive denial behaviors and administrative burdens those denials create,” Menack and Harper said in a recent article. “While its role will be to ensure compliance, the WISeR Model adds a layer of oversight that may complicate the billing process for many health care professionals and creates risk that contractors will act as modern-day bounty hunters.”

Introduction of the WISeR Model comes as program integrity concerns heat up in the hospice industry, particularly in four fraud hotbed states.

California, Arizona, Nevada and Texas have been on regulators’ radar due to the influx of hundreds of newly licensed hospice operators stepping into these states in recent years – far more than what’s typical compared to national trends. Multiple reports of unethical or illegal practices have surfaced, particularly among new companies. In some cases, patients who were not eligible for hospice were enrolled without their knowledge, while in other instances hospice patients received little to no care.

Regulators need improved ways of detecting potential patterns of fraudulent activity both from a payment and oversight perspective, according to Sheila Clark, president and CEO of the California Hospice and Palliative Care Association.

The ability to better identify and address unscrupulous billing practices is much needed in the hospice space, Clark said during the Hospice News ELEVATE conference in Florida. But future regulatory and payment policies must carefully consider the impacts of increased oversight on providers, she indicated.

“You have the first bucket [of] identity theft, [with] a beneficiary’s Medicare [information] that is worth more to a scammer than a credit card,” Clark told Hospice News during the conference. “And you have a second bucket, which is poor care, no care or uninformed consent. We basically have a road map to give them the opportunity to fail but hold them accountable. We need to bring this [CMS] administration into the room that is the provider burden, and we need to articulate that. The enhanced oversight is stinging for legitimate providers that are doing the good work.”