Medicare is launching AI-powered prior authorization for skin substitutes in four states. What medical device companies need to know.
Medicare is about to flip the switch on its WISeR (Wasteful and Inappropriate Service Reduction) Model, which will be the first time CMS will use AI specifically for prior authorization in Original Medicare.
This places AI reviewers between providers and medical devices, starting with skin substitutes — plus electrical nerve stimulators and knee arthroscopy for knee osteoarthritis, which also go live on January 1. Other devices, like deep brain stimulators and additional implantable devices, are expected to be added in later phases.
But it's also voluntary. Providers can opt to skip the AI prior auth process, but they’d also accept the risk of post-service payment denial. And businesses do not like risk.
WISeR kicks off January 1, 2026 in six states:
But only four of those six states will actually require prior authorization for skin substitutes. Arizona and Washington are sitting this round out.
Local Coverage Determinations (LCDs) are Medicare's regional rulebooks that outline exactly when and how services, such as skin substitutes, will be covered. AZ and WA can’t participate in the skin substitute portion of WISeR because their Medicare contractor hasn't created these rules, so there's literally nothing for the AI to enforce.
Those four remaining states represent 16.9% of national skin substitute spending. Texas alone accounts for 11.8%.
The voluntary nature of this gives physicians a choice: submit for prior authorization upfront (7-day wait for standard requests, 2 business days for expedited) or skip it and risk payment denial months later.
For skin substitutes specifically, the burden will get heavier.
Practices need to track:
Practices in these pilot states become the testing ground for what could expand nationwide. They're essentially beta testing the future of Medicare device coverage.
Starting January 2026, FDA clearance won't be enough for skin substitute manufacturers. The new LCDs require peer-reviewed published studies demonstrating effectiveness specifically for diabetic foot ulcers and venous leg ulcers. No studies, no Medicare coverage, regardless of your FDA status.
What does "building evidence" actually look like at this stage? If you don't already have published peer-reviewed studies, you may need to:
Companies without existing studies probably can't generate new prospective clinical trial data in time. Your best bet is to leverage whatever data you already have.
With Texas representing 11.8% of national skin substitute spending, it becomes the critical battleground state. Winning or losing Texas alone could determine market leadership for several companies. Some that have a heavy Medicare strategy might actually benefit from focusing resources on winning in a few states with the same market dynamics, rather than diluting efforts across all 50.
Field teams in Texas, New Jersey, Ohio, and Oklahoma just became even more crucial to success in those markets. Their ability to navigate this new system will directly impact market share in markets that represent nearly a fifth of national spending.
Another detail that should make us all a little nervous... the third-party tech companies running these AI reviews get paid a percentage of the savings they generate.
More denials equal more revenue.
These modern-day bounty hunters are heavily incentivized to find reasons to say no rather than reasons to say yes.
This isn't just about 2026 compliance. It's 2025 positioning too.
Treating WISeR solely as a regulatory checkbox misses a chance to differentiate in the market. These all require time and resources, but look into:
The voluntary nature of WISeR actually makes this more complex. You may need dual strategies: robust support for providers who opt into prior authorization, and bulletproof documentation for those who choose post-service review.
And not only do you need to build a support system, but reps need to know it inside and out so they can close more deals behind it. The commercial teams that hit quotas are the ones who make it easiest for doctors to get paid for using them.
