The Provider's New Reality

The 2025 to 2027 policy cycle is restructuring the operating environment for Medicare providers along three axes simultaneously. Authorization, revenue, and accountability are each changing in ways that would be significant in isolation. Together, they constitute a structural shift in what it means to deliver care to Original Medicare beneficiaries.

The WISeR model brings prior authorization to fee-for-service Medicare for the first time since the program’s creation. The transition to encounter-based risk adjustment and the impending exclusion of unlinked chart review records from HCC calculations restructure how providers participate in plan revenue generation. ACO participation now encompasses 14.3 million Medicare beneficiaries, and CMMI has signaled clearly that mandatory accountable care participation is on the horizon. The TEAM model requires 741 hospitals in 188 markets to accept episode-based financial accountability for surgical care beginning in January 2026.

Providers who respond to each development separately will find themselves reacting to a moving target. The more useful frame recognizes these changes as components of a single directional shift: Medicare is moving from a system where providers are paid for services delivered to a system where providers are accountable for cost, quality, and appropriateness at the point of care.

WISeR in Your Region

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The Wasteful and Inappropriate Service Reduction model launched on January 1, 2026, in six states: Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington. These states map to four Medicare Administrative Contractor jurisdictions. Noridian operates in Arizona and Washington. Novitas covers New Jersey. CGS covers Ohio. Palmetto operates in Oklahoma and Texas.

The services subject to WISeR prior authorization or prepayment review fall into three categories: skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for osteoarthritis. These are not the highest-volume services in Medicare, but they represent areas where CMS has documented elevated rates of inappropriate utilization, fraud, and patient harm from unnecessary procedures. Skin substitutes alone exceeded $10 billion in Part B spending in 2024.

The model’s operational structure is distinctive. Six technology companies, not MACs or traditional contractors, serve as the model participants administering prior authorization review. These companies are compensated based on the savings they generate through denied services, creating a payment alignment that has drawn criticism from physician groups. Final determinations that a service does not meet Medicare coverage requirements must be made by licensed clinicians, but the AI-assisted review process is intended to accelerate decisions compared to traditional prepayment review.

Providers in WISeR states face a binary choice for each covered service: submit a prior authorization request before rendering the service or proceed with the service and have the claim undergo prepayment review. Neither path exempts the service from scrutiny. The prior authorization path provides advance confirmation that the service meets coverage criteria. The prepayment review path subjects the claim to medical review before payment, with the risk of denial if documentation does not support medical necessity.

Gold carding represents the model’s primary incentive mechanism for provider compliance. Providers who demonstrate high approval rates on prior authorization requests will become eligible for exemption from WISeR review requirements. CMS has indicated that gold carding eligibility criteria will be announced in mid-2026. The threshold is expected to be based on approval rates over a defined lookback period, likely 85 percent or higher.

For practices with significant volume in WISeR-covered services, building toward gold card eligibility is a concrete operational priority. This means establishing internal tracking systems that monitor prior authorization submission rates, approval rates, and denial patterns by service category and clinician. Practices that can demonstrate consistent compliance with coverage criteria gain a competitive advantage: reduced administrative burden, faster care delivery, and differentiation in referral networks.

Revenue Implications of Risk Adjustment Reform

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The 2024 CMS-HCC risk adjustment model completed its three-year phase-in at 100 percent for payment year 2026. This transition matters for providers because the V28 model eliminated or constrained HCC coefficients where MA plan coding practices had diverged from the cost patterns the model is designed to predict. The practical effect is that some diagnosis codes that previously generated plan revenue no longer do so, or do so at lower rates.

More consequential for providers is the CY 2027 Advance Notice proposal to exclude diagnoses from unlinked chart review records from risk score calculation. Unlinked CRRs are diagnosis submissions that are not tied to a specific beneficiary encounter. They reflect the widespread practice in which MA plans contract with third-party vendors to conduct retrospective chart reviews, identify diagnosis codes documented in medical records but not submitted through encounter data, and submit those codes to CMS to increase risk scores.

Chart review exclusion, if finalized, will restructure how risk adjustment revenue flows to MA plans and, by extension, how providers participate in that revenue stream. Under the current system, providers who facilitate chart reviews through access agreements, medical record retrieval, and clinician time for review sign-off contribute to plan revenue without necessarily documenting conditions during patient encounters. Under an encounter-based system, every HCC that generates plan revenue requires the provider to have assessed the condition during a visit and submitted the diagnosis through encounter data.

This shift has immediate operational implications. Providers who contracted with MA plans to facilitate chart review programs face revenue loss on both sides: the plans’ risk adjustment revenue decreases, and the provider’s contract payments for chart review facilitation decrease. Clinical documentation improvement programs that were structured around retrospective chart review support must redirect toward encounter-based documentation completeness.

The compliance dimension is equally significant. Under chart reviews, the compliance question was whether the diagnosis code appeared somewhere in the medical record. Under encounter-based risk adjustment, the compliance question is whether the clinician assessed the condition during the visit and whether the documentation supports that assessment as an independent clinical judgment rather than a prepopulated prompt from plan software. The line between legitimate CDI support and inappropriate coding pressure becomes both sharper and more operationally consequential.

The CDI Compliance Question

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Plans will intensify their coding education and documentation improvement programs as encounter-based risk adjustment raises the stakes. The increased pressure is predictable: if plan revenue depends on clinician documentation at the point of care, plans have strong incentives to ensure that documentation captures every diagnosis that could generate an HCC.

Providers need clear internal protocols for managing plan-directed coding interactions. The distinction that matters is between two types of CDI support. Legitimate support includes reminders to assess and document clinically active conditions at the visit, education on documentation requirements for capturing disease severity, and alerts when encounter data shows gaps relative to a patient’s condition profile. Inappropriate pressure includes requests to confirm diagnoses from prepopulated lists without independent clinical assessment, incentives tied to HCC capture rates rather than documentation quality, and any structure that substitutes plan-driven coding for clinician judgment.

The compliance investment case has changed. Building infrastructure to document CDI training, establish provider coding autonomy protocols, and create audit trails for plan-directed coding interactions was previously an optional overhead function. It is now a strategic necessity. CMS has indicated that tightened guardrails on plan-provider coding interactions are coming through rulemaking, and enforcement attention to CDI practices will likely increase alongside encounter-based risk adjustment implementation.

Providers should also recognize that their documentation accuracy, coding completeness, and clinical judgment now constitute binding constraints on plan revenue. Plans cannot generate risk adjustment revenue from conditions that providers do not assess and document. This creates negotiating leverage that did not exist under chart review models, but it also creates accountability. Providers whose documentation practices are sloppy or incomplete will find themselves less attractive to MA plans seeking encounter-based risk capture.

The Accountability Landscape

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As of January 2026, 14.3 million Medicare beneficiaries receive care coordinated by accountable care organizations. This represents 4.4 percent growth from 13.7 million in 2025. The Medicare Shared Savings Program alone now includes 511 ACOs covering 12.6 million Traditional Medicare beneficiaries, served by more than 700,000 providers. ACO REACH adds another 74 organizations covering 1.7 million beneficiaries.

What ACO participation at this scale means for the non-ACO provider is increasingly consequential. Referral patterns are shifting as ACOs seek to keep care within attributed networks. Network inclusion requirements are becoming table stakes for specialty practices seeking primary care referrals. The ACO is no longer an optional participation model for providers with growth ambitions; it is the dominant structure for organizing fee-for-service care delivery.

The TEAM model adds a mandatory layer of episode-based accountability for hospitals. Beginning January 2026, 741 acute care hospitals in 188 core-based statistical areas must accept target prices for five surgical episodes: lower extremity joint replacement, surgical hip and femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedures. These episodes cover spending from admission through 30 days post-discharge.

TEAM’s mandatory design and regional scope represent a departure from prior voluntary bundled payment models. The target prices are set regionally, not based on each hospital’s historical spending, meaning that hospitals with costs above regional averages will face immediate pressure to reduce episode spending. Analysis by the Institute for Accountable Care suggests that two-thirds of participating hospitals will lose revenue under TEAM based on current spending patterns, with average losses of $1,350 per episode.

The interaction between TEAM and ACO participation deserves attention. Beneficiaries can be simultaneously attributed to an ACO and included in a TEAM episode. CMS has indicated that no adjustments will be made to either program’s reconciliation calculations for overlapping patients. This creates the possibility of complementary incentives, with ACOs focused on longitudinal cost management and TEAM hospitals focused on episode efficiency, but it also creates potential for attribution disputes and care coordination friction.

CMMI has signaled repeatedly that mandatory participation in accountable care is the direction of policy travel. The Long-term Enhanced ACO Design model, announced to succeed ACO REACH when it concludes at the end of 2026, continues this trajectory. For providers not currently participating in an ACO, the question is no longer whether to pursue accountable care relationships but how quickly to build the infrastructure necessary for successful participation before it becomes mandatory.

The Strategic Response

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The provider’s environment is changing on three axes simultaneously: authorization through WISeR, revenue through encounter-based risk adjustment and chart review exclusion, and accountability through ACO expansion and mandatory episodic payment. The strategic response is not to address each in isolation but to recognize them as a single structural shift.

What connects WISeR, encounter-based risk adjustment, and ACO participation is the underlying theory: provider-level accountability for cost, quality, and appropriateness at the point of care. WISeR tests whether prior authorization can reduce inappropriate services. Encounter-based risk adjustment tests whether risk capture tied to clinical encounters produces more accurate payment than retrospective coding. ACO and episodic models test whether shared savings and losses can drive efficiency.

Providers who position themselves to succeed under one of these models are positioning themselves to succeed under all of them. The capabilities required are overlapping: documentation quality, care coordination infrastructure, data integration, compliance systems, and clinical judgment exercised in real time rather than validated retrospectively.

The providers most exposed to disruption are those whose revenue models depend on volume without regard to appropriateness, chart review facilitation without encounter-based documentation, or fee-for-service billing without participation in cost accountability structures. The policy environment is moving away from each of these positions simultaneously.

Related Reading

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MCR-01_03 WISeR: Prior Authorization Comes to Traditional Medicare MCR-02_04 The Encounter-Based Risk Adjustment Future MCR-01_02 The New CMMI Playbook: Mandatory Risk, Prevention, Competition