Reimbursement is one of the major stumbling blocks holding back wider clinical adoption of artificial intelligence. But new legislation was introduced into the U.S. Congress last week that could ease AI’s reimbursement path.
For AI developers, getting an algorithm approved is just the first step toward commercial acceptance.
- Perhaps even more important than FDA clearance is Medicare reimbursement, as healthcare providers are reluctant to use a product they won’t get paid for.
Reimbursement drives clinical AI adoption, as evidenced by a 2023 analysis listing the top algorithms by CPT claims submitted (HeartFlow Analysis topped the list).
- But CMS uses a patchwork system governing reimbursement, from temporary codes like New Technology Add-On Payment codes that expire after 2-3 years to G-codes for procedures that don’t have CPT codes, on up to the holy grail of medical reimbursement: Category I codes.
The new legislation – S.1399 or the Health Tech Investment Act – would simplify the situation by setting up a dedicated Medicare coverage pathway for AI-enabled medical devices approved by the FDA (called “algorithm-based healthcare services”), as follows …
- All FDA-approved products would be assigned a Category III New Technology Ambulatory Payment Classification in the HOPPS program.
- NTAPC codes would last for five years to enable collection of cost data before a permanent payment code is assigned.
- Payment classifications will be based on the cost of service as estimated by the manufacturer.
The bill at present has co-sponsors from both political parties, Sen. Mike Rounds (R-SD) and Sen. Martin Heinrich (D-NM).
- The legislation has also drawn support from industry heavyweights like GE HealthCare and Siemens Healthineers, as well as industry groups like AdvaMed and others.
The Takeaway
The new bill sounds like a great idea, but it’s easy to be skeptical about its prospects in today’s highly charged political environment – especially when even bipartisan compromises like the 2025 Medicare fix got scuttled. Still, S.1399’s introduction at least shows that the highest levels of the U.S. government are cognizant of the need to improve clinical AI reimbursement.
