Dive Brief:

• Bipartisan legislators have introduced a bill to create a Medicare reimbursement pathway for algorithm-based healthcare services.
• The text of the House bill, which lawmakers introduced last week, was unavailable, but AdvaMed said it mirrors a Senate proposal for five years of cost-based reimbursement for certain medical devices.
• AdvaMed applauded the bill, explaining that the proposal “seeks to improve health outcomes for Medicare patients through creation of a clear and consistent reimbursement pathway.”

Dive Insight:

The Senate bill covers certain devices that are cleared or approved by the Food and Drug Administration. Eligible devices deliver services using artificial intelligence, machine learning or other similarly designed software. The services yield clinical outputs or generate clinical conclusions that physicians can use to screen, detect, diagnose or treat health conditions. 

Lawmakers drafted the bills to address particular pain points companies can face when commercializing such devices in the U.S. A statement from Rep. John Joyce, R-Pa., one of six people who introduced the House bill, explained that the legislation will ensure AI-enabled devices receive an accurate payment code under the Centers for Medicare and Medicaid Services.

Qualifying devices will receive a new technology ambulatory payment classification. The lawmakers view the model as a way to ensure that necessary data surrounding delivery and service costs are acquired before a permanent payment code is assigned.

A House report published last year said current mechanisms for calculating payment cannot adequately reimburse AI tools.

Lawmakers have also proposed provisions for algorithm-based services that are used concurrently with other procedures. The Senate bill classifies such add-on services as distinct new procedures. Responding to the Senate bill in May, Morgan Lewis attorney Ariel Seeley wrote in a blog post that AI services currently “often lack clear billing codes and are absorbed into broader procedures.”

AdvaMed CEO Scott Whitaker said in a statement that the House bill “will help ensure that AI-enabled medtech reaches its fullest potential.” Whitaker said the legislation would provide the clear, consistent and stable reimbursement policy that the sector needs to provide technologies that benefit patients at scale.