Right before the holiday last week, the Centers for Medicare and Medicaid Services proposed creating a new Medicare payment category for algorithmically driven care called Software as a Medical Service.
The new terminology was included in the 2027 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Proposed Rule, which dropped on July 2. It was designed to clarify a payment pathway for “software-based technologies that support clinical decision making through algorithmic analysis, including those that provide clinical or diagnostic functionality.”
In part, SaMS is designed to differentiate these kinds of AI-technologies from remote patient monitoring and digital therapeutics. The payment policies outlined for SaMS 2027 will also be temporary. The agency says it sees next year as an interim step towards a more comprehensive payment methodology for this new category.
Cybil Roehrenbeck, executive director of advocacy group AI Healthcare Coalition and a partner at the law firm Hogan Lovells, says that her organization has been pushing for the agency to come up with a more predictable and permanent payment pathway for AI medical services.
The proposed rule designates 36 Healthcare Common Procedure Coding System codes as SaMS. But Roehrenbeck notes that all of the services listed are distinct and in their own categories. She says a lot of questions remain about what else will be included.
“How do we distinguish between services that have already been reimbursed and paid for multiple payment cycles versus some that are newer,” she said.
Comments on the proposed rule are due by August 31, 2026. In the meantime, digital health companies should be on the lookout for the proposed 2027 Medicare Physician Fee Schedule, which is supposed to come out imminently.
Separately, President Donald Trump’s administration is experimenting with paying for AI medical services through value-based models of care, through its Advancing Chronic Care with Effective, Scalable Solutions Model. It will be interesting to see if and how the agency’s desire to control costs manifests for SaMS.
Now onto the news!
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