New senate bill would create Medicare payment pathway for AI-enabled devices

Bill would provide reimbursement for AI devices: ©Philip - stock.adobe.com

A bipartisan bill introduced this week in the U.S. Senate could clear one of the biggest hurdles to integrating artificial intelligence into clinical practice: reimbursement.

The Health Tech Investment Act (S. 1399), introduced by Sen. Mike Rounds (R-S.D.) and Sen. Martin Heinrich (D-N.M.), would establish a predictable Medicare payment system for AI-enabled medical devices that have been cleared by the FDA. These devices include algorithm-based healthcare services used in diagnostics, imaging, and other areas of clinical care.

“Medicare patients deserve access to the life-changing care that artificial intelligence-enabled devices can offer,” Rounds said. “There is currently no clear Medicare payment system for these devices, meaning that it can take years to be approved and paid out by Medicare accurately. This legislation would create that system, improving diagnoses and encouraging the adoption of AI devices in clinical settings.”

Physicians are increasingly seeing the clinical value of AI tools—particularly in radiology, where more than three-quarters of all FDA-cleared AI devices are currently used. But experts say the lack of a consistent payment mechanism through Medicare has become a major roadblock to adoption.

“Too often the prolonged pathway to coverage for medical devices and technology delays patient access to the critical care they need,” said Randall Rutta, CEO of the National Health Council. “This issue has intensified as the pace of innovation has increased.”

The bill would require CMS to place FDA-cleared AI devices into a “New Technology Ambulatory Payment Classification” within the Hospital Outpatient Prospective Payment System for a minimum of five years. This transitional payment category would give CMS time to gather sufficient cost and utilization data before assigning a permanent payment code.

For physicians and hospitals, the legislation could ease the financial uncertainty around adopting AI-enabled tools—especially in underserved or rural areas.

“Patients in rural regions of the country are too often the last to be able to access medical innovation since too many rural providers lack the resources to invest in innovative technologies,” said Jane Veerman, an oncology clinical research nurse at Sanford Health in South Dakota. “Senator Rounds' bill would give Medicare patients certainty that their hospitals and physician offices would be reimbursed for investing in AI-enabled technologies and bringing them to patient care.”

According to the bill sponsors, the legislation would:

• Create a formalized Medicare payment pathway for algorithm-based FDA-cleared devices
• Improve access to AI-powered diagnostic and therapeutic tools for Medicare beneficiaries
• Incentivize hospitals and physician groups to adopt clinical AI by reducing financial risk
• Support ongoing innovation by providing manufacturers and providers with predictable coverage

The bill has garnered support from several advocacy and industry groups, including AdvaMed, the Alliance for Aging Research, the National Psoriasis Foundation, Patients Rising, and the Right Scan Right Time coalition.

“With AI-enabled medical technologies already making remarkable strides in patient care—and even more incredible strides ahead—now is the time to establish a predictable reimbursement pathway,” said Scott Whitaker, president and CEO of AdvaMed. “It is critical to advancing the medical progress upon which patients depend and which is being driven by medtech.”

Peter Arduini, president and CEO of GE HealthCare and current chair of AdvaMed’s Board of Directors, said the legislation reflects “a deep knowledge of how AI is used in health care” and offers an important step forward.