This Act establishes specific payment guidelines under Medicare for algorithm-based healthcare services utilizing FDA-cleared technology, ensuring appropriate reimbursement based on manufacturer cost data.
John Joyce
Representative
PA-13
The Health Tech Investment Act aims to establish clear payment guidelines for algorithm-based healthcare services under Medicare. This bill mandates that the Secretary of Health and Human Services ensure appropriate payment for these new technologies using manufacturer-submitted cost data when assigned to a new technology Ambulatory Payment Classification (APC). Furthermore, it clarifies payment policies for software as a service under the hospital outpatient prospective payment system.
Medicare Payment Overhaul: New AI Healthcare Services Get Fast-Tracked Payments Based on Manufacturer-Supplied Costs
This bill, the Health Tech Investment Act, is all about how Medicare pays for cutting-edge medical services that rely on artificial intelligence (AI) and machine learning (ML). Starting January 1, 2026, if you’re a Medicare patient getting a new outpatient service that uses an FDA-approved AI tool for diagnosis or treatment—think advanced screening software or diagnostic algorithms—this bill sets up a specific payment track for it. Essentially, it creates a fast lane for these new technologies to get covered under Medicare’s Outpatient Prospective Payment System (OPPS).
The AI Fast Lane: Payment Based on the Honor System
When a new medical technology comes out, Medicare often assigns it to a temporary payment category called a “new technology Ambulatory Payment Classification” (APC) until they have enough data to figure out the real cost. For these new AI services, the bill mandates that the initial payment rate must be based on cost data submitted by the manufacturer (SEC. 2). This isn't just the invoice price; it includes subscription fees, clinical staff costs, and even overhead. The idea is to make sure these innovative services aren't underpaid right out of the gate, which is a win for the companies developing them. However, this is also where things get tricky. Since Medicare must rely on the manufacturer’s word for costs like “overhead” before they have any claims data to verify it, there's a risk of the program overpaying until enough data exists to adjust the rate. Medicare administrators will have the tough job of vetting this manufacturer-provided data to protect taxpayer dollars.
Making Sure the Tech Gets Used
One of the biggest hurdles for new technology in healthcare is getting paid for it when it’s bundled with other procedures. Say a doctor uses an AI diagnostic tool during a standard physical exam. Currently, Medicare might only pay for the exam, not the fancy software. This bill tries to fix that. It requires the Secretary of Health and Human Services to adjust the application process to ensure these AI services are covered even if they are performed “at the same time as, in addition to, or as part of another service” (SEC. 2). As long as the AI service is defined as a distinct procedure—meaning it has a clear beginning, middle, and end—it should qualify for its own payment. This is good news for patients, as it encourages hospitals to adopt the latest technology without worrying about getting stiffed on the bill.
Software as a Service Gets Locked In
In a less flashy but important move, the bill locks in the current Medicare payment policy for “Software as a Service” (SaaS) under the OPPS, making it effective retroactively to January 1, 2023 (SEC. 2). This provides certainty for hospitals and clinics already using subscription-based software for things like electronic health records or data analytics that interface with patient care. Essentially, it takes an existing rule and cements it into law, which means less uncertainty for the business side of healthcare operations.