Medicare and Medicaid to Cover Software-Based Treatments Starting 2026: What the Digital Therapeutics Bill Means for Your Health Coverage

The Access to Prescription Digital Therapeutics Act of 2025 is the government’s signal that software is officially medicine. This bill mandates that Medicare Part B and Medicaid begin covering certain FDA-cleared “Prescription Digital Therapeutics” (PDTs) starting January 1, 2026. A PDT is essentially a medical device—a product, app, or software—that treats, prevents, or manages a medical condition, provided it has been approved or cleared by the FDA.

Your Phone, Your Pharmacy: What’s Covered Now

This is a big deal for Medicare and Medicaid recipients, particularly those dealing with chronic conditions that can be managed or treated by software. Think of apps that deliver cognitive behavioral therapy for insomnia or substance abuse, or programs that help manage diabetes or hypertension. If your doctor prescribes an FDA-approved PDT, Medicare Part B will now cover it as a “medical and other health service” (SEC. 2). Medicaid is also required to add PDTs to its list of covered services (SEC. 3). For the millions relying on these federal programs, this drastically expands access to cutting-edge digital health tools that were often only available through private insurance or out-of-pocket costs.

The Price Tag and the Paperwork Trap

While expanded access is great, the bill creates a complex new payment system that could have manufacturers sweating. The Secretary of Health and Human Services has one year to figure out how to pay the companies that make these PDTs. The payment rate will be based on a few factors, including the manufacturer’s list price and, critically, the weighted median of what private insurance companies are already paying for the product (SEC. 2).

To make this work, the bill imposes intense annual reporting requirements on PDT manufacturers starting in 2026. They must report exactly what every private insurer paid them for the PDT, how many units were distributed, and the total number of users—and this pricing data must include every discount, coupon, and rebate they offered. If a manufacturer fails to report this complex data, or if they misrepresent it, the penalty is a jaw-dropping $10,000 per day (SEC. 2. Manufacturer Reporting Requirements; Penalties for Not Reporting). For a small tech startup that develops a life-changing app, this administrative burden and financial risk could be crippling, potentially slowing down innovation or pushing smaller players out of the Medicare market altogether.

The Real-World Rollout

For the average person, the good news is that by 2026, a new category of treatment could be covered, making it easier to manage health conditions using tools you already own, like a smartphone or tablet. For instance, a senior managing chronic pain might receive a prescription for a PDT that guides them through therapeutic exercises and tracks their progress, all covered by Medicare.

However, the massive discretion given to the Secretary in setting the payment structure (lump sum versus spread out payments) and the two-year window to establish permanent billing codes (HCPCS codes) means the rollout could be messy. Until those systems are firmly in place, providers and patients might face confusion about billing and coverage, even though temporary codes are mandated to bridge the gap. Ultimately, this bill brings medicine into the digital age for federal health programs, but the fine print reveals that the government is imposing strict, high-stakes financial oversight on the companies that bring these software treatments to market.