Medicare may soon be able to reimburse physicians for using artificial intelligence-based medical devices, thanks to a bipartisan bill recently introduced to Congress.
The bill, called the Health Tech Investment Act, would set up a payment system for devices that use AI or machine learning, which the bill’s cosponsors say would encourage providers to use the technology in clinical settings and help improve diagnoses.
“Medicare patients deserve access to the life-changing care that artificial intelligence-enabled devices can offer,” Sen. Mike Rounds of South Dakota, one of the bill’s cosponsors, said in a statement on April 10. “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.”
How it’d work. If the bill is signed into law, it would create a temporary Medicare payment code for devices that use AI, machine learning, or “other similarly designed software.”
That temporary code would be applied to the devices for at least five years, during which time the Centers for Medicare and Medicaid Services (CMS) would collect data to determine a permanent payment code, according to a press release from the bill’s cosponsors.
The caveat. While the bill, if passed, would be a good first step toward creating a payment system for AI-based devices, it probably wouldn’t “open up the flood gates” for Medicare to actually start covering them widely, according to Jenn Kerfoot, chief strategy and growth officer at health tech company Duos, which works with Medicare beneficiaries.
For one, the bill’s wording is somewhat ambiguous in terms of what medical devices would be covered by the payment code, Kerfoot said.
AI-based medical devices also aren’t at the top of the priority list for many payers or health systems at the moment, according to Kerfoot.
“Hospital systems right now are trying to debate if they need to buy a new MRI machine because it’s about to be hit by a bunch of tariffs,” she said, adding that finding room in budgets for health systems and payers right now may be difficult because they need to balance changes in risk adjustments, Part D policy, and drug and utilization costs.
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Show me the money. It’s unclear what kind of financial impact paying for AI-based medical devices would have on Medicare.
There may be an initial increase in spending at first, Kerfoot said, but in the long term, the devices could lead to cost savings. With some AI-based devices able to detect diseases earlier, they “really can reduce that need for more expensive interventions later,” she said.
For example, a deep learning tool developed at Washington State University detects disease in human tissue faster and at a higher accuracy rate—and more consistently over time—than humans when reviewing histopathological slides, according to a 2024 study from the university.
The bill, if passed, could also spur development of new and improved AI medical devices, Kerfoot noted, as more companies may be willing to throw their hat in the ring if they know there’s a payment system in place.
The use of AI in healthcare has grown substantially in recent years, with 66% of about 1,100 physicians in 2024 reporting they used AI as part of their workflows, up from 38% in 2023, according to a survey from the American Medical Association.
There hasn’t been any movement on the bill since it was introduced last month, but AdvaMed, the medical device industry’s largest trade group, has lauded the legislation, with its President and CEO Scott Whitaker saying in a statement that it “is critical to advancing the medical progress upon which patients depend.”