Recently, Ways and Means Health Subcommittee Chairman Vern Buchanan (R-FL-16) sent a letter to the Centers for Medicare & Medicaid Services (CMS) regarding the importance of updating the reimbursement process for software as a medical device (SaMD). Along with Representatives David Schweikert (R-AZ-01) and Michelle Steel (R-CA-45), Chairman Buchanan urged CMS to reconsider their treatment of SaMD in the reimbursement process. This is an important step forward in the adoption of cutting-edge technology in healthcare. Read the full text of the letter here.
We applaud this effort to highlight the challenges SaMD faces in the Medicare reimbursement formula. CMS has acknowledged in previous versions of the Medicare Physician Fee Schedule (PFS) that the current process does not adequately account for the utility of SaMD, including artificial intelligence (AI) software and devices. Congressional attention on this important issue will bring much-needed urgency to the discussion.
CMS currently treats all SaMD the way they have historically treated software used in medical practice: as an “indirect practice expense,” or overhead necessary to the function of a medical practice but not essential to any specific procedure. This wrongly groups sophisticated clinical decision support software and programs that analyze complex medical images with basic scheduling tools and word processors, providing an insufficient reimbursement for these more complicated tools. Instead, SaMD tools and programs should appropriately be categorized as “direct practice expenses” or tools necessary for a specific medical procedure. Direct practice expenses fittingly have a higher rate of reimbursement, which would allow more physicians and providers to adopt these tools and use them for the advancement of their patient’s health.
Congress must continue to prioritize value-based care in its work, including legislation like the PREVENT DIABETES Act and oversight actions like this letter. We hope that CMS will see this interest from Congress and commit to updating its approach to categorizing and covering SaMD. Clinical support software, image analysis, and other innovative tools will continue to bring down the costs of care for patients, physicians, and the system as a whole. We look forward to more support for changes like this one going forward.
