Sponsors (8)
The bill clarifies and locks in outpatient reimbursement for FDA‑cleared AI/ML and subscription software—improving access and payment predictability for beneficiaries, providers, and vendors—while raising the risk of higher Medicare spending and added administrative/oversight needs unless strong cost verification is enforced.
Medicare beneficiaries will get clearer, regularly reimbursed access to FDA‑cleared AI/ML diagnostic and treatment software used in hospital outpatient departments starting 1/1/2026, improving care availability and coverage certainty.
Hospitals and software vendors will gain payment predictability because algorithm‑based services are assigned to new technology (NT) APCs with cost‑based payments and cannot be removed until sufficient claims data and five years of NT APC payments exist, reducing revenue uncertainty for providers and small health IT businesses.
Providers and vendors will have reduced billing uncertainty because the outpatient prospective payment system (OPPS) SaaS payment policy is codified retroactively to 1/1/2023, clarifying reimbursement for subscription‑based software.
Taxpayers and the Medicare program could face higher spending if manufacturer‑reported invoice or subscription prices are high, leading to increased federal outlays and potential premium/benefit impacts for beneficiaries.
Manufacturers could inflate reported costs or include broad overhead in their submissions, creating a risk of higher Medicare payments and overpayments absent strict verification and audit safeguards.
Hospitals, payers, and healthcare staff may face increased administrative and compliance burden to document adjunctive algorithm services and satisfy revised NT APC application criteria, raising operational costs.
Based on analysis of 2 sections of legislative text.
Requires Medicare to assign FDA-cleared/approved AI/ML clinical software used in hospital outpatient departments to NT APCs and set payment using manufacturer cost data, with retroactive SaaS rules to Jan 1, 2023.
Introduced November 20, 2025 by John Joyce · Last progress November 20, 2025
Creates a Medicare payment rule that treats FDA-cleared or approved AI/ML-based clinical software used in hospital outpatient departments as a distinct payable item by assigning such products to New Technology Ambulatory Payment Classifications (NT APCs). It applies an OPPS software-as-a-service payment policy retroactively to January 1, 2023, and requires HHS to base NT APC payment amounts for algorithm-based services on manufacturer-submitted cost data beginning January 1, 2026. Requires manufacturers to provide cost information (invoice or subscription prices, clinical staff time, overhead, and other costs) for NT APC assignment and protects a product’s NT APC status until there are adequate claims data and it has been paid under the NT APC for at least five years; also expands eligibility criteria so adjunctive or concurrent algorithm-based services that consume additional resources can qualify as new technology.