Medicare Reimbursement Pathway for AI-Enabled Medical Devices Considered in Senate’s Health Tech Investment Act

On April 9, 2025, U.S. Sens. Mike Rounds, Republican of South Dakota, and Martin Heinrich, Democrat of New Mexico, introduced a bill titled the Health Tech Investment Act (S 1399). The proposed bill would amend Title XVIII of the Social Security Act to create a Medicare payment system for algorithm-based healthcare services (AHBS), defined in the proposed legislation as services delivered through FDA-cleared or -approved devices that use artificial intelligence (AI), machine learning, or similar software to yield clinical outcomes for use by healthcare professionals to diagnose and treat diseases.

The use of AHBS in healthcare has become increasingly common across medical specialties. In radiology, for example, AI-enabled devices are frequently used to analyze imaging faster and more accurately, leading to improved health outcomes for patients. According to the press releases of the two bill sponsors, FDA has approved over 600 AI-enabled devices. Nevertheless, there still is no consistent and predictable payment pathway for the use of these devices in healthcare delivery under Medicare.

The Healthcare Tech Investment Act seeks to address this issue by assigning AHBS to a new technology ambulatory payment classification (APC). This would create stability and certainty in the reimbursement process, which could spur innovation and increase access by patients to health-improving and life-saving technologies. Under the legislation, the new technology APC is designed as a transitional reimbursement mechanism that would be assigned to a device for at least five years. This approach would provide the Centers for Medicare & Medicaid Services with the time needed to collect enough data on delivery and service costs to adequately determine a permanent APC for the technology.

Last session, publications issued by the Bipartisan Senate AI Working Group (AI Policy Roadmap, May 2024) and the Bipartisan House AI Task Force (Report on AI, December 2024) included recommendations to establish a stable pathway for reimbursing AI-enabled devices under Medicare. The Health Tech Investment Act, which builds on these earlier efforts, has not progressed since it was introduced and referred to the Committee on Finance in early April. If enacted, however, the bill would have significant implications for health tech innovation and patient access to these devices.   

Stakeholders should monitor this legislation for developments.