“As a champion of medical innovation, I am concerned about CMS’ current approach toward digital health tools,” said Congressman Buchanan. “Their current assessment toward new digital health tools discourages and stifles innovative, life-saving technologies. CMS should rather encourage and bring eligible digital health innovations into Medicare beneficiaries’ care continuum, and I look forward to working with CMS to do just that.”
CMS’s current methodology creates significant barriers to the uptake of digital health innovations. Unfortunately, this continues to remain a major barrier to meaningful Medicare payment reforms and is long overdue for a change.
In fact, earlier this year, House Ways and Means Committee Republicans held a roundtable on the use of AI in health care. After hearing from Republican members on the committee and the roundtable’s participants, Buchanan was encouraged by the ways health professionals can utilize AI technologies in health care, especially in preventative care measures.
Specifically, Software as a Medical Device (SaMD) technologies can be used to enable greater clinical communication and analyze critical medical data so doctors can provide information to patients in a quick, efficient and timely manner.
“I have consistently championed innovation in health care, which can lead to health outcomes for patients,” said Congresswoman Steel. “I’m pleased to join Rep. Buchanan in urging CMS to support new technologies to modernize the Medicare program and improve treatments options for our seniors.”
"Classifying Software as a Medical Device (SaMD) as a direct expense is essential for aligning healthcare innovation with real-world clinical practice,” said Kyle Williams, CEO of MD Revolution. “SaMD is not a peripheral tool—it plays a critical role in diagnostics, treatment, and patient monitoring. By recognizing it as a direct input, we ensure that physicians are fairly compensated for using these technologies, which drives wider adoption. This shift will accelerate access to cutting-edge digital health solutions, improve patient outcomes, and ultimately reduce healthcare costs. It's time to treat SaMD as the essential medical asset that it truly is."
“The biggest barrier to the adoption of high-value, novel software as a medical device (SaMD) is reimbursement,” said Robert Longyear, Co-Founder and President of Avenue Health. “Encouraging the use of validated SaMD technologies to solve previously unsolvable diagnostic, treatment & progress monitoring, and treatment itself has the potential to revolutionize the delivery of care in the United States allowing for better quality, access to care, and treatment outcomes. Often classified as or used within an SaMD technology, artificial intelligence has transformative potential, but without better reimbursement pathways many of these advances will die on the vine despite demonstrating effectiveness. Importantly, updating the practice expense methodology should also allow CMS to benefit from reduced costs of delivery from these software-based technologies when previous approaches were delivered manually or via expensive hardware.”
“The Connected Health Initiative applauds this effort by Chairman Buchanan to highlight the need for changes to how Medicare categorizes and covers Software as a Medical Device (SaMD) innovations,” said Brian Scarpelli, Executive Director of Connected Health Initative (CHI). “The Centers for Medicare and Medicaid Services (CMS) have long acknowledged that the current process does not adequately account for the utility of SaMD, including artificial intelligence (AI). We urge CMS to take action to address Chairman Buchanan’s concerns and take overdue steps to provide responsible coverage and payment of SaMD innovations that are well-proven to improve patient outcomes, reduce costs, augment population health, and bolster the healthcare workforce experience.”
In addition to being the Vice Chairman and most senior Republican on the powerful U.S. House Ways and Means Committee, Buchanan is also the Chairman of the Health Subcommittee, which has broad jurisdiction over traditional Medicare, the Medicare prescription drug benefit program, and Medicare Advantage.
Read the full text of Congressman Buchanan’s letter to CMS here or below:
Dear Administrator Brooks-LaSure:
We write to you regarding this year’s Physician Fee Schedule (PFS), in which the Centers for Medicare and Medicaid Services (CMS) requested input on how to improve the practice expense (PE) methodology. We are encouraged that CMS recognizes that its existing PE methodology creates significant barriers to the uptake of digital health innovations through the classification of most software as a medical device (SaMD) as indirect practice expense.
While the existing PE methodology is meant to account for a physician practice’s costs, both direct and indirect, the ongoing choice of CMS to categorize SaMD as an indirect practice expense discourages the uptake and use of SaMD, remains one of the largest barriers to meaningful Medicare payment reforms, and is long overdue for a change. CMS’ indirect methodology leverages cost bases and uses physician work relative value units (RVUs) but does not account for other factors like device maintenance.
While CMS began considering SaMD an indirect cost in 2019, CMS has more recently indicated an interest in revising its approach to SaMD. CMS has been cross-walking payment rates for SaMD-inclusive codes to what CMS would have paid if the SaMD product had been included as a direct input. CMS has an obligation to steward Medicare beneficiary access to leading SaMD solutions and should seize this opportunity to advance meaningful PE methodology reform. We ask CMS to engage in the following recommendations to make these valuable SaMDs more accessible to Medicare beneficiaries.
We urge CMS to evolve its PE methodology to reflect the value that software provides by incorporating the value of software into CPT codes to address PE and/or work intensity for RVUs.
Specifically, the value of services delivered by a physician to interpret or act on new digital health technology information should be included in work RVUs, and the value of the software used to address improvements and efficiency in patient care should be factored into practice expense RVUs.
As CMS allows for SaMD reimbursement as direct supply inputs, CMS should obtain the most accurate estimate of the per-service cost of the input as possible, particularly by relying on invoices.
CMS’ equipment amortization formula should only apply in the case of locally installed computer programs with an upfront payment where a useful life can be estimated and where that SaMD is only used in one service at one time.
CMS should bring eligible digital health innovations into Medicare beneficiaries’ care continuum by clarifying whether digital medical devices, such as SaMD, are included in existing benefit categories.
Consistent with CMS’ clear authority and its obligation to improve Medicare beneficiary outcomes, we call on CMS to act in its Calendar Year 2025 Physician Fee Schedule rulemaking to effect overdue changes to its PE methodology to accurately categorize and support the use of SaMD in Medicare; and (2) to then launch a standalone consultation to inform broader reforms to its PE methodology. We appreciate your attention to this important issue and look forward to working with you to broaden beneficiary access to SaMD.
Sincerely,
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