Senate Bill Proposes Clear Medicare Payment Pathway for AI Medical Devices

U.S. Senators Martin Heinrich and Mike Rounds introduced the Health Tech Investment Act to enhance healthcare outcomes for Medicare patients by promoting the adoption of AI-enabled medical devices. The bill aims to establish a consistent Medicare payment pathway for these advanced technologies, addressing current gaps that delay coverage and reimbursement. With over 600 FDA-approved AI devices on the market, inconsistent payment policies by the Centers for Medicare & Medicaid Services (CMS) risk hindering broader patient access and clinical adoption.

The legislation mandates that all FDA-approved AI medical devices be assigned a New Technology Ambulatory Payment Classification within the Hospital Outpatient Prospective Payment System for at least five years. This approach is designed to collect sufficient data on delivery and service costs before setting a permanent payment code, thus enabling more predictable reimbursement for providers and manufacturers.

By formalizing payment protocols for algorithm-based healthcare services (ABHS), the bill provides clarity and financial incentives for healthcare providers and innovators in AI medical technology. Improved payment structures are expected to accelerate deployment of AI diagnostics and monitoring tools, which can lead to earlier detection of diseases and enhanced patient outcomes in the Medicare population.

The Health Tech Investment Act has received support from several health and industry groups, including AdvaMed and the National Health Council. This bipartisan initiative reflects growing regulatory and market recognition of AI’s potential to transform clinical care under value-based and technology-driven healthcare models. Insurers, providers, and device makers stand to benefit from reduced administrative barriers and clearer reimbursement pathways in a rapidly evolving digital health ecosystem.