Thursday, June 13, 2024

MedPAC Issues Annual June Report: Software in Medicare and Hospital-at-Home

Each June, MedPAC releases a lengthy Report to Congress on a selected list of Medicare policy topics.  The June 2024 edition is out.

Particularly novel or interesting chapters include:

  • Paying for software technologies in Medicare
  • Medicare's Acute Hospital Care-at-Home Program
  • Medicare Advantage: Prior Auth & Narrow Networks
Find the 269-page report here:


AI Corner

I gave the 30-page chapter on software to GPT4 for a summary, as below.  The actual chapter defies such a short summary, with many interesting tables and examples of CMS pricing history and complicated, different evolving policies for software.   MedPAC is always highly in favor of bundling - they never saw a service they didn't think was benefited by bundling rather than paid separately, and this is clear in the last several pages of the software chapter.   But, at a higher level, here's a good AI summary.

This MeddPAC report on CMS payments for software technologies in Medicare is extensive and detailed, focusing on the evolving landscape of software as a medical device (SaMD) in healthcare, particularly how these technologies are integrated, regulated, and reimbursed within the Medicare system. Here is a detailed summary, highlighting dilemmas and key points relevant to diagnostic tests:


The increased reliance on software technologies in healthcare, including AI and machine learning applications, poses new challenges and opportunities for Medicare. Technologies such as clinical decision support software and computer-aided detection (CAD) systems are growing more sophisticated, requiring updated regulatory and payment frameworks.

FDA Approval and Medicare Coverage

Software technologies must receive FDA clearance or approval as SaMD before they are eligible for Medicare coverage. The FDA classifies these technologies based on risk, and there are different pathways for their approval: premarket notification (510(k)), De Novo classification, and premarket approval (PMA).

Medicare Payment Systems

Medicare covers and pays for SaMD under various systems:

  • Part A and Part B services: Coverage depends on the software fitting into a Medicare benefit category and being reasonable and necessary for diagnosis or treatment.
  • Outpatient Prospective Payment System (OPPS) and Physician Fee Schedule (PFS): SaMD can be separately payable or bundled with other services, with specific codes assigned for billing purposes.

Dilemmas in Payment and Coverage

  1. Balancing Innovation and Cost: Medicare must balance the encouragement of innovation with the need to control costs and prevent overpayment for technologies that could be bundled with other services.
  2. Service Integration: Deciding whether a new technology should be paid separately or as part of a bundled payment presents a significant challenge, especially as some software can perform functions independently of hardware devices.

Diagnostic Tests: Specific Insights

  • Software used in radiology, pathology, and genetics, such as CAD systems for diagnostic imaging and AI-driven analysis tools, is critical. These systems analyze medical images and data to assist in diagnosis and management but pose unique challenges for integration into Medicare’s payment frameworks.
  • Technologies like the LumineticsCore for detecting diabetic retinopathy and CAD systems used in radiological assessments are examples where Medicare provides coverage under specific conditions.

Policy Recommendations

The report suggests continued evaluation and adjustment of payment models to accommodate the rapid advancement of medical software technologies. This includes considering the implications of AI and machine skill learning, where software not only supports but potentially replaces human decision-making in clinical settings.

This summary addresses the critical points of integrating new medical software technologies into the Medicare framework, focusing on both the potential benefits and the complexities of ensuring effective coverage and reimbursement without stifling innovation or increasing costs disproportionately. [/end chatgpt 4]