MedPAC Contemplates Medicare Reimbursement for Fast-Moving Technology Developments in Health Care

During the meeting, staff laid out some of the current terminology, noting that software as a medical device includes the following:

• Software as a service (SaaS): algorithm-driven software that assists clinicians in making clinical assessments; and
• Prescription digital therapeutics (PDTs): Software applications delivered on beneficiaries' personal devices that treat an illness or injury.

Staff stated that while SaaS has been covered by Medicare since 2018, PDTs do not fit into an existing Medicare benefit category, and thus cannot be covered. Further, SaaS is covered through the Hospital Outpatient Prospective Payment System (OPPS). Under the OPPS, MedPAC noted that there are several SaaS devices eligible for separate payment, although only one, HeartFlow®, used for blood flow assessment, has seen significant volume in the OPPS.  These devices are also reimbursed under the Medicare Physician Fee Schedule, but because of the low volumes, these items are priced by Medicare's contractors rather than at a set fee schedule rate.

The discussion noted that, in theory, PDTs might be covered under Medicare's durable medical equipment benefit, but this would only happen in circumstances where the software is embedded into a device.  Thus, PDTs in which software is solely usable on a personal device are not covered by Medicare.

The Commission discussion focused on how complicated and expensive this space could be for Medicare and that to encourage use and discourage inefficiency, these types of devices should probably be considered part of larger bundles of services rather than separately payable line items.   The chair summarized that the Commission is far from developing recommendations, but would continue to track these issues because of their importance. The slides used to guide the Commission's discussion are available on the MedPAC website.