CMS Finalizes 2027 Medicare Rules With Interim Path for AI Diagnostic Software
CMS coined "Software as a Medical Service" with an interim New Technology APC pathway, while ONC rolled back model-card certification duties and CMS moved AI governance and RPM/RTM staffing duties onto providers.
In one week, CMS finalized the CY2027 OPPS and MPFS rules, ONC streamlined health IT certification criteria in the HTI-5 final rule, and OCR issued a HIPAA cybersecurity newsletter. The reimbursement headline is new: CMS coined "Software as a Medical Service" (SaMS) and created an interim pathway assigning qualifying software-based diagnostic services to New Technology APCs under new status indicator O1, plus a separate route for stand-alone algorithmic analyses of previously completed laboratory data, including secondary genomic analyses. The MPFS adds an RFI on technology-enabled primary care, permits AI to support several Medicare Annual Wellness Visit components while keeping clinical responsibility with the clinician, requires clinical staff performing RPM/RTM to be directly employed by the billing practice (delayed to Jan. 1, 2029), adds telehealth platform modifiers, removes the MIPS Security Risk Analysis attestation, and creates a MIPS Improvement Activity rewarding AI governance policies.
Why it matters: AI-enabled diagnostic services now have partial payment recognition just as certification-based transparency and risk-management duties for predictive decision support are being scaled back, shifting diligence, contracting and monitoring burden onto health systems and vendors.
Watch next: O1 coding and claims implementation, the AMA's proposed clinical AI liability framework, and the pending PATIENT AI Act and Doctors Not AI Act.