West OC Times

Three Republican lawmakers have urged the Centers for Medicare & Medicaid Services (CMS) to revise its practice expense methodology concerning software as a medical device (SaMD). They argue that the current classification of SaMD as an indirect practice expense limits access to innovative technologies.

The legislators hoped CMS would address SaMD in the 2025 physician fee schedule. However, CMS did not implement any changes in the final schedule released on November 1. The agency mentioned it might consider adjustments in future rulemaking.

“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,” stated a letter from Representatives Vern Buchanan (R-FL), David Schweikert (R-AZ), and Michelle Steel (R-CA).

The Food and Drug Administration defines SaMD as medical software not physically part of hardware devices, such as artificial intelligence algorithms and digital therapeutics. Stakeholders express concerns that classifying SaMD as an indirect expense does not sufficiently cover software costs.

To better represent SaMD costs, the lawmakers requested CMS to incorporate “the value of services delivered by a physician to interpret or act on new digital health technology information” into work relative value units. They also suggested including “the value of the software used to address improvements and efficiency in patient care” into practice expense relative value units.

Incorporating these factors could potentially increase Medicare payments for SaMD, encouraging the adoption of innovative technologies, according to a digital health lobbyist.

Additionally, the lawmakers sought clarification from CMS on whether digital medical devices, including SaMD, fall under existing Medicare benefit categories.

A June 2024 report from the Medicare Payment Advisory Commission indicated that CMS has been aware of stakeholder concerns about treating SaMD as an indirect practice expense. CMS noted that treating SaMD directly could inadvertently allocate excessive indirect costs due to their basis on direct expenses.