Health Tech Investment Act 2025

On April 10, 2025, Senators Mike Rounds (R-SD) and Martin Heinrich (D-NM) introduced the Health Tech Investment Act (S. 1399), which would establish a Medicare reimbursement pathway for FDA-approved medical devices that utilize artificial intelligence and machine learning, particularly those delivered as Software as a Service (SaaS)—under Medicare’s Hospital Outpatient Prospective Payment System (OPPS). 

The legislation would amend the Social Security Act to include a “new technology ambulatory payment classification of algorithm-based healthcare services.” The legislation requires the Secretary of Health and Human Services (HHS) to revise application procedures and evaluation criteria to better accommodate and evaluate AI technologies. The Act confirms that SaaS-based digital therapeutics or diagnostic platforms are eligible for payment under OPPS, consistent with CMS’s 2022 final rule, but now cemented into statute.

Existing Medicare payment structures often do not align with digital or AI-based technologies, which do not involve physical products or procedures. By creating a specific ambulatory payment classification, the bill aims to incentivize innovation while ensuring access to new AI-enabled services, bringing greater clarity and transparency on reimbursement, and enabling the adoption of algorithm-driven care tools without imposing financial uncertainty on hospitals and providers.