Limited Policy and Payment Changes for AI Services in CY 2027 OPPS Proposed Rule

The Centers for Medicare and Medicaid Services (CMS) views 2027 as a “transitional period” and is proposing incremental policy and payment changes for medical services that use artificial intelligence (AI).

In the CY 2027 Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule released on July 2, CMS proposes a limited set of changes for 2027 related to billing and payment for AI-enabled services. The agency noted that although there has been significant activity in this area, the technology's rapid evolution makes it premature to propose a comprehensive payment framework.

AI Proposals in the CY 2027 OPPS Proposed Rule

CMS seeks public comment on three proposals.

• Change in Terminology: In prior regulations, CMS has referred to services that use algorithm-driven technology, including AI, as Software as a Service (SaaS). CMS proposes to change the terminology from SaaS to Software as a Medical Service (SaMS). SaaS is an industry term used in non-health-related sectors. CMS believes that the change to SaMS will provide greater clarity and distinguish medical technology from other non-medical technology.

• Interim Payment Policy - New Tech APCs for SaMS: While CMS continues to consider a comprehensive payment framework for SaMS, for 2027 CMS is proposing only an interim policy that assigns SaMS eligible for separate payment under the OPPS to a new technology APC. CMS will not apply its rate-setting methodology to these services in 2027; instead, it will assign them rates similar to their CY 2026 rates. Table 61 in the proposed rule lists the codes designated as SaMS. A small number of SaMS codes fall under the OPPS conditionally packaged policy. CMS proposes to maintain this policy for these codes and to not assign them to a new technology APC.

  In an analysis I conducted comparing the 2027 proposed payment rates with the 2026 rates for codes designated as SaMS, six codes experienced payment decreases under the proposed payment policies. Payment rate changes ranged from a decrease of $26.84 to an increase of $61.59 for one code (G0566).

  CMS is also assigning 10 HCPCS codes that describe various SaMS analyses performed on lab tests to new technology APCs. These codes are listed in Table 62 of the proposed rule.

• New Status Indicator: CMS proposes creating a new status indicator, “O1,” for codes designated as SaMS. It is defined as “Software as Medical Service, Paid Under OPPS, Separate APC Payment.”

Although the agency has characterized the changes as incremental, stakeholders should consider implications for reporting AI services and impact on reimbursement for these services. Comments on the proposed rule are due by August 31, 2026. A high-level summary of the proposed rule is available HERE.

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For more information and questions, please contact:

Sheila Madhani

Madhani Healthcare Consulting

Email: smadhani@madhani-health.com

Tel: (202) 679-2977