Why this Newsletter
Companies developing AI-enabled clinical data-analysis products may want to evaluate if their services could be affected by the Centers for Medicare and Medicaid Services (CMS) proposal to establish a new Medicare payment category, Software as a Medical Service.
Even if a company’s AI-enabled product is not for the Medicare population, it would be wise to evaluate this CMS proposal because Medicare proposals and decisions can affect the entire US health insurance market.
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In July 2026 CMS released its proposal for a new payment category, Software as a Medical Service (SaMS). The proposal begins a long and uncertain road to establishing reimbursement processes for software and AI-enabled algorithmic analysis products that support clinical decision as standalone services.
It is important to understand the July 2026 proposal is CMS’ first effort to reimburse for software-based clinical services in a structural manner, that is as their own category rather than as a cost buried inside reimbursement for another procedure or service.
Details of CMS’s proposal can be found in the CY 2027 Hospital Outpatient Prospective Payment System (OPPS) proposed rule https://www.federalregister.gov/documents/2026/07/07/2026-13656/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment and the CY 2027 Physician Fee Schedule (PFS) proposed rule https://www.federalregister.gov/documents/2026/07/16/2026-14327/medicare-and-medicaid-programs-cy-2027-payment-policies-under-the-physician-fee-schedule-and-other
Much of the value created by AI for medical purposes comes from reducing or replacing the physician interpretation work effort. A fully autonomous AI service could involve little to no physician work effort or costs, resulting in little to no physician reimbursement from Medicare.
However, there are other costs for the physician such as subscription and maintenance fees, associated with purchasing and using software and AI-enabled algorithmic analysis products. CMS recognizes this and proposes to capture and reimburse this cost by incorporating it into the Practice Expense (PE) component documented in the Physician Fee Schedule. The Practice Expense component includes costs such as office rent, supplies, software fees, clinical staff time, equipment maintenance etc.
The PE approach noted above is not new for CMS; the agency has used the same approach for physician reimbursement related to retinal-imaging analysis. This analysis is captured under CPT® (Current Procedural Terminology) code 92229.
® Current Procedural Terminology is a registered trademark of the American Medical Association.
This newsletter is for illustrative purposes only.
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About Rowinski Group
2026 marks the 22nd year in business for Rowinski Group LLC. Rowinski Group is a global reimbursement and healthcare payer data analytics consultancy for medical devices, digital health and diagnostics companies who are developing for and selling in the U.S healthcare market. Rowinski Group has offices in Silicon Valley – San Francisco Bay area, Minneapolis and Portland.
Rowinski Group has two core service offerings; securing codes and reimbursement on behalf of our company clients and using healthcare payer data analytics to help our companies solve their business issues like responding to questions from the FDA and Medicare, sales forecasting, building marketing models, Key Opinion Leader (KOL) identification.
Through our service offerings Rowinski Group assists companies from around the work to establish and build their U.S. market share.
