How does Medicare pay for AI?

Bundled unless it has its own code

CMS describes packaging as the historical rule: before 2018, software used in outpatient services "was packaged into the payment for the underlying clinical service," such as image-enhancing software paid within the MRI (Federal Register). For inpatient care, Medicare "covers and pays for software as part of the broader bundled payment made for each hospital stay," according to the Medicare Payment Advisory Commission, which also notes that software is not an explicit benefit category in the Medicare statute (MedPAC).

The few AI services with their own payment

Autonomous diabetic eye screening (CPT 92229) was assigned no physician work value when Medicare set its payment for 2021 (Federal Register); MedPAC reported 2024 rates of $41 in the physician fee schedule and $58 in hospital outpatient departments. Noninvasive fractional flow reserve from coronary CT (75580) paid $903 and $997 (MedPAC). AI coronary plaque analysis became a Category I code, 75577, on Jan. 1, 2026, and hospital outpatient departments are paid for it in a new-technology payment band of $901 to $1,000 (Federal Register). For most software services in the physician fee schedule, CMS has not set national rates, and the regional Medicare contractors set prices case by case (MedPAC).

A code is not a payment. The AMA says its CPT panel has accepted 43 codes classified as AI across code years 2021 through 2028 (AMA), but Medicare decides separately whether and how much to pay for each.

Hospital stays: new technology add-on payments

Medicare can add a temporary payment for a new technology used in an inpatient stay, capped at the lesser of 65% of the technology's cost or 65% of the case's costs above the DRG payment (Federal Register). Examples: up to $1,040 per case for Viz.ai's stroke-detection software ContaCT in fiscal 2022 (Federal Register), and for fiscal 2027, up to $137.53 for Aidoc's BriefCase-Triage CT tool and up to $61.84 for Bayesian Health's sepsis software (Federal Register). Applications for fiscal 2028 are due Oct. 5, 2026 (CMS).

What CMS has proposed for 2027

The proposed 2027 hospital outpatient rule would rename software services "Software as a Medical Service," designate 36 codes as such, move them into new-technology payment groups and give them a new status indicator, "O1," for separate payment (Federal Register). The proposed physician fee schedule would have contractors price 10 software analyses of lab tests. It asks how "technology and clinical AI" are affecting primary care and how CMS might change how it pays for technology-enabled care, and what barriers current annual wellness visit rules create for models in which "an AI technology company develops or operates these clinical AI tools and affiliates with a Medicare enrolled provider or supplier" (Federal Register). Both are proposals; the final rules usually come out in November.

Remote monitoring

Remote patient monitoring and remote therapeutic monitoring codes pay for the device supply, by days of data, and for management time; none of the code descriptors includes separate payment for an algorithm's analysis. For 2026, Medicare began paying for new CPT codes for two to 15 days of data and for the first 10 minutes of management (Federal Register). For 2027 it has proposed requiring an initiating visit and paying only when the practice's own employed clinical staff furnish the service (CMS).

Coverage comes before payment

Medicare pays only for services that fit a benefit category Congress created: "CMS does not have authority to establish new Part B benefit categories" (Federal Register). Regional contractors' coverage policies can add conditions. Noridian's policy on AI plaque analysis, for example, covers it only for certain chest pain presentations, with FDA-cleared or -approved software, interpreted by a physician with advanced training or credentialing in coronary CT and AI plaque analysis (Noridian LCD L39881).

New payment models

The ACCESS model, which began July 5, 2026, sets maximum annual allowed amounts of $180 to $420 per patient for technology-supported chronic care in the first year, by condition track ($90 to $210 in follow-on years). The amounts include the patient's 20% coinsurance, and Medicare withholds half of its share until reconciliation after the 12-month care period (CMS). In the WISeR model, Medicare pays companies that use AI and clinicians to review prior authorization requests a share of the spending they avert (CMS). The New York Times reported in September that officials had discussed whether AI physicians run by technology companies should be paid as much as 60% to 80% of what human physicians earn, citing a person involved in the discussions, according to Becker's (Becker's). CMS had published no such proposal in the rules and notices checked as of Sept. 28, 2026.

What to check before assuming an AI tool pays for itself

1. Is there a code, and is it paid separately in the setting where it will be used, or bundled?
2. Who sets the rate: a national fee schedule amount or the regional contractor?
3. Does a local coverage policy limit the indications, the software or who interprets?
4. For inpatient tools, is there an add-on payment, for how much, and for how long?
5. Is the payment final or only proposed?
6. For Medicare Advantage patients, what does the plan's contract pay?