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  • Sailesh Conjeti

Who will pay for AI in Healthcare?

Updated: Jul 2, 2021


Original Article: Who Will Pay for AI?, Melissa M. Chen, Lauren Parks Golding, and Gregory N. Nicola Radiology: Artificial Intelligence20213:3


An excellent article in the Radiology AI journal exploring the US system reimbursement system and how can the adoption of AI in radiology driven into a mainstream market via reimbursement from the Payors such as the Center for Medicare and Medicaid Services (CMS). My Observations and Notes:

  • 2 current channels being used - Medicare Physician Fee Schedule (MPFS) and the Inpatient Prospective Payment System (IPPS)

  • MPFS being used for reimbursing IDx-DR. Check out: Excellent presentation by Dr. Abramoff on Autonomous AI and Ethics (Link)

  • AMA CPT ® Editorial Panel created first ever CPT® category 1 code for autonomous AI, on May 15, 2019: 9225X to go into effect Jan 1, 2021

  • 9225X vignette may describe a rigorously validated autonomous AI system, authorized by FDA, operated in primary care physicians to diagnose diabetic retinopathy and diabetic macular edema, without eye care provider involvement.

  • Primary care physicians are billing and collecting successfully

  • CMS finalized the reimbursement for IDx-DR as “carrier pricing,” meaning that coverage and pricing will be determined by local contractors

  • IPPS use Diagnosis Related Groups (DRGs)

  • NTAP was created to encourage adoption of innovative technology by reimbursing hospitals for part of the cost of expensive new health care services that may not be accounted for in the DRG reimbursement.

  • To qualify for reimbursement under NTAP, a technology must meet three criteria:

  • (a) the technology or medical service must be considered new and “not substantially similar” to existing technologies,

  • (b) the technology is inadequately paid for under the existing DRG system, and (c) use of the technology must substantially improve clinical outcomes more than existing services or technology.

  • NTAP is equal to the lesser of 65% of the amount by which the total covered costs of the case exceed the DRG payment or 65% of the costs of the new technology.

  • Check out the excellent commentary paper by Ameer E Hassan in JNIS BMJ (Link).

  • Future: Value based Payments: Merit-based Incentive Payment System (MIPS) and Alternative Payment Models are being explored. MIPS is particularly attractive to be used for AI-based Peer Review and Quality control. Certainly food for thought for the vendors in the market!

Closing quote directly from Chen et al.:

The entity that receives the most benefit likely will pay for AI and ultimately may consider this payment simply the cost of doing business.

and I could not agree more with them.




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