CMS proposes 'Software as a Medical Service' as an interim Medicare outpatient payment category for algorithmic clinical software; final rule pending
In its CY 2027 hospital outpatient (OPPS/ASC) proposed rule, issued July 2, 2026 and published at 91 FR 41734 on July 7, CMS proposed to rename the algorithm-driven clinical tools it has called "Software as a Service" to Software as a Medical Service (SaMS): software that supports clinical decision-making through algorithmic analysis, including diagnostic functions.
CMS calls its plan an interim payment policy for CY 2027 while it studies longer-term approaches. It proposes to designate 36 HCPCS codes as SaMS, move the separately paid ones out of clinical APCs and into New Technology APCs at rates that closely track CY 2026, keep SaMS already in New Technology APCs where they are, and flag them with a new status indicator, "O1" (Software as a Medical Service, paid under OPPS; separate APC payment). Comments closed August 31, 2026; the final rule has not been issued yet.
Practical upshot: this would be Medicare's first step toward treating clinical AI software as its own payment category in hospital outpatient settings. If your hospital bills for AI-based analyses (for example, AI-QCT plaque imaging), payment levels would stay roughly level for 2027, but watch the final rule for whether CMS adopts the category and the "O1" indicator.