from a possible physician-equivalent payment rate to a live claims-review pilot and new funding for autonomous care models, federal officials are moving on several fronts at once to define how Medicare pays for AI in clinical care.
Here are four things to know:
1. HHS and CMS are drafting a new Medicare payment category for AI tools that deliver care or generate diagnoses, with internal discussions centering on paying AI 60% to 80% of what human physicians earn for the same services. Medicare has authorized more than 200 companies for AI pilot programs, and the FDA has cleared over 1,500 AI-enabled medical devices.
Four unapproved AI models have also been allowed through an FDA program aligned with the Medicare effort; one is an AI chatbot that delivers mental health therapy to Medicare beneficiaries. HHS spokesperson Grace Davis Jamison said the agency is taking “an evidence-based approach to AI and expanding its use as evidence demonstrates value.”
2. Separately, CMS’s Wasteful and Inappropriate Service Reduction model will pay AI companies a share of the money they save by automatically rejecting Medicare claims for about a dozen procedure types deemed wasteful, including steroid injections for pain relief. The model launches in January across six states, New Jersey, Ohio, Oklahoma, Texas, Arizona and Washington, and could generate billions in savings if expanded, said Abe Sutton, director of the CMS Innovation Center.
3. On the innovation side, the Advanced Research Projects Agency for Health is funding an autonomous AI system for heart failure management, able to assess symptoms, prescribe medications and order lab tests, with up to $33.7 million in year one and a four-year commitment of $62.7 million, according to Qz. The program, called Advocate, is billed as the first bid for FDA-authorized clinical AI that manages cardiovascular care directly, with Medicare and the FDA working in parallel on new regulatory pathways for autonomous clinical tools.
4. Physicians, for their part, want a cut of any savings AI generates. In a Doximity survey of nearly 23,000 U.S. physicians published Aug. 28, more than 40% said they should capture most of the cost savings if AI improves their efficiency, and 48% said physicians — not health systems or payers — should be the primary beneficiaries of AI productivity gains. More than 65% of respondents already use AI daily or weekly for clinical or administrative work, though average physician pay rose just 2% last year, down from 3.7% in 2024.
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