Transforming Healthcare with AI: Effective Reimbursement Can Lead to Better Care and Lower Costs

Strategies for Payment of AI-Enabled Healthcare

In a recent JAMA IM Viewpoint, Professor of Health Care Policy, Michael Chernew and coauthors Anna Zink, and Hannah Napresh explore the potential of AI-enabled clinical services, existing payment structures, and the economic factors affecting AI pricing. The authors propose three payment strategies for the US Centers for Medicare & Medicaid Services (CMS) as they establish and expand Medicare reimbursement for these services.

Artificial intelligence (AI) holds promise to revolutionize healthcare with AI-enabled clinical services integrated into patient care, assisting clinicians in diagnosing, treating, and triaging patients. While the US Food and Drug Administration has approved over 500 such services, a critical question remains: how should we pay for them?

The current fee-for-service payment system, which reimburses each medical service independently, is not easily adapted to these AI-enabled clinical services, which are often used in combination with existing services. There is also uncertainty surrounding the cost of such services; with prices reflecting lack of competition, there is concern that high initial payments from CMS could become entrenched, leading to excessively high AI service costs, if not corrected over time.

In response to these concerns, the authors propose the following three payment strategies for integrating AI-powered services:

  • Bundling: Bundling the AI service with another complimentary service, such as an imaging service.
  • Value-based pricing: Establishing a price based on similar services or the quality improvement that the AI service offers.
  • Regular price adjustments: Regularly revising prices to accurately reflect the AI service's costs and its impact on other services.

AI-enabled clinical services have the potential to both enhance healthcare quality and reduce costs. However, pricing and payment for these services are still in development. By carefully considering how to pay for these services, the healthcare system can unlock the significant benefits this technology offers and improve patient care.