The landscape of digital health policy continues to evolve, with significant advancements shaping the regulatory and reimbursement frameworks. Here are some of the key developments that occurred during 2024 as well as our predictions for what lies ahead in 2025.
CMS and AMA: Catalyzing Digital Health Adoption
Last year was an impactful year for digital health reimbursement. Updates to reimbursement codes reinforce the integration of digital health technologies into healthcare. Digital therapeutics reimbursement codes received the most buzz, and there were also notable changes to support the adoption of telehealth, remote monitoring and AI-driven tools. By streamlining the billing process and incorporating emerging technologies, these updates aim to accelerate the use of innovative solutions in patient care, paving the way for broader access and improved healthcare delivery. Key areas of focus include the following:
- Digital therapeutics: In a long-needed win for the digital therapeutics sector, new Healthcare Common Procedure Coding System (HCPCS) codes were introduced specifically for digital mental health treatment (DHMT) devices, including G0552 (for 2025) for reimbursing physicians providing FDA-cleared DTx devices for mental health, G0553 for the first 20 minutes of managing a patient’s digital therapeutic device each month and G0554 for each additional 20 minutes of management. These codes can encourage DTx adoption by reimbursing providers for management of these solutions. Notably, there is also a supply code that allows DTx manufacturers to indirectly bill through a buy-and-bill model. However, these codes cover only products that treat psychiatric conditions under FDA regulation 882.5801 and do not cover DTx solutions for other therapeutic areas.
- Remote therapeutic monitoring (RTM): Updates were made to the RTM codes, which focus on monitoring therapy adherence and response. Specific changes include clarifying that the procedure can be ordered but not necessarily performed by a physician or qualified healthcare professional, that billing be restricted to one practitioner per patient per 30-day period and that the 16-day monitoring rule used with remote patient monitoring (RPM) billing does not apply to RTM.
- Wearable devices: New HCPCS codes were introduced for wearable health devices, including GWD01 for continuous glucose monitors, GWD02 for smartwatches with health tracking capabilities and GWD03 for wearable ECG monitors. This change allows for distinct codes to be used for different types of wearable devices, ensuring more precise billing and better support for the integration of these technologies into patient care. Before 2024, existing codes could not distinguish between device types, limiting adoption.
- Telehealth services and equipment: New CPT codes were introduced to expand the range of telehealth services covered, including virtual check-ins, e-visits and remote consultations. These codes cover the professional time and expertise involved in delivering care remotely and make it easier for providers to offer and be reimbursed for virtual care. In addition, new HCPCS codes were introduced that allow providers to bill for the physical equipment and technology necessary to conduct telehealth services. New codes include GTE01 for videoconferencing tools, GTE02 for remote diagnostic devices and GTE03 for telehealth carts; these codes are expected to encourage increased adoption and integration of virtual care solutions into healthcare practices.
- Breakthrough devices: After eight years of debate and various congressional bills, Centers for Medicare & Medicaid Services (CMS) rules and administrative actions, the Transitional Coverage for Emerging Technologies (TCET) pathway for reimbursement of breakthrough devices has mercifully been finalized. Unfortunately for digital health, the rule considers only breakthrough devices that fit within a Medicare benefit category, so this rules out most software as a medical device (SaMD), such as DTx and AI-enabled dosing devices, for now. However, home-based monitoring and therapeutic devices with wearables or virtual reality hardware could qualify through the durable medical equipment benefit category.
- AI in healthcare: New Current Procedural Terminology (CPT) codes were introduced for AI-driven diagnostic tools and decision support systems for radiology and pathology. These include:
- 0764T and 0765T: AI-driven cardiac risk assessment, based on electrocardiogram data
- 0794T: Pharmaco-oncologic algorithmic treatment ranking, which uses AI to rank cancer treatment options
- 0857T: Breast imaging analysis and reporting
- 0877T to 0880T: AI-based chest CT image analysis
- 0897T: Augmentative arrythmia analysis derived from quantitative simulations
- 0898T: Prostate cancer estimation mapping derived from image-guided fusion biopsy
- 0899T and 0900T: Analysis of blood flow from cardiac magnetic resonance
These codes were built upon earlier AI-based image analysis codes that were available for radiology, pathology and ophthalmology. Note that the AI codes are Category III, or temporary, codes; therefore, payment has not yet been assigned to them.
FDA: A Year of Refinement
As we discussed a year ago, 2023 was a foundational year for digital health, with advancements in AI/ML, digital in pharma, cybersecurity and real-world evidence, setting the stage for a transformative future. In 2024, FDA took a more measured pace with digital health announcements, focusing on incremental updates and continuing to advance many initiatives behind the scenes that had already been introduced. While the year was characterized by fewer high-profile actions, the steps taken by the Agency set the stage for a potentially transformative 2025.
- AI/ML Action Plan updates: Building on its 2021 Action Plan, FDA issued new guidance clarifying expectations for AI/ML-based devices with adaptive algorithms. The focus was on ensuring algorithm transparency and robustness while enabling iterative improvements. The Agency also outlined a framework for managing expected modifications to AI-based software, encouraging manufacturers to proactively define and validate planned changes, detailing the associated testing, risk management and quality controls in a predetermined change control plan (PCCP) included in the marketing submission.
- Cybersecurity: FDA implemented stricter guidelines for cybersecurity, emphasizing the need for comprehensive premarket submissions. This included detailed risk assessments and postmarket management plans to align with evolving threats. Notably, this shift impacted substantial equivalence determinations for 510(k) submissions, requiring manufacturers to address cybersecurity as a core component of device functionality.
- Health equity: FDA introduced a discussion paper emphasizing the need for inclusiveness in the development, evaluation and regulation of medical devices to address health disparities. The paper shows that diverse patient populations often experience unequal health outcomes due to limited representation in clinical studies and device design, and therefore, calls for strategies to ensure that devices are effective and safe across demographic groups, including different races, ethnicities, ages, genders and socioeconomic statuses.
Predictions for 2025
The digital health policy environment of 2024 laid critical groundwork for innovation, balancing patient safety, regulatory clarity, and meaningful steps towards improving patient access and provider adoption. As we begin 2025, the FDA, CMS and the American Medical Association (AMA) will continue to act as catalysts for integrating digital health solutions into the broader healthcare landscape, including health systems and the pharmaceutical ecosystem. Here are six key drivers for 2025:
- Reimbursement traction: Many of the new reimbursement codes and updates became effective on Jan. 1, so we will soon start to find out how meaningful these decisions were. Early adoption of the digital therapeutics, RTM and AI codes is expected to be slow, and investors will be looking for signs of traction before making further financing commitments. And the more scripts that are written for CMS reimbursement, the more likely it will be to see adoption by commercial payers, further broadening the awareness and appeal of digital medicine solutions and potentially re-energizing the industry.
- Prescription drug use-related software (PDURS): FDA introduced draft guidance in 2023 outlining how software output can be added to a drug label. Pharma has been energized by the new framework, as it may finally solve the riddle of how evidence-based software can be paired with drugs in a flexible, practical and impactful way. The wild card is what the final guidance will look like when it is issued by FDA in the first half of the year, as there were many unanswered questions in the draft guidance that could make or break this opportunity to transform the industry.
- Final guidance on AI and cybersecurity: The finalization of guidance on Marketing Submission Recommendations for a Predetermined Change Control Plan for Artificial Intelligence-Enabled Device Software Functions will provide a framework for adaptive AI models, ensuring innovation is balanced with safety and effectiveness. Concurrently, the Cybersecurity in Medical Devices guidance will introduce heightened expectations for quality systems and premarket submission content, reflecting FDA’s commitment to addressing evolving cybersecurity threats.
- Clarity on clinical evidence requirements: With an increasing number of FDA clearances in digital health, there is now sufficient pattern recognition for FDA to better outline the clinical evidence requirements for specific types of products and approaches. On the heels of draft guidance issued in 2024 on Clinical Considerations for Studies of Devices Intended to Treat Opioid Use Disorder, FDA has announced that it is now working on similar guidance for digital mental health treatment devices, which includes DTx and neurotech devices. FDA is also expected to finalize its guidance on Use of Real-World Evidence to Support Regulatory Decision-Making for Medical Devices, which may both open new avenues for use of RWE and close them due to the high rigor of the proposed framework. Another clinical evidence related guidance Recommendations for the Use of Clinical Data in Premarket Notification [510(k)] Submissions may also be finalized this year, but it focuses more on whether clinical data is required rather than the type of evidence required.
- Life cycle management and predicate device selection: Draft guidance on Best Practices for Selecting a Predicate Device to Support a Premarket Notification [510(k)] Submission underlines FDA’s focus on long-term oversight and thoughtful predicate selection. This change in predicate selection raises expectations for using a modern predicate with up-to-date safety and performance standards and requirements to provide robust evidence for decisions. Given the changes introduced with this document, the old certainties of predicate selection are thrown out, and the only safe approach to validate predicate selection is a pre-submission meeting with FDA.
- Continued expansion of digital health reimbursement: CMS and commercial payers will continue to evaluate digital health products, further defining their use. As these devices become more integral to the standard practice of medicine, including usefulness for patient management, we anticipate additional product and procedure codes to be approved by both AMA and CMS. This year is also expected to see further expansion of telehealth services; the addition of interprofessional consultation codes that will allow clinical psychologists, social workers and other providers to independently bill Medicare for remote consultations; and audio-only telehealth. But the big wild card will be the new Congress and the new presidential Administration’s views on digital health. There were some interesting legislative moves in the 118th Congress, including H.R. 8816, which would have revised interpretation of the benefit categories for SaMD, and of course, our old friend, the Access to Prescription Digital Therapeutics Act (H.R. 1458) – both are expected to be reintroduced. A new 21st Century Cures 2.1 legislation is in the planning stages and is specifically intended to accelerate the development and deployment of innovative healthcare technologies, which could include digital health. Any of these could have far-reaching impacts if the stars align and they are advanced in the 119th Congress.
Conclusion
While 2024 may have been a year of quiet consolidation, it laid the groundwork for what promises to be an impactful 2025. As FDA advances its regulatory efforts, manufacturers must stay ahead of the curve, integrating these changes into their product pipelines to drive both compliance and competitive advantage. CMS and AMA are expected to continue to expand digital health reimbursement, but the pace will be slower than many would hope unless legislative changes materialize. In the meantime, let’s see if manufacturers can take advantage of the new reimbursement codes and integrate them into innovative commercial models such as virtual care, and if pharma will continue to lean in on digital health as it did last year. Stay tuned for a dynamic 2025…
Author
Brian Abraham, Director of Revenue Management Solutions at EVERSANA™, helps medical technology and biopharma companies develop and execute strategies around coding, coverage and payment for innovative medical technology products. He has 20 years of…
With over 25 years in business and technology operations, Kory brings a wealth of experience to the ever-evolving medical device field. He partners with companies developing medical devices, leveraging his deep understanding of global…
Marty Culjat, PhD is the SVP, Global Head of Digital Medicine & Regulatory Innovation at EVERSANA. In this role, he leads a cross-functional team supporting the commercialization of digital medicine products within companies ranging…