Tech & Innovation in Healthcare

Question: Our facility owns a DXA machine to perform bone scans and trabecular bone scores. For our providers to analyze the results, they need to use specialized software. The software carries a hefty licensing fee. In the past, we have been unable to collect Medicare reimbursement for the licensing fees.

Is there a chance that CMS finally allows practices to collect for software and licensing fees?

Minnesota Subscriber

Answer: Sadly, you’ll have to wait until next year to see if they change their minds. On November 2, 2021, the Centers for Medicare and Medicaid (CMS) issued their Calendar Year (CY) 2022 Physician Fee Schedule (PFS).

In the final rule, CMS mentions they have “considered most computer software and associated licensing fees to be indirect costs tied to associated costs for hardware considered to be medical equipment.” Stakeholders have expressed concerns, much like yourself, about the policy. Several technologies rely on software and licensing fees —the healthcare industry is not the only field where this is true — but it may be one of the few where practices can receive compensation for it.

CMS received several comments expressing that software that can be tied directly to a specific physician service is “a direct expense,” and there are multiple examples in past PFSs that implement the costs. To which CMS responded that while they’ve made exceptions in the past, they still believe that “costs associated with software, licensing, and analysis fees are not well accounted for in the (Practice Expense) methodology.”