Congress opens Medicare to digital health products with no price controls

What it does

This bill requires Medicare and Medicaid to cover prescription digital therapeutics—software-based medical products cleared by the FDA—starting January 1, 2026. It directs the Secretary of Health and Human Services to establish payment rates for these products within one year, create billing codes within two years, and require manufacturers to report pricing and usage data annually, with penalties up to $10,000 per day for false reporting.

Why we flagged it

The bill's core function is to establish Medicare/Medicaid coverage and reimbursement pathways for a new category of FDA-cleared digital products. It is fundamentally a market-access and payment-methodology bill, not a consumer-protection or cost-control measure.

What the text implies

• The bill anchors Medicare/Medicaid reimbursement to 'actual list charge' (the first publicly available price), giving manufacturers strong incentive to set high initial prices. No explicit price-negotiation or cost-effectiveness review is required before coverage begins.
• Manufacturers must report private-payor pricing and volume data to CMS, but this data is treated as confidential (like drug pricing under section 1927). This may limit transparency about whether government reimbursement rates are benchmarked to competitive private-market prices or inflated by manufacturer list prices.

The full analysis lists 5 implications of this text.

Who stands to gain

Digital therapeutics manufacturers (e.g., Livongo/Teladoc, Omada Health, Proteus Digital Health, Can; FDA-cleared digital health device companies; Health insurance intermediaries managing digital benefit administration