The Service Line

Medicare has never had a standing way to pay for AI software as its own billable service, and CMS’s newest hospital outpatient rule proposes creating one for the first time, with radiology and cardiac imaging AI tools making up most of the initial list. The Centers for Medicare and Medicaid Services (CMS) proposed a new “Software as a Medical Service” (SaMS) payment category in its Calendar Year (CY) 2027 Hospital Outpatient Prospective Payment System (OPPS) rule, published July 2, 2026, designating 36 Healthcare Common Procedure Coding System (HCPCS) billing codes as SaMS and moving 21 of them into New Technology Ambulatory Payment Classifications (APCs), a temporary payment track CMS reserves for services without enough claims data for a permanent home, under a newly created status indicator, O1. The list leans heavily on imaging and cardiac AI: coronary CT angiography-derived blood flow analysis (the FFR-CT test sold by HeartFlow), quantitative brain MRI analysis, imaging-based fracture-risk scoring, and AI-based retinal imaging sit alongside algorithmic ECG risk tools. CMS says CY2027 payment rates under the new track will stay close to CY2026 levels, meaning the rule creates a billing identity for AI tools before it creates a durable price for them, and hospital IT and billing teams have until August 31, 2026 to check whether their AI vendors’ codes made the list before commenting. Confidence: High on the rule’s substance and code counts, drawn from CMS’s own proposed rule and confirmed by multiple independent legal and trade analyses; Medium on whether SaMS survives structurally intact into the final rule, since CMS explicitly frames CY2027 as a transitional year. Sources: Calendar Year 2027 Hospital OPPS/ASC Proposed Rule fact sheet, CMS, CMS floats new Medicare payment category for AI diagnostic software, Becker’s Payer Issues, CMS signals intent to revamp how it pays for clinical software, AI, STAT.

Reimbursement

CMS’s proposed 2027 physician fee schedule cuts the base conversion factor for the fourth straight year, but the American College of Radiology’s own read of the rule shows diagnostic radiology, nuclear medicine, interventional radiology, and radiation oncology all still coming out ahead once practice-expense changes are counted. CMS published the Calendar Year (CY) 2027 Medicare Physician Fee Schedule (MPFS) proposed rule July 14, 2026, proposing to cut the conversion factor for physicians outside qualifying Alternative Payment Models (APMs) to 32.8409 dollars from 33.4009 dollars, a 1.68 percent drop, and the APM-qualified conversion factor to 33.1693 dollars from 33.5675 dollars, a 1.19 percent drop, largely because a one year, 2.5 percent statutory conversion factor increase expires. Despite that headline cut, CMS’s own proposed practice-expense revaluation, which shifts more of physician payment toward nonfacility and technical-service costs, produces an estimated positive 2 percent impact for diagnostic radiology and nuclear medicine and a positive 3 percent impact for interventional radiology and radiation oncology if finalized unchanged, according to the American College of Radiology’s (ACR) summary of the rule. For a hospital-based or freestanding imaging group building its 2027 budget, the number that matters is not the conversion factor headline, it is the subspecialty-level practice-expense math underneath it, and comments close September 14, 2026. Confidence: High on the published conversion factor figures and ACR’s rule summary; Medium on whether the practice-expense gains survive comment untouched, since CMS has revised similar provisions between proposed and final rules before. Sources: Calendar Year (CY) 2027 Medicare Physician Fee Schedule Proposed Rule, CMS, ACR issues initial summary of 2027 MPFS proposed rule, AuntMinnie.

Enforcement

A ransomware attack on two Washington state imaging practices in January 2025 has turned into a 3.3 million dollar class-action settlement covering more than 340,000 patients, a reminder that a PACS or RIS breach now carries the same order of financial exposure as a billing-fraud case. Mt. Baker Imaging LLC and Northwest Radiologists, radiology practices based in Whatcom County, Washington, agreed to a 3.3 million dollar, non-reversionary settlement fund in Whatcom County Superior Court after an unauthorized party accessed their network between January 20 and January 25, 2025 and obtained the personal and protected health information of roughly 340,184 patients. Under the settlement, class members can claim a pro rata cash payment with no proof of loss required, or up to 5,000 dollars for documented out-of-pocket losses, plus two years of credit and medical-identity monitoring; the claims deadline is August 19, 2026, ahead of a final approval hearing August 21, 2026. Imaging operators, whose PACS and RIS systems hold some of the largest stores of protected health information in outpatient medicine, should treat this as a going benchmark, a little under 10 dollars a patient record, when pricing their own cyber liability coverage. Confidence: High on the settlement terms and figures, drawn from the court filing itself; Low on whether Mt. Baker’s per-record cost is representative of other imaging practices’ risk. Sources: Mt. Baker Imaging seeks settlement in ransomware attack lawsuits, Cascadia Daily News, Mt. Baker Imaging & Northwest Radiologists Data Breach Settlement, HIPAA Journal.

Who’s Buying

CARPL.ai, a radiology AI marketplace already used by four of the world’s top five private radiology groups, just raised 10 million dollars in Series A funding, a bet that capital keeps flowing into radiology AI infrastructure even while CMS is still deciding how to pay for the tools running on it. CARPL.ai, which operates out of Delhi and San Francisco, announced the round July 23, 2026, led by the International Finance Corporation (IFC), the World Bank Group’s private-investment arm, with existing investor Stellaris Venture Partners also participating; the company had previously raised 6 million dollars in 2023. CARPL’s platform gives radiology groups a single integration point to more than 300 AI applications from over 100 vendors, letting them build, test, deploy, and monitor models across their clinical workflow without committing to one vendor’s stack, and the company says the new capital will fund expansion across North America, Latin America, Europe, and Asia-Pacific. The raise lands the same month CMS proposed its first standing payment path for imaging AI, and the sequencing matters: a vendor-neutral marketplace like CARPL is positioned to benefit regardless of which individual AI products end up with durable codes, since it profits from AI adoption broadly rather than any single product’s payment status. Confidence: High on the funding round’s terms; Medium on how durable that vendor-neutral advantage proves once CMS’s Software as a Medical Service framework starts routing money to specific codes. Sources: CARPL.ai raises $10M, AuntMinnie, Radiology artificial intelligence marketplace CARPL.ai raises $10M, Radiology Business.

Clinical Policy

The Radiology Outpatient Ordering Transmission (ROOT) Act, the bill that would resurrect Medicare’s shelved imaging appropriate-use-criteria program, just got folded into a bigger bipartisan Medicare payment bill, giving it a stronger vehicle than the standalone Senate bill that has sat in committee since May. Representatives John Joyce, Greg Murphy, and Kim Schrier, physician co-chairs of the House’s Republican and Democratic Doctors Caucuses, introduced the Patients First Act on July 14, 2026, a broader Medicare physician-payment overhaul that would replace the current conversion factor with one tied to the Medicare Economic Index minus 1 percentage point and create a new quality-reporting system, POINTS, to eventually replace the Merit-based Incentive Payment System. The bill incorporates the ROOT Act’s provisions modernizing the imaging Appropriate Use Criteria (AUC) program, letting ordering physicians consult evidence-based imaging guidelines through a clinical decision support tool at the point of care instead of the real-time claims-reporting requirement CMS rescinded in 2024, which the American College of Radiology (ACR) and American Society for Radiation Oncology project will save Medicare about 2 billion dollars and beneficiaries about 1.5 billion dollars over 10 years. ACR chief executive Dana Smetherman called the inclusion “a practical path forward,” and for imaging groups that mothballed AUC clinical-decision-support workflows after the 2024 pause, a bill carrying two Doctors Caucus co-chairs as sponsors is a meaningfully stronger signal to keep that infrastructure than the Senate companion has been on its own. Confidence: Medium on passage timing, since the Patients First Act itself has not had a committee vote; High on the bill’s introduction, sponsors, and the ACR-cited savings estimate. Sources: Societies applaud introduction of Patients First Act, AuntMinnie, ACR Applauds ROOT Act Inclusion in House Medicare Reform Bill, Imaging Technology News.

The Operator Metric

The number to track this week: 20-fold, the multiple by which US production capacity for the cancer-fighting isotope actinium-225 is set to grow, eventually, once a Philadelphia plant that broke ground this spring comes fully online. TerraPower Isotopes, the Bill Gates-founded nuclear science company, announced March 17, 2026 a 450 million dollar, 250,000-square-foot actinium-225 (Ac-225) manufacturing facility in Philadelphia’s Bellwether District, which combined with capacity expansion at its existing Everett, Washington site is projected to increase the company’s Ac-225 output twentyfold and make it the world’s top distributor of the isotope; the plant is expected to start production in 2029 and create 225 permanent jobs. Ac-225 and its radiopharmaceutical cousin lutetium-177 are the growth engine behind PET and theranostics volume nationally, but both isotopes decay within days, Ac-225 in roughly ten and lutetium-177 in about a week, so none of it can be stockpiled against a shortage, and Bristol Myers Squibb’s RayzeBio has already had to pause new-patient enrollment in a Phase III actinium trial for lack of supply. Any imaging or radiation oncology group building out a theranostics service line this year should model 2026 through 2028 against today’s constrained supply, not against the capacity TerraPower and its competitors are still years from delivering. Confidence: High on the TerraPower investment figures, drawn from Pennsylvania’s and the company’s own announcements; Medium on the twentyfold capacity figure and the RayzeBio trial pause, which trace to trade press rather than a primary regulatory filing. Sources: Governor Shapiro Secures $450 Million Investment from TerraPower Isotopes, Commonwealth of Pennsylvania, Gates-backed TerraPower Isotopes blueprints $450M plant to supply next wave of radiopharmaceuticals, FiercePharma.