Prescription digital therapeutics reimbursement is making significant progress as software-based treatments prescribed by doctors gain traction in the healthcare system. Despite growing clinical validation, PDTs have faced challenges in achieving broad recognition and reimbursement from payers. However, a major federal update has brought PDTs closer to mainstream acceptance: the Centers for Medicare & Medicaid Services (CMS) has introduced a new reimbursement code specifically for FDA-cleared PDTs, paving the way for greater patient access.
What the New HCPCS Code Means for PDTs
In February 2025, CMS announced the establishment of a Level II Healthcare Common Procedure Coding System (HCPCS) code for “prescription digital behavioral therapy, FDA cleared, per course of treatment.” This new administrative code formalizes PDTs as a legitimate and recognized component within the healthcare reimbursement framework.
Though the new HCPCS code does not come with direct government funding, its impact should not be underestimated. It is a critical step in integrating PDTs into existing billing and reimbursement systems. By creating an identifiable and standardized code, CMS makes it easier for private payers, Medicaid programs, and other insurers to consider coverage for these digital therapies.
CMS’s memo states, “CMS believes that establishing a code at this time may facilitate options for non-Medicare payers to provide access to this therapy in the home setting.” This signals the agency’s recognition of PDTs’ value as at-home treatment options that can reduce healthcare costs and improve outcomes by increasing accessibility.
This move is an important milestone for prescription digital therapeutics reimbursement, setting the stage for payers to acknowledge and support digital treatments alongside traditional medical care.
Why This Matters: Validation from a Federal Healthcare Giant
Shiv Bhavnani, founder of the Global Institute of Mental and Brain Health Investment, described the creation of the HCPCS code as “a huge, massive step in the right direction.” Bhavnani emphasized that it represents essential validation or recognition from CMS, a critical gatekeeper for many healthcare innovations.
Until now, many PDT providers have struggled to find reimbursement pathways due to the novelty of their offerings and payers’ unfamiliarity with the product type. This recognition helps clear one major hurdle for prescription digital therapeutics reimbursement.
Beth Keyt, Vice President of Government Affairs at Pear Therapeutics—the first company to secure FDA clearance for digital therapeutics treating diseases such as substance use disorder, opioid use disorder, and chronic insomnia—echoed this sentiment. Pear’s experience highlights the reimbursement challenges PDTs face: “Many commercial and Medicaid health plans wouldn’t or couldn’t reimburse Pear’s PDTs as a pharmacy benefit.”
With the new HCPCS code, Keyt explained, “It opens the door for payers to pay for this within their existing systems.” The code is crucial to building “sustainable processes in the future” and scaling access to PDTs, ultimately supporting broader prescription digital therapeutics reimbursement.
What Are Prescription Digital Therapeutics?
A prescription digital therapeutic is an application or software program that patients use on smartphones, tablets, or computers to treat medical conditions. Unlike traditional pharmaceuticals, PDTs deliver therapy digitally under the oversight of a physician.
Dr. Omar Manejwala, Chief Medical Officer of DarioHealth Corp., explained this modern concept: “Instead of swallowing a pill … you’re using a software application on your phone.” Like medication, PDTs are prescribed for a specific period, can be refilled or adjusted, and require medical supervision.
DarioHealth specializes in digital therapeutics for chronic diseases like diabetes, hypertension, depression, and anxiety. Interestingly, the company chooses not to require prescriptions for its therapies, opting instead to remove barriers to access.
Dr. Manejwala posed a key question: “If tools are effective, can’t we trust consumers to use them the way that they should and deploy those at scale as long as the evidence is there? Do we make it harder for people to access these things, or do we make it easier?”
The Evolving Landscape of Digital Health Reimbursement
The CMS HCPCS code for PDTs follows other important digital health billing innovations. In late 2021, the American Medical Association (AMA) added billing codes for remote patient monitoring, marking a significant milestone for reimbursable digital health services.
Incremental steps like these are shaping a future where digital therapeutics and monitoring tools become recognized, reimbursable components of healthcare delivery. Although the new PDT code itself does not immediately guarantee reimbursement, it establishes a critical pathway for payers and providers.
This matters greatly because Medicare and Medicaid represent the largest sources of healthcare funding in the United States. Together, they accounted for $1.5 trillion, or approximately 36%, of all healthcare spending in 2020. Private insurance covered roughly 29%, or $1.15 trillion, of total spending.
Creating a clear reimbursement path for PDTs within Medicare and Medicaid programs can unlock significant financial support, enabling wider patient access and further innovation in prescription digital therapeutics reimbursement.
Legislative Efforts Signal Growing Support
Beyond CMS’s administrative action, there is legislative momentum supporting prescription digital therapeutics. On March 10, 2025, bipartisan bills were introduced in both the U.S. Senate and House of Representatives. These bills would mandate Medicare reimbursement for PDTs, further strengthening their legitimacy and expanding coverage.
Shiv Bhavnani called government reimbursement “the Holy Grail” for PDT companies—reflecting the profound impact that official coverage would have on the industry.
If passed, these bills would create a stable and reliable funding stream, encouraging more companies to invest in PDT development and helping more patients benefit from these therapies. This legislative progress is a critical component of advancing prescription digital therapeutics reimbursement nationwide.
The Patient Impact: Increasing Access to Digital Care
For patients, the new HCPCS code could be transformative. PDTs provide evidence-based therapies that are accessible at home through digital devices. They reduce the need for in-person visits, increase convenience, and can improve adherence to treatment protocols.
As the healthcare system embraces value-based care models, PDTs can play a key role in improving outcomes while controlling costs. Access to reimbursed digital therapies may help bridge gaps for underserved populations who face barriers to traditional care.
The formalization of reimbursement codes ensures that patients can access these digital treatments without facing prohibitive out-of-pocket costs, further reinforcing the promise of prescription digital therapeutics reimbursement.
What’s Next for Prescription Digital Therapeutics?
While the CMS code is a major milestone, many challenges remain. Payers must adopt coverage policies, providers must integrate PDTs into clinical workflows, and patients must become more familiar with digital therapy options.
Yet the momentum is clear. With federal recognition, legislative efforts, and industry innovation converging, prescription digital therapeutics are poised to become a standard part of healthcare treatment portfolios supported by prescription digital therapeutics reimbursement.
Conclusion: A New Era for Digital Therapeutics Begins
The creation of a CMS HCPCS reimbursement code for FDA-cleared prescription digital therapeutics marks a critical turning point for the digital health industry. It establishes PDTs as recognized medical treatments within the billing infrastructure, facilitating easier payer coverage and expanding patient access.
As legislation progresses and reimbursement pathways solidify, PDTs have the potential to revolutionize how care is delivered—making evidence-based treatments more accessible, scalable, and integrated within the broader healthcare ecosystem through consistent prescription digital therapeutics reimbursement.
