New CPT Codes for AI-Driven Pathology Tests Arrive Without a National Price
Short answer: In February and May 2026, AMA CPT added five Category III codes (1063T, 1064T, 1097T, 1106T, 1107T) covering AI-driven algorithmic analysis of digitized pathology slides for bladder, pancreatic, breast, and prostate cancer. Category III codes are rarely priced nationally, and CMS's proposed CY2027 hospital-outpatient and physician-fee-schedule rules confirm that pattern here: computational pathology is being pushed toward hospital-specific APC rates or MAC-set "Contractor Priced" status rather than a standard national CLFS rate. Labs running or referring these tests should plan for fragmented, site-specific reimbursement in 2027, not a single published price.
Five new codes, one new test category
Between February and May 2026, the AMA CPT Editorial Panel released five new Category III codes describing a specific kind of test: software that analyzes digitized, hematoxylin-and-eosin-stained slides from formalin-fixed paraffin-embedded (FFPE) tumor tissue and reports algorithm-derived risk or response predictions alongside the pathologist's own read. Per the CPT Category III long descriptors published by the AMA, the five codes are:
- 1063T - bladder cancer (high-grade, non-muscle invasive): algorithm-derived parameters reported as prognostic of recurrence and progression.
- 1064T - bladder cancer: algorithm-derived parameters reported as predictive of response to Bacillus Calmette-Guerin (BCG) therapy.
- 1097T - pancreatic cancer: algorithm-derived parameters predicting response to a fluorouracil-backbone versus a gemcitabine-backbone chemotherapy regimen.
- 1106T - breast cancer: algorithm-derived 5-year and 10-year risk of distant metastasis.
- 1107T - prostate cancer: algorithm-derived 10-year risk of distant metastasis and prostate-cancer-specific mortality.
Each descriptor bundles the digitization of the glass slide and the H&E staining into the same code as the algorithmic analysis - meaning the code covers the whole workflow from slide to score, not just the software step. That is a meaningfully different structure than a typical companion-diagnostic or genomic PLA code, and it is part of why these tests landed in Category III rather than Category I or as a new PLA code.
Category III means no automatic national price
The distinction matters for revenue-cycle planning. PLA codes and Category I codes can move onto the Clinical Laboratory Fee Schedule (CLFS) and be nationally priced there through crosswalk or gapfill, the same process this site covered for the CY2027 CLFS cycle. Category III codes are a different track - temporary tracking codes created so CMS can collect utilization data on emerging technology - and health-policy analyst Bruce Quinn, who tracks CPT and CLFS pricing at Discoveries in Health Policy, notes they are "nearly never priced nationally by CMS." A Category III code can sit on the books for years generating claims data without a standard published rate. CMS's own CY2027 proposed rules confirm that pattern for these five codes and their neighbors.
Two separate CMS proposals push pricing off the CLFS
CMS released two relevant proposed rules in July 2026, and according to Quinn's review of both, they treat computational pathology as something other than a standard clinical laboratory test:
The CY2027 Hospital Outpatient Prospective Payment System (OPPS) proposed rule (CMS-1850-P), published in the Federal Register July 7, 2026 with a comment period that closed August 31, 2026, proposes handling computational pathology through Ambulatory Payment Classifications (APCs) in the hospital-outpatient setting rather than as a clinical laboratory service under CLIA. Per Quinn's analysis, proposed New Technology APC pricing would pay 1063T and 1064T under APC 1542 at $350.50 each, and 1097T under APC 1509 at $750.50 - hospital-outpatient rates, not a CLFS national rate billable regardless of site of service.
Separately, the CY2027 Physician Fee Schedule (PFS) proposed rule (CMS-1848-P), released July 14, 2026 and published in the Federal Register July 16, 2026, proposes moving roughly ten molecular and digital-pathology-adjacent codes to "Contractor Priced" status - each Medicare Administrative Contractor sets its own local amount instead of CMS publishing one national CLFS rate. Quinn's review flagged codes including 0511U (three-dimensional tumor-microenvironment drug-response culture), 0208U (mRNA expression analysis from fine-needle aspirate), and the 81416/81417 comparator exome pair, alongside image-analysis codes tied to histology or immunohistochemistry - noting the list appears to mix genuinely software-driven services with wet-lab, specimen-based work swept in by category rather than function.
The CLIA RFI adds a third open question: who is even "the laboratory"?
The same week CMS released the PFS proposed rule, CMS and the CDC jointly published a Request for Information on modernizing CLIA regulations - the subject of our earlier coverage of that RFI's broader scope and September 14 deadline. Two topics land directly on computational pathology. Topic 6 asks how CLIA should address AI-assisted interpretation across histopathology, sequencing, and other high-complexity testing, including validating algorithm performance and image quality. Topic 7 examines "data-only facilities" - entities that receive only digital images or analytical data rather than physical specimens - and asks, in CMS's own framing, "which organization is legally operating the laboratory service" when interpretation happens somewhere other than where the slide was cut.
That question is not hypothetical here. A hospital pathology department could digitize a slide and send the image to a separate company running the proprietary algorithm behind 1063T or 1106T. It is not fully settled which entity's CLIA certificate governs that interpretation - the RFI is CMS's own acknowledgment that the rules have not caught up to the workflow.
Two proposed rules, one comment deadline
Labs and hospital pathology departments that want to weigh in have a compressed window. The OPPS comment period closed August 31, 2026. But the PFS proposed rule's comment deadline is September 14, 2026 - the same date the CLIA RFI's comment period closes. A compliance or RCM team that has not yet reviewed either document has roughly a week left to submit input on how "Contractor Priced" status should apply to specific codes, or how CLIA should treat AI-assisted interpretation and data-only facilities, before both windows shut on the same day.
What labs and hospital pathology programs should do now
First, inventory exposure. If your lab, health system, or referral network already runs - or is validating - any of the five new algorithmic pathology tests, or bills any code named in the PFS "Contractor Priced" proposal, do not assume a CLFS rate will exist for it on January 1, 2027. Model both a hospital-APC scenario and a MAC-specific Contractor Priced scenario, since the final rule (expected around November 2026) could land in either lane depending on the code.
Second, separate the software claim from the specimen claim in internal cost accounting. Quinn's critique - that CMS's contractor-pricing list mixes wet-lab sequencing work with genuinely algorithmic services - is a useful diagnostic for your own billing too: know which line items in a bundled digital-pathology workflow are the H&E stain and slide-scan, and which are the proprietary algorithm, since they may end up reimbursed on entirely different bases.
Third, if you operate or are considering a "data-only" interpretation model - reading digitized slides for a specimen your organization never physically handled - read CLIA RFI Topics 6 and 7 before scaling that model. However CMS eventually answers "which organization is legally operating the laboratory," it will likely apply to arrangements already in place, not just new ones.
Fourth, keep an eye on how novel-code claims get denied. A test billed under a Contractor Priced or brand-new Category III code, with no CLFS history, is exactly the profile MACs scrutinize most closely on first submission.
Frequently asked questions
What are CPT codes 1063T, 1064T, 1097T, 1106T, and 1107T?
Five Category III CPT codes released by the AMA in February and May 2026 for AI-driven algorithmic analysis of digitized, H&E-stained pathology slides, covering bladder cancer recurrence and BCG-response prediction, pancreatic cancer chemotherapy response, breast cancer metastasis risk, and prostate cancer metastasis and mortality risk.
Will these codes have a national Medicare price in 2027?
Not automatically. Category III codes are rarely priced nationally by CMS. CMS's proposed CY2027 rules point toward hospital-specific Ambulatory Payment Classification rates for at least two of the codes, or "Contractor Priced" status for related digital-pathology-adjacent codes, rather than a single published CLFS rate.
What does "Contractor Priced" mean for a lab's reimbursement?
It means the local Medicare Administrative Contractor, not CMS nationally, sets the payment amount for that code. Rates can differ by MAC jurisdiction, and there is no single number a lab can point to when budgeting national revenue for that test.
How does this connect to the CMS CLIA modernization RFI?
The RFI, published July 16, 2026 with comments due September 14, 2026, includes dedicated topics on AI-assisted interpretation and "data-only facilities" that receive only digital images rather than physical specimens - directly relevant to how these algorithmic pathology tests are performed and by whom.
When do these proposed rules become final?
CMS typically finalizes the Physician Fee Schedule and Hospital Outpatient Prospective Payment System rules each November for the following calendar year. Nothing in either proposed rule is binding until the final rule publishes; the specific APC and Contractor Priced treatment described here could still change.
This article is educational information for laboratory, revenue-cycle, and clinical professionals. It is not medical advice, legal advice, coding advice, or a guarantee of payment. The rules discussed here are proposals as of this writing, and final CMS determinations, code placements, and payment amounts can change. Always verify current status against CMS.gov, the Federal Register, and your MAC's published guidance before making billing or clinical decisions. ScreenMyGene does not determine coverage or payment for any individual claim. Learn more about our work at ScreenMyGene.
Sources: American Medical Association, CPT Category III Codes Long Descriptors (2026 release), codes 1063T, 1064T, 1097T, 1106T, 1107T; Federal Register, "Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems... CY 2027" (CMS-1850-P), published July 7, 2026, comment period closed August 31, 2026; CMS, CY 2027 Medicare Physician Fee Schedule proposed rule (CMS-1848-P), released July 14, 2026, published in the Federal Register July 16, 2026, comments due September 14, 2026; Quinn B., "AMA Releases Cat III Codes; CMS Prices New Digital Pathology Cat III Codes" and "Tying Together: New CLIA Reform RFI, and CMS Summer OPPS/PFS Proposals; All Circle Around Computational Pathology," Discoveries in Health Policy, July 2026; CMS/CDC, Request for Information, Clinical Laboratory Improvement Amendments (CLIA) Regulations, Federal Register, July 16, 2026 (docket CMS-3485, document 2026-14358).