EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) in the US healthcare industry is expected to continue growing, especially in the digital health technology segments, which are projected to surpass consulting, business, and managed healthcare services. Software, platforms, and technology will contribute to $30.4B in EBITDA and is expected to have the highest growth rate (>10%). Healthcare data and analytics ($12.2B EBITDA) is another area with significant growth (>10%). Therefore, technology-driven healthcare segments are the main growth drivers. Businesses should focus investments and innovation in the healthcare data analytics and technology spaces, including innovations in AI technologies, to capture future growth.

Even though technologies are the future, healthcare in the US is a tricky field as it’s dealing with sensitive information and requires a careful attitude to local laws and regulations. The market is governed by a multifaceted system of overlapping federal and state laws, agencies, and standards. Navigating these regulations effectively helps to make products that provide patient data protection, device safety, healthcare data compliance, and reimbursement eligibility, thereby reducing legal risks and avoiding costly delays in product approval and market entry.

HIPAA is one of the most well-known regulations in the country. However, as we mentioned, US healthcare is governed not just by HIPAA, but by a broad set of laws, rules, and agencies. In this article, we’ll look at all aspects of healthcare-related regulations, including the key federal and state acts and laws impacting digital health. Of course, we’ll start with HIPAA.

HIPAA – the foundation of healthcare data protection

The Health Insurance Portability and Accountability Act (HIPAA) is a cornerstone of healthcare data protection in the United States. Enacted in 1996, HIPAA establishes national standards to safeguard sensitive patient information and help make healthcare operations private and secure. Its core components include the Privacy Rule, Security Rule, and Breach Notification Rule, each playing a vital role in protecting Protected Health Information (PHI).

Privacy Rule

The Privacy Rule sets the standards for how PHI — any information that can identify an individual and relates to their health condition or payment for healthcare — must be handled, emphasizing patients' rights to access and control their personal health data.

Security Rule

The Security Rule complements this by specifying administrative, physical, and technical safeguards that healthcare organizations must implement to protect electronic PHI (ePHI) from unauthorized access, breaches, and other security threats.

Breach Notification Rule

The Breach Notification Rule requires covered entities to promptly notify affected individuals, the Department of Health and Human Services (HHS), and in some cases, the media, if a healthcare data breach involving PHI occurs.

While HIPAA provides the foundational framework for protecting health information, it is important to recognize that it is not the only regulation medtech companies must consider. Here are strong reasons for not only relying on HIPAA:

• Additional laws and standards: Numerous other federal and state laws, regulations, and standards apply to health data privacy, medical device security, and healthcare operations. While HIPAA forms the backbone of US healthcare data privacy, organizations operating internationally or serving patients from the European Union might even need to comply with the General Data Protection Regulation (GDPR).
• Stricter and broader requirements: Additional regulations may impose stricter requirements or cover areas beyond HIPAA’s scope, including health cybersecurity, public health initiatives and state-specific patient privacy laws.
• FDA oversight: FDA regulations for medical devices and software add another layer of compliance requirements.
• Limitations of sole compliance: Relying solely on HIPAA compliance is insufficient for full regulatory adherence, especially as new digital health challenges arise.
• Need for comprehensive strategy: A comprehensive regulatory strategy that incorporates HIPAA along with all relevant standards is essential to provide full protection for both patient welfare and healthcare organizations.

While HIPAA regulates the privacy and security of patient health information handled by software, the FDA’s guidance focuses on the safety and effectiveness of healthcare software as medical devices. Let’s see how this regulation works.

FDA regulations – oversight of medical devices and software

The US Food and Drug Administration (FDA) watches over the safety, effectiveness, and quality of medical devices and related software in healthcare. As the main regulatory body, the FDA evaluates new products, oversees manufacturing, and monitors devices after they reach the market.

Software as a Medical Device (SaMD)

One important area under FDA regulation is Software as a Medical Device (SaMD), which is increasingly prevalent in digital health and health information technology. SaMD refers to software intended to be used for medical purposes without being part of a hardware medical device. This includes mobile applications, cloud-based platforms, and algorithms that provide diagnostic or therapeutic functions. SaMD is classified into risk categories — low, moderate, and high — based on the potential impact on patient health. Depending on the classification, SaMD must meet specific design, testing, and validation requirements to prove its safety and efficacy before receiving FDA clearance or approval.

Other regulated software

In addition to SaMD, related technologies like Medical Device Data Systems (MDDS) and Clinical Decision Support (CDS) software have distinct regulatory considerations.

• MDDS transfer, store, convert, or display medical device data without altering the healthcare data, typically facing lighter regulatory oversight.
• CDS Software provides clinicians with patient-specific assessments or recommendations to support medical decision-making, but its regulation depends on whether it is intended for use in diagnosis or treatment, with some CDS types being exempt from FDA review.

Approval pathways

The FDA regulates medical devices based on their risk level and novelty, offering three main pathways for market entry: Premarket Approval (PMA), 510(k) clearance, and the De Novo process. Each pathway is designed to help medical devices meet patient safety and effectiveness standards appropriate to their potential risks.

Premarket Approval (PMA)

Target devices: High-risk devices (Class III), such as implantable or life-sustaining devices, that support or sustain human life or present a potential unreasonable risk of illness or injury.

Requirements: PMA is the most stringent FDA review process and requires comprehensive scientific evidence, including extensive clinical trials, to demonstrate a device’s safety and effectiveness.

Process: Manufacturers submit detailed technical documentation covering device design, manufacturing processes, preclinical and clinical data, and labeling. The FDA thoroughly reviews all material, conducts inspections of manufacturing facilities, and may consult advisory panels before approval. PMA approval can take a year or more depending on the complexity of the evidence and FDA evaluation timelines.

510(k) clearance

Target devices: Moderate-risk devices that are generally Class II and substantially equivalent to a legally marketed predicate device already approved or cleared by the FDA.

Requirements: The manufacturer must show that the new device is at least as safe and effective as the predicate based on similarities in intended use, technology, and performance. While clinical data may be required, often bench and non-clinical test results suffice.

Process: The 510(k) submission includes device description, comparison with predicate, performance testing results, and proposed labeling. The FDA aims to review 510(k) submissions within 90 days. This route is faster and less costly than PMA, but applicability depends on device equivalence.

De Novo classification

Target devices: Novel low-to-moderate-risk devices that belong to Class I or II for which no legally marketed predicate device exists, thus not qualifying for the 510(k) pathway, but are not high-risk enough for PMA.

Requirements: Manufacturers must demonstrate the device is safe and effective through valid scientific evidence. The evidence requirements are generally less rigorous than PMA but more than 510(k).

Process: The De Novo process involves submitting a classification request that includes device description, risk assessment, proposed controls to mitigate risks such as performance standards and labeling, and supporting data. After a device is classified through the De Novo process, similar future devices can use the 510(k) pathway by referencing this classification, making it easier to enter the market.

Understanding these pathways helps medtech developers navigate compliance concerns in digital health innovation, select the appropriate regulatory strategy, plan necessary testing and documentation, and anticipate FDA review timelines for successful and timely market clearance of their medical devices and software.

CMS, Medicare, and Medicaid – payment and reimbursement of services

The Centers for Medicare & Medicaid Services (CMS) is the federal agency responsible for administering and regulating the Medicare and Medicaid programs, which together provide healthcare coverage to millions of Americans. CMS plays a pivotal role in defining which medical services, treatments, and technologies are eligible for payment and reimbursement under these federal programs.

For medtech companies developing digital health technologies, understanding CMS’s policies is important as these programs drive significant portions of healthcare spending in the US. CMS has established specific billing codes and reimbursement rates for remote patient monitoring and similar telehealth services, allowing healthcare providers to be compensated for using such technologies.

To access Medicare and Medicaid reimbursement, healthcare organizations and medtech firms must comply with strict documentation and billing requirements. This includes:

• Maintaining accurate patient records
• Demonstrating medical necessity
• Adhering to defined coding protocols for digital health services

Proper documentation is essential for audit readiness and accurate billing, helping to reduce the risk of claim denials or penalties and supporting the overall effectiveness of compliance efforts.

CMS’s regulatory framework — shaped in part by major federal policy changes such as those introduced by the Affordable Care Act (ACA) — has expanded access to care, established new quality reporting requirements, and promoted the use of digital health technologies through Medicare and Medicaid reimbursement. For medtech developers, aligning product capabilities with CMS policies and billing requirements is essential to unlock market adoption and financial viability.

State-specific healthcare laws and telehealth compliance regulations

Healthcare regulation in the U.S. is heavily influenced by state-level laws that present considerable variation across the country. Understanding these differences is vital for medtech companies aiming to deliver compliant digital health technologies nationwide.

Physician licensing

Multi-State Licensure Compacts (IMLC): Some states participate in the IMLC, which speeds up licensing for physicians seeking to practice telemedicine across member states. Examples include Illinois, Arizona, and Texas. However, many states like California and New York still require full individual licensing, complicating cross-state telehealth services.

State-specific scope of practice: Some states impose additional restrictions on telemedicine practice depending on the healthcare provider’s scope. For example, Vermont requires healthcare professionals to pass an in-person exam before telehealth for certain conditions.

Telehealth practice and reimbursement

Reimbursement policies:

California and Massachusetts: These states have expansive telehealth reimbursement policies under Medicaid and private insurers, often covering a wide range of services and modalities including video, audio-only, and remote monitoring.

Florida and Georgia: Reimbursement scope is more limited, typically focusing on live video encounters, with fewer services eligible for reimbursement and restrictions on provider types.

Allowed services:

New York: Allows broad telemedicine services including behavioral health, chronic care management, and more.

Texas: May restrict telehealth services for certain specialties or require additional certifications for telehealth provision.

State healthcare data protection laws

California Consumer Privacy Act (CCPA): California enforces one of the strictest state-level privacy laws, which affects healthcare providers and vendors, mandating enhanced healthcare data privacy controls and breach disclosures.

New York SHIELD act: Extends data security and breach notification requirements beyond HIPAA, requiring broader safeguards for private health data.

Massachusetts data privacy law: Imposes stringent encryption and access control requirements specifically tailored toward personal health data.

Patient consent requirements

Texas: Requires explicit written informed consent before initiating telehealth services, including disclosures about any technology-related risks.

Florida: Requires verbal or written consent, with documentation retained in the medical record.

Illinois: Mandates disclosure of the telehealth provider’s licensure status and requires consent about limitations of remote patient care.

These examples illustrate the regulatory patchwork healthcare organization developers must navigate. A digital health solution compliant in one state may face additional requirements or restrictions in another. Designing flexible, adaptable systems and incorporating state-specific workflows is important to operational success and regulatory compliance.

Other important regulatory acts

There are a few other noteworthy healthcare compliance regulations that medtech developers should be aware of. Let’s briefly name them:

Anti-Kickback Statute (AKS) and Stark law

These laws prohibit improper financial relationships, kickbacks, and self-referrals that could influence medical decisions or referrals in federal healthcare programs. To be compliant with these acts, medtech solutions must be confident that financial arrangements with healthcare providers — such as consulting fees or discounts — do not improperly influence referrals or create prohibited conflicts of interest.

False Claims Act (FCA)

This act prohibits submitting false or misleading claims to government health care programs and encourages whistleblowers to report fraud. To comply with the FCA, medtech companies must submit only accurate and truthful claims and documentation to government health care programs, avoiding any false or misleading information.

HITECH act

The HITECH Act expands HIPAA protections by increasing penalties for health data breaches, strengthening notification requirements, and promoting the adoption of Electronic Health Records (EHR). To meet HITECH requirements, medtech products handling electronic personal health information must implement strong patient data security, support EHR interoperability, and promptly report any health data breaches.

21st Century Cures act

This act accelerates medical innovation and mandates improved interoperability and free flow of health information, as well as prohibits information blocking. To comply with this act, medtech solutions must provide seamless health data exchange, prevent information blocking, and provide patients with access to their own health data.

Building compliance-driven medtech solutions

For effective, end-to-end regulatory compliance in healthcare software development, consider these best practices:

Integrate regulatory requirements at every development stage

Effective compliance begins with embedding all relevant regulatory requirements — such as HIPAA, FDA, CMS, and state laws — into every phase of the product development lifecycle. From initial concept and design to testing, deployment, and maintenance, regulatory standards must guide decision-making. With this approach, privacy, safety, and quality controls are not afterthoughts but fundamental components of the product architecture and functionality.

Develop a comprehensive health data security strategy

A robust security framework is essential for protecting sensitive health data and meeting regulatory demands. This strategy should cover end-to-end healthcare data protection, including encryption in transit and at rest, strict access controls, secure authentication, and continuous monitoring for threats. Infrastructure security must include system availability, scalability, and resilience, preventing vulnerabilities that could compromise patient data or device functionality.

Implement audit and reporting systems for ongoing compliance

Continuous compliance monitoring is achieved through integrated audit systems that automatically log key activities, access events, and security incidents. These systems help to timely detect anomalies or breaches and support regulatory reporting obligations such as HIPAA breach notifications. Transparent reporting workflows support both internal governance and external regulatory inspections, helping maintain compliance throughout the product’s lifecycle.

Engage legal expertise and compliance consulting

Navigating complex and evolving health care regulations requires ongoing collaboration with legal experts and compliance professionals. Their guidance helps interpret nuanced regulatory language, assess business impact, and shape development practices accordingly. Early and continuous involvement of legal counsel and compliance consultants minimizes risks, helps avoid costly violations, and helps the solution stand up to regulatory scrutiny. Collaboration with a leading digital health center — such as the Stanford Center for Digital Health, Mayo Clinic’s Center for Digital Health, or Harvard’s HealthTech Center — can help healthcare organizations stay compliant. Another path is to develop your software with an agency that is experienced in building regulatory compliant applications.

How Ronas IT can help

Participation in the US healthcare compliance digital health ecosystem helps organizations build trust, demonstrate regulatory leadership, and stand out in a market that is constantly adapting to new technologies and requirements. At Ronas IT, we provide full-cycle MedTech development services, supporting your project from the initial planning and design stages through launch and ongoing maintenance. Our team has in-depth knowledge of US healthcare compliance regulations — including HIPAA, FDA, and state laws — so your solutions match all relevant compliance requirements. We develop secure, scalable, and interoperable software that integrates with EHR systems and meets strict security standards. Throughout every phase, we help clients navigate the complexities of regulatory compliance in digital health, reducing time to market and minimizing risks.

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