NAVIGATING THE NTAP PROCESS

The new technology add-on payment (NTAP) is a Medicare policy that offers additional reimbursement to hospitals using eligible new technologies, beyond standard Diagnostic Related Group (DRG) payments.

The process for identifying and ensuring sufficient payment for certain new medical services and technologies under the Inpatient Prospective Payment System (IPPS) are described in Sections 1886(d)(5)(K) and (L) of the Social Security Act. Regulations for add-on payments under the IPPS are outlined at 42 CFR 412.87 and 412.88.

While any organization can apply for NTAP, manufacturers typically apply for NTAP status for their new technology.

42 CFR § 412.87(b) specifies three criteria that a new medical service or technology must meet to be eligible to receive the additional payment:

(1) Newness: the medical service or technology must be new and should not be ‘‘substantially similar’’ to another medical product that was approved or cleared by FDA and has been on the market for more than 2 to 3 years.

(2) Cost Criterion: the medical service or technology must be costly such that the MS-DRG payment rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate – i.e., the average charge per case for cases eligible for the technology must exceed the threshold(s) established with the release of the most recent annual IPPS final rule.

(3) Substantial Clinical Improvement: the medical service or technology must represent an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries.

Additionally, starting with FY 2025 applications, technologies must be either FDA market authorized or have an active and complete FDA marketing authorization request when submitting for NTAP. Applicants must provide documentation of FDA acceptance or filing to CMS at the time of NTAP application submission, in line with the type of FDA marketing authorization application submitted.

Certain new medical services and technologies can apply for NTAP through alternative pathways. These technologies are not considered substantially similar to existing ones and do not need to meet the substantial clinical improvement criterion. These include:

Certain Transformative New Devices: Technologies that are part of FDA’s Breakthrough Devices Program and receive marketing authorization as a Breakthrough Device for the indication covered by the Breakthrough Devices Program designation.

Certain Antimicrobial Products: Technologies designated by FDA as a Qualified Infectious Disease Product (QIDP) and that receive marketing authorization for the same indication; and for technologies approved under FDA’s Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) and that are used for the same indication.

A hospital is eligible for receiving a new technology add-on payment, when using a technology approved for NTAP, where the costs of the inpatient stay exceed the MS-DRG payment, including adjustments for disproportionate share and indirect medical education but excluding outlier payments, for the stay. The new technology add-on payments are calculated as the lesser of 65% of the cost of the technology, or 65% of the amount by which the cost of the stay exceeds the MS–DRG payment for that stay.

For QIDP or a product approved under FDA’s LPAD, the new technology add-on payments are limited to the lesser of 75% of the cost of the technology, or 75% of the amount by which the cost of the case exceeds the MS–DRG payment.

Hospitals will want to ensure that they are correctly billing for new technologies. This includes understanding when it is appropriate to use the technology, billing for the correct ICD-10-PCS code when the technology is used, and charges reflect the cost to the hospital for furnishing the technology or service as well as other costs for the stay.

Detailed guidelines, criteria, and annual updates are available on the Centers for Medicare & Medicaid Services (CMS) website, the Medicare Electronic Application Request Information System (MEARIS), and most recent IPPS proposed and final rules.

The skilled professionals at McDermott+ have been successful in assisting organizations with many NTAP applications. Connect with us below to learn how we can help your company.