Medicare IPPS New Technology Add-On Payment Updates for FY 2016

April 22, 2015

McDermott+Consulting

The Centers for Medicare and Medicaid Services is considering nine applications for new medical services and technologies add-on payments in fiscal year 2016 under the Medicare Inpatient Prospective Payment System.

Sections 1886(d)(5)(K) and (L) of the Social Security Act establish a process of identifying and ensuring adequate payment for new medical services and technologies (collectively referred to as new technologies) under the Medicare Inpatient Prospective Payment System (IPPS). Regulations specify three criteria for a new medical service or technology to receive the additional payment:

The medical service or technology must be new.
The medical service or technology must be costly such that the Diagnosis-Related Group (DRG) rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate.
The service or technology must demonstrate a substantial clinical improvement over existing services or technologies.

Applicants for new technology add-on payments must have U.S. Food and Drug Administration approval by July 1 of each year prior to the beginning of the fiscal year (FY) in which the application is being considered.

The new medical service or technology add-on payment policy under the IPPS provides additional payments for cases with relatively high costs involving eligible new medical services or technologies. The payment mechanism is based on the cost to hospitals for the new medical service or technology. If the costs of the discharge (determined by applying cost-to-charge ratios) exceed the full DRG payment (including payments for indirect medical education and disproportionate share hospitals, but excluding outlier payments), Medicare will make an add-on payment equal to the lesser of (1) 50 percent of the estimated costs of the new technology (if the estimated costs for the case including the new technology exceed Medicare’s payment), or (2) 50 percent of the difference between the full DRG payment and the hospital’s estimated cost for the case. Unless the discharge qualifies for an outlier payment, the additional Medicare payment is limited to the full MS-DRG payment plus 50 percent of the estimated costs of the new technology.

The Centers for Medicare and Medicaid Services (CMS) is proposing to discontinue new technology add-on payments in FY 2016 for the following:

Glucarpidase (Voraxaze®)
Zenith® Fenestrated Abdominal Aortic Aneurysm (AAA) Endovascular Graft
Zilver® PTX® Drug Eluting Peripheral Stent

CMS is proposing to continue new technology add-on payments in FY 2016 for the following:

Kcentra™
Argus® II System
CardioMEMS™ HF (Heart Failure) Monitoring System
MitraClip® System
Responsive Neurostimulator (RNS®) System

CMS received and is considering nine applications for new technology add-on payments in FY 2016:

Angel Medical Guardian® Ischemic Monitoring Device – an implantable ischemia detection system designed to provide early detection and patient alerts for ischemic and other cardiac events experienced by ambulatory patients.
Blinatumomab (BLINCYTO™) – a bi-specific T-cell engager (BiTE) used for the treatment of Philadelphia chromosome-negative (Ph-) relapsed or refractory (R/R) B cell precursor acute-lymphoblastic leukemia (ALL), which is a rare aggressive cancer of the blood and bone marrow.
Ceftazidime Avibactam (AVYCAZ) – used for the treatment of adult patients who have been diagnosed with complicated urinary tract infections (cUTIs), including pyelonephritis and complicated intra-abdominal infections (cIAIs), for which there are limited or no available treatment options.
DIAMONDBACK 360® Coronary Orbital Atherectomy System – a percutaneous orbital atherectomy system used to facilitate stent delivery in patients who have been diagnosed with coronary artery disease and severely calcified coronary artery lesions.
CRESEMBA® (Isavuconazonium) – an intravenous and oral broad-spectrum antifungal used for the treatment of adults who have severe invasive and life-threatening fungal infections, including invasive aspergillosis and mucormycosis (zygomycosis).
Idarucizumab – a product developed as an antidote to reverse the effects of PRADAXA® (Dabigatran), an oral direct thrombin inhibitor currently indicated to (1) reduce the risk of stroke and systemic embolism in patients who have been diagnosed with non-valvular atrial fibrillation (NVAF), (2) treat deep venous thrombosis (DVT) and pulmonary embolism (PE) in patients who have been administered a parenteral anticoagulant for five to 10 days, and (3) reduce the risk of recurrence of DVT and PE in patients who have been previously diagnosed with NVAF. Idarucizumab is a humanized fragment antigen binding (Fab) molecule, which specifically binds to Dabigatran to deactivate the anticoagulant effect, thereby allowing thrombin to act in blood clot formation.
LUTONIX® Drug-Coated Balloon (DCB) Percutaneous Transluminal Angioplasty (PTA) Catheter and IN.PACT™ Admiral™ Paclitaxel Coated Percutaneous Transluminal Angioplasty (PTA) Balloon Catheter – drug-coated balloon angioplasty treatments for patients diagnosed with peripheral artery disease (PAD).
VERASENSE™ Knee Balancer System (VKS) – a sterile, single patient use device to intraoperatively provide a means to dynamically balance the patient’s knee during total knee arthroplasty (TKA) surgery.
WATCHMAN® Left Atrial Appendage (LAA) Closure Technology – an implant that acts as a physical barrier, sealing the LAA to prevent thromboemboli from entering into the arterial circulation from the LAA, thereby reducing the risk of stroke and potentially eliminating the need for Warfarin therapy in those patients diagnosed with non-valvular AF and who are eligible for Warfarin therapy.

CMS will determine whether any of the nine technologies are eligible for new technology add-on payments for FY 2016 in the FY 2016 IPPS/LTCH PPS final rule. CMS will also discuss the estimated payment impact of the technologies eligible for new technology add-on payments in that rule.

As of October 1, 2015, health plans and providers are required to use the ICD-10 coding system instead of the ICD-9 coding system for reporting diagnoses and procedures for Medicare hospital inpatient services provided to Medicare beneficiaries as classified under the MS-DRG system and paid for under the IPPS. CMS has created a new component within the ICD-10-PCS codes, labeled Section “X” codes, to identify and describe new technologies and services. The new Section “X” codes identify new medical services and technologies that are not usually captured by coders, or that do not usually have the desired specificity within the current ICD-10-PCS structure required to capture the use of these new services and technologies. The new Section “X” codes within the ICD-10-PCS structure will be implemented on October 1, 2015, and will be used to identify new technologies and medical services approved under the new technology add-on payment policy for payment purposes beginning October 1, 2015.

CMS invites comments on its proposals on new technology add-on payments.

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