What is NTAP?
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.
Who can apply for NTAP?
While any organization can apply for NTAP, manufacturers typically apply for NTAP status for their new technology.
What are the eligibility criteria for NTAP?
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.
What are the alternative pathways to NTAP?
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.
How is the NTAP calculated on a per inpatient stay?
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.
What is the timeline of the NTAP application and for how long does a technology receive NTAP status?
Technologies are eligible for up to 3 years depending on how long the product has been on the market. Each year, CMS reviews the products approved to determine if, based on the newness date, the product should be extended for an additional FY.
Below is the estimated timeline* for FY 2027 NTAP Applications:

*Note that the dates are approximate dates based on historical rule releases and CMS deadlines. The dates vary each year.
What should hospitals consider when implementing NTAP-designated technologies?
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.
Where can I find more detailed information about NTAP?