IPPS FY 2020 Proposed Rule: Part 4 New Technology Add-On Payments

on Tuesday, 21 May 2019. All News Items | Case Management | Documentation | Coding

Providing Patients with Better Value and Results

Over the past three weeks we have covered proposed changes to MS-DRGs, ICD-10-CM diagnosis code severity designation, payment updates and a proposal to address wage index disparities found in the FY 2020 IPPS Proposed Rule

CMS Administrator Seema Verma is quoted as saying in an April 23rd Press Release that “transformative technologies are coming to the private market, but Medicare’s antiquated payment systems have not contemplated these technologies…I am particularly concerned about cases that have been reported to the agency in which Medicare’s inadequate payment has led hospitals to curtail access to needed therapies. We must continually update our policies in response to the rapid pace of advancement in medical science.” To that end, this week’s article focuses on proposals being made “to ensure that Medicare payment supports broad access to transformative technologies.”


Annually, CMS addresses applications for new technology add-on payments in the IPPS proposed rule. They do not make proposals, instead the proposed rule describes any concerns they may have about an applicant meeting the criteria for payment as a new technology and seeks additional information as needed to make a decision in the IPPS final rule. To be eligible for an add-on payment a new technology must meet the following three criteria:

  • The medical service or technology must be new;
  • The medical service or technology must be costly such that the DRG rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate; and
  • The service or technology must demonstrate a substantial clinical improvement over existing services or technologies.

Once a new technology add-on payment status is granted hospitals are eligible to receive the payment for up to three years.

Proposals and Applications

Proposal to Increase Add-on Payments

Currently, the calculation for add-on payments is based on cost to hospitals for the new medical service or technology. Specifically, Medicare will make an add-on payment equal to the lesser of the following:

  • 50% of the costs of the new medical service or technology, or
  • 50% of the amount by which the costs of the case exceed the standard DRG payment.

In response to concerns from commenters and stakeholders, CMS agrees “that capping the add-on payment amount at 50 percent could, in some cases, no longer provide a sufficient incentive for the use of the technology.” As such, for discharges on or after October 1, 2019, CMS is proposing to make an add-on payment equal to the lesser of the following:

  • 65% of the costs of the new medical service or technology, or
  • 65% of the amount by which the costs of the case exceed the standard DRG payment.

Proposal to Modernize Payment Policies for Medical Devices Meeting FDA’s Breakthrough Devices Designation

In December 2018 the U.S. Food and Drug Administration (FDA) implemented the Breakthrough Devices Program. At that time, the FDA indicated this “is a voluntary program for certain medical devices and device-led combination products that provides for more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions…this program is intended to help patients have more timely access to these medical devices by expediting their development, assessment, and review, while preserving the statutory standards for premarket approval, 510(k) clearance, and De Novo marketing authorization, consistent with the Agency’s mission to protect and promote public health.”

In the FY 2019 IPPS Proposed Rule, CMS is “proposing that, for applications received for IPPS new technology add-on payments for FY 2021 and subsequent fiscal years, if a medical device is part of the FDA’s Breakthrough Devices Program and received FDA marketing authorization, such a device would be considered new and not substantially similar to an existing technology for purposes of new technology add-on payment under the IPPS.”

Applications for New Technology Add-On Payments for FY 2020

There are 17 new applicants for new technology add-on payment for FY 2020 in the proposed rule. CMS is also proposing to continue new technology add-on payments for 10 of the 13 technologies currently receiving add-on payment. Note, there are 3 remaining technologies that will no longer be within their newness period in FY 2020 and the add-payment will be discontinued.

The following table highlights new technologies approved for add-on payments in FY 2019, whether or not CMS is proposing to continue the new technology status, the FY 2019 maximum add-on payment and the proposed FY 2020 maximum add-on payment. Note, the FY 2020 proposed payment reflects the proposed increase in add-on payments from 50% to 65%. If the proposal to increase payments is not finalized the maximum add-on payment will remain the same as the FY 2019 amount. 

Proposed FY 2020 Status of Technologies Approved for FY 2019 New Technology Add-On Payments
Medical Service or TechnologyIndication for TreatmentProposal to Continue Add-On PaymentFY 2019 Maximum Add-On PaymentFY 2020 Maximum Add-On Payment
Defitelio® (Defibrotide) Treatment for hepatic veno-occlusive disease (VOD) with evidence of multi-organ dysfunction No $80,500 N/A
Ustekinumab (Stelara®) Treatment for moderate to severe active Crohn’s Disease No $2,400 N/A
Bezlotoxumab (ZINPLAVA™) Reduce C-diff recurrence in adult patients receiving antibacterial drug treatment who are at high risk of recurrence of C-diff No $1,900 N/A
KYMRIAH® & YESCARTA® Chimeric Antigen Response (CAR) T-cell immunotherapy to treat Non-Hodgkins Lymphoma & Large B-cell Lymphoma Yes $186,500 $242,450
VYXEOS™ Treatment for adults newly diagnoses therapy-related acute myeloid leukemia (t-AML) or AML with myelodysplastic-related changes (AML-MRC) Yes $36,425 $47,353.50
VABOMERE™ (Meropenem-Vaborbactam) Treatment for adults diagnosed with complicated urinary tract infections (cUTIs) Yes $5,544 $7,207.20
Remedē® System Implantable Phrenic Nerve Stimulator to treat moderate to severe central sleep apnea (CSA) Yes $17,250 $22,425
ZEMDRI™ (Plazomicin) Treatment for adults diagnosed with cUTIs Yes $2,722.50 $3,593.25
GIAPREZA™ First synthetic formulation of human angiotensin II. Used to raise blood pressure in adult patients diagnoses with septic or distributive shock Yes $1,500 $1,950
Sentinel® Cerebral Protection System Embolic protection device to capture and remove thrombus and debris while performing transcatheter aortic valve replacement (TAVR) Yes $1,400 $1,820
AQUABEAM System (Aquablation) Treatment of patients experiencing lower urinary tract symptoms caused by benign prostatic hyperplasia (BPH) Yes $1,250 $1,625
AndexXa™ (Andexanet alfa) Treatment for patients receiving Xarelto® or Eliquis when reversal of anticoagulation is needed due to life threatening or uncontrolled bleeding Yes $14,062.50 $18,281.25

This next table highlights the applications for new technology add-on payments for FY 2020 and includes the medical service or technology name and the indication for treatment.

Proposed FY 2020 Applications for New Technology Add-On Payments
Medical Service or TechnologyIndication for Treatment
AZEDRA® (Ultratrace® iobenguane Iodine-131) Solution Treatment of patients diagnosed with obenguane avid malignant and/or recurrent and/or unresectable pheochromocytoma and paraganglioma
CABLIVI® (caplacizumab-yhdp) Treatment to inhibit microclot formation in adult patients who have been diagnosed with acquired thrombotic thrombocytopenic purpura (aTTP).
CivaSheet® CivaSheet® is intended for medical purposes to be placed into a body cavity or tissue as a source for delivery of radiation therapy. It is indicated for use as a brachytherapy source for the treatment of selected localized tumors.
CONTEPO™ (Fosfomycin for Injection) Treatment for cUTIs caused by multi-drug resistant (MDR) pathogens in hospitalized patients.
DuraGraft® Vascular Conduit Solution DuraGraft® is designed to protect the endothelium of the vein graft by mitigating ischemic reperfusion injury (IRI), the basis of vein graft disease (VGD) and vein graft failure (VGF).
Eluvia™ Drug-Eluting Vascular Stent System A drug-eluting stent for the treatment of lesions in the femoropopliteal arteries indicated for improving luminal diameter in treatment of peripheral artery disease (PAD) with symptomatic new or restenotic lesions in the native superficial femoral artery (SFA) and or proximal popliteal artery (PPA) with reference vessel diameters (RVD) ranging from 4.0 to 6.0 mm and total lesion lengths up to 190 mm.
ELZONRIS™ (tagraxofusp, SL-401) A targeted therapy for the treatment of blastic plasmacytoid dendritic cell neoplasm (BPDCN), previously known as blastic natural killer (NK) cell leukemia/lymphoma, administered via infusion.
Erdafitinib A second-line treatment of adult patients who have been diagnosed with locally advanced or metastatic urothelial carcinoma whose tumors exhibit certain fibroblast growth factor receptor (FGRG) genetic alterations as detected by an FDA-approved test, and who have disease progression during or following at least one line of prior chemotherapy including within 12 months of neoadjuvant or adjuvant chemotherapy.
ERLEADA™ (Apalutamide) Oral drug that is an androgen receptor inhibitor indicated for the treatment of patients who have been diagnosed with non-metastatic castration-resistant prostate cancer (nmCRPC).
SPRAVATO (Esketamine) A nasal spray for treatment-resistant depression (TRD). As noted in the proposed rule, “patients who have not responded to at least two different anti-depressant treatments of adequate dose and duration for their current depressive episode are considered to have been diagnosed with TRD.”
XOSPATA Indicated for the treatment of adult patients who have been diagnosed with relapsed or refractory acute myeloid leukemia (AML) with a FMS-like tyrosine kinase 3 (FLT3) mutation as detected by an FDA-approved test.
GammaTile™ A brachytherapy technology for use in the treatment of patients who have been diagnosed with brain tumors, which uses cesium-131 radioactive sources embedded in a collagen matrix.
Imipenem, Cilastatin, and Relebactam (IMI/REL) Injection Indicated for treatment of patients 18 years and older who have been diagnosed with a complicated intra-abdominal infection (cIAI) or cUTI, including pyelonephritis, caused by susceptible gram-negative microorganisms where there is limited or no alternative therapy available.
JAKAFI™ (Ruxolitinib) An oral kinase inhibitor indicated for the treatment of graft-versus-host disease (GVHD) in patients who have had an inadequate response to corticosteroids.
Supersaturate Oxygen (SSO2) Therapy (DownStream® System) The DownStream® System is an adjunctive therapy that creates and delivers superoxygenated arterial blood directly to reperfused areas of myocardial tissue which may be at risk after an acute myocardial infarction (AMI). SSO2 Therapy’s proposed indication is for patients receiving treatment for an ST-segment elevation myocardial infarction (STEMI).
T2Bacteria® Panel (T2 Bacteria Test Panel) According to the applicant, the T2Bacteria® Panel is indicated as an aid in the diagnosis of bacteremia, bacterial presence in the blood which is a precursor for sepsis. It is a multiplex diagnostic panel that detects five major bacterial pathogens (Enterococcus faecium, Escherichia coli, Klebsiella pneumoniae, Pseudomonas aeruginosa, and Staphylococcus aureus) associated with sepsis. The applicant indicates the T2 Bacteria® Panel is capable of detecting bacterial pathogens directly in whole blood more rapidly and with greater sensitivity as compared to the current standard-of-care, blood culture.
VENCLEXTA® An oral anti-cancer drug for the treatment of adult patients diagnosed with Chronic Lymphocytic Leukemia (CLL) or small lymphocytic lymphoma (SLL), with or without 17p deletion, who have received at least one prior therapy, and in combination with azacitidine or decitabine or low-dose cytarabine for the treatment of newly-diagnosed acute myeloid leukemia (AML) in adults age 75 or older, or who have comorbidities that preclude use of intensive induction chemotherapy.

For those looking for a little light reading over the Memorial Day weekend, you can find new technology add-on payments proposals on pages 19272 through 19373 of the proposed rule. Reminder, CMS is accepting comments no later than 5 p.m. EDT on June 24, 2019.

Article by Beth Cobb

Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Analytics at Medical Management Plus, Inc.  Beth has over twenty-five years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. 

In her current position, Beth is a principle writer for MMP’s Wednesday@One weekly e-newsletter, an active member of our HIPAA Compliance Committee, MMP’s Education Department Program Director and co-developer of MMP’s proprietary Compliance Risk Assessment (CRA) Tool. You may contact Beth at This email address is being protected from spambots. You need JavaScript enabled to view it..

This material was compiled to share information.  MMP, Inc. is not offering legal advice.  Every reasonable effort has been taken to ensure the information is accurate and useful.

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