Knowledge Base Article

“The primary objective of the IPPS and the LTCH PPS is to create incentives for hospitals to operate efficiently and minimize unnecessary costs, while at the same time ensuring that payments are sufficient to adequately compensate hospitals for their legitimate costs in delivering necessary care to Medicare beneficiaries.”

• Source: Appendix A: Economic Analysis of FY 2025 IPPS Proposed Rule

New Technologies Eligible for Add-On Payment (NTAPs) Background

Effective for discharges beginning on or after October 1, 2002, Section 1886(d)(5)(K)(i) of the Act requires the Secretary to establish a mechanism to recognize the costs of new medical services and technologies under the payment system under the subsection which establishes the system for paying for the operating costs of inpatient hospital services.

The system of payment for capital costs is established in section 1886(g) of the Act. For this reason, capital costs are not included in the add-on payments for a new medical service or technology.

NTAPs are not budget neutral and the “newness” for payment is limited to the 2-to-3-year period after the point at which data begin to become available reflecting the inpatient hospital code assigned to the new service or technology.

There are three pathways for a new service or technology to be approved for the add-on payment (Traditional pathway, Certain Antimicrobial Products Alternative Pathway, and Certain Transformative New Devices Alternative Pathway).

For the alternative pathways, a technology is not required to have a specified FDA designation at the time the application for NTAP is made. Instead, “CMS reviews the application based on the information provided by the applicant only under the alternative pathway specified by the applicant at the time of new technology add-on payment application submission. However, to receive approval for the new technology add-on payment under that alternative pathway, the technology must have the applicable FDA designation and meet all other requirements in the regulations in § 412.87(c) and (d), as applicable.”

Coding NTAPs

Section X New Technology was added to ICD-10-PCS effective October 1, 2015. CMS has indicated (https://www.cms.gov/Medicare/Coding/ICD10/Downloads/2016-Section-X-New-Technology-.pdf) that “Section X was created in response to public comments received regarding New Technology proposals presented at ICD-10 Coordination and Maintenance Committee Meetings, and general issues facing classification of new technology procedures.”  To receive payment for an eligible NTAP, the applicable section X New Technology ICD-10-PCS code must be on the claim submitted for adjudication.

NTAPs by the Numbers

For FY 2025, CMS has proposed to:

• Discontinue 7 technologies no longer considered to be “new,”
• Continue coverage for 24 technologies they consider to still be “new,” and
• Have assessed 26 applications.

For the 24 technologies that CMS considers to still be “new,” CMS estimates that collectively there will be 50,910 cases with an estimated total financial impact of just over $416 million.

Based on preliminary information from the FY 2025 applicants for new technology approval, CMS estimates the collective impact to be $345.3 million.

FY 2025 NTAP Program Proposals

Consistent with CMS’ Sickle Cell Disease Action Plan, CMS is proposing to increase the NTAP percentage from 65% to 75% for a gene therapy that is indicated specifically for the treatment of sickle cell disease (SCD) (subject to CMS’ determination in the FY 2025 IPPS final rule that any applicable gene therapy(ies) indicated and used specifically for treatment of SCD meets the criteria for approval for NTAP).

CMS has also proposed to use the October 1^st start of a new fiscal year, instead of April 1^st, to determine whether a technology is within its 2- to 3- year newness period. This change would be effective in FY 2026 for new applicants and extending the NTP an additional year for technologies initially approved in FY 2025.

CMS is accepting comments on the proposed rule through June 10, 2024.

Resource

FY 2025 IPPS Proposed Rule CMS webpage:

https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2025-ipps-proposed-rule-home-page