“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 2022 IPPS Final Rule
CMS released the display copy of the Fiscal Year (FY) 2022 Inpatient Prospective Payment System (IPPS) Final Rule (CMS-1752-F) on Monday August 2, 2021. This article focuses on New Technology Add-On Payments (NTAP) for FY 2022.
New Technology Add-On Payment Pathways
There are now several pathways for a new services or technology to be approved for New Technology Add-On Payments (NTAPs) including:
- Traditional Pathway: To meet this pathway, the medical service or technology must be new, must be costly such that the DRG rate otherwise applicable to discharges involving the NTAP is inadequate, and must demonstrate a substantial clinical improvement over existing services or technologies.
- Certain Antimicrobial Products Alternative Pathway: In FY 2021 the alternative pathway for Qualified Infectious Disease Products (QIDPs) was expanded to include products approved under the Limited Population for Antibacterial and Antifungal Drugs (LPAD) pathway. In the Final Rule, CMS finalized policy to refer more broadly to “certain antimicrobial products” rather than specifying FDA programs for antimicrobials (i.e., QIDPs and LPADs). Products approved through this pathway will be considered new and not substantially similar to an existing technology and will not need to demonstrate that it meets the substantial clinical improvement criterion. However, the technology will need to meet the cost criterion.
- Certain Transformative New Devices Alternative Pathway: Beginning in FY 2021, “if a medical device is part of FDA’s Breakthrough Devices Program and received FDA marketing authorization, it will be considered new and not substantially similar to an existing technology for purposes of the new technology add-on payment under the IPPS.” However, the new device must meet the cost criterion and must receive marketing authorization for the indication covered by the Breakthrough Device Program designation.
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 will review the application based on the information provided under by the applicant under the alternative pathway specified by the applicant. However, to receive approval for the new technology add-on payment under that alternative pathway, the technology must have the applicable designation and meet all other requirements in the regulations in § 412.87(c) and (d), as applicable.”
Additional Payment for NTAP’s
Payment for an NTAP is based on the cost to hospitals for the new medical service or technology. As set forth in § 412.88(b)(2), unless the discharge qualifies for an outlier payment, the additional Medicare payment will be limited to the following:
- For “Traditional Pathway” and “Certain Transformative New Devices”, Medicare will make an add-on payment equal to the lesser of: (1) 65 percent of the costs of the new medical service or technology; or (2) 65 percent of the amount by which the costs of the case exceed the standard DRG payment.
- For Certain Antimicrobial NTAPs (QIDPs and LPADs), Medicare will make an add-on payment equal to the lesser of: (1) 75 percent of the costs of the new medical service or technology; or (2) 75 percent of the amount by which the costs of the case exceed the standard DRG payment.
Coding NTAPs
Section X is the New Technology section that was added to ICD-10-PCS effective October 1, 2015. CMS has indicated 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. The public had opposed many requests to add new codes to the existing ICD-10-PCS sections for the use of specific drugs, devices, or supplies in an inpatient setting, even when the code related to an application for New Technology add-on payments.
NTAPs for FY 2022 by the Numbers
NTAPs are not budget neutral and generally this add-on payment is limited to the 2-to-3-year period after the date a technology becomes available. Due to the COVID-19 Public Health Emergency (PHE) impacting hospital volumes, CMS finalized using FY 2019 data for rate setting. They also finalized a one-year extension of NTAPs for technologies that would have otherwise been discontinued beginning October 1, 2021.
CMS estimates the payment amounts for new technology add-on payments in the Final Rule based on the applicant’s estimates. This amount and the estimated number of patients is highlighted in Appendix A of the Final Rule. Appendix A begins on page 2,174 of the display version of the Final Rule.
- A total of 42 services or technologies have been approved for NTAPs,
- The estimated total amount to be paid to hospitals is $1,424,341,317.63, and
- The estimated number of patients is 468,206.
- The estimated number one NTAP by volume and payment is Veklury® (remdesivir) with an estimated 174,996 cases and estimated total payment of $354,891,888.00. This drug is used in the treatment of COVID-19 patients.
NTAPs FY Trend: Number of Services or Technologies Approved for NTAP
- FY 2020: 18
- FY 2021: 24
- FY 2022: 40
NTAPs FY Trend: Estimated Number of Patients to Receive a New Technology during an Inpatient Stay
- FY 2020: 71,659
- FY 2021: 259,201
- FY 2022: 468,206
New COVID-19 Treatment Add-on Payments (NCTAPs)
As new therapies were approved in response to the COVID-19 PHE, New COVID-19 Treatments Add-on Payment (NCTAP) were created. CMS finalized the following related to NCTAPs in the FY 2022 IPPS Final Rule:
- The NCTAP for eligible COVID-19 products will extend through the end of the fiscal year in which the PHE ends, and
- A hospital will be eligible to receive the NCTAP and the traditional NTAP for qualifying patient stays, through the end of the fiscal year in which the PHE ends, with the NTAP reducing the amount of the NCTAP.
You can learn more about NCTAP’s on the related CMS COVID-19 NCTAP specific webpage (link).
Moving Forward
Identifying and coding new technologies is an opportunity not to be missed for those hospitals providing these services. That said, some questions come to mind for you to think about:
- Is your hospital providing any of these medical services or technology?
- Who needs to be aware of what the new technologies are? (i.e. Physicians, Pharmacy, Coding Professionals, Clinical Documentation Integrity Specialists, Case Managers)
- What process do you have in place to alert your Coding Staff of the need to code the new technologies?
Resources:
CMS August 2, 2021, Fact Sheet: https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2022-medicare-hospital-inpatient-prospective-payment-system-ipps-and-long-term-care-0
FY 2022 IPPS CMS webpage: https://www.cms.gov/medicare/acute-inpatient-pps/fy-2022-ipps-final-rule-home-page
