How a New Technology Add-On Payment (NTAP) Works

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Additional Medicare payment in the inpatient setting may be available to certain qualifying new technologies, but requires successful navigation of application processes.

August 2023 Update

In the Fiscal Year (FY) 2024 IPPS final rule released on August 1, the Centers for Medicare & Medicaid Services (CMS) finalized revisions to the eligibility criteria for technologies applying for NTAP designation that have not yet received Food & Drug Administration (FDA) marketing authorization. Beginning for applicants in the FY 2025 NTAP cycle, such applicants must now:

  1. Have a “complete and active FDA marketing authorization request” at the time of submission
  2. Have FDA marketing authorization by May 1 (moved up from July 1)

Connect with the Avalere NTAP team to learn more about these eligibility changes and the broader NTAP application process.

Original Post

Under the Inpatient Prospective Payment System (IPPS), Medicare pays for a patient’s inpatient hospital stay under a bundled payment, which covers all costs of acute care services performed. Examples of costs include those for room and board, operating room time, supplies, radiology, nursing, and laboratory services. Although this bundled payment covers most drugs, devices, and supplies, certain qualifying products are also eligible for additional payment via the new technology add-on payment (NTAP) designation.

For products that meet specified criteria, the CMS may provide additional payment. An NTAP designation enables additional payment to hospitals above the standard Medicare Severity Diagnosis-Related Group (MS-DRG) payment amount. A product’s NTAP designation lasts for no more than 3 years for a specific indication. Typically, a technology must meet 3 criteria to qualify for NTAP:

  • Newness: A technology is considered new until claims data reflecting the use of the technology have become available (typically up to 3 years after FDA approval). The technology must also not be “substantially similar” to any existing technology.
  • Cost: The technology must be determined to be inadequately paid under the existing MS-DRG system, meaning that the average standardized charge for inpatient cases using the technology exceeds the cost threshold.
  • Substantial Clinical Improvement: Use of the technology must significantly improve clinical outcomes for a specified patient population, compared to currently available treatments. Clinical data must be either specific to or generalizable to Medicare patient population.

The CMS recently created alternative NTAP approval pathways for certain technologies. Devices that obtain breakthrough designation and drugs that obtain qualified infectious disease product designation from the FDA need only meet the cost criterion because the CMS assumes that those products meet the newness and substantial clinical improvement criteria.

The NTAP application process takes place on an annual basis, where CMS reviews applications and decides whether or not to award this payment designation as part of its annual IPPS rulemaking cycle. NTAP applications for a given fiscal year are due the October before that fiscal year begins.

Having supported more than a dozen successful applications during the past decade, Avalere’s experts understand the NTAP process and can offer the following services to manufacturers:

  • Provide an NTAP primer explaining the process, key internal stakeholder involvement, timelines, and case studies of successful, similar technologies
  • Assess cost feasibility to determine a technology’s likelihood of meeting the cost criterion
  • Assess a technology’s ability to meet the newness and clinical improvement criteria (e.g., by reviewing clinical evidence)
  • Draft and submit the NTAP application, including the cost-threshold analysis
  • Prepare clients for the CMS’s annual NTAP town hall meeting and schedule pre-submission informational sessions with the CMS to seek clarification on specific evidence requirements
  • Create and submit the International Classification of Diseases, 10th Revision, Procedural Coding System (ICD-10-PCS) code request and prepare the client for ICD-10 Coordination and Maintenance Committee meeting as necessary
  • Draft the IPPS proposed comment letter for submission as needed

The NTAP application process—as shown in the expected FY 2025 timeline below—requires submission of the application in October (note: the full FY 2025 timeline has not yet been published). Given the cost analyses and clinical information required as part of this application, manufacturers should begin working on their NTAP applications now.

Table 1. FY 2025 NTAP Application Timeline
NTAP Activity Traditional Pathway Alternative Pathway Alternative Pathway with Proposed Conditional Approval
Assess Technology’s Ability to Meet NTAP Criteria Aug 2023 Aug 2023 Aug 2023
Prepare NTAP Application Aug–Sep 2023 Aug–Sep 2023 Aug–Sep 2023
Submission Deadline for NTAP Application Oct 17, 2023 Oct 17, 2023 Oct 17, 2023
Prepare ICD-10-PCS Request Nov 2023 Nov 2023 Nov 2023
Develop Town Hall Presentation Nov 2023 * *
Present at New Technology Town Hall Dec 2023 * *
Submit ICD-10-PCS Code Request Dec 2023 Dec 2023 Dec 2023
Submit Additional NTAP Application Information Dec 2023 Dec 2023 Dec 2023
Develop ICD-10-PCS Presentation Jan 2024 Jan 2024 Jan 2024
Present at ICD-10 Coordination & Maintenance Committee Meeting Mar 2024 Mar 2024 Mar 2024
IPPS Proposed Rule Released Apr 2024 Apr 2024 Apr 2024
FDA Approval Deadline May 1, 2024 May 1, 2024 May 1, 2024
Submit IPPS Comment letter Jun 2024 ** **
IPPS Final Rule Released Aug 2024 Aug 2024 Aug 2024
If Awarded, NTAP Effective Oct 1, 2024 Oct 1, 2024 Quarter after FDA approval

*The New Technology Town Hall’s purpose is to present information regarding the clinical improvement criteria.  As alternative pathway applicants only have to meet the cost criteria, these applicants need not attend the town hall.

**A comment letter may not be needed for those applying through the alternative pathway because the CMS will provide conditional approval of the NTAP in the IPPS proposed rule.

Connect with us to learn from our NTAP and inpatient reimbursement expertise.

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