Innovation Spurs Growth in Medicare NTAP

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Recent growth in the NTAP designation alters dynamics for manufacturers considering pursuing the designation for new technologies.

When preparing to launch a technology for use in the inpatient setting, manufacturers assess this setting’s bundled reimbursement dynamics, and some may qualify for a new technology add-on payment (NTAP). Because the Centers for Medicare & Medicaid Services (CMS) and most private plans reimburse inpatient episodes of care using a bundled payment approach, coding of patient diagnoses drives Medicare Severity Diagnosis Related Group (MS-DRG) assignment and facility payment. Ultimately, reimbursement for an episode of care that utilizes an NTAP-qualifying technology will depend on several key factors, including:

  • The coded diagnoses and procedures for the patient’s episode of care, which inform the MS-DRG and payment rate for the episode
  • The billed charges for the episode of care
  • The wholesale acquisition cost (WAC) of the NTAP-eligible technology

The NTAP amount for the product may vary from $0 to 75% of the technology’s WAC and is calculated by comparing the total cost of the episode of care—including the cost of the NTAP technology—to the payment rate of the MS-DRG. Understanding payment variability, both for episodes of care and for NTAP-eligible products, can help manufacturers to engage customers and project payments effectively.

Over the past decade, drug and biological manufacturers have increasingly sought NTAP designation for their products. This trend may reflect both growing investments in new inpatient care technologies and CMS efforts to incentivize such investments through higher NTAP amounts as well as alternative application pathways for certain kinds of technologies.

However, this increasing interest in NTAP also creates challenges for manufacturers applying for it through the traditional pathway. Such applicants must demonstrate that, in comparison to standard of care, their products both are meaningfully different (i.e., are “new”) and result in better clinical improvement. As more technologies achieve NTAP designation, some of those technologies become new comparators for future applicants, requiring a nuanced approach to articulating newness and clinical improvement.


To better understand the NTAP landscape of recent years, Avalere has examined the number of NTAP-eligible products (Figure 1) and NTAP payments by type of product (Figure 2), including oncology products, devices, drugs approved through the Qualified Infectious Disease Product (QIDP) program, and other drug products. By 2022, the number of NTAP-eligible products (n=39) had more than tripled compared to 2019 (n=12), with a continuous increase in the number of devices eligible for NTAP. NTAP-eligible oncology products accounted for more than 70% of total NTAP payment dollars in 2019 and 2020, reflecting NTAP designation for high-cost therapies such as chimeric antigen receptor (CAR) T-cell therapy and therapies for acute myeloid leukemia and bone marrow cancer.

These analyses demonstrate the increasing number of products eligible for NTAP and the financial impact of NTAP status in terms of Medicare payments. Manufacturers considering pursuing NTAP designation should assess the strategic implications of recent growth in NTAP use and understand the variability of potential payment based on the cost of each technology as well as a range of episode- and site-specific factors.

Figure 1. Number of Products Eligible for New Technology Add-On Payments, 2019–2022

Figure 2. New Technology Add-On Payments, 2019–2022

Note: NTAP Payments for QIDP products in 2019 are excluded due to CMS cell size suppression policy.


Avalere analyzed 2019–2022 CMS claims data in the Medicare Provider Analysis and Review data files and used the Medicare Administrative Contractor implementation files published with the inpatient prospective payment system (IPPS) final rule each year as well as published guidance from CMS in the Medicare Learning Network to map NTAP-eligible products.

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