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NTAP Eligibility Criteria Opportunities for Inpatient Reimbursement

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Recent CMS rulemaking has expanded the opportunity for new drugs and devices to achieve NTAP status, either through the traditional process or via alternative. Manufacturers that are nearing the launch of new technologies, especially in the antimicrobial space, should assess whether their technology may qualify for NTAP. Applications for NTAPs effective in FY 2022 are due this fall.

Each spring and summer, the Centers for Medicare & Medicaid Services (CMS) releases the Inpatient Prospective Payment System (IPPS) proposed and final rules, modifying or adjusting payments, quality metric thresholds, and policies for the inpatient hospital system. Typically, devices, drugs, and services are paid for under a single Medicare Severity Diagnosis-Related Group (MS-DRG) bundled payment, which covers all costs for acute care stay (e.g., room and board, drugs received, laboratory services). As part of this rulemaking cycle, the CMS also evaluates and approves certain new high-cost technologies to receive New Technology Add-on Payments (NTAP), an additional payment hospitals can receive if a hospital’s costs for a specific stay utilizing such a designated therapy exceed the MS-DRG bundled payment amount. The maximum amount a hospital can receive for NTAP is 65% of the cost of the technology. An NTAP designation lasts no more than 3 years for a specific technology and specific indication.

In recent years, the CMS has refined the NTAP process by clarifying criteria used to determine eligibility for this payment designation and creating 2 pathways for approval: traditional and alternative. As Figure 1 illustrates, applications for NTAP have steadily increased since the programs inception in 2003, with a sharp increase in the last couple of years coinciding with these new pathways.

Figure 1: Number of NTAP Applications by Type, 2003–2021
Figure 1: Number of NTAP Applications by Type, 2003–2021

Traditional NTAP Pathway

To qualify under the traditional process, a technology must meet 3 criteria:

  • Newness: A technology is considered new until claims data reflecting the use of that technology become available. The technology must also not be “substantially similar” to existing technologies.
  • Cost: The technology is considered inadequately paid under the existing MS-DRG system if it is shown that the average standardized charge for inpatient cases receiving the technology exceeds the cost threshold.
  • Clinical Improvement: Use of the technology must significantly improve clinical outcomes for a patient population as compared to currently available treatments. Clinical data must be specific or generalizable to the Medicare patient population.

Alternative NTAP Pathway

The CMS finalized in the Fiscal Year (FY) 2020 IPPS rule that certain drugs designated by the Food & Drug Administration (FDA) as a qualified infectious disease product (QIDP) or devices with FDA breakthrough status may apply for NTAP using an alternate pathway to NTAP. For such drugs and devices, the technology only needs to satisfy the cost criterion to qualify for NTAP designation. Additionally, technologies approved for NTAP with QIDP designation have a maximum add-on payment of 75% of the cost of the drug, as opposed to 65% under the traditional pathway. In the FY 2021 NTAP cycle, 6 QIDP drugs and 3 breakthrough devices sought NTAP using the alternate pathway.

In the recently released FY 2021 IPPS proposed rule, the CMS proposes that technologies approved through FDA’s Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) may use the alternative NTAP pathway and have a maximum NTAP of 75% of the cost of the drug. Additionally, the CMS is considering granting conditional NTAP approval to QIDP and LPAD products, which would allow NTAP to begin in the quarter following the FDA marketing approval. By contrast, NTAP begins on the fiscal year for technologies approved through the traditional pathway or breakthrough devices.


The expected FY 2022 NTAP application process for the various pathways is shown below in Table 1. Given the cost analyses and clinical information required as part of this application, manufacturers should begin working on their NTAP application as soon as possible to be considered in this rulemaking cycle. Having supported over 10 successful applications in the past 8 years, Avalere is able to assist manufacturers to identify strategy and navigate the complexities of inpatient reimbursement considerations and NTAP application process for their products.

Table 1: FY 2022 Expected NTAP Timeline
NTAP Activity Traditional Pathway Alternative Pathway Alternative Pathway with Proposed Conditional Approval
Assessment of Technology Ability to meet NTAP Criteria Aug 2020 Aug 2020 Aug 2020
Preparation of NTAP Application Aug–Sep 2020 Aug–Sep 2020 Aug–Sep 2020
Submission Deadline for NTAP Application Oct 2020 Oct 2020 Oct 2020
Preparation of ICD-10-PCS Request Nov 2020 Nov 2020 Nov 2020
Development of Town Hall Presentation Nov 2020 * *
Presentation at New Technology Town Hall Dec 2020 * *
Submission of ICD-10-PCS Code Request Dec 2020 Dec 2020 Dec 2020
Submission of Additional NTAP Application Information Dec 2020 Dec 2020 Dec 2020
Development of ICD-10-PCS Presentation Jan 2021 Jan 2021 Jan 2021
Presentation at ICD-10 C&M Committee Meeting Mar 2021 Mar 2021 Mar 2021
Release of IPPS Proposed Rule May 2021 May 2021 May 2021
Submission IPPS Comment Letter Jun 2021 ** **
Deadline for FDA Approval Jul 1, 2021 Jul 1, 2021 Prior to Jul 1, 2022
Release IPPS Final Rule Aug 2021 Aug 2021 Aug 2021
If Awarded, NTAP Effective Oct 1, 2021 Oct 1, 2021 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, the applicant may choose not to attend.

**A comment letter may not be needed with the alternative pathway, as the CMS will provide proposed granting of NTAP in the IPPS proposed rule.

Avalere is advising life science companies, healthcare providers, and stakeholders across the healthcare industry to improve access to new therapies. To learn more about our work, connect with us.

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