August 17, 2022

There are few things more certain than the prospect of progress.  It’s all around us, in our homes and in our hands.  Just a few days ago, physicists at the Lawrence Livermore National Laboratory officially confirmed a major breakthrough in the decades-long dream of nuclear fusion.  The feat, which actually occurred one year ago, involved the first successful instance of ignition—the point at which a nuclear fusion reaction becomes self-sustaining.  Progress in technology is exciting and expedient.  From a cost-benefit perspective, individuals and institutions are generally enriched when such advancement in technology is made available. 

In a continuation of our review of the 2023 Inpatient Prospective Payment System (IPPS) Final Rule (FR), we will take a look specifically at the most recent provisions that focus on new technology and how they might impact the nation’s hospitals.  Much of the below review is based on a CMS fact sheet concerning the 2023 IPPS FR.

Data for New Technology Add-on Payment

Since IPPS payments are generally based on the most recently available Medicare claims and cost report data, which tends to have a lag of two to three years, the statute provides temporary additional payments for certain cases with high costs under the New Technology Add-on Payment (NTAP) policy. Under this policy, for eligible technologies, Medicare pays the applicable MS-DRG payment rate and up to an additional 65 percent (75 percent for certain antimicrobials) of the cost of the approved new technology. The NTAP is not budget neutral and is generally limited to the two- to three-year period following the date the product begins to become available.

For FY 2023, CMS is returning to its historical practice of using the latest available data (e.g., FY 2020 MedPAR claims) to recalibrate the FY 2023 MS-DRG relative weights.  The agency believes the costs of technologies, for which the three-year anniversary date of the product’s entry into the U.S. market occurs prior to the latter half of the upcoming fiscal year (and therefore are no longer “new”), may now be fully reflected in the MedPAR claims data used to recalibrate the MS-DRG relative weights for FY 2023.  Accordingly, the FR discontinues new technology add-on payments for these technologies in FY 2023.  CMS is also discontinuing new technology add-on payments for the technologies that received a one-year extension in FY 2022.

Applications for NTAP

The FR approves eight technologies that applied for new technology add-on payments for FY 2023.  This includes three technologies submitted under the traditional new technology add-on payment pathway and five technologies submitted under the alternative pathway for new medical devices that are part of the FDA Breakthrough Devices Program.  CMS also conditionally approved one technology under the alternative pathway for products that received FDA Qualified Infectious Disease Product (QIDP) designation that otherwise meets the alternative pathway criteria but has not yet received FDA approval.  Additionally, CMS is finalizing the NTAP for one technology that it determined to be substantially similar to an existing technology approved for NTAP in FY 2022.

CMS is also continuing new technology add-on payments for 15 technologies currently receiving the add-on payment that will remain within their newness period for FY 2023.  As discussed above, CMS is not using its exceptions and adjustments authority under section 1886(d)(5)(I) of the Social Security Act to provide for a one-year extension of new technology add-on payments for the remaining technologies no longer within their newness period in FY 2023, in light of its return to using the latest available data (e.g., FY 2020 MedPAR claims) to recalibrate the FY 2023 MS-DRG relative weights.

In total, 25 technologies are eligible to receive add-on payments for FY 2023.  CMS estimates that FY 2023 Medicare spending on new technology add-on payments will be approximately $784 million.

Changes to NTAP Policies for FY 2023

CMS is finalizing its proposal, with some modifications, to publicly post completed NTAP applications, certain related materials, and additional application information submitted subsequent to the initial application (except for certain types of information, as described in the final rule) at the time the proposed rule is issued in order to increase transparency, minimize the risk of omission or misinterpretation of an applicant’s data, and increase operational efficiencies.  This policy is effective beginning with the application cycle for FY 2024.  CMS is not finalizing its proposal to use only National Drug Codes (NDCs) to identify claims involving the administration of therapeutic agents approved for NTAP, rather than ICD-10-PCS codes.

We will bring you further details from the 2023 IPPS Final Rule in future alerts.  Until then, you can reach us at info@miramedgs.com.