New Medical Services and New Technologies (NTAP) is an additional add-on payment for new medical services and technology used in the inpatient setting.[1] A medical service or technology can qualify forNTAP if 1) the medical service or technology is new (newness criteria);(2) “the medical service or technology must be costly such that the MS-DRG rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate” (cost criteria); and (3) “the medical service or technology must demonstrate a substantial clinical improvement over existing services or technologies” (substantial clinical improvement criteria).
A product satisfies the newness criteria prong if it is NOT substantially similar to one or more existing technologies. [2] A product that meets all of the following is not substantially similar and, thus, not eligible for the NTAP pathway: 1) The technology employs a mechanism of action that is the same as or similar to that of existing technology to achieve a therapeutic outcome, 2) the technology is assigned to the same MS-DRG as the existing technology for achieving a therapeutic outcome, 3) the new application of the technology targets the treatment of the same or a similar type of disease and patient population as the existing technology.
The cost criteria prong purpose is to encourage usage of the new technology despite the MS-DRG not covering the entire cost of the technology. MS-DRG (Medicare Severity Diagnosis-Related Group (MS-DRG)) is a payment system for which CMS reimburses hospitals for inpatient care. The inpatient prospective payment system (IPPS) determines MS-DRG by calculating payments based on the average resource utilization associated with each specific MS-DRG.[3] The MS-DRG includes all inpatient costs, including medications associated with the hospital stay, services during the stay, and supplies.[4] However, some drugs qualify for separate reimbursement outside of the MS-DRG bundling.
Drugs that qualify for separate reimbursement are called pass-through payments. The Outpatient Prospective Payment System (OPPS) reimburses pass-through drugs instead of the IPPS through a bundled cost approach. [5] There are additional steps to qualify for pass-through status, which are outside the scope of this article. CAR-T therapies (Chimeric Antigen Receptor T-cell) also qualify for a case-by-case exception.[6] A drug approved through the pass-through pathway is reimbursed at the average sales price + 6%.
Why is it relevant?
The NTAP pathway, pass-through designation, or the CAR-T exception is a way to lessen the financial burden on hospitals and providers when prescribing new medications. These pathways are critical in ensuring the successful commercialization of new drugs and technologies. Approval through one of these pathways could increase market adoption, decrease provider hesitation, and increase financial viability early in a product’s life cycle.
[1] Centers for Medicare & Medicaid Services, New Medical Services and New Technologies, CMS.gov (accessed Jan. 4, 2025), https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/new-medical-services-and-new-technologies#:~:text=New%20medical%20services%20and%20technologies,for%20the%20add%2Don%20payment.
[2] Centers for Medicare & Medicaid Services, New Medical Services and New Technologies, CMS.gov (accessed Jan. 4, 2025), https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/new-medical-services-and-new-technologies#:~:text=New%20medical%20services%20and%20technologies,for%20the%20add%2Don%20payment.
[3] 42 CFR § 412.60.
[4] 42 CFR § 412.2
[5] 42 CFR § 419.66. Currently, CustomFlex ArtificialIris (HumanOptics), Dextenza (Ocular Therapeutix), Dexycu (EyePoint Pharmaceuticals), and Omidria (Omeros) have pass-through status. Cataract & Refractive Surgery Today. (2021, February). J-codes and pass-through status. Retrieved from https://crstoday.com/articles/feb-2021/j-codes-and-pass-through-status.
[6] 42 CFR § 419.66; CAR-T therapies like Kymriah or Yescarta, are cancer medications created by collecting T-cells from the patient’s blood. The blood is sent to a lab where scientists modify the T-cells by introducing genes that produce a protein capable of recognizing and binding to cancer cells. Once engineered, the CAR-T cells are infused back into the patient. A “living drug,” National Cancer Institute, https://www.cancer.gov/about-cancer/treatment/research/car-t-cells#:~:text=CAR%20T%2Dcell%20therapy:%20A%20%22living%20drug%22&text=As%20their%20name%20implies%2C%20T,B%20cells%2C%20CD19%20or%20BCMA. (last visited Jan. 11, 2025).