The Changing Characteristics of Technologies Covered by Medicare’s New Technology Add-on Payment Program | Medical Devices and Equipment | JAMA Network Open | JAMA Network
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Figure.  New Technology Add-on Payment Technology (NTAP) Trends by Fiscal Year
New Technology Add-on Payment Technology (NTAP) Trends by Fiscal Year

A, NTAP technologies covered in each fiscal year (fiscal years 2003-2020). An individual technology is included in each year for which it is NTAP approved (up to 3 years). B, Potential hospital loss from NTAP technologies, based on first fiscal year of NTAP approval. Fiscal year 2020 hospital losses calculated with the newly revised maximum NTAP rate of 65% (75% for 1 qualified infectious disease product). All other years calculated with an NTAP rate of 50%.

Table.  New Technology Add-on Payment Technology Characteristics, Fiscal Years 2003-2011 vs 2012-2020
New Technology Add-on Payment Technology Characteristics, Fiscal Years 2003-2011 vs 2012-2020
1.
Clyde  ATBL, Bockstedt  L, Farkas  JA, Jackson  C.  Experience with Medicare’s new technology add-on payment program.   Health Aff (Millwood). 2008;27(6):1632-1641. doi:10.1377/hlthaff.27.6.1632PubMedGoogle ScholarCrossref
2.
Centers for Medicare & Medicaid Services. IPPS regulations and notices for FY2003 to FY2020. Published 2019. Accessed August 13, 2019. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/IPPS-Regulations-and-Notices.html
3.
Judson  TJ, Dhruva  SS, Redberg  RF.  Evaluation of technologies approved for supplemental payments in the United States.   BMJ. 2019;365:l2190. doi:10.1136/bmj.l2190PubMedGoogle ScholarCrossref
4.
Hernandez  J, Machacz  SF, Robinson  JC.  US hospital payment adjustments for innovative technology lag behind those in Germany, France, and Japan.   Health Aff (Millwood). 2015;34(2):261-270. doi:10.1377/hlthaff.2014.1017PubMedGoogle ScholarCrossref
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    Research Letter
    Health Policy
    August 27, 2020

    The Changing Characteristics of Technologies Covered by Medicare’s New Technology Add-on Payment Program

    Author Affiliations
    • 1Department of Medicine, Division of Hematology and Oncology, University of Pennsylvania, Philadelphia
    • 2Departments of Radiation Oncology and Medical Ethics and Health Policy, University of Pennsylvania
    • 3Department of Medicine, Perelman School of Medicine, University of Pennsylvania
    JAMA Netw Open. 2020;3(8):e2012569. doi:10.1001/jamanetworkopen.2020.12569
    Introduction

    Medicare’s inpatient prospective payment system pays for inpatient hospitalizations according to diagnosis related groups (DRGs), with reimbursement based on average costs for each DRG in the previous 2 years. Because this calculation cannot incorporate payments for newly available expensive drugs or devices provided during hospitalizations, Medicare has established the new technology add-on payment (NTAP) program, which provides additional reimbursement of up to 50% (65% starting fiscal year 2020) of the cost of NTAP-approved technologies that are new, provide “substantial clinical benefit,” and exceed cost thresholds for the applicable DRGs.1 NTAP payments are intended as bridge payments for the 2 to 3 years it takes a DRG to recalibrate.1 We examined how NTAP technology characteristics have changed during NTAP’s 18-year existence.

    Methods

    Data on NTAP technologies, cost, and payments were extracted from publicly reported data in Medicare’s annual inpatient prospective payment system final rules for fiscal years 2003-2020.2 Potential hospital loss was calculated as the annual final rule–reported technology cost minus the maximum NTAP payment (eMethods in the Supplement).

    Results

    The number of technologies covered by NTAP each year has increased, peaking at 18 technologies for fiscal year 2020 (Figure). Comparison of the first and second 9-year periods of NTAP (fiscal years 2003-2011 vs 2012-2020) shows that the number of unique NTAP technologies increased 3.7-fold, from 10 to 37 (Table). The proportion of technologies that were drugs (vs devices) increased from 10% (n = 1) to 59% (n = 22); that were oncology-related, from 10% (n = 1) to 32% (n = 12); and that resulted in potential hospital losses of greater than $30 000, from 10% (n = 1) to 24% (n = 9) across the 2 periods. Despite the increased 65% reimbursement, 6 of the 18 fiscal year 2020 technologies may incur potential hospital losses of greater than $10 000, including 3 greater than $50 000. The median oncology technology cost for all years was $74 725 vs $12 291 for nononcology technologies. Median costs were lower for drugs than devices ($11 312 vs $20 265), but high-priced drugs were more highly skewed (maximum cost, $382 605 vs $168 761).

    Discussion

    This study demonstrates that the number, types, and costs of NTAP technologies have changed significantly since the program’s inception, driven particularly by oncology drugs. Administration routes have diversified. For fiscal year 2020, oral cancer drugs erdafitinib and apalutamide received NTAP approval essentially as expensive home medications that patients should continue to receive during hospitalizations but are not covered by DRG reimbursement. Many new oral medications fit these criteria, possibly opening the floodgates for similar NTAP approvals. Yet when NTAP approval expires for these drugs, the dozens of underlying DRGs still will not meaningfully reflect these medication costs. Device approvals may also increase because of recent policy changes loosening NTAP criteria for Food and Drug Administration–designated “breakthrough devices.”2

    Very high prices for some products have increased the possibility of high hospital losses, given current maximum NTAP payments. Our loss calculation has limitations because hospitals may negotiate lower prices or recoup some losses through outlier payments; however, they also may not qualify for maximum NTAP payments. Nevertheless, these data suggest that an analysis of actual hospital expenditures and reimbursement is warranted to assess the adequacy of current payment policy and whether NTAP provides effective bridge payments to higher DRG reimbursement.

    A recent study raised concerns that many NTAP technologies may not provide substantial clinical benefit.3 Drawing from other countries’ experiences, others highlighted the need for broad US policy reform that aligns technology prices with value.4 Our study adds to this ongoing discussion by raising questions regarding adequacy of reimbursement of these technologies and whether, despite recent increases, NTAP payments will be sufficient to incentivize hospitals to offer these therapies to patients in need. Further research and policy improvements are needed to ensure patient access to high-value technologies.

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    Article Information

    Accepted for Publication: May 24, 2020.

    Published: August 27, 2020. doi:10.1001/jamanetworkopen.2020.12569

    Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2020 Manz CR et al. JAMA Network Open.

    Corresponding Author: Christopher R. Manz, MD, Penn Center for Cancer Care Innovation, Abramson Cancer Center, 3400 Civic Center Blvd, PCAM South, 12th Floor, Philadelphia, PA 19104 (christopher.manz@pennmedicine.upenn.edu).

    Author Contributions: Dr Manz had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

    Concept and design: Manz, Doshi.

    Acquisition, analysis, or interpretation of data: All authors.

    Drafting of the manuscript: Manz.

    Critical revision of the manuscript for important intellectual content: All authors.

    Statistical analysis: Manz.

    Administrative, technical, or material support: Manz.

    Supervision: Doshi.

    Conflict of Interest Disclosures: Dr Manz reports tisagenlecleucel is a drug currently approved for new technology add-on payments and was originally invented at the University of Pennsylvania. The University of Pennsylvania has received and may receive royalties arising from the licensure of such intellectual property to Novartis. Dr Bekelman reports receiving grants from Pfizer, UnitedHealth Group, North Carolina Blue Cross Blue Shield, and Embedded Healthcare; and personal fees from Centers for Medicare & Medicaid Services Innovation, Optum, CVS Health, and the National Comprehensive Cancer Network outside the submitted work. Dr Doshi reports receiving personal fees from Allergan, Boehringer Ingelheim, Catabasis, Ironwood Pharmaceuticals, Janssen, Kite Pharma, MeiraGTx, Merck, Otsuka, Regeneron, Sarepta, Sage Therapeutics, Sanofi, The Medicines Company, Vertex, and Takeda; and grants from Janssen, Merck, Regeneron, Sanofi, AbbVie, Biogen, Humana, Novartis, Pfizer, Pharmaceutical Research and Manufacturers of America, and Valeant outside the submitted work. She reports that her spouse holds stock in Merck and Pfizer.

    References
    1.
    Clyde  ATBL, Bockstedt  L, Farkas  JA, Jackson  C.  Experience with Medicare’s new technology add-on payment program.   Health Aff (Millwood). 2008;27(6):1632-1641. doi:10.1377/hlthaff.27.6.1632PubMedGoogle ScholarCrossref
    2.
    Centers for Medicare & Medicaid Services. IPPS regulations and notices for FY2003 to FY2020. Published 2019. Accessed August 13, 2019. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/IPPS-Regulations-and-Notices.html
    3.
    Judson  TJ, Dhruva  SS, Redberg  RF.  Evaluation of technologies approved for supplemental payments in the United States.   BMJ. 2019;365:l2190. doi:10.1136/bmj.l2190PubMedGoogle ScholarCrossref
    4.
    Hernandez  J, Machacz  SF, Robinson  JC.  US hospital payment adjustments for innovative technology lag behind those in Germany, France, and Japan.   Health Aff (Millwood). 2015;34(2):261-270. doi:10.1377/hlthaff.2014.1017PubMedGoogle ScholarCrossref
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