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New Technology Add-On Payment
Supplemental Medicare payment for inpatient use of qualifying new technologies.
Reviewed by Christian Espinosa, Founder, Blue Goat CyberLast reviewed May 5, 2026
Definition
NTAP provides up to 65% additional payment (75% for some categories) above the MS-DRG rate to hospitals using qualifying new technologies. Eligibility requires FDA marketing authorization, newness (typically <3 years), substantial clinical improvement, and inadequate MS-DRG payment. NTAP applications are due in the fall for the next fiscal year and are reviewed in the IPPS proposed and final rules. Breakthrough Devices and certain antimicrobial products follow an alternative pathway that does not require proving substantial clinical improvement. NTAP status generally lasts two to three years, after which the cost should be reflected in DRG data. What the regulation says
The Centers for Medicare & Medicaid Services (CMS) establishes the New Technology Add-On Payment (NTAP) program to facilitate beneficiary access to new medical technologies and services. The criteria for NTAP eligibility are outlined in the Medicare Prospective Payment System (PPS) for inpatient hospital services, specifically in the annual Inpatient PPS Final Rule, which includes requirements related to FDA marketing authorization, newness, substantial clinical improvement, and inadequate payment under existing Diagnosis-Related Group (DRG) rates. The program aims to ensure that hospitals are not financially disadvantaged when using qualifying new technologies before their costs are fully incorporated into DRG payment rates.What this means in practice
NTAP bridges the gap while CMS gathers utilization data to update DRG weights. Time-limited (2–3 years). Critical for high-cost devices used inpatient.Examples
- A medical device manufacturer secures NTAP for a novel cardiac assist device after demonstrating its FDA approval, significant improvement in heart failure patient outcomes, and that existing DRG payments do not cover its acquisition cost.
- A hospital successfully applies for NTAP for a new surgical robot that allows for less invasive procedures with shorter recovery times, meeting the newness and substantial clinical improvement criteria.
- A pharmaceutical company receives NTAP for a new antibiotic that treats highly resistant infections, as it has FDA approval and provides a unique treatment option where existing therapies are ineffective.
Common pitfalls
- •A common pitfall is failing to secure timely FDA marketing authorization, which is a prerequisite for NTAP consideration.
- •Misinterpreting the "newness" criterion can lead to missed application windows, as technologies typically qualify for a limited period, often three years.
- •Overlooking the requirement for "substantial clinical improvement" can result in rejection, as mere incremental advancements may not be sufficient.
- •Failing to demonstrate that the existing Medicare Severity-Diagnosis Related Group (MS-DRG) payment is inadequate to cover the technology's costs is a frequent pitfall.
- •Companies sometimes assume NTAP is a permanent solution rather than a transitional payment mechanism while CMS updates DRG weights.
Frequently asked questions
FDA marketing authorization, such as 510(k) clearance or PMA approval, is a mandatory prerequisite for a technology to be considered for NTAP by CMS.
Cross-references
Related terms
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· Hand-selected related conceptsReimbursement
Inpatient Prospective Payment System(IPPS)
Medicare's payment system for inpatient hospital stays.
Reimbursement
MS-DRG(MS-DRG)
Medicare's inpatient hospital payment classification system.
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Transitional Pass-Through Payment(TPT)
Supplemental outpatient payment for new device technologies.
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Medicare Administrative Contractor(MAC)
Private contractors that process Medicare Part A/B and DME claims and issue Local Coverage Determinations within their jurisdictions.
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Reimbursement
Transitional Coverage for Emerging Technologies(TCET)
CMS pathway providing time-limited Medicare coverage for FDA-designated Breakthrough Devices.
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Budget Impact Model(BIM)
Financial model that estimates the total cost consequences of adopting a new technology to a payer's budget over a defined horizon.
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CPT Codes(CPT)
AMA-maintained codes that describe medical procedures and services.
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Sources
3 sourcesEvery citation below opens the original document. Each is graded against our source-tier hierarchy so you can see what rests on binding law versus commentary.
Tier 2Regulator guidance and consensus· 1Tier 4Trade press and expert commentary· 2
Link health: 3 verified· last checked 2026-06-20
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- 1CMS NTAPTier 2 VerifiedCMScms.gov
- 2AdvaMed - Payment & CoverageTier 4 VerifiedAdvaMedadvamed.org
- 3AMA CPT ResourcesTier 4 VerifiedAMAama-assn.org
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