NTAP Application Guide for Medical Devices: New Technology Add-On Payment Criteria, Timeline, and Strategy

Complete guide to CMS New Technology Add-On Payment (NTAP) for medical device manufacturers — eligibility criteria (newness, cost, substantial clinical improvement), traditional vs alternative pathways, FY 2027 application timeline, MEARIS submission, Town Hall process, payment calculation, and proposed changes to Breakthrough Device fast-track pathways.

Why NTAP Matters for Medical Device Commercialization

FDA authorization gets your device to market. But it does not ensure that hospitals will be adequately reimbursed to use it. When a new medical device is significantly more expensive than existing technologies, the standard Medicare Severity Diagnosis-Related Group (MS-DRG) payment that hospitals receive for inpatient procedures may not cover the added cost. Without adequate reimbursement, hospitals have a financial disincentive to adopt your technology — regardless of its clinical benefits.

The New Technology Add-On Payment (NTAP) program is CMS's mechanism for addressing this gap. NTAP provides incremental payment above the standard MS-DRG rate to hospitals that use qualifying new technologies, encouraging early adoption during the critical first years after market entry. For FY 2026, NTAP payments can reach up to $2,325,000 per case for certain gene therapies, underscoring the program's significant commercial impact.

This guide covers everything a medical device manufacturer needs to know about NTAP: the three eligibility criteria, traditional and alternative pathways, the annual application and rulemaking cycle, payment calculation, proposed policy changes for FY 2028 and beyond, and practical strategies for building a successful NTAP application.

What Is NTAP and How Does It Work?

Legal Authority

The NTAP program was established under Sections 1886(d)(5)(K) and (L) of the Social Security Act. Regulations for add-on payments under the Inpatient Prospective Payment System (IPPS) are outlined at 42 CFR §§412.87 and 412.88.

Purpose

NTAP ensures that the MS-DRG payment system does not create a disincentive for hospitals to provide new, costly technologies to Medicare patients. The program provides additional payment to hospitals above the standard DRG rate for qualifying new technologies used during inpatient stays.

Duration

A product's NTAP designation lasts for no more than three years for a specific indication. Each year, CMS reviews approved products to determine whether they should continue based on the newness period.

Payment Calculation

For FY 2026, Medicare calculates the NTAP as the lesser of:

65% of the cost of the new technology, or
65% of the amount by which the cost of the case exceeds the MS-DRG payment

For qualifying infectious disease products (QIDP) and products approved under FDA's Limited Population Approval Pathway (LPAD), the rate increases to 75%.

A hospital is eligible to receive NTAP when the costs of the inpatient stay exceed the MS-DRG payment (including adjustments for disproportionate share and indirect medical education, but excluding outlier payments).

FY 2026 NTAP Examples

Technology	Maximum NTAP Payment
Casgevy (sickle cell gene therapy)	$1,650,000.00
Lyfgenia (sickle cell gene therapy)	$2,325,000.00
Breyanzi (CAR-T cell therapy)	$316,860.05
Tecelra (T-cell receptor therapy)	$472,550.00

The Three NTAP Eligibility Criteria

Under the traditional NTAP pathway, a technology must satisfy all three criteria set forth in 42 CFR §412.87(b):

Criterion 1: Newness

The technology must be new and not "substantially similar" to any other product that has been available on the market for more than two to three years. CMS evaluates newness by considering:

Mechanism of action: Does the technology work through a fundamentally different mechanism than existing products?
MS-DRG assignment: Does the technology fall into a different DRG than existing technologies?
Disease or patient population: Does it treat a different condition or patient subgroup?

A technology loses newness if CMS determines it is substantially similar to an existing technology — regardless of whether it has new FDA clearance or approval. This is particularly important for 510(k) devices, where the predicate device may already be on the market for years. However, a 510(k) product that differs meaningfully on one or more of these factors, and exceeds cost thresholds while providing substantial clinical improvement, may still qualify.

Criterion 2: Cost

The technology must be costly enough that the applicable MS-DRG payment rate is determined to be inadequate. Specifically, the average charge per case for cases involving the technology must exceed the cost threshold established in the most recent annual IPPS final rule.

CMS publishes the specific cost threshold each year. The manufacturer must provide detailed cost data demonstrating that the DRG payment does not adequately cover the cost of the technology.

Criterion 3: Substantial Clinical Improvement (SCI)

The technology must demonstrate a substantial clinical improvement over existing services or technologies. CMS takes a "totality of the circumstances" view, evaluating:

Reduced mortality: Does the technology improve survival rates?
Reduced complications: Does it decrease adverse events or treatment-related morbidity?
Reduced healthcare utilization: Does it shorten hospital stays, reduce readmissions, or lower the need for subsequent interventions?
Improved functional outcomes: Does it enhance patient quality of life or functional capacity?
Changes in clinical management: Does it enable a fundamentally different treatment approach?

Applicants are encouraged to provide as much data as possible to support their SCI claim. CMS's SCI framework is explicitly comparative — it asks whether a technology offers improvement "relative to technologies previously available."

Traditional vs Alternative Pathways

CMS offers three NTAP pathways with different eligibility requirements:

Traditional Pathway

All three criteria (newness, cost, SCI) must be independently demonstrated. This is the standard route for most medical devices and technologies.

Alternative Pathway for Breakthrough Devices

Devices that obtain FDA Breakthrough Device designation and subsequent marketing authorization need only demonstrate the cost criterion. CMS assumes that the Breakthrough Device designation process already establishes that the product meets the newness and substantial clinical improvement criteria.

This alternative pathway was created in the FY 2020 IPPS Final Rule and expanded in FY 2021. It has been significantly easier for qualifying products because the majority of products that fail to meet NTAP criteria fail on the SCI standard.

Alternative Pathway for QIDP and LPAD Products

Drugs that obtain Qualified Infectious Disease Product (QIDP) designation from FDA, and products approved under the Limited Population Approval Pathway (LPAD), need only demonstrate the cost criterion. These products also receive an enhanced payment rate of 75% (rather than the standard 65%).

Pathway Comparison

Requirement	Traditional	Alternative (BTD)	Alternative (QIDP/LPAD)
FDA marketing authorization or active application	Yes	Yes	Yes
Within newness period	Yes	Yes	Yes
Must demonstrate not substantially similar	Yes	No	No
Must demonstrate cost criterion	Yes	Yes	Yes
Must demonstrate SCI	Yes	No	No
Payment rate	65%	65%	75%

The NTAP Application Timeline: FY 2027 Cycle

NTAP operates on an annual cycle aligned with the federal fiscal year (October 1 – September 30). Applications for a given fiscal year are due the October before that fiscal year begins. Below is the FY 2027 cycle timeline, based on published CMS deadlines:

August 2025

MEARIS application portal opens (opened August 11, 2025 for FY 2027)
Begin preparing the NTAP application, including cost data, clinical evidence, and FDA authorization documentation

October 6, 2025 (5:00 p.m. ET)

NTAP application submission deadline
Applications must be submitted electronically through CMS's Medicare Electronic Application Request Information System (MEARIS)
Only MEARIS submissions are accepted — no paper or email applications

October–November 2025

Prepare for the New Technology Town Hall presentation
Develop ICD-10-PCS code request if needed for the technology

November 3, 2025 (5:00 p.m. ET)

Presenter registration deadline for Town Hall

November 13, 2025

Presentation submission deadline for registered Town Hall presenters

December 10, 2025

New Technology Town Hall meeting — public meeting where applicants present on the SCI criterion
CMS evaluates whether technologies demonstrate substantial clinical improvement

December 15, 2025 (5:00 p.m. ET)

Supplemental information deadline — any additional information for the NTAP application must be received by this date for guaranteed inclusion in the IPPS proposed rule
SCI comments deadline following the Town Hall

December 2025 – March 2026

Submit ICD-10-PCS code request
Develop ICD-10-PCS presentation for the Coordination and Maintenance Committee

March 2026

Present at ICD-10 Coordination and Maintenance Committee meeting

April 2026

IPPS Proposed Rule released — contains summary of NTAP applications and discussion of CMS concerns
NTAP application summaries posted publicly on MEARIS
Public comment period opens

May 1, 2026

FDA marketing authorization deadline — applicants must have FDA marketing authorization by this date to be eligible for FY 2027 NTAP

June 2026

Public comment deadline on the IPPS proposed rule (June 9, 2026 for FY 2027)
Submit comment letters addressing any CMS concerns about the application

August 2026

IPPS Final Rule released — CMS announces which technologies receive NTAP designation

October 1, 2026

NTAP effective date (start of FY 2027) — hospitals begin receiving add-on payments for qualifying technologies

FDA Authorization Requirements

Applicants must meet specific FDA authorization timing requirements:

For all pathways: The applicant must either:

Already have FDA marketing authorization at the time of NTAP application submission, OR
Have submitted a complete and active FDA marketing authorization request by the NTAP submission deadline

Additionally, FDA marketing authorization must be obtained by May 1 of the fiscal year for which NTAP is being sought (May 1, 2026 for FY 2027).

For QIDP and LPAD products: FDA marketing authorization must be received before July 1 of the fiscal year for which the application is being considered.

Building a Successful NTAP Application

Documentation Requirements

A comprehensive NTAP application should include:

Technology description: Detailed description of the device, its mechanism of action, and how it differs from existing technologies
FDA authorization documentation: Evidence of FDA marketing authorization or documentation of a submitted and active FDA application
Cost data: Detailed cost analysis demonstrating that the MS-DRG payment is inadequate, including per-case device cost, associated procedure costs, and comparison to DRG payment rates
Clinical evidence package: Peer-reviewed publications, clinical trial data, and any real-world evidence demonstrating clinical improvement
Substantial clinical improvement analysis: Structured comparison to existing technologies across all SCI dimensions (mortality, complications, healthcare utilization, functional outcomes, clinical management changes)
Newness argumentation: Analysis distinguishing the technology from existing products on the market, addressing mechanism of action, DRG assignment, and patient population
ICD-10-PCS coding: Proposed ICD-10-PCS codes or existing codes that would be used to identify the technology in claims data

Common Reasons for NTAP Denial

Based on historical CMS decisions, the most common reasons for NTAP denial include:

Failure to demonstrate SCI: The most common failure point. Applicants provide insufficient clinical evidence to show that their technology substantially improves outcomes compared to existing alternatives
Substantial similarity: CMS determines the technology is too similar to an existing product already on the market
Inadequate cost data: The applicant fails to demonstrate that the DRG payment is truly inadequate
Missing FDA authorization: The product does not obtain FDA marketing authorization by the May 1 deadline
Incomplete application: Required documentation or data is missing from the submission

Strategic Considerations for Medical Device Manufacturers

Align clinical programs with NTAP evidence requirements early. CMS's SCI evaluation asks different questions than FDA's safety and efficacy review. Clinical trial protocols should be designed to generate data that addresses both agencies' requirements — not just FDA endpoints.

Engage CMS before applying. CMS encourages informal contact prior to formal NCD and NTAP submissions. Early engagement helps manufacturers understand evidentiary expectations and identify potential concerns before the formal review begins.

Leverage Breakthrough Device designation. If your device qualifies for FDA's Breakthrough Device Program, the alternative NTAP pathway eliminates the SCI and newness demonstration requirements. This significantly streamlines the application.

Prepare for the Town Hall. The annual New Technology Town Hall meeting is the primary public forum for presenting SCI evidence. Prepare a clear, concise presentation focused on comparative clinical outcomes.

Plan for ICD-10-PCS coding. Without appropriate procedure codes, hospitals cannot bill for NTAP-designated technologies. Ensure ICD-10-PCS code requests are submitted on schedule through the Coordination and Maintenance Committee.

Proposed Policy Changes: Elimination of Alternative Pathways

The FY 2027 IPPS proposed rule (released April 2026) includes a significant proposed change: CMS proposes to eliminate alternative NTAP pathways beginning with FY 2028 applications, including the pathway tied to FDA Breakthrough Device designation.

What Would Change

If finalized:

All NTAP applicants would need to independently demonstrate all three criteria (newness, cost, and SCI) under the traditional pathway
FDA Breakthrough Device designation alone would no longer serve as a proxy for newness and SCI
The change would apply to NTAP applications received for the FY 2028 cycle and beyond
FY 2027 applications already submitted under the alternative pathway would continue to be reviewed under the rules in effect when submitted

CMS's Rationale

CMS cites concerns about:

Insufficient evaluation of the substantial clinical improvement criterion under alternative pathways
Overreliance on expedited pathways that may not adequately assess clinical value
The need to refocus NTAP on its core premise: add-on payment should be reserved for technologies that can independently demonstrate substantial clinical improvement through evidence

Impact on Device Manufacturers

For companies with FY 2028 and later NTAP plans:

Reassess evidence strategy: Build CMS-specific clinical evidence packages demonstrating SCI, not just FDA endpoints
Align clinical programs with CMS's questions: Design studies to answer CMS's comparative effectiveness questions, not just FDA's safety and efficacy endpoints
Reassess newness and similarity assumptions: A technology may lose newness if substantially similar to existing products, regardless of FDA clearance status
Watch the rulemaking calendar: The proposal will be finalized in the August 2026 IPPS Final Rule. If not finalized, CMS indicates it will continue reviewing applications under existing alternative pathways

OPPS Device Pass-Through Changes

For outpatient device pass-through payments, CMS proposes that applications submitted on or after October 1, 2026 must demonstrate substantial clinical improvement. Applications submitted before that date for FDA-designated Breakthrough Devices with marketing authorization would remain eligible under the alternative pathway, and existing device category codes would continue for their standard two- to three-year duration.

NTAP and the Broader Reimbursement Landscape

NTAP does not operate in isolation. It is one component of a broader reimbursement strategy that includes:

NTAP + Coding

ICD-10-PCS codes must be in place for hospitals to identify NTAP-eligible cases
New CPT/HCPCS codes may be needed for outpatient settings
Category III CPT codes can serve as an interim mechanism while permanent codes are developed

NTAP + Coverage

NCD or LCD coverage must exist (or the absence of a non-coverage determination must allow coverage)
Coverage with Evidence Development (CED) may run alongside NTAP
The new RAPID coverage pathway for Breakthrough Devices may accelerate NCD issuance, but NTAP remains necessary for adequate inpatient payment

NTAP + Health Economics

Cost-effectiveness data strengthens both the NTAP cost criterion and broader market access arguments
Budget impact analyses help CMS assess the program-wide implications of NTAP designation
Real-world cost data from the initial NTAP period supports the case for continued adequate payment after NTAP expires

Practical Timeline for Device Manufacturers

18–24 months before anticipated FDA authorization:

Assess NTAP eligibility (newness, cost, SCI criteria)
Determine whether to pursue traditional or alternative pathway
Begin developing the clinical evidence package
Engage CMS informally to understand expectations

12–18 months before authorization:

Prepare the NTAP application, including cost analysis
Identify relevant ICD-10-PCS codes and prepare code requests
Engage specialty societies for support letters

6–12 months before authorization (October deadline):

Submit NTAP application through MEARIS
Register for Town Hall presentation
Submit ICD-10-PCS code request to Coordination and Maintenance Committee

Around FDA authorization:

Present at Town Hall meeting
Submit supplemental information to CMS
Submit public comments on the IPPS proposed rule
Obtain FDA marketing authorization by May 1 deadline

Post-NTAP designation:

Train hospital customers on NTAP billing requirements — ensure the correct NTAP ICD-10-PCS code appears on every claim, as NTAP is only issued if the code is on the claim
Coordinate with hospital supply chain, charge master coordinators, HIM coding professionals, and pharmacy to ensure NTAP-eligible technologies are properly identified
Set up EHR alerts to notify coding professionals when NTAP devices or drugs are used
Monitor claims data to ensure NTAP payments are being captured — work with case management and clinical documentation improvement (CDI) teams to flag eligible claims
Prepare for the three-year NTAP sunset by working toward adequate DRG reassignment
Collect real-world evidence to support long-term payment adequacy