None of the companies that requested a Medicare new-technology add-on payment for fiscal 2012 will receive one, according to the final inpatient prospective payment system rule released by CMS Aug. 1.

This marks only the second year since the program began a decade ago that the agency has not awarded any new add-on payments for new technologies. The first time was in the fiscal 2008 final rule. (See “ Also In The FY 2008 Inpatient Rule ” – “The Gray Sheet” Aug. 6, 2007.)

Products Qualifying, FY 2003-2012

Since the program's start, these products have met CMS requirements for new-tech add-on payments:

Xigris medication from Eli Lilly & Co. to treat severe sepsis (2003-2004)
InFuse bone graft from Medtronic for spinal fusion (2004-2005)
Kinetra implantable neurostimulator from Medtronic to treat essential tremor and Parkinson’s disease (2005-2006)
InSync cardiac resynchronization therapy with defibrillation from Medtronic to treat chronic, moderate-to-severe heart failure (2005)
Tag endovascular graft from W.L. Gore for repair of the thoracic aorta (2006-2007)
Restore rechargeable implantable neurostimulator from Medtronic to treat chronic intractable pain (2006-2007)
X STOP interspinous process decompression system from St. Francis Medical to treat back and leg pain due to lumbar spinal stenosis (2007)
Cardiowest Temporary Artificial Heart System from SynCardia Systems to support patients awaiting heart transplant (2009-2010)
IBV Valve System from Spiration to treat prolonged respiratory air leaks (2010)
AutoLITT Auto Laser Interstitial Thermal Therapy system from Monteris Medical to treat malignant brain tumors (2011-2012)

The agency created the new-tech add-on payment program in 2001 as a way to support advanced medical technologies as they are first introduced to the market and before enough patient data has been collected for their costs to be weighted in the MS-DRG payment system.

Last November, three firms applied for the add-on payments: CardioMems for its Champion hemodynamic monitoring system; TranS1 for its AxiaLIF 2L+ spinal fixation system; and UMF Corporation for its PerfectCLEAN with Micrillon antimicrobial wipe. (See “ At CMS Town Hall, Firms Pitch New Tech’s Impact On Reducing Hospital Stays ” – “The Gray Sheet” Feb. 7, 2011.)

CardioMEMS Inc. withdrew its application following publication of the IPPS proposal this spring because the company believed it would not meet the July 1 deadline to receive FDA approval for the device, CMS said. (See “ Device Payments Mostly Steady In Medicare Inpatient Proposal ” – “The Gray Sheet” April 25, 2011.)

CMS requires that a technology obtain FDA approval or clearance by July 1 to qualify for add-on payments in the following fiscal year.

In its April 19 IPPS proposal, CMS expressed concerns that the AxiaLIF 2L+ may be too similar to other TranS1 devices to meet the agency’s substantial clinical improvement requirements. The agency also questioned the company’s methodology for demonstrating whether it met the program’s cost criterion. Because CMS did not receive comments addressing those concerns, it finalized its proposal to deny the add-on payment for the product.

FDA Registration Vs. Approval

PerfectCLEAN has not received 510(k) clearance or PMA approval from FDA and as such is not eligible for the new-tech add-on payment program, CMS noted.

According to the Medicare agency, UMF believes that PerfectCLEAN is not subject to FDA pre-market review, but told CMS it was registering and listing its product with FDA and expected to complete the process in time to meet CMS' July 1 deadline.

However, since registration would not result in a 510(k) or PMA, CMS noted, the PerfectCLEAN product would not be eligible for a Medicare new-tech add-on payment.

CMS said, however, that it will consider whether it would be appropriate for a product that is registered and listed with FDA to be eligible for the add-on payments.

“If we conclude that such products should be eligible for new technology add-on payments in the future, we will propose changes to our regulations in future rulemaking,” CMS wrote.

Earlier Awardees No Longer Considered New

In addition, the Medicare agency will discontinue add-on payments Oct. 1, the start of fiscal 2012 under the inpatient payment system, for two devices no longer considered new: the Spiration IBV Valve System to control air leaks following lung surgery and the CardioWest Temporary Total Heart System from SynCardia Systems.

Under the new-tech add-on payment program, a medical technology may be considered new for a period of two to three years, typically starting on the date a device receives FDA approval or clearance, although other criteria are sometimes used to designate the start date.

CMS will continue to offer inpatient hospitals new-tech add-on payments in fiscal 2012 for the Auto Laser Interstitial Thermal Therapy system ( AutoLITT) from Monteris Medical at a maximum add-on of $5,300 per case. The minimally invasive MRI-guided laser-tipped catheter, designed to destroy malignant brain tumors, began receiving new-tech add-on payments in fiscal 2011. (“See “ CMS Awards Monteris Add-On Payment For Tumor Ablation Catheter ” – “The Gray Sheet” Aug. 9, 2010.)

CMS will open an application period for the fiscal 2013 new-tech add-on payments later this year.

Trade Group Asks For Program Revamp

The fact that no new payments were awarded in 2012 is likely to further feed long-held frustrations in the device industry with the new-tech add-on payment program.

In a June 20 letter to CMS Administrator Donald Berwick, device group AdvaMed seeks improvements to the program.

AdvaMed observes that CMS has approved only eight applications for new-tech add-on payments since 2005.

AdvaMed wants CMS to lower the current cost threshold required to trigger an add-on payment; increase the amount of add-on payments to cover a larger share of the estimated new-technology costs; allow major incremental improvements in technology to meet the newness criteria; and consider a broader range of evidence when assessing substantial clinical improvement over older technology.

“By our calculations, CMS has approved only eight applications for new-tech add-on payments since 2005,” AdvaMed wrote. “It is critical for CMS to maintain and improve incentives for hospitals and other providers to provide beneficiary access to innovative technologies.”

In general, the 2012 rule contains no major payment swings either up or down for the major procedure categories that involve implantable devices. On average, the rule will increase inpatient payments to acute care hospitals by 1.1% next fiscal year, which is up from the 0.55% reduction that CMS had floated in its proposed rule.

By Monica Hogan

Denied! CMS Grants No New Inpatient New-Technology Add-On Payments For 2012

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