September 14, 2001

CMS Finalizes Rule On Extra Payments for New Technologies

The Centers for Medicare and Medicaid Services (CMS) Sept. 7 published the methodology [66 Federal Register 46902]that it will use to identify and pay for expensive new technologies under the Medicare inpatient prospective payment system (PPS). The regulation was mandated by the Medicare, Medicaid, and SCHIP Benefits Improvement Act of 2000 (BIPA) and was originally proposed on May 4, 2001. While the methodology has been finalized, no additional payments will be made until federal fiscal year 2002. This regulation follows the pattern in the Medicare outpatient PPS system to make additional payments for new technologies.

Under the regulations, a special payment will be made for a new technology that "represents an advance in medical technology that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries." The payment will be 50 percent of the amount by which the costs of a case that involves the new technology exceeds the comparable per case payment, up to 50 percent of the costs of the new technology. CMS has set a target limit on these payments to be one percent of projected total inpatient PPS payments. The one percent amount will be financed by a reduction to the base standardized amount for all inpatient cases. If the special payments are estimated to be higher than this amount, they will be reduced prospectively to ensure the target is not exceeded.

Information: Karen Fisher, AAMC Division of Health Care Affairs, 202-862-6140.