CMS has eliminated the pathway that allowed medical devicemakers to use FDA Breakthrough Device status to qualify for Medicare’s New Technology Add-on Payment program.
And according to Jeffrey Zigler, SI-Bone’s senior vice president of market access and reimbursement, that development is directly responsible for a separate change: new Medicare severity diagnosis-related groups, or MS-DRGs, covering complex spinal fusion cases.
“If you follow the bouncing ball, it starts with this breakthrough [designation],” Mr. Zigler said.
The pathway that was eliminated
CMS created the alternative NTAP pathway to give hospitals extra Medicare payments for using new technologies without requiring evidence of substantial clinical improvement, as required under the standard pathway. The improvement standard can be difficult for spine and orthopedic devices to meet because many devices in those categories reach the market through the 510(k) clearance pathway.
The gap between the two NTAP pathways shows up in CMS’ application data. In fiscal 2020 — the last year before the alternative pathway took effect, CMS received 18 NTAP applications. By fiscal 2027, that had grown to 47 applications.
CMS’ fiscal 2027 final rule eliminates the alternative pathway for NTAP applications beginning in fiscal 2028.
“The bar is too high right now for the standard NTAP,” Mr. Zigler said, adding that a company without European trial data “would never” get a standard NTAP application through CMS without the fast-track pathway.
How SI-Bone used the pathway while it was active
SI-Bone’s Granite pelvic fixation screw received FDA Breakthrough Device designation, and hospitals received an add-on payment for using it during Granite’s three-year NTAP window.
Hospitals report their costs to CMS as part of routine billing, and Mr. Zigler said SI-Bone compiled claims data showing Granite was used more often in complex cases that carried meaningfully higher costs.
SI-Bone took its Granite case data to CMS, and Carlsmed did the same with case data from its own NTAP breakthrough device. CMS subsequently created new MS-DRGs separating high-cost, high-complexity spinal fusion cases from the broader DRG categories into which they previously fell. Mr. Zigler argued that slower hospital adoption without the add-on payment would have meant a smaller, slower accumulation of claims data. Without that data, he said, SI-Bone would not have had a case to bring to CMS.
“We would have probably come out with that screw anyway, but would hospitals have adopted it as fast? Maybe not,” Mr. Zigler said. “And then Medicare wouldn’t have enough data.”
The change does not increase Medicare’s overall spending, but instead separates complex cases into a new category. Moving these higher-paying, complex cases into a new MS-DRG means the old classification sees payment reductions because its highest-cost cases have moved out, according to Zigler.
Mr. Zigler said removing the alternative pathway also removes an adoption incentive for devices that might not “cure polio” but represent “iterative, important updates” that advance patient care and healthcare in a different way.
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