What CMS's Proposed NTAP Change Means for Your Breakthrough Device Strategy

Tonya Dowd and Jessica Holmes' Strategic Reimbursement Perspective:

The Medicare Inpatient Prospective Payment System (IPPS) reimburses hospitals through fixed, bundled payments per discharge based on Diagnosis-Related Groups (DRGs), which often lag in accounting for new technology costs. To bridge this gap, CMS established programs like New Technology Add-on Payment (NTAP) and Transitional Pass-through (TPT), offering temporary incremental reimbursement for technologies that meet criteria for newness, cost, and substantial clinical improvement (SCI).

In recent years, FDA-designated Breakthrough Devices benefited from an alternative pathway that presumed they met the SCI requirement, easing access to NTAP. However, in the FY 2027 IPPS Proposed Rule, CMS proposes to eliminate this presumption, requiring all technologies to independently demonstrate meaningful clinical improvement—signaling a stronger emphasis on robust, outcomes-based evidence.

CMS May Eliminate the “Breakthrough Shortcut” for NTAP 

In the FY 2027 IPPS Proposed Rule released on April 10, 2026, CMS proposes to repeal the alternative pathway that has helped certain FDA-designated Breakthrough Devices attain New Technology Add-on Payment (NTAP) for inpatient services and outpatient services under Transitional Pass Through Payment (TPT), without meeting the substantial clinical improvement hurdle.

Why this matters: If finalized, Breakthrough Designation may still open doors with FDA, but it may no longer open the same doors for Medicare incremental payment. For companies preparing for NTAP or TPT, this is a wake-up call to strengthen evidence, reimbursement strategy, and policy engagement early on.

The filing cut-off date for 2027 NTAP eligibility is May 1, 2026. The operative date for TPT in 2027 is September 30, 2026. Thereafter, under the existing proposal, all Breakthrough Designation applications will need to demonstrate that a technology is new, costly, and supported by evidence showing a substantial clinical improvement over existing options.

This is still only a proposal, which means there is time to weigh in. If this change could affect your technology, your launch strategy, or patient access, public comments may be submitted to CMS by 5:00 pm EDT on June 9, 2026 -- See the proposed rule and submit comments here.

From Sam Murray's Regulatory Perspective:  Focus on TAP, not NTAP, for long-term strategy

Most of the early reaction to CMS’s proposed NTAP change has, understandably, focused on reimbursement. If finalized, Breakthrough designation may no longer provide the same shortcut into NTAP or TPT. That matters, however, from our regulatory perspective, it does not change the bigger picture nearly as much as some people may think. Breakthrough was never valuable only because of NTAP.

Breakthrough still does a few important things very well. First, it gives a company meaningful third-party validation. While not a marketing authorization, it is the FDA agreeing that the product shows enough technical and clinical promise (“success”) to warrant the designation. That matters, especially for emerging companies trying to raise capital, build credibility, or show that their story is more than just an internal belief.

Second, it gives sponsors more access to FDA. Sprint discussions and related program features can help companies get targeted feedback earlier and avoid wasting time and money going too far down the wrong path. That is not just a speed benefit - it is a capital efficiency benefit.

Third, and maybe most important going forward, Breakthrough can open the door to TAP. That is where the long-term strategic value may now sit. TAP gives companies earlier opportunities to hear from payers and other stakeholders about the evidence they actually want to see. It can shape study design, evidence planning, and even fundraising strategy in a much more practical way than waiting until after launch to find out what the market will require.

NTAP was always helpful, but it was never permanent. TAP may actually prove to be the more important advantage.

So our view is pretty simple: Breakthrough is still a high-reward, relatively low-risk strategic tool. What may change under this proposal is not whether companies should pursue it, but how they should think about its value -- less as a reimbursement shortcut, and more as a way to validate their story early, get closer to FDA, and build a smarter evidence plan for the path ahead.

For more information on the proposed NTAP change, please reach out to our team: CONTACT US