CMS Proposes Ending “Fast-Track” NTAP Pathways for Breakthrough Devices

By Jake Leys

The Centers for Medicare & Medicaid Services’ (CMS) FY 2027 Inpatient Prospective Payment System (IPPS) Proposed Rule is framed as a hospital payment update, but for many FDA-regulated companies, its real significance is that it would eliminate the fast-track New Technology Add-On Payment (NTAP) alternative pathways that have helped bridge the gap between FDA authorization and early hospital adoption. Although the proposal would not eliminate NTAP altogether, it would remove a widely used pathway for securing additional Medicare reimbursement during the early commercialization period. More broadly, the proposal signals that CMS is shifting toward a tighter, more evidence-driven approach to paying for “new” technologies, especially those that previously benefited from Breakthrough-linked NTAP shortcuts. For companies whose technologies depend on adequate inpatient payment to gain traction, that change could materially affect launch planning, evidence strategy, and adoption assumptions.

Companies that have relied on Breakthrough-linked NTAP access should reassess their evidence, reimbursement, and commercialization strategies now.

NTAP Framework and Proposed Policy Shift

While FDA authorization gets you to market, it does not ensure that hospitals will be adequately reimbursed to use your product. NTAP is one of CMS’s main levers for helping bridge the gap between FDA authorization and adequate inpatient payment for qualifying new technologies. If the applicable Medicare Severity Diagnosis-Related Group (MS-DRG) payment does not cover the added cost of a new technology, hospitals may be slow to adopt it regardless of its clinical efficacy. Under the traditional NTAP pathway, CMS requires applicants to demonstrate three elements: (1) newness, (2) cost, and (3) substantial clinical improvement (SCI) relative to existing technologies, as set forth in 42 CFR § 412.87.

CMS has also established alternative NTAP pathways, including one tied to FDA Breakthrough Device designation. Under those pathways, certain technologies, including Breakthrough Devices, may satisfy the SCI requirement without making the same showing required under the traditional pathways, thereby reducing the evidentiary burden.

CMS’s streamlined NTAP pathways are not limited to devices. They also apply to certain qualifying anti-infective drugs and products. If CMS finalizes the proposed rollback, the effect would extend beyond Breakthrough Devices to other alternative NTAP pathways, although recent NTAP cycles have been dominated by Breakthrough Device applications.

The FY 2027 IPPS proposed rule would eliminate alternative NTAP pathways beginning with FY 2028 applications, including the pathway tied to FDA Breakthrough Device designation. Companies currently planning NTAP submissions should reassess their timelines, evidence strategy, and reimbursement assumptions immediately. CMS is seeking to refocus NTAP on its core premise: add-on payment should be reserved for technologies that can demonstrate “substantial clinical improvement” through evidence. CMS cites concerns about insufficient evaluation of clinical improvement and overreliance on expedited pathways as part of its rationale.

What This Proposed Rule Changes, and What It Does Not

Although the FY 2027 IPPS proposed rule would eliminate the fast-track NTAP alternative pathways, it would not dismantle NTAP altogether. Traditional NTAP would remain in place, and the proposal would affect reimbursement eligibility, not FDA regulatory status. In practical terms, the proposal would do the following:

1. It would not change FDA programs: Breakthrough Device designation remains unchanged. 

2. It would change reimbursement strategy: The proposal would remove the NTAP advantage tied to Breakthrough status. 

3. It would change NTAP access, but not FDA status: The impact is on Medicare payment eligibility, not regulatory designation.

Why This Matters for FDA-Regulated Companies

Even if you never bill a hospital claim, hospital payment policy can determine whether your technology is adopted, coded appropriately, and financially viable during the early launch period. NTAP is intended to address situations in which the MSDRG payment may be inadequate for cases involving a new technology. For manufacturers, that creates a practical gating issue: If hospitals expect to lose money on cases where your product is used, utilization may be harder to drive regardless of how clinically compelling the technology is. NTAP can reduce that early financial friction while coding and DRG payment structures evolve.

CMS’s NTAP guidance is explicit about what factors it considers in evaluating SCI, including improved outcomes, earlier diagnosis that changes management, and options for patients unresponsive/ineligible for existing treatments. If CMS removes Breakthrough-linked shortcuts for NTAP applications, manufacturers should anticipate:

• More demanding evidence expectations, as applicants would need to establish SCI without relying on an alternative pathway.
• Less predictability around whether early inpatient utilization will be supported by addon payment.
• Earlier and more deliberate planning around clinical endpoints, comparators, and the Medicare-relevant value story needed to satisfy a traditional NTAP analysis.
• Reduced strategic value of Breakthrough designation as a reimbursement lever, even as it remains important for FDA engagement. 
• Potential delays in clinical adoption, particularly for higher-cost technologies that may be harder for hospitals to absorb without NTAP support.

Deadline for Comments

The deadline for comments on the proposed rule is June 9, 2026, at 5:00 p.m. EDT. Stakeholders should consider whether to submit comments, particularly if the proposed changes could materially affect development timelines, evidence strategy, or commercialization assumptions.

What To Do Now

1) If you are a Breakthrough Device company, reassess your NTAP strategy on the assumption that the alternative pathways will no longer be available.   

Plan for a scenario in which you will need to independently demonstrate SCI under the traditional pathway for future cycles, and evaluate whether your existing evidence package cleanly supports the SCI factors CMS describes.

2) Align your evidence development with Medicare’s questions, not just FDA’s. 

CMS’s SCI framework is explicitly comparative, asking whether a technology offers substantial clinical improvement “relative to technologies previously available,” with particular attention to outcomes and changes in clinical management.

3) Reassess “newness” and “substantial similarity” assumptions.

CMS explains that a technology loses newness if it is considered substantially similar to existing technologies, regardless of whether the product has new FDA clearance or approval. CMS identifies the criteria it uses in that analysis, including mechanism of action, MS-DRG assignment, and disease or patient population.

4) Watch the key NTAP gating dates.

CMS’s NTAP guidance also notes that technologies under review must receive FDA marketing authorization by specified deadlines to remain eligible for discussion in the final rule. Because NTAP eligibility can be sensitive to timing, regulatory and reimbursement timelines should be managed together.

5) Reevaluate the role of Breakthrough designation in your overall strategy.

Breakthrough may remain valuable for FDA engagement, but its direct reimbursement value may diminish if the alternative NTAP pathways are eliminated.

How Gardner Law Can Help

Gardner Law advises FDA-regulated companies on the regulatory, reimbursement, and commercialization issues that can shape product adoption after authorization. We help clients assess how evolving CMS policy may affect evidence strategy, launch planning, payment assumptions, and early adoption risk. Our regulatory team also brings a strong understanding of the underlying science, which helps us translate complex clinical and technical issues into practical legal and strategic advice.