[Code of Federal Regulations]
[Title 42, Volume 2]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR412.87]

[Page 409-410]
 
                         TITLE 42--PUBLIC HEALTH
 
                             HUMAN SERVICES
 
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL SERVICES--Table of Contents
 
 Subpart F--Payment for Outlier Cases and Special Treatment Payment for 
                             New Technology
 
Sec. 412.87  Additional payment for new medical services and technologies: General provisions.

    (a) Basis. Sections 412.87 and 412.88 implement sections 
1886(d)(5)(K) and 1886(d)(5)(L) of the Act, which authorize the 
Secretary to establish a mechanism to recognize the costs of new medical 
services and technologies under the hospital inpatient prospective 
payment system.
    (b) Eligibility criteria. For discharges occurring on or after 
October 1, 2001, CMS provides for additional payments (as specified in 
Sec. 412.88) beyond the standard DRG payments and outlier payments to a 
hospital for discharges involving covered inpatient hospital services 
that are new medical services and technologies, if the following 
conditions are met:
    (1) A new medical service or technology represents an advance that 
substantially improves, relative to technologies previously available, 
the diagnosis or treatment of Medicare beneficiaries. CMS will determine 
whether a new medical service or technology meets this requirement and 
announce the results of its determinations in the Federal Register as a 
part of its annual updates and changes to the hospital inpatient 
prospective payment system.
    (2) A medical service or technology may be considered new within 2 
or 3 years after the point at which data begin to become available 
reflecting the ICD-9-CM code assigned to the new service or technology 
(depending on when a new code is assigned and data on the new service or 
technology become available for DRG recalibration). After CMS has 
recalibrated the DRGs, based on available data, to reflect the costs of 
an otherwise new medical service or technology, the medical service or 
technology will no longer be considered ``new'' under the criterion of 
this section.

[[Page 410]]

    (3) The DRG prospective payment rate otherwise applicable to 
discharges involving the medical service or technology is determined to 
be inadequate, based on application of a threshold amount to estimated 
charges incurred with respect to such discharges. To determine whether 
the payment would be adequate, CMS will determine whether the charges of 
the cases involving a new medical service or technology will exceed a 
threshold amount set at one standard deviation beyond the geometric mean 
standardized charge for all cases in the DRG to which the new medical 
service or technology is assigned (or the case-weighted average of all 
relevant DRGs if the new medical service or technology occurs in many 
different DRGs). Standardized charges reflect the actual charges of a 
case adjusted by the prospective payment system payment factors 
applicable to an individual hospital, such as the wage index, the 
indirect medical education adjustment factor, and the disproportionate 
share adjustment factor.

[66 FR 46924, Sept. 7, 2001]