---
kind: "section"
citation: "42 C.F.R. § 412.88"
title: "42"
number: "412.88"
heading: "Additional payment for new medical service or technology."
url: "https://uscodex.org/cfr/42/412.88"
---

# §412.88. Additional payment for new medical service or technology.

- (a) For discharges involving new medical services or technologies that meet the criteria specified in [§ 412.87](/cfr/42/412.87.md), Medicare payment will be:
  - (1) **One of the following—**
    - (i) The full DRG payment (including adjustments for indirect medical education and disproportionate share but excluding outlier payments);
    - (ii) The payment determined under [§ 412.4(f)](/cfr/42/412.4.md?p=f) for transfer cases;
    - (iii) The payment determined under [§ 412.92(d)](/cfr/42/412.92.md?p=d) for sole community hospitals; or
    - (iv) The payment determined under [§ 412.108(c)](/cfr/42/412.108.md?p=c) for Medicare-dependent hospitals; plus
  - (2)
    - (i) **For discharges occurring before October 1, 2019.** If the costs of the discharge (determined by applying the operating cost-to-charge ratios as described in [§ 412.84(h)](/cfr/42/412.84.md?p=h)) exceed the full DRG payment, an additional amount equal to the lesser of—
      - (A) 50 percent of the costs of the new medical service or technology; or
      - (B) 50 percent of the amount by which the costs of the case exceed the standard DRG payment.
    - (ii) **For discharges occurring on or after October 1, 2019.**
      - (A) Except as provided under [paragraph (a)(2)(ii)(B)](#a-2-ii-B) of this section, if the costs of the discharge (determined by applying the operating cost-to-charge ratios as described in [§ 412.84(h)](/cfr/42/412.84.md?p=h)) exceed the full DRG payment, an additional amount equal to the lesser of—

        (1) 65 percent of the costs of the new medical service or technology; or

        (2) 65 percent of the amount by which the costs of the case exceed the standard DRG payment.

      - (B) For a medical product designated by FDA as a Qualified Infectious Disease Product or, for discharges occurring on or after October 1, 2020, for a product approved under FDA's Limited Population Pathway for Antibacterial and Antifungal Drugs, if the costs of the discharge (determined by applying the operating cost-to-charge ratios as described in [§ 412.84(h)](/cfr/42/412.84.md?p=h)) exceed the full DRG payment, an additional amount equal to the lesser of—

        (1) 75 percent of the costs of the new medical service or technology; or

        (2) 75 percent of the amount by which the costs of the case exceed the standard DRG payment.

      - (C) For a medical product that is a gene therapy that is indicated and used specifically for the treatment of sickle cell disease and approved for new technology add-on payments in the FY 2025 IPPS/LTCH PPS final rule, for discharges occurring on or after October 1, 2024, if the costs of the discharge (determined by applying the operating cost-to-charge ratios as described in [§ 412.84(h)](/cfr/42/412.84.md?p=h)) exceed the full DRG payment, an additional amount equal to the lesser of—

        (1) 75 percent of the costs of the new medical service or technology; or

        (2) 75 percent of the amount by which the costs of the case exceed the standard DRG payment.

- (b)
  - (1) **For discharges occurring before October 1, 2019.** Unless a discharge case qualifies for outlier payment under [§ 412.84](/cfr/42/412.84.md), Medicare will not pay any additional amount beyond the DRG payment plus 50 percent of the estimated costs of the new medical service or technology.
  - (2) **For discharges occurring on or after October 1, 2019.** Unless a discharge case qualifies for outlier payment under [§ 412.84](/cfr/42/412.84.md), Medicare will not pay any additional amount beyond the DRG payment plus—
    - (i) 65 percent of the estimated costs of the new medical service or technology;
    - (ii) For a medical product designated by FDA as a Qualified Infectious Disease Product, 75 percent of the estimated costs of the new medical service or technology; or
    - (iii) For discharges occurring on or after October 1, 2020, for a product approved under FDA's Limited Population Pathway for Antibacterial and Antifungal Drugs, 75 percent of the estimated costs of the new medical service or technology.
    - (iv) For discharges occurring on or after October 1, 2024, for a medical product that is a gene therapy that is indicated and used specifically for the treatment of sickle cell disease and approved for new technology add-on payments in the FY 2025 IPPS/LTCH PPS final rule, 75 percent of the estimated costs of the new medical service or technology.

## Notes

### Amendments

[66 FR 46924, Sept. 7, 2001, as amended at 67 FR 50111, Aug. 1, 2002; 69 FR 49244, Aug. 11, 2004; 72 FR 47411, Aug. 22, 2007; 84 FR 42612, Aug. 16, 2019; 85 FR 59021, Sept. 18, 2020; 89 FR 69910, Aug. 28, 2024]

### Authority

Authority: 42 U.S.C. 1302 and 1395hh.

### Source

Source: 50 FR 12741, Mar. 29, 1985, unless otherwise noted.

### Amendments

[66 FR 46924, Sept. 7, 2001, as amended at 67 FR 50111, Aug. 1, 2002; 69 FR 49244, Aug. 11, 2004; 72 FR 47411, Aug. 22, 2007; 84 FR 42612, Aug. 16, 2019; 85 FR 59021, Sept. 18, 2020; 89 FR 69910, Aug. 28, 2024]