1. (a) For discharges involving new medical services or technologies that meet the criteria specified in § 412.87, Medicare payment will be:

   1. (1) One of the following:

      1. (i) The full DRG payment (including adjustments for indirect medical education and disproportionate share but excluding outlier payments);
      2. (ii) The payment determined under § 412.4(f) for transfer cases;
      3. (iii) The payment determined under § 412.92(d) for sole community hospitals; or
      4. (iv) The payment determined under § 412.108(c) for Medicare-dependent hospitals; plus

   2. (2)

      1. (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)) exceed the full DRG payment, an additional amount equal to the lesser of—

         1. (A) 50 percent of the costs of the new medical service or technology; or
         2. (B) 50 percent of the amount by which the costs of the case exceed the standard DRG payment.

      2. (ii) For discharges occurring on or after October 1, 2019.

         1. (A) Except as provided under paragraph (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)) 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.

         2. (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)) 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.

         3. (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)) 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.

2. (b)

   1. (1) For discharges occurring before October 1, 2019. Unless a discharge case qualifies for outlier payment under § 412.84, 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. (2) For discharges occurring on or after October 1, 2019. Unless a discharge case qualifies for outlier payment under § 412.84, Medicare will not pay any additional amount beyond the DRG payment plus—

      1. (i) 65 percent of the estimated costs of the new medical service or technology;
      2. (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
      3. (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.
      4. (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.

[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]