The Centers for Medicare & Medicaid Services (CMS), an agency within the Department of Health and Human Services (HHS), has initiated a critical phase in its process for evaluating innovative medical services and technologies. A virtual Town Hall meeting is set for December 9 and potentially December 10, 2026. This public forum is designed to gather stakeholder input on applications for Fiscal Year (FY) 2028 new technology add-on payments under the hospital Inpatient Prospective Payment System (IPPS). The central question for discussion will be whether these proposed technologies demonstrate "substantial clinical improvement," a statutory requirement that dictates their eligibility for enhanced Medicare reimbursement.
Background on New Technology Add-On Payments
The framework for these add-on payments was established by section 1886(d)(5)(K)(i) of the Social Security Act, effective for discharges beginning on or after October 1, 2001. This mechanism recognizes the costs associated with new medical services and technologies that otherwise might not be adequately reimbursed through the standard IPPS rates. The IPPS generally pays hospitals a fixed amount per patient discharge, based on the patient's diagnosis-related group (DRG). However, truly innovative technologies often incur higher costs not fully reflected in these DRG payments, potentially hindering patient access to breakthrough treatments. New technology add-on payments aim to bridge this gap, encouraging the adoption of valuable innovations.
Over the years, CMS has refined its criteria for these payments. Key updates were outlined in the FY 2012, FY 2020, FY 2021, and most recently, the FY 2027 IPPS/Long-Term Care Hospital Prospective Payment System (LTCH PPS) final rules. Notably, for applications submitted for FYs 2021 through 2029, certain technologies qualifying under alternative pathways for "transformative new devices" or "antimicrobial products" are exempt from the substantial clinical improvement requirement. This carve-out reflects a policy effort to expedite access to specific categories of innovations deemed critically important.
The "Substantial Clinical Improvement" Criterion
For technologies not falling under these alternative pathways, demonstrating "substantial clinical improvement" is paramount. CMS has codified its evaluation process in its regulations at 42 CFR 412.87. This criterion is not a singular checklist but rather a holistic assessment, considering the "totality of the circumstances." A technology is deemed to represent a substantial improvement if it meets one of several conditions:
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New Treatment Option: It offers a viable treatment for patients who are unresponsive to or ineligible for currently available therapies.
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Enhanced Diagnosis: It provides the ability to diagnose a medical condition that was previously undetectable, or enables earlier diagnosis in a way that directly impacts patient management.
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Significant Clinical Outcomes: It demonstrably improves clinical outcomes compared to existing services or technologies. This can be evidenced by several factors, including a reduction in clinically significant adverse events like mortality or complications, a decrease in subsequent diagnostic or therapeutic interventions, fewer future hospitalizations or physician visits, a more rapid resolution of the disease process (e.g., reduced length of stay or recovery time), an improvement in activities of daily living, an improved quality of life, or greater medication adherence.
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Overall Advancement: The totality of available information otherwise indicates a substantial improvement over previously available technologies.
CMS also specifies the types of evidence it considers for this evaluation. These include clinical trials, peer-reviewed journal articles, study results, meta-analyses, consensus statements, white papers, patient surveys, case studies, various reports, systematic literature reviews, letters from major healthcare associations, editorials, and public comments. The regulations acknowledge that a medical condition may have low prevalence among Medicare beneficiaries or that the improvement might apply to a specific subpopulation, reflecting a nuanced approach to innovation in specialized fields.
The Town Hall Meeting: Purpose and Format
The upcoming virtual Town Hall is a direct fulfillment of Section 1886(d)(5)(K)(viii) of the Social Security Act, which mandates public input before the publication of a proposed rule. This provision requires CMS to:
- Solicit public comments on whether a new service or technology represents a significant advance.
- Maintain a public list of pending applications.
- Accept data and recommendations from the public.
- Convene a meeting where stakeholders, including hospitals, physicians, and manufacturers, can present their perspectives to CMS clinical staff.
The meeting will feature registered presenters, each allotted 10 minutes to discuss whether a FY 2028 application meets the substantial clinical improvement criterion. This will be followed by a period for questions from CMS staff and other interested parties. The number of presentations will determine if a second day of meetings is necessary. The final schedule and details for accessing the virtual event will be posted on the CMS website. Following the meeting, written comments may be submitted for consideration in the FY 2028 IPPS/LTCH PPS proposed rule, with a deadline of December 14, 2026.
Implications for Healthcare Innovation and Patient Access
This Town Hall meeting represents a critical juncture for both innovators and beneficiaries. For manufacturers, it offers an opportunity to directly advocate for their technologies and demonstrate their value within the Medicare payment structure. For healthcare providers, it is a chance to weigh in on the clinical utility and impact of these innovations. Ultimately, the outcomes of this evaluation process will directly influence which new medical services and technologies receive critical add-on payments, thereby shaping their availability and adoption across the Medicare population. The process underscores CMS's commitment to balancing the adoption of beneficial innovations with its responsibility for fiscal stewardship and equitable healthcare delivery.
The public input mechanism is vital for ensuring transparency and incorporating diverse perspectives into CMS's decision-making. As the healthcare landscape continues to evolve with rapid advancements, the agency's criteria and evaluation processes for new technologies remain a focal point for all stakeholders invested in the future of medical care.
