Medicare plans to provide supplemental reimbursement to hospitals for patients treated on an outpatient basis with Medtronic’s (NYSE:MDT) new In.Pact Admiral drug-coated balloon for peripheral artery disease (PAD) in the upper leg.

Medtronic said that the new transitional pass-through payments will make it easier for Medicare patients to be treated with the device. The supplemental payment provision goes into effect April 1 and will last up to three years.

The U.S. Centers for Medicare and Medicaid Services (CMS) is also evaluating whether to provide supplemental payments for inpatient use. A decision is expected this summer.

Medtronic’s In.Pact Admiral drug-coated balloon received FDA approval in January and CE clearance in 2009. To date, nearly 100,000 patients have been treated with the device in Europe.

In January, Medtronic merged with Covidien in a deal valued at around $50 billion.