The federal government is increasingly scrutinizing reimbursement for wound-care services, particularly for advanced treatments such as skin substitute products. As a result, The Centers for Medicare & Medicaid Services (CMS) has proposed a significant overhaul in how skin substitutes are reimbursed, aiming to curb escalating costs and streamline payment processes across different healthcare settings.
These proposed changes, set to take effect in 2026, could have a profound impact on healthcare providers, manufacturers, and patients relying on these products.
CMS has reported that spending on skin substitutes for wound treatment soared past $10 billion in 2024, nearly 10 times the amount spent in 2022. It has a responded by proposing flat‐fee reimbursement policies and tighter utilization rules, among other changes.
Our team of experienced healthcare attorneys at Chapman Law Group is closely monitoring these developments to help healthcare providers navigate the constantly evolving rules and regulations and remain fully prepared should the government question their wound care billing or reimbursement practices.
Under the current system, Medicare reimburses skin substitutes using an Average Sales Price (ASP) model. Each skin substitute product is assigned a unique billing code and payment limit, resulting in significant variations in reimbursement rates.
Some products command prices as high as $3,400 per square inch, contributing to a dramatic rise in Medicare spending. Medicare’s expenditure on skin substitutes skyrocketed from $252 million to over $10 billion from 2019 to 2024, reflecting a growing financial burden on the program.
To address these rising costs, CMS has proposed a transformative shift in how skin substitutes are classified and reimbursed. Skin substitutes will no longer be treated as biologicals but instead as incident-to-supplies. This reclassification would align reimbursement rates across the Outpatient Prospective Payment System (OPPS), Ambulatory Surgical Center (ASC) settings, and Physician Fee Schedule (PFS).
Under the proposed rule, skin substitutes would be reimbursed at a flat rate of no more than $125 per square centimeter. This standardized approach aims to eliminate the wide pricing disparities seen in the current ASP model. According to CMS, this change could reduce Medicare spending on skin substitutes by an estimated 90%, potentially saving billions annually while maintaining access to these critical treatments.
The proposed reimbursement changes could significantly impact healthcare providers and manufacturers of skin substitutes. For providers, the flat-rate model may simplify billing processes but could also reduce revenue for procedures involving high-cost skin substitutes. Manufacturers, particularly those producing premium-priced products, may face challenges adapting to the lower reimbursement rate, potentially affecting product development and market availability.
At Chapman Law Group, we understand the complex web of healthcare rules and regulations that impact on your practice or business. Our specialized healthcare compliance attorneys are here to help guide you through these changes, from compliance with new billing requirements to advocating for fair reimbursement policies.
As CMS finalizes these proposed changes, our wound care compliance attorneys encourage healthcare providers and manufacturers to stay informed and prepare for the transition. Our team at Chapman Law Group is dedicated to keeping you updated on regulatory developments and providing tailored legal guidance to protect your interests.
For more information or to discuss how these changes may affect your practice, contact Chapman Law Group today. Let us help you stay ahead in the ever-changing world of healthcare compliance and your competitors.
Individuals depicted or heard in the foregoing media appearance or images may no longer be current attorneys, employees, members or affiliates with Chapman & Associates, PC or The Chapman Law Group (the “Firm”), including Ronald W. Chapman, II who is no longer affiliated with the Firm. For a current listing of the attorneys and services available with the Chapman Law Group, please see https://chapmanlawgroup.com/team.
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