2026 Brings Major Changes to Medicare’s Reimbursement Model for Skin Substitutes

The Centers for Medicare & Medicaid Services (“CMS”) just implemented significant changes to the way Medicare reimburses providers for skin substitutes. The changes were triggered in part by a September 2025 report by the Department of Health & Human Services’ Office of Inspector General (“HHS-OIG”), which sounded the alarm on skyrocketing Medicare Part B spending for skin substitutes. According to that report, by the end of 2024, Medicare spending for skin substitutes exceeded $10 billion annually, a 40-fold increase from 2019. The OIG concluded that action was “urgently needed to rein in the massive increases in Medicare Part B spending for skin substitutes.”

Through the last day of 2025, skin substitutes were paid as if they were biologicals under an average sales price (ASP)-based payment methodology. Under that methodology, each skin substitute was assigned a unique billing code and payment limit. Beginning January 1, 2026, however, skin substitute products will now be paid as “incident to supplies” when they are used as part of a covered application procedure paid under the Medicare Physician Fee Schedule (PFS) in the non-facility setting or the Hospital Outpatient Prospective Payment System (OPPS) in the hospital outpatient department setting. Most importantly, CMS has replaced the ASP-based payment methodology with a single flat rate which, for CY2026, is $127.14 per cm².CMS projects that this change will cut Medicare spending on skin substitutes by nearly ninety percent.

The attorneys at Chilivis Grubman are actively representing a number of providers undergoing investigations and/or overpayment audits related to billing for skin substitutes. If you need assistance with such a matter, please contact us today.