Background

As outlined in our previous blog post, "Skin Substitutes - What's New in 2023? Are Major Updates Coming Up?", the Centers for Medicare and Medicaid Services (CMS) proposed significant changes in 2022 to the terminology and payment structure for skin substitutes, also known as cellular and/or tissue-based products (CTPs). The goal was to reclassify these products as ‘wound care management products’ to better reflect their clinical use, streamline coding, and ensure consistent payment under the Physician Fee Schedule (PFS) starting January 1, 2024.

In the CY 2023 PFS Proposed Rule, CMS set forth several objectives to refine skin substitute policies under Medicare. These included establishing a consistent payment approach across different care settings, ensuring appropriate HCPCS codes, using a uniform benefit category for all products regardless of their composition, and maintaining clarity on CMS policies and procedures.

Taking into account stakeholder feedback, CMS decided to adopt a phased approach over multiple rulemaking cycles to integrate skin substitutes as supplies under the PFS rate setting methodology (for details, refer to "Skin Substitutes - What's New in 2024? Preparing for a Phased Approach"). Consequently, the CY 2024 PFS Final Rule did not finalize any new proposals for skin substitute policies but instead sought further comments to refine their approach.

Looking ahead to 2025, CMS has reiterated its commitment to developing a consistent payment mechanism for all CTPs. For now, the CY 2025 PFS Final Rule and the CY 2025 OPPS Final Rule included no new updates regarding skin substitute policies. Meanwhile, Medicare Administrative Contractors (MACs) have released new local coverage determinations (LCDs) with several updates, which we summarize in this blog post.

For LCDs, refer to topic: LCD. For details on OPPS, see blog post "CY 2025 Medicare OPPS and ASC Payment System Final Rule: Essential Updates for Wound Care Programs" , for Physician Fee updates, see "CY 2025 Medicare PFS Final Rule: Essential Updates for Wound Care Professionals".

So what's new in 2025?

All Medicare Administrative Contractors have issued consistent Local Coverage Determinations (LCDs) and Billing and Coding Articles, applying the same policies and determinations effective 2/11/25 nationwide. A summary of LCDs and Articles is listed below. For links to LCDs and Articles by MAC, see section 'Medicare Administrative Contractors and Local Coverage Determinations' in topic "Cellular and/or Tissue Based Products" and 'topic "Medicare Coverage Determinations for Wound Care".

Local Coverage Determinations

Based on comments and literature submitted during the open comment period the following changes have been made from the proposed to final policy, for LCDs across all MACs: 

• The term ‘Failure to respond’ has been replaced with the phrase ‘50% ulcer area reduction.’ Clarification of documentation requirements, additional definitions and other clarifying language added as recommended by commenters.
• Ankle-Brachial Index (AB) was replaced with vascular assessment, uncontrolled diabetes removed examples of contraindications and Class III compression requirement removed.
• Language added to clarify that standard of care is expected to be continued throughout the course of treatment.
• Application limit expanded from 4 to 8 and duration increased from 12 to 16 weeks based on submitted literature, comments received, and recommendations from SMEs.
• Use of the KX-modifier is added as an attestation of medical necessity for use over 4 applications.
• Further description of wastage documentation requirements added to the B & C article.
• Clarified use of product over exposed muscle, tendon, or bone when consistent with the labeled indication. The relevant ICD-10-CM codes were added to B & C article.
• Additional references were added to section on product classification and further clarification of porcine dressings were detailed in the LCD.
• Four systematic reviews and a new section entitled “Real World Evidence” (RWE) with summary of previous and newly submitted RWE were added to evidence review section.
• Additional literature was added for to product section for Apis, Derma-Gide, DermaPure, Grafix, Kerecis, NuShield, Phoenix wound Matrix, PuraPly AM, Restrata, Supra SDRM, and Theragenesis (Pelnac). Derma-Gide, Kerecis and NuShield were added to the DFU covered list.
• The product Oasis Tri-Layer Wound was found to have insufficient evidence for coverage in DFUs and VLUs, therefore, it was removed from tables 1 & 2 and placed in table 3 in the LCD.
• The evidence for DFU and VLU was placed in separate tables and corresponding sections of the B&C article to ensure clarity that coverage is based on evidence for the indication in which has been studied.
• Additional literature added to the Societal Guidance section.
• Analysis of Evidence section expanded and provides further discussion on the limitations of the current body of literature, clarity on the methodology utilized to assess the literature, and explanation for the above changes. Multiple published sources to aid investigators in development of high-quality future studies have been added as requested by Stakeholders.
• Additional ICD-10-CM codes with clarifications were added to Billing and Coding Article.

Billing and Coding Article

Updates across Billing and Coding Article across all MACs include: 

 Modifiers Guidance:

• Includes detailed guidance for JW and JZ modifiers:
• JW: Identifies unused drugs or biologicals from single-use vials/packages that were discarded.
• JZ: Indicates no discarded amounts.
• Requires documentation for these modifiers, making them mandatory for single-use drugs under Medicare Part B.
• The JW and JZ modifier policy does not apply for drugs that are not separately payable, such as packaged OPPS or ASC drugs, or drugs administered in the FQHC or RHC setting.
• The JW and JZ modifiers do not apply to drugs assigned status indicator N (Items and Services Packaged into APC Rates) under the OPPS.
• Modifier - KX:
• If more than 4 applications of a skin substitute grafts/CTP in a 12–16-week period, claims must be appended with a -KX modifier. Failure to apply the -KX modifier for applications greater than 4 will result in return of claim or claim denial.
• Modifier -KX must be used as an attestation by the practitioner and/or provider of the service that documentation is on file verifying that the patient meets the requirements for additional applications of skin substitute grafts/CTP.

Utilization Parameters:

• Expands the treatment period from 12 weeks to 12–16 weeks with the same limit of 8 applications.
• Adds detailed documentation for exceeding 4 applications (requires -KX modifier with medical justification).

Coding Guidance:

• Includes stricter coding rules for non-covered items:
• Explicitly prohibits combining injectable or liquid substitutes with 15271-15278 or C5271-C5278 (Skin substitute graft application codes).
• Additional HCPCS codes for specific graft products categorized by cost and application.

Documentation Requirements:

• Extensive documentation requirements:
• Photo documentation with wound measurements (size, depth) at baseline and follow-ups.
• Justification for wasted materials, including serial numbers and reason for excess usage.
• Justification of any repeat application, including whether the current treatment plan has resulted in wound healing and expectation that the wound will continue to heal with this plan. Estimated time for extended treatment, number of additional applications anticipated and plan of care if healing is not achieved as planned.
• Graphic or photographic evidence of wounds before and after treatment.

Payment for CTPs and their application in 2025

As mentioned above, the CY 2025 PFS Final Rule and the CY 2025 OPPS Final Rule included no new updates regarding skin substitute policies. Below is a summary on the current status of CMS regulations involving payment for skin substitutes/CTPs and HCPCS Level II Coding in 2025, grouped by relevance to physician/ qualified healthcare professional (QHP) offices and hospital outpatient departments (HOPDs):

For physician/QHP offices

• For CY 2025, there was no change in the way CMS pays physician/QHP offices for CTPs and their application. (CY 2025 PFS Final Rule) 
• Skin substitutes with a HCPCS A2XXX code: in regards to payment for FDA 510(k)-cleared biological and synthetic CTPs that have been assigned a HCPCS A2XXX code, QHPs should continue to use high-cost CPT codes and the corresponding HCPCS A2XXX code to report their application. (CY 2025 PFS Final Rule) 

For HOPDs:

• For CY 2025, the packaged OPPS payment methodology for the application of CTPs remains the same. 
• Background on CMS' high-cost and low-cost classification (MLN Matters MM13481) :
• The payment for CTPs that do not qualify for CMS Hospital Outpatient Prospective Payment (OPPS) pass-through status are packaged into the OPPS payment for the associated CTP application procedure. For OPPS payment purposes, CTPs fall in 2 groups:
• High-cost skin substitute products: to be used in combination with of one of the skin application procedures described by Common Procedural Terminology (CPT) codes 15271-15278
• Low-cost skin substitute products for packaging purposes: to be used in combination with one of the skin application procedures described by HCPCS code C5271-C5278
• High-cost and low-cost classification of skin substitutes are listed in Table 135 of the CY 2025 OPPS Final Rule.
• Drugs and biologicals with pass-through status are listed in Tables 130-132 of the CY 2025 OPPS Final Rule (no skin substitutes/CTPs are listed).
• Skin substitutes with a HCPCS A2XXX code: hospital outpatient departments should continue to use high-cost CPT codes and the corresponding HCPCS A2XXX code to report application of FDA 510(k)-cleared biological and synthetic products that have been assigned a HCPCS A2XXX code, just like in the QHP office setting.(CY 2025 OPPS Final Rule)
• For CY 2025, CMS will continue to assign any skin substitute product that is assigned a code in the HCPCS A2XXX series to the high-cost skin substitute group, including new products without pricing information.
• New skin substitutes without pricing information that are not assigned a code in the HCPCS A2XXX series would be assigned to the low-cost category until pricing information is available to re-evaluate its classification. Also, HCPCS code A4100 (Skin substitute, fda cleared as a device, not otherwise specified) continues to be assigned to the low cost skin substitute group, consistent with CMS’ existing payment policy that unclassified graft skin substitute products be assigned to the low cost skin substitute group.
• 2025 OPPS National Average Allowable rates: application of CTPs (both high-cost and low-cost products) performed at HOPDs received OPPS payment increases compared to CY 2024.
• For current national average rates for the application of CPT codes 15271-15278 for high cost CTPs and HCPCS Level II codes C5271-C5278 for low cost CTPs, refer to the topic “Chargemaster Template for Hospital Outpatient Wound Care Services".

For both HOPDs and Physician/QHP offices: 

• 2024 updates on skin substitute cost category assignment (high-cost or low-cost): 
• For CY 2024, CMS changed categories of the following products (CY 2025 OPPS Final Rule): 
• From the low-cost category to the high-cost category: Q4216 Artacent cord, Q4252 Vendaje, Q4262 Dual layer impax, Q4268 Surgraft 
• From the high-cost category to the low-cost category: no changes
• High-cost and low-cost classification of skin substitutes are listed in Table 135 of the CY 2025 OPPS Final Rule.
• Sheet versus powdered products: in CY 2025, CMS continues to cover only CTPs that are in sheet form and not powdered skin substitute products (e.g. micronized sheet skin substitute broken down into particulate form).
• JZ and JW modifiers (skin substitute waste reporting):
• The JW modifier is used to report the amount of a drug or biological (like a skin substitute) that is discarded and not administered to the patient. The JZ modifier was introduced to be used when no drug amount is wasted during a procedure. 
• In the 2023 PFS Final Rule, CMS finalized the proposal to require that billing providers report the JZ modifier (used when no drug amount is wasted) beginning no later than July 1, 2023.  Also, CMS stated that it would begin claims edits for both the JW and JZ modifiers beginning October 1, 2023. CMS delayed reinforcement of the reporting requirement until October 1, 2023. 
• In regards to how CMS will handle claims for skin substitutes reported with the JW modifier in a future payment methodology: like for CY 2024, in the CY 2025 PFS Final Rule, CMS finalized that JW units of skin substitutes will not be used for the discarded drug refund calculations and CMS will not issue reports to manufacturers with respect to skin substitutes.
• For clinical, reimbursement and documentation updates and checklists, see topic "Cellular and/or Tissue Based Products". For a list of LCDs and LCAs by MACs, see topic "Medicare Coverage Determinations for Wound Care".

HCPCS Level II Coding for CTPs in 2024

Summary: 

• For CY 2025, CMS did not finalize any of the HCPCS Level II coding proposals originally described in the CY 2023 PFS Proposed Rule.(CY 2023 PFS Final Rules, CY2024 PFS Final Rule, CY 2025 PFS Final Rule) 
• HOPDs and QHPs should verify that their electronic health record, their charging system, and their coding and billing software are updated with the correct HCPCS codes for the CTPs that they use. For background on the classification of skin substitutes, and development of HCPCS A or Q codes, see blog post "Skin Substitutes - What's New in 2023? Are Major Updates Coming Up?"

This page will be updated as new updates arise.

Resources

• Skin Substitutes - What's New in 2024? Preparing for a Phased Approach
  
• Skin Substitutes - What's New in 2023? Are Major Updates Coming Up?
• Cellular and/or Tissue Based Products
• Medicare Coverage Determinations for Wound Care
  
• CY 2025 PFS Final Rule
• CY 2025 OPPS Final Rule