On October 31 2025, the Centers for Medicare & Medicaid Services (CMS)  published the CY 2026 PFS Final Rule, which includes several updates taking effect January 1, 2026 for the payment and coding of Skin Substitutes, also known as cellular and/or tissue-based products (CTPs) or Cellular, Acellular, and Matrix-like Products (CAMPS). These changes mark significant shifts in years for wound care clinicians, billing teams, and product manufacturers.

CMS’ key policy objectives behind the updates include: 

• (1) to ensure a consistent payment approach for skin substitute products across the physician office and hospital outpatient department settings; 
• (2) to ensure that appropriate HCPCS codes describe skin substitute products; 
• (3) to employ a uniform approach across products within the physician office setting, regardless of whether the product is synthetic or comprised of human- or animal-based material; and 
• (4) to provide clarity for interested parties on CMS skin substitutes policies and procedures.

Background - The Shift from Past Payment Methodologies

Up Until Fiscal Year (FY) 2026

• Hospital Outpatient Departments (HOPDs) (i.e. Facilities): Since 2014, payments for skin substitutes that do not qualify for CMS Hospital Outpatient Prospective Payment (OPPS) pass-through status have been packaged (bundled) into the OPPS payment for the associated CTP application procedure (i.e., the amount Medicare pays the facility, or "facility payment rate").  For the actual skin substitute application services performed at an HOPD, qualified healthcare professionals (QHPs) have been paid under the PFS rates by reporting CPT codes 15271–15278, regardless of whether the product is classified as high- or low-cost (CY 2014 OPPS Final Rule). For OPPS bundled payment purposes, CTPs has been categorized in 2 groups:  
• High-cost skin substitute products: have been 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:  have been used in combination with one of the skin application procedures described by HCPCS code C5271-C5278
• Physician/Qualified Healthcare Professional (QHP) Offices and patient’s homes. (i.e. Non-Facilities): Like at HOPDs, non-facilities have been using CPT codes 15271 to 15278 to bill for skin substitute application services (of note, “low cost CTP” CPT application procedures C5271 to C5278 do not apply in non-facilities). However, unlike at HOPDs, skin substitutes have been considered biologicals and paid separately under the Average Sales Price (ASP) plus 6 percent methodology. This means each product has received a unique billing code and payment limit. 
• Average Sales Price (ASP): the ASP is calculated by Part B drug manufacturers as a volume-weighted average of their sales prices of Part B-covered drugs and biological products to all customers in the U.S., net of most discounts and price concessions. CMS then uses this information, published quarterly, to set payment limits, most often as ASP plus 6%. 

Why the Change?

According to CMS, there has been a nearly 40-fold increase in Medicare Part B spending for skin substitutes between 2019 and 2024, rising from $252 million to over $10 billion. Much of this surge was attributed by CMS to increases in skin substitute payment rates and launch prices for skin substitute products under the ASP plus 6% methodology reserved for biologicals (CY 2026 PFS Final Rule).

So, What’s New in 2026?

Starting January 1, 2026, CMS is implementing several changes for Skin Substitutes in Medicare Part B, including:

• Initial Unified Payment Rate for Skin Substitutes: Starting January 1, 2026, both facilities and non-facilities will be paid at a flat national rate of $127.28 per square centimeter for covered skin substitute products that are not biologicals licensed under Section 351 of the Public Health Service Act (CY 2026 PFS Final Rule).
• For biologicals, the average sales price (ASP) payment methodology will continue to apply. All other skin substitutes will now be considered “incident-to supplies” when used during a covered wound application procedure, for both facility and non-facility care settings (CY 2026 PFS Final Rule).
• Of note, CMS will continue to offer separate reimbursement for the application service and the product. The amount above covers the product's payment. 
• Definition of "incident-to-supplies", according to CMS:
• "Supplies are a large category of items and can be anything that is not equipment."
• “Incident-to supplies” refers to supplies that are furnished as an integral, although incidental, part of the physician's professional services in the course of diagnosis or treatment of an injury or illness, among other requirements. 
• Future Payment Rate Differentiation: While a single payment rate is set for CY 2026, CMS intends to propose payment rates in future years that differentiate between the three FDA regulatory categories of skin substitutes (PMAs, 510(k)s, and 361 HCT/Ps). See section 'Deep Dive: How Did CMS Determine Initial Unified Payment Rate for Skin Substitutes?' below.
• Consistency Across Care Settings: These policy changes will be implemented in both HOPD (facility) and QHP offices and patient’s homes (non-facility) to maintain consistency across different care environments.
• Unbundling in HOPDs (facilities): Per the CY 2026 PFS Final Rule and the CY 2026 OPPS Proposed Rule, CMS will unpackage skin substitute products from the payment for their application. The application of the skin substitute and the product itself will be paid for separately. 
• This means the HCPCS C-codes describing the low-cost group (HCPCS codes C5271-C5278) will be deleted, while high-cost group HCPCS codes (15271-15278) will be preserved, to describe application procedures.
• HCPCS add-on application codes 15272, 15274, 15276, and 15278 would still be packaged in the hospital outpatient setting (e.g. 15272 - Application of skin substitute graft to trunk, arms, legs, total wound surface area up to 100 sq cm; each additional 25 sq cm wound surface area, or part thereof) (CY 2026 OPPS Proposed Rule)
• Other relevant CMS Skin Substitutes updates set to stat on January 1 2026: The change in payment methodology finalized in the CY 2026 PFS Final Rule is just one part of a broader set of updates taking effect on January 1, 2026. Two additional policy areas will directly impact use of skin substitutes:
• Wasteful and Inappropriate Service Reduction (WISeR) model:  introduces new prior authorization processes in the Medicare fee-for-service program beginning on Jan. 1, 2026. The WISeR model is being piloted initially in six states (New Jersey, Ohio, Oklahoma, Texas, Arizona and Washington) and as summarized by the American Medical Association, will include service categories such as skin and tissue substitutes, electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis
• Part B Medicare Administrative Contractor (MAC) coverage policies: establish coverage criteria and limit the skin substitute products permitted for diabetic foot ulcers (DFUs) and venous leg ulcers (VLUs). While the new payment policy determines payment amounts, the Part B MAC policies will dictate when skin substitute application is allowed for DFUs and VLUs. For details, see blog post  "Skin Substitutes - What's New in 2025? Key CMS Updates". 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".

How Can Practices Navigate the 2026 Changes to the Medicare Part B Skin Substitute Payment Model?

• Even under the new payment model, many high-quality skin substitute products with strong evidence of safety and effectiveness will remain both clinically appropriate and financially sustainable.
• To preserve sustainability, profit margin and compliance, wound care practitioners can follow the steps below: 
• Step 1. Select the lowest-priced skin substitutes/CTPs/CAMPS with demonstrated clinical effectiveness using the resources below. Many of the payment limits are less than $127.28 per sq cm. Selection of cost-effective products ensures a predictable profit margin based on the difference between the fixed CMS payment rate and the acquisition cost, without concerns over audits related to manufacturer discount agreements.
• For the list of skin substitutes that will be covered by the MACs starting on Jan 1. 2026, along with the average sales price (ASP) reported by manufacturers, refer to Table 1 below.
• For the entire list of skin substitute ASPs, refer to the CMS ASP Pricing Files webpage, download and open the ASP Pricing File, then look for “Payment Allowance Limits for Medicare Part B Drugs ”.
• For the latest available ASP, along with clinical, pricing, coding and reimbursement information on each CTP, refer to the WoundReference Product Navigator, find the specific CTP page, and on the "Essentials Table", click on the "Product Reimbursement" Tab, then look for the column labeled "Office and/or Facility - Product reimbursement".
• Step 2. Focus on optimizing documentation, treatment justification, and care pathways to ensure that the standard of care is consistently met. For clinical, reimbursement and documentation updates and checklists, see topic "Cellular and/or Tissue Based Products".

Table 1. List of Covered CTPs published on CMS Local Coverage Determinations for all Medicare Administrative Contractors, effective January 1, 2026

Deep Dive: How Did CMS Determine the Initial Unified Payment Rate for Skin Substitutes?

CMS arrived at the initial $127.28 per square centimeter payment rate for CY 2026 by:

• 1. Aligning with FDA Categories: CMS has finalized a policy to align payment for covered sheet skin substitutes with their FDA regulatory categories. This policy establishes three groups for payment, categorizing each skin substitute based on its FDA approval, clearance, or self-determination.
• These three FDA groups are:
• 361 Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/P)
• Pre-Market Approvals (PMAs)
• 510(k)s
• Biologicals are not considered “incident-to-supplies”: CMS also finalized their proposal to codify the definition of “biological” as “a product licensed under section 351 of the Public Health Service Act” at §§ 414.802 and 414.902. If a skin substitute is licensed under section 351 of the PHS Act, the ASP payment methodology under section 1847A will continue to apply. 
• For a complete list of skin substitute codes and FDA categories, please see file titled “Skin Substitute Products by FDA Regulatory Category” available on the CMS website under downloads for the CY 2026 PFS Final Rule.

• 2. Utilizing existing ASP and MUC data to establish the initial payment rate: CMS first used the weighted, per-unit average of ASPs for skin substitute products in each of these three FDA regulatory categories (based on for the fourth quarter of calendar year 2024 ASP data from OPPS, submitted by manufacturers). When ASP data was unavailable, the hospital outpatient Mean Unit Cost (MUC) was used.

Future Payment Rate Updates: What is CMS’ Strategy for Determining Future Payment Rates for Three FDA Categories of Skin Substitutes? 

Once updated utilization patterns reflecting this new policy become available, CMS plans to use all relevant products and combined utilization patterns (from both OPPS and non-facility settings) to determine a weighted average per-unit cost by FDA category and set separate payment rates for each of the three categories.

• CMS will update the rates for the skin substitute categories annually using one or more recently available calendar quarter(s) of ASP data, when available.
• In the event ASP data is not available for a particular product, CMS will use the hospital outpatient Mean Unit Cost (MUC) data, which is a payment rate derived from hospital claims data.
• If MUC is not available, CMS will use the product's Wholesale Acquisition Cost (WAC) or 89.6 percent of Average Wholesale Price (AWP) if WAC is also unavailable. 

What About Non-Sheet Form Skin Substitutes?

CMS is finalizing a policy to consider products not in sheet form (e.g., gels, powders, ointments, foams, liquids, injected products) as skin substitutes for separate payment as incident-to supplies. These products will be priced by the Medicare Administrative Contractors (MACs).

Will Skin Substitutes be Excluded from the Discarded Drug Policy? 

Skin substitute products that are not regulated as drugs or biological products under section 351 of the PHS Act and are paid as incident-to supplies are not subject to the Medicare discarded drug policy. They are also currently excluded from Part B inflation rebates (CY 2026 PFS Final Rule).

HCPCS Codes and Billing 

For facilities (OPPS)

• Existing HCPCS Codes Maintained: Current HCPCS codes for skin substitutes will be maintained, and CMS will assign the codes to the three Ambulatory Payment Classifications (APCs) based on the product's FDA regulatory category, with an initial unified payment rate for each of the new proposed APCs (CY 2026 OPPS Proposed Rule):
• APC 6000 (PMA Skin Substitute Products);
• APC 6001 (510(k) Skin Substitute Products); and
• APC 6002 (361 HCT/P Skin Substitute Products). 
• New Unlisted HCPCS Codes: to prevent delays in Medicare payments for new FDA-approved or cleared skin substitute products that do not yet have a specific HCPCS or CPT code, CMS has proposed to create three new unlisted HCPCS codes, and assign the unlisted HCPCS codes to the appropriate APCs based on the product's FDA approval or clearance as follows: 
• QXXX1 (Unlisted PMA skin substitute product), assigned to APC 6000 (PMA Skin Substitute Products);
• QXXX2 (Unlisted 510(k) skin substitute product), assigned to APC 6001 (Unlisted 510(k) Skin Substitute Products); and
• QXXX3 (Unlisted 361 HCT/P skin substitute product), assigned to APC 6002 (Unlisted 361 HCT/P Skin Substitute Products) 
• Status Indicator S1: CMS has proposed to create a new status indicator, S1, for skin substitute products to allow for separate payment under the OPPS. CMS proposed to assign status indicator S1 to all skin substitute products assigned to APCs 6000, 6001, and 6002.

For non-facilities 

• Add-On Codes: For non-facilities, all skin substitute product codes are being converted to add-on codes with an indicator of ZZZ. This clarifies that only skin substitute products used with existing CPT application codes will be paid for and treated as supplies (CY 2026 PFS Final Rule).
• For example, CPT code 15271 (application of skin substitute graft, leg or ankle) would be reported with a practice expense (PE)-only add-on code that includes the resources involved in using the skin substitute product. Such PE-only codes are designated with a PC/TC indicator of 3 and are only paid under the PFS in the non-facility setting (CY 2026 PFS Final Rule).

Preparing for 2026

These changes represent a significant update of skin substitute payment policies. Wound care clinicians and billers must familiarize themselves with these updates to ensure accurate coding, billing, and appropriate reimbursement. Stay informed, review the relevant CMS documentation, and adjust your practices accordingly to navigate these new regulations effectively.

This page will be updated as new updates arise.

Resources

• Skin Substitutes - What's New in 2025? Key CMS Updates
  
• 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 2026 PFS Final Rule
• CMS ASP Pricing Files
• CMS list of Skin Substitute Products by FDA Regulatory Category
• CY 2026 OPPS Proposed Rule