The final calendar year 2026 Medicare Physician Fee Schedule includes major changes to Medicare funding for skin substitutes, which the Department for Health & Human Services contends will reduce program costs and wasted funding.
The final rule “advances primary care management through improved quality measures, reduces waste and unnecessary use of skin substitutes, and introduces a new payment model focused on improving care for chronic disease management,” an Oct. 31 press release from the Centers for Medicare & Medicaid Services (CMS) said.
In 2026, CMS will pivot from its current Medicare policy of categorizing skin substitutes as biologicals and shift to an incident-to-supplies process, in which skin substitutes will be billed as part of a physician’s service, rather than as a separately billable item.
CMS has also revised payment: The single payment rate of approximately $127.28 per square centimeter will apply to all skin substitutes … and is far less than the current costs of many skin substitute products.
These changes, CMS said, are “expected to reduce Medicare spending on these products by nearly 90% without compromising patient access or quality of care. We estimate this action will reduce gross fee-for-service program spending for skin substitute services by $19.6 billion in 2026, while incentivizing the use of products with the most clinical evidence of success.”
CMS blamed the rising costs for skin substitutes — more than $10 billion in 2024 compared to $256 million in 2019 — on “abusive pricing practices in the sector, including the use of products with limited evidence of clinical value.”
The American Podiatric Medical Association (APMA), which advocates for the advancement of foot and ankle medicine and surgery, said in a reaction to the proposed rule that it “appreciates” CMS’s concern over the rapid rise in costs, but also believed the proposed rule had “significant flaws that will cause unintended consequences for patients with wounds and the physicians who treat them.”
APMA had therefore urged CMS to refrain from finalizing skin substitute proposals in favor of developing “a more reasonable and sound payment methodology that protects access to skin substitutes for Medicare beneficiaries.”
