Mid-Atlantic Health Law TOPICS

Medicare reimbursement and coverage policies for cellular and tissue-based products (CTPs), often referred to as skin substitutes, are changing significantly in 2026. 

On October 31, 2025, the Center for Medicare and Medicaid Services (CMS) published a final rule announcing that it would be bolstering reimbursement requirements, documentation expectations, and oversight for CTP utilization, effective for calendar year 2026.

For many providers, these changes translate into (1) reduced reimbursement per square centimeter, (2) less tolerance for product waste, and (3) increased vulnerability to denials, audits, and overpayment demand (particularly where documentation does not clearly establish medical necessity and adherence to applicable coverage criteria). 

Below is a summary of key considerations and practical steps for providers to reduce denial and overpayment risk as CMS moves toward more standardized policies.

Key Policy Changes for 2026

Reimbursement: fixed-rate payment and “incident-to” treatment

CMS is moving CTP reimbursement away from the prior “high-cost” framework and toward a fixed-rate methodology under the Physician Fee Schedule with a current proposed price of $127.28 per sq cm.

In addition, CTPs that were previously treated more as separately payable biologicals may be treated as “incident-to” supplies, meaning that they are considered integral, yet incidental, components of the professional service rather than separately reimbursable products.  

WISeR Model

CMS is piloting the “Wasteful and Inappropriate Service Reduction” (WISeR) Model in six states to reduce utilization of services viewed as low-value or unsupported by evidence. The WISeR Model is designed to move medical-necessity review earlier in the claims process. 

The six states currently participating in the six-year WISer Model pilot phase are Arizona, New Jersey, Ohio, Oklahoma, Texas and Washington, with potential expansion if the model is deemed successful during the pilot period.

LCD standardization

CMS previously decided to standardize local coverage determinations (LCDs) for CTPs in 2026, limiting coverage to only 18 products. However, CMS deferred this approach following stakeholder feedback and additional evidence submissions from manufacturers regarding the reduction in available wound care products.;

Now, CMS is treating 2026 as a “status quo” period for manufacturers to complete clinical trials of products and providers to tighten clinical and billing documentation before unified LCDs are likely reintroduced in 2027.

Providers should anticipate the following changes to coverage criteria: (a) mandatory four-week trial of standard/conservative care before CTP use; (b) strict limit of eight applications per episode/case (as applicable); and (c) uniform documentation standards across all Medicare Administrative Contractor (MAC) jurisdictions.

Covered vs. Non-Covered Product Lists

CMS is shifting from broader discretion for coverage toward a stricter, evidence-based approach focused on diabetic foot ulcers (DFU) and venous leg ulcers (VLU). Now, only products with peer reviewed clinical evidence demonstrating efficacy for DFU and VLU treatment will be included on the coverage list. Notably, CMS indicated that amniotic products not already on an applicable coverage list will be categorized as “unproven/investigational,” leading to automatic denials.

Click here for a fact sheet on the CY 2026 Physician Fee Schedule final rule.
 

Practical Steps for Providers

Many denials and adverse audit outcomes trace back to repeatable documentation and billing issues. Accordingly, providers using higher volumes of CTPs, or products at increased risk of being categorized as investigational, are encouraged to start strengthening their documentation to build defenses against denials and overpayment allegations.

Moving forward, providers may consider whether the following steps were taken:

• Coverage criteria (LCD/NCD and payer rules) verified for the indication (DFU/VLU vs. other);
• Baseline wound assessment documented and updated at each visit/application;
• Conservative-care trial documented (dates, interventions, and response);
• Vascular assessment documented when indicated;
• Units billed reconcile to wound size and product used; 
• Wastage documented with rationale;
• Prior authorization obtained where required (including WISeR-model states, if applicable);
• Modifier and same-day E/M billing rules followed and supported in the record; and
• Advanced Beneficiary Notices of Non-Coverage obtained when appropriate for potential noncoverage scenarios. 

Kennedy M. Hagens
410-576-4146 • khagens@gfrlaw.com