CMS has already rewritten how Medicare pays for skin substitutes, and a second change is now pending for 2027. Effective January 1, 2026, CMS reclassified cellular and tissue-based products (CTPs) from separately payable biologicals priced off average sales price to incident-to supplies paid at a single flat rate per square centimeter of wound surface area treated. A proposed rule for calendar year 2027 would extend that same per-square-centimeter methodology to non-sheet form products, closing the last pricing gap between delivery formats. For a wound care practice, the shift compresses the margin that used to come from product selection and moves the compliance risk onto documentation of exactly how much product covered exactly how much wound.
From ASP Pricing To A Flat Per-Square-Centimeter Rate
Under the prior methodology, skin substitutes were billed as separately payable biologicals under average sales price (ASP) rules, and CMS said Part B spending on these products grew from $252 million in 2019 to more than $10 billion in 2024. The CY2026 Medicare Physician Fee Schedule final rule (CMS-1832-F) responded by reclassifying most CTPs, including 361 human cells, tissues, or cellular and tissue-based products (HCT/Ps), 510(k)-cleared devices, and PMA-approved products, as incident-to supplies bundled with the application procedure. CMS set a single national rate of $127.14 per square centimeter, after a November 2025 technical correction to the initially published $127.28 figure, effective January 1, 2026, in both the non-facility physician office setting and the hospital outpatient department.
The 2027 Proposal For Non-Sheet Products
CMS's proposed CY2027 Physician Fee Schedule rule (CMS-1848-P), published in the Federal Register in July 2026, proposes pricing non-sheet form skin substitutes billed under HCPCS codes G0681 through G0684 at the same per-square-centimeter rate as sheet-form products, on the theory that resource costs between the two forms are comparable. This is a proposed rule, not a final one. The comment period runs through September 14, 2026, with a final rule expected in early November 2026 and a January 1, 2027 effective date if CMS adopts the proposal largely as written. Until the final rule publishes, practices billing non-sheet products should treat parity pricing as anticipated, not settled.
The Margin Effect For Wound Care Practices
When every covered CTP pays the same flat rate per square centimeter regardless of which product was applied, the margin that used to come from selecting a specific product's ASP no longer exists. A practice's profitability under the new methodology now turns on acquisition cost relative to the flat rate, not on which product carried the richest historical reimbursement. Practices that built a business model around higher-margin products face the sharpest compression, and that pressure is exactly what CMS designed the rule to create.
The flat per-square-centimeter rate does not just cut CTP payments. It removes product selection as a lever for margin, and it makes the accuracy of every wound measurement the difference between a compliant claim and an overstated one.
Documentation Now Carries The Compliance Risk
CMS ties payable square centimeters to the wound surface area actually treated, not the size of the product applied or wasted. That makes accurate measurement, debridement documentation, and product-application charting the front line of both correct billing and audit defense. A claim that reports more square centimeters than the treated wound surface area, or that lacks a contemporaneous signature log tying the application to the billing provider, is now a target for denial under the applicable local coverage determination or for a post-payment audit. Practices should tighten this record now, while the CY2027 rule is still proposed, rather than after an audit notice arrives. Product selection, wound size, and application frequency are already the specific findings auditors return to; see our guide to skin substitute audit defense for how those findings develop into recoupment demands.
Why Early Legal Counsel Is Critical
It is critical that healthcare providers promptly retain experienced healthcare defense counsel upon receiving a subpoena, audit notice, investigative request, or other government inquiry. Early legal intervention can protect the provider's rights, ensure appropriate responses to government requests, avoid inadvertent admissions, preserve relevant defenses, and allow counsel to communicate with investigators on the provider's behalf. Delaying legal representation can significantly affect the outcome of a matter and expose the provider to unnecessary risk.
How Health Law Alliance Can Help
Health Law Alliance defends wound care providers facing skin substitute and CTP billing audits, with 25+ years of combined experience across 2,000+ audits overseen. If your practice bills cellular and tissue-based products and needs help preparing for the CY2027 payment changes or responding to an existing audit, contact our wound care audit defense team for a free, confidential consultation.
