CMS Proposes Major Reimbursement Shifts for Skin Substitutes and Outpatient Services in 2026

In July 2025, the Centers for Medicare & Medicaid Services (CMS) released a sweeping set of proposed rules for Calendar Year 2026 that could significantly reshape how hospitals and physician practices are reimbursed for wound care services and advanced treatment modalities.¹ These proposals aim to reduce spending waste, increase transparency, realign payment policy with clinical value, and reward prevention — especially when it comes to skin substitutes, commonly referred to as cellular and/or tissue-based products (CTPs) or CAMPs.²

“This proposed rule protects Medicare and those that depend on it, fights fraud, and enforces pricing transparency—with real prices and not just estimates.” 

— Robert F. Kennedy Jr.³

While final rules won’t be issued until later this year, SHS is monitoring the changes closely. Here’s a clear summary of what these proposed changes could mean for wound care teams.

Skin Substitutes / CTPs / CAMPs – Proposed Payment Realignment

CMS is proposing to end Average Sales Price (ASP)-based reimbursement for most skin substitutes. Instead, these products would be classified as incident-to supplies — reimbursed as part of the application procedure rather than separately. This change would impact both:

• Physician office-based settings (Place of Service 11) under the Physician Fee Schedule (PFS)

• Hospital outpatient departments — including off-campus (POS 19) and on-campus (POS 22) sites — under the Outpatient Prospective Payment System (OPPS)²

What’s Changing:

• Beginning in 2026, CMS would pay all FDA-approved skin substitute products at a flat rate of $125.38/cm², regardless of whether they are:

  • 361 Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps)

  • 510(k)-cleared devices

  • Premarket Approval (PMA) devices

• This rate is derived from proposed Practice Expense (PE) and Malpractice (MP) relative value units (RVUs), prior to geographic adjustments.

• CMS intends to differentiate payment by FDA regulatory category in future rulemaking, based on clinical variation and resource use.

• The stated goal is to encourage price competition, ensure consistency across sites of service, and incentivize the use of products backed by strong clinical evidence.

Why It Matters:

Medicare Part B spending on skin substitutes rose dramatically from $252 million in 2019 to over $10 billion in 2024 — a 40-fold increase.¹ CMS cited improper billing practices and pricing disparities as primary drivers behind this proposal. In one instance, the CMS Fraud Defense Operations Center identified over $1 million in skin substitute claims submitted by a psychiatric practice.⁴

If finalized, this change is projected to reduce Medicare spending on skin substitutes by nearly 90% — without limiting access to care.¹

Key Changes in the 2026 Physician Fee Schedule (PFS)

In addition to the skin substitute policy overhaul, CMS is proposing several technical and financial adjustments under the PFS that may impact documentation, billing, and strategic planning in outpatient wound care.

Conversion Factor Updates:

• Two separate conversion factors¹:

  • $33.59 for Advanced APM (Alternative Payment Models, such as ACOs) participants (+3.83%)

  • $33.42 for non-APM clinicians (+3.62%)

• Increases reflect:

  • A 0.75% boost for APMs

  • A 0.25% boost for non-APMs

  • A statutory one-time +2.5% payment increase

  • A +0.55% adjustment based on RVU changes

Efficiency Adjustment:

• CMS proposes a -2.5% efficiency adjustment for non-time-based services (excluding E/M codes, telehealth, maternity, etc.).¹

• This is based on a 5-year look-back using the Medicare Economic Index (MEI) productivity adjustment.

• CMS is signaling a shift from subjective survey data — such as AMA RUC inputs — toward time-and-motion studies for more accurate valuation.¹

Hospital Outpatient and ASC Payment Updates

Hospitals and ambulatory surgery centers (ASCs) may see modest increases and major policy shifts under the 2026 OPPS and ASC proposed rule:

• 2.4% payment increase for OPPS and ASC services

• 285 musculoskeletal procedures proposed for removal from the Inpatient-Only List

• 276 new procedures proposed for the ASC Covered Procedures List

• 340B (a federal drug pricing program for eligible hospitals) repayment structure changed:

  • Pay cut increased from 0.5% to 2%

  • Repayment timeline shortened from 2041 to 2031

Price Transparency Enhancements:

Beginning January 1, 2026, CMS proposes hospitals must:

• Report the 10th, 50th (median), and 90th percentile allowed amounts

• Use EDI 835 data (electronic remittance advice) to ensure accuracy

• Attest to the completeness of payer-negotiated charge files

• Accept a 35% penalty reduction if they waive administrative hearings and comply promptly

“We are building on our efforts to modernize Medicare payments by advancing site neutrality, simplifying hospital billing, and ensuring real prices — not estimates — are available to patients.” — Chris Klomp, Deputy Administrator, CMS⁵

Sidebar: What’s Next for Chronic Care & Prevention

While not specific to wound care, CMS’s broader 2026 proposals reflect a clear shift toward prevention and upstream chronic condition management:

• Ambulatory Specialty Model (ASM): A new mandatory payment model launching in 2027 to improve outcomes in heart failure and low back pain

• Medicare Diabetes Prevention Program Expansion: More beneficiaries would gain access to coaching, nutrition counseling, and behavior change support to prevent Type 2 diabetes — at no cost

• New Quality Measures: Ten outdated or redundant quality measures are proposed for removal, while five new measures focused on outcomes, prevention, and patient health impact would be added.

These shifts underscore CMS’s intent to reward providers who prioritize early intervention, patient engagement, and long-term cost reduction — principles that align closely with SHS’s approach to wound care sustainability.

“We have a generational opportunity to fix our health care system and help people stay healthy for longer.”— Dr. Mehmet Oz, CMS Administrator⁶

Key 2026 CMS Proposed Rule Changes for Wound Care Teams

These proposals aren’t just technical adjustments — they represent a broader realignment of Medicare payment philosophy, with major implications for wound care programs:

• Product selection and billing workflows will need review, especially for skin substitutes. ²

• Wound care teams should be prepared to document incident-to services accurately and adapt to new PFS valuation methods.

• Hospitals and physician practices should anticipate changes to site-neutral payment expectations, price reporting, and quality measure incentives.⁷

Need Help Navigating the Changes? SHS Is Here to Support You

From reimbursement shifts to documentation updates, Shared Health Services is here to help your wound care team stay ahead. We provide practical, compliance-ready education tools and clear guidance — all built to simplify workflows and strengthen audit readiness.

Our team is actively tracking CMS’s proposed changes for 2026 and will continue equipping our partners with timely updates, real-world insights, and step-by-step support.

Want help reviewing your billing strategy or documentation processes? Call us at 800.474.0202, email us at sales@sharedhealthservices.com , or schedule a discovery call to get started.

CMS’s 2026 proposals signal a major shift — but your wound care team doesn’t have to face it alone. The wound care experts at Shared Health Services is here to help your team adapt — with clarity, confidence, and support you can count on.

References:

1. Centers for Medicare & Medicaid Services. CMS 2026 Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule Fact Sheet. CMS.gov. Published July 2025. https://www.cms.gov/newsroom/fact-sheets/calendar-year-2026-hospital-outpatient-prospective-payment-system-opps-and-ambulatory-surgical

   
   

2. Centers for Medicare & Medicaid Services. CY 2026 Physician Fee Schedule Proposed Rule – Skin Substitute Packaging Updates. CMS.gov. Published July 2025. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-pfs-proposed-rule-cms-1832-p

   
   

3. Kennedy RF Jr. (Secretary). “This proposed rule protects Medicare … real prices and not just estimates.” X (formerly Twitter). July 15, 2025. Accessed July 17, 2025. https://x.com/seckennedy

   
   

4. Centers for Medicare & Medicaid Services. CMS proposes physician payment rule to significantly cut spending waste, enhance quality measures, and promote health equity. Published July 10, 2025. Accessed July 17, 2025. https://www.cms.gov/newsroom/press-releases/cms-proposes-physician-payment-rule-significantly-cut-spending-waste-enhance-quality-measures-and

   
   

5. Klomp C. Deputy Administrator, CMS. Quoted in: Centers for Medicare & Medicaid Services. CMS 2026 Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule Fact Sheet. CMS.gov. Published July 2025. https://www.cms.gov/newsroom/fact-sheets/calendar-year-2026-hospital-outpatient-prospective-payment-system-opps-and-ambulatory-surgical

   
   

6. Feiger L. Dr. Oz pushed for AI health care in first Medicare agency town hall. Wired. 2025. Accessed July 17, 2025. https://www.wired.com/story/dr-oz-ai-health-care-medicare-cms-town-hall

   
   

7. Centers for Medicare & Medicaid Services. Calendar Year (CY) 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule. Federal Register. Published July 2025. Accessed July 17, 2025. https://public-inspection.federalregister.gov/2025-13271.pdf