Skin Substitutes: National Pricing of Non-Sheet Products

What CMS proposed. For CY 2027, CMS proposes to nationally price non-sheet form skin substitutes (products such as gels, powders, and other flowable or particulate forms) at the same payment rates as sheet-form skin substitutes,¹ ending the contractor (MAC) pricing approach finalized for CY 2026. CMS states that, on balance, the resource costs per cm² for non-sheet products are consistent with those of sheet-form products, and that for non-sheet products cm² reflects the wound surface area treated rather than the physical dimensions of the product. Separately, CMS proposes to narrow the skin-substitute exclusion from the Part B inflation-rebate program so that any future skin substitute licensed as a drug or biological product under section 351 of the PHS Act would be a Part B rebatable drug.

Sources: CY2027 PFS proposed rule (CMS-1848-P), §II.D(49) and §III.F. See the full rule.

From contractor pricing to national rates

In the CY 2026 PFS final rule (90 FR 49500), CMS finalized contractor pricing for non-sheet form skin substitutes. The agency’s stated concern was standardization: non-sheet products “have the potential to be payable as skin substitutes,” but the units expressed in a product’s coding were “difficult to standardize for payment purposes.”² So CMS kept the existing coding mechanism and directed the Medicare Administrative Contractors (MACs) to determine appropriate payment³, while committing to keep evaluating whether an alternative methodology might suit these products better.⁴

One year later, CMS says that evaluation is done. Based on “ongoing analysis and feedback from internal and external interested parties,” the agency has concluded that the resource costs per cm² for non-sheet form skin substitutes are, on balance, consistent with the resource costs of sheet-form products. The key interpretive move is how CMS reads the unit: for non-sheet products, cm² reflects the wound surface area treated, not the physical dimensions of the product. A powder or gel has no fixed sheet size, so CMS anchors the unit to the wound instead.

On that basis, CMS proposes to nationally price non-sheet form skin substitutes at payment rates consistent with sheet-form skin substitutes for CY 2027. The rule does not enumerate the affected products; CMS maintains the list of non-sheet form skin substitutes on its skin substitutes web page.⁵

	CY 2026 (current)	CY 2027 (proposed)
Sheet-form skin substitutes	Nationally priced under the standardized payment approach	Unchanged
Non-sheet form (gels, powders, flowables)	Contractor (MAC) priced	Nationally priced at rates consistent with sheet-form products
Unit basis for non-sheet products	Varies by product coding; MAC discretion	cm² = wound surface area treated

For the broader rate-setting context (conversion factors and efficiency adjustments that determine what those national rates actually pay), see Payment Impact.

The bigger picture: how skin substitutes are paid now

The non-sheet proposal is an extension of a much larger overhaul CMS finalized for CY 2026 (90 FR 49496, 50009). In that rule, CMS moved skin substitutes off the ASP-based drug payment methodology under section 1847A of the Act: ASP pricing is now limited to skin substitutes that are approved as a drug or biological product under section 351 of the PHS Act, and payment for certain groups of skin substitutes was restructured as incident-to supplies.⁶

Throughout, CMS defines “skin substitutes” as products included within the suite of cellular- and tissue-based products that aid wound healing.⁷ The CY 2027 proposal completes the CY 2026 framework’s coverage: sheet-form products were nationally priced in CY 2026, and non-sheet products, the last category left to MAC discretion, would join them at the same rates in CY 2027.

The inflation-rebate wrinkle (§351-licensed products)

A second, quieter skin-substitute proposal sits in §III.F of the rule. In the CY 2025 PFS final rule (89 FR 98580), CMS codified skin substitutes as an excluded product category at § 427.101(b)(5), meaning they are not “Part B rebatable drugs” under the Medicare Prescription Drug Inflation Rebate Program. That exclusion was written before the CY 2026 payment overhaul, and CMS now considers it overly broad.

For CY 2027, CMS proposes to revise § 427.101(b)(5) so the exclusion applies only to skin substitutes that are not licensed as a drug or biological product under section 351 of the PHS Act.⁸ Under the proposed text, a skin substitute for exclusion purposes is “[a] product included within the suite of cellular- and tissue-based products that aid wound healing, other than skin substitute products that are licensed as a drug or biological product under section 351 of the Public Health Service Act.”⁹

The practical effect: any skin substitute licensed under §351 would be subject to Part B inflation rebates and the beneficiary coinsurance adjustment under § 427.201. CMS notes that no skin substitute product is currently licensed under §351; this proposal is prospective, clarifying that any future §351-licensed product could be rebatable.¹⁰ If finalized, it would not affect Rebate Reports for the fourth quarter of 2026 or earlier.¹¹

This aligns the rebate rules with the CY 2026 payment rules: §351-licensed skin substitutes are the only ones still paid under ASP methodology, and ASP-paid drugs are the ones the inflation-rebate program is built around.

Why it matters for wound care

Skin substitutes have been the highest-profile payment issue in wound care for two years, and this proposal settles the last open category. What changes for clinicians:

• Predictability. Under MAC pricing, payment for a gel or powder product could vary by contractor and was resolved locally. National pricing means one rate schedule, known in advance, regardless of jurisdiction.
• Form-neutral economics. If sheet and non-sheet products pay the same per cm² of wound treated, the payment system no longer pays more for one physical form than another. CMS reached this by finding that resource costs are, on balance, consistent across the category, accepting that an individual non-sheet product whose manufacturing cost diverges from the sheet-form average will be paid above or below its own resource cost. Product selection can turn on clinical fit (wound geometry, depth, tunneling, exudate) rather than on which form is paid more generously in a given jurisdiction.
• Documentation shifts to the wound. Because cm² for non-sheet products means wound surface area treated, wound measurement documentation becomes the billing unit’s foundation. Accurate, consistent measurement practice is directly tied to correct payment.
• The product list lives outside the rule. Which products count as non-sheet skin substitutes is maintained on the CMS website, so the operational impact depends on a list that can be updated without rulemaking.

Deep-dive: implications by practice model

Office-based wound care

Office-based wound care practices that apply skin substitutes in place of service office have absorbed the largest changes from the CY 2026 overhaul, since the incident-to-supply approach applies to the non-facility setting where the practice buys and bills the product. For practices using non-sheet products (flowables for tunneling wounds, powders for irregular surfaces), CY 2026 left payment to MAC discretion, which meant jurisdiction-by-jurisdiction variation in whether and how these products were paid. The CY 2027 proposal replaces that with the same national rates that apply to sheet products, and ties the unit to wound surface area treated.

For office-based practices this is, on net, a stabilizing proposal: it removes the MAC-pricing uncertainty that made non-sheet products financially risky to stock. Two variables shape the final effect. First, the actual national rate levels: the proposal sets non-sheet rates “consistent with” sheet-form rates, so whatever happens to sheet-form rates flows straight through to non-sheet products. Second, the wound-surface-area unit makes measurement documentation (length x width, method, date) the foundation of the billing unit, and therefore the likely focus of audit review. Whether a given product receives the national rate depends on its inclusion in the non-sheet product list maintained on the CMS website, which can change outside rulemaking.

Mobile wound care

Mobile and traveling wound care providers deliver skin substitutes wherever the patient lives, from private homes to skilled nursing facilities, so the non-sheet pricing changes in this proposal reach them across every setting they serve. The tabs below look at the two main mobile settings separately.

Home & residence

Mobile and house-call wound practices are heavy users of products that travel well and tolerate imperfect application conditions, a category where flowables, gels, and powders are practically attractive. These practices often span multiple MAC jurisdictions or operate near jurisdiction boundaries, so contractor pricing for non-sheet products meant real variability in the economics of the same visit depending on where the patient lived. A single national rate removes that variable. See SNF and Mobile Wound Care for the fuller picture of how this rule treats non-facility, home-based care.

Mobile practices are well positioned to benefit from this change: the products whose pricing it standardizes, such as flowables, gels, and powders, are a natural fit for home-based application, and national pricing makes their use financially predictable across an entire service area for the first time. The offsetting factor is the same as for office practice, amplified: wound measurement in the home is harder to standardize, and the cm²-as-wound-area unit makes measurement the billing foundation, so documentation consistency carries more weight in this setting. The net effect for a mobile practice also depends on how the national rates interact with the practice-expense and efficiency-adjustment changes elsewhere in this rule (Payment Impact), since a national product rate operates within the overall visit economics.

Skilled nursing facility

Wound care furnished to SNF residents sits in a complicated payment lane: Part A stays bundle product costs into the SNF PPS, while Part B billing for residents in non-covered stays follows PFS rules with facility-setting constraints on what the practitioner can separately bill. The practical reach of the non-sheet national pricing into SNF work therefore depends on stay status and on who bears the product cost. What the proposal does change everywhere is the reference price: a national rate for non-sheet products creates a known benchmark where MAC discretion used to be. See SNF and Mobile Wound Care for the full SNF analysis.

SNF wound care rarely turns on PFS product payment directly, but this proposal is relevant to SNF-focused practice in two ways. First, a national price gives SNFs and their contracted wound providers a transparent reference point for allocating product cost, where MAC pricing left that reference point ambiguous. Second, non-sheet products are often clinically appropriate for the deep, tunneling pressure injuries common in SNF populations, and payment clarity may affect access to them for Part B-billable residents. An open question is whether the final rule or subsequent guidance will address the facility/non-facility distinction for these supplies explicitly; the proposal does not.

Wound care center

Hospital-based outpatient wound centers are paid under the OPPS rather than the PFS for the facility side, so the PFS skin-substitute payment rules primarily reach wound-center physicians through their professional billing and through any office-based (non-facility) sites the program operates. Where wound-center physicians see patients in freestanding clinic space billed under the PFS, the non-sheet national pricing applies the same as for any office practice. Physician work for application procedures also interacts with the efficiency adjustment discussed in Payment Impact and the E/M changes in the EM modifier analysis.

For wound-center programs the direct effect of this proposal is narrower than for office practice, but the direction is notable: CMS is completing a unified national payment structure for the entire skin-substitute category, and OPPS policy has historically tracked PFS direction on these products. Once proposed rates publish, the relative economics of hospital-based versus freestanding sites may shift for particular product types, since a national PFS rate for non-sheet products changes the non-facility side of that comparison. One analytical caveat: CMS reached its “comparable resource cost” conclusion on balance across the category, not product by product, so how the national rate compares to a given center’s product mix will vary by product.

Considerations for providers and manufacturers

Each point below states what CMS proposed and then what it would mean in practice. These are analytical implications, not recommendations; some stakeholders may also weigh them when deciding whether to submit input during the public comment period.

• A single national rate detaches payment from a product’s own cost. If non-sheet products are paid the same per-cm² rate as sheet-form products, a high-cost flowable and a low-cost powder are reimbursed identically. For manufacturers, margin stops tracking a product’s cost structure and starts tracking clinical value and volume; for providers, product choice becomes roughly cost-neutral at the payment line, pushing selection toward clinical performance and supply logistics. Because CMS has not published the per-cm² cost data behind its “on balance comparable” conclusion, neither side can yet tell whether the national rate sits above or below their specific product’s economics.

• Paying by wound area, not product used, changes where the risk sits. For formless products cm² reflects the wound surface treated, so reimbursement no longer varies with how much gel or powder is applied. That removes any incentive to over-apply, but it makes wound measurement (and its documentation) the thing that determines payment. Measurement accuracy and documentation become the primary denial and audit exposure, in place of product-quantity questions.

• List placement, not FDA status, gates the national rate. The set of non-sheet products that receive the national rate lives on a CMS web page outside notice-and-comment regulation. For manufacturers that means payment status can change between list updates without a rulemaking, creating a payment-continuity risk that is administrative rather than clinical; a product’s payment status is only as stable as its current list placement.

• §351 licensure becomes a reimbursement-model decision (§427.101(b)(5)). A skin substitute that later obtains §351 biologics licensure would move out of the excluded incident-to-supply category into rebatable-drug status and ASP-based payment, with different coinsurance and inflation-rebate exposure. For manufacturers weighing a §351 pathway for a pipeline product, the regulatory route now also determines the payment model. CMS says no such product exists today and does not fully specify the transition timing, so this is forward-looking.

The public comment period is open through September 14, 2026 (docket CMS-2026-2377). See How to Comment for the mechanics.

Footnotes

1. Proposed rule §II.D(49), National Payment for Non-Sheet Form Skin Substitutes (CMS-1848-P, 91 FR 43895). CMS states:
   “Based on ongoing analysis and feedback from internal and external interested parties, we have come to believe that, on the balance, the resource costs per cm² for non-sheet form skin substitutes is consistent with the resource costs associated with those associated with sheet form skin substitutes. For non-sheet skin substitute products, cm² reflects the wound surface area treated rather than the physical dimensions of the product. Therefore, for CY 2027, we are proposing to nationally price the non-sheet form skin substitutes consistent with the payment rates associated with the sheet form skin substitutes.”

2. Proposed rule §II.D(49), National Payment for Non-Sheet Form Skin Substitutes (CMS-1848-P, 91 FR 43895). CMS states:
   “In the CY 2026 PFS final rule (90 FR 49500), we finalized contractor pricing for non-sheet form skin substitutes. We stated that these products have the potential to be payable as skin substitutes; but that the units, as expressed in a product’s coding, are difficult to standardize for payment purposes.”

3. Proposed rule §II.D(49), National Payment for Non-Sheet Form Skin Substitutes (CMS-1848-P, 91 FR 43895). CMS states:
   “Therefore, we finalized that we would maintain the current coding mechanism for these products and would direct the Medicare Administrative Contractors (MACs) to determine appropriate payment, which is generally consistent with how these products are currently paid.”

4. Proposed rule §II.D(49), National Payment for Non-Sheet Form Skin Substitutes (CMS-1848-P, 91 FR 43895). CMS states:
   “We stated that we would continue to evaluate payments for these products to determine if an alternative payment methodology may be better suited to non-sheet products.”

5. Proposed rule §II.D(49), National Payment for Non-Sheet Form Skin Substitutes (CMS-1848-P, 91 FR 43895). CMS states:
   “For a list of the non-sheet form skin substitutes, please refer to the skin substitutes section located on the CMS website (https://www.cms.gov/medicare/payment/fee-schedules/physician-fee-schedule/skin-substitutes).”

6. Proposed rule §III.F, Treatment of Skin Substitutes as a Part B Rebatable Drug Excluded Product Category (§ 427.101(b)(5)) (CMS-1848-P, 91 FR 44006). CMS states:
   “Since that policy was finalized, in the CY 2026 PFS final rule (90 FR 49496, 50009), we modified how skin substitutes are paid under Part B. In particular, we finalized our proposal to limit application of the ASP payment methodology under section 1847A of the Act to skin substitutes that are approved as a drug or biological product under section 351 of the PHS Act. Additionally, we modified payment for the provision of certain groups of skin substitutes as incident-to supplies.”

7. Proposed rule §III.F, Treatment of Skin Substitutes as a Part B Rebatable Drug Excluded Product Category (§ 427.101(b)(5)) (CMS-1848-P, 91 FR 44006). CMS states:
   “In the CY 2025 PFS final rule (89 FR 98580), we codified skin substitutes (that is, products included within the suite of cellular- and tissue-based products that aid wound healing) as an excluded product category at § 427.101(b)(5) and therefore they are not considered Part B rebatable drugs.”

8. Proposed rule §III.F, Treatment of Skin Substitutes as a Part B Rebatable Drug Excluded Product Category (§ 427.101(b)(5)) (CMS-1848-P, 91 FR 44006). CMS states:
   “To avoid an overly broad exclusion at § 427.101(b)(5), we are proposing to clarify that skin substitutes licensed as a drug or biological product under section 351 of the PHS Act would not be excluded from the definition of a Part B rebatable drug, and, as such, would be subject to Part B inflation rebates and subject to the beneficiary coinsurance adjustment under § 427.201.”

9. Proposed rule §III.F, Treatment of Skin Substitutes as a Part B Rebatable Drug Excluded Product Category (§ 427.101(b)(5)) (CMS-1848-P, 91 FR 44006). CMS states:
   “We are proposing to amend § 427.101 by revising paragraph (b)(5), which describes skin substitutes as an excluded product category for Part B rebatable drugs, to state a skin substitute is “[a] product included within the suite of cellular- and tissue-based products that aid wound healing, other than skin substitute products that are licensed as a drug or biological product under section 351 of the Public Health Service Act”.”

10. Proposed rule §III.F, Treatment of Skin Substitutes as a Part B Rebatable Drug Excluded Product Category (§ 427.101(b)(5)) (CMS-1848-P, 91 FR 44006). CMS states:
    “We note that currently there are no skin substitute products licensed as a drug or biological product under section 351 of the PHS Act; however, our proposal would make clear that any future skin substitute products that are licensed as a drug or biological product under section 351 of the PHS Act could be rebatable.”

11. Proposed rule §III.F, Treatment of Skin Substitutes as a Part B Rebatable Drug Excluded Product Category (§ 427.101(b)(5)) (CMS-1848-P, 91 FR 44006). CMS states:
    “If finalized, this proposal would not impact Rebate Reports for the fourth quarter of 2026 or earlier.”