On January 1, 2026, the Centers for Medicare & Medicaid Services (CMS) implemented a reclassification that fundamentally changed how skin substitutes are reimbursed in the United States. For wound care managers, billing coordinators, and clinical teams, this shift represents one of the most significant regulatory changes in the past decade. If you're still operating under 2025 assumptions about skin substitute pricing and billing, your practice's revenue recognition and compliance posture are at risk.

We've spent the last two months working with practices across the Southwest to map out the new landscape and build compliant billing workflows. This guide walks you through what changed, why CMS made these decisions, and exactly what your practice needs to do to stay operational without revenue disruption.

What Changed: The Core Reclassification

For the better part of the past decade, CMS classified most skin substitutes as biologics subject to Average Selling Price (ASP) plus 6% methodology. That system created a direct linkage between wholesale pricing, actual utilization, and Medicare reimbursement rates—a model that incentivized manufacturers to maintain stable pricing but also introduced significant complexity for billing teams tracking quarterly ASP updates.

Effective January 1, 2026, CMS reclassified the majority of skin substitutes as "incident-to" supplies under a flat payment methodology. The new rate: approximately $127 per square centimeter of product applied, regardless of the specific product, manufacturer, or ASP. This applies to products classified by the FDA as either Section 361 Human Cells, Tissues, and Cellular Products (HCT/Ps) or those approved via the 510(k) pathway.

The financial impact is substantial. CMS projected this reclassification would reduce gross fee-for-service spending by $19.6 billion over ten years—a recognition that ASP-based pricing had created unsustainable cost growth in the wound care space. For practices, that translates to tighter margins on standard skin substitutes, which makes clinical selection and efficient application more critical than ever.

However—and this is crucial—products with a Biologics License Application (BLA) under Section 351 of the Public Health Service Act remain on ASP-based reimbursement. This category includes certain advanced wound products that maintain their previous pricing structure. Understanding which products in your inventory fall into which category is now a core billing competency.

HCPCS Code Changes and the New Q Code Landscape

The old system relied on HCPCS codes C5271–C5278, which broadly categorized skin substitutes by application type and indicated they were billable under ASP. Those codes are being phased out entirely. In their place, CMS introduced 25 new Q codes, each with specific descriptors tied to FDA classification, product dimensions, and application methodology.

This code expansion was intentional. Rather than lumping all skin substitutes into eight broad categories, CMS wanted granularity—the ability to track which products are in use, how they perform, and whether the flat rate adequately covers the clinical benefit. For billing, it means your revenue cycle team will need to maintain a crosswalk document that maps each product in your inventory to its corresponding Q code. Getting this wrong doesn't just create denials; it creates audit risk.

Critical point: a claim submitted with the correct CPT application code (15271–15278) but an incorrect or misaligned HCPCS Q code will likely be denied at the payer edit level. Medicare contractors are prioritizing these edits, and secondary payers are rapidly following suit. Our team has already seen denials for cross-coding errors, even when the underlying clinical documentation is solid.

The FDA Classification Framework That Now Drives Billing

The new reimbursement structure is explicitly pegged to FDA regulatory pathway. This represents a significant shift: for the first time, your billing accuracy directly depends on knowing not just what you ordered, but how it was regulated.

There are three main categories:

Section 361 HCT/Ps: These are minimally manipulated human or animal tissue products that rely on donor eligibility and manufacture standards for safety, rather than specific pre-market approval. Many acellular dermal matrices and amnion-derived products fall here. These now reimburse at the flat $127/cm² rate under the new Q codes.

510(k) Predicate Devices: Products approved via the streamlined 510(k) pathway (demonstrating substantial equivalence to a predicate device) comprise the bulk of the synthetic and xenograft market. These also fall under the flat rate structure. The clinical evidence supporting these products varies widely; 510(k) approval is not a statement that a product outperforms traditional care, only that it's equivalent to something already on the market.

PMA Products (Section 351 Biologics): A smaller but strategically important category. Products approved via the more rigorous Premarket Approval pathway—which includes comprehensive clinical efficacy data—continue under ASP reimbursement. The regulatory assumption here is that these products have demonstrated clinical superiority, which justifies individualized pricing. This is where advanced biologics like fish skin grafts sit, and it's why their reimbursement model differs fundamentally from the flat-rate cohort.

Your billing team needs a simple reference table mapping every product you use to one of these three categories. If your vendor's documentation doesn't clearly state FDA pathway, it's not their job to tell you—it's your job to look it up on the FDA website or contact us.

What Your Practice Must Do Now: A Compliance Checklist

1. Audit Your Product Inventory Against FDA Classifications

Go through every skin substitute you stock or order. For each one, determine its FDA pathway. This takes an hour or two per vendor; it's non-negotiable. Document it in a spreadsheet or billing system. If you find products without clear FDA pathway information, contact your supplier or discontinue use. Billing on uncertainty isn't a viable strategy.

2. Map Each Product to the Correct New HCPCS Q Code

Once you know the FDA category, reference the CMS Q code guidance (available through your Medicare Administrative Contractor or our team). Assign a Q code to each product. This is the single most important billing change—getting Q codes right prevents 90% of the claim denials we're seeing in practices that haven't completed this step.

3. Verify Your CPT Application Codes Are Documented

The skin substitute reimbursement only triggers if the claim includes one of the covered application codes (CPT 15271–15278). These codes describe the anatomical location and depth of the wound being treated. Your clinical documentation must support the specific CPT code billed. A claim with a valid Q code but no supporting CPT code will be denied. This is a documentation issue as much as a coding issue—make sure your clinical team understands that wound location, depth, and size are now billing-critical data points.

4. Update Your Revenue Cycle Edits and Front-End Controls

Work with your billing software vendor or consultant to implement front-end edits that prevent mismatched HCPCS/CPT combinations from being submitted. The edits should verify that the HCPCS code matches the FDA classification, that the CPT code is one of the allowable wound application codes, and that the patient is Medicare-eligible (if billing Medicare). This prevents wasted claims and reduces denial volume significantly.

5. Communicate the Flat Rate Change to Your Clinical Team

Surgeons and wound care nurses don't follow CMS policy, but they should know that the economics of skin substitute selection have changed. When two products are clinically equivalent and one costs three times as much to acquire, the cheaper one now makes financial sense at the practice level—you're no longer recouping the price difference through ASP reimbursement. This conversation should happen without pressure, but it should happen. Clinical judgment comes first; economics come second. But when they're not contradictory, efficiency matters.

6. Set Up a Quarterly Compliance Review

Secondary payers are still catching up to the CMS reclassification. Denials and overpayments will happen. Build a routine check into your billing calendar: monthly or quarterly, pull a sample of paid claims, verify the HCPCS codes match your product mapping, and confirm that denials are being appealed with the correct codes. We've seen practices identify and recover $50K–$150K in underpayment within the first quarter of this review process.

How Kerecis and SYLKE Position in the New Framework

Kerecis fish skin graft (Kerecis Allo) is an FDA-approved biologic therapy (PMA pathway) with strong clinical efficacy data from the Odinn Trial and subsequent real-world evidence. It continues under ASP-based reimbursement, which means your reimbursement is not capped at $127/cm². That pricing structure reflects the clinical evidence supporting its use in moderate to severe wounds—places where the flat-rate alternatives have shown less consistent outcomes.

SYLKE spider silk wound dressing uses a different regulatory pathway and occupies a different clinical niche (primarily as a primary or secondary dressing for acute wounds). Its reimbursement and coding will depend on how it's submitted—as a dressing (unrelated to the skin substitute codes) or as part of a larger reconstructive procedure. Your vendor can clarify this, and our team can help map it.

Looking Forward

The 2026 reclassification was not a small adjustment; it was a structural recalibration of how CMS values skin substitutes relative to traditional care. For practices that complete this transition cleanly—with clear product mappings, compliant billing, and sound clinical judgment—the new system is manageable and actually more straightforward than the ASP tracking that preceded it.

For practices that ignore it or assume their billing software will figure it out, the next 12 months will bring denials, audit risk, and revenue volatility. The time to get ahead of this is now. If you have questions about how your specific products align with the new codes or how to structure your compliance process, reach out. We've guided 40+ practices through this transition and have a playbook that works.