Medicare Proposes Capping Advanced Wound Care Costs Based on 2023 Prices, Starting 2026

If you or someone you know relies on Medicare for advanced wound care—think those tough, chronic wounds often associated with diabetes or circulatory issues—this bill is worth paying attention to. The Skin Substitute Access and Payment Reform Act of 2025 is trying to fix a big problem: Medicare’s current payment system for high-tech bandages called “skin substitutes” is confusing and, frankly, encourages providers to use the most expensive options, driving up overall costs (SEC. 2).

The Cost-Cutting Formula: Locking in 2023 Prices

Starting January 1, 2026, Medicare is changing how it pays for these products. Instead of the current system, the new payment limit for all skin substitute products will be based on a weighted average of what Medicare paid during the last three months of 2023 (SEC. 3). Think of it like this: CMS is taking a snapshot of the prices and usage from late 2023, averaging them all together, and saying, “That’s the most we’ll pay from now on.” For 2027 and beyond, that capped price will only increase based on the consumer price index (inflation). The goal here is straightforward: control costs by stopping the incentive to use pricier products when studies show many of them are equally effective (SEC. 2).

One Code to Rule Them All: Simplifying Billing

One thing that should make life easier for doctors and clinics is the requirement that the Secretary of CMS create a single, consolidated billing and payment code for all covered skin substitutes by January 1, 2026 (SEC. 3, Administrative Changes). Right now, the complexity of billing for various products can be a headache. Consolidating the codes simplifies the administrative side of wound care for providers, which could potentially reduce overhead costs and streamline the process of getting treatment.

The Fine Print: Less Oversight on Pricing

Here’s where things get tricky and potentially less transparent. The bill explicitly exempts manufacturers of these skin substitutes from having to report their Average Sales Price (ASP) data to Medicare (SEC. 3, Administrative Changes). For many other expensive medical supplies, manufacturers have to report this data, which allows Medicare to ensure payments are reasonable. By removing this requirement, the bill reduces transparency into the actual cost structure of these products. While the new payment cap is based on 2023 data, this lack of ongoing price visibility means policymakers and the public will have less insight into how much manufacturers are actually charging moving forward.

What About Safety and Effectiveness?

The bill also makes a specific rule about coverage: once these new rules kick in, Medicare cannot deny coverage for a skin substitute product solely based on a review of clinical evidence (SEC. 3). Coverage can still be denied if the product is found to be unsafe due to contamination, serious infection risk, or severe adverse reactions. However, preventing CMS from using clinical evidence alone to determine if a product is “reasonable and necessary” is a significant change. On one hand, this ensures access to a wide range of products. On the other hand, it limits Medicare’s ability to use the latest research to differentiate between products that might offer only marginal benefit but still cost the system money, so long as they meet the basic 'reasonable and necessary' standard under other criteria.