🏛️ Policy & Payers

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The FY 2026 ICD-10-CM Coding Guidelines from Centers for Medicare & Medicaid Services (CMS) and National Center for Health Statistics (NCHS) introduced new and revised diagnosis codes that went into effect last month. The updates most relevant to dermatology cover conditions including lipodystrophy, chronic ulcers, cellulitis, lymphangitis, and xylazine-related wounds.

At the same time, the CPT 2026 code set from The American Medical Association (AMA) adds hundreds of procedure code changes and takes effect January 1, 2026. Together, these updates shape how dermatology claims are coded and reimbursed heading into the new year. Below are a few ways to make sure your systems and staff are ready.

The 2026 ICD-10-CM update adds greater detail to several skin-related categories:

These updates also include several smaller dermatology-adjacent revisions, such as eyelid inflammation, superficial injury, and exposure codes, which refine existing categories without major workflow impact.

Together, these changes improve diagnostic precision and reimbursement accuracy when reflected in documentation and charge capture workflows.

CMS has also finalized a major coding overhaul for Superficial Radiation Therapy (SRT), a service commonly delivered by dermatologists.

For 2026, CMS introduced four new CPT codes that collectively cover the full SRT workflow, including planning, simulation, and treatment delivery. Several existing codes will be deleted, including CPT 77401, 0394T, and HCPCS G6001.

CMS also adopted a new valuation method for SRT, moving to a model based on OPPS Ambulatory Payment Classifications (APCs). Early indications suggest this may increase reimbursement for SRT treatment delivery.

Before the holidays, take a moment to verify that your EHR and billing platforms have applied both the FY 2026 ICD-10-CM update (effective October 2025) and are ready for the CPT 2026 code set in January. Confirm that encounter forms reflect current codes, retired ones have been removed, and CPT-to-ICD crosswalks still align for wound care and biopsy procedures.

A quick internal audit now can help you avoid the “invalid code” denials that often spike in early January.

System updates only work when staff use them correctly. Coders, billers, and clinicians should review new site and severity options for ulcers and abscesses, proper use of xylazine-associated wound codes, and updated documentation expectations for anatomical detail. 

Even a short team refresher can go a long way in preventing confusion once claims start moving through.

Beyond the annual code set updates, the CY 2026 Physician Fee Schedule (PFS) Final Rule introduces major reimbursement changes for dermatology.

Effective January 1, 2026, CMS will reclassify skin substitutes as “wound care management products” and shift reimbursement from the ASP-based method to a flat-fee “incident-to supply” payment. This site-neutral policy will likely reduce per-application payments and places greater emphasis on clear documentation of medical necessity, appropriateness, and frequency.

The rule also introduces financial adjustments, including a 3.26% increase to the conversion factor (CF) for most clinicians, offset by a new 2.5% efficiency adjustment that reduces payments for many codes.

Code updates don’t have to be disruptive. Treat them as a natural checkpoint. Practices that plan ahead tend to see cleaner claims, faster payments, and fewer headaches when January hits.

Here’s a quick checklist to guide your final sweep:

When you're ready for an expert to make your practice's billing bulletproof, schedule a strategy call with our team.

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