Weekly roundup
Here’s what you missed last week!
🏛️ Policy & Payers
Missouri could slash prior auth requirements for practices with high approval rates under a new state bill, following the gold card model gaining traction nationwide.
Prior auth is getting a 2026 makeover: expect faster response times, AI automation, and more state-level reform as payers face mounting pressure to streamline approvals.
False Claims Act settlements hit a record $6.8 billion in 2025, with healthcare fraud accounting for the lion's share. Compliance isn't optional.
Indiana is targeting Elevance's controversial out-of-network penalties with a bill that would ban the practice, offering potential relief for providers caught in payer contract disputes.
📈 Business & Tech
Forget generative AI: providers are finding bigger wins by focusing on basic automation fundamentals before chasing shiny new tech.
EHR micro-apps are reducing clinician burden by breaking workflows into smaller, targeted tools rather than forcing staff through clunky all-in-one systems.
Real-time data insights and cross-team collaboration are helping health systems boost Medicare Star Ratings through smarter health IT investments.
🩺 Clinical
Drug spending by advanced practice clinicians in dermatology has tripled since 2013, reflecting the growing APC presence in the specialty.
Hospitals are running out of time to prep for CMS's TEAM bundled payment program, with workflow changes needed now to avoid reimbursement hits.
The National Psoriasis Foundation adopted a simplified severity definition: just "mild" or "moderate to severe." This could ease prior auth battles for biologics.
Over 40% of healthcare workers are aware of unauthorized AI use in their organizations, raising safety and compliance red flags practices should address proactively.
⭐ Just for Fun
The Deep Dive
From $2,000 to $127: skin subs just collapsed
Some skin substitute products were billing over $2,000 per square centimeter. As of this year, CMS pays $127.28. That's not a typo.
The biggest reimbursement story in dermatology just landed, and most practices haven't fully grasped what it means for their wound care revenue.
The spending explosion that triggered this
According to CMS, Medicare Part B spending on skin substitutes exploded from $256 million in 2019 to over $10 billion in 2024, a nearly 40-fold increase in five years. By 2024, skin subs accounted for more than 15% of total Part B drug spending.
The Office of Inspector General flagged even steeper short-term growth. An Applied Policy analysis of OIG data found spending increased 640% over just two years.
CMS responded by fundamentally restructuring the entire payment model.
What actually changed
Under the old system, each of the 75+ skin substitute products had its own billing code and received reimbursement under the ASP+6% methodology. Some manufacturers priced aggressively—very aggressively. CMS noted that some products exceeded $2,000 per square centimeter.
The new system collapses most products into a single "incident-to supply" classification. Products approved through the Pre-Market Approval (PMA), 510(k), and self-determined 361 HCT/P pathways now receive a flat rate of $127.28 per square centimeter under the 2026 Medicare Physician Fee Schedule final rule.
The exception: True biologics licensed under Section 351 of the Public Health Service Act continue to be reimbursed at ASP pricing. If you're unsure which pathway applies to your products, check with your manufacturer rep for specific reimbursement details.
The math is brutal. CMS projects this will cut fee-for-service spending by $19.6 billion in 2026 alone—a 90% reduction.
Why CMS went nuclear
CMS didn't hide its reasoning. The final rule explicitly cites "abusive pricing practices in the sector" and products with "limited evidence of clinical value."
The fraud cases speak for themselves.
In 2025, the Fraud Defense Operations Center stopped nearly $185 million in improper payments to suspect providers. One case flagged $4.3 million in suspicious payments for wound care allegedly provided to a single beneficiary who "lacked evidence of prior wound treatment," according to CMS.
An Arizona couple pleaded guilty to orchestrating a $1.2 billion fraud scheme involving medically unnecessary wound grafts, as documented by Applied Policy.
The OIG identified additional problematic patterns: multiple claims submitted on the same date to avoid automated denial thresholds, billing by clinicians in specialties unrelated to wound care, and high-volume claims from individual providers generating millions in payments with minimal patient numbers.
The 2026 structure and what's coming in 2027
For 2026, all skin substitutes (e.g. 361 HCT/Ps, Pre-Market Approvals (PMAs), and 510(k) devices) receive the same flat $127.28 rate. The CMS final rule aligned categorization with FDA regulatory status but didn't differentiate payment.
If you're in one of six states, there's more. CMS also launched the Wasteful and Inappropriate Service Reduction (WISeR) Model, a six-year program running through 2031 in Texas, New Jersey, Oklahoma, Ohio, Washington, and Arizona. Under WISeR, providers have two options for skin substitute claims:
Prior authorization — Get approval before the service
Post-service review — Submit without prior auth, but expect a denial that requires appeal
If your practice is in a WISeR state, factor this added administrative burden into your wound care calculations.
That changes in 2027. CMS has signaled it intends to propose differentiated payment rates by FDA category next year. Products with stronger clinical evidence and more rigorous regulatory pathways may see higher reimbursement. Products in the 361 HCT/P category (which faced the most scrutiny) may remain at lower rates.
The regulatory landscape will continue shifting. Practices that build wound care programs need to plan for ongoing policy evolution, not a one-time adjustment.
What this means for your practice
If wound care is a meaningful part of your revenue, this is a significant hit. The economics of skin substitute procedures fundamentally changed overnight.
Products that were profitable at $2,000 per square centimeter may not make clinical or financial sense at $127.28. The margin compression is severe. Practices that built wound care programs around premium products need to reassess their entire approach.
Documentation matters more than ever. The OIG has officially added skin substitute claims to its formal work plan, signaling that audits will intensify through 2026 and beyond. An auditor must be able to reconstruct the patient's entire course of treatment from the medical record alone, so things like clinical justification, wound measurements, application details, and rationale for product selection are non-negotiable.
Takeaways
Reassess your product mix immediately. Evaluate which skin substitutes still make clinical and financial sense at the new flat rate. Products with limited efficacy data are harder to justify when reimbursement collapses. Consider whether wound care remains viable in your practice model.
Audit your wound care documentation now. Don't wait for a records request. Review recent skin sub claims for complete documentation: wound etiology, size measurements at each visit, clinical rationale for product choice, and detailed application notes. If you can't defend it, stop billing it.
Watch 2027 closely. CMS intends to propose differentiated rates by FDA category. Products with stronger clinical evidence may see reimbursement improvements. Stay informed on which category your preferred products fall into.
Bottom line: The golden age of skin substitute reimbursement is over. The practices that adapt fastest (reassessing product choices, tightening documentation, and staying ahead of regulatory changes) will come out ahead.
Need a pro?
When you're ready for an expert to make your practice's billing bulletproof, schedule a strategy call with our team.
That’s it for this week.
This one was super fun. Hope you enjoyed it too.
