Skin Substitute Reimbursement Changes 2026: MAC Denials, Q Codes, and What’s Next

Daniel Kapp, MD, shares his observations on conflicting Medicare contractor guidance and coding confusion in early 2026 have effectively halting reimbursement for skin substitute applications in one MAC. ​​​​​​

1. Contractor Guidance Conflicts With Federal Policy and Prior Instructions -- This speakers shares that Noridian’s March 2026 Q&A states that only Section 351 products qualify as skin substitutes eligible for payment—yet no such products currently exist, and this stance contradicts both CMS’s 2026 Physician Fee Schedule and Noridian’s own prior billing guidance requiring use of application CPT codes (15271–15278) with Q-coded products.  
2. Reimbursement Collapse Likely Driven by System or Policy Misalignment -- The speaker has seen providers across multiple MAC jurisdictions report widespread claim denials for skin substitute applications, aligning with CMS testimony noting a 99% drop in billing in Q1 2026—suggesting either a systemic coding error or a coordinated shift in contractor behavior treating these products as non-payable “incident-to” supplies.  
3. Patient Access is Already Impacted, With Broader Consequences Looming -- He feels that the disruption is leading providers to withhold care, particularly in complex wound cases where skin substitutes are often the only viable option, while CMS’s reliance on beneficiary complaints overlooks access barriers—highlighting the urgent need for congressional intervention and a formal, long-overdue definition of “skin substitute.”  

Please note: This content is a direct transcript, capturing the authentic conversation without edits. Some language may reflect the flow of live discussion rather than polished text.  

So it's end of Q1 for calendar year 2026. And as we were looking back, as we do in our practice at the guidance across the country, we were reviewing the guidance documents from the various MAC jurisdictions. And what we found is that on March 6th, Niridian had asked the contractor series on its webpage and there were two notable questions on that ask the contractor series, and I think it was either March 6th or March 5th. I can't remember which particular date it was, but we can share the link with the audience so they can read it. (https://med.noridianmedicare.com/web/jea/article-detail/-/view/10521/acm-questions-and-answers-march-5-2026) And in those question and answers, Noridian stated unequivocally that they would not pay for application fees for skin substitutes because in their understanding of the 2026 physician's final rule, the only products that qualify as skin substitutes would be regulated under Section 351 of the Public Health Service Act. 

Now remember, there are multiple different pathways for skin substitutes. There's the 510K, which is the FDA dressing pathway where CMS then determines whether that product should be considered a skin substitute. There's the 361 pathway that is a human tissue equivalent. There's a PMA pathway, which is that it has been vetted with a pivotal trial. And then there's a 351 pathway. 351 pathway is a drug or biologic, and that has had the highest level of evidence for any one of these pathways. And if you remember at SAWC Spring that I discussed the four different regulatory pathways. 

And so what Noridian did in the beginning of March just said, "We're not paying for anything that isn't a 351 product, and those are the only ones we consider to be skin substitutes." The problem is that their published billing guidance, which is online since July of 2025, states that if you use a product that has a Q code, you must bill it with the CPT application code, which is the 15271 through 15278 codes for the application of those materials. So they have billing instructions that say, if you use the Q code, you must bill it with the application code. And then they publish this guidance that says, "We're not paying for it unless it's a 351 product." There are currently no 351 products, and all of this contradicts the 2026 PFS or physician's fee schedule, which says that if you use the products and the products have CPT code 152 ... I'm sorry, if the products have acute code and their skin substitutes, you must bill them with the 15271 through 15278 codes. 

And so they have ignored the mandate from Medicare in the federal register. They've ignored their own billing guidance documents and created a whole new policy through a question and answer. Where's this left providers? Mysteriously, about three or four, maybe almost six weeks ago, because we're already the end of April, I started getting phone calls from different providers that they were no longer getting reimbursed. Their claims were getting denied for the application of skin substitutes. Now, it's really interesting because about three or four weeks ago, Kim Brant, who's the COO of CMS, spoke before Congress, and she stated that there's been a 99% reduction in billing for skin substitutes in Q1. The question is, why is there a 99% reduction in billing for skin substitutes? And it appears to be, we have the answer now, which is that the Medicare administrative contractors have stopped paying for the application codes for the skin substitutes because they're now classified as incident to supplies. 

So I know a number of both manufacturers and the societies now have issued letters to Noridian in particular, but it seems to be that it's a problem, not just unique to Neridian, but throughout the administrative contractors where they have just stopped paying for the application codes for the skin substitutes. And when the skin substitutes have been billed along with the application codes, they're denying the claims altogether. And it seems to be, I likely think that it is a coding error in the software rather than a policy error and the right hand not knowing what the left hand is doing. However, also in her testimony, Kim Brant said that they haven't seen a consequent increase in the number of lower extremity amputations because of this rapid decline. But remember, that's a little bit of smoke and mirrors because there is a time interval between when the wound occurs and when it gets amputated because we don't just say, "Okay, we're not using the skin substitute. 

We're going to amputate you, " because then we would be doing unnecessary amputations for people who do have a potential, even though it may be small, they may have a potential to heal. And so what we really see is once again, a mismanagement of policies on the part of the contractors and the part of CMS creating most importantly, an interruption in patient care. And she does say in her March 17th statement to Congress that it is not their intention to eliminate the products from the patients who need it. Well, it may not be their intention, actions have consequences. And once again, we see the law of unintended consequences here. The real-time effect is people aren't getting care. The real-time effect is that providers are just not giving care. I can tell you in my own practice where I do a lot of complex plastic surgery reconstruction, we have an issue where we have patients who've undergone surgeries by other surgeons with very significant, highly morbid defects of the scalp and of the lower extremity and of the arm, where the only reconstructed option that those patients have had is the application, the skin substitute. 

And now based on the policies that they've set forth, doing these things is for Botan. And so we really see people walking around with injuries and things that they don't need to have. I think the only thing that can occur now is really a congressional intervention. And when you look back at the regulatory history of this, I think if we take an honest look at where CMS should have been, CMS needed to actually go to Congress and say, "We have this problem. This is the solution we need and it needs to be a legislative solution." The branches of government are supposed to work together and CMS still, after 23 years or 25 years, doesn't have a definition of skin substitutes. We start with a mandated legislative definition of skin substance. When you look at a bill, when you look at a law, when you look at a regulation, the first few paragraphs of that are just the definitions. 

And we have an agency that's refused to define what a skin substitute is. Without having a definition of skin substitutes, we start without clarity. So if we start without clarity, all the downstream expenses, costs, repercussions were inevitable because we didn't start with clarity at the get- go, and we still haven't gone back 25 years later and asked, let's restart with the definition of what is a skin substitute. Once we define a skin substitute, we can define where we use it, we can define who we use it on, and we can define when we use it. And clearly, because we didn't start at A, we see that the downstream effects are we can't make an LCD. The LCD gets published, the LCD gets withdrawn, the LCD gets published, the LCD gets ... It's happened four times. It's not that complicated, but because the starting point was not appropriate, we keep on circling back to all these problems. 

And what it's ultimately become is an economic decision on the part of CMS that has downstream impacts. One of the things that she also said in her testimony was that they have not seen a consequent rise in beneficiaries contacting CMS about lack of access. Well, we have to look at who most of the beneficiaries are for these things. And when we look at who the beneficiaries are, they are the medically needy. They're poorly educated, they have poor access. They may not even know how to use a computer. They may have access to internet. So how would we expect those individuals to contact their member of Congress to be told that they need this service which are not being provided? That's not going to happen. That's wishful thinking. And it's good pat on our back to say, well, nobody's complaining about it, but how can you say that about people who have no ability to actually be able to do those things? 

And so you're blaming the victim. Well, I think that the letters to Congress, the letters to the Medicare administrative contractors, they are effective. People are busy. They don't take the time. I saw the Wound Healing Society actually has a very nice link, and maybe you can post it on the commentary, but they have a very nice link about how to send a letter to your member of Congress about this issue.