Background

As announced in July of 2022, the Centers for Medicare and Medicaid Services (CMS) proposed several changes to their policies for skin substitute products (aka cellular and/or tissue-based products or CTP) to streamline the coding, billing, and payment rules and to establish consistency in how CMS codes and pays for these products across various settings. Specifically, CMS proposed to change the terminology of skin substitutes to ‘wound care management products’ in order to accurately reflect how clinicians use these products, to provide a more consistent and transparent approach to coding for these products, and to treat and pay for these products as incident to supplies under the PFS beginning on January 1, 2024. 

Additionally, CMS solicited feedback on key objectives related to skin substitute policies, which include:

• (1) ensuring a consistent coding and payment approach for skin substitute products across the physician office and hospital outpatient department setting;
• (2) ensuring that all skin substitute products are assigned an appropriate HCPCS Level II code, including proposal regarding what documentation is necessary to provide CMS for currently marketed and future products;
• (3) using a uniform benefit category across products within the physician office setting, regardless of whether the product is synthetic or comprised of material, so we can incorporate payment methodologies that are more consistent; and
• (4) maintaining clarity for interested parties on CMS skin substitutes policies and procedures.

The Alliance of Wound Care Stakeholders and several other parties provided feedback to CMS, mentioning that changes to the way cellular- and/or tissue-based products for skin wounds are coded and paid for in the physician office under the proposed 2023 Physician Fee Schedule could create barriers to care that could ultimately lead to increased amputations and infections for patients with chronic non-healing wounds. The Alliance urged CMS to remove or delay implementation of the proposed CTP provisions from the final 2023 Physician Fee Schedule until patient access issues can be further studied.

In August 2023, three Medicare Administrative Contractors (MACs) - CGS Administrators, Novitas Solutions, and First Coast Service Options (FCSO) - finalized Local Coverage Determinations (LCDs), Local Coverage Articles (LCAs), and responses to comments, making significant changes to Medicare's fee-for-service coverage for skin substitute grafts and CTPs for diabetic foot and venous leg ulcers, and suggested that they become effective on October 1, 2023 (originally effective September 17, 2023). Among other changes, the LCDs and LCAs finalized the items in Table 1 below. On 9/28/23, following many inquiries, the 3 MACs withdrew the new LCDs and LCAs, returning to their prior versions of LCDs and LCAs. For CGS and Novitas, frequency limitation has returned to 10 CTP applications within a 12 week episode of care. Additionally, CGS and Novitas' current LCAs no longer list specific covered CTPs like the rescinded versions did. According to these MACs, a new Proposed LCD will be published for comment and presented in an open meeting in the near future (See CGS LCD and LCA; Novitas LCD and LCA; FCSO LCD and LCA) 

So what's new in 2023?

While proposals published on the calendar year (CY) 2023 Physician Fee Scheduled Proposed Rule did not materialize for CY 2023, several other updates went effective starting in January 2023. Below is a summary on updates regarding payment for CTPs and HCPCS Level II Coding in 2023, grouped by relevance to Physician/ qualified healthcare professional (QHP) offices and hospital outpatient departments (HOPDs). For updates in 2024, see blog post "Skin Substitutes - What's New in 2024? The Calm Before the Storm?"

Payment for CTPs and their application in 2023

For physician/QHP offices

• CMS did not finalize any of the Physician Fee Schedule coverage and payment proposals described in the CY 2023 PFS proposed rule. As a result, there was no change in the way CMS pays physician/QHP offices for CTPs and their application. (2023 PFS Final Rules) 
• In regards to payment for FDA 510(k)-cleared biological and synthetic CTPs that have been assigned a HCPCS A2XXX code, QHPs should use high-cost CPT codes and the corresponding HCPCS A2XXX code to report their application. (2023 PFS Final Rules) 

For HOPDs:

• Background (MLN Matters MM13041) :
• The payment for CTPs that do not qualify for CMS Hospital Outpatient Prospective Payment (OPPS) pass-through status are packaged into the OPPS payment for the associated CTP application procedure. This policy also applies to the ASC payment system. For OPPS payment purposes, CTPs fall in 2 groups:
• High-cost skin substitute products: to be used in combination with of one of the skin application procedures described by Common Procedural Terminology (CPT) codes 15271-15278
• Low-cost skin substitute products for packaging purposes: to be used in combination with one of the skin application procedures described by HCPCS code C5271-C5278
• Effective January 1 2023, hospital outpatient departments should use high-cost CPT codes and the corresponding HCPCS A2XXX code to report application of FDA 510(k)-cleared biological and synthetic products that have been assigned a HCPCS A2XXX code, just like in the QHP office setting.(2023 OPPS Final Rule)
• HCPCS Code C1849 (Skin Substitute, Synthetic, Resorbable, by per Square Centimeter) should no longer be used, as CMS finalized its policy to retire HCPCS code C1849, which is the code that had been used under OPPS to report the usage of synthetic skin substitute products.
• CMS now makes payment under the OPPS for product-specific HCPCS A codes for skin substitute products and for other unclassified FDA 510(k)- cleared products identified by HCPCS code A4100.(2023 OPPS Final Rule)
• Any graft skin substitute product that is assigned a code in the HCPCS A2XXX series is assigned to the high cost skin substitute group.
• However, HCPCS code A4100 (Skin substitute, fda cleared as a device, not otherwise specified) is assigned to the low cost skin substitute group, consistent with CMS’ existing payment policy that unclassified graft skin substitute products be assigned to the low cost skin substitute group.
• With respect to the application of powdered skin substitute products (e.g. micronized sheet skin substitute broken down into particulate form), CPT codes that describe the application of ‘‘skin substitute graft” (CPT codes 15271, 15273, 15275, 15277 and HCPCS  codes C5271, C5273, C5275, and C5277) should continue to not be utilized, as powdered skin substitute products are not assigned to neither the high cost skin substitute group nor to the low cost skin substitute group.(2023 OPPS Final Rule)
• CMS interprets the term ‘‘skin substitute graft’’ as sheet skin substitute products that would be grafted in the wound area. According to CMS, a powder is not a graft even if the product forms a sheet scaffolding similar to a skin substitute  product. If a skin substitute product is not a sheet product, then it is not described by the skin substitute graft application codes, and the product cannot be assigned to the high cost or low cost skin substitute groups. 
• As for the 2023 OPPS National Average Allowable rates: for current national average rates for the application of CPT codes 15271-15278 for high cost CTPs and HCPCS Level II codes C5271-C5278 for low cost CTPs, refer to the topic “Chargemaster Template for Hospital Outpatient Wound Care Services".

For both HOPDs and Physician/QHP offices: 

• To find out which cost category (high cost or low cost) each CTP has been assigned to in CY 2023, visit Table 10 of CR 13041 "Skin Substitute Assignments to High Cost and Low Cost Groups for CY 2023".(Table 10 of CR 13041)
• In the January 2023 update of the ASC Payment System, CMS moved the following products from the low-cost category to the high-cost category: A2005-A2006, A2208-A2013, A2015-A2018, A4100, Q4170, Q4191, Q4210, Q4235, Q4248-Q4250, Q4254 (AAPC)
• In August 2023, three Medicare Administrative Contractors (MACs) - CGS Administrators, Novitas Solutions, and First Coast Service Options (FCSO) - finalized Local Coverage Determinations (LCDs), Local Coverage Articles (LCAs), and responses to comments, making significant changes to Medicare's fee-for-service coverage for skin substitute grafts and CTPs for diabetic foot and venous leg ulcers. Among other changes, the LCDs and LCAs finalized the items in Table 1 below.
• On 9/28/23, following many inquiries, the 3 MACs withdrew the new LCDs and LCAs, returning to their prior versions of LCDs and LCAs. For CGS and Novitas, frequency limitation has returned to 10 CTP applications within a 12 week episode of care. Additionally, CGS and Novitas' current LCAs no longer list specific covered CTPs like the rescinded versions did. According to these MACs, a new Proposed LCD will be published for comment and presented in an open meeting in the near future (See CGS LCD and LCA; Novitas LCD and LCA; FCSO LCD and LCA).
  
• For clinical, reimbursement and documentation updates and checklists, see topic "Cellular and/or Tissue Based Products". For a list of LCDs and LCAs by MACs, see topic "Medicare Coverage Determinations for Wound Care".

Table 1. Cancelled CTP Coverage Changes for Diabetic Foot and Venous Leg Ulcers: Updates from CGS Administrators, Novitas Solutions, and FCSO Originally Set for October 1, 2023

For mobile providers delivering care at the patient’s home

• Effective January 3, 2023, CMS announced it would add the following codes to the home health consolidated billing non-routine supply code list:
• A2014 Omeza collag per 100 mg Omeza collagen matrix, per 100 mg
• A2015 Phoenix wnd mtrx, per sq cm Phoenix wound matrix, per square centimeter
• A2016 Permeaderm b, per sq cm Permeaderm b, per square centimeter
• A2017 Permeaderm glove, each Permeaderm glove, each
• A2018 Permeaderm c, per sq cm Permeaderm c, per square centimeter
• This typically means that if a provider applies these CTPs on a patient who is homebound and receiving care from a home health agency, payment for the CTPs will be denied by Medicare because of consolidated billing. The most current Home Health Consolidated Billing Master Code List can be found on the CMS website.

Table 2. CMS proposals for payment of CTPs and their application (CY 2023 PFS proposed rule)

HCPCS Level II Coding for CTPs in 2023

Summary: 

• CMS did not finalize any of the HCPCS Level II coding proposals described in the CY 2023 PFS Proposed Rule (Table 3).(CY 2023 PFS Final Rules) 
• CTPs have now HCPCS A codes or Q codes. HOPDs and QHPs should verify that their electronic health record, their charging system, and their coding and billing software are updated with the correct HCPCS codes for the CTPs that they use.

Background on the classification of skin substitutes 

• As reviewed in the CY 2023 PFS Final Rules, from the FDA’s regulatory standpoint, CTPs can be classified as:
• Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) that are regulated by the FDA solely under section 361 of the Public Health Service (PHS) Act and the regulations in 21 CFR part 1271 (“361 HCT/Ps”)
• CTPs regulated by the FDA as devices that may be subject to premarket review through a 510(k) premarket notification submission (“510(k)”) in accordance with section 510(k) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (“510(k)-cleared CTP”). 
• FDA 510(k)-cleared CTPs can be biological or synthetic products
• In the CY 2021 OPPS/ASC final rule with comment period (85 FR 86064 through 86067), CMS revised its description of skin substitutes to include 510(k)-cleared synthetic products, in addition to biological products. 

Current status: HCPCS Level II codes of skin substitutes 

• CTPs have unique HCPCS Level II codes that describe skin substitutes. As of 2023, most CTPs have a HCPCS Q code but newer 510(k)-cleared synthetic or biological CTPs have a HCPCS A code.(CY 2023 PFS Final Rules)  

HCPCS “Q” codes: 

• As of 2023, CTPs with a HCPCS Q code consist of:
• 361 HCT/Ps
• 510(k)-cleared CTPs that at the time of code assignment were considered as biologicals by CMS.
• Note: When these products are used in the office setting, they are paid by Medicare using the methodology under section 1847A of the Act, which, in many cases, is based on the average sales price (ASP) plus a statutorily mandated 6 percent add-on. (CY 2023 PFS Final Rules) 

HCPCS “A” codes:

• Starting in January 2022, all new skin substitute products with an FDA 510(k) clearance started to receive product-specific A codes in the HCPCS A2XXX series (87 FR 44655). These products include both biological products that are not human cell, tissue, or cellular or tissue-based products (361 HCT/Ps) as well as synthetic products. 
• Note: HCPCS A codes are payable in the physician office setting as contractor priced products that are billed separately from the procedure to apply them. (CY 2023 PFS Final Rules) 

Table 3. CMS proposals for HCPCS Level II Coding for Skin Substitutes (CY 2023 PFS Proposed Rule)

And what proposals might be revisited in the near future?  

See proposed changes in their entirety on the Federal Register. While proposals were not finalized for CY 2023, CMS intends to revisit them in the future.

Changing the Terminology of Skin Substitutes

CMS proposed to replace the term “skin substitutes” with the term “wound care management” or “wound care management products", and will revisit this proposal in 2024. CMS believes this new term more accurately describes the suite of products that are currently referred to as skin substitutes while providing enough specificity to not include bandages or standard dressings, which are not considered real skin substitutes as they do not actually function like human skin that is grafted onto a wound. CMS recognizes that the proposed term could cause confusion with the care management series or Evaluation or Assessment and Management (E/M) codes of AMA CPT codes. But they also considered alternate terms such as wound coverings, wound dressings, wound care products, skin coverings and cellular and/or tissue-based products for skin wounds and still believe the proposed terms are more technically accurate and descriptive for how these products are used than the alternative's considered. 

Revising Payment for Skin Substitutes

In order to ensure CMS treats skin substitutes consistently in terms of coverage, coding, and payment, CMS proposes that skin substitute products that are commonly furnished in the physician office setting be considered as incident to supplies in accordance with section 1861(s)(2)(A) of the Act, effective January 1, 2024. “Incident to supplies” refers to supplies that are furnished as an integral, although incidental, part of the physician's personal professional services in the course of diagnosis or treatment of an injury or illness (§ 410.26). Under CMS' proposal, in the office setting, CMS would no longer pay separately for skin substitute products under the ASP+6% payment methodology.

• CMS believes that the suite of products referred to as skin substitutes should be treated in a uniform manner across different outpatient care settings. In terms of payment for these products within the office setting, CMS acknowledges the current variation between contractor pricing for synthetic skin substitute products and payment based on ASP+6% for non-synthetic skin substitute products; and also the challenges to the clear categorization of products as synthetic or non-synthetic. As a result, CMS believes establishing a consistent framework for how these products are treated within the physician office and hospital outpatient settings will help ensure equitable access and appropriate payment for these services.
• Treating these products as incident to supplies would mean that the resource costs for these products would be included in establishing PE relative value units (RVUs) for the associated physicians' service with which they would be furnished. For example, for CPT Code 15271 (application of skin substitute graft, leg or ankle), we establish the PE RVU by considering three separate categories of PE resource costs involved in furnishing the service: clinical labor, supplies, and equipment. Together, these costs are the total direct PE resource inputs. When considering these skin substitute products as a supply, CMS would add their associated cost to the direct PE inputs for the service with which the product is furnished.
• CMS further proposes to establish “A” codes for all skin substitute products meeting the criteria for a HCPCS Level II code (i.e., new and existing products), and propose to contractor price these codes effective January 1, 2024.
• For CY 2023, skin substitute products that were previously assigned Q codes will continue to be paid under the current ASP+6% payment methodology.

Updates: CMS Town Hall January 2023 

After reviewing comments on the proposals, CMS announced in the CY 2023 PFS Final Rules that it understands that it would be beneficial to provide interested parties more opportunity to comment on the specific details of changes in coding and payment mechanisms prior to finalizing a specific date when the transition to more appropriate and consistent payment and coding for these products will be completed.

In January of 2023, CMS conducted a Town Hall with interested parties to address concerns as well as discuss potential approaches to the methodology for payment of skin substitute products under the PFS. CMS is taking into account comments received on the questions below, to strengthen proposed policies for skin substitutes in future rulemaking:

• 1) What should we consider as part of CMS efforts to ensure consistent, fair, and appropriate payment for services and products across different settings of care?
• 2) How could we ensure that valuation under the PFS adequately accounts for variability in relative resource costs of different skin substitute products as supplies within the Practice Expense Relative Value Unit (PE RVU) methodology?
• 3) Are there similarly resourced groups of products/services that could inform how payment might be stratified without risking access to services?
• 4) What should we consider as alternatives regarding any potential changes to terminology?

This page will be updated as new updates arise.

Resources

•  For updates in 2024, see blog post "Skin Substitutes - What's New in 2024? The Calm Before the Storm?"