Published November 5, 2025 • Effective January 1, 2026
This update explains the new Medicare rule in clear terms and how it may affect wound care services. It covers what changed, when it starts, and what actions providers should take.
Plain Language Summary of Updates
Two conversion factors (the base dollar used to set payments):
- Qualifying Participants (QPs) in Advanced APMs: $33.5675
- Non-QPs: $33.4009
Both amounts are higher than 2025.
–2.5% “efficiency” adjustment applies to work RVUs and intra-service time for non–time-based codes (many procedural codes). Time-based E/M and several other service types are excluded.
Skin substitutes (CTPs): Starting in 2026, Medicare will pay separately for most products as incident-to supplies in both the physician office and the hospital outpatient department. For 2026, Medicare will use one national per–square centimeter rate (approximately $127.28/cm²). Products licensed as §351 biologics will continue to be paid under the ASP methodology.
Coverage rules (LCDs): DFU/VLU LCDs become active January 1, 2026. Payment depends on meeting these medical necessity requirements.
Telehealth and supervision:
- Medicare keeps and simplifies parts of the Telehealth List.
- Virtual direct supervision (real-time audio and video) is permanently allowed for certain incident-to services and some other categories.
- This does not apply to procedures with 10- or 90-day global periods, and audio-only does not qualify.
Key Terminology
- Conversion factor: The base dollar Medicare multiplies by RVUs to set payment.
- RVU (work RVU): A measure of clinician effort and intensity.
- Incident-to: Services provided by clinical staff under a physician’s supervision and billed by the physician.
- QP: Qualifying Participant in an Advanced Alternative Payment Model.
- LCD: Local Coverage Determination issued by your Medicare contractor.
- CTP: Cellular and tissue-based products, commonly called skin substitutes.
Key Dates to Know
- November 5, 2025: Final rule published.
- January 1, 2026: All changes take effect, including new conversion factors, the –2.5% efficiency adjustment, separate payment for skin substitutes, and DFU/VLU LCDs.
What Changed and Why It Matters to Wound Care
1. Skin substitutes (CTPs)
How payment works in 2026: Most products are paid as supplies using a single national per–cm² rate. Application procedures will use add-on (ZZZ) product codes with the correct square centimeter units.
What this likely means:
- Practices using high acquisition-cost products may see lower margins.
- Lower-cost options may become more financially sustainable.
- Aligning physician office and hospital outpatient payment reduces incentives to shift sites of service solely for product reimbursement.
Coverage first: Claims will be paid only if DFU/VLU LCD criteria are met and documented, including ulcer type, duration, conservative care attempts, intervals between applications, and objective wound measurements.
2. –2.5% efficiency adjustment on many procedures
This adjustment applies to non–time-based codes, including many wound procedures.
Although the conversion factor increases, reductions in work RVUs may result in net payment increases, flat payment, or decreases depending on the code. Practices should model their most frequently billed wound codes.
3. Telehealth and supervision
Virtual direct supervision via real-time audio and video is now permanently allowed for certain services delivered by staff under physician supervision.
This does not apply to procedures with 10- or 90-day global periods, and audio-only does not qualify.
This change may support staffing flexibility across multiple locations, provided documentation clearly shows immediate availability and the correct modality.
4. Remote monitoring and pricing signals
Medicare continues to streamline telehealth policies and may rely on hospital outpatient data to set future technical payment amounts. Remote monitoring supply and technical components could be repriced over time.
Practical Actions for Wound Care Programs
- Review your CTP formulary and costs.
- Map each product to its HCPCS code and regulatory category.
- Estimate margins at approximately $127.28 per cm² for 2026.
- Create clinically appropriate substitution rules.
- Update charge capture and EHR.
- Build add-on (ZZZ) product codes with cm² units.
- Verify bundling rules and modifiers.
- Tighten documentation for DFU/VLU LCDs.
- Standardize templates for ulcer type, size, duration, conservative care, and response.
- Finalize a virtual direct supervision policy.
- Define eligible supervisors and documentation standards.
- Train staff that audio-only does not qualify.
- Reforecast your 2026 budget.
- Model top wound codes under the new conversion factors.
- Build scenarios for QP and non-QP status.
- Monitor claims in Q1 2026.
- Review denials weekly.
- Adjust workflows quickly based on payer feedback.
Likely Industry Impact (What to Watch)
- Product mix and access: A single per–cm² rate may shift utilization toward lower-cost products.
- Procedure payments: Some non–time-based procedures may not see net gains.
- Operational flexibility: Permanent virtual direct supervision may support multisite coverage.
How Safe Harbor Group Can Help
We can assist with: (1) a 2026 CTP margin model and formulary review, (2) LCD-ready DFU/VLU documentation templates, and (3) a charge capture and code build audit to ensure alignment with final CMS policy.
Source: CMS CY 2026 Medicare Physician Fee Schedule Final Rule (CMS-1832-F) fact sheet:
https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-final-rule-cms-1832-f
This material is for general compliance education and is not legal advice. Always confirm details in the final CMS addenda and your Medicare Administrative Contractor’s guidance.
