Payment reform for skin substitute products

(a) Coverage of skin substitute products Section 1861(s)(2) of the Social Security Act (42 U.S.C. 1395x(s)(2)) is amended— (1) in subparagraph (II), by striking and at the end; (2) in subparagraph (JJ), by adding and at the end; and (3) by inserting after subparagraph (JJ) the following new subparagraph: (KK) skin substitute products (as defined in section 1847A(c)(6)(J)).. (b) Payment (1) Payment amount Section 1847A of the Social Security Act (42 U.S.C. 1395w–3a) is amended— (A) in subsection (a)(1)— (i) by striking the period at the end and inserting; and; (ii) by striking shall apply to and inserting “shall apply— (A) to; and (iii) by adding at the end the following new subparagraph: (B) to payment for skin substitute products (as defined in subsection (c)(6)(J)) that are furnished on or after January 1, 2026.; and (B) in subsection (b)— (i) in paragraph (1)— (I) in the text preceding subparagraph (A), by inserting or a skin substitute product after drug or biological; (II) in subparagraph (B), by striking or at the end; (III) in subparagraph (C), by striking the period at the end and inserting; or; and (IV) by adding at the end the following new subparagraph: (D) in the case of a skin substitute product (as defined in subsection (c)(6)(J)), the amount determined under paragraph (9).; and (ii) in paragraph (2)— (I) in subparagraph (A), by inserting or a skin substitute product after drug or biological; and (II) in subparagraph (B), by inserting, and, with respect to a skin substitute product, a square centimeter after pertaining to liquids; and (iii) by adding at the end the following: (9) Skin substitute products (A) Payment amount (i) Initial payment amount For 2026, the amount determined under this paragraph for a skin substitute product is the volume-weighted average of the Medicare payment allowance limits for skin substitute products, as determined under subparagraph (B). (ii) Annual update For 2027 and each subsequent year, the amount determined under this paragraph for a skin substitute product for such year is equal to the amount determined under this paragraph for the previous year, adjusted by the percentage increase in the Consumer Price Index for All Urban Consumers (United States city average) for the 12-month period ending with June of such previous year. (B) Volume-weighted average payment limit For purposes of subparagraph (A)(i), the volume-weighted average of the Medicare payment allowance limits for skin substitute products is determined by— (i) calculating, with respect to each billing and payment code listed in the April 2023 ASP Pricing File for each skin substitute product, an amount equal to the product of— (I) the payment limit included in such file with respect to such code; and (II) the number of units (as specified under paragraph (2))— (aa) billed with respect to such code for a date of service in 2023; and (bb) listed in the CMS Integrated Data Repository for Part B (Carrier & DME) claims data; (ii) calculating the sum of all amounts determined under clause (i); and (iii) dividing the sum calculated under clause (ii) by the total number of units determined under clause (i)(II).. (2) Conforming amendments Section 1833(a)(1) of the Social Security Act (42 U.S.C. 1395l(a)(1)) is amended— (A) in subparagraph (S)(i), by striking subject to subparagraph (EE)’’ and inserting ‘‘subject to subparagraphs (EE) and (II)’; (B) by striking and (HH) and inserting (HH); and (C) by inserting, and (II) with respect to skin substitute products under section 1861(s)(2)(KK), the amount paid shall be 80 percent of the lesser of the actual charge or the payment amount established under section 1847A(b)(9) before the semicolon at the end. (c) Skin substitute product defined Section 1847A(c)(6) of the Social Security Act (42 U.S.C. 1395w–3a(c)(6)) is amended by adding at the end the following: (J) Skin substitute products The term skin substitute product — (i) means a cellular, tissue, biological or synthetic material that— (I) is applied to a wound and intended to remain within the wound bed; and (II) is marketed pursuant to section 510(k), 513(f)(2), or 515 of the Federal Food, Drug, and Cosmetic Act, or section 361 of the Public Health Service Act; and (ii) does not include a product that is intended to temporarily protect or cover the wound bed and be removed without resorption such as a dressing; and (iii) the term skin substitute product shall include any products reimbursed pursuant to skin substitutes codes by the Medicare program at any time prior to January 1, 2026.. (d) Exclusion from reporting requirements Section 1847A(f)(2)(A) of the Social Security Act (42 U.S.C. 1395w–3a(f)(2)(A)) is amended by inserting (except that, beginning January 1, 2026, a drug or biological so described does not include a skin substitute product (as defined in subsection (c)(6)(J))) after products that are payable under this part as a drug or biological. (e) Consolidated billing and payment code Not later than January 1, 2026, the Secretary of Health and Human Services shall establish a new billing and payment code for all skin substitute products (as defined in subparagraph (J) of section 1847A(c)(6) of the Social Security Act (42 U.S.C. 1395w–3a(c)(6)), as added by subsection (b)).