Reimbursement Policy Changes for Billing of Skin Substitutes

Highmark is updating its reimbursement and billing requirements for skin substitutes. These updates align with changes made effective Jan. 1, 2026, by the Centers for Medicare and Medicaid Services (CMS) that aim to ensure accurate claims processing and usage monitoring.

Effective Jan. 1, 2026, the CMS began reimbursing non-BLA (Biologics License Application) skin substitutes as incident-to supplies at a flat national rate. Highmark is adopting the CMS flat national rate pricing methodology for non-BLA skin substitutes, with the change taking effect on:

• Jan. 1, 2026, for Medicare Advantage plans
• July 1, 2026, for Commercial plans

It is important to note that reimbursement for BLA skin substitutes will continue to be processed under the Highmark Average Sales Price (ASP) methodology for both Medicare Advantage and Commercial plans.

Use of Modifiers JW and JZ

To gather more data on the appropriate use and billing of these products, Highmark is updating Reimbursement Policy RP-003: Convenience Kits, Drug and Biological Wastage, with additional directions for the reporting of skin substitutes. These changes will outline the billing requirements for a provider seeking reimbursement for these services.

Effective immediately, Highmark requires providers to append one and/or both modifiers on claim lines when reporting the use of skin substitute products:

• JW – Drug/Biological amount discarded/not administered to any patient
• JZ – Zero drug amount discarded/not administered to any patient

Highmark will not apply payment alterations based on the presence of these modifiers on the claim line. The modifiers will be used to identify and monitor the utilization of these products.

RP-003: Convenience Kits, Drug and Biological Wastage will be updated on July 1.

Background on the Use of Skin Substitutes

The rising number of chronic wound cases, especially among the elderly and those with diabetes, has significantly increased the demand for skin substitutes. This has led to a dramatic escalation in Medicare Part B spending for these products in non-facility settings, jumping from $252 million in 2019 to over $10 billion in 2024.