Coding Guidelines for Skin Substitute Grafts

Recently on July 7, 2022, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that announces the proposed policy changes for Medicare payments under the Physician Fee Schedule (PFS), and other Medicare Part B issues, effective on or after January 1, 2023. This proposed rule also suggested some changes for skin substitute products to streamline the coding, billing, and payment rules. Before discussing those proposed changes, let’s understand the coding guidelines for skin substitute grafts. 

Coding Guidelines Skin Substitute Grafts

  • As per the Current Procedural Terminology (CPT) definition, skin substitute grafts include non-autologous skin (dermal or epidermal, cellular, and acellular) grafts (e.g., homograft, allograft), non-human skin substitute grafts (i.e., xenograft), and biological products that form a sheet scaffolding for skin growth. 
  • Skin substitute graft codes are not to be reported for application of non-graft wound dressings (e.g., gel, powder, ointment, foam, liquid) or injected skin substitutes.
  • Non-graft wound dressings or injected skin substitute codes are not used with skin replacement surgery application codes and are considered incorrect coding. Such products are bundled into other standard management procedures if medically necessary and not separately payable.
  • Claims reporting skin substitute grafts must contain the presence of an appropriate application CPT code.
  • If the service for the application code is denied, the service for the skin substitute will also be denied.
  • When billing for Part B drugs and biologicals (except those provided under the Competitive Acquisition Program [CAP] for Part B drugs and biologicals), the use of the JW modifier to identify unused drugs or biologicals from single-use vials or single-use packages that are appropriately discarded is required. The discarded amount shall be billed on a separate claim line using the JW modifier. Providers are required to document the discarded drug or biological in the patient’s medical record.
  • Payers expect that where multiple sizes of a specific product are available, the size that best fits the wound with the least amount of wastage will be utilized.
  • When a portion of a drug/biological is discarded, the medical record must clearly document the amount administered and the amount wasted. The documentation must include the date, time, amount of medication wasted, and the reason for the wastage.
  • In situations where a portion of a single-use package must be discarded, payment will be made for the portion discarded along with the amount applied up to the amount of the product on the package label. Medical record documentation must clearly indicate the information noted above.

Documentation Requirements

  • All documentation must be maintained in the patient’s medical record and made available to the contractor upon request.
  • Every page of the record must be legible and include appropriate patient identification information (e.g., complete name, dates of service[s]).  The documentation must include the legible signature of the physician or non-physician practitioner responsible for providing the care to the patient.
  • The submitted medical record must support the use of the selected ICD-10-CM code(s). The submitted CPT/HCPCS code must describe the service performed.

Medicare Physician Fee Schedule Proposed Rule CY 2023

CMs are proposing several changes to policies for skin substitute products to streamline the coding, billing, and payment rules and to establish consistency in coding and reimbursements. Specifically, CMS is proposing 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 is collecting feedback on our key objectives related to skin substitute policies, which include:

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

You can refer CMS article ‘Medicare Physician Fee Schedule (MPFS) Proposed Rule CY 2023’ for proposed changes in skin substitutes coding. In case of any assistance is needed for medical billing and coding for your wound care practice, contact MedicalBillersandCoders (MBC) at / 888-357-3226 for more information.