Inventory as Liability: The Financial Exposure coming in January
January 2026 is not just the start of a new era in wound care. It marks the moment that the economics of skin-substitutes and wound barriers are rewritten in real time. What clinics purchased in good faith under one payment model may be billed under a completely different one—and the gap between those two is where the real exposure is.
For years, many wound-care practices operated under the ASP+ system with predictable outcomes and flexible return policies. Come January, that era ends. As CMS finalizes its shift toward treating skin substitutes as incident-to supplies, reimbursed at a flat national rate of roughly $127.28/cm², existing inventory becomes more than a storage issue. It becomes a potential liability.
The clinics that recognize this now will avoid the losses. Here’s a quick primer for those who want more.
1. The Policy Shift That Changes Everything
CMS is not being subtle about why it restructured this category. After years of rapid growth and escalating Medicare spending on skin substitutes, the agency is moving toward cost containment, uniformity, and simplified payment policy.
Starting January 1, 2026, most skin-substitute products—HCT/Ps, 510(k)s, and PMAs alike—will fall under a single, site-neutral incident-to rate rather than the historical ASP+ reimbursement pathway.
The effect is immediate and profound:
Products that used to reimburse at several hundred—or several thousand—dollars per cm² will now reimburse at a flat rate.
Payment differentiation between “high-cost” and “low-cost” products collapses.
The economic assumptions many clinics used when stocking inventory no longer match the marketplace they will operate in.
This shift isn’t hypothetical. It is published policy with a definitive start date. And clinics holding legacy inventory may have to reconcile yesterday’s costs with tomorrow’s Medicare allowable.
2. When Inventory Becomes a Financial Liability
Outside of the clinical value, there is also an economic reality to all this: Any skin substitute purchased under the old model risks becoming a liability as of January 1st.
Consider a simplified example:
A graft purchased at $500/cm² under ASP-era expectations will reimburse at roughly $127.28/cm² in 2026. If a clinic stocked multiple units, that difference compounds quickly into tens of thousands of unanticipated loss.
That exposure is particularly acute for:
Clinics that stock large amounts of inventory or “buy in bulk”
Practices with historically high per-cm² cost products
Sites that relied on flexible return policies that may no longer exist
Consignment closets filled with product aligned to pre-2026 reimbursement rules
For many Doctors, the inventory line on the balance sheet may appear stable. But its economic value—if measured against Medicare Allowable—has already changed. Waiting until January to reconcile this is too late.
3. Not All Supplier Models Operate the Same Way
Some distributors and long-standing representatives will continue honoring broad return flexibility based on personal relationships. But clinics should understand that not every supplier operates under that same philosophy or risk profile.
National manufacturers, stocking distributors, and PE-backed organizations are already tightening policies in anticipation of the 2026 economic shift.
Their decisions are driven by margin compression, inventory exposure, and operational risk—not by ill will toward providers.
A single rep’s business ethos, however admirable, does not reflect the structural pressures shaping the broader supply chain. And while some partners may choose to absorb risk to preserve relationships, others cannot—and will not—maintain 2024–2025 levels of flexibility under a new Medicare Allowable system.
This is why clinics should verify return terms directly with each supplier rather than assuming past practices will hold. The risk is not theoretical; it varies by supplier model, inventory exposure, and internal policy. Understanding that variation is essential to protecting the clinic’s financial position heading into January.
4. Operational Fallout: Economics, Scheduling, and Compliance
If one thing in this business is certain, it’s that economic exposure doesn’t exist in a vacuum. It spills directly into day-to-day clinic operations. And the realities of this will become obvious in the next few months, particularly in three ways:
Economics shift fast.
If the Medicare Allowable drops significantly while cost-of-goods remains anchored to pre-2026 pricing, clinics may feel the pressure almost immediately in Q1. Working capital, supply ordering patterns all shift at once.
Scheduling uncertainty increases risk.
A single no-show on a grafting appointment in December can convert a product into stranded inventory with potentially no path to return or exchange. The January rule amplifies the consequences of unpredictable patient flow.
Documentation and coding scrutiny intensifies.
When policies change, audits follow. CMS has already signaled increased attention to medical necessity, utilization patterns, and grafting frequency. Economic pressure often coincides with operational enforcement.
Clinics need stability going into 2026. Stability depends on eliminating unnecessary exposure now.
5. The December Shelf Review: What Clinics Should Do Right Now
A single structured hour spent reviewing inventory can prevent months of downstream financial strain. The steps are simple:
Step 1. Pull a complete list of every skin-substitute SKU currently on hand.
Include size, cost basis, date of acquisition, and remaining units.
Step 2. Model future reimbursement.
Apply the 2026 incident-to rate against each product to make sure it makes sense for the clinic.
Step 3. Identify high-risk items.
These include SKUs acquired under an assumption of flexible returnability.
Step 4. Call every manufacturer/supplier this week.
Return windows are tightening across the industry. Some manufacturers are ending returns entirely. Do not assume past policies apply through year-end.
5. Adjust ordering immediately.
Shift away from stocking and toward just-in-time ordering.
6. Stabilizing the Practice: Strategic Moves for 2026 and Beyond
The clinics who navigate the transition well will enter 2026 with clarity rather than surprise. The most effective long-term adjustments include:
Moving to smaller, more predictable on-hand inventories
Strengthening supplier relationships around transparency and policy communication
Building internal processes that reduce no-shows, improve documentation, and tighten scheduling discipline
These intelligent corrections will help acclimate to our new economic reality. For many clinics, they will determine whether 2026 is disruptive or manageable.
Bionavix will continue tracking these changes and helping clinics understand the implications before they arrive. Before they’ve become problems.
If you want help modeling your 2026 strategy, we’re here to support you. Reach out.