PolyNovo Limited (ASX:PNV), a disruptive ASX 200 medical technology company based in Melbourne, specialises in products that simplify the management of acute complex wounds. The company has released an announcement outlining the potential impact and opportunity presented by proposed changes to U.S. Medicare reimbursement for outpatient wound care. The changes, detailed in a recent article in The Australian, address current disincentives in the system that favour higher-priced skin substitutes, leading to significant Medicare outlays.
The proposed changes by the Centers for Medicare & Medicaid Services (CMS) involve a flat reimbursement rate of USD $806 per square inch for outpatient skin substitutes. This aims to remove the economic incentive for surgeons to use more expensive products, creating a market that values clinical outcomes and cost-effectiveness. According to a CMS press release in July 2025, this shift is expected to save billions for Medicare and taxpayers while incentivizing the use of products with the most clinical evidence of success.
PolyNovo anticipates sustained margins for its NovoSorb® BTM and MTX products under the proposed flat rate. The company also foresees enhanced competitiveness as the removal of price-based incentives may reduce the market presence of higher-cost competitors, benefiting clinically robust and cost-effective options. Acting CEO Dr Robyn Elliott stated that outpatient product application, the focus of the CMS proposed changes, is a significant potential growth area for PolyNovo’s products.
Chairman David Williams expressed excitement about the possibilities, particularly in bringing PolyNovo’s technology to help American servicemen and women, veterans, and others with chronic wounds exacerbated by diabetes. The CMS proposal is currently under consultation, with a decision expected in November and a potential start date of 1 January 2026. PolyNovo will continue to monitor developments and update shareholders accordingly.
