Below The Knee | Market Signal

OPENING SHOT

OPPS Sets the Table. PFS Is About to Set the Real Number.

CMS released the CY2027 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center proposed rule on July 2, and deeper analysis of it kept surfacing all week. Legal and policy read-throughs published in the days since are calling it one of the most consequential outpatient payment rules in years — and for once, that's not hyperbole about a routine 2.4% rate update. The rule proposes fundamentally restructuring how Medicare pays for 340B-acquired drugs, cutting reimbursement from ASP plus 6% to ASP minus 33.4% while continuing to pay non-340B drugs at ASP plus 6%, and simultaneously accelerating recovery of the 340B budget-neutrality remedy from a 0.5% to a 3% annual conversion factor reduction. That's a direct hit to hospital outpatient departments running wound care programs with 340B-acquired biologics in their formulary — a different and arguably bigger story than the payment-rate line most of this industry is watching. On skin substitutes specifically: CMS proposes no change. The $127.14/cm² flat rate holds for CY2027, with CMS repeating that it doesn't yet have enough CY2026 claims data to justify differentiated rates by FDA regulatory category — that decision is pushed to CY2028 rulemaking, same as flagged here in prior weeks. Comments close August 31; final rule in November.

Here's what matters more for this audience: OPPS only governs the hospital outpatient setting. The bulk of CAMPs volume runs through physician offices, and that's Physician Fee Schedule territory — a separate rule, separate track. Last year's CY2026 PFS proposed rule, the one that actually created the office-based incident-to-supply framework for skin substitutes in the first place, dropped July 14, 2025. On that same calendar cadence, the CY2027 PFS proposed rule is due any day now — plausibly before next week's edition of this newsletter goes out. That's the rule this desk will be reading line by line the moment it lands. Given CMS just held the line on the hospital-side rate and cited the same "not enough claims data yet" justification it's used all year, the base case is that PFS mirrors OPPS and keeps $127.14 flat for physician offices too. But PFS is where CMS has the freedom to move independently of OPPS, and it's the rule that actually sets the rate for the site of care where most CAMPs dollars flow. Don't assume the two rules move in lockstep until PFS is actually on paper.

That claims-data gap CMS keeps citing as the reason to wait is exactly what makes this week's other reimbursement story land hard: a national clinician survey published in the Journal of Wound Care confirms what individual companies have been reporting all year — the fixed $127.14/cm² rate is producing authorization delays, treatment denials, reduced provider capacity, and service-line closures across community-based wound care settings. This is peer-reviewed, survey-level evidence, not one company's guidance cut. It's precisely the kind of data CMS says it's waiting on before it will revisit the rate — and it's arriving well ahead of CMS's own claims pipeline. Expect it to show up in the CY2027 OPPS comment file, and likely in commentary on PFS once that rule is out.

Meanwhile, PolarityBio's July 1 BLA submission for SkinTE — covered here last week — is the reimbursement-arbitrage play worth keeping in view against all of this. Products approved under a BLA are paid under ASP-based biologics methodology, entirely outside the incident-to-supply CAMPs framework that OPPS and PFS both govern. While CMS holds the flat rate in place for another year, at least one manufacturer is building a product specifically positioned to sidestep the entire structure. That's the trade this whole rate debate is implicitly about.

One smaller item, for the record: CMS also reversed a Medicare billing change this week that had cut reimbursement for Orthofix's non-invasive bone growth stimulators by roughly 10%, following April's FDA reclassification of the devices from Class III to Class II. Good news for Orthofix — the stock jumped roughly 10% after hours and led the BTK Wound Care Fund™ this week — but it's a device-specific billing correction, not a CAMPs signal, and shouldn't be read as one.

Here's the week.

REIMBURSEMENT & POLICY

Regulatory | CMS Issues Sweeping CY2027 OPPS/ASC Proposed Rule — 340B Overhaul, Skin Substitute Rate Holds

CMS released the CY2027 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center proposed rule on July 2 (CMS-1850-P). Beyond the headline 2.4% OPPS/ASC rate increase, CMS proposes: cutting 340B-acquired drug reimbursement from ASP+6% to ASP-33.4% while non-340B drugs keep ASP+6%; accelerating the 340B budget-neutrality remedy recovery from a 0.5% to a 3% annual conversion-factor reduction (compressing repayment to roughly CY2029 instead of stretching into the 2040s); removing 637 more procedures from the Inpatient Only list; and expanding site-neutral, PFS-equivalent payment to additional imaging services in off-campus provider-based departments. On skin substitutes: no substantive change. CMS maintains the existing $127.14/cm² APC rate and payment methodology for CY2027, again citing insufficient CY2026 claims data to support the FDA-category differentiated rates it has now deferred twice. Comments close August 31; final rule expected November.

The BTK read: Don't let the flat skin-substitute line be the only thing you take from this rule. The 340B drug payment overhaul is a bigger and more immediate financial event for any hospital outpatient wound care program running 340B-acquired biologics — ASP-33.4% versus ASP+6% is a real margin swing, not a rounding error, and it hits January 1, 2027 if finalized as proposed. Separately, the skin substitute deferral is now the second consecutive rulemaking cycle where CMS has said "not enough data yet" — CY2026 set the flat rate, CY2027 holds it, and CY2028 is now the real target for differentiation. That's a long runway for manufacturers positioned to benefit from FDA-category rate splits, and a long runway of flat-rate pain for everyone else. The rule this desk is actually waiting on is the CY2027 Physician Fee Schedule proposed rule — OPPS only covers hospital outpatient, and most CAMPs volume runs through physician offices under PFS. Based on last year's release cadence (CY2026 PFS dropped July 14, 2025), expect CY2027 PFS any day now.

Reimbursement | Survey Confirms 2026 CMS CAMPs Fixed Payment Is Causing a Wound Care Access Crisis

A national clinician survey published in the Journal of Wound Care confirms widespread disruption following CMS's January 2026 Physician Fee Schedule change establishing the fixed $127.14/cm² reimbursement rate for all CAMPs regardless of product type. The survey links the policy to authorization delays, treatment denials, reduced provider capacity, and service-line closures across community-based wound care settings.

The BTK read: This is the first survey-level, peer-reviewed evidence — not anecdote, not a single company's guidance cut — quantifying what this newsletter has tracked company by company since January. It also happens to be exactly the kind of data CMS says it's waiting on before it will revisit the flat rate in CY2028 rulemaking. Evidence like this typically shows up in agency comment files faster than CMS's own claims data catches up. Expect it cited in the CY2027 OPPS comment period, and likely referenced once the CY2027 PFS proposed rule drops.

Reimbursement | Elevance Health Pays $342M to CMS Amid Medicare Advantage Billing Probe

Elevance Health paid $342 million to CMS following a billing probe alleging years of overcharges in its Medicare Advantage plans covering approximately 2 million beneficiaries. CMS had threatened to halt Elevance's MA enrollments in February 2026 unless the company corrected persistent noncompliance with accurate billing and overpayment return requirements.

The BTK read: A landmark enforcement number and a signal, not an isolated event. CMS is tightening scrutiny of Medicare Advantage risk-adjustment coding broadly, and MA is the payment rail under a large share of wound care, vascular intervention, and limb salvage claims. Any company or provider group with MA-heavy payer mix should read this as the leading edge of a coding-accuracy enforcement cycle, not a one-off Elevance problem.

Regulatory | FDA Advisory Panel to Review Peptide Bulk Drug Substances, Including Obesity Treatments

An FDA advisory panel is set to assess peptide bulk drug substances spanning obesity to opioids, signaling increased regulatory scrutiny of compounded peptide drugs.

The BTK read: Peptide-based compounds are increasingly used in chronic wound and diabetic foot ulcer management, and this review touches compounding pharmacy access to those agents in BTK-adjacent clinical settings. A watch item, not an action item — the panel hasn't ruled on anything yet.

Also this week, briefly: CMS reversed a Medicare billing change that had cut reimbursement roughly 10% for Orthofix's non-invasive bone growth stimulators (HCPCS E0747, E0748, E0760), following April's FDA Class III-to-II reclassification of the devices. Orthofix stock rose ~10% after hours on the news and led the BTK Wound Care Fund™ this week at +15.49% — see Opening Shot for the full context on why this is a device-specific correction, not a CAMPs signal.

WOUND CARE

Market | Mölnlycke Launches Three New Wound Care Products in US Market

Mölnlycke rolled out three new wound care products in the United States this week, expanding its advanced wound management portfolio. Full product detail wasn't available at publication, but the launch is notable on scale alone — Mölnlycke is one of the category's largest players, and a three-product US drop typically applies competitive pressure across the advanced dressings field.

The BTK read: Watch how Smith+Nephew, 3M/Solventum, and Coloplast respond over the next quarter. Mölnlycke doesn't launch casually in the US market — three simultaneous SKUs suggests a coordinated commercial push, not a single line extension. Worth a follow-up once full product specs surface.

Clinical | German Expert Consensus Backs NPWT for Cutting Postoperative Complication Costs

A newly published German expert consensus makes the economic case for negative pressure wound therapy as a cost-mitigation tool for postoperative wound complications, rather than purely a clinical one.

The BTK read: Expert consensus documents in major European markets are procurement signals as much as clinical ones — they shape institutional adoption and reimbursement conversations well before they show up in US guidelines. NPWT manufacturers with EU commercial exposure should treat this as an early input into 2027 tender and formulary conversations, not just a clinical footnote.

Also this week — briefs:

VASCULAR INTERVENTION

Clinical | Penumbra Launches FORWARD Study for Distal Stroke Thrombectomy

Penumbra initiated its FORWARD study, an international real-world prospective multi-center study collecting safety and efficacy data on mechanical thrombectomy — including computer-assisted vacuum thrombectomy (CAVT) and modulated aspiration — in acute ischemic stroke with distal occlusions. The study evaluates Penumbra's RED reperfusion catheter portfolio, including THUNDERBOLT, the first CAVT platform delivering modulated aspiration for M2 occlusions.

The BTK read: This is real-world evidence generation, not a pivotal trial — and that's the point. Post-FDA-clearance RWE studies are how CAVT adoption expands into previously underserved distal occlusion subsets without waiting for a new pivotal readout. Adjacent to BTK's core coverage, but worth tracking as a bellwether for how aspiration-based mechanical thrombectomy evidence gets built — the same playbook applies to peripheral vascular intervention.

CLINICAL & RESEARCH

Clinical | FibroBiologics Completes Third Batch of Diabetic Foot Ulcer Drug

FibroBiologics completed manufacturing of the third batch of its investigational fibroblast-based DFU therapy — a process marker supporting continued clinical development.

Regulatory | Organogenesis' ReNu (Knee Osteoarthritis) Clears FDA BLA Acceptance

The FDA has accepted Organogenesis' Biologics License Application for ReNu, a cryopreserved amniotic suspension allograft for symptomatic knee osteoarthritis, with a PDUFA date of April 24, 2027. Worth a brief note here for visibility into an Organogenesis pipeline event — but knee OA sits outside the DFU/VLU wound care indications this newsletter tracks under Skin Substitutes/CAMP, and outside the CAMPs reimbursement conversation above. Not a CAMPs signal; a separate Organogenesis story to watch on its own terms.

FINANCE | CAPITAL ACTIVITY

Investment | GTCR Divests Biosurgery Unit of Corza Medical

GTCR is divesting its biosurgery business unit through Corza Medical, separating surgical and wound-related biologics assets from the broader Corza portfolio.

The BTK read: This is a private equity portfolio restructuring move, not a distress signal — GTCR is narrowing Corza around focused platforms, which is standard sponsor playbook. But biosurgery assets (hemostats, tissue repair biologics) overlap directly with limb salvage and surgical wound management, so watch for who the buyer turns out to be. A strategic acquirer with existing wound care distribution would be the more consequential outcome than another PE flip.

Investment | Fibroheal Raises ₹14 Crore (~$1.7M) to Expand Advanced Wound Care into Developed Markets

Bengaluru-based Fibroheal Woundcare secured ₹14 crore (~$1.7M) from a syndicate of healthcare and life sciences investors, including existing backer KITVEN Funds, to fund international expansion of its silk biomaterial-based wound care products. The round followed a secondary exit for early investor Telama Investment at a 29.6% IRR.

The BTK read: Small check, but a real signal — an emerging-market wound care innovator with a validated exit (29.6% IRR for an early backer) raising specifically to enter the US and European markets. Not a near-term competitive threat, but worth a placeholder in the Innovation Index if Fibroheal files for US regulatory clearance.

BTK Wound Care Fund™ — Week in Review

The Fund finished the 5-day period at +0.01% — effectively flat against a mixed week for the broader indices. S&P 500 +0.81%, Dow Jones -0.78% and Nasdaq +1.45%.

Top 5 · 5D: Celularity (CELU) +20.61% · Orthofix (OFIX) +15.49% · Sanuwave (SNWV) +13.78% · Conmed (CNMD) +8.27% · MiMedx (MDXG) +4.81%

Bottom 5 · 5D: Avita Medical (RCEL) -12.85% · Bioventus (BGS) -5.27% · Axogen (AXGN) -4.95% · InfuSystem Holdings (INFU) -4.43% · Globus Medical (GMED) -4.38%

The only real-time wound care market portfolio in existence. Live at intelligence.belowtheknee.co

📅 UPCOMING EVENTS

July 14 | Pre-Market — AngioDynamics FY2026 Full-Year Earnings

August 6–9 | Nashville, TN — APMA Annual Scientific Meeting — Gaylord Opryland

🤝 September 10–11 | New Orleans, LA — IPAWS & Tissue Repair Summit (Kernexus) — The Ritz-Carlton - BTK Partner Event

September 14–16 | Louisville, KY — NAWCO HEAL Conference 2026

September 23–27 | Kuala Lumpur, Malaysia — WUWHS 2026

October 15–18 | Las Vegas, NV — SAWC Fall 2026 — Caesars Palace

October 22–24 | Anaheim, CA — DFCon 2026 — JW Marriott

November 6 | Virtual — WoundCon Fall 2026

December 9–12 | Phoenix, AZ — Desert Foot — Multi-Disciplinary Limb Salvage & Wound Care Conference

Below The Knee | belowtheknee.co — Independent market intelligence for wound care, limb salvage, vascular intervention, and foot & ankle.

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See you next week,

-Scott