Within a microscopic statistical description of heavy ion collisions, we investigate the effect of the medium on the formation of light clusters. The dominant medium effects are self-energy corrections and Pauli blocking that produce the Mott effect for composite particles and enhanced reaction rates in the collision integrals. Microscopic description of composites in the medium follows the Dyson equation approach combined with the cluster mean-field expansion. The resulting effective few-body problem is solved within a properly modified Alt-Grassberger-Sandhas formalism. The results are incorporated in a Boltzmann-Uehling-Uhlenbeck simulation for heavy ion collisions. The number and spectra of light charged particles emerging from a heavy ion collision changes in a significant manner in effect of the medium modification of production and absorption processes.