President Donald Trump sent a social media post disparaging proposed new regulations aimed at limiting profiteering and bad treatment in the wound care industry on Sunday, setting off a round of speculation that his administration would freeze the pending regulations indefinitely or simply eliminate them.
The post on Trump’s Truth Social platform accused the Biden administration of making the proposed regulations, and predicted “more suffering and death,” and a rise in amputations as a result of the regulations, both statements that are untrue. “Help is on the way,” the post said, adding “We must end this policy now.”
The post appeared to be a copy of someone else’s mini-graphic, not Trump’s trademark Truth Social typed post. It is not clear who made the graphic.
As a result of industry profiteering and poor treatment, the proposed new regulations, called Local Coverage Determinations, for skin substitutes in the wound care industry were set to go into place on Feb. 12, but they were suddenly frozen on Jan. 24. While no reason for the freeze was given, industry figures said then that they thought it was part of the administration’s regulatory freeze, and a new date of April 13 was given for implementing them, with no explanation. The regulations are intended to limit skyrocketing costs and also to prevent bad treatment, causing patient harm with the use of amnion and similar grafts, made from placentas and other substances, used to treat non-healing wounds.
The Truth Social post (see at right) set off immediate alarms. “Trump is basically parroting the distorted soundbites of the amnion companies and speaking up against the L.C.D. in his personal post on Truth Social,” an industry insider who spoke on condition of anonymity wrote in an email.
“He is openly supporting the largest Medicare fraud and abuse since the opioid crisis.”
Dr. Danielle Whitacre, of Bloom Healthcare in Lakewood, Colo., wrote in an email: “Ugh! It’s absolutely what you think it is. The skin substitute manufacturers or someone advocating for the use of the products got to Trump. The post has their talking points. The ‘crooked policy’ is the LCD. This is terrible news.” Whitacre previously detailed for ClearHealthCosts Bloom’s experiences with mobile wound care companies treating Bloom’s homebound patients with skin substitutes and causing harm, including hospitalization and amputation.
A lawyer for the industry sources who want to turn back the local coverage determinations, Preeya Pinto of the law firm King & Spaulding, wrote in an email: “President Trump shared a similar post about the LCDs several months ago, before the election. This is his second time posting about the issue and the MASS Coalition is pleased that the post recognizes that the policy set forth in the LCDs would harm patients and limit innovation. We don’t have any further information on the post but the MASS Coalition fully support rescinding the LCDs.” The MASS Coalition is a group of manufacturers, marketers and clinicians who oppose the L.C.D.’s.
Dr. Helen Gelly, who heads a wound care and hyperbaric medicine group practice in the Atlanta area, wrote in an email: “I have no idea if that is real or not. With this administration and the convoluted thinking, they might rescind the policy. However, from a DOGE and cost cutting perspective there seems to be a disconnect. The amount of fraud and abuse is eye popping, how they would not see that aspect is unclear.”
Dr. Caroline Fife, chief medical officer at the health records company Intellicure and a frequent blogger on wound-care-related topics at CarolineFifeMd, wrote: “I hope the incoming administration’s focus on reducing waste will include the possible overuse of skin substitutes. We need a plan other than allowing the current Wild West of Wound Care to continue.”
The industry insider added, “When talking to some people on the Hill this week the response we have basically gotten is ‘this administration is not against people making money.’ So there might not be that much appetite to uncover fraud, if it’s being done by U.S. companies or especially Trump sponsors.”
Special treatment
Wounds that don’t heal by themselves may need special treatment, sometimes by the application of products commonly known as skin substitutes that can be biologic or synthetic — derived from placentas, infant foreskins, or cadaver skin, as well as fish skin and some other sources. Treatment of these non-healing wounds, including diabetic foot ulcers and venous leg ulcers, as well as other wounds like pressure injuries (such as bedsores), some surgical incisions, and treatment of wounds caused by Mohs surgery for skin cancer, can avert pain and other complications, including amputations.
Doctors and industry experts agree that the products used to close wounds are important for the appropriate patient. But the system has generated a fierce competition for creating products that some say are wildly overpriced, and a series of practices for pricing and application of the products that are less than pristine — it’s a market described by some sources as “the wild, wild West.”
Spending has skyrocketed, with much of that spending coming from Medicare — about 16% of Medicare beneficiaries have a chronic non-healing wound. The prices of the skin substitute products, which hovered around $125 a square centimeter for years, have shot up to $3,000, $4,000 and up, industry sources said. Some manufacturers sell a graft for, say, $3,000, and then give the purchaser a rebate (the polite name for a kickback) — while the purchaser gets reimbursed by Medicare for the full price. When improperly applied or used on the wrong patients — people whose physical troubles like circulatory difficulties or poor nutrition are at the heart of their failure to heal — people get hurt. (For our first story about this, see here. For our second installment, see here. For our third installment, see here.)
As a result of concern over high prices and improper usage, the new Local Coverage regulations were proposed by the nation’s seven Medicare Administrative Contractors to limit the number of skin substitute products that are covered by Medicare, and also to impose some other restrictions, including a condition that the products should have good research behind them supporting their efficacy, and that the people applying these products should be certain that patients are assessed for underlying reasons that might delay wound healing, like poor circulation, poor nutrition and other causes. The restrictions were due to come into effect Feb. 12. But implementation of those regulations, proposed in identical Local Coverage Determinations (L.C.D.’s) by the administrative contctors, was postponed on Jan. 24 until April 13.
The accounts we heard are hair-raising: Patients with failed wound grafts they didn’t need who are hospitalized with infections, and charged a 20 percent co-pay if they lack supplemental insurance. Doctors’ offices who see the possibility of free money with a big buy of wound grafts, applied apparently with the best of outward intentions — and bringing big profits in the form of rebates, which are supposedly illegal in healthcare as financial inducements for treatment. Unskilled clinicians with slipshod sterile practices. But if it is within the guidelines, and the loser is not obvious — it’s only Medicare, right? — then what is the problem?
It’s also true that Medicare Advantage, the privatized version of Medicare, seldom pays for these practices. So ads for wound care products like this one from RXWound specify that the patient has to have a traditional Medicare policy, not Medicare Advantage.
In reporting these stories, it has became clear that the topic is complicated and full of mystery. Several of the people I spoke with were candid and then said they could not be quoted on the record — either fearing professional damage, or wishing not to be made into a pariah in the small world of wound care. Several refused to speak with me at all.
Federal investigation
Separate from Trump’s social media post, several industry sources said they had been in contact with federal investigators who were looking into the industry.
Two people with knowledge of the investigation, speaking on background and on condition of anonymity, said wound care has been a topic of investigation for several years, as far back as 2014. Investigators did uncover a case last year, a case that came to light in June, when two people in Arizona, Alexandra Gehrke and Jeffrey King, “were charged by indictment with various counts of conspiracy, health care fraud, receiving kickbacks, and money laundering in connection with an alleged scheme to fraudulently bill Medicare $900 million for highly expensive amniotic allografts,“ the Office of the Inspector General wrote. That investigation included the F.B.I., the inspectors general of the Department of Health and Human Services and the Veterans Administration, and the Defense Criminal Investigative Service, the criminal investigative arm of the U.S. Department of Defense Office of Inspector General. The sum was later revised to $1.2 billion.
Continuing probes involving the Health and Human Services Office of Investigations and the Department of Justice are focusing on all aspects of the industry, the two said: Manufacturers, marketers, people like the Arizona couple, the sales force, and the provider at a wound care center, even relationships between the sales force and a provider or a wound care center, “even down to the nurse or physician or P.A. who’s actually applying the graft.”
Has the trouble in the industry increased? “I would say that we’re seeing more of it than usual. But I think a lot of that has to do with there’s more options out there for what can be used. The technology is growing. A lot of these skin substitutes are very helpful. But at the same time, when when access to to easily accessible, yet highly reimbursable items come out, they’re also targets for for fraudsters, and so we are seeing that in the Arizona case, and then likely some others to come in the near future,” one said.
One interesting aspect, they said, is the benefit to a skilled nursing or other congregate care facility, where a lot of mobile wound care treatment takes place. “Also, where’s the benefit to the provider? It’s really in the volume of patients that they can see in a very short period of time, in a congregate living setting. We see this with many other broad schemes, not just in terms of of skin substitutes, that this is a pretty vulnerable population to be thinking about.”
The Office of the Inspector General of the Department of Health and Human Services said last November that it was conducting an audit of Medicare Part B payments for skin substitutes. The work plan for the audit says: “From calendar years 2020 through 2023, Medicare Part B payments for skin substitutes have increased substantially. We will review Medicare Part B claims for skin substitutes to identify payments that were at risk for noncompliance with Medicare requirements.” The report is expected to be complete in 2026.
A change in pricing mechanisms led to an inspector general’s report in March 2023 about how some companies were skirting the law on reporting of A.S.P.’s, leading to chaotic pricing. (See full document below.)
Unsubstantiated claims
The Truth Social post claims that the L.C.D.’s are a Biden policy, but that is not true — they were generated by the Medicare Administrative Contractors, who are separate from the Centers for Medicare and Medicaid Services. The contractors noted the surge in spending and created a unified set of guidelines to head off the worst practices in the market.
One principal part of the regulations cuts the number of “covered” skin substitutes — those Medicare will pay for — to 17 from the current list of hundreds. Many of the hundreds lack complete evidence of efficacy. (Skin substitutes are not regulated by the Food and Drug Administration; rather, they come to market via what is called the “361 pathway,” used for things like transplanted organs, instead of the F.D.A.’s drug approval process.)
The claim that the policy would lead to 431,429 unnecessary amputations, citing the Journal of Wound Care, Vol. 31 No. 10, 2022, is also an exaggeration. In reality, about 160,000 people with diabetes undergo amputations each year in the U.S.
“The Journal of Wound Care (Oct. 2022 issue) did not specifically attribute any increase in amputations to a Biden policy. Instead, it likely discussed the general risk of amputations from diabetic foot ulcers and the importance of advanced wound treatments without predicting a 270% spike,” the industry insider wrote. “In fact, clinical evidence shows that using advanced wound therapies (like skin substitutes) significantly reduces amputation rates. One Medicare analysis saw amputation incidence drop by 65% (to 2.1%) when modern treatments were applied properly. Trump’s claim flips this benefit on its head, assuming a catastrophic jump in amputations if certain products aren’t covered. There is no factual basis that 431,429 amputations would inevitably occur; the journal certainly did not state that Biden’s policy will cause such a precise number of unnecessary limb losses. In short, Trump’s use of the Journal of Wound Care is misleading. The data in that publication underscore the importance of evidence-based wound care, but do not remotely validate his doomsday claim about amputations.”
Further, more than 187,000 deaths are predicted in the Truth Social post, a number attributed to the National Institutes of Health. The insider went on: “This claim is not grounded in any official NIH publication and is an extrapolation based on mortality statistics. The NIH itself has not issued a statement that 187,286 Americans will die due to this policy. Trump’s team apparently derived this number by combining the earlier amputation figure with the known high mortality rates after diabetic amputations. Medical research does show that major diabetes-related amputations carry a very high 5-year mortality risk on the order of 56% mortality within five years. (In fact, most of that mortality is from the vascular disease that leads to the chronic wound and is not related to the wound status) If one takes Trump’s inflated amputation count (431,429) and applies roughly a 43% mortality rate, you get about 187,000 deaths, which is evidently how his campaign arrived at that scare statistic. However, this is not an official NIH-sanctioned forecast; its a hypothetical worst-case scenario.
“To put it plainly: no NIH report confirms 187,286 people will die because of a product coverage change. Instead, what the science says is that diabetic foot complications are dangerous, a point everyone agrees on, but Trump is distorting that to claim an inevitability of nearly 200,000 deaths. This number is designed to shock, not to inform. It is a projection built on Trump’s earlier faulty assumptions, not a direct statistic from the NIH.”
Further delay expected
One industry insider, speaking on condition of anonymity to avoid disrupting an ongoing investigation, said he thinks the L.C.D. decision will be kicked on down the road, rather than being implemented in April or killed entirely.
“No one in the industry that I know thinks anything is gonna change in April,” he said. “It’s gonna stay the same.”
He pointed out that much of the pricing shenanigans are legal under the Average Sales Price pricing rules fixed by the Centers for Medicare and Medicaid Services — the manufacturers set their prices, and Medicare pays. He said he has spoken with investigators who told him “we cannot investigate just because they are billing for high codes.”
“There’s no accountability, and the very organizations or agencies that are controlling and monitoring it are allowing it to flow. It’s a pretty clear message to people that as long as I follow the rules, it’s O.K.
“I think if nothing happens in April, a lot more people will get involved. It’s common sense. Maybe it’s not gonna last forever, but if it will last for another year…. “
‘Huge money’
Is money changing hands to influence regulation and policy? He replied that there are plenty of things that could be done to control the industry, like instituting price caps or auditing and investigating the places that collect the most money from Medicare. He said that’s not being done, and that very fact asks a question about why.
“This is huge money,” he said. “This isn’t a couple million dollars, this is billions of dollars that’s involved here.
“It’s not hard to find the bad players, not hard at all. So ask the question why: If they know it’s being abused, why haven’t they done anything about it? The only thing to be deduced is that someone has a vested interest in it not going away. And there you go.”
He said he has been trying to call attention to this problem for four years, speaking to investigators along the way, but nothing has changed materially.
“And if nothing happens in April, you can expect higher prices next year,” he said.
Do you have things to tell us about the wound care or skin substitute industry? Reach Jeanne Pinder at email jeanne@clearhealthcosts.com or encrypted Signal at 914-450-9499.
Posts in this series:
Wound care and skin substitutes: Rising costs, new policies and a whiff of scandal
Skin substitutes and possible danger: Is patient harm happening in wound care?
Federal investigators probe wound care industry
Trump makes social media post disparaging proposed wound-care rules, setting off speculation
Care groups raise concerns about ‘heartbreaking’ wound care practices
