Proposed rules aimed at reining in skyrocketing costs and questionable treatment of patients with wounds that won’t heal were delayed again today by the Centers for Medicare and Medicaid Services.
In an announcement on its website, C.M.S. wrote that it “is reviewing its coverage policies for skin substitute products” and that because of the review, the proposed regulations’ “effective date will be delayed until January 1, 2026.”
This essentially means that current practices, with high and rising prices, and sometimes inappropriate use of skin substitutes, can continue without restraint, and the regulations proposed by the nation’s seven Medicare contractors and fully approved, are to be delayed yet again.
Skin substitutes, used to treat wounds that do not heal properly, have become a focus of attention because of skyrocketing costs and questionable outcomes. Treatment of these wounds, including diabetic foot ulcers and venous leg ulcers, as well as other wounds like pressure injuries (bedsores), and some surgical incisions and Mohs surgeries, can avert pain and other complications, including amputations. Many assume that skin substitutes are good because — of course — healing any wound must be good. But that is not necessarily true.
Private insurers
Many private insurers will not pay for them, or pay very little, but traditional Medicare pays for them, because of a series of regulatory decisions. Medicare payments for such treatments were higher than $10 billion in 2024, double the 2023 spending, according to an analysis prepared for The New York Times. “Medicare now spends more on the bandages than on ambulance rides, anesthesia or CT scans, the analysis found,” The Times reported in its article, titled “Medicare Bleeds Billions on Pricey Bandages, and Doctors Get a Cut.”
Doctors speaking on the topic were careful to say that skin substitutes — made of substances like placenta tissue, infant foreskin tissue, fish skin, cadaver skin and the like — can be extremely helpful when used appropriately, but that they are sometimes being used willy-nilly and inappropriately, without comprehensive wound care practices, including assessment of the whole person.
It is also true that the “Average Sales Price” pricing system used by Medicare allows manufacturers or distributors to set their own prices, which the market is supposed to adjust — a practice that seems to encourage some manufacturers to charge high prices and some wound care specialists to use the most expensive product, regardless of research on efficacy. (See one of our previous stories here.)
Effectiveness questioned
Questions about the effectiveness of these treatments have also been raised. Dr. Danielle Whitacre of Bloom Healthcare in Lakewood, Colo., said that Bloom and others had raised alarms with Medicare after noting rising costs for wound care that Bloom discovered had been billed by wound care companies that treated Bloom patients in congregate care settings with little or no supervision or permission.
Of a Bloom cohort of patients who received skin substitutes, she said, one-third were hospitalized “for something that looked like infection of the wound.” Complications included osteomyelitis, cellulitis, sepsis, bacteremia and amputations. Only 10 percent healed; the remainder discontinued treatment with no positive results.
Whitacre said Bloom and other Accountable Care Organizations had found that the widespread applications of these substances to inappropriate patients had cost billions of dollars and suspected widespread patient harm.
As a result of the skyrocketing spending and questions about efficacy and patient harm, new regulations were proposed by the nation’s seven Medicare Administrative Contractors to limit the number of products that are covered by Medicare, and also to impose some other restrictions. They were due to come into effect Feb. 12. But those new regulations, proposed in identical Local Coverage Determinations (L.C.D.’s) by the M.A.C.’s, were postponed Jan. 24 until April 13 by the incoming Trump administration.
Among other things, the new regulations have would sharply limited the number of skin substitutes that Medicare would cover, including only those with clinical documentation of effectiveness but not the swelling number of “me-too” products with no such research. They also mandated that documentation of wound treatment be specific; that approved products have serious research documenting their effectiveness; and that the length of wound care treatment is limited. They also required full-on evaluation of the wound and the patient to determine the cause of the problem and see if there are other exacerbating factors, like poor circulation, poor nutrition and the like, the reason being that if treatments are applied but the underlying causes are not addressed, then the treatment will not work.
Further delays
Today’s move kicks the can further down the road, meaning that the existing practices will continue or get worse.
There have been a lot of rumors flying about industry figures making pilgrimages to Mar-a-Lago to plead their case for less regulation with the Trump administration. More than one photo of wound-care executives posing with the new Secretary of Health and Human Services, Bobby Kennedy Jr., have been circulating.
After the first delay in the L.C.D. regulations was announced in January, President Donald J. Trump made a social media post disparaging the regulations, and essentially copyng the talking points of the sector of the industry that wants few or no new restrictions.
Commenting on the Trump post at the time, one industry insider speaking on condition of anonymity said: “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.”
Higher prices?
Dr. Caroline Fife wrote today in an email after the delay was announced: “It does not appear that C.M.S. is moving away from its commitment to link coverage to evidence of clinical benefit. C.M.S. is offering manufacturers extra time to submit peer reviewed publications (until November 1, 2025). More research focused on wound healing treatments is a good thing. However, since by law C.M.S. can’t consider price in making coverage decisions — and since C.T.P. product prices continue to escalate — I’m not sure how we approach the issue of cost effectiveness.”
(The terminology is a little confusing: While they are commonly called “skin substitutes,” the formal name is officially “cellular and/or tissue-based products” (C.T.P.’s) or “cellular and acellular matrix-based products” (C.A.M.P.’s) — different variations on the theme. Payments are generally based on the price of the procedure plus the price of the product used, but there are different arrangements.)
Fife has been a certified wound specialist since 1998, and she is the chief medical officer of the wound care software company Intellicure, the executive director of the U.S. Wound Registry nonprofit and a professor at Baylor College of Medicine in Houston.
On her blog, in a short post marking the delay, she wrote: “There’s now an amniotic that is over $5,000 per cm2. I wonder how high the prices will go by next January?”
Praise for delay
A lawyer for the industry sources who want to turn back the local coverage determinations, Preeya Pinto of the law firm King & Spaulding, applauded the delay. She has been spearheading the legal opposition to the L.C.D.’s for the opposition group, the MASS coalition, trying to overturn or delay the regulations, saying they deny coverage in a way the coalition finds inappropriate.
“The MASS Coalition is pleased that Medicare has delayed moving forward with the Skin Substitute LCDs so that the Trump Administration has time to fully evaluate the appropriate coverage policy and payment reform for these critical treatments for patients with chronic wounds,” she wrote in an email today.
“We look forward to working with CMS on a coverage policy and payment reform that ensures access to skin substitutes for the benefit of patients, providers and the Medicare program.”
MASS has said that the limits on the number of approved products will constrict supply, meaning that patients who need these products cannot get them. That is challenged by many industry sources, who point out that the older generation of products, made by processing placenta and similar tissue — and in modest prices at $125 per square centimeter and below, as opposed to the $3,000 or even $5,000 per square centimeter of the products newly come to market — are in abundant supply.
(Membership and funding for MASS is not stated on the group’s website, and Pinto did not answer my question about that in a Zoom interview earlier this spring.)
Seeking fraud and waste
Reacting to the delay today, a number of industry figures pointed to the stated purpose of the Trump administration’s Department of Government Efficiency, DOGE, to reduce waste and fraud. Permitting the continued sketchy practices of high pricing and willynilly application set by manufacturers, clinicians and distributors with little proof of clinical efficacy and a clear profit motive, makes it very clear that DOGE is ignoring practices that much of the industry deplores.
One industry figure declined to comment on the record, but wrote in an email “DOGE stupidity is ignoring billion dollar fraud.”
It’s also true that often the distributors will sell a skin substitute product for an originally chosen sticker price, under C.M.S. pricing rules, and then give a 40 percent rebate to the medical practice that buys it, meaning that the effective price is 40 percent lower — and that the medical practice will bill Medicare for the full sticker price.
Eventually the original sticker price is supposed to be reduced, accounting for the rebate, but meanwhile the medical practice pockets the full price, the distributor or manufacturer sells over-priced goods, and Medicare continues to pay up.
Probes continue
Reports continue to circulate that federal investigators are probing various aspects of the industry — excessive billing, high pricing, kickbacks, inappropriate applications and other aspects of the industry.
Previously, an Arizona couple who had been charged with fraud relating to skin substitutes in June pleaded guilty on Jan. 31 to $1.2 billion in fraud in wound care. In the fraud case, 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 defendants targeted elderly Medicare patients, many of whom were terminally ill in hospice care, through their companies — Apex Mobile Medical LLC, Apex Medical LLC, Viking Medical Consultants LLC, and APX Mobile Medical LLC,“ the Office of the Inspector General wrote. (See legal document in our previous story.)
What’s next? In its announcement of the delay, C.M.S. wrote: “The Agency requests that any peer-reviewed publications and high-quality findings from other public sources of skin substitute study results be submitted to CMS at CAGInquiries@cms.hhs.gov by November 1, 2025.
“C.M.S. will ensure all evidence received will be sent to the M.A.C.’s to review to determine if revisions to the L.C.D. are appropriate. For more information on the L.C.D. process, see https://www.cms.gov/cms-guide-medical-technology-companies-and-other-interested-parties/coverage/local-coverage-determination-process-and-timeline.
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
