The entire landscape of treatment of non-healing wounds is about to change.
The Centers for Medicare and Medicaid Services has imposed a fixed price for skin substitute products used to treat non-healing wounds as of Jan. 1, a move that is expected to rein in excesses on higher-priced skin substitutes. At the same time, regulations to limit the number of reimbursement-approved skin substitutes were quietly shelved on Dec. 24.
The moves were an attempt to put limits on industry practices that have led to skyrocketing Medicare costs — and criminal charges and audits against multiple providers.
Neither decision was completely expected — or unexpected. The prices for skin substitutes had risen sharply over the past several years, and some industry regulations had been scheduled to come into effect last February — but the incoming Trump administration delayed them. Numerous reports of financial contributions to the Trump inauguration and other Trump-related spending by skin substitute manufacturers and distributors produced a spate of rumors that the administration was withdrawing the regulations as part of a “pay for play” atmosphere in Washington.
Meanwhile the price increases on the skin substitutes and excesses in the industry continued unabated — until the Jan. 1, 2026, limit on payments was announced in November. And proposed regulations to curb the number of products that would be paid for suddenly had less of a reason for being, because of the price limits — which would presumably limit desire for buying a $5,000 product if it would be reimbursed at $127.14.
‘Wild, wild West’
Wounds that don’t heal by themselves need special treatment, often 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. Skin substitute 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, can avert pain and other complications, including amputations. The prices charged for those products could go as high as $5,000 a square centimeter, meaning the providers, manufacturers, distributors and middlemen could make a lot of money.
Doctors and industry experts agree that the products used to close wounds are crucially important for care for some patients. But the system has generated a fierce competition by companies making products that some say are “me-too” products that 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 ballooned, with much of that spending coming from Medicare. Patient harm has been documented in treatment by unscrupulous providers.
As a result of the outcry among industry experts pointing to sketchy practices, a group of Medicare Administrative Contractors, who govern payments for Medicare procedures, came up with a guidelines in 2024 to limit the worst of the bad practices specifically on diabetic foot ulcers and venous leg ulcers — omitting other wounds, like pressure sores and others. But the Trump administration delayed the regulations, and then delayed them again, and on Dec. 24 they were completely withdrawn. See our previous coverage here and here and here and here and here and here.
Sketchy practices
Some industry experts hailed the price limits as possibly heralding a new era for a troubled industry.
“I finally have a sense of hope for the future of the field of wound care,” Dr. Caroline Fife, a wound care expert, wrote on her blog. “The status quo was totally unsustainable. Price controls are better for patients, Accountable Care Organizations, secondary insurers, tax payers, and the Medicare trust fund. Ultimately, it will also be better for the dedicated wound care practitioners who were never completely dependent on [cellular and/or tissue-based products] revenue….
“Despite all the grand standing that product choice was based on clinical benefit, let’s be honest, product use has been largely determined by product price defined by potential practitioner revenue. In 2026, product choice will still be determined by product price, except that practitioners will be incentivized to select products below a specific payment threshold. Under that price threshold, for the first time, the door is open to selecting [cellular-based tissue products] based on real world clinical benefit.”
Industry experts said that the skin substitutes had long been paid for by traditional Medicare because of complicated rules about how to introduce new products and how to set their prices. Essentially, a manufacturer could introduce a new product and set a price without proving the product’s efficacy, leading to “sky’s the limit” pricing practices. Medicare Advantage, the privatized version of traditional Medicare, tended not to approve these procedures and pay the sky-high prices.
There will be no list for now of covered or noncovered skin substitute products, as had previously been anticipated. But C.M.S. did set price controls: There is a fixed reimbursement rate for all products at $127.14 per square centimeter, which takes effect Jan. 1, 2026. (Apparently C.M.S. will also use its “wage unit” method to apply higher prices in metro areas and lower prices in rural areas, rather than having the $127.14 apply uniformly nationwide.)
Arrests, settlements
Signaling the gravity of the problem, several arrests for improper use of skin substitutes in wound care were announced by federal investigators recently, just as new rules attempting to crack down on improper usage were announced by the Centers for Medicare and Medicaid Services.
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,“ the Office of the Inspector General wrote. (See legal document in our previous story.)
In another case, a wound care company agreed to a $45 million settlement for “allegations that they violated the False Claims Act by knowingly causing the submission of claims to Medicare for medically unnecessary surgical procedures, for more lucrative surgical procedures when only routine non-surgical wound management had been done, and for evaluation and management services that were not billable under Medicare coverage and coding rules.”
Cost controls
It’s hard to know what took place behind the scenes, but the fixed price should address some of the worst excesses.
Opinions of the move varied. One knowledgeable doctor wrote in an email: “They probably withdrew the L.C.D. changes because the 2026 Medicare Physician Fee schedule reforms the reimbursement of skin substitutes and more effectively addresses the problem. My guess is that it probably wasn’t worth having to deal with the pushback from certain skin substitute manufacturers whose products would become non-covered with the new L.C.D. Let the lower reimbursement fix the problem of overuse organically instead. This is speculation. I don’t have any knowledge about this decision.”
One other knowledgeable person wrote in an email: “Manufacturers are talking about making bigger grafts rather than smaller ones, and C.M.S. rumors are that they will stop paying for wastage, which is really necessary in some instances, or they will cap the % that they allow to be wasted.”
This person elaborated: “For example, [manufacturer] Apligraf has only one size, 44 sq cm. Today, we can use it on a 2 cm sq ulcer and have 42 sq cm wastage which is paid for.
“Other products have varying sizes, however, the smaller the size typically the higher the price per sq cm, when you buy it. However, Medicare pays and average sales price (ASP + 6% handling fee) which is lower than the smaller priced products. Therefore, people lose money on the smaller pieces. So people pick something that is not a negative cash drain. …
“No one knows if they are going to start not paying for wastage over a certain amount (%) or how they are going to control costs further. Without the L.C.D., every product can be applied, currently to most any part of the body. C.M.S. will certainly audit these charts, but that is time consuming and costly, to both the provider and the C.M.S. contractor.”
Another person wrote of the Dec. 15 and Dec. 22 decisions: “It’s my suspicion that the regional M.A.C.’s adopted the list of covered and non-covered products as a back door way to contain costs when C.M.S. failed to do its job in managing the price escalation. That list has caused the M.A.C.’s no end of trouble. It was the reason for the delay to January 2026 and was going to require the M.A.C.’s to update the list almost every year as new products got research data.”
Research requirement
One other part of the proposed regulations — proof that products are clinically better — was also problematic, this person wrote.
“Also, it was only a temporary solution for pricing because the bad guys with the high priced amnions are sitting on $1 billion that they can spend for Clinical Research. With that much money, they could come up with a study that shows their product does something- and then they would end up back on the cupboard list even if they were $5,000 per square centimeter. (The evidence standards that the M.A.C.’s accepted were actually pretty low. The companies just had to do some kind of prospective trial.) Therefore — and this is just my opinion — creating a list of covered products inside the L.C.D. was a temporary solution to out of control pricing that was eventually going to stop working and was going to cause all kinds of extra work for the M.A.C.’s.
“Now that C.M.S. has done its damn job to control the pricing problem, the M.A.C.’s don’t need to have a list of covered and uncovered products anymore. The path of least resistance for them is to issue the L.C.D.’s without that list.”
Jeffrey D. Lehrman, writing in the HMP Global Learning Network, noted that “The press release announcing this change did not use either the term ‘delayed’ or ‘postponed.’ ” The word used was “withdrawn.”
He also wrote: “Medicare Part B coverage for skin substitutes will continue to vary by M.A.C., increasing documentation and compliance risk. Clinicians in Novitas, First Coast, and C.G.S. jurisdictions should continue to follow current L.C.D. requirements, while providers in other regions remain subject to ‘reasonable and necessary’ determinations. This variability reinforces the need for careful alignment between clinical decision-making, coding, and payer-specific expectations.”
People opposed to the changes did not respond to requests for comment over the holiday period. But the issue of paying for waste in wound care treatment did spark a LinkedIn post about the topic.
Manufacturers and distributors of the higher-priced products have opposed regulation generally, saying that it will stifle innovation and reduce patients’ access to treatments by discouraging the manufacture and distribution of many products.
Industry figures are also proposing that C.M.S. make a “sustainable evidence driven single national payment rate” that is not the $127 rate.
Change in plans
Interestingly, on Dec. 15, the Centers for Medicare and Medicaid Services issued a release (now no longer visible) saying the Local Coverage Determinations (L.C.D.’s) dating to last year “will be effective January 1, 2026. The L.C.D.’s will still only govern coverage of skin substitute application to diabetic foot ulcers and venous leg ulcers performed for Medicare Part B beneficiaries. The L.C.D.’s will still outline coverage criteria and documentation requirements for this service. The L.C.D.’s will list 18 products that are ‘covered’ and 158 products that are ‘not covered.’ There will be a third list of 154 other products in the LCDs for which coverage will be at the discretion of the Part B” Medicare Administrative Contractor that has jurisdiction where the service was performed, said a release from American Podiatric Medical Association (A.P.M.A.). “For these products to be covered, they must meet the ‘reasonable and necessary’ standard in section 1862(a)(1)(A) of the Social Security Act and any other applicable requirements. These lists can be viewed here.’
Then, on Dec. 24, these guidelines were withdrawn, and the link to the Dec. 15 decision on the Centers for Medicare and Medicaid Services site was changed to the link for the Dec. 24 decision.
The Dec. 15 guidelines are detailed in this blog post by Fife. 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.
Among other things, the regulations that were withdrawn 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.
The industry is rife with reports of audits, of manufacturers and clinicians and distributors. People want to talk about the presence of the audits, without delivering specifics.
Many in the industry were not enthusiastic about commenting except for anonymously, in keeping with our previous experiences. It seems that people in the industry do not see an upside in commenting publicly, especially given the fact that it is widely believed that people close to President Donald J. Trump and his administration have no quarrel with the excesses in the industry.
Prior authorization
In June, in a separate attempt to rein in abuses in wound care treatment and other areas, the Centers for Medicare and Medicaid Services rolled out a model to test new prior authorization requirements for a few items and procedures in traditional Medicare.
The model is called Wasteful and Inappropriate Service Reduction (WISeR), in an attempt to leverage technology, C.M.S. said in a statement. The agency said it was testing a streamlined prior authorization process while protecting Medicare beneficiaries from unnecessary and often costly procedures.
In a press release, the agency said the model will help “patients and providers avoid unnecessary or inappropriate care and [will safeguard] federal taxpayer dollars.” The model introduces into all Medicare payment requests for several specific procedures a prior authorization model.
This is important because it is the first time prior authorization — which is common in Medicare Advantage’s privatized insurance plans — has been introduced in traditional Medicare. (WISeR does not affect Medicare Advantage.)
The procedures affected — in addition to wound care — include but are not limited to electrical nerve stimulator implants, and knee arthroscopy for knee osteoarthritis. The model “excludes inpatient-only services, emergency services, and services that would pose a substantial risk to patients if significantly delayed,” C.M.S. said
The agency first said the model will be tested in six states: New Jersey, Ohio, Oklahoma, Texas, Arizona and Washington. As of Dec. 26, that had been scaled back to four states: New Jersey, Ohio, Oklahoma and Texas.
