In recent years, the cost of skin substitutes for wound care has skyrocketed, raising serious concerns for healthcare providers and Accountable Care Organizations (ACOs). The U.S. market for skin substitutes has grown from approximately $1 billion in 2019 to nearly $7 billion in 2024, fueled by questionable billing practices and inflated reimbursement rates. Advanced Management USA, a leader in ACO management, has been actively monitoring these trends and advocating for more sustainable solutions.
Understanding the Problem
Skin substitutes, including amniotic grafts and other tissue-based products, are essential for treating chronic wounds like diabetic foot ulcers and venous leg ulcers. However, misuse and overcharging have become widespread. ACOs have been particularly affected, as these products are often prescribed at high costs with marginal benefits.
David Klebonis, Chief Operating Officer at Advanced Management USA, described a striking case where a Florida patient’s skin substitute treatments resulted in $9.8 million in costs within a year. The patient’s ACO was responsible for the first $125,000 due to stop-loss measures, but the remaining $9.7 million was covered by Medicare—ultimately passed on to taxpayers. “We often see high costs for complex care like transplants or long-term ICU stays, but to see this level of spending on wound care products with limited evidence of benefit is alarming,” said Klebonis.
How We Got Here
Over 200 different types of skin substitutes are now on the market. Some of the most expensive products can cost over $4,000 per square centimeter. The high costs stem from a flawed reimbursement structure. Physicians’ offices receive separate payments for purchasing and applying skin substitutes, incentivizing overuse. Some companies even offer discounts to physicians while Medicare reimburses the full product cost—allowing clinicians to pocket the difference.
Dr. Lori Lane, Medical Director at Advanced Management USA, noted that this creates a misaligned incentive structure. “Clinicians are ethically responsible for choosing the most effective, cost-conscious option—but when reimbursement favors higher-cost products, it’s easy to see why the system gets abused,” Lane explained.
CMS and Regulatory Challenges
In response to rising costs, CMS introduced new guidelines to limit reimbursement for certain skin substitutes. However, the Trump administration recently put a hold on these measures, leaving the future of these regulations uncertain. The proposed rules would have limited coverage to 17 products for diabetic foot ulcers and venous leg ulcers while excluding over 180 others due to lack of clinical evidence.
Despite these setbacks, Advanced Management USA continues to advocate for thoughtful regulation. “ACOs are held accountable for both cost and quality of care, yet we have little control over how these products are used,” said Klebonis. He stressed the need for CMS to create more consistent national policies and give ACOs more tools to manage utilization.
A Path Forward
Advanced Management USA is working to educate its provider network on the appropriate use of skin substitutes, encouraging evidence-based decision-making. Dr. Lane emphasized the importance of ensuring that patients who genuinely benefit from these products continue to have access. “Skin substitutes have an important role in wound care, but they should be used responsibly, with clear clinical evidence to back them up,” she said.
David Klebonis echoed this sentiment: “We need smart regulations that balance cost containment with quality care. At Advanced Management USA, we are committed to working with our providers to find that balance.”
By driving awareness and supporting data-driven decision-making, Advanced Management USA aims to reduce unnecessary spending and ensure that patients receive the best possible care.
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MedPage Today – Experts Sound the Alarm on Pricey Skin Substitutes in Wound Care Industry
https://www.medpagetoday.com/special-reports/exclusives/114717 -
CMS Policy and Payment Changes for 2025
https://www.cms.gov/newsroom/fact-sheets/cms-finalizes-hospital-outpatient-and-ambulatory-surgical-centers-policy-and-payment-changes-2015 -
CMS Medicare Coverage Database
https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?LCDId=35041 -
MedPage Today – Medicare’s Response to Fraud and Overuse
https://www.medpagetoday.com/publichealthpolicy/generalprofessionalissues/113995 -
Department of Justice Healthcare Fraud Summary
https://www.justice.gov/criminal/criminal-fraud/health-care-fraud-unit/2024-national-hcf-case-summaries
