In October the Nationwide Affiliation of ACOs (NAACOS) and the Institute for Accountable Care printed analysis displaying that spending on pores and skin substitute merchandise for wound care is projected to succeed in $15.4 billion by the top of 2025, a 55% improve over 2024 spending. In response to outcry from NAACOS members and different organizations and a New York Instances investigation, the Facilities for Medicare & Medicaid Companies (CMS) has finalized new guidelines for pores and skin substitutes, with main modifications set to take impact on Jan. 1, 2026.
Will Robinson, senior vice chairman of accountable care at HarmonyCares, just lately co-authored a chunk in Well being Affairs exploring how ACOs can play a pivotal function in stemming fraud, waste and abuse in wound care. He gave an impassioned speak concerning the topic on the latest NAACOS convention and spoke to Healthcare Innovation on the subject in depth this week.
Troy, Mich.-based HarmonyCares is a supplier of home-based main care providers for complicated sufferers and it participates in each the Medicare Shared Financial savings Program and ACO REACH. I interviewed Michael Millie, M.D., M.B.A., the corporate’s chief medical officer, in September 2024.
Earlier than becoming a member of HarmonyCares, Robinson had labored for over six years at CMS, together with as appearing deputy director within the Division of Outpatient Care.
NAACOS notes that since 2023, 102 new pores and skin substitute merchandise have entered the market, together with greater than 50 in 2025 alone. The common gross sales worth varies, however 69 merchandise value greater than $1,000 per sq. centimeter, and a few value as much as nearly $6,000 per sq. centimeter. With out the brand new merchandise, spending from 2022 by July 2025 would have been decreased by greater than 70%.
Healthcare Innovation: I used to be watching your panel session on the NAACOS assembly. You referred to as the pores and skin substitute challenge the worst factor in American drugs immediately. You mentioned that it is exhausting to overstate how tousled that is. For readers who is perhaps unaware of how dangerous this example is, are you able to give a bit of primer on how we bought right here? Is there an absence of proof for the efficacy of many of those merchandise, and in that case, how did Medicare begin agreeing to pay for them within the first place? How did we get into this example?
Robinson: To be clear, delivering high-quality, evidence-based look after sufferers with wounds is essential, and pores and skin substitutes could also be acceptable for some sufferers. However Medicare has had each a fee and a protection downside for these merchandise. On fee, Medicare has paid for them like physician-administered medication and biologics, despite the fact that a lot of the merchandise are usually not regulated that approach. Consequently it led to explosive development in product launch costs, whole Medicare spending, and incentives for suppliers on the bottom to make use of the highest-cost merchandise. And sufferers and Medicare are paying the worth. We see this with our susceptible sufferers, a few of whom have had a number of hundreds of thousands of {dollars} value of pores and skin substitutes utilized with at greatest suspect medical profit.
I do not work for the FDA and I’m not a Ph.D., however there are some issues that I can say about the way in which that the merchandise are regulated, and folks can draw their very own conclusions. Quite a lot of these merchandise are delivered to market beneath what known as the human tissue pathway. To convey a product to market beneath that pathway, you do not want any medical proof. Once I take a drug and it’s prescribed by my doctor, I’m beneath the impression that the FDA has evaluated that product for medical efficacy, and that it has performed so in a approach that’s legitimate and legit, so that there’s some evaluation of the security and efficacy. That’s not the case for these human tissue merchandise, and the barrier to entry to convey them to market is basically a registration with the FDA. And if most of those merchandise are usually not medication or biologics, and there are much less restrictive boundaries to entry, why are we paying for them that approach?
CMS administrative contractors did an evaluation of the medical proof that these merchandise have, and so they discovered that only a few of them had any authentic medical proof.
HCI: However initially did CMS decide to pay for these?
Robinson: What truly occurred was the absence of a call. What tends to occur is that for merchandise the place there isn’t any native or nationwide protection willpower, which is basically no protection coverage from the federal government, then there’s a form of presumed quantity of protection. And over the course of years, the mixture of that lack of protection coverage and this frankly ridiculous fee coverage labored collectively to create a state of affairs the place wound-care suppliers on the bottom are closely incentivized to make use of merchandise which are wildly costly and have little to no medical proof.
HCI: They’re incentivized as a result of they get reimbursed with a share of the billed quantity?
Robinson: Sure, it’s what’s referred to as the “purchase and invoice” fee system. That is the way in which that that every one physician-administered medication work for issues like chemotherapy, ophthalmology, rheumatoid arthritis, and MS. There are medication and likewise pores and skin substitutes the place the clinicians are shopping for the product, in all probability from a wholesaler or straight from the producer, after which billing the Medicare program when they’re used. And they’re pocketing the distinction between what they’re in a position to purchase it for and what Medicare pays.
HCI: So in a lot of these instances, they’re incentivized, in a approach, to make use of the most costly drug, not probably the most efficacious?
Robinson: With out query. And the low boundaries to entry, significantly with these human tissue merchandise, created a cycle of product creation and excessive costs at launch, the place the producers may purchase market share from from one another. I will provide you with an instance: if the clinicians are incentivized to make use of a very costly product, and you’ve got a present product the place you may invoice a Medicare program for $1,000 and also you’re shopping for it for, say, $500 after which a brand new product comes out, and you may invoice a Medicare program $4,500 and you purchase it for $2,000, which product are you going to make use of? There is no medical proof on both of them. When you concentrate on it, it’s insane.
HCI: Have been the ACOs among the many first to name consideration to the scope of the issue, as a result of impulsively it was impacting their outcomes with their sufferers?
Robinson: Sure, most ACOs are monitoring claims information because it’s coming in. At HarmonyCares, we’re treating solely very complicated sufferers of their residence who’ve a excessive diploma of power sickness and a excessive chance of creating wounds, as a result of the severity of their sickness makes them extra inclined to them clinically. Teams like ours noticed this coming years in the past, and have been following the rise in utilization of high-cost merchandise. This has additionally drawn a whole lot of suppliers into this market as a result of they wish to make 1,000,000 {dollars} and retire subsequent 12 months, so they only leap in. It’s a horrifically dangerous state of affairs, which is why CMS took motion to handle the issue going ahead beginning in 2026.
HCI: Might you speak concerning the information analytics and care administration methods that ACOs use to detect suspicious developments like this?
Robinson: On the analytics facet, we’re continuously evaluating our claims for developments that point out one thing seems fairly out of whack. We noticed this within the information and mentioned, maintain on, there’s this product class that continues to develop. Does this make sense? Is that this an indication of really folks getting higher care?
ACOs, together with us, have layered in extra care administration methods to attempt to be sure that the sufferers who’ve wounds get to the best care on the proper time, and attempt to stop these wounds from deteriorating to turning into extreme. Usually, these merchandise are solely used as second- or third-line remedies, however there are a whole lot of sketchy suppliers who’re utilizing them as first-line therapy. The one factor they do is pores and skin substitutes, however they’re supposed for use after commonplace wound care has been tried, and a whole lot of wound care is about issues like bettering vascularization and addressing the underlying causes of why any person developed a wound within the first place.
From a care administration perspective, what we did was attempt to make sure that persons are getting the best care and attending to the best suppliers available in the market, and never those that we’ve got recognized as probably fraudulent or abusive.
Additionally, these merchandise are coated beneath Medicare Half B. The rationale why that is necessary is that there is a 20% value sharing related to the fee for the service, so Medicare pays 80% after which the affected person, or the supplemental protection, pays the rest. Most beneficiaries have a type of supplemental however for those who get $1 million in pores and skin substitutes, the place is the $200,000-plus cash going to return from? Quite a lot of these organizations are simply waiving the associated fee sharing as a matter of coverage, which isn’t allowed. That could be a beneficiary inducement that’s unlawful. However it occurs as a result of the associated fee sharing is so egregious.
HCI: Are there coverage levers that might assist the ACOs whereas defending them on the identical time —like stop-loss protections and speedy reporting channels?
Robinson: I believe each of these issues can be nice. We predict CMS ought to be applauded for what they did within the 2026 rule and past. The rule takes that loopy fee system and simply says, we’ll pay $127 per sq. centimeter, interval. That is it. There was a product within the October fee file from CMS that was paid at $5,800 per sq. centimeter with zero medical proof. So the change from what was occurring to what’s going to occur beginning in 2026 is unbelievable.
There’s the query of what kind of assist ought to ACOs be given going ahead to assist establish these items — issues like speedy reporting channels. CMS ought to undoubtedly create pathways to attempt to establish and cease this type of waste, fraud and abuse, in partnership with ACOs on a go-forward foundation, and I believe they’re fascinated by that now, and will probably be actually good to see what they give you.
Trying again at this 12 months, there is also a query concerning the high-needs ACOs, that are approach overexposed to the waste, fraud and abuse in pores and skin substitutes. What can CMS do to present them some reduction for 2025? That might take the type of a change in the way in which that cease loss, significantly for the excessive wants ACO REACH program, works and the way in which the benchmarks are calculated. We’ve talked to CMS about each of these issues.
