In October the Nationwide Affiliation of ACOs (NAACOS) and the Institute for Accountable Care revealed analysis displaying that spending on pores and skin substitute merchandise for wound care is projected to achieve $15.4 billion by the tip of 2025, a 55% enhance over 2024 spending. In response to outcry from NAACOS members and different organizations and a New York Occasions investigation, the Facilities for Medicare & Medicaid Providers (CMS) has finalized new guidelines for pores and skin substitutes, with main adjustments 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 position in stemming fraud, waste and abuse in wound care. He gave an impassioned discuss in regards to 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 advanced 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 value varies, however 69 merchandise price greater than $1,000 per sq. centimeter, and a few price as much as nearly $6,000 per sq. centimeter. With out the brand new merchandise, spending from 2022 by July 2025 would have been diminished 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 concern the worst factor in American drugs right now. You mentioned that it is arduous to overstate how tousled that is. For readers who is likely to be unaware of how unhealthy this case is, are you able to give a bit primer on how we received 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 case?
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 cost and a protection drawback for these merchandise. On cost, Medicare has paid for them like physician-administered medicine and biologics, despite the fact that a lot of the merchandise usually are not regulated that approach. Because of this it led to explosive development in product launch costs, complete Medicare spending, and incentives for suppliers on the bottom to make use of the highest-cost merchandise. And sufferers and Medicare are paying the value. We see this with our susceptible sufferers, a few of whom have had a number of thousands and 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 best way that the merchandise are regulated, and folks can draw their very own conclusions. Quite a lot of these merchandise are dropped at 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 executed so in a approach that’s legitimate and bonafide, 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 usually are not medicine or biologics, and there are much less restrictive limitations to entry, why are we paying for them that approach?
CMS administrative contractors did an evaluation of the medical proof that these merchandise have, they usually discovered that only a few of them had any official 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 type of presumed quantity of protection. And over the course of years, the mixture of that lack of protection coverage and this frankly ridiculous cost coverage labored collectively to create a scenario the place wound-care suppliers on the bottom are closely incentivized to make use of merchandise which can be 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” cost system. That is the best way that that each one physician-administered medicine work for issues like chemotherapy, ophthalmology, rheumatoid arthritis, and MS. There are medicine and likewise pores and skin substitutes the place the clinicians are shopping for the product, in all probability from a wholesaler or immediately from the producer, after which billing the Medicare program when they’re used. And they’re pocketing the distinction between what they’re capable of purchase it for and what Medicare can pay.
HCI: So in a lot of these instances, they’re incentivized, in a approach, to make use of the costliest drug, not essentially the most efficacious?
Robinson: With out query. And the low limitations to entry, notably 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 gives you 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’ll be able to 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’ll invoice a Medicare program $4,500 and you purchase it for $2,000, which product are you going to make use of? There isn’t any medical proof on both of them. When you consider it, it’s insane.
HCI: Had been the ACOs among the many first to name consideration to the scope of the issue, as a result of unexpectedly it was impacting their outcomes with their sufferers?
Robinson: Sure, most ACOs are monitoring claims knowledge because it’s coming in. At HarmonyCares, we’re treating completely very advanced sufferers of their residence who’ve a excessive diploma of power sickness and a excessive probability of creating wounds, as a result of the severity of their sickness makes them extra vulnerable 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 numerous suppliers into this market as a result of they need to make 1,000,000 {dollars} and retire subsequent 12 months, so they simply bounce in. It’s a horrifically unhealthy scenario, which is why CMS took motion to deal with the issue going ahead beginning in 2026.
HCI: Might you discuss in regards to the knowledge analytics and care administration methods that ACOs use to detect suspicious traits like this?
Robinson: On the analytics facet, we’re continuously evaluating our claims for traits that point out one thing appears fairly out of whack. We noticed this within the knowledge and mentioned, maintain on, there’s this product class that continues to develop. Does this make sense? Is that this an indication of truly individuals getting higher care?
ACOs, together with us, have layered in extra care administration strategies to attempt to be sure that the sufferers who’ve wounds get to the suitable 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 numerous sketchy suppliers who’re utilizing them as first-line remedy. The one factor they do is pores and skin substitutes, however they’re supposed for use after commonplace wound care has been tried, and numerous wound care is about issues like bettering vascularization and addressing the underlying causes of why anyone developed a wound within the first place.
From a care administration perspective, what we did was strive to make sure that persons are getting the suitable care and attending to the suitable suppliers available in the market, and never those that now we have recognized as probably fraudulent or abusive.
Additionally, these merchandise are coated beneath Medicare Half B. The rationale why that is essential is that there is a 20% price sharing related to the cost 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 come back from? Quite a lot of these organizations are simply waiving the 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 fee sharing is so egregious.
HCI: Are there coverage levers that might help 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 expect CMS needs to be applauded for what they did within the 2026 rule and past. The rule takes that loopy cost system and simply says, we will pay $127 per sq. centimeter, interval. That is it. There was a product within the October cost file from CMS that was paid at $5,800 per sq. centimeter with zero medical proof. So the change from what was taking place to what is going to occur beginning in 2026 is incredible.
There’s the query of what kind of help ought to ACOs be given going ahead to assist determine these things — issues like speedy reporting channels. CMS ought to undoubtedly create pathways to attempt to determine and cease this sort of waste, fraud and abuse, in partnership with ACOs on a go-forward foundation, and I believe they’re desirous about that now, and it will likely be actually good to see what they provide you with.
Wanting again at this 12 months, there is also a query in regards to the high-needs ACOs, that are approach overexposed to the waste, fraud and abuse in pores and skin substitutes. What can CMS do to offer them some reduction for 2025? That might take the type of a change in the best way that cease loss, notably for the excessive wants ACO REACH program, works and the best way the benchmarks are calculated. We’ve talked to CMS about each of these issues.
