CMS Reforms: Addressing Fraud, Waste, and Abuse in Skin Substitutes
The Centers for Medicare & Medicaid Services (CMS) has refined its definitions regarding fraud, waste, and abuse within the healthcare sector, with a focus on advanced wound care technologies like skin substitutes. This clarification follows guidelines from CMS and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), aiming to enhance regulatory compliance requirements within the industry.
Definitions in Focus
CMS outlines fraud as the act of intentionally submitting false claims to Medicare, falsifying records, engaging in kickbacks, or ordering care that is not medically necessary for financial gain. Waste refers to the overuse or misuse of resources that leads to higher costs without necessarily involving intent to deceive. Abuse encompasses practices that diverge from accepted medical or business norms, leading to unnecessary expenses or services, even without fraudulent intent.
Regulatory Reforms in the Skin Substitute Sector
The HHS-OIG has identified the skin substitute market under Medicare Part B as susceptible to fraud, waste, and abuse, with projected expenditures exceeding $10 billion annually by the end of 2024. Analysis indicated home care treatments were significantly more expensive than those conducted in office settings, reflecting the need for regulatory adjustments.
To address this, CMS has announced a policy, effective January 2026, to transition skin substitute payments from the current average sales price model to a standard flat rate per square centimeter. Additionally, these items will be reclassified as “incident-to” supplies under the Physician Fee Schedule, aiming to improve payer and provider risk management.
Furthermore, CMS will introduce the WISeR model on January 1, 2026, in select states, enhancing prior-authorization and review mechanisms for items at risk of misuse, including skin substitutes.
Industry Implications
These regulatory reforms directly impact wound care practitioners, coding professionals, suppliers, and healthcare administrators. A clear understanding of fraud, waste, and abuse is vital for compliance management, accurate documentation, and billing practices. The changes regarding skin substitutes require careful evaluation of medical necessity, comprehensive documentation, and adaptation to new reimbursement structures.
Both payers and manufacturers need to ensure alignment with evidence-based practices, as CMS is set to closely scrutinize expensive technologies to mitigate exploitation through inflated prices or unsupported clinical use. By tightening the compliance framework specific to skin substitutes, CMS is enforcing a more rigorous Medicare reimbursement process, and stakeholders should prepare for the forthcoming adjustments in payment and review protocols, effective early 2026.