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% 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 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, not too long ago 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 discuss 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 major 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 performing 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 typical gross sales worth varies, however 69 merchandise price greater than $1,000 per sq. centimeter, and a few price as much as virtually $6,000 per sq. centimeter. With out the brand new merchandise, spending from 2022 by means of July 2025 would have been lowered by greater than 70%.
Healthcare Innovation: I used to be watching your panel session on the NAACOS assembly. You known as the pores and skin substitute challenge the worst factor in American medication at this time. You mentioned that it is onerous to overstate how tousled that is. For readers who is likely to be unaware of how dangerous this example is, are you able to give a little bit primer on how we bought right here? Is there a scarcity of proof for the efficacy of many of those merchandise, and if that’s the 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 important, and pores and skin substitutes could also be applicable 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 medication and biologics, though many of the merchandise usually are not regulated that means. Because of this 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 thousands and thousands of {dollars} price of pores and skin substitutes utilized with at finest suspect scientific 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. Plenty of these merchandise are dropped at market below what known as the human tissue pathway. To convey a product to market below that pathway, you do not want any scientific proof. Once I take a drug and it’s prescribed by my doctor, I’m below the impression that the FDA has evaluated that product for scientific efficacy, and that it has carried out so in a means that’s legitimate and bonafide, so that there’s some evaluation of the security and efficacy. That isn’t 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 medication or biologics, and there are much less restrictive obstacles to entry, why are we paying for them that means?
CMS administrative contractors did an evaluation of the scientific proof that these merchandise have, they usually discovered that only a few of them had any professional scientific proof.
HCI: However initially did CMS decide to pay for these?
Robinson: What truly occurred was the absence of a choice. 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 kind 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 state of affairs the place wound-care suppliers on the bottom are closely incentivized to make use of merchandise which might be wildly costly and have little to no scientific 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 known as the “purchase and invoice” cost 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 in addition pores and skin substitutes the place the clinicians are shopping for the product, in all probability from a wholesaler or instantly 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 can pay.
HCI: So in lots of these circumstances, they’re incentivized, in a means, to make use of the costliest drug, not probably the most efficacious?
Robinson: With out query. And the low obstacles 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 offers 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 scientific proof on both of them. When you concentrate on 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 swiftly 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 completely very complicated sufferers of their residence who’ve a excessive diploma of persistent 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 quite a lot of suppliers into this market as a result of they wish to make 1,000,000 {dollars} and retire subsequent yr, so they only soar 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: May you discuss concerning the information analytics and care administration methods that ACOs use to detect suspicious traits like this?
Robinson: On the analytics facet, we’re always evaluating our claims for traits that point out one thing appears to be like 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 individuals getting higher care?
ACOs, together with us, have layered in extra care administration methods to attempt to make it possible for the sufferers who’ve wounds get to the correct care on the proper time, and attempt to stop these wounds from deteriorating to turning into extreme. Sometimes, these merchandise are solely used as second- or third-line remedies, however there are quite a 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 quite a lot of wound care is about issues like enhancing 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 correct care and attending to the correct suppliers out there, and never those that now we have recognized as probably fraudulent or abusive.
Additionally, these merchandise are coated below 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 in the event you get $1 million in pores and skin substitutes, the place is the $200,000-plus cash going to return from? Plenty of these organizations are simply waiving the associated fee sharing as a matter of coverage, which isn’t allowed. That may 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 will assist the ACOs whereas defending them on the similar time —like stop-loss protections and fast reporting channels?
Robinson: I feel each of these issues can be nice. We predict 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 scientific 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 assist ought to ACOs be given going ahead to assist establish these things — issues like fast reporting channels. CMS ought to positively create pathways to attempt to establish and cease this sort of waste, fraud and abuse, in partnership with ACOs on a go-forward foundation, and I feel they’re fascinated with that now, and it is going to be actually good to see what they give you.
Wanting again at this yr, there is also a query concerning the high-needs ACOs, that are means overexposed to the waste, fraud and abuse in pores and skin substitutes. What can CMS do to present them some reduction for 2025? That would take the type of a change in the way in which that cease loss, notably 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.
