OIG pushes for payment reforms for skin substitutes 

WASHINGTON – Medicare Part B expenditures for skin substitutes have skyrocketed over the last two years, surpassing $10 billion annually by the end of 2024, according to a new report from the Office of Inspector General (OIG). The increase in expenditures was driven by both increased utilization and higher prices, the report says. The OIG also found: 

• Despite Medicare Advantage having more than half of all Medicare enrollees, utilization and expenditures for skin substitutes under Medicare Advantage were just a fraction of utilization and expenditures under original Medicare. 
• Among enrollees with a skin substitute claim, costs for those reportedly treated at home were four times as high as those treated in an office setting. 

The OIG says the factors that may be driving these trends include: 

• The ability of manufacturers to quickly bring new skin substitutes to the market compared to typical products paid using ASP; and 
• Financial incentives such as spread pricing that make certain products more attractive to providers. 

“Action is urgently needed to rein in the massive increases in Medicare Part B spending for skin substitutes,” the OIG stated. “OIG’s findings illustrate the critical need for payment reforms that address fraud, waste, and abuse in Medicare skin substitute billing. As policymakers consider options, any solutions should ensure that Medicare enrollees continue to receive appropriate care while removing incentives for inappropriate and even fraudulent billing. CMS has recently taken steps toward addressing these concerns.” 

FMI: https://oig.hhs.gov/reports/all/2025/medicare-part-b-payment-trends-for-skin-substitutes-raise-major-concerns-about-fraud-waste-and-abuse/