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**Reducing Medicare Spending Waste for Skin Substitutes**
Medicare spending on wound care products known as “skin substitutes” has had unprecedented growth, rising from $256 million in 2019 to over $10 billion in 2024, according to Medicare Part B claims data. This dramatic spending increase is largely attributed to abusive pricing practices in the sector, including the use of products with limited evidence of clinical value. Current prices can reach more than $2,000 per square centimeter.
In 2025, the CMS Fraud Defense Operations Center (FDOC) stopped nearly $185 million in improper payments to suspect providers billing for skin substitutes. In one notable case identified in September 2025, the FDOC stopped more than $4.3 million in suspected improper payments submitted by a medical group practice. Virtually all of the $4.3 million was for wound care services purportedly provided to a single beneficiary who lacked evidence of prior wound treatment.
CMS currently treats skin substitutes as biologicals for the purposes of Medicare payment. In the CY 2026 PFS final rule, CMS will pay for skin substitutes under the PFS as incident-to supplies, a change expected to reduce Medicare spending on these products by nearly 90% without compromising patient access or quality of care. We estimate this action will reduce gross fee-for-service program spending for skin substitute services by $19.6 billion in 2026, while incentivizing the use of products with the most clinical evidence of success.

**Reducing Medicare Spending Waste for Skin Substitutes**
Medicare spending on wound care products known as “skin substitutes” has had unprecedented growth, rising from $256 million in 2019 to over $10 billion in 2024, according to Medicare Part B claims data. This dramatic spending increase is largely attributed to abusive pricing practices in the sector, including the use of products with limited evidence of clinical value. Current prices can reach more than $2,000 per square centimeter.
In 2025, the CMS Fraud Defense Operations Center (FDOC) stopped nearly $185 million in improper payments to suspect providers billing for skin substitutes. In one notable case identified in September 2025, the FDOC stopped more than $4.3 million in suspected improper payments submitted by a medical group practice. Virtually all of the $4.3 million was for wound care services purportedly provided to a single beneficiary who lacked evidence of prior wound treatment.
CMS currently treats skin substitutes as biologicals for the purposes of Medicare payment. In the CY 2026 PFS final rule, CMS will pay for skin substitutes under the PFS as incident-to supplies, a change expected to reduce Medicare spending on these products by nearly 90% without compromising patient access or quality of care. We estimate this action will reduce gross fee-for-service program spending for skin substitute services by $19.6 billion in 2026, while incentivizing the use of products with the most clinical evidence of success.