It was downright hot in Texas for Christmas (~80° F) but for New Year’s Eve, the storms battering the northeast are making their presence known as far south as Houston and the temperature has dropped 40 degrees in a few hours. The “skin substitute” market has been as unpredictable as Texas weather. I started blogging about the CTP/CAMP/skin substitute market about 3 years ago, trying to understand just what the heck was going on. I was confused because my 30+ career as a wound care practitioner had been spent in the Hospital Based Outpatient Department (HOPD) and that is not where the changes were taking place.
Since ~2014, the use of CTPs in HOPDs has been under “package pricing” whereby the cost of purchasing the CTP was included in the hospital’s facility application fee. Unfortunately, the HOPD package price payment was set too low by CMS because they used flawed data, which meant most HOPDs lost money when they used CTPs. We could treat only the smallest wounds with CTPs and certainly had no financial incentive to use them. The good news is that most clinicians in the HOPD learned how to heal wounds with high-quality wound care like compression, off-loading, arterial assessment, and nutritional supplementation. However, when advanced therapeutics like CTPs were needed, HOPDs were not likely to be able to afford them. For years, HOPDs had been struggling finically for many other reasons: hospitals are badly managed businesses with bad contracting practices, Medicare Advantage plans often don’t reimburse for facility fees, staffing is inadequate thanks to flawed “RVU” calculations, hospitals treat practitioners poorly, and hospital electronic medical records (EHRs) do not meet the needs of outpatient services creating huge administrative burdens and leading to incorrect billing. The situation was ripe for wound care to leave the HOPD and move into the office-based and mobile setting where practitioners could correct all of those problems.
Meanwhile, office-based practitioners were closing their doors because physician reimbursement had not kept up with inflation, a problem made even worse with a 3% budget sequester. The Merit Based Incentive Program (MIPS) failed to deliver financial incentives for high quality care (particularly in wound care where there are no national quality measures) and instead created additional financial and administrative burdens.
However, clinicians with wound care expertise realized they could take advantage of a grey area in physician billing of CTPs/skin substitutes. They could make a profit from the use of “skin substitutes.” In fact, depending on the moral compass of the practitioner, they could make HUGE profits. Never having been in private practice, it took me a few years to figure out what was going on. Prices for human placental products (which are exempt from FDA clearance requirements) soared from less than $100/cm2 to over $5,000/cm2. It is the nature of the free market to get the behavior we financially incentivize. There was so much money to be made in the CTP market, the use and abuse of CTPs escalated. The lure of those profits led to behavior which the Department of Justice considered criminal – behavior for which some practitioners and some manufacturers are in jail while others are under investigation. As potential profits escalated, wound care shifted out of the HOPD into the office and mobile setting, with care often provided by inexperienced practitioners so that although wound care services are more available to patients, the quality of that care is highly variable.
Medicare spending on CTPs soared. However, only the Centers for Medicare and Medicaid (CMS) – the “mothership” in Baltimore – can make changes in PAYMENT policy, but despite warning signs that something was wrong, CMS dragged its collective feet about correcting CTP payment policy. Without price controls, it was left to regional Medicare Administrative Contractors (MACs) and private payers to devise ways to control spending on CTPs through the mechanism under their control: COVERAGE POLICY and AUDITS. The Medicare Advantage (MA) Plans responded to overuse/abuse by making it nearly impossible for practitioners to get through prior authorization (PA) requirements and the regional MACs responded with a wave of draconian audits that have resulted in untold millions (maybe billions?) of dollars in monetary “claw backs” from even the most conscientious of practitioners. The MAC audits were based on a variety of sources including whatever Local Coverage Determinations (LCDs) existed regardless of region. The MACs collaborated to write a comprehensive LCD that they would all simultaneously adopt detailing coverage policy for the use CTPs in diabetic foot ulcers (DFUs) and venous leg ulcers (VLUs). These identical LCDs included a list of “covered” and “not covered” CTPs by brand, based on their analysis of published evidence. The MACs defended their decision to create such a list by appealing to the need for evidence-based care, but the result was to limit coverage to a relatively short list of venerable products which were relatively low-priced. The MACs apparently intended to reduce spending on CTPs by restricting coverage policy.
Separately, the Centers for Medicare and Medicaid Innovation (CMMI) decided to implement an artificial intelligence (AI) enhanced PA pilot process for traditional Medicare in 6 states called WISeR, aimed at a variety of potentially abused services including the use of CTPs for DFUs and VLUs – and which is still planned to begin in January of 2026. Meanwhile, many of the manufacturers that comprised the “not covered” list coalesced into a collective legal battering ram and simultaneously assaulted the doors of CMS, the MACs, Congress, and the executive branch with a predicable level of success.
On Christmas Eve, the MACs withdrew their LCDs on the use of CTPs for DFUs and VLUs. However, only when projected Medicare expenditures on CTPs passed $10 billion per year did CMS finally act to stop the price escalation by setting a fixed reimbursement rate for all products at around $127/cm2 (billed as medical supplies) that takes effect January 1, 2026. It will take a literal act of Congress to get that payment amount increased but those efforts are fully underway. Even if successful, Congressional efforts will not stop the payment adjustment from taking place on January 1, 2026. The above summary is an over-simplification of a wickedly complex issue, which required me to be sloppy with terms, otherwise this post would be as long as the Federal Register.
Now, where do we stand with CTPs/skin substitutes on the eve of 2026?
Here’s a list of the questions to which we do not know the answers:
- Will Congress increase the price per cm2 of CTPs at some point in 2026?
- Will the LCDs be re-issued (perhaps minus the “covered” list which is no longer needed with price controls in place)?
- Will there be a National Coverage Determination (NCD) for CTPs (in DFUs and VLUs or even in all wounds)?
- Will the WISeR model go forward to implement a 6-state PA process in traditional Medicare for DFUs and VLUs?
- How will the CMS fixed payment rate change in the future based on the specific FDA approval/clearance process of the product?
- Will CMS continue to pay for wastage? (The regulations may say yes, but rumors say no.)
Here’s a list of some things we do know as we ring in 2026:
- The MACs will not implement their proposed LCDs on January 1, 2026, which means there will be no list of “covered” and “not covered” CTPs.
- The door remains open for all CTP brands – but they will still all be PAID at ~$127/cm2.
- Draconian audits of previously billed CTPs will continue, with or without the new LCDs.
- Documentation will still determine whether practitioners keep the money they bill for CTPs, regardless of wound type. While the focus of audits might move away from the product selected, they will continued to focus on detailed documentation of the standard of care.
- According to data from Intellicure Analytics, clinical benefit from CTPs is generally unrelated to price, so selecting the lowest price product(s) will not decrease clinical benefit.
- Starting January 1, 2026, all CTPs/skin substitutes will be paid at ~$127/cm2.
- There will be no obvious source of national price information because the Average Sales Price (ASP) system has been thrown out.
- Based on the new payment reality, it is logical to expect that manufacturers will increase the price of very low-priced products and decrease the price of high-priced products.
- HOPDs are finally out from under badly designed package pricing and are likely to increase their use of CTPs since for the first time, they can treat large wounds and can make a profit on products if they select CTPs that cost less than ~$127/cm2.
- Clinicians in “mobile” and office-based practices must use CTPs that cost less than ~$127/cm2 or they will lose money.
- Despite this big change, mobile practitioners can still survive finically by selecting the lowest-priced products available to maximize the amount that they keep from the fixed payment rate.
- The math here is very basic: Practitioner Profit per cm2 of CTP applied = $127 – cost per cm2 of CTP
- Read more about this in Intellicure’s free eBook on the subject.
- If the price per cm2 is increased by an act of Congress, it will primarily serve to increase the profits for the clinicians who select the lowest priced product available.
- If the payment rate goes up thanks to Congress, clinicians should still select the cheapest product available.
- THE COMMERCIAL WINNER IN THE CTP MARKET WILL LIKELY BE THE PRODUCT WITH THE LOWEST PRICE PER CM2.
I finally have a sense of hope for the future of the field of wound care. The status quo was totally unsustainable. Price controls are better for patients, Accountable Care Organizations, secondary insurers, tax payers, and the Medicare trust fund. Ultimately, it will also be better for the dedicated wound care practitioners who were never completely dependent on CTP revenue. With the demise of the LCDs, product choice is still left up to the practitioner. However, despite all the grand standing that product choice was based on clinical benefit, let’s be honest, product use has been largely determined by product price defined by potential practitioner revenue. In 2026, product choice will still be determined by product price, except that practitioners will be incentivized to select products below a specific payment threshold. Under that price threshold, for the first time, the door is open to selecting CTPs based on real world clinical benefit. That is my “dog in the fight.” For two decades I have been monitoring real world clinical benefit of CTPs through registry data – even though no one seemed to care about it. Finally, we can have an honest discussion about the real world clinical benefit of individual CTPs – a discussion which includes considering which patients can benefit and how the quality of clinical care provided to the wound impacts benefit. This New Year’s Eve, I am going to drink a toast to a new era in the use of CTPs, based on data around real-world clinical effectiveness.
–Caroline
