The U.S. Department of Health & Human Services’ Office of Inspector General (OIG) has signaled a clear shift in how it is approaching wound care billing over the last year. This seems especially true in claims that include such services as skin substitutes, debridement, and specialized wound repair.
Healthcare providers should be aware that wound care is now a target for audits, investigations, and payment reform, especially given recent examples of increased oversight.
OIG published a Data Snapshot (“Medicare Part B Payment Trends for Skin Substitutes Raise Major Concerns About Fraud, Waste, and Abuse”) in September that revealed Part B spending on skin substitutes in non‐institutional settings exceeded $10 billion annually by the end of 2024. The review identified the following concerns:
Florida-based Forefront Dermatology and Henghold Surgery Center agreed to pay nearly $850,000 this summer to resolve allegations under the False Claims Act that they knowingly submitted inaccurately coded wound repair claims to Medicare.
United Wound Healing in Washington State settled for more than $290,000 in May after allegedly submitting false claims to Medicare and Medicaid for evaluation and management services in conjunction with wound care in nursing homes. In this instance, the federal government accused the defendants of billing wound care services separately rather than bundled with other services.
While the costs of skin substitutes have risen significantly, so have the number of Medicare enrollee claims. In fact, Medicare Part B spending on skin substitutes in non-institutional settings exceeded $10 billion in 2024, representing sharp increases in both utilization and price according to the OIG. Both factors draw increased auditor attention. This is part of an effort by the OIG to weed out fraud, waste, and abuse in the wound care sector. The expense of skin substitutes has ballooned.
The industry has unintentionally created a system where providers can be incentivized for product coding strategies such as units billed and location of services. For examples, Providers are paid more for using higher-priced skin substitutes or larger quantities, because reimbursement scales with cost.
Some providers bill without providing sufficient documentation of medical necessity, or past examples of conservative care. The OIG now recognizes this lack of past oversight and appears to be taking steps to resolve the problem.
In this rapidly evolving environment, healthcare providers who perform wound care should consider partnering with experienced legal counsel to protect against an OIG audit. Recommended steps include:
Most importantly, the OIG’s increasing attention to wound care submissions is not accidental. Rising costs, a perceived lack of past oversight and of a perceived environment that incentivizes higher-priced wound care services like skin substitutes are contributing to the increased attention.
Providers in this field should assume a higher likelihood of scrutiny, and proactively sharpen their documentation, billing practices, and compliance strategies to protect against potential audits.
Contact the compliance and wound care audit experts at Chapman Law Group for additional help.
Individuals depicted or heard in the foregoing media appearance or images may no longer be current attorneys, employees, members or affiliates with Chapman & Associates, PC or The Chapman Law Group (the “Firm”), including Ronald W. Chapman, II who is no longer affiliated with the Firm. For a current listing of the attorneys and services available with the Chapman Law Group, please see https://chapmanlawgroup.com/team.
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