A new analysis of Medicare data by the National Association of ACOs (NAACOS) and the Institute for Accountable Care raises concerns about accelerated spending on skin substitute products.
Medicare spending on skin substitute products is projected to reach $15.4 billion by the end of 2025, a 55 percent increase over 2024 spending, according to a new report released by NAACOS, a member-led nonprofit of nearly 500 ACOs and value-based care entities in Medicare, Medicaid, and commercial insurance.
The study follows the release of a September report by the Office of Inspector General (OIG) that also flagged concerning payment trends for skin substitutes and possible issues with fraud, waste, and abuse.
One reason for the excessive spending is due to the number of new skin substitutes introduced to the market in recent years. Since 2023, 102 new skin substitute products have entered the market, including more than 50 in 2025 alone, according to NAACOS. The average sales price (ASP) varies, according to the study, but 69 products cost more than $1,000 per square centimeter, and some cost up to almost $6,000 per square centimeter. Without the new products, spending from 2022 through July 2025 would have been reduced by more than 70 percent.
“The deliberate misuse of skin substitutes is endangering America’s seniors and pricing schemes are undermining the integrity and the long-term sustainability of Medicare,” said Emily Brower, president and chief executive officer of NAACOS, in the study announcement.
In July, the Centers for Medicare & Medicaid Services (CMS) proposed a rule to shift payment of skin substitutes for Medicare beneficiaries to be billed as supplies used for wound care procedures on an incident-to basis, rather than paying based on skin substitute products’ specific ASP. CMS also proposes an initial payment rate of $125.38 per square centimeter. NAACOS said that if the proposed rule is finalized and enacted in January 2026, the rule could save the government $9.4 billion. Several legislative efforts related to skin substitutes have also been introduced to address excessive spending, but the association said it would not rein in spending as much as the CMS proposed rule.
“We appreciate attention to skin substitute payment flaws, but every day that passes, Medicare loses millions of dollars to wasteful, unnecessary spending that does not improve the health of seniors,” said Aisha Pittman, senior vice president of government affairs for NAACOS. “Accountable care organizations are Medicare’s strongest defense against fraud, waste, and abuse—delivering high-quality care in patients’ best interests. But they cannot be held responsible for tens of billions of dollars in inappropriate spending that they have no control over.”