B. Moira Sykstus, MHA, CPCO, CPMA, RRT, CHT, DAPWCA
Over the past two years, Medicare’s oversight of skin substitute products has shifted from targeted program-integrity review to a level of enforcement that many providers now describe as existential. Across the country, wound care practices—many of which serve the most medically complex and socially vulnerable patients—are reporting debilitating financial losses, forced closures, and in some cases, the loss of Medicare billing privileges, even while disputed claims remain under formal appeal.
These outcomes raise urgent questions not only about audit methodology, but about Medicare’s obligations to providers and beneficiaries under federal law.
The human cost of retrospective enforcement
Skin substitute therapies are not theoretical services. They are applied to patients with chronic, non-healing wounds, often after months or years of unsuccessful conservative care. Providers purchase these products up front, at costs that can exceed thousands of dollars per unit, with no guarantee of reimbursement once an audit is initiated.
When Medicare later recoups payment—sometimes months or years after care was rendered—the provider does not merely lose revenue. They lose capital already expended, with no mechanism to recover those costs from manufacturers or distributors. Unlike an evaluation and management service, a skin substitute application leaves behind irreversible financial exposure.
In recent enforcement actions, providers report that:
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Entire payment streams have been frozen based on a small number of disputed claims;
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Extrapolation methodologies have multiplied alleged overpayments far beyond the original audit sample;
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Practices have been forced to lay off staff, reduce services, or close entirely;
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In at least one reported instance, a provider’s Medicare billing privileges were revoked on the basis of three claims, all of which were under timely appeal.
For those practices, the appeals process offered no meaningful protection. By the time due process could be exercised, the business no longer existed.
When “fraud” becomes a label, not a finding
Medicare regulations clearly distinguish between fraud, abuse, and payment error. Fraud requires intent. Abuse requires reckless disregard. Documentation disputes and medical-necessity disagreements are meant to be resolved through the claims and appeals process.
Yet in the current enforcement climate, providers report that allegations of fraud are sometimes asserted before appeals are exhausted, and in some cases before adjudication at any appeal level. Payment suspensions, recoupments, and privilege revocations proceed while providers are still exercising rights explicitly granted under the Medicare statute.
This approach risks transforming fraud from a legal conclusion into a procedural shortcut, applied when spending patterns are unpopular or politically untenable, rather than when evidence supports intentional wrongdoing.
Due process delayed is due process denied
Medicare’s appeals system is designed to ensure fairness. Providers are entitled to:
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Redetermination and reconsideration;
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Administrative Law Judge (ALJ) review;
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Judicial review where appropriate.
However, these protections are meaningful only if providers can survive long enough to use them.
When payment is suspended or recouped immediately—particularly in high-dollar service lines like skin substitutes—the appeals process becomes academic. A practice that cannot meet payroll or pay vendors cannot wait years for an ALJ decision, even if the ultimate ruling would favor the provider.
This reality has led many compliance professionals to question whether current enforcement practices effectively nullify statutory appeal rights, undermining the procedural safeguards Congress intended.
Medicare’s obligations—to providers and to patients
Medicare’s responsibilities extend beyond safeguarding the Trust Fund. Under federal law, the program has dual obligations:
To patients:
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Ensure reasonable access to medically necessary care;
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Avoid policies that drive providers out of underserved areas;
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Support continuity of care for beneficiaries with complex medical needs.
When wound care programs close or curtail services due to audit pressure, patients lose access to advanced therapies that may prevent infection, hospitalization, or amputation.
To providers:
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Apply coverage policies prospectively, not retroactively;
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Enforce compliance in a manner that is proportional and evidence-based;
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Respect due process rights throughout the audit and appeals continuum;
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Distinguish clearly between policy disagreement and fraudulent conduct.
A system that penalizes good-faith providers for operating within existing coverage guidance—only to later revise payment policy—risks eroding trust and participation in the program itself.
A path forward
None of this is an argument against oversight. Fraud should be identified and addressed decisively. But indiscriminate enforcement harms the very goals Medicare seeks to achieve.
A more balanced approach would include:
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Targeted audits focused on demonstrable outliers;
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Suspension of recoupment while timely appeals are pending;
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Clear, prospective guidance when payment policy changes;
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Recognition of the unique financial exposure inherent in high-cost biological therapies.
Without such reforms, the current trajectory threatens to replace compliance with fear—and patient care with avoidance.
Conclusion
The story of skin substitute audits is no longer just about documentation or utilization. It is about whether Medicare’s enforcement mechanisms respect the rule of law, economic reality, and patient access.
When compliant practices close, when privileges are revoked mid-appeal, and when providers are financially destroyed before due process is complete, the system has failed—not just providers, but the beneficiaries it exists to serve.
