Skin in the game: How accountable care can fight fraud while helping patients

Accountable care organizations (ACOs) aim to improve patient care by managing their conditions and maintaining access to affordable care.

To do so, ACOs amass data about patient health and spending, and there’s a potentially positive side effect: ACOs can serve as watchdogs to guard against wasteful and fraudulent spending in health care.

That happened in the last few years as Medicare spending ballooned to pay for skin substitutes used to treat wounds on patients. The U.S. Health and Human Services Office of Inspector General published a report with a title stating the problem: “Medicare Part B Payment Trends for Skin Substitutes Raise Major Concerns About Fraud, Waste, and Abuse.” Medicare spending for skin substitutes topped $10 billion in 2024, is expected to reach $15 billion for 2025, and prompted major changes for payment policy for 2026.

ACO leaders could see the spending patterns — and began growing alarmed, said Mara McDermott, JD, CEO of Accountable for Health, a Washington, D.C.- based organization that advocates for accountable care. Accountable for Health has called the situation a crisis in Medicare, and not just because it involves massive amounts of money. The organization’s website includes anecdotes about patients suffering due to unneeded treatments that made their conditions worse, not better.

McDermott spoke with Medical Economics about the situation and how ACOs can serve patient health and responsible spending across health care. This transcript has been edited for length and clarity.

Medical Economics: You've written about accountable care organizations, ACOs, and their ability to prevent and detect fraud, waste and abuse. Can you discuss the procedures or policies in place that facilitate that?

Mara McDermott, JD: Sure, and I think that the case study of success around ACOs and fraud, waste and abuse, really comes back to the reason ACOs were formed in the first place, right? One sort of theory of the case for accountable care organizations is that you could incentivize clinicians and others in the health care ecosystem to find waste and root it out by letting them share in waste reduction. So as we think about kind of the core mission, vision, values of a lot of accountable care organizations, it was looking for fraud, waste and abuse in the traditional Medicare payment system, identifying it, communicating a lot with their partners, whether that's other clinicians or the federal government, to eliminate that waste and then to share in the savings that result from that waste reduction.

Over the last 10 years of advocacy for accountable care, what I have noticed, personally and many others have as well, is that the data capabilities of these organizations has dramatically improved. The data landscape has completely transformed since ACOs came on the scene around 2010 and our ACOs are now super-efficient fraud spotters, right, and waste and abuse. But they are in their data, looking at patient data, population health data, every single day. They are identifying patterns and abnormalities, things that maybe just don't look right for a specific patient, to things that at a population health level are very alarming. We think about these examples in a very wide range. I know we're going to get more into skin substitutes, but we also have ACOs identify, for example, a patient who's a repeat user of the emergency room — oh, I noticed Mrs. Smith has been to the ER every Sunday for four weeks, something else might be going on. To have a case manager who can reach out to Mrs. Smith and find out what's going on. In the case of one of our specific ACOs, what they discovered was that the meal plan that that senior was on was running out by the end of the week. She was, in fact, returning to the hospital as a source of food. Instead, they were able to align her to a community provider of meals, eliminate that hospitalization, a much better outcome for the patient, for the health care system, and obviously, for the Medicare dollar. So we've seen ACOs’ capabilities in this regard across a wide range of behaviors, really improve over the last 10 years, to place where they can be a very reliable partner for the federal government and for patients in terms of making sure that care is right-sized.

Medical Economics: Accountable for Health has published extensively about Medicare spending in recent years on skin substitutes for wound care. At first glance, it might not appear that those issues really go together with accountable care. Can you explain that connection, how that emerged?

Mara McDermott, JD: A couple of years ago, many of our accountable care organizations started ringing the alarm around skin substitutes, and what they were able to observe in their data were massive spikes in spending on skin substitutes over time. What has emerged is a pattern across all of traditional Medicare of massive, really unnecessary growth in spend and utilization. We have a single patient in Texas who had $10 million of skin substitute spend in one month, in the month of May. That patient subsequently passed away in early July. We have many patients who have experienced skin substitutes being applied to their bodies while they are on hospice at the end of their lives with no real clinical evidence behind these products. We have ACOs in their benchmarks now, skin substitute spending is going to be over 5% of medical spend, so really enormous amounts of spending. And then at the national level, what we've seen is the spend for traditional Medicare on skin substitutes has grown from about $250 million, with an M, million dollars in 2019 to over $15 billion, with a B, in 2025. So you see the curve on that just dramatically spiking upwards, and again, with very minimal clinical evidence to support that type of utilization. The other thing that our ACOs were able to see is that in Medicare Advantage, for patients in Medicare Advantage, there is almost no utilization of skin substitutes, and you do not see this same type of growth because the plans are providing oversight and offering other treatments first and more appropriately managing wound care. So those were all the patterns that our ACOs were observing. The challenge with the ACO model, which is also one of its great strengths, is that ACOs cannot restrict network. One of the promises of the traditional Medicare program in terms of accountable care organizations, is that that patient, that original Medicare beneficiary, retains the right to see any Medicare provider. But the ACO is on the hook, accountable for the spend associated with that beneficiary. So there are strong incentives for ACOs to try to keep beneficiaries within the ACOs network, to refer them to high-value specialists and high-value skilled nursing facilities, things like that. Skin substitutes, really exposed a vulnerability, which is that our ACOs could see that patients were being treated by providers not affiliated with the ACO, that those patients were receiving massive amounts of skin substitutes that were likely inappropriate, and the ACO was unable to turn off those claims or to really control that spend in any way. So it became an acute issue for accountable care organizations, in a way that it's not really an issue for other fee-for-service providers, because the accountable care organizations are financially responsible for that $10 million patient or this $2 million patient, even when that's not supporting better health outcomes. So that is where the two issues converged, and why we became so active because of both the massive amounts of money. We haven't talked extensively about patient harm, but there is extensive patient harm, including patients who have passed away as a result of inappropriate skin substitute application. And then the added financial accountability that the ACOs have.

Medical Economics: Accountable for Health has compiled some stories about actual patients involved in these treatments. Can you talk more about that?

Mara McDermott, JD: It is incredibly upsetting. I would say there are stories on our website, and the press has covered some stories. The probably most horrific one that we have on the website relates to a patient whose wound became so badly infected that it became infested with maggots, and ultimately that patient had to have an amputation. The accountable care organization care team believes that that amputation was likely preventable, and it's hard to imagine worse outcomes than that. As I mentioned, we also have a patient in Colorado who passed away. This patient had had a wound that was well-managed for over 13 years. She moved to be closer to her family. When she moved, she became the victim of a mobile wound care clinic, and then within two weeks, her wound went septic and she passed away. So some really awful patient outcomes, which I feel like has been one of the factors that has really driven a lot of the policy change around skin substitutes, and certainly has motivated the accountable care organizations who, at the end of the day are here to try to deliver better patient health outcomes. And we're really seeing these patterns where patients were not getting better. In fact, their wounds were getting way worse.