Skin in the game: Medicare policy change is good, but more protections are needed for ACOs

The U.S. Centers for Medicare & Medicaid Services (CMS) have made big changes to how they pay for skin substitute treatments for wounds.

Those payment policies are changing starting with 2026 and will help bring down skin substitute spending that has ballooned in the last few year — and not always with good results for patient treatment.

Mara McDermott, JD, is 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, but things are changing for 2026. Here she continues discussion about payment policies around skin substitutes and Medicare’s new Wasteful and Inappropriate Service Reduction (WISeR) model. It has sparked concerns across health care for proposing new prior authorizations (PAs) for some treatments covered by traditional Medicare, which previously avoided the PAs that have delayed treatments for beneficiaries of Medicare Advantage. This transcript has been edited for length and clarity.

Medical Economics: CMS has changed its payment policy about skin substitutes. It sounds like Accountable for Health supported that policy change. Can you explain more about that?

Mara McDermott, JD: Yes, absolutely. So one factor that was leading to these horrific abuses that we've talked about is that there is — I don't know that loophole’s the right word, but there's sort of an interesting feature of reimbursement for skin sensitive products through the average sales price plus 6% methodology. Under that methodology, for many reasons skin substitute manufacturers have been able to refile their products at an escalating factor for price quarter after quarter. So you can look in the data. This is all publicly available data on the Medicare website. But you can look in the average sales price plus six, ASP + 6 files, and you can see that there are skin substitute products that are paid at $11 per square centimeter in 2025 now, everything has been adjusted, but in 2025 all the way up to products that were being reimbursed $5,700 per square centimeter of product, and everything in between. And you could sort of track the companies that were refiling every quarter, and you could watch this growth from $1,000 per square centimeter to $2,000 to $3,000 to $4,000 to $5,000 $6,000. What the administration did in the Medicare Physician Fee Schedule for 2026, so this policy is effective now, was basically say, we're not going to reimburse these products that way anymore, everyone is getting a flat rate of $127 per square centimeter. So we are taking that sort of boundless upper limit and placing a cap on it. We, CMS, will continue to review the data. But for now, the agency implementing this really sort of hard stop on the growth in the payment and reimbursement that we were seeing. Accountable for Health, as you said, super enthusiastic about this change. We were thrilled to see the change go through. We know that there were a lot of counterpressures on the agency, the manufacturers obviously did not want that payment change. So we were very excited to see that change go through, and we think that it will have a dramatic effect in terms of the abuses that we've seen, bringing things back into line, setting a more appropriate payment rate, and creating sort of a go forward strategy that doesn't allow this quarter over quarter unregulated growth.

Medical Economics: Accountable for Health has suggested at least four other steps to protect ACOs and their patients. Can you discuss those and why those are needed?

Mara McDermott, JD: In terms of our thinking about Accountable for Health and accountable care organizations — and I should say this isn't limited to accountable care organizations. There are others, like, kidney care is one that comes to mind, that take risk on their populations, that are in a similar situation, holding the risk or holding that financial accountability for these fraudulent claims. So the couple of areas where we have focused, we are again super thrilled about the payment policy going forward for 2026. Our accountable care organizations, our kidney care organizations, are still left holding the bag on $15 billion of fraud for 2025. So a lot of our work now with the administration has focused around, how can you hold accountable care entities responsible for financial spend that is fair, while not holding them accountable for fraud, waste and abuse? And I think in particular in the case of fraud, where we know that the provider should not have billed, but that was completely outside of the control of the accountable care entity, really asking CMS to take some steps to ensure that there's kind of like a right-sizing of accountability. So we have focused on asking the agency to either remove beneficiaries with spend over a certain threshold from the ACO math, like, from the calculations, or otherwise truncate, apply a stop loss policy, something like that, to provide financial protection to those organizations.

The other area where we've been really interested is, like, how can we get in front of this in the future? ACOs had their hands up for a long time, waving that red flag saying something weird is going on here. CMS, can you please move faster, investigate, shut it down? And as evidenced in the data, it has taken years to get to a resolution on the payment policy. So we are working with the agency to uncover ways to more quickly, address fraud, waste and abuse, and in particular, in the case of providers, where we have a strong suspicion of fraud and data to back it up, is there a way to stop payment on those claims faster? So we're not left holding accountability for it on the back end, but stopping the payment of those claims in the first place.

Medical Economics: You touched on an interesting point that has come up in the discussion around the skin substitutes, that disparity in spending between Medicare Advantage and traditional Medicare. Among our audience, Medicare Advantage at times generates frustration due to prior authorization, the PA process. It sounds like in this instance, the prior authorization process really helped to probably benefit not only the spending, but the patient care. Could you talk about that differential?

Mara McDermott, JD: I've been thinking about this a ton, honestly, especially with regard to the WISeR model. I don't know if that's something that your audience has been focused on, but the administration had announced the intent to test WISeR, which is a prior-auth-like model for traditional Medicare. And I know many of our providers also kind of did a deep sigh when they heard about that. And I should say also, we hear the frustrations with prior auth all the time, so I'm very well aware of that side of the coin. I do think, to your point, skin substitutes is kind of a flip side, right? It's like prior auth is frustrating when it slows you down from doing things that are necessary. Prior auth can be great if it stops a patient from being murdered or infected or having an amputation they don't need because they're having inappropriate wound care. And to me, it has seemed like the real rubber-meets-the-road moment is to figure out, how do you get more of the good stuff and less of the bad stuff, right? And, yes, speeding it up. But I think that skin substitutes is a really strong indicator that sometimes more controls are needed. We have had situations in our ACOs’ data, we talked in the beginning about ACOs’ data capabilities improving. The ACOs can see there are clinicians billing for wounds the exact same size, the exact same day, for the exact same number of patients for weeks. And it seems to me like that is the kind of thing that AI is good at detecting those types of patterns and saying, hey, is something else going on here? It seems highly unlikely you would have that number of patients with that number of wounds exactly the same size, if you're measuring by centimeters. I think that there is absolutely a role for these utilization management techniques. Speeding it up is obviously important, and getting it right is obviously important. But I do think skin sub sort of shows the other side of the coin from what we've been hearing on prior auth for two-plus years now.