Skyrocketing spending on skin substitutes: Why is traditional Medicare paying so much?

Examining skin substitutes, federal investigators noticed a key difference between payment in traditional Medicare and in Medicare Advantage (MA) plans. Why is that? Prior authorization and insurer oversight may have been the deciding factor. David Tawes, MA, regional inspector general in the Baltimore, Maryland, HHS-OIG Office of Evaluation and Inspections, explains.

Medical Economics: It appeared that there were some differences in the spending trends for Medicare Part B and Medicare Advantage, and I was hoping you might be able to discuss that distinction.

David Tawes, MA: Medicare Advantage now covers about, more than half of Medicare enrollees. So you would expect maybe spending or utilization to be the same, or close to the same, between Medicare Advantage and traditional Medicare. But in all of 2024, only 3,800 patients received or billed for a skin substitute in Medicare Advantage, compared to 24,000 in Part B. So more than six times more people in traditional Medicare received a skin substitute compared to MA. And then spending in MA was less too, so the average per patient was less, the number of units, the cost of what was billed, so MA spending was just 7% of Part B spending. This is likely because MA can use reimbursement and coverage tools like prior authorization that, at the moment, aren't really available in traditional Medicare.