Chronic wounds like diabetic foot ulcers (DFUs) and venous leg ulcers (VLUs) are a challenge to treat, and the consequences of failure to heal are worse-- disability, amputation, and death following years of pain, limited mobility and productivity, and social isolation. At the time human amniotic membrane treatments like Epifix© were introduced in 2006, a third of the cost of treating diabetic patients in the US ($116B in direct healthcare costs, and an additional $58.3B in disability and productivity losses) was spent in treating diabetics with chronic wounds.[1] The introduction of amnio products in wound healing allowed physicians to treat recalcitrant wounds with faster wound healing and higher rates of complete wound closure.[2]
Reimbursement incentives for these treatments were originally requested and designed to get treatments to mobility-limited patients as effectively as possible, by treating them in the community setting in physician’s offices and by mobile wound clinics that visited patients in long-term care and assisted nursing facilities. The incentives for these points of care were based on a percentage of the average selling price (ASP) of the product and volume they used in treating patients.
The road to hell is paved with good intent and bad incentives.
There was a perverse incentive for new manufacturers to charge higher and higher prices for products that had the same benefit. The higher the ASP, the more the physicians would be compensated for placing them. These terms of reimbursement not only nudged patients into accessible treatment, they nudged manufacturers into charging astronomical fees for each cm2 and they nudged some facilities into placing as much of the materials on as many patients as they could identify…even patients that did not qualify for treatment, such as hospice patients. And yet, despite costs for skin substitute placement increasing exponentially, DFUs and VLUs were still undertreated.
The pendulum swung in the opposite direction.
“They threw the baby out with the amnio,” states Dr. David Armstrong, Distinguished Professor of Surgery and Neurological Surgery at the University of Southern California and a 20-year veteran in the limb salvage space. At first, just a few manufacturers would have been allowed reimbursement, based on experience and clinical studies. Then reimbursement rates were proposed which would limit reimbursement for the skin substitutes and the labor and overhead to apply them to $125.38/cm2 in mobile wound care and physician practice settings, regardless of layering, source, processing or structure. CMS reimbursement, the pace-setter for all US insurers, would barely cover the cost of materials, let alone the cost of gas for mobile clinics and the time and effort of a practitioner qualified to apply them in either community setting[3].
In double-blind focus groups of 25 wound care practitioners held at the Fall conference held by SAWC in September, 2025, many office-based practices and mobile wound care clinics expected that patients in need of skin substitutes- still viewed as the most effective treatment for wounds which other treatments have failed- will shift to traditional wound care clinics if the guidance remains unchanged. Wound care clinics, in turn, expect delay of care and more patients shifting to the more expensive inpatient treatment settings and the OR. Surgeons in those settings are concerned that delay of care will result in increased amputations and morbidity[4]. “There won’t be any place to send these patients at those rates,” stated one surgeon in a focus group of wound care practitioners.
In other words, the costs of care won’t go away with this guidance- they will just be delayed, along with care. While most practitioners across practice settings agree the current reimbursement is unsustainable and do not advocate for the companies that inflated prices per cm2 without evidence that their products work any better than the pioneering brands, any skin substitute application is going to be too costly for many practices to provide and for most chronic wound patients to receive at the proposed ASP.
So where should the guidance land? What is the magic number where chronic wound patients will have access to proven treatments, and physicians will be able to afford to apply them? How should reimbursement be structured so that the costs of treatment and non-treatment won’t swamp taxpayer contributions to healthcare? Where is the midpoint of the pendulum’s swing from one untenable point to the opposite pole?
“It comes down to a setting a fair, consistent reimbursement that allows physicians to focus on healing- not whether they can sustain their practice while doing so.” answers Dr. Armstrong.
Five points could correct the guidance and lead to better, sustainable coverage going forward:
1) Most chronic wound care should be done in the community setting, and guidance should reflect and incent that. Earlier, accessible treatment is more successful treatment…and with the correct incentive and reimbursement programs, and it’s also cheaper than either treating patients in inpatient settings or the aftermath of amputation and permanent disability.
2) Multiple applications should be allowable, as long as progress is being made. Expectations that a chronic wound that has failed other treatment plans will heal completely in 4 applications of a skin substitute is unreasonable- as is asking a physician to stop treating a patient with something that is actively healing the wound where other solutions failed.
3) A logical price per cm2 and consistent application reimbursement across sites of care should be established that allows physicians and mobile care clinics to do more than just break even on the cost of materials. The most common response from physician’s practices and mobile wound care clinics in focus group research and quantitative research was between $350-$700. “We need to cover the cost of application, documentation, transportation, and the materials we leave with patients to ensure care of the wound between visits.”
4) Several respondents and opinion leaders have mentioned that allowable reimbursement amounts should be augmented for those companies conducting clinical trials and demonstrating ample outcomes data, at least for a period of time.
5) Specific outcomes to maximize could be “ulcer free days”, “hospital free days”, and “activity rich days”, according to Armstrong.
After the CMS guidelines are finalized, both Dr. Armstrong and the Wound Care team at SmartTRAK foresee an increase in particulate products and BLAs[5], the biologic license applications that go through a more formal and strenuous development cycle before going to market.
If the CMS guidance is adjusted to the correct reimbursement amount for skin substitutes, the US wound care practitioners and manufacturers stand to achieve three major wins:
1) DFU and VLU treatment costs will decrease substantially without limiting access to care for patients who truly need skin substitutes to heal. (A reduction from $4000/cm2 to $350-700/cm2 will still result in substantial savings from CMS’ 2024 bill of $8B, and will sift out the companies that purely took advantage of the current reimbursement with little regard for any outcomes beyond practice profitability.)
2) The ~ $60B of baseline costs associated with DFU/VLU delayed care, limb loss, and disability will be mitigated compared to the likely consequences of proposed guidelines.
3) With audits and clear directives on appropriate use for skin substitutes, inappropriate and fraudulent use will be less rewarding, and less frequent.
Another benefit to stabilizing prices in the US to a rational level is that it will allow global use of skin substitutes to expand more rapidly.
There is still an opportunity for CMS to address the situation and optimize positive outcomes with appropriate guidance- ones that don’t cost either taxpayers or patients an arm and a leg.
[1] American Diabetes Association. "Economic costs of diabetes in the US in 2007." Diabetes care 31.3 (2008): 596-615.
[2] Vecin, Nicole M, and Robert S Kirsner. “Skin substitutes as treatment for chronic wounds: current and future directions.” Frontiers in medicine vol. 10 1154567. 29 Aug. 2023, doi:10.3389/fmed.2023.1154567
[3] https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-pfs-proposed-rule-cms-1832-p
[4] SAWC FALL 2025
[5] https://blog.smarttrak.com/cms-proposes-major-changes-to-skin-substitutes-reimbursement-what-you-need-to-know?utm_campaign=10529355-SmartTRAK%20Interviews%202025&utm_content=340586519&utm_medium=social&utm_source=facebook&hss_channel=fbp-1942088756023581