OIG Launches Nationwide Audit of Medicare Part B Skin Substitutes: What Wound Care Providers Need to Know
On September 8, 2025, the U.S. Department of Health & Human Services Office of Inspector General (OIG) released a report that should be on every wound care provider’s radar entitled Medicare Part B Payment Trends for Skin Substitutes Raise Major Concerns About Fraud, Waste, and Abuse.
Following the release, wound care companies across the country are receiving audit emails titled “Nationwide Audit of Medicare Part B Substitutes.”
So, what does this mean for you as a wound care provider and how can you prepare?
Key Findings From the OIG Report
The OIG’s analysis paints a picture of skyrocketing Medicare Part B spending on skin substitutes.
The OIG’s analysis shows that Medicare Part B expenditures for skin substitutes have risen at an unprecedented pace. Spending, which was approximately $400 million per quarter in 2023, ballooned to nearly $3 billion per quarter by late 2024, surpassing $10 billion annually. This increase has been driven both by a rise in the number of beneficiaries receiving skin substitutes and by significant growth in the number of units billed per patient — with utilization per enrollee climbing more than 80 percent in just two years.
Another trend highlighted in the report is the disproportionate role of home-based claims. By the end of 2024, more than half of all Part B spending for skin substitutes came from patients reportedly treated in their homes, where costs per enrollee were nearly four times higher than in physician office settings.
The report also noted that manufacturers continue to introduce new products at high prices, and the structure of the Medicare payment system allows providers to retain a financial “spread” between acquisition costs and reimbursement. While these dynamics clearly contribute to overall spending growth, the nationwide audit now underway appears to be targeting providers rather than manufacturers
Why Providers Are in the Spotlight
Although the OIG acknowledges the role of manufacturers in shaping the market, the enforcement response is focused squarely on provider billing practices. The report points to patterns such as claims submitted without adequate evidence of medical necessity or prior conservative care, unusually high-cost claims submitted on a single date of service, and billing by specialists who may not typically provide wound care.
These findings indicate that OIG is looking closely at whether providers are appropriately documenting, coding, and justifying the use of these expensive products.
What You Should Do Now
If your practice bills Medicare for skin substitutes, this is the time to:
Review documentation practices. Ensure that records clearly demonstrate medical necessity and prior conservative treatment.
Confirm the product itself along with use aligns with FDA/Medicare coverage criteria. Off-label or excessive product use is a red flag.
Audit your own billing. Look for patterns that could be misinterpreted as overutilization or abuse and determine whether you are using appropriate codes and modifiers.
CMS has already signaled payment reform, including a proposal to reclassify most skin substitutes for 2026 and implement AI-driven prior authorization in selected states. The compliance landscape is shifting fast.
How We Can Help
The OIG’s nationwide audit marks a turning point in how skin substitutes will be monitored and reimbursed. While the report highlights systemic issues, providers are bearing the brunt of the enforcement response.
If your organization has received an audit request — or if you want to proactively strengthen your compliance program — HealthWise Legal can help. We regularly represent wound care practices in CMS audits, and have tailor made compliance programs to address the compliance needs exclusive to wound care providers.
