Six Months Into the $10 Billion Correction: Enforcement Arrives

An update to our February 2026 analysis of the new rigor in skin substitute reviews 

In February, we examined the regulatory correction reshaping the wound care industry in “The $10 Billion Correction: Understanding the New Rigor in Skin Substitute Reviews.” At the time, Medicare Part B spending on skin substitutes had surged roughly 3,800 percent — from approximately $256 million in 2019 to about $10 billion in 2024 — and CMS had responded with a flat national payment rate, restructured coverage, and far more demanding documentation expectations. We predicted that the era of “automatic” reimbursement was over. 

Nearly six months later, that prediction has been confirmed on every front. The courts have declined to unwind the payment reform. The Department of Justice has brought the largest wound care enforcement action in history. Auditors are working backward through the boom years. And CMS has proposed carrying the new framework into 2027 — and extending it further. Here is what has changed since February, and what it means for providers, suppliers, and manufacturers. 

The Courts Weigh In: The Correction Stands 

The most consequential legal question hanging over our February analysis was whether litigation would undo the payment reform. In late March, the U.S. District Court for the Northern District of Texas answered that question, dismissing CAMPs Initiative v. HHS — the trade group challenge seeking to overturn the 2026 payment rule and restore the prior pricing methodology — on jurisdictional grounds. A companion provider-led class action was dismissed on the same basis. 

The practical effect is twofold: the flat national rate of $127.14 per square centimeter remains fully in force, and the administrative appeals system — where cases are won or lost on the strength of the medical record — is now the primary arena of contest. For providers, that makes documentation quality not merely a compliance matter but the deciding factor in whether denied claims can be recovered. 

June’s Fraud Takedown: Enforcement at Unprecedented Scale 

On June 23, the Department of Justice and HHS Office of Inspector General announced the 2026 National Health Care Fraud Takedown: alleging more than $6.5 billion in alleged false claims with 455 defendants charged. Skin substitutes were at the center of it. 

Four cases specifically targeted amniotic allograft billing. The largest, in the Southern District of Texas, alleges approximately $906 million billed and $297 million paid — including grafts applied to patients in hospice care. A Northern District of Texas case involves roughly $268 million paid under a profit-split arrangement that guaranteed providers 30–40 percent margins.  

The common thread is instructive: each scheme exploited the pre-2026 pricing environment, in which certain products commanded more than $2,000 per square centimeter. The data that generated these prosecutions exists for every provider that has ever submitted skin substitute claims. Enforcement is no longer reactive; it is systematic. 

The Audit Wave: Looking Backward, Not Just Forward 

When we wrote in February, the focus was on prospective review — the scrutiny applied to new claims under the revised coverage framework. Now the correction is equally retrospective. Providers across the country report escalating Additional Documentation Requests (ADRs), with Unified Program Integrity Contractors (UPICs) and Medicare Administrative Contractors denying claims as not reasonable and necessary. 

Medicare can recoup overpayments up to four years after payment, placing the entire 2023–2025 boom period within reach. Industry analysts estimate potential recoveries of as much as $25 billion from 2024–2025 claims alone over the next several years. Providers who billed during those years should assume their claims will be reviewed and should assess now whether their documentation — conservative care history, treatment failure, clinical rationale for product selection, and measured wound progress — can withstand that review. 

CY 2027: The Framework Becomes Permanent 

On July 14, CMS issued the CY 2027 Physician Fee Schedule proposed rule. The rule maintains the skin substitute payment framework without substantive change — and proposes extending the national payment methodology to non-sheet skin substitute products currently priced by individual MACs. 

In other words, CMS is not retreating; it is expanding. Stakeholders who wish to comment on the proposal have until September 14. 

The Next Deadline: December 31, 2026 

The coverage framework we described in February — in which products are categorized rather than treated interchangeably — now has a hard date attached. Under the LCDs effective January 1, 2026, only 18 products hold evidence-based covered status, while roughly 150 more sit in a discretionary category subject to case-by-case MAC review. Manufacturers of discretionary-category products face a December 31 deadline to submit additional clinical evidence; products without adequate support face non-coverage. 

The Bottom Line 

Every development since February points in the same direction. The payment correction has survived its first legal test. Enforcement has moved from warning to indictment. Audit contractors are working backward through the highest-spending years in the sector’s history. And CMS has signaled that the new framework is not just here to stay but growing. For providers, the message we delivered in February bears repeating with new urgency: thorough, contemporaneous documentation of conservative care, treatment failure, product selection rationale, and wound progress is no longer best practice — it is the difference between defensible claims and recoupment. As Medicare continues to rein in billions in spending, FHAS remains committed to providing clarity on the evolving standards used by Medicare Contractors, so that appropriate care remains accessible while fraud, waste, and abuse are mitigated. 

Editor’s note: This article updates and should be read alongside our February 16, 2026 analysis, “The $10 Billion Correction: Understanding the New Rigor in Skin Substitute Reviews.”