By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
Federal authorities have greatly increased their scrutiny of physicians and other healthcare providers who prescribe, apply, or bill Medicare for skin substitutes used in wound care. The Department of Justice (DOJ), Centers for Medicare & Medicaid Services (CMS), and the Department of Health and Human Services Office of Inspector General (HHS-OIG) have identified significant concerns and allegations of excessive billing, medically unnecessary treatments, and potential kickback arrangements.
Physicians, wound care clinics, and other healthcare professionals should be aware that wound care faces growing scrutiny from audits, investigations, and repayment demands.
Podiatrists, wound care physicians, and nurse practitioners performing wound care seem to be the professionals being targeted. Program integrity audits, fraud audits, and audits by CMS and its contractors are specifically reviewing the medical records and payments made for skin grafts and wound treatment.
Why Are Skin Substitutes Under Federal Investigation?
A skin substitute is a material used to cover and promote healing of skin wounds by acting as a temporary or permanent replacement for damaged skin. Although these products can provide important medical benefits, their high reimbursement rates have attracted federal attention.
In September 2025, the OIG published a report (“Medicare Part B Payment Trends for Skin Substitutes Raise Major Concerns About Fraud, Waste, and Abuse”) that revealed Medicare Part B spending on skin substitutes exceeded $10 billion annually by the end of 2024. Federal investigators identified concerning billing patterns, including unusually high costs for treatments provided in patients’ homes and substantial increases in product prices.
These findings have raised concerns that some providers and suppliers may be exploiting Medicare reimbursement policies for financial gain.
DOJ Targets Alleged Medicare Fraud Involving Skin Substitutes
Federal prosecutors have prioritized healthcare fraud enforcement related to skin substitute billing.
For example, in September 2026, the DOJ announced a $2.6 million False Claims Act (FCA) settlement involving a Kentucky wound care provider. The government alleged that the company overbilled Medicare and TRICARE for expensive skin substitute products.
The settlement was part of a broader federal initiative known as “Operation Skin Scam” aimed at uncovering fraud schemes involving expensive skin substitute materials and holding accountable those who attempt to exploit government payments for them.
Other investigations have focused on allegations involving unnecessary treatments, excessive product quantities, improper financial incentives, and billing for procedures that were never performed.
These enforcement actions demonstrate that physicians and medical practices involved in wound care may face substantial legal exposure when their billing practices fail to comply with federal requirements.
How Can Skin Substitute Billing Lead to False Claims Act Liability?
The federal False Claims Act (FCA) allows the government to pursue civil penalties and damages when individuals or businesses knowingly submit, or cause the submission of, false claims for government payment. More importantly, it allows private citizens, including nurses, physician assistants, surgical assistants, and billing and coding employees, to bring their own lawsuits to recover overpayments made on behalf of the government. These individuals are called “relators” or whistleblowers. They are then entitled to a large percentage of any money that is recovered by the government in such cases.
Healthcare providers may face FCA investigations involving:
1. Billing for skin substitutes that were not medically necessary.
2. Submitting claims for products or procedures that were never provided.
3. Billing for excessive quantities of skin substitute materials.
4. Failing to maintain documentation supporting treatment decisions.
5. Submitting claims connected to unlawful referral or kickback arrangements.
Depending on the circumstances, violations may result in significant financial penalties, repayment obligations, exclusion from federal healthcare programs, or criminal prosecution under applicable federal laws. Importantly, not every billing error constitutes fraud. However, questionable billing patterns may trigger Medicare audits and government investigations.
Medicare Payment Changes Increase Compliance Concerns
CMS has also taken steps to address rapidly increasing Medicare expenditures for skin substitutes. Changes to Medicare reimbursement policies for 2026 have altered how claims for certain skin substitute products are paid. These reforms are intended to reduce excessive spending and discourage reimbursement practices that may encourage unnecessary utilization.
Healthcare providers should review current Medicare payment requirements, applicable coverage policies, billing codes, and medical necessity standards before submitting claims. For example, there is a national coverage decision (NCD) published by CMS on this, which all health providers should be following. Failure to follow applicable Medicare requirements may result in claim denials, overpayment demands, audits, or additional enforcement actions.
Contact Health Law Attorneys Experienced with Health Care Fraud, False Claims Act Violations, and Anti-Kickback Statute Violations
The attorneys of The Health Law Firm represent healthcare providers in cases of medical billing fraud, overbilling, Medicare audits, program integrity contractor audits, False Claims Act cases, and whistleblower/qui tam cases throughout Florida and across the United States. Our attorneys also represent physicians, medical groups, nursing homes, home health agencies, pharmacies, hospitals, and other healthcare providers and institutions in Medicare and Medicaid investigations, audits, recovery actions, and termination from the Medicare or Medicaid program.
To contact The Health Law Firm, please call (407) 331-6620 or toll-free at (888) 331-6620 and visit our website at
www.TheHealthLawFirm.com.
Sources:
McCormack, Jay. “In the Enforcement Crosshairs: Skin Substitutes.” American Health Law Association. (September 1, 2026). Web.
Department of Health and Human Services (HHS) Office of Inspector General (OIG). “Medicare Part B Payment Trends for Skin Substitutes Raise Major Concerns About Fraud, Waste, and Abuse” Data Snapshot. (September 2025). Web.
About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Avenue, Suite 1000, Altamonte Springs, FL 32714, Phone: (407) 331-6620 Toll-Free: (888) 331-6620.
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