Check out the entire series here.

I am getting a lot of comments by folks who feel that they should remain anonymous because otherwise they put their job at risk.  I am going to post anonymous comments from people I know well enough to trust. If you want to send me a message to post anonymously, email me at [email protected] and I will review it and perhaps discuss it with you further.

Anonymous comments:


“No. You are not the only one who thinks something is wrong.”

“Thank you for talking about this. Please keep it up.”

“Dr. Fife, since you asked how this works, I will explain with this example: If you have a graft that costs $1000 per square cm, then a 4 sq cm wound will require $4000 of product per application. Medicare pays 80% of the cost, which is $3200. However, these companies give the doctor a 30% or 40% or even higher discount, which means that the doctor pays only (for example) $2400 for the product. That means the doctor makes $800 off the product itself — assuming the patient or the secondary insurance does not pay the other 20%. However, if the patient pays the 20% out of pocket or has a secondary insurance, then the doctor makes $1600 off the product. Now, repeat this process up to ten times. In larger wounds, it truly gets crazy. This is why skin sub spend is growing so fast.”

“Keep in mind that the patient has to pay their 20% of the price under traditional Medicare. How copay/coinsurance works for Advantage plans depends on the plan.”

“People seem to think there are no victims to this but the money Medicare has to spend on wound care is being soaked up by this behavior. And physicians are cherry-picking the good paying patients to make money in the office (rather than allowing them to be seen in a wound center).”

“Medicare pays 80% of fee schedule.  There is always a 20% patient co-pay.”

“The assumption many providers have is that none of their Medicare patients have co-pay insurance or are willing or able to pay the 20% patient responsible portion.  So, these companies discount the 20% co-pay in their margin modeling to proactively address co-pay concerns the physician may have when they make their illegal margin spread pitch. However, the reality is that 80% of Medicare Part B beneficiaries have some form of co-pay assistance.”

“Selling “the spread” is illegal.  This stuff has been brought to the attention of CMS and the MACs many times.  They’re trying to put policies that stop this behavior and shift the focus from financial game-playing to clinical outcomes through LCDs and rulemaking.  Unfortunately, every time CMS or the MACs try to impact this, our industry and clinical supporters mercilessly beat it down with ‘the sky is falling’ predictions of negative consequences to patient any time any level of restraint is attempted. Then we all claim victory! However, we are not seeing the bigger picture. We all lose in the end – patients, taxpayers, industry.   This is never going to be fixed unless clinical leaders help CMS and MACs understand how they can change policy effectively without using one-size-fits-all, sledgehammer policy approaches.

Here are my follow up questions to those of you who understand how this boondoggle works:

  • Why do these discounts and rebates not impact the average sales price (ASP) of the product?
  • Why isn’t an invoice required? I thought that it was required so that the physician could show what they paid for a product.
  • Are patients paying 20% of the listed price, or 20% of the discounted price?
  • What happens to patients who don’t have secondary insurance? It looks like they will get a bill for thousands of dollars. Then what?