468

Here’s another perspective on the proposed LCDs. These are excellent discussion points. (I have withheld the author’s name at their request.)

–Caroline


Pretty much everyone agrees that CMS has a big problem on its hands with “skin substitutes.” This blog and other sources have thoroughly explored the explosive rise in prices and Medicare spending for these products, and the flawed reimbursement system which created this situation. CMS has proposed multiple solutions over the last several years but so far has failed to act on any of them. Admittedly, clinicians and the wound care industry have not been much help, declining to collaborate on a solution and instead for the most part digging in to support an unsustainable status quo.

Now it appears that CMS may be trying to wash its hands of the issue.  CMS’ MAC contractors have stepped in to propose coordinated draft Local Coverage Determinations (LCDs) which would in effect serve as an unsanctioned National Coverage Determination (NCD), without the procedural safeguards which govern CMS’ NCD process. The upshot of the LCDs seems to be that skin sub applications will mostly be limited to four (again) and that products without completed randomized controlled trials (RCTs) meeting certain unspecified standards will not be reimbursed by Medicare anywhere in the country.

So far CMS seems to be standing by to allow the MACs to proceed, a truly bad idea. The MACs are not the right entities to solve this problem.  They do not have the array of tools and options CMS has to bring to bear, nor do they have CMS’ broader and longer-term perspective. Most importantly the MACs cannot permanently fix the underlying reimbursement and pricing problems, which will rear their ugly head again sooner or later.  (As soon as some high cost products can get a relatively routine if expensive RCT completed, we will be right back where we started cost-wise).

Instead, it appears that the MACs are simply trying to cut costs in the short term by limiting the availability of skin substitutes for patients.  Not coincidentally, this goal matches their own private interests. Several of the MACs are owned by companies which also provide Medicare Advantage plans.  These MA plans are now required to follow the LCDs their own subsidiaries are proposing and can save their own money if they can reduce product availability. This is not exactly a recipe for thoughtful policy making.

If the LCDs are allowed to go into effect as is, the forward progress of wound care innovation will be reversed, possibly permanently.  CMS and the MACs have for years allowed new skin substitute products to be reimbursed without a specific clinical study requirement. This is consistent with the FDA’s approach to these products, the vast majority of which are approved as HCT/Ps or 510(k)s and do not require clinical studies for regulatory approval.  In reliance on these established policies, companies have made significant investments in developing new products, launched them into the market, and hired and built out their teams. Providers and patients have come to use and depend on these products, which have saved many patients legs and lives.

Now the MACs propose to eliminate more than ninety (90)% of the products on the market effectively overnight, with no warning or opportunity to develop the specific studies the MACs now say they want to see. The products for which reimbursement is proposed to be eliminated includes all of the products from the small and innovative companies in the space, putting these companies in a financially perilous position.  The affected products also includes all of the new products launched since 2016. Newer products which use synthetic materials, human proteins, and other technologies to improve cost effectiveness and address specific clinical needs would be gone from the market, with a real risk that they could be gone for good. The upshot is that the MACs are proposing to turn back the clock on skin substitute innovation by almost a decade.

The short terms impacts of these LCDs would be severe. There is no question that patients will go without products that they need, that the treatment options available to providers will be severely reduced, and that many good people in the industry will lose their jobs.

The longer term impacts on innovation are equally concerning. We know that chronic wounds are a major public health crisis in the US and globally and that this challenge is only growing.  Innovation to improve our ability to treat these wounds is critically important, but obtaining funding to push innovation forward in this space is already very difficult. Investors are reluctant to invest in wound care technologies, in large part because they perceive the reimbursement environment as unfavorable and highly unpredictable. If these LCDs are allowed to go into force as is, and if innovative skin sub products are removed from the market suddenly for any significant period of time, many millions of dollars of public and private investment will be lost.  The medtech investment community will then have another very prominent reminder of why it is right to avoid investing in wound care. This is the exact opposite of the direction we need to be moving.

The underlying skin substitute reimbursement issue needs to be fixed, but not at the cost of harming patients or impeding much-needed innovation. Here are some specific suggestions for a more effective solution:

  • CMS should pause the actions of its MACs and address the skin sub issues itself
  • CMS should fix the reimbursement and pricing problem, which is the real driving force behind both the problems in the market and the real reason for the proposed LCDs
  • Industry and clinicians should actively collaborate with CMS to develop the needed changes to the reimbursement system for skin substitutes
  • If evidentiary standards are to be required, CMS should implement them via an NCD or other appropriate process which will determine and clearly delineate what level of evidence is appropriate and allow a grace period for existing products to meet the new standards to prevent loss of innovative technologies, investor capital and jobs

The outcome of this LCD process may be extremely important to the future of the wound care industry. We hope every person interested in wound care innovation will submit comments and make their voices heard.