Susan Paquette, the VP of the Wound division of SmartTRAK, recently posted an article on that company’s blog about the Cellular Tissue Product (CTP) / skin substitute industry. SmartTRAK provides market intelligence on industry trends and has been closely watching the CTP/skin sub space.
It will surprise no one that, based on recent Medicare data, >90% of sales for CTPs/skin subs are in the sites of care that are not subject to “package pricing” – meaning, the physician office, patient’s home, and mobile practices. The majority of those sales are for products with a very high average sales prices (ASPs), marketed by companies that are privately held and thus for which there is limited visibility with regard to their revenue or margins. Based on Susan’s recent article, the sales in these sites of care represent over $2 billion dollars of Medicare spending, compared to the “established group” of CTPs/skin subs at ~ $1.8 B.
Among the products marketed by the “established” CTPs/skin sub manufacturers, the average ASP is $134.68. However, among the groups marketed almost exclusively in the “non-package price” environment, the average ASP is $1,013.49. (The dramatic difference in pricing provides no additional clinical benefit, and in fact, cannot be justified in any economic sense).
The point of Susan’s article is that the recent arrests by the DOJ must represent the “tip of the iceberg” when it comes to defrauding Medicare. I am sure that she is correct when sales reps for these companies have bragged on social media about delivering a million dollars of amniotic product to a single practice in one week.
Susan points out something else that is very important:
“…it is interesting to note that the company billing Medicare is the one being charged rather than the supplier of the product.”
It is the practitioner who commits a crime under the False Claims Act when he or she fails to accurately represent to CMS the amount they paid for the product, and is thus reimbursed more money by Medicare than the actual cost of the product. While these amniotic manufacturers and/or distributors provide a lot of “extras” to “help” practitioners, they do not provide criminal defense attorneys.
Like Susan, I expect that we are going to hear about a lot more DOJ prosecutions in the months to come. It seems unlikely that we will see new developments in the field of wound care until there is a very big housecleaning.
(SmartTRAK and Intellicure Analytics are collaborating to make real world data on wound treatments available.)
Dr. Fife is a world renowned wound care physician dedicated to improving patient outcomes through quality driven care. Please visit my blog at CarolineFifeMD.com and my Youtube channel at https://www.youtube.com/c/carolinefifemd/videos
The opinions, comments, and content expressed or implied in my statements are solely my own and do not necessarily reflect the position or views of Intellicure or any of the boards on which I serve.
I worked for a company that is distributing these grafts all over the country to various practices like candy.
When I was there, we were all overpaid compared to roles in similar industries without having the years of experience to make that kind of money. A colleague and I always wondered, are the majority of these grafts actually being applied to patients or is it a scam like that Arizona couple?
Majority of the shipments were going to patients covered by Medicare and one patient would be receiving an absurd amount of grafts for months on end. I’m talking over millions of dollars worth of these grafts being applied to some of the patients, then eventually their name would no longer show up on our pick sheets so I guess they were cured or died idk.
Most of the distributors that we shipped for were these small companies that consisted of very few employees, their websites had little to no information on them and their company logos honestly look like they were made by the same graphic designer. The practices we shipped to while many being legit, the majority of them had ridiculous sounding names and sounded like shell companies.
The specific company I worked for has generated over a Billion in revenue (2024 alone) where the CEO has now purchased other companies in other industries. I think his strategy is to move onto something else once this dries up.
Every time the MAC pricing would depreciate, the company would simply rebrand the product every six months.
Lastly, I can’t find a lot of empirical evidence on the legitimacy of these grafts unless it came inside of the industry. I saw the before and after pictures on the sales sheets but I’ve never heard of any patient testimonials. One could argue because of HIPAA laws but with the absurd amount of grafts we were sending out, I just find it odd that I can’t find really any testimonials online. All of the sales reps were making six to seven figures too.
Perhaps I sound conspiratorial, but a lot of this sounded too good to be true. Was a great company and gig when I was there from a career standpoint but something doesn’t sit right with me about it ethically and I kinda figured this was going on. Most of the employees besides the reps were clueless this is going on when I was there.
Whistleblowers can make an absurd amount turning all these back actors into the OIG as the previous post has suggested is rampant in this industry. It appears it has already started to happen in the Derm market, the biller turning into a whistleblower for inappropriate use of skin subs for acute MOHS procedures.https://www.justice.gov/usao-mn/pr/tareen-dermatology-agrees-pay-more-16-million-resolve-alleged-false-claims-act