Dear Manufacturer of Cellular Tissue Product (CTP) Skin Substitutes,
In the past few weeks, the CTP/skin sub market has completely changed and the roadmap for the clinical use of your products is completely different. I thought I’d say the quiet part out loud about the impact on practitioners and what that means for product pricing.
Here are the facts:
- The playing field is level for all products: The LCDs have been withdrawn so there is no “covered” or “not covered” list for any wound type. The advantage that some manufacturers had for being on the LCD “covered” list is gone.
- There is no payment for any “wastage”:
- I should clarify that CMS does pay for any product APPLIED, which should include the amount of product beyond the wound itself that is needed to secure it, and the additional product that may be needed when the wound is deep and the product must also cover the “walls” of the wound. Unfortunately, CMS has not issued any guidance around how much they will allow for these factors. The issue may only arise during an audit, but nearly everyone is being audited. Practitioners could have to pay money back to CMS for any amount of product that an auditor deems is “too much” to account for these factors.
- Right now, your products come in only certain sizes which will require practitioners to do one of three things to avoid running afoul of CMS on product size:
- Use a product smaller than the wound (not clinically acceptable)
- Use a product larger than the wound and hope they do not have to repay the cost of the excess to CMS in an audit
- Spend time “scrapbooking” small sized products to match the wound size (and you generally charge MORE money for small sizes)
- There is a fixed Medicare allowable rate of ~$127/cm2 regardless of product category (at least for now).
- Medicare pays 80% of the allowable and the rest must be obtained from the patient or their secondary insurance and is thus not guaranteed, so the payment they can count on is $101.60/cm2
- Practitioners lose 2% due to the sequester on all physician payment and supplies, which takes that amount down to $99.57/cm2
- Practitioner reimbursement is further decreased by adjustments for the wage index, which could be as much as 15%, potentially reducing actual payment to ~$85/cm2 depending on your geographic location
- Medicare audits on practitioners are ubiquitous and necessitate meticulous, detailed documentation even in the absence of an active LCD. (CMS policy might allow the two active LCDs to be applied nationally for audit purposes.)
- The fact is that even practitioners whose practice standards and CTP use could earn them a visible angelic halo can expect to spend some of their Medicare payment on lawyers and consultants to handle Medicare audits, not to mention the cost of time for them and their staff to review and print out medical records. Some significant percentage of payment must be set aside to cover the cost of audits (perhaps as much as 50% of payment received).
- I have been talking to mobile practitioners and some of them have told me that even $40/cm2 is too much, based on the overhead costs associated with audits.
- Many patients are seen by “mobile” practices who will have to carry around many different sizes of products and perhaps many different brands– not to mention the time-suck of figuring out which product comes in just the right size for a given wound.
Previously, the payment structure incentivized the use of large, high-priced products. Let’s be honest about the fact that it was revenue from product sales (rather than procedure revenue), which drove CTP decision-making by practitioners. Those days are gone, but CMS has created an entirely legal framework for revenue generation based on the difference between the fixed Medicare payment rate and the product cost. The focus of practitioners is still on product cost, but now it is about finding the lowest price product. In the past, the price at which products were sold has been practically unrelated to the usual market factors such as production cost, the pathway to market, or proven effectiveness. Thankfully, many of your products have low production costs. This should allow them to be sold at prices far enough below $85/cm2 to enable practitioners to account for all the above factors. Products that were effective at $2,000/cm2 will still be effective at $20/cm2 – but now they will be COST EFFECTIVE. Practitioners are going to need those low priced products in many different sizes, and they are certainly NOT going to be able to pay higher prices for small-sized products.
I will state the obvious: The manufacturer with the lowest-priced CTP and the widest variety of sizes can own the current CTP market. Don’t shoot the messenger.
You can watch the way the use of your product is changing month by month in practices across the country here: Wound Care Industry Dashboard • Intellicure Analytics
Caroline
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.
