The Skin Substitute Lawsuit, Round Two: Guest blog by Dr. Ryan Mathis

–The legal fight over how Medicare pays for skin substitutes is back in court! Here’s a guest blog by Dr. Ryan Mathis to explain it.

Caroline

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On June 22, 2026, the CAMPs Initiative refiled its lawsuit challenging the skin substitute reimbursement provisions of the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) final rule — this time with changes designed to fix the problem that sank its first attempt.

What the Fight is About

As everyone knows, on January 1, 2026, CMS changed how it pays for skin substitutes. Under the CY 2026 PFS final rule, physicians are reimbursed at a flat $127.14 per cm² rather than at a rate based on each product’s average sales price (ASP) – or wholesale acquisition price — since many did not report an ASP. For many products that is a substantial cut, and it is the payment change the lawsuit is trying to undo.

Why the First Case Was Dismissed

On March 12, 2026, the U.S. District Court for the Northern District of Texas threw out the CAMPs Initiative’s first case — not on the merits, but on a jurisdictional technicality. Medicare has a rule called the “channeling requirement,” which says that claims arising under the Medicare Act generally cannot go straight to court. A party must first present its grievance to Health and Human Services (HHS) or the Centers for Medicare and Medicaid Services (CMS) and work through the administrative process before suing. The court found the group hadn’t done that, so it had no authority to hear the case. The CAMPs Initiative appealed to the Fifth Circuit, then voluntarily dropped the appeal, explaining that it would refile the case instead of pursuing it.

What’s New in the Refiled Case

The refiled complaint — which will again be heard by Chief Judge Reed O’Connor — is built to cure that jurisdictional defect. The key change is the addition of two physician plaintiffs:

• Dr. Brandon Elrod, of Anchor Wound Management
• Dr. Michael F. Sedrak, of Life Back Medical

According to the complaint, both submitted Medicare claims for skin substitutes under the CY 2026 rule and were paid at the $127.14/cm² rate rather than at ASP. Because they went through the billing-and-payment process, they can now say they presented their grievance to HHS/CMS before suing — the thing the first case lacked. The plaintiffs also go a step further and argue that they have completely exhausted their administrative remedies, because there is no remaining avenue to pursue: the Medicare appeals process has no mechanism to challenge the legality of a final rule, and the HHS/CMS officials who hear appeals are bound to follow that rule anyway. In other words, they argue that going further administratively would be pointless, so the courthouse door should now be open.

What They’re Asking for Right Now

Alongside the complaint, the plaintiffs filed a motion to stay the rule or, in the alternative, for a preliminary injunction barring CMS from continuing to implement the skin substitute provisions of the CY 2026 rule. The goal is to freeze the new payment rate while the case is litigated.

The Class-Action Backup Plan

The refiled case adds a fallback the first one didn’t have: if the court declines to issue a nationwide stay under the Administrative Procedure Act (APA) or a conventional preliminary injunction, the plaintiffs ask that the case be certified as a class action. This appears designed to preserve a route to nationwide relief in light of the Supreme Court’s recent decision in Trump v. CASA, which made courts more cautious about nationwide injunctions. The end goal is the same — an order stopping implementation of the rule — but relief through a class action would likely take longer because it adds procedural steps.

The Government’s Response

The plaintiffs asked the court to hear the case on an expedited basis, however, the government objected, arguing that the plaintiffs could have refiled as early as March — right after the physician plaintiffs submitted their claims and were paid at the new rate — but instead waited until June and took the full 90 days to file (and then drop) their appeal. In its response, the government also signaled that it intends to file a motion to dismiss in which it will likely again raise several jurisdictional arguments similar to those that ended the first case.

Where Things Stand

Whether or not the case is expedited, it will take at least weeks to resolve, which means continued uncertainty for providers and manufacturers of skin substitutes. There is also a wildcard on the horizon: the CY 2027 PFS proposed rule is expected in the coming weeks. It remains to be seen what CMS proposes for skin substitute payment — and whether that proposal affects this case, or the case affects the proposal.

The case is captioned CAMPs Initiative v. HHS, No. 4:26-cv-769 (N.D. Tex.).

The Possible Outcomes

Here is how this could plausibly break, and what each path would mean on the ground:

1. The court grants a stay or preliminary injunction. CMS would be blocked from continuing to apply the skin substitute provisions of the CY 2026 rule, at least temporarily, with payment reverting toward the prior ASP-based approach. If the court issues an APA stay, that relief could reach nationwide; the flat $127.14 rate would be paused while the case proceeds.
2. The court denies the stay/injunction. The $127.14/cm² rate stays in effect during litigation. Providers continue to be paid the flat rate, and the financial pressure — and uncertainty around skin subs — continues while the underlying case grinds on.
3. The government’s motion to dismiss succeeds. If the court again finds it lacks jurisdiction (the channeling/exhaustion problem), the case is thrown out without a ruling on whether the rule is lawful. The plaintiffs would be left to appeal or find yet another way back in, and the rule stands in the meantime.
4. The case survives dismissal and is decided on the merits. The court would then rule on whether the CY 2026 skin substitute payment methodology is lawful. It could vacate the provision and send it back to CMS to redo or uphold it. This is the outcome that actually resolves the legal question — but it is the slowest.
5. A class is certified (if a nationwide stay is declined). This preserves a path to nationwide relief without relying on a disfavored nationwide injunction, but it adds procedural steps and time before any broad relief could take effect.
6. The CY 2027 proposed rule changes the picture. If CMS proposes a different skin substitute payment approach for 2027, it could narrow, moot, or reshape the dispute — or the litigation could influence what CMS decides to propose. This is the hardest variable to predict and could overtake the court process entirely.

It is not likely that this issue will be resolved cleanly or quickly. The immediate question worth watching is the stay/preliminary injunction — that is the ruling that would change what providers are paid now, rather than months from now.

Ryan Mathis, M.D.
Director of Global Medical Policy
Kerecis

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.