An Initial Rough Estimate of the Potential Cost to the CAMPS Industry of the new CMS LCDs

All eight CMS Medicare Administrative Contractors (MACs) promulgated proposed concurrent Local Coverage Determinations (LCD’s) on April 25th for Skin Substitutes. In all but 2 MACs, only 15 products would be covered, and coverage would be limited to 4 applications in a 12-week epoch. The Alliance of Wound Care Stakeholders has written a great overview of the nature and scope of the LCD’s.

An initial thought that I had upon review of the LCD’s this past weekend is the potential cost to the industry. What could the potential impact be? So, I decided to do a a rough estimate using some internal OWR data and simple assumptions.

CautionProceed with caution!

This is a thought experiment and not a study, statement of fact, or an opinion about the LCDs.

At OWR we have a CAMPS Medicare claim dataset that we put together for research and application development. Here, we used the data for the calendar year 2022. We found the 15 products, and their HCPCS codes. The products/codes that are covered are as follow:

	hcpcs_cd	hcpcs_cd_short_description	lcd_status
0	Q4159	AFFINITY1 SQUARE CM	covered
1	Q4168	AMNIOBAND, 1 MG	covered
2	Q4151	AMNIOBAND, GUARDIAN 1 SQ CM	covered
3	Q4101	APLIGRAF	covered
4	Q4122	DERMACELL, AWM, POROUS SQ CM	covered
5	Q4106	DERMAGRAFT	covered
6	Q4187	EPICORD 1 SQ CM	covered
7	Q4186	EPIFIX 1 SQ CM	covered
8	Q4145	EPIFIX, INJ, 1MG	covered
9	Q4128	FLEXHD/ALLOPATCHHD/SQ CM	covered
10	Q4133	GRAFIX STRAVIX PRIME PL SQCM	covered
11	Q4107	GRAFTJACKET	covered
12	Q4113	GRAFTJACKET XPRESS	covered
13	Q4105	INTEGRA DRT OR OMNIGRAFT	covered
14	Q4103	OASIS BURN MATRIX	covered
15	Q4124	OASIS TRI-LAYER WOUND MATRIX	covered
16	Q4102	OASIS WOUND MATRIX	covered
17	Q4110	PRIMATRIX	covered
18	Q4121	THERASKIN	covered

We then set the LCD coverage status of products/HCPCS codes in the dataset. A sample of the final dataset looks like this:

	hcpcs_cd	hcpcs_cd_short_description	lcd_status	units	payments	payment_per_unit
0	Q4188	AMNIOARMOR 1 SQ CM	non-covered	52,494.0	24,675,938.39	470.07
1	Q4169	ARTACENT WOUND, PER SQ CM	non-covered	148,464.5	39,159,374.52	263.76
2	Q4210	AXOLOTL GRAF DUALGRAF SQ CM	non-covered	47,228.6	29,083,601.85	615.8
3	Q4105	INTEGRA DRT OR OMNIGRAFT	covered	168.0	24,435.53	145.45
4	Q4205	MEMBRANE GRAFT OR WRAP SQ CM	non-covered	41,491.0	10,068,052.33	242.66

We can then roll up the numbers by covered vs. non-covered, in terms of units and Medicare payments.

	lcd_status	payments
0	covered	121,836,612.57
1	non-covered	1,134,254,167.08

We now need an estimate of the ratio of diabetic and venous ulcers claims/payments for Medicare beneficiaries that we can apply to the non-covered cohort (remember the LCD’s are limited to diabetic and venous ulcers). Fortunately, Marissa Carter et al wrote a wonderful paper in 2023¹ that is fount of information regarding Medicare wound-type reimbursement. We can take a look at Figure 4 in that paper.

If we sum the diabetic and venous wound-types (the principal diagnosis column) we get that they represent 0.2459 of the total. If we apply that proportion to the non-covered cohort - the math looks like this:

\[ 1,134,254,167.08 - (1,134,254,167.08 * (1 - 0.2459)) = $278,913,099.68 \]

$278,913,099.68² … is what these LCD’s could potentially cost the CAMPS industry in Medicare payments.

That is quite a number…

Footnotes

1. Carter MJ, DaVanzo J, Haught R, Nusgart M, Cartwright D, Fife CE. Chronic wound prevalence and the associated cost of treatment in Medicare beneficiaries: changes between 2014 and 2019. J Med Econ. 2023 Jan-Dec;26(1):894-901. doi: 10.1080/13696998.2023.2232256. PMID: 37415496.

2. This number is probably conservative as we have not factored in that coverage would be limited to 4 applications in a 12-week epoch in covered products