Reviewing the House Oversight roundtable on skin substitute spending

A straight, speaker-by-speaker read of the July 21, 2026, session for people who work in this space, with the full video and a searchable transcript.

Medicare
wound care
skin substitutes
CTP
CMS
policy
Author

Zwelithini Tunyiswa

Published

July 24, 2026

On July 21, 2026, the House Committee on Oversight and Government Reform’s Subcommittee on Health Care and Financial Services held a roundtable titled “Medicare Fraud: Examining the Explosive Growth in Skin Substitute Spending.”1 Rep. Glenn Grothman (R-WI), the subcommittee chairman, ran the session. It was a roundtable rather than a formal hearing, and Grothman noted at the top and again at the close that no minority members attended.

Who was in the roundtable?

Four witnesses gave opening statements, and the chairman and two other subcommittee members took part. Notably, the table split between the two sides of this debate: manufacturers and value-based care. All of the members present were Republicans.

Witnesses

Committee members

Watch the roundtable

The full roundtable is below. The embedded player starts at the gavel; a speaker-by-speaker transcript follows.

Prefer YouTube? Watch the full roundtable on YouTube.

Explore the full transcript

The transcript below is a searchable, speaker-by-speaker record of the roundtable. Filter by speaker with the chips at the top (grouped into Witnesses and Committee members): click one to show only that speaker, click it again or “Show all” to reset, or hold ⌘/Ctrl to compare several. Clicking a speaker’s name inside a turn does the same. Search for any phrase with the box. Play a passage with the three buttons on the right of each turn: the speaker icon plays that passage’s audio, the video-camera icon plays the matching video clip, and the YouTube icon opens that moment on YouTube in a new tab. Audio and video play in a small player beside the transcript, and each word highlights as it is spoken.

Themes from the roundtable

Why the spending exploded

Nobody in the room defended the trajectory, and the witnesses converged on structure rather than a single villain. Three features of how these products (skin substitutes, or cellular and tissue-based products, CTPs) are regulated and paid for did the work.

A low-barrier regulatory pathway. Most of these products are marketed as human cells, tissues, and cellular and tissue-based products (HCT/Ps) under Section 361 of the Public Health Service Act. Joe Capper of MiMedx said “these products require no pre-market clearance by the FDA to enter the market,” and that under Section 361 “as a manufacturer, I kind of self-regulate” (1:29:36): no 510(k), no BLA, no PMA. New entrants proliferated, CMS issued HCPCS Q codes at a fast pace, and the category grew from a couple dozen products to a couple hundred in a few years.

A drug-style payment formula for a non-drug. Under Part B, the products were paid ASP plus 6 percent, the same average-sales-price method used for drugs and biologics. Capper argued CTPs are neither, so a manufacturer effectively sets the initial ASP on a thinly transacted product. He described the mechanism plainly: sellers “can get a couple of people to pay them a really high price for the product and set it at $2,000, $3,000, $4,000 and $5,000” (1:30:35), then “give half of that money to the doctor in the form of a discount” (1:30:51). A product could then be cycled off the market and relaunched to reset the reported ASP before the discount pulled it down.

Per-square-centimeter pricing and the spread. Because payment ran per square centimeter, the discount became the clinician’s margin. Mara McDermott, JD, MPH, of Accountable for Health said that “while some products are reimbursed under $11 per square centimeter, in 2025, high-cost products were reimbursed nearly $5,000 per square centimeter, and recently, some even coming in higher than that” (59:19). Capper said sales agents were “actively advertising the profit a clinician could make … even without collecting the customary 20% copay” (1:14:53). Site of service compounded it: the incentive was sharpest in the office and home settings, outside the HOPD rate structure.

Amer Alnajar, MD, of Vytalize Health stressed that the pattern is not product-specific. He pointed to urinary catheter billing, where “Medicare payments grew 14-fold in two years” (1:06:40), and warned that “bad actors will simply move to the next opportunity” (1:08:15).

The patient harm

McDermott argued that what made this episode different from ordinary runaway spending was the harm to patients, and she offered two cases (1:00:23; more are collected at woundcarenightmare.com):

  • “Maria,” an 88-year-old San Antonio woman with dementia, received 12 skin substitute applications over about 45 days, more than seven and a half square feet of product, generating over $10 million in claims. She received no lab work, primary care, or follow-up during that time and died about two months after treatment began.
  • “Barry” switched from a Medicare Advantage plan, which had declined skin substitutes as not clinically necessary, to traditional Medicare, where he underwent 12 procedures billing over $3.5 million. His wounds were eventually infested with maggots, and his lower leg was amputated after a sepsis hospitalization.

Alnajar added figures from his own ACO: two hospice patients in 2024 generating more than $2.1 million in skin substitute spending shortly before death, 11 patients in 2025 with more than $1 million each, and “one patient with $36 million in skin sub-billing between April and September” (1:05:48). He said these were reported to CMS, but that ACOs have no power to stop the payments.

McDermott also noted that Medicare Advantage, which covers a little over half of Medicare enrollees, shows “almost no utilization of skin substitutes because they are working through those utilization steps” (2:00:14), and that she has not seen, in that population, evidence of the hospitalizations and amputations reported in traditional fee-for-service Medicare.

What has already changed

Witnesses credited CMS with acting, while disagreeing on whether it went too far.

  • A price cap. CMS’s calendar year 2026 final rules revised payment in both the outpatient (OPPS) and physician fee schedules, capping skin substitutes at $127.14 per square centimeter. McDermott said the Congressional Budget Office “estimates that this payment change saves over a quarter of a trillion dollars over the 10-year budget window, $250 billion” (59:51).
  • Enforcement. The Department of Justice and HHS Office of Inspector General have pursued cases; Jelena Olmstead of Levaris Global said that for those held accountable, “assets were seized” (2:24:23), though she added that their value was unclear.
  • An ACO fraud channel. In January, following an OIG recommendation, CMS established a dedicated fraud-referral channel for ACOs. Previously, Alnajar and McDermott said, reporting ran through a CMS.gov inbox and often produced no visible follow-up; Alnajar described the old process as being able only to “report and hope the right thing happens” (1:39:04).

The counterweight: access

Olmstead and Rep. Rich McCormick, MD, pressed a second theme: that the correction may have overshot. Olmstead argued the current policy “may have taken a sledgehammer to a scalpel issue” (1:22:02), warning that ethical physicians now fear audits and repayment demands and that some are leaving home-based and nursing-facility wound care, where rural and homebound patients are hardest to reach. McCormick said an affected manufacturer in his district had “70% of their employees … laid off now” (1:43:52) and argued the new price point, which he put in the range of $106 to $156 with a median near $123, is too low to keep the industry viable. Capper agreed the cap was low but said the deeper problem was that the payment structure still rewards discount-driven overuse; he said products with no proven efficacy were “being manufactured in other countries such as India and being sold to product distributors for as low as $8 a square centimeter” (1:15:35).

Olmstead placed the fraud in context, citing GAO estimates that “fraud across federal programs costs taxpayers between $233 billion and $521 billion annually” (1:22:14), and argued the government did not respond to pandemic-era fraud by presuming every business was guilty. She and McCormick both argued that roughly two-thirds of the documented waste traced to about 100 providers.

The fixes on the table

The proposals raised during the roundtable, by speaker:

  • ACO-triggered prepayment review (Alnajar): let qualified ACOs flag suspect claims for an immediate payment hold while existing Medicare contractors review them, without delaying treatment, converting a tip that “may sit for months” (1:07:49) into a pause on the money going out.
  • Invoice pricing with a ceiling (Capper): reimburse the actual price the provider paid up to a cap, turning products into pass-through costs and removing the discount spread, paired with a higher application fee so clinicians are paid for their work rather than their product choice.
  • An evidence requirement (Capper): require basic proof of safety and efficacy before Medicare reimburses, and treat the products more like devices, with FDA 510(k) clearance.
  • Certification and training (Sessions): “if you’re going to charge for something, you have to be trained on that” and certified (1:51:01).
  • Claims analytics for outliers (Olmstead): use “claims analytics to identify extreme billing and utilization outliers” (1:26:42) rather than the whole field.

Several speakers returned to the same word, “nimble.” Capper said CMS has “got to be more nimble” (2:09:51) because “they do pay and then chase” (2:10:15), and the recurring ask was for the agency to spot anomalies and slow payments in months rather than years. Rep. Pete Sessions tied the episode to his subcommittee’s work on “the $2 trillion worth of what’s commonly called waste, fraud, and abuse,” which he prefers to call “misdirected payments” (1:52:40). Both he and Grothman framed the fix as a matter of balance: stop the fraud without cutting off patients who legitimately need the products.

What the record means for the field

Read by constituency, the roundtable surfaced distinct claims and proposals:

  • Manufacturers. The manufacturer witnesses (Capper, Olmstead) did not ask for the category to be left alone. Capper’s asks were to reimburse invoice price up to a ceiling so the discount spread disappears, pay clinicians through a higher application fee instead of product margin, and gate reimbursement on evidence, potentially via 510(k) rather than the Section 361 pathway. He argued that sub-$10 imported product would remain an arbitrage opportunity even under the cap, so in his telling the open questions are price methodology and evidence, not the $127.14 figure alone.
  • Providers and clinicians. The access-side speakers (Olmstead, McCormick) warned that denials, audits, and clawbacks had overshot and were pushing ethical clinicians out of home- and nursing-facility wound care. That downstream harm to patients was, like the claimed harm from overuse, asserted rather than demonstrated at the table. They proposed certification and training requirements and site-of-service parity as ways to protect legitimate practice while narrowing the opening for abuse.
  • Payers. The most concrete data point for plans was the Medicare Advantage contrast: near-absent CTP use under utilization-management safeguards. McDermott said she had seen no evidence of worse outcomes in that population and invited the manufacturers to produce any; no outcome data was presented either way, so the claim that low utilization harms patients went untested at the table. ACOs positioned themselves as an early-warning layer, proposing that qualified ACOs be able to trigger prepayment review, and pointed to the new CMS ACO fraud-referral channel opened in January.
  • Policymakers. The witnesses’ shared structural diagnosis (ASP plus 6 percent layered on a self-certified Section 361 pathway) and McDermott’s citation of the CBO’s $250 billion 10-year savings estimate framed the policy discussion. The shared request was for CMS to move from “pay and chase” to something nimbler, with the explicit caveat, from members on both the integrity and access sides, that the correction not strand patients who need the products.

No minority-side perspectives were on the record; Grothman said he would raise the absence with the committee’s Democrats.

Footnotes

  1. Subcommittee on Health Care and Financial Services roundtable, “Medicare Fraud: Examining the Explosive Growth in Skin Substitute Spending,” July 21, 2026. Video: youtube.com/live/-DWIEhfji20. Figures, quotations, and characterizations in this post are drawn from the recording and are attributed to the speakers who stated them; timestamps in the transcript below link to the corresponding moment in the video.↩︎