The HHS Office of Inspector General (OIG) recently issued several new work plan items aimed at Medicare Part B payments for skin substitutes. Part B reimbursement for skin substitutes products has long been a thorn in the side of Medicare. Medicare is generally required by federal law to reimburse certain skin substitute products covered under Part B using an Average Sales Price (ASP) methodology established by Congress. However, as the use of these products has grown and the pricing has increased exponentially, HHS has looked for ways to address rising costs to the Medicare program.
OIG updated its work plan in November 2024 to include several new initiatives that OIG intends to undertake in the area of skin substitutes and ASP pricing. First, OIG intends to update its prior conclusions regarding ASP pricing. ASP pricing requires manufacturers to report pricing data. In March 2023, OIG issued a report that found that manufacturer noncompliance with new ASP reporting requirements for skin substitutes led to millions in excessive Part B payments. OIG noted that, since then, Part B expenditures for skin substitute products have continued to rise significantly. OIG therefore intends to provide an update on these manufacturer reporting issues, as well as highlight billing trends and identify potential solutions to any challenges in using the ASP methodology for skin substitutes.
Second, OIG intends to investigate alternative pricing under ASP. The ASP methodology established by Congress mandates that OIG compare ASPs with average manufacturer prices (AMPs) and the widely available market price, if any. If OIG finds that the ASP exceeded the AMP by 5 percent in the two previous quarters or in three of the previous four quarters, then HHS may substitute the reimbursement amount with a lower calculated rate. OIG intends to perform this comparison for various time periods and believes that it may offer recommendations for Medicare to achieve additional savings.
Third, OIG intends to further ratchet up scrutiny of Medicare Part B claims for skin substitutes. Due to the increasing pricing of these products and the lack of specific Medicare coverage policies, skin substitutes have long been under scrutiny from federal regulators and law enforcement. OIG noted both these trends in updating its work plan and intends to review Medicare Part B claims for skin substitutes to identify payments that were at risk for noncompliance with Medicare requirements.
For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to Medicare coverage of skin substitute products or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.