Skin substitutes have gained attention recently for the rapid growth in Medicare Part B spending. Used to replace or regenerate damaged skin, skin substitutes are bioengineered materials or tissue products that mimic the structure and function of healthy skin and can serve as a permanent or temporary solution to conditions like diabetic foot ulcers or burns.
Previous reports have revealed Traditional Medicare Part B spending almost tripled from 2022 to 2023, from $1.5 billion to $4.4 billion and then more than doubled from 2023 to 2024 to $10.1 billion. Skin substitutes are billed by the square centimeter, with the price differing by the specific product used. The cost for a patient depends on the product, the size of the area treated, and how often a patient is treated. The increase in spending is due to: 1) more patients receiving treatment; 2) more treatments per patient, and; 3) higher prices per unit.
In addition to the increase in spending, the Office of Inspector General reported on the gap in spending between Medicare Part B and Medicare Advantage. Despite a clinically similar patient population, almost 6 times more Medicare Part B enrollees received skin substitute treatments than Medicare Advantage enrollees from July to September 2024. The cost per unit for Medicare Advantage was $730, half of the cost per unit for Part B ($1,470).
To understand whether spending trends on skin substitutes varied geographically, we used claims data for people enrolled in Traditional Medicare to analyze spending on skin substitutes by county across the US in 2024. Our analysis excludes counties with less than 1,000 Medicare Part B beneficiaries or where the number of patients treater was suppressed due to small sample size.
Medicare FFS Spending per Beneficiary on Skin Substitutes by County Ranged from $0 to over $3,000 in 2024.
We first looked at per person Medicare spending on skin substitutes, which is equal to the Total Medicare Spending divided by Medicare Part B beneficiaries in that county. Since total Medicare spending is highly dependent on population size, we focus on spending per Medicare Part B beneficiary which accounts for differences in population.
Among the counties that had at least 1,000 Medicare Part B Beneficiaries, the average spending per person ranged from $0 to $3,132 in 2024. The median amount of spending per person among all of the counties is $94. In the middle 50% of counties, the 25th to the 75th percentile, spending per person ranged from $31 to $227. Five percent of counties spent more than $735 per person on skin substitutes in 2024. Fayette County, Texas; Albany County, Wyoming; and Craig County, Oklahoma had the highest spending.
The map below (Figure 1) shows the variation in Medicare Part B spending per person on skin substitutes by county in 2024.
Patients are receiving skin substitutes per county ranged from 0 to 17 per 1,000 beneficiaries.
Understanding use requires assessing the number of people who are receiving skin substitutes as well as the number of units of skin substitutes used per person.
Previous reports noted the number of patients treated with skin substitutes has increased. Among counties with at least 1,000 Medicare Part B Beneficiaries, 0 to17 beneficiaries per 1,000 received a skin substitute. In the middle 50% of counties, 2 to 4 Part B beneficiaries per 1,000 were treated with skin substitutes. Five percent of counties had more than 7 beneficiaries per 1,000. The counties with the highest number of beneficiaries treated with skin substitutes per 1,000 were Ballard, Carlisle, and Livingston counties in Kentucky.
The map below (Figure 2) shows the average number of Medicare skin substitute patients per 1,000 people in each county in 2024.
Claims per patients and units per claim varied by county.
Treatment per patient is a combination of how many times a patient is being treated as well as the size of the area treated. We measure the times a patient is being treated by their total number of visits or claims per patient. The median number of claims per patient was 4.8 and the middle 50% of counties had an average of 3.6 to 6.17 claims per patient. 5% of counties had an average number of almost 9 claims per patient in 2024. The three counties with the highest number of claims per patient were Carter County, Oklahoma, Fayette County, Texas, and Putnam County, West Virginia.
We measure the area treated, or average size of the skin substitute applied during a visit by looking at the units per claim. A “unit” of skin substitutes is one square centimeter. For context, a post-it note is approximately 60 square centimeters. Across counties, the median number of units per claim in 2024 was 4.82. The middle 50% of counties saw an average number of units per claim range from 10 to 20 units per claim. Five percent of counties averaged more than 31 units per skin substitute claim. The counties with the highest number of units were Caddo County, Oklahoma, Coffee County, Georgia, and Camden County, Georgia.
Figure 3 shows the map of claims per patient by county and Figure 4 shows a map of the average number of units per claim by county in 2024.
Price per skin substitute unit ranged from $233 to $844 among the middle 50% of counties.
Lastly, we examined the average price per unit, which is the total Medicare payment divided by the total number of units. Other reports cite rising unit costs as contributing to rapidly higher skin substitute spending.
The median price per unit was $521. The range for the middle 50% of counties was between $233 and $844. In 5% of counties, we found the price per unit was higher than $1,141. The counties with the highest price per unit were Los Angeles County, California, Fayette County, Texas, and Clay County, Mississippi. Los Angeles County’s price per unit of over $18,000 is an extreme outlier.
The map in Figure 5 shows the average price paid per unit in each county in 2024.
Chocktaw County in Alabama and Wayne County in Mississippi Had Both Higher Prices and Higher Use of Skin Substitutes.
More patients receiving treatment, more treatments per patient, and higher prices per unit all factor into spending per beneficiary. Though there were not consistent patterns across geographies, there are counties that fall into multiple categories of high spending, higher patients per capita, high number of visits per patient, and high unit prices. For example, Clarke and Clay counties in Mississippi had a high price per unit and higher number of claims per patient. Van Buren County, Iowa, and Kingman County, Kansas, had a high number of claims per patient and patients per capita but the average price per unit was low (less than the 25th percentile). Chocktaw County in Alabama and Wayne County in Mississippi both were in the top 5% of patients per capita and price per unit resulting in being in the top 5% of spending per capita.
Los Angeles and Miami counties had a high number of patients per capita, higher treatment per patient, and high price per unit. These cities also have large populations overall, which an amounted to over $600 million in spending on skin substitutes in LA and almost $230 million in Miami in 2024.
Analysis at the county level builds upon what has been reported nationally, and points to wide variation in price, use, and spending by county. These maps suggest there may be geographic pockets of skin substitute spending that warrant additional exploration. CMS is already taking action to address the rapid increase in spending like moving away from ASP-based payments to a flat fee. The new uniform payment could help eliminate one source of variation and more focus could be put on the increased utilization of skin substitute products. The WISeR model’s use of prior authorizations could also put more scrutiny on the medical necessity of skin substitute treatments.