Skin Substitute Audits Intensify: What Providers Must Know About Medicare, Medicaid, and Private Payer Enforcement

As regulatory scrutiny around skin substitutes accelerates, providers are facing increasingly aggressive audits from Medicare, state Medicaid programs, and private payers alike. According to healthcare attorney Davidson N. Brooks, evolving guidance and enforcement priorities are reshaping how audits unfold; and raising the stakes for documentation and medical necessity compliance.

Key Takeaways:

• Audit Intensity Is Converging Across Payers
  State Medicaid and private payer audits are expected to mirror the intensity of Medicare enforcement, with private payers leveraging clearer guidance to pursue faster, more decisive audit actions against providers.
• Documentation and Medical Necessity Are the Primary Risk Controls
  Providers must produce rigorous documentation for medical necessity, product selection rationale, dimensions used, and waste, using LCDs and national guidance—even outside their immediate jurisdiction.
• Skin Substitutes Will Remain a Major Enforcement Target Through 2026–27
  Ongoing ambiguity around appropriate skin substitute usage continues to expose wound care providers to civil and criminal investigations, and while clearer guidance may emerge, enforcement activity in this space is expected to remain high.

In your experience, do you think that audits from state Medicaid or private payers may be similar to or differ from Medicare audits for skin substitutes? Do you think the recent regulatory landscape will influence this at all?

I think that state Medicaid audits are likely to initiate intense audits from private contractor auditors. Many private payers had guidance for skin substitutes, making the audits more “cut and dry.” Private payers are going to pursue audits with the same intensity as a Medicare audit where there was no prior authorization or coverage guidance but may have more guidance in place that helps streamline/defeat arguments from providers earlier in the process. I think that we will continue to see very intense Medicare audits for skin substitute products.

With skin substitute enforcement scrutiny increasing, what compliance priorities should providers focus on to reduce regulatory risk?

Providers should focus on documentation and medical necessity requirements from LCDs and guidance even outside their jurisdictions. Providers should document the reasoning, process, dimensions of product used, product waste, etc. Anything that an audit may use as a basis for denial should be documented clearly and honestly.

Looking ahead to 2026–27, what regulatory changes or enforcement trends in the health care reimbursement landscape do you think will have the greatest impact on wound care providers? Does it lie with skin substitutes, or are there other areas that may be off the radar?

I think the regulatory changes and enforcement trends will focus on skin substitutes as having the greatest impact on wound care providers, but there will be numerous other areas of focus on other kinds of providers and suppliers. There is some degree of ambiguity as to skin substitute usage that ends up getting a lot of wound care providers in hot water. Right now, there are a lot of wound care providers being investigated for civil and criminal liability. As guidance becomes more clear, I think we will continue to see significant impact in this space.

Mr. Brooks is an attorney that represents hospitals, physician groups, long-term care providers and other health care entities in a wide range of disputes, including reimbursement claims, regulatory compliance matters and professional liability defense. He also assists clients in responding to government investigations and audits involving the Centers for Medicare & Medicaid Services (CMS), the Department of Justice (DOJ), and state-level agencies.