OIG Again Flags Skin Substitute Spending as a Major Medicare Fraud Risk

• Medicare Part B, skin substitutes, US (noninstitutional setting): Spending exceeded $10 billion annually by end of 2024 after surging over two years; the Office of Inspector General (OIG) characterized growth as “skyrocketing,” citing program integrity concerns.

• Medicare Part B vs Medicare Advantage: OIG identified a large spending disparity between payment models, warranting scrutiny for potential vulnerabilities in coverage rules, billing practices, or utilization management.

• OIG enforcement posture: Advanced data analytics flagged “alarming” utilization trends in skin substitutes; during the period, OIG completed 909 investigations, initiated 352 criminal, and pursued 481 civil actions, signaling sustained oversight of wound care services.

Medicare Skin Substitute Utilization Surpasses $10 Billion Annually

According to the report, Medicare Part B spending for skin substitutes used in noninstitutional settings surged dramatically over the past two years, exceeding $10 billion annually by the end of 2024. OIG characterized this growth as “skyrocketing” and identified multiple spending patterns that raise serious program integrity concerns.¹

Among the most notable findings was a large disparity between Medicare Part B and Medicare Advantage spending for skin substitutes. OIG stated that this gap warrants further scrutiny and may signal vulnerabilities related to coverage rules, billing practices, or utilization management across payment models. The findings were detailed in a dedicated OIG evaluation examining Part B payment trends for skin substitutes.¹

Advanced Analytics Drive Wound Care Enforcement Strategy

OIG emphasized that advanced data analytics are central to its fraud prevention strategy. By identifying abnormal utilization patterns early, OIG aims to detect and disrupt potentially improper billing before losses escalate. Skin substitutes were specifically highlighted as an area where analytics revealed “alarming trends” that merited additional follow-up by federal oversight and enforcement entities.¹

This focus aligns with OIG’s broader mandate to protect Medicare and Medicaid from fraud and abuse. During the reporting period, OIG completed 909 investigations, initiated 352 criminal actions, and pursued 481 civil actions, underscoring a sustained enforcement posture across health care sectors.¹

Wound Care Providers Face Heightened Oversight Environment

While the report does not single out individual wound care providers or manufacturers, its emphasis on skin substitutes signals continued regulatory attention to high-cost wound care technologies. OIG’s findings reinforce that rapid spending growth alone can trigger oversight, particularly when accompanied by utilization patterns that diverge across Medicare payment systems.¹

As OIG continues deploying data-driven oversight tools, skin substitutes and wound care services remain firmly within the agency’s enforcement lens. The report underscores that Medicare utilization trends—especially those involving high-dollar products—will remain a focal point for audits, evaluations, and potential enforcement actions moving forward.¹
 
Reference 
1.        Office of Inspector General, US Department of Health and Human Services. Semiannual Report to Congress: April 1, 2025–September 30, 2025. Published January 21, 2026. Accessed January 25, 2026.