Effective wound care is critical for patients recovering from surgery or managing chronic or non-healing wounds. Advances in treatment have led to the development of skin substitutes—bioengineered or natural materials designed to promote healing by replacing or supporting damaged skin. While these innovations hold great promise for the future of wound care, they have also come under increased scrutiny by regulatory agencies and the Department of Justice (DOJ).

Concerns around clinical efficacy, medical necessity, and appropriate use as well as heightened scrutiny of the agreements between the healthcare providers and the skin substitute distributors and manufacturers have prompted calls for more rigorous review and oversight and, in some instances, allegations of fraud. Arguably, this increased oversight aims to ensure that skin substitutes provide real, measurable benefits to patients while maintaining integrity within federal healthcare programs. But, many healthcare providers offering legitimate and necessary treatment to their patients have also found themselves within the crosshairs of this fight.

Increased Focus Cost and Billing Practices

For context, Medicare covers many wound care services, like debridement, dressing changes, and skin grafts, but only when the services are medically necessary and properly documented. Medicare Part B payment for skin substitutes alone can range from $100 to over $1,000 per square centimeter of graft material, and, again, the rising use of these high-cost materials has drawn the attention of regulators. Because these treatments are billed frequently and can lead to significant reimbursement costs, Medicare has enhanced its review of wound care billing—targeting it as high-risk for fraud, overpayment, and misuse. Because billing rules vary by region and depend on accurate documentation and coding, even small mistakes such as incorrect codes or unclear explanations for treatment can lead to denied, delayed, or reduced payments, putting both patients and providers at risk.

Simply put, there has been a surge in government audits and investigations targeting wound care services and the application of skin substitutes. The Health and Human Services Office of Inspector General (OIG) added skin substitute billing to its oversight work plan, and Medicare contractors like Unified Program Integrity Contractors (UPICs), Recovery Audit Contractors (RACs), and others are actively reviewing claims, with a focus on those involving high-cost products or providers who bill more frequently than their peers.

These audits often begin with a request for records, but if documentation does not align with Medicare’s regulations and guidelines, the government may resort to more drastic measures like suspension. Even small mistakes in coding or incomplete medical charts can garner the attention of regulators, and potentially escalate to allegations of fraud, prompting additional investigation by DOJ.

The risks for providers are substantial, as demonstrated by a recent False Claims Act (FCA) case involving skin substitutes, filed by the DOJ against Vohra Wound Physicians Management LLC, its founder Dr. Ameet Vohra, and VHS Holdings, P.A., alleging a nationwide scheme to defraud Medicare. United States v. Vohra, No. 1:25-cv-21570-RKA (S.D. Fla. Apr. 4, 2025). In particular, the government alleges that Vohra, one of the country’s largest wound care providers, submitted false claims for surgical debridement procedures that were not medically necessary or not actually performed to receive higher reimbursements.

Allegedly, Vohra created and used an electronic medical record (EMR) software to misclassify procedures as surgical; pressured physicians to meet revenue-based debridement quotas; and programmed billing systems to improperly apply Modifier 25, an exception that allows Medicare to pay additional costs beyond standard surgical packages, to nearly all examinations to inflate payments.

Notably, the Vohra case wasn’t initiated by a whistleblower, meaning that DOJ investigated and filed this case on its own accord, underscoring the importance of this issue to regulators and the likelihood that we should expect more DOJ- and OIG-initiated investigations involving skin substitutes in the near future.

Key Takeaways

Providers can take the following proactive steps, among others, to reduce their audit risk and improve reimbursement outcomes when utilizing skin substitutes.

• First, documentation must be detailed and support medical necessity, particularly when using advanced products that are newly developed with less research support, like cellular or tissue-based grafts, are used.
• Next, the provider should also ensure each patient’s chart clearly shows why the standard of care was insufficient and why continued treatment was needed. Providers should note the proposed Local Coverage Determinations (LCDs) scheduled to become effective on January 1, 2026, allow only 8 applications of skin substitutes, and the treatment must be completed within 16 weeks.  While the LCD is not yet effective, providers would be well advised to clearly document support for extended use of skin substitutes beyond 8 applications, where applicable.
• Providers should consider conducting regular internal audits of high-risk billing codes, understand LCD guidelines, and remain current on Medicare’s evolving regulations and guidance.
• Finally, providers should consider reviewing their agreements with manufacturers and distributors of skin substitutes to ensure there is no concern about federal or state Anti-Kickback Statute exposure.

Because wound care and the use of skin substitutes is an evolving area of interest for Centers for Medicare & Medicaid Services, OIG, and DOJ, when an individual or entity receives a letter from a UPIC or other Medicare auditor, a civil investigative demand from DOJ or an administrative subpoena from OIG, that provider should consider contacting a healthcare attorney as soon as possible to discuss an appropriate strategy for next steps to respond timely and fully to such demand. Please contact the authors if you have questions about how this information may affect your business.

Special thanks to summer associates Kyra Moore and Annie Edwards for their valuable contributions to this post.