QUESTION:
My wound care practice has been getting excellent results curing patient wounds, bed sores, and ulcers by using Bioengineered Skin Substitutes (“BSS”).  I realize that these BSS products are expensive, but they WORK!  Despite our excellent clinical results and after doing our best to follow Medicare’s confusing billing guidance, we were just informed by something called the local Unified Program Integrity Contractor (“UPIC”) that our use of the BSS was not medically necessary (despite the fact that the BSS cured the patients’ wounds) and are claiming that a significant refund is due the Medicare program.  Is this for real???

ANSWER FROM HORTYSPRINGER ATTORNEY HENRY CASALE:
Unfortunately, yes.  While it may be of little solace to you, a number of providers across the country are finding themselves in your exact situation.  Your only recourse is to refund the amount demanded or run the gauntlet of the Medicare’s appeals process.  But if you are going to appeal (and from the sound of your question you should), make sure you do so in time to avoid any recoupments taking place during the appeals process (to the extent that is possible).

You and other similarly situated legitimate providers are paying the price for Medicare’s lax oversight for the payment of BSS and some egregious actions by a few providers – who deserve whatever happens to them.

Medicare’s current shortsighted approach to BSS providers fails to recognize, what you already know from your clinical experience, that BSS when applied properly to suitable candidates is actually cost-effective care that reduces avoidable complications, including amputations, minimizes the need for acute care services, enhances patient care, patient quality of life, and patient satisfaction and allows a provider such as yourself to deliver high-quality, patient-centered wound care to the ever-increasing need for specialized wound care among the aging and medically complex populations suffering from complex wounds, bed sores, and ulcers.

First some background.  Medicare covers BSS, including some amniotic membrane allografts made from human placental tissue and even animal tissue like pork placenta. I know, sounds gross, but the way that these BSS work is that they are grafted to an open wound to cover the wound and the human placental tissue or animal tissue used in the BSS will assist with wound closure or skin growth, referred to as “scaffolding.” When used properly on suitable patients, BSS can provide really impressive improvement to horrendous wounds, bed sores, and ulcers that do not respond to traditional therapy.

So, the idea behind BSS is great, but they are EXPENSIVE.  The 2026 Physician Fee Schedule has an entire section devoted to payment for BSS.  That section of the Fee Schedule states that Medicare payment for BSS has increased 40 fold over the past several years, from $250 million in 2019 to over $10 billion in 2024.  So, Medicare drastically changed its coverage rules beginning January 1, 2026.  Many commercial insurers are even more restrictive in their coverage of BSS and you need to be sure to follow the rules of each insurer before submitting a claim for BSS.

The UPIC that you asked about conducts the first level of Medicare audit.  They are focused on BSS and seem to be hell-bent on demanding that providers repay the amount that has been paid to them by Medicare whenever and however they can.  They also have the right to begin to recoup the amount due on the claims at issue.  While you have 180 days to appeal the UPIC’s decision, if you do not file the first level appeal (called a Redetermination) with your local MAC within 60 days of receipt of the UPIC decision, Medicare will start recouping claims regardless of the validity of your argument on appeal.

Do not expect any relief from the MAC and again while you have more than 60 days to appeal the MAC’s denial, you must submit your Reconsideration Request to your local Qualified Independent Contractor (“QIC”) within 60 days of the MAC’s denial, or recoupment can begin.

The QIC is to make a decision within 60 days.  However, recently they have been running behind.  If the QIC takes longer than 60 days to make a decision, the QIC will write to you and give you the option to go directly to the next level of appeal – which is an Administrative Law Judge (“ALJ”).  While it is tempting to have your case heard by a supposedly independent administrative judge, please keep in mind that in the unlikely event that the QIC rules in your favor, the appeal to the ALJ will not be necessary.  But more importantly, in the event that you choose to appeal to the ALJ (or if there is an adverse decision by the QIC) then recoupment of the claims at issue can begin immediately – again regardless of the validity of your position that the claims for the BSS were medically necessary and submitted in accordance with Medicare’s coverage rules.

We hope you won’t need them, but there are two additional levels of appeal if the disputed claims are not resolved by the ALJ – an appeal to the Medicare Appeals Council Review and a review by the Departmental Appeals Board (“DAB”), and if that appeal is not successful you will have the right to seek judicial review by a federal district court, provided the amount in controversy is met (which in these cases it almost always is) – but you must exhaust all of these administrative remedies or the federal courts will not consider your appeal.

The other reason that Medicare is cracking down on BSS, is that due to Medicare’s past lax oversight of claims for BSS, certain people have been able to defraud the Medicare program for some REALLY BIG BUCKS.  We direct you to our next Episode of “The Kickback Chronicles” that will be entitled “A Grafting Grifter” and will be published on April 13 to learn about a situation that arose in Phoenix, Arizona where a couple of grifters were able to bill approximately $1.2 BILLION in false and fraudulent claims to health insurance programs for BSS, including submitting over $960 million in claims to the federal health care programs for BSS, of which, federal and state payers and commercial insurers collectively paid $614,945,420.

You will have to wait until April 13 to check out the next edition of The Kickback Chronicles in order to find out the details of their scheme, the lavish lifestyle they lived due to their ill-gotten gains, and what happened when it all came crashing down on them.

That kind of enforcement action we applaud.  What Medicare is currently doing to you, and to a number of other legitimate providers across the country who are using BSS to help their patients, is the real crime.

If you have a quick question about this, e-mail Henry Casale at info@hortyspringer.com.