In the past several years, skin substitute spending has exploded, demonstrating how bad actors take advantage of Medicare payment loopholes to drive inappropriate spending. Spending on these products grew from roughly $200 million in 2019 to more than $14 billion in 2025, a 7,000 percent increase in six years, without evidence of improved care outcomes.
On Tuesday, Jul. 21, Vytalize Health co-founder and Chief Medical Officer Dr. Amer Alnajar brought the physician and accountable care perspective to Washington, joining a House Oversight and Government Reform Subcommittee roundtable on Medicare fraud and skin substitute spending.1
What Dr. Alnajar Told Congress
His core message: accountable care organizations (ACOs) are one of the best fraud-detection tools Medicare has, and they could do more.
ACOs utilize both comprehensive patient data and provider and patient relationships across their networks to identify potential fraud. Dr. Alnajar described specific cases Vytalize identified within our ACOs. In 2024, two hospice patients generated more than $2.1 million in skin substitute billing within months of their deaths. In 2025, 11 Vytalize patients accumulated more than $1 million in skin substitute spending, including one patient with $36 million between April and September alone. Vytalize reported each case to the Centers for Medicare and Medicaid Services (CMS).
He also described the frustration that follows: after an ACO reports suspicious billing, payments typically keep flowing. ACOs can raise the alarm, but they have no authority to stop a claim.
The Fix Vytalize is Proposing
Dr. Alnajar credited CMS with real progress. Effective Jan. 1, 2026, CMS ended the pricing methodology that made skin substitutes so lucrative to abuse. Products that had been reimbursed at manufacturer prices running as high as $5,000 per square centimeter now pay a single flat national rate of about $127 per square centimeter. Aa cut of up to roughly 90 percent for the most inflated products.2 The Department of Justice’s June 2026 national fraud takedown charged 11 defendants in the wound care space, tied to billions in fraudulent claims.3 Earlier this year, CMS opened a dedicated channel for ACOs to refer suspected fraud, acting on a longstanding recommendation from the Department of Health and Human Services Office of Inspector General.4
This was an important step, but as Dr. Alnajar noted, the problem is not any single product. When skin substitute enforcement tightened, urinary catheter billing surged again. Bad actors move to the next opportunity.
So Vytalize has proposed allowing qualified ACOs with proven analytic capability to trigger immediate “prepayment review” of providers submitting suspected fraudulent claims. Prepayment review differs in important ways from prior authorization. Rather than stopping patient care, payments are paused pending medical review, allowing time for CMS’s contractors to check the documentation. The proposal converts an ACO’s fraud referral from a tip that can sit for months into an immediate hold on payments.
What This Means For Practices
Fraud committed against a practice’s attributed patients directly impacts shared savings. Inappropriate spending counts against the ACO, eroding the savings pool that practices share in. Honest practices end up subsidizing fraud they had nothing to do with. Vytalize ACOs build in stop loss protections that mitigate the worst abuses, but the best protection is stopping fraudulent and abusive spending before CMS pays.
For our practices, Vytalize monitors attributed patients’ claims continuously, flags suspicious billing, and reports it to CMS. Practices contribute the clinical judgment, while Vytalize handles the analytics and reporting.
Vytalize will continue to advocate for increasing the role of ACOs in fraud fighting, promoting policy solutions that stop fraudulent payments faster, and protecting primary care practices, their patients, and taxpayers.
Sources
- House Committee on Oversight and Government Reform, Subcommittee on Health Care and Financial Services, roundtable “Medicare Fraud: Examining the Explosive Growth in Skin Substitute Spending,” Jul. 21, 2026:
https://oversight.house.gov/release/grothman-leads-roundtable-on-tackling-medicare-fraud-in-skin-substitutes-funding - CMS, Calendar Year 2026 Medicare Physician Fee Schedule Final Rule fact sheet (CMS-1832-F),finalizingskin substitute payment reclassification effective Jan. 1, 2026:
https://cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-final-rule-cms-1832-f - HHS Office of Inspector General, 2026 National Health Care Fraud Takedown (announced Jun. 23, 2026):
https://oig.hhs.gov/fraud/enforcement/2026-national-health-care-fraud-takedown/ - HHS Office of Inspector General, OEI-02-15-00451, recommending CMS prioritize ACO fraud referrals; CMS concurred.
