A Defining Moment for Wound Care

Chronic wound care is at an inflection point. Nearly seven million Americans live with chronic wounds, many tied to diabetes or cardiovascular disease, and that number will rise as the population ages. This means that most of the burden will fall to Medicare and U.S. taxpayers to pay the cost.

The U.S. already spends nearly $25 billion annually treating chronic wounds.¹ Through 2024, more than $10 billion was spent on skin substitutes, advanced therapeutic products designed to replace the function of damaged skin.² Unlike standard bandages, skin substitutes provide temporary or permanent wound coverage replicating natural skin function to promote faster healing and support new tissue formation.

In the last five years, Medicare spending on skin substitutes grew from about $250 million to a projected $15.4 billion by the end of the year.^2,3 This increase was driven primarily by dehydrated allograft products – skin substitutes derived from donated placental tissue containing growth factors and other beneficial components to support healing. 2022 to 2024 saw a six-fold increase in Medicare spending on these products, despite utilization only doubling in that period.

The current policy for skin substitutes – average sales price plus six percent, allows manufacturers to set the price of these products leading to exponential price increases fueled by those taking advantage of loopholes in reimbursement policies. Given this recent escalation in spending, the Centers for Medicare & Medicaid Services (CMS) has rightly focused on solutions to reform payment rules without limiting patient access to these products.

Patient access is critical. Diabetic foot ulcers (DFUs) are among the most dangerous diabetes-related complications, about one-third of diabetics will develop a DFU during their lifetime.⁴ What’s more, DFUs precede as many as 85% of lower-limb amputations⁵, and the outlook following an amputation is grim. The five-year mortality rate exceeds 50%, which is higher than the pooled five-year mortality of all reported cancers combined⁴. Similarly, venous leg ulcers (VLUs) manifest on the lower limb and represent between 60% and 80% of all leg ulcerations.⁶ Chronic venous insufficiency from cardiovascular disease is a major risk factor, and recurrence is high, with up to 70% of those with ulcers recurring.⁷

These wounds represent a true medical emergency, which is why we and many other leaders in the field think coverage and payment reform is long overdue.

This October, CMS issued the 2026 Physician Fee Schedule (PFS) marking a significant step forward in skin substitute payment reform. The new PFS schedule removes the ASP plus 6% model and establishes a per centimeter square payment methodology across sites of care. Further, the new policy will differentiate skin substitutes based on FDA regulatory classification, drawing an important distinction among the many different types of skin substitutes on the market.  Finally, CMS has assigned a new flat payment rate of $127.14 per square cm creating a much-needed consistent payment approach in both the hospital outpatient and physician office settings.

This policy is a significant step in payment reform. Notably, it will increase patient access to Premarket Approval (PMA) products – the most stringent type of FDA approval for medical devices. The PMA process requires evidence from large, randomized control clinical trials to prove the product is safe and effective.

Organogenesis pioneered the use of this type of skin substitute for wound care. In 1998, we introduced Apligraf, the world’s first and only bioengineered living-cell skin substitute granted PMA designation by FDA to treat both DFUs and VLUs. Though impactful, innovation in the wound care sector has lagged, even though the need has only grown. Factoring clinical differentiation into reimbursement rates and increasing payment for PMA products will incentivize investment in developing new products that offer better outcomes.

As the population ages and more people suffer from chronic wounds, it is vital for the industry to restart innovation that is focused on advancing the standard of care for wound healing.

Organogenesis celebrates our 40^th anniversary this year, marking four decades at the forefront of regenerative medicine. We remain committed to driving meaningful change for patients and will continue to work with CMS to acknowledge the value of PMA products with differentiated payments that accurately reflect the higher cost of development, manufacturing, and post-market approval requirements. Additional collaboration with policymakers, clinicians, and all stakeholders will help to expand access to treatment, resulting in long-term reductions of amputations as well as lowering overall cost of care.

Written by Gary S. Gillheeney, Sr., President, Chief Executive Officer and Chair of the Board, Organogenesis