1. According to a report issued by the Office of Inspector General (OIG) in March 2023, Part B expenditures for Skin Substitute Grafts (SSGs), also known as Cellular and/or Tissue-based Products (CTPs), provided in non-institutional settings skyrocketed over the past several years, surpassing $10 billion annually by the end of 2024.
2. As a result, Unified Program Integrity Contractors (UPICs) became relentless in pursuing some of that money by conducting nationwide audits on SSGs in CY 2025 - - and their efforts were rewarded with tremendous sums of recoupment clawed back primarily from sole and/or independent providers.
3. Expect that activity level to either remain the same or possibly increase in CY 2026. The Christmas Eve notification from CMS (Medicare) indicating the withdrawal of the Local Coverage Determinations (LCDs) from the 7 Medicare Administrative Contractors (MACs) was applauded by many in the wound management industry; however, that action also put the industry right back where it has been for the past several years - - meaning audits will continue!
4. The shift to a flat‑rate payment model also makes it easier for auditors to spot outliers. Without product‑specific pricing, unusual utilization patterns or questionable wound‑size reporting stand out much more quickly. And since wastage will no longer be reimbursed, auditors now have a new indicator to watch - - cases where the product size used (and billed as applied amounts) is significantly larger than the wound requires. On top of that, CMS is putting stronger emphasis on FDA‑aligned coding accuracy, appropriate homologous use of 361 HCT/Ps, and lessons learned from prior audits that found issues concentrated among a small group of high‑volume providers. Taken collectively, all these factors point toward continued, or even expanded, audit activity rather than any reduction in scrutiny and providers should expect more frequent, more detailed, and more data‑driven audit activity over the next several years.
5. As a result, the 2026 outlook suggests increased audit activity, more variability in audit contractor denial reasons/rationale, and more extrapolation and medical necessity denials - - in short, less clarity and more risk. In addition, changes to both the Physician Fee Schedule (PFS) and Outpatient Prospective Payment System (OPPS) for CY 2026 will result in more audits to ensure that providers/suppliers are compliant with the changes.