Medicare’s big-money bandage feud

Why it matters: So-called skin substitutes are a massive cost driver in health care, and this will be a test of the federal government’s ability to actually bring spending down.

• Medicare officials’ change is expected to cut spending on the skin substitutes by an estimated $19.6 billion this year after outlays ballooned fortyfold in five years, accompanied by accusations of suspicious spending and patient harm.
• But biotech manufacturers are fighting back, in a case that could become a bellwether for the Trump administration’s broader moves to address waste and fraud in the medical system.

State of play: A coalition of manufacturers is challenging the decision to pare Medicare payments in court, saying it’s arbitrary and goes against laws outlining how Medicare pays for biologics.

• The average price per square inch for the bandages used on diabetic ulcers and severe burns reached nearly $6,000 last year, per a New York Times investigation.
• Medicare officials finalized the payment change in the face of heavy lobbying from wound care companies aided by Ballard Partners, a firm with close ties to the Trump administration.

The lawsuit has been assigned to U.S. District Court Judge Reed O’Connor, who’s known for invalidating federal health regulations, mostly from Democrat administrations.

CMS administrator Mehmet Oz said at a health conference this week that he’s “highly confident” the administration will prevail.

• “There’s good vendors out there, I’m quite sure,” Oz said. But, he added, most skin substitutes “had no data that would support them being continued on any formulary.”

The intrigue: The administration last year scrapped a Biden-era policy to reduce Medicare spending on the bandages after a skin substitutes company donated $5 million to the MAGA Inc. PAC, the Times reported.

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