New CMS policies will lead to 'big change' in wound care practices, analyst says

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New Medicare and Medicaid reimbursement practices within the next year will significantly change preferred treatment methods for wounds that are common in long-term care settings, according to a new market analysis.

The Centers for Medicare & Medicaid Services has indicated it will switch from a fee-for-service model to a bundled payment system for wound care services. This will put pressure on providers to use more cost-effective wound care therapies, says Jason Napodano, a sell-side equity research analyst with Zacks Investment Research.

Under the existing payment model, skin substitute products are a go-to treatment for chronic wounds if debridement and/or negative pressure therapy does not succeed, Napodano noted in his analysis, posted Monday on the website Seeking Alpha. Physicians currently are reimbursed separately for grafting procedures and the associated skin substitute products, but this is likely to change in 2014, Napodano wrote.

CMS has proposed reimbursing $874 total for the grafting procedure and related product. This would not cover the costs associated with the skin substitute products, according to the analysis. Industry sources say they see CMS capping the entire reimbursement for healing a chronic wound such as a diabetic foot ulcer at $4,000 per episode, Napodano told McKnight's.*

“The leading products are on their way out,” Napodano wrote. Less costly alternatives are already poised to capture more market share, he argued. He identified several products whose use could grow significantly.

*Editor's Note: This article has been updated to clarify that the $4,000 total bundle is an industry estimate, not a CMS figure.

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