04/02/2026
Between 2019 and 2024, Medicare spending on skin substitute bandages rose from $256 million to more than $10 billion. Not because of an epidemic, but because of a documented billing scandal.
CMS fixed the problem for 2026, projecting nearly $20 billion in savings. That should have been the end of the story. It wasn't.
In Health Affairs with Thomas Kornfield and Daniel Shenfeld, I write how that fraudulent spending spike is now being embedded into Medicare Advantage payment rates for 2027, shifting nearly $3 billion toward skin diagnoses while plans serving patients with heart disease, lung disease, and kidney disease lose out.
CMS needs to fix this before the 2027 rules are finalized, and modernize a risk adjustment framework that's decades overdue for an overhaul.
CMS should ensure that temporary spending shocks—such as the recent spike in skin substitute costs—are not mechanically carried forward into future MA payments for 2027 and beyond. But CMS should also move beyond the decades-old HCC framework and modernize its risk adjustment approach.