Navigating the Wound Care Crisis – From Perverse Incentives to a Value-Based Solution

Navigating the Wound Care Crisis – From Perverse Incentives to a Value-Based Solution

Hosts: Dr. Alex Mohseni (Founder, ClinX Academy), Dr. Reza Alavi (Founder, Quintuple Aim)
Special Guest: Dr. Nima Ahmadi (Co-founder & CEO, The Wound Company)

Episode Synopsis:
In this episode, Alex Mohseni (ClinX Academy) and Reza Alavi (Quintuple Aim) examine the escalating wound care crisis in the United States with Nima Ahmadi, CEO of The Wound Company, the nation’s first value-based wound care provider. A medical engineer and healthcare innovator, Dr. Ahmadi unpacks the systemic drivers behind billions in waste and abuse within wound care—particularly for the senior population. Together, we explore the convergence of advanced biotechnologies, fee-for-service (FFS) misaligned incentives, and vulnerable care settings that have positioned wound care as CMS’s number one target for cost containment and fraud and abuse. The conversation not only highlights the depth of the problem but also showcases the transformative promise of value-based care models.

Key Discussion Points for a Physician Audience:

• The Scope of Chronic Wounds: Beyond acute trauma, the focus is on chronic wounds among seniors—pressure injuries (bedsores), diabetic ulcers, arterial and venous ulcers. These wounds are critical entry points for life- and limb-threatening infections like sepsis and often obscure substantial costs under comorbid diagnoses like diabetes or cardiovascular disease.

• Optimal Wound Healing Requires Holism: Addressing root causes is essential, such as pressure offloading for bedsores, compression for venous ulcers, and glycemic control in diabetes, rather than relying solely on topical solutions.

• The Rise of a Crisis:

  • Skin Substitutes represent a legitimate biotech advancement but, under FFS, have become a vehicle for overuse.

  • Perfect Storm Factors: Extremely lucrative reimbursement, influx of private equity, and a shift to home-based care.

  • Runaway Costs: Medicare pays an average of $4,700 per square centimeter for some skin substitutes, fueling a 40x increase in expenses in five years, now totaling tens of billions.

• Fraud, Waste, and Abuse:

  • Fraud: Billing for products never applied, misrepresenting costs, failing to document unused materials. The DOJ recently filed a $900 million lawsuit against a mobile wound provider.

  • Waste/Abuse: More common, such as 35+ applications in six months without addressing underlying causes—driven purely by financial incentives.

• Reimbursement Disparities:

  • Home/ALF/SNF: Q-code reimbursement per square centimeter encourages product overuse, with home-based skin substitute usage soaring from 1% in 2019 to 54% in 2024.

  • Outpatient Centers: Operate on flat bundled CPT fees, creating less incentive for overuse.

• Medicare Advantage Plans:

  • Use coverage policies and prior authorization to curb expenses.

  • Risk: untreated wounds from denials can increase hospitalizations and SNF utilization, with wound costs hidden under other diagnoses.

• Government Levers for Change:

  • CMS 2026 Rule: Proposed flat fee of $125/cm² for skin substitutes.

  • Coverage Limits: Caps on applications for diabetic and venous ulcers, though pressure injuries remain a policy gap.

  • WISER Program: Utilization management via upfront review.

• Policy Change Paradoxes:

  • Flat fees may incentivize lowest-cost substitutes regardless of efficacy.

  • Site neutrality could increase applications in outpatient centers.

  • Loopholes persist where no coverage policy exists.

• The Inherent FFS Flaw:

  • Incentivizes wounds to remain larger and longer, turning them into annuities.

  • Patients face 20% co-insurance, sometimes tens of thousands in bills.

  • Fraud often involves waiving co-insurance to maximize reimbursements.

• Vulnerabilities in Non-Traditional Care Settings:

  • Home/ALF/SNF environments are “petri dishes for abuse” due to weak safeguards, vulnerable patients, and staffing shortages.

  • Mobile clinics exploit gaps with “skin sweeps” and problematic home health collaborations that risk anti-kickback violations.

• The Wound Company’s Value-Based Solution:

  • Nationally scaled value-based model that incentivizes prevention and cost-effective healing.

  • Sustainable provider framework through sub-capitation and PMPM contracts, freeing clinicians from volume-driven pressures.

  • Metrics-driven contracts based on Part A and B spend, requiring advanced analytics for accurate attribution.

  • Empowering ethical providers to deliver evidence-based, patient-centered wound care.

Connect with Our Guest:
Learn more about Nima Ahmadi and The Wound Company’s pioneering approach to value-based wound care at The Wound Company.