Skin Substitutes: Fighting a War on Two Fronts

The indictment confirms that the US Department of Justice (DOJ) remains focused on investigating and prosecuting health care fraud involving skin substitute products coupled with a sharp increase in administrative enforcement efforts.

CMS Intensifies Administrative Scrutiny of Skin Substitutes

Under the Trump Administration, the Centers for Medicare & Medicaid Services (CMS) has deployed increasingly aggressive tools to identify and stop suspected fraudulent billing. CMS Administrator Dr. Mehmet Oz summarized the agency’s priorities as follows: 

Prosecuting criminals who steal from American patients is necessary — but stopping them before a single dollar leaves the building is smarter. CMS is done playing catch-up. We’re deploying advanced data analytics to expose fraud networks, freeze suspicious payments, and shut down bad actors before they can do damage to the programs that millions of Americans depend on.

For example, CMS announced the launch of the Wasteful and Inappropriate Service Reduction (WISeR) Model, which partners with technology companies to conduct prepayment medical-necessity reviews for certain items and services. CMS also recently implemented a six-month enrollment moratorium on hospice and home health agencies to prevent waste, fraud, and abuse in these areas. In July, CMS announced a proposed rule that would expand its authority to deny and revoke Medicare enrollment, make revocations retroactive, and claw back payments to the retroactive revocation date when it suspects fraudulent billing. These tactics already affect providers through increased claim denials, audits, and overpayment allegations from CMS and its contractors.

CMS has made skin substitute products a particular focus. Medicare spending on skin substitutes increased from $256 million in 2019 to over $10 billion in 2024. CMS attributed that “unprecedented growth” to “abusive pricing practices.” As a result, in calendar year 2026, CMS reduced the Medicare Physician Fee Schedule rates for skin substitute products by approximately 90%. Skin substitute claims are also among the services the WISeR model assesses before payment.

DOJ Continues Criminal Enforcement: United States v. Dubin

CMS’s increased administrative scrutiny of Medicare claims, particularly skin substitute claims, might suggest a slowdown in criminal enforcement. But that has not been the case. The DOJ’s annual health care fraud takedown this summer included 11 defendants across six federal districts charged with schemes involving unnecessary wound care treatments and fraudulent billing practices.

The DOJ’s focus on skin substitutes was further confirmed with its recent indictment in United States v. Dubin, No. 2:26-cr-00512 (D. Nev. Aug. 5, 2026). According to the indictment, the physician received illegal kickbacks and bribes disguised as “Rebate Agreements” from certain allograft companies. Dubin then submitted claims to Medicare for the full invoice price of the allografts rather than the lower rebated price he actually paid. The indictment also alleges that Dubin applied the allografts to Medicare beneficiaries when the allografts were medically unnecessary and ineligible for Medicare reimbursement. Many of these patients were elderly and received treatment through home health agencies and hospices. The DOJ charged Dubin with one count of conspiracy to commit health care fraud and five substantive counts of health care fraud.

Takeaways for Providers Using Skin Substitutes

In this two-front environment, providers should consider the following steps:

• Audit and document every claim before submission. Confirm medical necessity, wound measurements, prior record of conservative care, product selection, and quantities for every skin substitute claim. If CMS requests additional documentation and the records do not support the claim, expect denials, recoupment demands, and potentially broader scrutiny. If a review may surface significant billing problems, consider conducting it through counsel to protect the analysis under the attorney-client privilege.

• Review financial relationships. Review distributor and manufacturer arrangements for Anti-Kickback Statute (AKS) risk. These arrangements include “rebate agreements,” volume discounts, and purchasing incentives. Do not assume an arrangement is safe because it is labeled or styled as a rebate or discount. Although the AKS includes a discount safe harbor, 42 C.F.R. § 1001.952(h), that protection applies only when specific disclosure and reporting requirements are satisfied. Arrangements that fail to meet these requirements may expose providers to significant civil and criminal liability.

• Prepare now for WISeR. In New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington, establish a prior authorization workflow and confirm that complete supporting records can be submitted before payment review. A process built after claims are held will be too late. Providers outside the initial model states should build the same capability. CMS has signaled that prepayment review tools of this kind are likely to be deployed nationally.

• Investigate outliers before CMS does. Track billing volume, product selection, and utilization and document legitimate explanations for unusual patterns. Data analytics can flag outliers and trigger scrutiny even without a whistleblower.

• Protect cash flow and escalate early. Treat denials, payment holds, and prepayment review as immediate operational risks. Escalate recurring documentation or billing issues promptly; unresolved patterns can lead to broader audits, overpayment allegations, penalties, and even DOJ interest.

ArentFox Schiff counsels health care providers in responding to CMS and OIG audits, overpayment demands, payment holds, and other administrative actions. We also assist in defending against DOJ investigations and health care fraud charges. Our health care enforcement team brings deep experience in health care fraud defense, CMS regulatory matters, Anti-Kickback Statute compliance, and government investigations. This experience enables us to address administrative and criminal risks together. With enforcement escalating and CMS increasingly acting before payment, ArentFox Schiff encourages providers to develop robust compliance policies and to seek counsel early, before a denial, audit, or investigation becomes a larger liability.