According to industry experts, companies can set high prices for their products due to the intricacies of Medicare pricing rules. During the first six months of a new bandage product’s lifespan, Medicare sets a refund rate based on the company’s chosen price. The agent will then adjust the refund to reflect the actual price that your doctor will pay after any discounts.
To avoid decreases in refunds, some companies opt to introduce new products regularly.
For example, in April 2023, Medicare started reimbursing $6,497 per square inch for bandages called Zenith sold by Legacy Medical Consultants, a company based in Fort Worth, Texas. However, six months later, the refunds for Zenith dropped to $2,746.
In October 2023, Medicare began reimbursing $6,490 for a “double layer” bandage for a new product called Impax from Legacy.
Both products use the same images and similar descriptions in their marketing materials, touting them as offering optimal wound care and protection.
Analysis by Earty Read shows that spending on Zenith and Impax has surpassed $2.6 billion since 2022.
When asked about the marketing and pricing strategies for these products, Legacy Medical Consultants did not provide a response. Company spokesman Dan Childs stated, “Legacy abides by laws that govern the system.”
Doctor discounts
In the field of wound care, doctors and nurses visit patients’ homes for treatment. Some companies that specialize in skin alternatives target doctors to help mitigate the rise in bandage prices.
Dr. Caroline Fife, a Texas-based wound care physician, highlighted the industry’s excesses in her blog last year. She shared an email she received from an undisclosed skin replacement company, which claimed that doctors could generate significant revenue from their bandages.
Some companies offer doctors bulk discounts of up to 45%, as reported by interviews with doctors and contracts reviewed by The Times. However, doctors could still receive Medicare rebates for the full price of the product.
The anti-kickback law prohibits physicians from receiving financial incentives from pharmaceutical or medical supply companies. While Medicare allows for discounts, experts suggest that rebates on bandages may have violated federal law by not requiring actual bulk purchases. In some cases, doctors only needed to buy three products to qualify for a 40 or 45% discount.
Lawyer Reuben Guttman from Washington, D.C., who represents Medicare whistleblowers, commented, “That’s not a volume discount,” indicating that such practices could be a way to disguise kickbacks.
In 2024, at least nine healthcare practices claimed over $50 million in Medicare reimbursements for skin replacements, according to an analysis conducted by The Times and the National Association of Associations representing healthcare organizations incentivized to reduce Medicare spending.
Source: www.nytimes.com
