Trump admin to finally cap price of weird bandages that cost $10 billion last year

Last year, Medicare spent over $10 billion on dubious bandages—called skin substitutes—that come with eye-popping prices. Some are made from medical waste, like dried bits of discarded placentas or infant foreskin, and many have not gone through rigorous testing to prove they offer any advantage over standard bandages. Yet, in some cases, Medicare reportedly paid for bandages priced at more than $21,000 per square inch. And individual patients have quickly racked up bills over $1 million just for their bandaging—some who puzzlingly didn't even have a wound.

Private insurance companies largely do not cover these bandages, declaring many of them "unproven and not medically necessary." But Medicare's current coverage seems to tie back to a rule change in 2020 that opened the door to broader use of them—and the market for these dubious skin substitutes, often used for diabetic ulcers, exploded. Since 2023, more than 100 new products have been introduced, according to an investigative report from The New York Times in April.

The Times investigation highlighted two big reasons why they're so pricy: First, due to an oddity in pricing rules, Medicare initially sets the reimbursement rate for the bandages at whatever price the manufacturer chooses—for the first six months at least. The second is that doctors are granted steep discounts, incentivizing them to use the pricy products for bigger reimbursements. After the initial six-month period, Medicare reimburses only what doctors pay after manufacturer discounts. However, some bandage makers get around this by just rolling out new products that are suspiciously similar to the old ones, maintaining the large reimbursement rates.

Crackdowns

In 2019, before the rule change, Medicare paid about $250 million for these types of skin substitute bandages. However, total spending rose about 40-fold in 2024 to over $10 billion.

Realizing this was a problem, the Biden administration introduced a new policy in April 2024 that would cover the bandages for certain types of leg and foot ulcers, only for bandages that had gone through high-quality testing and had shown an advantage over standard bandaging. The policy was supposed to go into effect this February.

But when the Trump administration took office, the policy was delayed as part of a blanket freeze on new regulations. And in April, the administration announced that the policy would be delayed until 2026. The Times noted that Trump had received a large campaign donation from a leading bandage maker and has subsequently defended the bandages on social media on at least two occasions.

But this week, the administration seems to have reconsidered. In the new proposed policies, the Trump administration proposed a flat rate of about $809 per square inch, which would go into effect in January 2026.

In a statement to the Times this week, a spokesperson for a bandage industry trade group said: “If this exceedingly low payment rate were to take effect, companies producing skin substitutes would no longer be able to cover their production costs, and providers would not be able to afford to treat their patients."

Meanwhile, Mehmet Oz, current administrator of the Centers for Medicare & Medicaid Services, said the administration is "cracking down on abuse that drives up costs."