The prevalence of chronic and acute wounds, including diabetic ulcers, pressure ulcers, surgical wounds, and burn wounds, is increasing. The global wound care market is projected to reach $35.9 billion by 2032, growing at a compound annual growth rate of 7.0%. As a result, more patients are seeking wound care, driving increased demand for effective wound management solutions. While this presents a promising opportunity for healthcare providers to expand their services, stakeholders must navigate complex regulatory frameworks to comply with federal and state laws.
Reimbursement Opportunities in Wound Care
The Centers for Medicare & Medicaid Services (CMS) offers various reimbursement opportunities for negative pressure wound therapy, skin substitutes, and debridement procedures. Providers must adhere to CMS guidelines, including accurate documentation, justification of medical necessity, and proper coding to ensure reimbursement eligibility.
The standards set forth by CMS are continuously evolving. . For example, effective April 13, 2025, CMS began to require additional documentation, including photographic evidence of the ulcer and an assessment of modifiable risk factors, for reimbursement of skin substitutes used in the treatment of diabetic foot ulcers and venous leg ulcers.
Regulatory Considerations in Wound Care
Several key federal and state laws impact wound care arrangements:
- Federal Anti-Kickback Statute (AKS): The AKS prohibits offering, paying, soliciting, or receiving anything of value to induce or reward referrals for services reimbursed by federal healthcare programs. Arrangements between wound care providers, skilled nursing facilities (SNFs), assisted living facilities (ALFs), marketers, and Management Service Organizations (MSOs) must be carefully evaluated for compliance to reduce the risk of implicating the AKS and applicable state analogues. Arrangements with wound care product manufacturers or equipment suppliers must also be carefully structured to avoid implications of improper inducements.
- Corporate Practice of Medicine (CPOM): Many states prohibit unlicensed individuals from forming business entities that directly employ physicians or other licensed providers. Violations can result in licensing discipline, insurance fraud, and potential false claims, leaving providers vulnerable to significant fines and in certain circumstances, criminal penalties.
Enforcement Trends and Risks
The Office of Inspector General (OIG) and the Department of Justice (DOJ) have increased their focus on wound care compliance. Recent enforcement actions have addressed:
- Improper financial arrangements between wound care providers and SNFs or ALFs that potentially constitute illegal kickbacks.
- Billing for medically unnecessary procedures or misrepresenting the nature of services rendered.
- Use of unqualified personnel to deliver wound care services.
As private equity investments in wound care companies grow, investors must perform thorough legal diligence to reduce regulatory pitfalls that increase the risk of implicating federal and state fraud and abuse laws. Similarly, providers must be vigilant about regulatory exposure caused by improper business relationships and billing practices that can result in the submission of false claims to federal and state payors, as well as discipline from respective licensing boards.
Conclusion
Wound care presents significant opportunities for healthcare providers and investors. However, success in this space requires strict adherence to federal and state regulatory requirements. Stakeholders should ensure that business relationships are properly structured, remain current on reimbursement policies, and monitor ongoing enforcement activity. By doing so, wound care providers can operate successfully while mitigating legal risks. For a comprehensive review of your wound care business model or guidance on how to launch your wound care business, contact Frier Levitt.
