The Economic Burdens and Policy Implications of Chronic Nonhealing Wounds
by Marcia Nusgart, Executive Director, Alliance of Wound Care Stakeholders
Editor's note:This blog post is part of the WoundSource Trending Topics series, bringing you insight into the latest clinical issues and advancement in wound management, with contributions by the WoundSource Editorial Advisory Board.
The true burden of wound care to Medicare has been relatively obscured. Traditionally, wound care procedures were performed in the hospital setting. When the Centers for Medicare & Medicaid Services (CMS) created the hospital-based outpatient payment system in 2000 with the goal of providing care in complex cases when patients did not require hospitalization, management of nonhealing wounds shifted to the outpatient setting. Today, approximately 1,500 specialized hospital-based outpatient “wound centers” across the United States provide standard wound care treatment, as well as numerous therapeutic treatments. Wound care is also provided in patients’ homes by home health services and in skilled nursing facilities.
It has been postulated that the CMS’s current methods for allocating resource use fail to identify the financial burden of chronic wounds because most of their costs accrue from outpatient services rather than from sentinel inpatient events. As a result, the prevalence and the financial burden of chronic nonhealing wounds today are not fully appreciated by Medicare policy leaders. Therefore, the goal of the study, “An Economic Evaluation of the Impact, Cost, and Medicare Policy Implications of Chronic Nonhealing Wounds,” published in the International Society for Pharmacoeconomics and Outcomes Research’s Value in Health journal, was to determine the cost of chronic wound care for Medicare beneficiaries in aggregate, by wound type, and by setting, and this goal was accomplished by analyzing 2014 Medicare data.
The study shows the full economic cost of wound care in the US Medicare population. The study found that chronic nonhealing wounds affected nearly 15% of Medicare beneficiaries (8.2 million). The annual cost was conservatively estimated at $28 billion when the wound was the primary diagnosis on the claim. When the analysis included wounds as a secondary diagnosis, the cost for wounds was conservatively estimated at $31.7 billion.
These newly uncovered prevalence and economic impact figures can have important implications for federal research funding and CMS policies. Together, they highlight the need for CMS health policy makers to develop more appropriate quality measures, episode of care measures, and reimbursement models for wound care. In addition, this information fills the void for this type of data and comprehensive analysis on wound care needed by wound care clinicians to be used in their future scientific papers and lectures.
The study was sponsored by an association of clinician and medical specialty societies focused on promoting quality care and access to products and services for people with wounds and the providers who treat them. The purpose of these societies is to educate policy makers about the importance of more meaningful quality measures for the wound care space. The following information is the result of collaboration with thought leaders and statisticians in the wound care space to understand the data needed and to develop methodologies to analyze and calculate prevalence and cost across a broad range of wound types and care settings.
The following is an overview of their challenges and findings, as well as the implications of these findings for wound care patients and providers in the public policy space.
The Challenge: Determine the Prevalence of Wounds in the Medicare Population
Although analyses have been performed on specific wound types, there have been no recent comprehensive analyses of chronic wounds across the spectrum. This study organized International Classification of Diseases-Ninth Revision and Current Procedural Terminology codes into 12 broad wound categories: arterial ulcers, chronic ulcers, diabetic foot ulcers, diabetic infections, pressure ulcers, skin disorders, skin infections, surgical wounds, surgical infections, traumatic wounds, venous ulcers, and venous infection. This list of codes was then applied to the Medicare Limited Data Set.
To determine the number of beneficiaries with each type of wound, we searched the primary and up to 24 secondary diagnosis codes on all Medicare claims data for inpatient and outpatient hospital, skilled nursing facility, home health agency, and hospice services. For Medicare Part B carrier and durable medical equipment claims, we used the specific line-level diagnosis codes to identify specific services for wound care.
The Challenge: Estimate Medicare Spending Associated With Wound Care
In most sites of care, Medicare reimburses providers for an episode of care (e.g., an entire hospital stay) during which time multiple diagnoses are identified for a beneficiary. However, it is difficult to determine what portion of the payment is attributable to each of the patient’s conditions. Therefore, it was necessary to develop a methodology to allow payment to be apportioned among the diagnoses. For this analysis, three different estimates were employed for the cost of wound care. The first method (low-range estimate) counted only Medicare provider payments when a wound was the primary diagnosis on the claim, excluding beneficiary deductible and coinsurance. The second method (midrange estimate) attributed the entire payment of a claim to wound care if a wound diagnosis was the primary diagnosis.
The third method counted Medicare provider payments when a wound was either the primary or secondary diagnosis and provided an upper bound estimate to total spending associated with wound care assuming that the wound was always the underlying cause of the service. Total Medicare spending estimates were extrapolated from the 5% sample to the entire Medicare fee-for-service population. (Refer to the more detailed description of methodology in the study.1
This first comprehensive study of Medicare spending on wound care analyzed and calculated the cost of chronic wound care for Medicare beneficiaries by wound type and by care setting and found the following:
- Chronic nonhealing wounds affect nearly 15% of Medicare beneficiaries (8.2 million).
- A conservative estimate of the annual cost is $28 billion when the wound is the primary diagnosis on the claim. When the analysis includes wounds as a secondary diagnosis, the cost for wounds is conservatively estimated at $31.7 billion.
- Surgical wounds and diabetic foot ulcers drove the highest total wound care costs (including cost of infections).
- On an individual wound basis, the most expensive mean Medicare spending per beneficiary was for arterial ulcers, followed by pressure ulcers.
- Hospital outpatient services drove the greatest proportion of costs, thus demonstrating a major shift in site-of-service costs from hospital inpatient to outpatient settings.
- Surgical infections were the largest prevalence category, followed by diabetic wound infections.
- View tables:
- Prevalence of wound types
- Medicare spending by wound type
- Medicare spending for wound care per beneficiary
- Medicare spending for wound care by type of service
Why These Findings Matter
The calculation and documentation of the economic costs and impacts can have important implications for federal research funding and CMS policies, such as the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).
With quality measure–based payment models driving reimbursement under MACRA, wound care practitioners have been particularly challenged because there are not enough reportable quality measures relevant to wound care. The documentation of the specific, significant burden of chronic wounds in the Medicare population illustrates the need for CMS and health policy makers to include wound-relevant quality measures in all care settings as well as develop episode of care measures, chronic care models, and reimbursement models to drive better health outcomes and smarter spending in the wound care space.
Documenting the significant economic cost and impact of chronic wounds can influence priorities for federal research funding in this space and for innovative payment approaches by the CMS, including quality and performance measures within MACRA. Chronic wounds can’t be forgotten about if better health outcomes and smarter wound care spending is to be achieved. The CMS needs to recognize the cost and prevalence of chronic wounds in the development of chronic care models and episodes of care.
1. Nussbaum SR, Carter MJ, Fife CE, et al. An economic evaluation of the impact, cost, and Medicare policy implications of chronic nonhealing wounds. Value Health. 2018;21(1):27–32
About the Author
Marcia Nusgart is the executive director of the Alliance of Wound Care Stakeholders, a multidisciplinary consortium of more than 15 physician, clinician, provider, manufacturer and patient organizations that addresses regulatory and legislative issues impacting wound care. She also serves as executive director for the Coalition of Wound Care Manufacturers and president of Nusgart Consulting, LLC.
The views and opinions expressed in this blog are solely those of the author, and do not represent the views of WoundSource, Kestrel Health Information, Inc., its affiliates, or subsidiary companies.