Americans like to joke that our healthcare system costs "an arm and a leg," but for thousands of patients, this cliché is their reality without proper wound care. Some of our most vulnerable patients—diabetics, military veterans, and burn victims—risk unnecessary amputations and early death not because our health system lacks innovation, but because bureaucracy has failed to keep pace with medical advances.
If Secretary of Health & Human Services Robert F. Kennedy Jr. and newly appointed Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz want to fight the conflicts of interest harming patients, they should target the bureaucratic labyrinth that enriches private insurers at patients' expense.
The Medicare Administrative Contractor Problem
They can start with Local Coverage Determinations (LCDs), which dictate what treatments Medicare covers in specific regions. These LCDs are developed by Medicare Administrative Contractors (MACs), and here lies the problem: six of the seven MACs are subsidiaries of BlueCross BlueShield—private insurers with a vested interest in minimizing payouts to their private clients. Yet with taxpayer dollars, the perverse incentive flips: they benefit from allowing as much money as possible to reimburse treatments while turning a blind eye to an estimated $90 billion in annual Medicare fraud.
This conflict has devastating consequences in wound care. Chronic wounds affect more than 6 million Americans annually, costing our healthcare system upwards of $50 billion. Advanced treatments like placenta-based skin grafts have shown remarkable efficacy in clinical trials, promoting faster healing and reducing amputations compared to traditional practices. Studies, including a 2020 meta-analysis in Advances in Wound Care, found that patients treated with amniotic grafts healed 60% faster than those receiving standard care. A newly released white paper found that despite upfront cost increases, these biological solutions save patients approximately $5,000 over the course of treatment—not counting the immeasurable value of avoiding infection or amputation.
When Innovation Meets Bureaucracy
One would expect public health authorities to embrace innovations that save taxpayer dollars while dramatically improving patient outcomes. While LCDs can play a vital role in standardizing care, reducing unnecessary spending, and aligning treatment with evidence-based medicine, they often classify innovative treatments as "experimental," limiting coverage and forcing patients to pay out of pocket or forgo treatment altogether.
Such restrictions align suspiciously with the financial incentives of MACs, which understand that if CMS covers a therapy, MAC owners like BlueCross BlueShield will soon have to follow suit. This likely explains why MACs were poised to withdraw coverage of numerous placenta-based skin substitutes for all Medicare patients in April—an action the Trump administration wisely delayed until year's end.
The Path to Reform
This regulatory reprieve, while necessary, is merely a band-aid on the systemic problems plaguing patient access to innovative therapy. The administration must deliver structural reforms:
- Eliminate Annual Coverage Rulings: Health authorities should end the annual coverage determinations that prioritize bureaucratic tidiness over patient care and innovation. Coverage should remain current with medical understanding rather than perpetually lagging months or years behind.
- Streamline Documentation Requirements: Doctors are unfairly burdened by a nebulous maze of documentation to justify treatments. A 2022 American Medical Association survey found that 82% of doctors reported increased administrative burdens due to LCD variability, with BlueCross BlueShield policies cited as a primary culprit. Small practices lose hours to appeals or avoid proven treatments altogether, knowing reimbursement is unlikely.
- Address the Conflict of Interest: The current system of relying on Big Insurance to handle taxpayer reimbursements through Medicare Administrative Contractors creates inherent conflicts. While MACs were established to streamline Medicare claims processing, we now live in the age of artificial intelligence, where technological innovation occurs in days and weeks, not years.
Embracing Technology for Transparency
The White House has already shown a willingness to use artificial intelligence to identify government inefficiencies through its DOGE initiative. They should embrace the same approach to healthcare, cognizant of a major pitfall: Insurers have enthusiastically adopted AI to deny coverage—evident in the Medicare Advantage program, where an Inspector General report found nearly one in five denials from private insurers were improper.
The solution is to bring these coverage determinations into the light. Open-source AI can deliver efficient decisions that account for cost savings, current research, and patient outcomes in a transparent manner, allowing patients and providers to understand the reasoning behind coverage decisions—all at a fraction of the cost of paying billions to insurance companies annually. An open-source agentic AI would also allow taxpayers to own the models and read the code making coverage determinations, delivering transparency and accountability that are crucially missing from today’s system.
During his swearing-in on April 18th, Dr. Oz emphasized "modernizing Medicare and Medicaid." MAHA reformers have a tremendous opportunity to overhaul these antiquated, biased, and conflicted bureaucratic tools, replacing them with auditable, transparent, dynamic systems that embrace cutting-edge science and AI. Such reforms would benefit patients, physicians, taxpayers, and even the companies involved in the process.
For thousands of Americans at risk of amputation, these reforms cannot come soon enough. Their limbs—and lives—depend on it.
Jason Matuszewski is CEO of BioStem Technologies
