Ethical Placental Tissue Company Speaks Out

In this article, the Parent’s Guide to Cord Blood Foundation (PGCB) interviews the co-owner of a company that manufactures therapeutic products from placental tissue. We shall call this person “OP”, because they wish to remain anonymous.

PGCB: What is your experience in this field?

OP: My colleagues and I have been in the business of producing human allograft products for surgical implantation for over 35 years. For the last 10 years we have been focused on making products from placental tissues that are used for demanding applications in wound healing and specialty surgical procedures. Thousands of our placental tissue grafts are implanted every year and we are recognized for the quality and safety of our products. We have pledged to work collaboratively with our clients to uphold our core values of integrity, excellence, and transparency.

PGCB: Why did you reach out to us?

OP: Earlier this year some rather provocative articles were published in the New York Times, where skin substitutes produced from donated human placental tissues were described as “pricey bandages”^1,2. My attempts to contact, engage, and educate the journalists who wrote these articles were not successful. I believe that the public should know that placental tissue-based skin substitutes are an essential tool for managing chronic and difficult to heal wounds. They have been used for decades and consistently outperform other treatments to positively affect wound healing and improve the patient’s quality of life³.

The vast majority of us in the placental tissue field run ethical businesses where we produce high quality products and we genuinely care about the patients we serve. But as occurs in certain areas of medical practice, there are some in the placental tissue business who game the medical reimbursement system by charging exorbitant prices for their own financial gain.

PGCB: What is going on with the prices of placental tissue skin substitutes?

OP: Hospitals, surgeons, patients, and taxpayers are getting ripped off by companies that charge hyper-inflated prices for placental tissue wound dressings. As of July 2025, the Centers for Medicare & Medicaid Services (CMS) reported that the average sales price (ASP) of placental grafts, per square centimeter, ranged from $20.85 to $4770⁴. That represents a greater than 200 fold variation in price on products that are essentially no different in how they are sourced, processed, formed, and packaged, or how well they work in the patient. There is no justifiable reason, other than the fact that the system allows for it, that any company should charge an exorbitant price for placental tissue allografts.

PGCB: How do the companies that produce placental tissue grafts get their customers to accept such high prices?

OP: Some of these placenta companies are playing a shell game. CMS limits how much hospitals can pay for placental grafts, but there is a loophole that allows physicians in private practices to buy the expensive products⁵. During the first six months after a new product has been launched, physicians can buy that product at a discount. Under the current reimbursement system, the physician can charge the patient’s insurance the full price approved by CMS, pay the supplier a discounted price, and pocket the difference. This gives physicians an incentive to purchase those new pricey bandages. It really is a shell game, because once the six months of privileged new product time expires, the placental tissue company simply “launches” the same product under a new name and continues the game. A number of unscrupulous industry participants are getting away with this, at considerable cost to taxpayers. It has been reported that total CMS spending on placental tissue skin substitutes has grown from just over $1 billion in 2022 to an estimated $5.5 billion in 2024⁵.

PGCB: How important is it for placental tissue grafts to go through clinical trials? At the beginning of 2025, CMS had planned to only allow reimbursement for the 17 skin substitutes that had published results from randomized controlled clinical trials (RCT) to establish their efficacy^3,6. Those plans were scrapped in April 2025¹. Meanwhile, we found something interesting about the prices of those 17 products: Working from the July 2025 CMS database, the average of the prices shown for the 17 products with RCT was only $168.51 per sq cm, whereas the average of the prices shown for all 281 skin substitutes was $1014.81.

OP: All placental tissue grafts are basically the same. As one plastic surgeon told Medpage, "human placenta is human placenta”⁵. Grafts of placental amnion are designated by the FDA as a 361 product⁷. This means the product cannot undergo more than minimal manipulation during processing, and the product is intended for “homologous” use performing the same basic function that the tissue performed in the donor. So long as placental tissue companies are making products that comply with the FDA’s 361 guidelines, there is no need for each placental tissue company to go through the time and significant cost of running prospective clinical trials.

PGCB: What can you tell us about Extremity Care? It has been revealed that the placental tissue company Extremity Care donated $5 million to MAGA Inc. just before the Trump administration stopped the CMS plan to restrict skin substitute coverage to 17 products⁸. Extremity Care and another placental tissue company, Legacy Medical, are leaders of a group called the MASS coalition which is lobbying to block reform of the CMS rules⁹. They are trying to mobilize the public by claiming that the new rules will hurt patient access to wound care.

OP: Babies continue to be born and there is no shortage of donated placentas. No one is going to lose access to wound care if reimbursements are capped.

Extremity Care does not process the placental grafts that they sell. Extremity Care and several other companies are subsidiaries or business partners of Tiger BioSciences. One company processes the placental tissue grafts for Extremity Care, and then the products are sold under a reimbursement code (Q-code) owned by yet another company. This is why “Extremity Care” does not appear in the CMS database of companies that manufacture skin substitute products⁴.

I estimate that Extremity Care and Legacy Medical are billing over $100 million per quarter. The owners of Extremity Care and Legacy Medical both travel by private jet. Taxpayers are paying for their profits because CMS allows sky-high reimbursements for basic placental tissue grafts.

PGCB: In July 2025, CMS proposed another set of rules to take effect in January 2026¹⁰. These rules would not limit coverage to products that have clinical trials, but they would cap the reimbursement for skin substitutes at $806 per square inch.

OP: The price cap proposed by CMS is fair. The media talks about price per square inch, but in this industry we work with price per square centimeter. Doing the math, $806 per sq in is $125 per sq cm, and that is a fair price for a placental tissue graft.

I hope the new rules will put an end to the shell game of giving physicians discounts for the first six months of a new product. Furthermore, I don’t believe that patients or physicians will suffer if companies that survive on exploitive reimbursement practices are forced to change how they operate or cease to exist.

References

1. Kliff S, Thomas K. Trump Administration Delays Plan to Limit Pricey Bandages. NYTimes. Published 2025-04-11
2. Kliff S, Thomas K. Trump Administration Will Limit Medicare Spending on Pricey Bandages. NYTimes. Published 2025-07-15
3. CMS.gov Skin Substitute Grafts/Cellular and Tissue-Based Products for the Treatment of Diabetic Foot Ulcers and Venous Leg Ulcers. Local Coverage Determination 39828. Notice released 2024-11-14
4. Centers for Medicare & Medicaid Services (CMS) Physician Fee Schedule (PFS) Look-up.
5. Firth S. Experts Sound the Alarm on Pricey Skin Substitutes in Wound Care Industry. Medpage Published 2025-03-18
6. Verter F. US Government Changes Physician Reimbursements for Placenta Products. Parent's Guide to Cord Blood Foundation. Newsletter. Published 2025-08
7. Code of Federal Regulations, title 21 part 1271. Part 1271.10: Are my HCT/P’s regulated solely under section 361 of the PHS Act and the regulations in this part, and if so what must I do?
8. Legum J. Days after $5 million donation to MAGA Inc., Trump freezes Medicare waste crackdown. Popular Information. Published 2025-08-04
9. MASS Coalition. https://saveourwoundcare.org/
10. CMS.gov CMS Proposes Physician Payment Rule to Significantly Cut Spending Waste, Enhance Quality Measures, and Improve Chronic Disease Management for People with Medicare. Press release. 2025-07-14