Guest blog by Ryan Mathis
On August 26, 2026, the court dismissed the CAMPs Initiative’s second lawsuit challenging the skin substitute reimbursement provisions of the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) final rule. Just like the first time, the case was dismissed on jurisdictional grounds, The court did not decide whether the rule making CTP/CAMPS/skin subs billed as supplies is lawful.
A Quick Refresher on Round One
On March 12, 2026, the U.S. District Court for the Northern District of Texas dismissed the first case because the CAMPs Initiative, or a proxy, had not satisfied what is called the channeling requirement. Claims arising under the Medicare Act cannot go straight to court. Before suing the government, a party has to clear two hurdles:
- Presentment — Put the grievance in front of the Department of Health and Human Services (HHS) or the Centers for Medicare & Medicaid Services (CMS).
- Exhaustion — Take that grievance all the way through the administrative appeals process.
Both are jurisdictional prerequisites. Miss either one, and the courthouse door stays shut, no matter how strong the underlying argument may be. In response, the CAMPs Initiative appealed that March decision to the Fifth Circuit, then voluntarily dropped the appeal, explaining that it would refile instead.
What Changed in the Refiled Case
The refiled complaint, again before Chief Judge Reed O’Connor, added two physician plaintiffs:
- Dr. Brandon Elrod, of Anchor Wound Management
- Dr. Michael F. Sedrak, of Life Back Medical
Both clinicians submitted Medicare claims for skin substitutes under the CY 2026 rule and were paid the flat $127.14 per cm² rather than a rate based on the product’s average sales price (ASP). That was the point of adding clinicians. Unlike the CAMPs coalition, these are physicians who actually bill Medicare, so they could say they had presented their grievance to HHS/CMS before filing suit.
However, regarding the requirement for “exhaustion” of the appeals process, the plaintiffs argued that the Medicare appeals process has no mechanism to challenge whether a final rule is legal. The HHS and CMS adjudicators who hear appeals are bound to follow the rule – they can’t make a determination as to whether the rule is wrong in the first place. Thus, to go through this process would be futile — so the futility exception should let them skip it. Alongside the complaint the plaintiffs filed a motion to “stay the rule”, meaning, to get a preliminary injunction stopping CMS from continuing to implement the skin substitute provisions (to stop CMS from considering them as supplies and paying at a fixed rate). The government opposed both and moved to dismiss the case, arguing that this was precisely the kind of claim Congress intended to run through the administrative process first.
Why the Court Dismissed It Anyway
The court agreed that the physician plaintiffs had satisfied presentment by filing their claims with CMS. That half worked. Exhaustion is where the argument fell apart. The court held that the plaintiffs still had to appeal their claims through every level of Medicare review before coming to court. In this context, that means all four rungs of the ladder:
- Redetermination by their Medicare Administrative Contractor (MAC)
- Reconsideration by a qualified independent contractor (QIC)
- A hearing before an HHS administrative law judge
- An appeal to the Medicare Appeals Council
The court rejected the futility argument, reasoning that the futility exception does not apply when what a plaintiff is claiming is that a particular Medicare claim should have been paid a particular amount. That is an ordinary claims dispute, and the administrative process exists to handle it. The court acknowledged the financial harm to the industry is significant but held that financial harm does not excuse the requirement to exhaust.
What the Court Did Not Decide
Because the case was dismissed on jurisdictional grounds, the court never reached a decision on the merits — it made no ruling on whether the challenged portion of the CY 2026 PFS final rule is lawful. Every other pending motion, including the request for a stay or preliminary injunction, was denied as moot.
The dismissal was without prejudice, which means the plaintiffs are free to refile once they have exhausted their administrative remedies. The door is closed, not locked.
What Happens Next
There are two paths forward, and they are not mutually exclusive:
- Appeal to the Fifth Circuit. The plaintiffs have 60 days to appeal the dismissal. If they do, a decision could take roughly 12 to 18 months.
- Work through the administrative process. Alternatively, the plaintiffs could skip the appeal and complete the full Medicare review process — all four rungs — and then refile. That is slow, but it is the route the court has told them to take.
Here is the interesting wrinkle: if the physician plaintiffs have been pursuing their administrative appeals all along, it is possible — and perhaps likely — that they would finish exhausting those remedies before the Fifth Circuit would rule on an appeal. In that scenario the appeal becomes the slower road to the same place.
Where That Leaves Things
In every one of these scenarios, the challenged portions of the CY 2026 PFS final rule remain in effect. Physicians continue to be paid for skin subs as supplies at $127.14 per cm². Nothing about this decision changes what anyone gets paid tomorrow. Two and a half years into this, after two lawsuits and two dismissals, there is still no word from any court about whether the payment methodology is actually lawful.
Ryan Mathis, M.D. Director of Global Medical Policy Kerecis
The case is captioned CAMPs Initiative v. HHS, No. 4:26-cv-769 (N.D. Tex.).
