Health Plan Skin Substitute Audit Uncovers Carve-Out Overpayments 

During a payment integrity proof of concept with a national commercial health plan, Penstock uncovered irregular billing patterns in skin substitute claims—specifically for a wound-care product billed per square centimeter. 

What We Did 

– Deep-Dive Analysis Reveals Unusual Skin Substitute Billing Patterns 

Penstock performed a deep-dive analysis of wound-care claims to evaluate billing patterns for skin substitutes billed per square centimeter. 

– Identifying Outliers in Wound-Care Billing

For a single patient treated weekly for the same diabetic foot ulcer, billed units varied sharply: 
Week 1: 21 → Week 2: 21 → Week 3: 21 → Week 4: 70 → Week 5: 11 → Week 6: 3, driving large swings in billed charges (one visit billed $17,805). 

– Benchmarking Utilization Against Clinical Expectations

Penstock segmented the data by HCPCS (supply and implant codes), revenue code, provider, and member to isolate repeat outliers and identify billing trends. The team benchmarked utilization against clinical norms—recognizing that wound size should remain stable or decrease over time, not triple and shrink in consecutive weeks. 

– Linking Findings to Payment Structures

By connecting these patterns to the plan’s percent-of-charge carve-out payment structure, Penstock demonstrated how unit variability could contribute to payment inconsistencies and the need for deeper review. 

Results 

Turning Complex Carve-Out Data into Actionable Insights 

Penstock’s audit revealed a clear pattern of inconsistent unit billing on recurring wound-care visits—differences that would have been easy to miss without a deep, claim-level data review. Because the plan reimburses skin substitutes under a percent-of-charge carve-out, even small unit fluctuations led to higher-than-expected payments. 

Quantifying the Financial Impact of Unit Variability 

Drawing on its clinical, coding, and analytic expertise, Penstock built a comprehensive findings package that traced every variance to specific claims and products, quantifying how unit changes affected reimbursement. The audit demonstrated how complex carve-out payments can mask significant leakage, insights that only surface through detailed data mining and expert interpretation. 

The Value of Deep Data Expertise in Payment Integrity 

This analysis underscored how Penstock’s human-led, tech-enabled audits uncover issues that standard reviews miss—helping health plans identify hidden risks, strengthen oversight, and recover value through data-driven insight.