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Lucifer secludes himself in his office when he starts picking at his skin so no one catches him doing it.
Diavolo is aware of the scars but he's never been able to catch Lucifer in the act in order to stop him. He got Lucifer some pain stim toys which do help sometimes, but unfortunately not always.
Lucifer will subconsciously pick at his gloves in uncomfortable situations, he did so even when he lost his memories in Season two during the Night Dagger arc.
Lucifer has sets of fingerless gloves so Asmo can do his nails without seeing the scars. Luckily Asmo doesn't question ripped off hangnails.
Lucifer mostly picks at his left hand since he writes with his right but he is ambidextrous.
Lucifer will pick until he bleeds. sometimes accidentally hitting an artery but since demons regenerate quickly he doesn't die.
Lucifer's picking isn't always on his hand, sometimes he picks at the rest of his forearm or on his thighs. Occasionally he pulls out a feather or two from his wings because it hurts more but he never leaves permanent damage on his wings.
Lucifer will feel guilty for picking but the guilt makes him anxious making him pick more. It is not just guilt though, he was God's perfect creation, physically at least, so he feels good destroying the body God Loved so much.