Update on Federal Mandates to Cover COVID-19 Testing Services: New Guidance for States, Plans, and Insurers

By Sabrina Corlette, Georgetown University Center on Health Insurance Reforms

In March, as COVID-19 cases were surging, Congress enacted two bills to help ensure that consumers could access free diagnostic tests. The congressional mandate (included in the Families First Coronavirus Relief Act (FFCRA) and amended by the Coronavirus Aid, Relief, and Economic Security (CARES) Act), directs employer group plans and insurers (including self-funded and grandfathered plans) to cover and waive enrollee cost-sharing for diagnostic COVID-19 tests and any services required to determine the need for such a test. Almost immediately after enactment of these bills, there were questions about the scope of the new mandate and potential gaps that could expose consumers to unexpected out-of-pocket costs.

The federal agencies responsible for regulating insurers and employer health plans – the Departments of Health & Human Services, Labor, and Treasury (collectively, the “tri-agencies”) – published guidance on April 11 in attempt to clarify some of the law’s requirements. However, as calls have increased for more widespread and frequent testing, particularly of at-risk populations such as health care workers, residents and staff of long-term care facilities, and people potentially exposed at protests or rallies, insurers have questioned their responsibility to cover all testing in all circumstances. State regulators have had to step in, with some requiring insurers to cover, for example, specified workplace-related testing, while others have agreed with insurers that such testing would not be “medically necessary.” On June 23, the tri-agencies published new guidance that attempts to answer implementation questions from states, plans, and insurers. State regulators in particular have raised issues such as:

Determination of “Medically Appropriate”

The tri-agencies’ April 11 guidance indicated that plans and insurers would be required to cover COVID-19 testing services “when medically appropriate for the individual, as determined by the individual’s attending health care provider.” However, many individuals have sought and received tests in unconventional settings and from unconventional providers, such as hospital parking lots, walk-in minute clinics, even in libraries and gyms. State regulators have thus asked for clarification on what type of provider counts as an “attending health care provider.”

The tri-agencies conclude that a provider does not need to be “directly” responsible for providing care to a patient to be considered an “attending” provider, so long as the provider is making an “individualized” clinical assessment that a COVID-19 test is medically necessary.

Surveillance or Workplace Related Testing

As states have ramped up testing, particularly for at-risk populations, employers, insurers, and regulators have sought clarification on whether private insurance should cover, without cost-sharing, testing for asymptomatic individuals, in some cases frequently. For example, CMS has recommended that nursing home workers be tested weekly. Here, the tri-agencies are definitive, asserting that FFCRA and CARES do not require plans and insurers to cover testing of asymptomatic individuals when the purpose is to screen for general workplace health and safety or for public health surveillance. However, the guidance does clarify that plans and insurers are required to cover testing for an asymptomatic individual who has had a “known or suspected” exposure to the virus, as determined by a health care provider. The tri-agencies also confirm that plans and insurers must cover multiple COVID-19 tests for the same individual, if a provider has determined them medically appropriate.

This latest guidance, however, raises additional questions for states or employers that require testing for workers in high-risk environments, such as nursing homes or meatpacking plants. Many of these workers will arguably have had “suspected” exposure to the virus simply by coming to work; this guidance seems to suggest that, so long as a health care provider orders the tests for each worker, plans and insurers will need to cover it, with no cost-sharing.

Coverage of Hospital “Facility Fees”

FFCRA requires plans and insurers to cover, and waive cost-sharing, for the services a patient receives to determine the need for a COVID-19 test, such as a physical exam, or tests to rule out other diseases or conditions. When patients receive these services in a location that is owned by a hospital, the hospital often adds a “facility fee” to the charge. In this guidance, the tri-agencies clarify that plans and insurers must cover not only the service costs but also the facility fee, if charged.

Protections against Provider Balance Billing

Some have raised concerns that the CARES Act does not prohibit out-of-network testing providers from sending patients surprise balance bills. Section 3202 of that law requires plans and insurers to reimburse testing providers either a negotiated rate or their full charges (so long as the provider posts its charges on a public website), but it does not impose a concomitant requirement on those providers to refrain from balance billing patients. Here the tri-agencies assert that, because plans and insurers are required to pay the testing provider in full, the CARES Act effectively precludes balance billing. However, the CARES Act only applies to reimbursement for the test itself. Patients could still be subject to balance billing for other services, such as those provided to determine whether a test is medically necessary (although providers that receive federal dollars through the CARES’ Act “Provider Relief Fund” are prohibited from balance billing patients).

States have also sought to clarify whether Section 3202 of the CARES Act would preempt their own balance billing protection laws, many of which limit or leave to an arbitrator the amount insurers must pay for out-of-network services in certain scenarios (such as emergencies or when the services are delivered in an in-network hospital). The tri-agencies’ answer to this question is a bit ambiguous. On the one hand, the guidance says that states’ dispute resolution processes would continue to apply, in cases where the insurer and the testing provider do not have a negotiated rate. However, the guidance also says that state laws would be preempted if they “prevent the application of” the requirements in Section 3202. Since Section 3202 requires insurers to pay the testing provider’s full charges (if posted on a public website), some state requirements that an insurer pay less than that (such as a percentage of the Medicare rate) could be perceived to directly conflict. Several states, including California, Maryland, Connecticut, and New Mexico make such a payment standard the primary mechanism for resolving these out-of-network reimbursement disputes.

This may be an issue Congress itself will need to clarify. States, however, should be aware that the CARES Act only prescribes what plans and insurers must pay. There is no federal law precluding states from limiting the amount testing providers may charge. Such limits may be critical where there is evidence that testing providers are taking advantage of the pandemic to charge exorbitant prices.

For a more detailed summary of the June 23 guidance, which addresses several FFCRA and CARES implementation issues not discussed above, see Katie Keith’s blog post.