Insurers And Plans Must Cover At-Home Tests For COVID-19

On January 10, 2022, the Departments of Health and Human Services (HHS), Labor, and Treasury announced new guidance outlining how insurers and group health plans will be required to cover and reimburse enrollees for up to eight at-home tests for COVID-19 per enrollee per 30-day period. This policy applies to tests purchased beginning on January 15, 2022 through the end of the declared public health emergency. Additional details are discussed below, and HHS issued consumer-facing frequently asked questions (which also address the coverage of at-home tests by Medicare and state Medicaid programs).

The impact of this policy will of course hinge on the availability of at-home tests. As many can attest, the supply of rapid tests has not kept up with demand. As a result, it has been challenging for many to find rapid tests. And, for those able to find tests to purchase, those tests may be prohibitively expensive or strain family finances. There are many reasons why there is a testing shortage, which will hopefully be resolved soon and has been a separate focus of the Biden administration in its plan (discussed below).

Assuming the availability of tests ramps up, this policy will hinge on insurers. Under the new guidance, insurers are incentivized to use their bargaining power with in-network pharmacies and other retailers to ensure that enrollees can obtain at-home COVID-19 tests without cost sharing (i.e., for free) at the pharmacy or retail counter. This would streamline access to tests by eliminating a burdensome process where enrollees pay for tests upfront, submit paperwork, and await reimbursement. For those who want or need to go through this reimbursement process, insurers can help simplify the process. Although the requirement goes into effect on January 15, it will surely take some insurers some time to arrange for tests directly and establish a process for reimbursing enrollees for the cost of these tests.

The same guidance separately addresses the coverage of follow-up colonoscopies for those age 45 to 49 without cost sharing and clarifies how insurers and plans should be covering the full scope of contraceptives under the Affordable Care Act. Those issues are also summarized below.

Guidance On COVID-19 Testing

The January 10 guidance clarifies that insurers and plans must cover (and, if needed, reimburse enrollees for) at-home COVID-19 diagnostic tests under Section 6001 of the Families First Coronavirus Response Act (Families First) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This policy extends to eight tests per person per 30-day period (i.e., 32 tests per 30 days for a family of four). Enrollees do not need a prescription, an order from a health care provider, or a clinical assessment for their tests to be covered. This policy begins on January 15, 2022 and extends until the end of the declared public health emergency. (Insurers can, but are not required to, reimburse enrollees for OTC COVID-19 tests purchased prior to January 15.)

Brief Background

The guidance follows an announcement by President Biden on December 2, 2021 that outlined new steps that the federal government would take to combat the COVID-19 pandemic, especially in light of the new omicron variant and the continued impact of the delta variant. The updated plan includes nine key pillars, such as expanding access to vaccines and boosters; keeping schools and workplaces open; strengthening public health protocols for international travel; and providing treatment for COVID-19.

Under the plan, people with private health insurance would be reimbursed for the cost of over-the-counter (OTC) COVID-19 diagnostic tests by their health insurer. Federal agencies were instructed to issue guidance by January 15. (For those who are uninsured, at-home COVID-19 tests are available through health centers, rural clinics, and other key community sites in addition to more than 20,000 federally supported free testing sites—and open enrollment extends through January 15.) The goal of this policy is to expand access to free at-home COVID-19 tests while also increasing the supply of rapid at-home tests (which is addressed separately throughout the plan).

As noted above, the Biden administration is issuing the new guidance under Families First and the CARES Act. Collectively, these bills require comprehensive private health insurance plans to cover testing needed to detect or diagnose COVID-19, and the administration of that testing, without cost sharing or medical management requirements. These requirements apply to group health plans (plans offered by employers) and insurers that offer individual and group health insurance coverage, including grandfathered health plans. Importantly, these requirements are temporary and only extend for the duration of the declared public health emergency.

There have been multiple rounds of prior federal guidance to implement these requirements, including initial guidance  on which entities were required to comply with the new laws, what must be covered, the duration of the coverage requirement, and telehealth. Later guidance from June 2020 and an interim final rule issued in fall 2020 offered additional clarity on the scope of testing requirements, surprise bills, and when testing must be covered.

Under the June 2020 guidance, insurers and plans were required to cover at-home COVID-19 tests only for “diagnostic” purposes, meaning only when an individual’s provider determined that a test was medically appropriate. But the Trump administration did not include “testing conducted to screen” for workplace health and safety, for public health surveillance, or for any purpose not primarily intended for individualized diagnosis or treatment. As such, tests were not covered for “surveillance” purposes.

(As I wrote at the time, this always seemed like a false distinction since all tests are used to diagnose people with COVID-19 regardless of the reason for the test—including if a test is for surveillance purposes. Others made a related point that we do not make a similar distinction between diagnostic versus surveillance testing when it comes to other public health issues, such as HIV and hepatitis treatment and prevention, where tests across both types are regularly covered by private health insurers.)

The June 2020 guidance was followed by Biden-era guidance, issued pursuant to an executive order, that confirmed that plans and insurers must cover, without cost sharing, COVID-19 tests for asymptomatic individuals regardless of whether a patient has symptoms or was exposed to COVID-19. The Biden administration issued further guidance in October 2021 focused on the coverage of COVID-19 vaccines and wellness programs.

Encouraging Access Without Hassle

As noted above, the January 10 guidance clarifies that insurers and plans must cover and reimburse members for up to eight OTC COVID-19 diagnostic tests per enrollee per 30-day period. In general, insurers and plans cannot limit coverage or reimbursement to only tests purchased at in-network pharmacies and other retailers. Put another way, a member can seek reimbursement no matter where they purchased their test from—whether at an in-network pharmacy or through Amazon.

But the tri-agencies want—and thus strongly encourage—insurers and plans to pay manufacturers or sellers directly for OTC COVID-19 tests. To that end, the guidance creates a safe harbor from enforcement for those that set up a “direct coverage” option. Under this option, the insurer or plan will arrange for OTC COVID-19 tests to be free (i.e., with no cost sharing) for enrollees through its in-network pharmacies and other retailers. Insurers and plans cannot impose prior authorization or medical management requirements—and must ensure that members truly have access to COVID-19 tests through an adequate number of retail locations.

Those that offer direct coverage will be allowed to limit reimbursement to $12 per test or the actual price of the test (whichever is lower) when a member purchases a test from a non-network pharmacy or retailer. This $12 limit helps mitigate the risk of price gouging by manufacturers and sellers. If payer reimbursement was uncapped, manufacturers and sellers might be tempted to raise the price of tests significantly, putting COVID-19 tests further out of reach for millions of people.

To summarize, if your insurer or plan offers the direct coverage option, you can go to an in-network pharmacy or retailer and obtain a test for free (with no need for paperwork). Or you can purchase a test from anywhere and then submit a claim to your insurer and wait on reimbursement of up to $12 per test. The latter will require an individual or family to pay for the tests upfront and then seek (and wait on) reimbursement. (Note that the reimbursement cap is based on the number of tests per package, so a package with two OTC COVID-19 tests would be eligible for reimbursement of up to $24.)

Insurers and plans that fail to satisfy the safe harbor (including on a temporary basis) are prohibited from denying coverage, requiring cost sharing, or setting limits on the reimbursement amount for any OTC COVID-19 tests (including from non-network providers and retailers).

Limit Of Eight Tests Per Person Per Month

Insurers and plans can limit the number of OTC COVID-19 tests covered to eight tests per enrollee per 30-day period (or per calendar month) so long as they meet the standards laid out in a second safe harbor. Consistent with the above, this limit applies per test, so if a package includes two tests, both count towards the eight-test cap. One condition is that insurers and plans cannot impose limits within a 30-day period, such as refusing to reimburse someone who buys four tests in 15 days. This is because people may reasonably purchase more tests in a single day than they will use that day or week—or there may be times when multiple family members need to be tested in a short period of time.

Federal officials think it is reasonable to include some safeguards for the number of covered OTC tests because individuals can purchase them on their own. These limits are important to help prevent stockpiling or other behaviors that could lead to future shortages. (In contrast, enrollees have unlimited access to covered COVID-19 tests when ordered by a health care provider or subject to an individualized clinical assessment.)

Reasonable Measures to Prevent Fraud And Abuse

Insurers and plans can, of course, take reasonable steps to prevent, detect, and address suspected fraud and abuse, and the guidance identifies some examples of permissible activities for doing so. For instance, an insurer or plan can require an attestation, signature, or proof of purchase to confirm that an OTC COVID-19 test was purchased for the enrollee’s use (as opposed to someone else’s use), has not been reimbursed by another source, and is not for resale. Insurers and plans can adopt these types of fraud prevention measures so long as they do not create significant barriers for obtaining tests (such as requiring enrollees to submit documents or delaying reimbursement).

Promoting Consumer Education

Insurers and plans are encouraged to educate their members and provide other forms of consumer support to help support access and use of OTC COVID-19 tests. All information and resources should make reimbursement policies clear. This includes highlighting the differences between OTC COVID-19 tests and provider-mediated COVID-19 tests, explaining how a member can obtain OTC COVID-19 tests using the direct coverage method, and outlining the process that a member would use to submit a claim for reimbursement.

Putting The Guidance In Context

The new guidance is a shift from the June 2020 guidance. Why the shift? When the June 2020 guidance was issued, the Food and Drug Administration (FDA) had not yet authorized at-home COVID-19 diagnostic tests that could be self-administered and self-read (i.e., without help from a health professional). Given subsequent FDA approval of these tests, this new interpretation is a natural extension of the prior policy and consistent with the statute. Section 6001 of Families First (as amended by the CARES Act) applies to FDA-approved in vitro diagnostic tests for COVID-19—as well as any test that the Secretary determines is appropriate.

While this policy applies to OTC COVID-19 tests purchased for individual use, it does not extend to workplace testing. Rather, the new guidance preserves this part of the Trump-era policy, meaning plans and insurers do not have to cover workplace testing without cost sharing under Section 6001.

Guidance On The Coverage Of Colonoscopies

Under Section 2713 of the Public Health Service Act, all non-grandfathered private health plans—including individual, small group, large group, and group health plans—must cover certain preventive services without cost sharing. These preventive services include evidence-based services that have a rating of “A” or “B” under current U.S. Preventive Services Task Force recommendations.

In 2016, the Task Force recommended screening for colorectal cancer for those age 50 to 75. But coverage of colonoscopies and related screening has not always been smooth. Some consumers went in for a screening colonoscopy that they expected to be free only to receive significant bills after their procedure was coded as diagnostic. The tri-agencies have responded to these concerns over time, issuing guidance to ensure that insurers and plans cover, without cost sharing, various items and services that are an integral part of performing a colonoscopy. This includes a pre-screening consultation with a specialist, bowel preparation medications, anesthesia, polyp removal, and polyp biopsies.

In May 2021, the Task Force extended its recommendation for colorectal cancer screening to those age 45 to 49. A follow-up colonoscopy is especially important for this age group after a stool-based test or direct visualization test (such as flexible sigmoidoscopy or CT colonography screening) reveals abnormal results.

The January 10 guidance confirms that insurers and plans are required to cover a follow-up colonoscopy, without cost sharing, after a positive stool-based screening test or direct visualization test. The fact that a preliminary test came before the follow-up colonoscopy does not transform the colonoscopy into a diagnostic test; it (and the items and services noted above) remains a preventive service that should be covered without cost sharing. Insurers and plans must provide this coverage without cost sharing for plan or policy years beginning on or after May 31, 2022.

Guidance On The Coverage Of Contraceptives

The tri-agencies also clarify the scope of coverage for contraceptives without cost sharing under Section 2713. Under federal rules and guidance, insurers and plans must ensure access to the full range of the FDA-approved contraceptive methods as prescribed by a health care provider.

While payers can use reasonable medical management techniques, insurers and plans must make reasonable accommodations for those who need access to a different contraceptive method (such as women who need a brand name contraceptive because a generic contraceptive would be medically inappropriate). Prior guidance confirms that FDA-approved items and services are supposed to be covered without cost sharing if a provider determines that it is medically necessary. Guidance from 2015 further clarified that plans and insurers must cover, without cost sharing, at least one form of contraception in each method identified by the FDA in its Birth Control Guide as well as establish an exceptions process to request any other FDA-approved item.

One ongoing concern—documented by the media and in letters from members of Congress—is that insurers and plans are limiting access to, or imposing cost sharing for, a range of FDA-approved contraceptives and may not be in compliance with federal standards. Examples include discouraging the use of devices such as IUDs by requiring prior authorization—or making it harder or more expensive to stay on a brand name contraceptive even if the generic version is causing side effects. Many payers appear to have treated the FDA’s Birth Control Guide as gospel, using it to drive coverage decisions (and coverage limitations) even though the FDA insists it was created only for educational purposes.

The January 10 guidance clarifies these requirements under Section 2713, citing complaints and public reports of potential violations of the contraceptive mandate. In general, the guidance makes clear that insurers and plans must cover, without cost sharing, all FDA-approved, cleared, or granted contraceptive products that are deemed medically appropriate by an individual’s provider. This is true regardless of whether the contraceptive product is specifically identified in the FDA Birth Control Guide or not.