The US Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) on January 10 published much-anticipated FAQs implementing President Joseph Biden’s announcement last month to expand free at-home COVID-19 testing for all Americans during the continued period of public health emergency.
The FAQs expand on existing guidance under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) requiring group health plans (including grandfathered plans) to provide certain COVID-19 testing benefits without cost-sharing (deductibles, copayments, and coinsurance), prior authorization, and other medical management requirements during the public health emergency. The CARES Act expanded the FFCRA requirements by requiring group health plans to reimburse certain providers for COVID-19 diagnostic testing. Specifically, FAQs Part 43 (published in June 2020) included guidance on coverage for at-home testing when ordered by an attending health care provider, although at that time the Food and Drug Administration (FDA) had not yet authorized such tests.
Now that the FDA has authorized over-the-counter at-home COVID-19 tests (OTC COVID-19 tests), the FAQs clarify that group health plans must cover such FDA-authorized, cleared, or approved OTC COVID-19 tests for diagnostic purposes, with or without the involvement of a health care provider, effective January 15, 2022 through the end of the public health emergency. The public health emergency is ongoing, and it is unclear when the Department of Health and Human Services will announce its end or let the period expire. This means that group health plans will have to cover the cost of OTC COVID-19 tests at no cost-sharing for an indefinite period, resulting in a significant financial burden for self-insured employers and issuers of group health plan coverage.
In addition to the OTC COVID-19 testing guidance, the Departments also address some preventive care services in the FAQs. Below is a summary of some key points from the FAQs.
Reimbursement for and Access to OTC COVID-19 Tests
Limitations on Coverage for OTC COVID-19 Tests
Addressing Fraud and Abuse
Implementing direct coverage for OTC COVID-19 tests is a significant administrative undertaking. With the implementation date of January 15 and the lack of availability of OTC COVID-19 tests, most group health plans will likely not be in the position to provide direct coverage by January 15, cutting off the group health plan’s ability to limit reimbursements for testing kits purchased from nonpreferred pharmacies and retailers. Notably missing from the guidance is what recourse, if any, group health plans have against price gouging while gearing up to provide direct coverage. Given the current scarcity of OTC COVID-19 tests, if a participant purchases the only OTC COVID-19 test that they can find for $100 (even though that test normally retails for $30), the FAQs offer no guidance allowing a group health plan to limit its reimbursement to the manufacturer’s retail price. Requiring the group health plan to cover the full $100 cost will place a significant strain on an already expensive requirement given, for example, that a group health plan must cover a minimum of 32 tests per month for a family of four participants.
Follow-Up Colonoscopies Without Cost-Sharing
Effective for plan years on or after May 31, 2022 (January 1, 2023 for calendar year plans), the FAQs require that non-grandfathered group health plans cover, without cost-sharing, a colonoscopy conducted after a positive noninvasive stool-based screening test or direct visualization screening test for colorectal cancer for adults ages 45-75. The FAQs note that such follow-up colonoscopies are an integral part of preventive screening, without which the screening would not be complete.
Contraceptive Products and Services Without Cost-Sharing
Pointing to numerous complaints from participants who have been denied contraceptive coverage in violation of the contraceptive mandates under Section 2713 of the Public Health Services Act, the Departments cautioned active investigation of these complaints or other corrective actions. The FAQs remind nonexempt group health plans that they are required to cover all FDA-approved, cleared, or granted contraceptive products that are determined by an individual’s medical provider to be medically appropriate to such individual without cost-sharing, whether or not specifically identified in the current FDA Birth Control Guide. The FAQs clarify that this means that a plan may need to cover a newer contraceptive product–such as a mobile app for contraception based on fertility awareness—if it is deemed medically appropriate.
While coverage of preventive care services has always been an area of audit for group health plans, these FAQs heighten awareness for group health plans that the Departments will likely be increasing audit and enforcement activities to ensure compliance with the preventive care services requirements. Group health plan sponsors should take active measures to confirm that their third-party administrators or insurance issuers are complying with these coverage requirements.
Sharing insights and resources that help our clients prepare for and address evolving issues is a hallmark of Morgan Lewis. To that end, we maintain a resource center with access to tools and perspectives on timely topics driven by current events such as the global public health crisis, economic uncertainty, and geopolitical dynamics. Find resources on how to cope with the globe’s ever-changing business, social, and political landscape at Navigating the NEXT. to stay up to date on developments as they unfold. Subscribe now if you would like to receive a digest of new updates to these resources.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Lisa H. Barton
Michelle M. McCarthy
Craig A. Bitman