Health plans

Problems arise as health plans begin to cover COVID-19 home testing

[updated: 1/20/22]

AAs the Biden administration’s requirement that health plans and insurers cover the cost of at-home COVID-19 testing, within certain limits, took effect Jan. 15, the first stumbling blocks were evident. Some insurers said their data processing systems were not yet ready to pay the upfront costs of tests purchased by consumers from pharmacies. Employers with self-insured health plans, meanwhile, were trying to decide how best to pay for the tests.

“Setting up and running was a little difficult given that the regulations were released on Monday, January 10, with plan sponsors and insurers having to comply by the following Saturday,” said John Coleman, director of the health and benefits human resources consulting firm Mercer. in Morristown, New Jersey

Reminder: Coverage Requirements

A set of
frequently asked questions and answers released Jan. 10 by the Department of Labor says purchases of over-the-counter test kits beginning Jan. 15 will be covered without the need to place an order with a health care provider. Plans and insurers:

  • May require participant, beneficiary or registrant who purchases an OTC COVID-19 test to submit a claim for reimbursement. However, plans are strongly encouraged to provide direct coverage for OTC COVID-19 testing by directly reimbursing sellers.
  • Must reimburse tests purchased by consumers outside of a preferred network but may limit non-preferred provider reimbursement to $12 per test (or the price of the test, if lower) if the plan also offers direct coverage for OTC testing through a direct-to-consumer pharmacy network.
  • May choose to provide a more generous refund to schedule enrollees down to the actual price of tests purchased from a non-preferred vendor.
  • Can set limits on the number of OTC tests covered without cost sharing but must allow up to eight tests per enrollee in the plan per month. A family of four, all on the same plan, could get up to 32 of these tests covered by their health plan per month.
  • Can’t set limits on the number of tests covered if ordered by a health care provider following a clinical assessment.
  • May require certification that the test is for personal use, is not for employment purposes, has not been (and will not be) reimbursed by another source, and is not for resale.
  • May require plan enrollees to provide receipts for purchased test kits.

Employees can order free tests by mail

As plan sponsors and issuers adjusted their benefits to cover the cost of COVID-19 home testing, the administration moved forward with President Joe Biden’s order asking the federal government
buy 500 million COVID-19 home rapid test kits to be sent free of charge to Americans who request it.

The administration’s action is in addition to its policy of allowing Americans to purchase and be reimbursed by private insurance for home tests.

On January 18, the government
COVIDtests.gov The website has started accepting orders for free COVID-19 test kits for home delivery. Orders are limited to
four tests per household from the initial batch of 500 million, according to a White House fact sheet.

Test kits will typically ship within 7 to 12 days of ordering, the White House said. The service will prioritize orders and send tests first to “the most socially vulnerable households and communities that have experienced a disproportionate share of COVID-19 cases and deaths, particularly during this omicron surge.”

Employers can inform workers of this additional opportunity to acquire test kits, as “there is nothing stopping employees covered by an employer-sponsored plan from going to the website and ordering tests,” it said. noted Coleman.

Some observers have raised concerns that the delivery time of more than a week could encourage people who do not need an immediate test to order kits and keep them on hand, which which could overload the systems and lead to further delivery delays.

“There is nothing stopping employees from going to the government website and ordering tests.”

Insurer systems need to be updated

Regarding the new mandate that health plans (for self-insured employers) and insurance companies (for fully insured employers) pay for the cost of test kits, some insurers said it could take additional weeks after the government’s January 15 start date before they can update their systems to pay for test kits at the point of sale,

The New York Times reported
January 14.

“The new process will be difficult, insurers say, because over-the-counter coronavirus tests are different from the doctor visits and hospital stays they typically cover,” health reporter Sarah Kliff wrote. “Tests currently don’t have the kind of billing codes that insurers use to process claims. Health plans rarely process retail receipts; instead, they’ve built systems for digital claims with predefined formats and long-established billing codes.”

Consumers who purchase home tests from January 15 are advised to keep their receipts and be prepared to submit them to their insurer for reimbursement. Additionally, Jenny Chumbley Hogue, a Texas-based insurance broker, recommended buyers “keep not only the receipts but also the boxes the tests come in, as some plans may require the boxes as proof of purchase.” , reported Kliff.

Separately, the
Time reported that several major US companies, including Google and Morgan Stanley, have been
store rapid COVID-19 tests for their employees, noting that the distribution of test kits “has become the newest wellness perk, one to keep employees healthy and working – even from their sofas – while providing peace of mind” .


Direct-to-consumer safe harbor

The January 10 guidelines established a “direct coverage safe harbor” that limits a health plan’s reimbursement for over-the-counter COVID-19 tests from out-of-network (or “non-preferred”) pharmacies and from other retailers at actual price or $12 per test, whichever is lower, Allison B. Bans explained, an attorney at Snell and Wilmer in Phoenix.

Under Safe Harbor, oversight agencies will not take enforcement action against a plan that:

  • Directly covers OTC COVID-19 testing that members buy through the plan’s pharmacy network and direct-to-consumer program.
  • Does not require prior authorization or other medical management requirements for participants purchasing OTC COVID-19 tests.
  • Take reasonable steps to ensure attendees have access to OTC COVID-19 testing through an adequate number of outlets (including in-person and online).

“‘Direct coverage of OTC COVID-19 testing means the plan must make the necessary systems and technology changes to directly process payment for the plan to the preferred pharmacy or retailer at no upfront cost to the participant,'” Bans wrote. . .

When working with Pharmacy Benefit Managers (PBMs) or their Party Administrators (TPAs), she advised plan sponsors “to consider confirming that PBMs and TPAs ​​will directly cover OTC COVID-19 testing in accordance direct coverage Safe Harbor, and if not, what steps they will take to comply with the new requirements to cover OTC COVID-19 testing.”

Since PBMs and TPAs ​​may need more time to establish a direct coverage program, “in the meantime, plans will have to pay the full cost of testing, even if it’s over $12.” if purchased off-grid,” Bans explained. “Accordingly. , plans are encouraged to comply with the direct coverage safe harbor as soon as possible so that they can limit the cost to $12 per test, to help prevent price gouging,” she noted. .

Expenses management

Mercer’s Coleman advised employers to take steps to reduce the costs of unbudgeted expenses related to paying for COVID-19 home tests. He suggested these three options for self-insured employers:

1. Plan ahead knowing that the mandate allows eight tests per family member per month.
With an average cost of $15 per test, it could cost $480 per family per month at a flat rate.. “Obviously, not every family will need 32 tests, but it’s important to assess usage assumptions to develop a reasonable estimate of projected cost,” Coleman advised. “A plan’s health consultant or actuary can help with this type of analysis.”

2. For self-insured employers, balance cost versus access. A self-insured employer can decide whether or not to cover OTC COVID-19 testing as part of their medical and/or prescription drug plans. “While covering both benefits potentially creates more access, it can lead to much higher costs if the proper coordination isn’t in place,” Coleman said. “If there is no data sharing between the medical carrier and PBM, self-insured plan sponsors could end up covering eight tests per member per month under the medical plan and another eight under of the pharmaceutical diet, which can be expensive.”

3. Work directly with preferred OTC test vendors through a network of pharmacies and direct-to-consumer shipping program. “This allows participants to get the test without upfront payment,” Coleman noted. “If plan sponsors use this safe harbor, they can limit reimbursement to $12 per test, or $24 if two tests are in a kit. If the direct-to-consumer option is not adopted, there is no There is no cap on -network reimbursements, which could drive up costs for plan sponsors.”


Coleman also noted that some PBMs (for drug plans) and insurance companies (for health plans) are developing their own direct-to-consumer online option, which will allow enrollees to order tests for free and will enable self-insured plan sponsors to limit their out-of-network costs.

Updating plan documents

“Plan sponsors should work with their third-party administrator or insurer to develop a process for covering OTC COVID-19 testing and to develop procedures to reduce the risk of participant fraud,”
advised a January 14 alert from law firm McDermott Will & Emery. “New requirements should be incorporated into relevant participant communications, such as registration and open communication materials, plan documents, summary plan descriptions and summary of material changes.”


Related SHRM article:

DOL sets out requirements to pay for COVID-19 test kits, starting Jan. 15
SHRM online, January 2022