If You Can Find an At-Home COVID-19 Test, Your Plan Must Now Pay For It

Seyfarth Synopsis: Since March 18, 2020, group health plans have been required to provide benefits for certain items and services related to testing for or diagnosis of COVID-19 during the applicable emergency period - see our blog post here.

On December 2, 2021, President Biden announced that the Departments of Health and Human Services, Labor and the Treasury (Departments) would issue guidance by January 15, 2022, to clarify that individuals who purchase over-the-counter (OTC) COVID-19 diagnostic tests would be able to seek reimbursement for the tests from their group health plan.

Accordingly, on January 10th (five days before the effective date!) the Departments issued FAQs on the scope of required coverage for OTC COVID-19 tests obtained without a doctor’s order. The FAQs include enforcement safe harbors that allow plans to (a) limit the amount required to be reimbursed for non-preferred pharmacy and retail OTC tests, and (b) limit the amount of tests required to be covered each month without a doctor’s order.   

• No doctor’s order required. Plans are required to cover the cost of OTC COVID-19 tests without imposing any cost-sharing requirements, prior authorization or other medical management requirements (except as outlined below). Although plans are strongly encouraged to reimburse sellers (i.e., pharmacies and retailers) directly for tests provided, plans may require participants to pay for the tests and then submit a claim for reimbursement.

Notably, the FAQs do not modify prior guidance limiting the health plan mandate to costs for tests that are primarily intended for individualized diagnosis or treatment of COVID-19.  So, for example, plans are still not required to cover any costs of testing for employment purposes only. Of course, given that plans generally may not require a doctor’s order for OTC testing, plans will be limited in their ability to implement any meaningful controls in this regard.  

• Safe harbor for limiting amount of reimbursement. A plan may not limit its coverage to tests provided by preferred pharmacies or retailers. A plan may, however, limit reimbursement for tests purchased at non-preferred pharmacies or retailers to $12 per test (or the actual cost, if less), provided that the plan also arranges for direct coverage of tests both through its pharmacy network and a direct-to-consumer shipping program.

“Direct coverage” means that a participant is not required to seek reimbursement post-purchase; instead, the plan makes the systems and technology changes necessary to process the plan’s payment to the preferred pharmacy or retailer directly (including the direct-to-consumer shipping program) with no upfront out-of-pocket cost to the participant. 

A plan must take reasonable steps to ensure that participants have adequate access to OTC COVID-19 tests, through an adequate number of retail locations. If a plan is unable to meet the requirements of the safe harbor (e.g. there are long delays in the plan’s direct-to-consumer shipping program), the plan cannot set limits on the amount of reimbursement, or impose cost-sharing, for any tests obtained by participants. The guidance appears to contemplate that, depending on market conditions, plans may be forced to operate outside of the safe harbor for certain periods of time, reimbursing for non-preferred provider tests at actual cost even though those costs may exceed the safe harbor $12/test level.

• Safe harbor for limiting number of tests. A plan may limit the number of OTC COVID-19 tests covered without cost sharing to 8 tests per 30-day period (or per calendar month) per covered individual.  Under the safe harbor, plans may not impose sub-limits (e.g., 4 tests every 15 days). The 30 day (or one calendar month) period is the smallest/narrowest measurement period that may apply.  Further, this safe harbor only applies with respect to reimbursement or direct coverage for OTC COVID-19 tests with no provider order/assessment. In other words, if the participant has a doctor’s order for a test, the plan would still need to cover it even if the participant has exceeded the 8-test safe harbor limit. 
• Fraud and abuse. A plan may take reasonable steps to ensure that a test was purchased for a covered individual’s use, such as requiring an attestation that the test was purchased for personal use and not for employment purposes, or requiring proof of purchase. 

Notably, the implementation of the coverage mandate for at-home OTC COVID-19 tests roughly coincides with the Biden “Test or Vax” ETS (although that provision remains in limbo pending a ruling by the Supreme Court following recent oral arguments).  To the extent employers do not intend to cover the cost of testing for employees who have opted out of vaccination, those employers’ health plans may look to limit cost-shifting back to the plan (and to the employer indirectly) by requiring that employees attest that they are not ordering the tests to satisfy the workplace testing mandate. We should caution that while plans are clearly permitted to require such an attestation under the FAQs, any such attestation would be considered PHI under HIPAA privacy rules.  So, to the extent a plan becomes aware that certain participants are misrepresenting the basis for their OTC test reimbursement requests, the plan would not be able to share that information with the employer and the employer would be prohibited from taking adverse employment actions against the employee.  For more information on the interaction between the OTC mandate and the ETS, click here. 

• Effective Date. Plans must provide the coverage described in the FAQs for tests purchased on or after January 15, 2022 and during the public health emergency.  Plans may (but are not required to) reimburse for OTC COVID-19 tests purchased prior to January 15, 2022 (although any tests purchased pursuant to a doctor’s order or clinical assessment would still be required to be reimbursed regardless of whether such test was purchased prior to January 15).  The FAQs provide that plans will be exempt from any advanced notice obligation that would prevent compliance with this deadline.   

Few employers will have a pre-established process for reimbursing participants for at-home tests.  Further, we anticipate most employers will want to implement the preferred provider safe harbor. As such, we anticipate employers will need to lean on their service providers (TPAs, insurance carriers, etc.) to implement the new coverage mandate. While we would anticipate such service providers will struggle to set up such a significant undertaking in the next few days, employers may consider preemptively sending an employee communication advising that (a) the plan is aware of the requirement and is working with its vendors to implement, (b) more information will be forthcoming as soon as it is available, (c) reimbursements will not cover tests purchased for employment purposes, and (d) reimbursements for tests purchased on or after January 15, 2022, may be delayed pending system set-up. 

For more information on COVID-19 tests and group health plan coverage, please contact the authors of this post or the benefits lawyer you work with for additional information. You can also visit the DOL website.