FAQs on Families First and CARES Acts Implementation for Health Plans

The Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the “Departments”) have released frequently asked questions (FAQs) for health plans implementing coverage changes under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The tri-agency FAQs provide helpful and much needed clarifications that will assist health plans, health insurance issuers, providers and other healthcare stakeholders in understanding and complying with the new law.

Below we provide a high-level overview of the clarifications detailed in the FAQs.

COVID-19 Diagnostic Testing

Generally – The FFCRA, as amended by the CARES Act, requires health plans to cover COVID-19 detection and diagnostic testing without imposing any cost-sharing or prior authorization or other medical management requirements.

Types of health plans and health insurance issuers subject to coverage requirements – The new coverage requirements apply to fully insured and self-funded group health plans, non-federal governmental plans, church plans, and health insurance issuers offering group or individual health insurance coverage (including grandfathered health plans under the Affordable Care Act). The coverage requirements do not apply to short-term, limited-duration insurance, excepted benefits or retiree-only plans.

Types of tests covered – Health plans are required to cover in vitro diagnostic tests for the detection of SARS-CoV-2 virus or the diagnosis of COVID-19 disease, including those tests approved/authorized by the FDA, tests for which the developer has requested emergency use authorization by the FDA (that have not been rejected), tests developed in and authorized by a state that has notified HHS of its intent to conduct such reviews, and other tests approved by HHS in guidance. Additionally, health plans must cover serological tests which are used to detect antibodies against the SARS-CoV-2 virus which causes the COVID-19 disease, and are intended for use in the diagnosis of the disease or current or past infection with SARS-CoV-2.

Other items and services covered during visit – Health plans are also required to cover items and services furnished to an individual during an office visit. Office visit is defined broadly to include in-person, telehealth, urgent care, emergency room, and appropriate COVID-19 drive-through visits. Coverage is required to extend to testing for other respiratory illnesses, such as influenza, that a provider deems appropriate.to determine the need for COVID-19 diagnostic testing, and where the visit results in an order for or administration of a COVID-19 diagnostic test.

No cost-sharing, prior authorization or medical management permitted – Health plans must cover the cost of all items and services that the individual’s attending health provider determines are medically appropriate for the individual, in accordance with accepted standards of medical practice without imposing cost-sharing (including deductibles, copayments and coinsurance), prior authorization requirements or other medical management requirements.

In-network and out-of-network coverage required – Health plans are required to cover the cost of the COVID-19 testing and related services furnished by providers (described above) that are both in-network and out-of-network. Where a rate was negotiated before the public health emergency declaration, that rate will apply. A plan or insurer may seek to negotiate a rate lower than what the provider has published even now, but absent an agreement, will need to pay the cash price listed by the provider on a public website. All providers must post cash rates for diagnostic testing or face penalties of up to $300.

Applicable Period – Covered health plans are subject to these requirements from March 18, 2020, through the end of the public health emergency.

Plan Modifications and Required Disclosures

Generally, rules regarding the Summary of Benefits and Coverage (SBC) provide that if a plan or issuer makes a material modification in any of the terms of the plan or coverage, the plan or issuer must provide 60 days advance notice of the modification to enrollees. Because the new coverage requirements took effect immediately, the Departments announced that they will not take enforcement action against any plan or insurer that provides greater coverage for the diagnosis and/or treatment of COVID-19, without providing at least 60 days advance notice.  Instead, health plans must provide notice of these changes as soon as reasonably practicable by issuing a new SBC or a notice of material modification describing the changes.

Generally, health insurance issuers are not permitted to modify the health insurance coverage for a product mid-year.  However, HHS will not to take enforcement action against insurers that change the benefits or cost-sharing structure of their plans mid-year to provide increased coverage for services related to the diagnosis and/or treatment of COVID-19.

The Departments’ non-enforcement policies will last through the end of the public health emergency. However, the Departments caution that any health plans or issuers wishing to maintain coverage changes beyond the public health emergency period must comply with all other applicable requirements to update plan documents or terms of coverage.  The Departments also warn that they will continue to take enforcement action against any health plans or issuers that attempt to limit or eliminate other benefits, to increase cost-sharing, to offset the cost of increasing benefits for COVID-19 diagnosis and/or treatment.

State Requirements

The FAQs clarify that the FFCRA does not prevent a state from imposing additional requirements on health insurers with regard to COVID-19 diagnosis or treatment, so long as such state requirements do not conflict with any federal requirements. Any such state requirements would likely apply only to insured plans and not to self-funded health plans that are governed by ERISA, which generally preempts state insurance laws.

Excepted Benefits

Excepted benefits are exempt from certain mandates under the Public Health Services Act, ERISA and the Internal Revenue Code, including special enrollment requirements, requirements to provide preventive care with zero cost-sharing and requirements to provide essential benefits with no annual or lifetime limits, among others. In this set of FAQs, the Departments clarify that employers may offer benefits for COVID-19 diagnosis and testing through their employee assistance programs (EAPs) and through their on-site medical clinics during this public health emergency without jeopardizing the status of such clinics and programs as excepted benefits.

Telehealth and Other Remote Care Services

The Departments encourage all health plans and issuers to provide a robust suite of telehealth and other remote care services, including mental health and substance use disorder services, and to cover these types of services without cost-sharing and other medical management requirements during this public emergency period. The Departments also reminded plan sponsors of the CARES Act provisions that allow zero-cost coverage for all telehealth services without affecting the eligibility of participants in high-deductible health plans to contribute to health savings accounts. As with COVID-19 testing, the Departments will not take enforcement action against plans or issuers that add benefits or reduce or eliminate cost-sharing for telehealth and other remote care services without modifying their SBCs 60 days in advance. The Departments urge the states to support efforts to increase access to telehealth and remote care services, and to consider relaxing state licensing laws during this period to enable more in-state and out-of-state providers to offer telehealth and other remote care services in the state.

Key Considerations to Takeaway

The joint agency FAQs provide significant clarifications that may assist health plans, health insurance issuers, providers and other healthcare stakeholders in understanding and complying with the new laws. Plan sponsors will need to consider action that include budgeting for expenses and making appropriate plan amendments and SBC modifications. Employers may consider the effects of the required changes and consider new options for telehealth services and for offering COVID-19 testing to employees who are not enrolled in their plans. The Departments expect to issue additional guidance about the FFCRA, the CARES Act, and other health coverage issues related to COVID-19 and stakeholders should be on the lookout for that guidance.

Depending on the specific changes plan sponsors make to their health plans in accordance with these new laws, they should consult with their benefits counsel to ensure they are meeting their legal requirements. Ballard Spahr LLP’s Employee Benefits and Executive Compensation attorneys can provide advice and assist plan sponsors in making plan amendments and other plan design changes under the new laws and other existing laws governing employee benefit plans.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.