Health Plan Coverage Required for COVID-19 Testing

The U.S. Departments of the Treasury, Labor, and Health and Human Services jointly have issued a new set of FAQs that require health plans to cover the cost of over-the-counter COVID-19 test kits obtained without a health care provider’s prescription or clinical assessment.

The coverage of these over-the-counter products must be furnished without prior authorization or other medical management and without any out-of-pocket expense to the plan participant. Plans must meet the requirements set forth in the FAQs no later than January 15, 2022, and continue to meet them through the public health emergency.

There are limits to the application of the new guidance. Where a health care provider is involved in the order or decision to test, prior rules will apply. In addition, the new guidance applies only to testing for individualized diagnosis and treatment, not to testing for employment purposes. As a result, health plans and health insurance policies will not need to cover the cost of testing established as a workplace safety measure.

When the new guidance does apply, coverage for over-the-counter test kits cannot be limited to in-network providers, but plans may make certain distinctions based on their arrangements with pharmacies and other suppliers. The Departments will not take enforcement action against a plan that directly reimburses in-network pharmacies and one or more designated direct-to-consumer shipping companies for the full cost of test kits, but requires participants to submit claim forms for reimbursement from non-preferred suppliers. These plans also may limit the amount that they will reimburse participants for the cost of test kits purchased from non-preferred suppliers to $12 (or, if less, the actual cost of the test kit). However, this limitation will be available only if a plan takes reasonable steps to ensure that participants have adequate access to over-the-counter COVID-19 test kits. If, for example, test kits from preferred suppliers are subject to shortages and delays that are significantly greater than for other items covered under the plan, the plan may not limit the amount of its reimbursement to non-preferred suppliers. 

A plan also may limit the number of over-the-counter tests it will cover to eight tests per enrollee per month. If a package contains more than one test, each of the separate tests in the package will count toward the limit.

Although plans may not apply medical management to the purchase of over-the-counter test kits, they may implement reasonable steps to prevent fraud or abuse. Plans also may provide education about COVID-19 testing and the plan’s coverage of testing that is consistent with applicable requirements.

Plan sponsors are allowed to amend their plans to address the new guidance without satisfying notice requirements for modifications. Plans must provide the notice as soon as reasonably practicable.  

The new guidance addresses several other preventive care issues, including:

• A requirement to cover 100% of the cost of colonoscopies and related costs that are performed as a follow-up to less invasive screening tests. This requirement takes effect for plan years beginning on or after May 31, 2022.
• Reinforcement of the guidance that requires full coverage of female contraceptive expenses and the requirement to make available a clear and accessible process for exceptions to a plan’s standard medical management limitations based on an attending provider’s recommendation.

The new requirement for covering over-the-counter COVID-19 tests comes at a time when test kits remain in short supply. Plan sponsors should consider their coverage options and communicate them to plan participants.

Ballard Spahr has a world-class health care practice focused on the continually changing legal landscape of health benefit plans. For more information contact an attorney in our Employee Benefits and Executive Compensation Group.

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