On January 10, 2022, the Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Departments) issued a series of FAQs alongside another set of FAQs issued by the Centers for Medicare and Medicaid Services announcing that insurance companies and group health plans will be required to cover the cost of over-the-counter (OTC), at-home COVID-19 test kits starting January 15, 2022. Prior COVID-era legislation already mandates that group health plans and health insurance issuers offering group or individual health insurance coverage, including grandfathered health plans, provide benefits for certain items and services related to testing for the detection of COVID-19 or the diagnosis of COVID-19, when those items or services are furnished during the ongoing emergency period. The latest set of sub-regulatory guidance (on which the Departments have relied extensively throughout the COVID pandemic in lieu of following the traditionally mandated “notice and comment” process) expands the obligations of health insurance and group health plans.
Procedurally, it is unclear how this expansion of COVID OTC, at-home test coverage will work. According to the latest guidance, an individual seeking a test can go online or to a pharmacy or store and purchase the FDA-approved diagnostic test. At that point, the test would either be covered through reimbursement from the plan or free of charge through a direct coverage arrangement with insurance.
The Administration states it is strongly incentivizing plans and insurers to create networks from which a consumer can procure the test. In fact, a “safe harbor” will apparently be available if an insurer or plan makes tests available through its pharmacy network and a direct-to-consumer shipping program. When using the safe harbor, the plan can limit the coverage to $12 per test (or the actual cost, if lower). It appears that if the plan or insurer does not do so, the entire cost of the test must be covered. Thus, for a package containing two tests, the maximum amount covered for a plan or insurer with the requisite network would be $24, even if the package costs more to the consumer.
Complying with the safe harbor will negate enforcement action by the Departments. Any plan or issuer that is unable (or unwilling) to meet the requirements of the safe harbor cannot deny coverage or impose cost-sharing (including setting limits on the amount of reimbursement for OTC COVID-19 tests) with respect to any OTC COVID-19 test.
An issuer or plan can also limit the total number of covered tests to no less than 8 tests per covered member per 30 days (or per calendar month). This limit will not apply to COVID-19 tests administered in a clinic setting.
Significantly, plans are not required to provide coverage for testing that is for an employment purpose. It is unclear exactly how a plan would differentiate between employment tests and tests for other purposes. Also, while the announcement anticipates reimbursement, it does not obligate the insurers or plans’ network to actually possess tests and does not announce a penalty if that network does not have tests available or tests are subject to a substantial delay in availability (e.g., due to demand).
Ultimately, it is unclear what legal effect this sub-regulatory guidance has on employer-sponsored plans. It appears that insurers will be forced to challenge or create compliance plans for insured plans; for self-insured plans, plan sponsors will likely want to start conversations with their TPAs/ASOs to determine whether the plan can/will comply with the “safe harbor”. Unfortunately, with an announced effective date of January 15, 2022, it appears that this may create significant confusion for the entire impacted community – including employers and employees.