Health Plans Must Cover OTC COVID-19 Tests

The DOL, IRS, and HHS have issued FAQ guidance addressing group health plan coverage of over-the-counter (OTC) COVID-19 diagnostic tests under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). As background, these laws and implementing regulations (see our Checkpoint article) generally require group health plans and insurers to cover COVID-19 diagnostic testing without cost-sharing, prior authorization, or other medical management requirements. The agencies previously addressed the diagnostic testing requirements in FAQs Part 42 (see our Checkpoint article), Part 43 (see our Checkpoint article), and Part 44 (see our Checkpoint article). Among other things, the prior guidance stated that group health plans and insurers must cover at-home COVID-19 diagnostic tests ordered by an attending health care provider who has determined that the test is medically appropriate for the individual and otherwise meets the FFCRA criteria. Since then, the FDA has authorized additional COVID-19 diagnostic tests, including OTC tests that can be self-administered and self-read at home without the involvement of a health care provider.

The agencies have now clarified that individuals who purchase OTC COVID-19 tests during the COVID-19 public health emergency can seek reimbursement from their plan or insurer. Here are highlights:

• Coverage of OTC Tests. Group health plans and insurers must cover OTC COVID-19 tests that meet the FFCRA criteria—including tests obtained without the involvement of a health care provider—without imposing cost-sharing requirements, prior authorization, or other medical management requirements. Plans and insurers are strongly encouraged to provide “direct coverage” by reimbursing sellers of OTC tests directly without requiring participants to incur out-of-pocket expenses or submit claims for reimbursement. In lieu of direct coverage, however, participants may be required to submit claims under the plan’s or insurer’s claims procedures. The coverage requirement does not apply to tests acquired for employment purposes.
• Preferred Sellers. Plans and insurers may not limit coverage of OTC tests to those purchased from preferred sellers. Under a safe harbor applicable to OTC tests obtained without a provider’s involvement, however, plans and insurers may limit direct coverage to OTC tests obtained through their pharmacy networks and a direct-to-consumer shipping program, and may cap reimbursement for OTC tests purchased from non-preferred sellers at $12 per test (or the actual price, if lower). If a plan or insurer cannot meet the safe harbor’s requirements—including taking reasonable steps to ensure that OTC tests are available through an adequate number of both in-person and online retail locations—then the plan or insurer may not deny coverage, impose cost-sharing, or limit the reimbursement amount for OTC tests obtained from non-preferred sellers.
• Quantity Limit. Under another safe harbor, plans and insurers may limit coverage of OTC tests purchased without a provider’s involvement to eight tests per covered individual per 30-day period (or per calendar month).
• Fraud and Abuse. Although plans cannot impose medical management techniques, they may act to prevent and detect fraud and abuse—for example, by requiring an attestation that the OTC test was purchased for the covered individual’s personal use; is not for employment purposes; will not be reimbursed from another source; and is not for resale.
• Education. Plans and insurers may, along with coverage information, provide education and consumer support on topics such as differences between OTC tests and those processed in a laboratory, OTC tests’ quality and reliability, direct coverage options, and submitting claims for reimbursement.
• Effective Date. The coverage requirements are effective for OTC tests purchased without a provider’s involvement on or after January 15, 2022, and during the COVID-19 public health emergency. Plans and insurers may adopt these provisions prior to satisfying any otherwise applicable notice-of-modification requirements and without regard to restrictions on midyear insurance changes.

EBIA Comment: As we enter year three of the COVID-19 public health emergency, diagnosis, prevention, and treatment tools continue to evolve, and health plans’ and insurers’ obligations are also changing. Quick action will be needed to meet the January 15 effective date. Because HHS’s Centers for Medicare and Medicaid Services has issued a consumer-oriented information sheet explaining that free OTC tests will soon be available, plans and insurers should expect participants to be aware of the new coverage requirements and be prepared to answer questions. For more information, see EBIA’s Group Health Plan Mandates manual at Section XVI.C (“Mandated Coverage of Diagnostic and Preventive Services”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.C.11 (“Coverage Mandates Relating to the COVID-19 Pandemic”) and EBIA’s Consumer-Driven Health Care manual at Section X.H (“COVID-19 Testing and Treatment”).

Contributing Editors: EBIA Staff.