Departments issue FAQs on coverage of over-the-counter COVID-19 tests

Under Affordable Care Act Implementation FAQs Part 51 — recently issued by the departments of Labor, Health and Human Services, and Treasury — group health plans and insurance companies must cover at least eight over-the-counter (OTC) at-home COVID-19 tests per person each month. For example, a family of five all enrolled in the same group health plan would be able to get at least 40 OTC COVID-19 tests covered by their health plan per calendar month.

The guidance provides that, starting January 15, 2022, and through the end of the public health emergency, employees enrolled in group health plans can buy an OTC COVID-19 test online or at a pharmacy or store and either get the test paid for at the point of sale by their health plan or pay for the test upfront and then get reimbursed by submitting a claim to their health plan.

Health plans must provide the coverage with no cost-sharing requirements (i.e., deductibles, copays or coinsurance), prior authorization or other medical management requirements, or a healthcare provider’s order or clinical assessment. Coverage is not required for OTC COVID-19 tests used for employment purposes (e.g., return-to-work testing).

The Centers for Medicare & Medicaid Services also issued FAQs on the OTC COVID-19 testing guidance.

Note: There is no limit on the number of COVID-19 tests, including OTC tests, that must be covered when they are ordered or administered by a healthcare provider following an individualized clinical assessment.

2 options for OTC COVID-19 test group health plan coverage

Option 1: Direct coverage program with limited out-of-network reimbursement

Under the “direct coverage” option, which the departments “strongly encourage,” plans and issuers cover the costs upfront (at the point of sale) via a network of OTC COVID-19 testing providers, eliminating the need for participants to submit a claim for reimbursement. Plans or issuers may not impose any prior authorization or other medical management requirements on participants who obtain OTC COVID-19 tests via a direct coverage program.

Because a plan or issuer sets up a network of pharmacies or retailers where plan participants can buy their OTC COVID-19 tests, the amount reimbursed per test for retailers outside of that network can be capped at $12 or the actual price, if lower. (Note: In this instance, participants would pay upfront for the costs of their OTC COVID-19 tests and submit for reimbursement.) The departments view this ability to limit the reimbursement amount as an “incentive” for plans and issuers to choose this option.

Option 2: Reimbursement program

If the group health plan or issuer has not set up a direct coverage program as described above, then it must reimburse the cost of the tests. The participant will need to save receipt(s) to submit to the plan for reimbursement. Employer group health plan sponsors should be aware that there is no dollar limit on the cost of OTC COVID-19 tests under the reimbursement option; the plan and issuer must reimburse the full cost of the test.

Although plans cannot impose medical management techniques, the departments provide several examples of how they may act to prevent, detect and address fraud and abuse. Among the permissible actions, plans can (1) require the participant to attest that the test was purchased for the covered individual, is not for employment purposes, has not and will not be reimbursed by another source, and is not for resale; and (2) require reasonable documentation of proof of purchase.

Going forward

• Employer plan sponsors that choose to use a direct coverage program will want to discuss implementation with their third-party administrators (TPAs) and pharmacy benefit managers (PBMs) as soon as possible. The plan or issuer must also make the systems and technology changes necessary to process the direct payments.
• Employer plan sponsors that do not use a direct coverage program should work with their TPAs and PBMs to implement a reimbursement system (including verifying receipts, requiring an attestation and developing reimbursement processing procedures).
• Employers should consider amending the terms of their group health plans and inform employees on whether their qualified OTC COVID-19 tests will be covered via a direct coverage program or a reimbursement program.