Payers, employers, providers, consumers and states question the cost of COVID-19 testing

Public health experts continue to stress the importance of testing to reopening workplaces and the larger economy to stay on top of any COVID-19 outbreaks, but repeated testing of front-line workers, and even one-time testing of a company’s employees, can be expensive. The federal government, states, employers, payers and providers all have taken various roles, but who should pay going forward?

Through relief packages, Congress has funded expanded testing and has required government and private payers to cover testing without cost sharing or prior authorization throughout the public health emergency. The Families First Coronavirus Response Act and the Paycheck Protection Program and Health Care Enhancement Act each included $1 billion to reimburse healthcare providers for COVID-19 testing for the uninsured starting Feb. 4. The first payments started going out May 18.

Of the $2 billion that Congress set aside to cover costs for testing uninsured patients, an HRI analysis of CDC data showed that as of June 2, only $10.8 million had been paid to healthcare entities to reimburse them for the costs of testing the uninsured.

The cost of the testing can vary widely. Medicare is reimbursing providers who test uninsured patients at Medicare rates. CMS has increased payment for high throughput testing to $100, but other testing is reimbursed at lower rates, ranging from $35-$51 depending on the test type and region. Politico reported a national insurer was charged almost $7,000 for a COVID-19 test.

CMS issued guidance saying that under the CARES Act, plans and issuers should reimburse providers for COVID-19 diagnostic testing at “an amount that equals the negotiated rate or, if the plan or issuer does not have a negotiated rate with the provider, the cash price for such service that is listed by the provider on a public website.”

HHS also required providers that received some of the relief funds to sign an attestation that they would not “seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network Recipient.”

Worried that billing issues will keep consumers from getting tests, states have stepped in to clarify where possible, with the Washington insurance commissioner issuing an executive order that carriers cannot engage in surprise billing for lab charges. Other states, including Massachusetts and North Dakota, have issued bulletins to encourage health plans to remove any barriers to testing.

HRI impact analysis

While there is recognition among public health experts that any strategy to mitigate the spread of the virus requires more testing and contact tracing, the current approach does not present a clear picture of which players will be on the hook for testing costs going forward. While the federal government has put states in the driver’s seat for testing strategies, many states face budget crises from plummeting state revenues that reduce their ability to fund widespread testing.

Payers and employers should evaluate the impact to their budgets of shifting responsibility when it comes to testing costs. And while those sectors could see testing as an expensive proposition, they should also consider whether the overall costs of proactive testing could be less than treating a larger second wave of critically ill COVID-19 patients who need expensive intensive care and have potentially long hospital stays.

More effective testing also could help produce a better picture of the disease spread through local communities, boosting the level of comfort that the public has with returning to work, stores and healthcare providers.

In a May 14 letter to HHS Secretary Alex Azar and CMS Administrator Seema Verma, the National Association of Insurance Commissioners pressed for answers on how testing should be financed. “States, local governments, employers, and carriers would benefit from a consistent and clear message about what tests are approved for what uses and in what circumstances they should be covered by insurers,” the group wrote. “We are also hopeful that the federal funding made available to states so far will be sufficient to support the testing that is essential to states’ ability to reopen their economies but given the major fiscal challenges that states are facing as a result of the coronavirus pandemic, additional federal funding may be necessary.”