You Have Questions, the Government Has Answers Regarding Group Health Plan Coverage of At-Home COVID-19 Tests
On February 4, 2022, the Departments of Health and Human Services, Labor, and Treasury (the “Departments”) issued guidance in the form of five new FAQs regarding the requirement that health plans, including employer-sponsored group health plans, must cover the cost of certain at-home COVID-19 tests. This requirement applies for at-home tests purchased on or after January 15, 2022. This new guidance follows up on the Departments’ previous FAQs issued on January 10, 2022. (See our previous client alert here.) In general, the Departments’ guidance states that group health plans must cover, through direct payment to the provider or by reimbursement to the participant, at least eight at-home tests per participant per month.
Under the Families First Coronavirus Response Act (“FFCRA”), all group health plans, including grandfathered group health plans, generally must cover certain items and services related to testing for COVID-19 without participant cost-sharing (i.e., deductibles, copayments or coinsurance). Before January 15, 2022, the requirement to cover at-home tests was limited to situations in which an individual had an order or individualized clinical assessment from a health care provider for an at-home test.
Now, group health plans must cover the cost of certain at-home tests regardless of whether a health care provider has been involved. (As a reminder, health plans are not required to cover the cost of routine testing for employment purposes.) Coverage generally must be provided through a direct coverage arrangement or by reimbursement to participants. If coverage is provided through a direct coverage arrangement, a group health plan may limit its reimbursement of at-home tests to the lesser of $12 or the actual cost of the test from non-preferred providers. As explained below, a direct coverage arrangement generally must have at least one direct-to-consumer arrangement.
The Departments’ new guidance clarifies that group health plans have flexibility in how they establish a direct coverage arrangement for at-home tests. To establish a direct coverage arrangement, a group health plan must ensure that participants have adequate access to at-home tests, which will depend on all of the facts and circumstances. However, a direct coverage arrangement generally must have at least one direct-to-consumer arrangement in order to rely on the $12 reimbursement limit to non-preferred providers outside of the direct coverage arrangement. Additionally, a direct coverage arrangement generally must also have at least one in-person mechanism.
(There may be some limited circumstances in which a direct coverage arrangement could provide adequate access without establishing both a direct-to-consumer arrangement and in-person mechanism. For example, if a small employer’s group health plan covers only employees who live and work in a localized area, it could be possible that distribution at a nearby location constitutes adequate access to at-home tests without establishing a direct-to-consumer arrangement.)
When providing coverage of at-home tests through a direct-to-consumer arrangement, group health plans must cover reasonable shipping costs and sales tax in a manner consistent with other items or products provided by the group health plan via mail order. Additionally, when providing coverage outside of the direct coverage arrangement, group health plans must cover the total cost of the at-home test (including shipping costs and sales tax) up to $12 per test. A direct-to-consumer arrangement may allow for orders to be placed online or by telephone through the plan’s pharmacy network, or through non-pharmacy retailers (e.g., through distribution of coupons for participants to receive tests from certain retailers without cost-sharing).
Additionally, the new guidance clarifies that a direct-to-consumer arrangement is any program that provides direct coverage of at-home tests for participants without requiring the individual to obtain the test at an in-person location.
The direct coverage arrangement does not have to cover every eligible test from every manufacturer. For example, if the group health plan establishes a direct coverage arrangement, and the arrangement excludes a particularly expensive test, the group health plan may limit reimbursement to $12 because that test is outside the direct coverage arrangement. However, the health plan itself must still cover all eligible tests (even if reimbursement is limited to $12 for tests purchased outside of the direct coverage arrangement). This specific guidance applies prospectively, effective February 4, 2022.
The Departments will not consider a group health plan to be out of compliance with the requirement to cover at-home tests if it has established a direct coverage arrangement, but is temporarily unable to provide adequate access through the arrangement due to a supply shortage. In that circumstance, a group health plan may continue to limit reimbursement to $12 per test (or the full cost of the test, whichever is lower) for at-home tests purchased outside of the direct coverage arrangement.
Actions to Prevent Fraud and Abuse
Group health plans may act to prevent, detect, and address suspected fraud and abuse. For example, a group health plan may establish a policy that limits coverage of at-home tests purchased without the involvement of a health care provider to tests purchased from established retailers that would typically be expected to sell at-home tests. In other words, group health plans may exclude tests sold by third-party resellers. However, group health plans should educate participants about which tests from which resellers are eligible (or ineligible) for coverage.
Coverage of At-Home Self-Collection Tests
The requirement to cover at-home tests does not include at-home self-collection tests that must be sent to a lab to be processed, but those tests must still be covered (with no cost-sharing and no medical management) if ordered by a health care provider.
Interaction With Health FSAs, HRAs, and HSAs
At-home tests can be paid for or reimbursed by health flexible spending arrangements (“Health FSAs”), health reimbursement arrangements (“HRAs”), or health savings accounts (“HSAs”). (See our previous client alert here.) However, no double-dipping is allowed. In other words, at-home tests cannot be paid for or reimbursed by a Health FSA, HRA, or HSA, and also be paid for or reimbursed by a group health plan. Plan sponsors of group health plans should remind participants that they may not be reimbursed more than once for the same expense.
Plan sponsors of group health plans should consult with their insurers (of fully insured plans) or third-party administrators (of self-funded plans) as soon as possible to discuss compliance with this new guidance.
If you have any questions, please contact the authors or another attorney within Miller Johnson’s employee benefits practice.