Federal Government Issues New FAQs Regarding Coverage of COVID-19 Diagnostic Testing

On February 4, 2022, the Departments of Labor, Health and Human Services, and the Treasury (the “departments”) issued a new set of five FAQs that clarify a few points raised in original guidance concerning the coverage of over the counter (OTC) COVID-19 tests issued on January 10, 2022. Our article covering that original guidance can be found in the January 20, 2022, edition of Compliance Corner.

The first FAQ revises the “safe harbor” established in the original guidance that allows plans or carriers to provide coverage of OTC COVID-19 tests purchased by covered employees and their dependents by arranging for direct coverage of OTC COVID-19 tests through both its pharmacy network and a direct-to-consumer shipping program. The safe harbor also allows plans and carriers that use it to limit reimbursement for OTC COVID-19 tests from non-preferred pharmacies or other retailers to no less than the actual price or $12 per test (whichever is lower). The first FAQ clarifies that whether a plan or issuer provides adequate access through its direct coverage program will depend on the facts and circumstances but will generally require that OTC COVID-19 tests are made available through at least one direct-to-consumer shipping mechanism and at least one in-person mechanism. When providing OTC COVID-19 tests through a direct-to-consumer shipping program, plans and carriers must cover reasonable shipping costs related to covered OTC COVID-19 tests in a manner consistent with other items or products provided by the plan or issuer via mail order. When providing coverage of OTC COVID-19 tests outside of a direct coverage program, the price of tests includes shipping and sales tax costs related to the purchase of OTC COVID-19 tests, so that plans and carriers must cover the total cost of the COVID-19 test (including shipping costs and sales tax) up to $12 per test.

The second FAQ states that the departments will not take enforcement action against a plan or carrier if they cannot meet the safe harbor requirements because of a supply shortage. Plans or carriers that otherwise meet the requirements of the safe harbor may continue to limit reimbursement to $12 per test (or the full cost of the test, whichever is lower) for OTC COVID-19 tests purchased outside of the direct coverage program.

The third FAQ describes steps that plans and carriers may take to address fraud, waste and abuse related to the coverage of OTC tests. Plans or carriers may establish a policy that limits coverage of OTC COVID-19 tests purchased without the involvement of a healthcare provider to tests purchased from established retailers that would typically be expected to sell OTC COVID-19 tests. Accordingly, plans or carriers may deny reimbursement for tests purchased from a private individual (either in-person or online) or online resellers. If plans or carriers adopt such a policy, then it could include requiring reasonable documentation showing that a covered employee or their dependent purchased the OTC from an established retailer. Plans or carriers that implement such a policy should provide information to covered employees and their dependents regarding acceptable retailers.

The fourth FAQ clarifies that the COVID-19 tests that plans or carriers must cover do not include tests that require processing by a laboratory or healthcare provider (unless a healthcare provider orders those tests). OTC tests subject to this FAQ and the guidance from January 19, 2022, must be authorized and approved by the FDA to be self-administered and self-read (i.e., the covered employee or their dependents obtain the results of the test directly).

Finally, the fifth FAQ notes that the cost of OTC COVID-19 tests is reimbursable by healthcare FSAs, and HRAs; however, since plans or carriers are obligated to pay this cost, participants in those arrangements cannot also seek reimbursement for it. An individual cannot be reimbursed more than once for the same medical expense. Similarly, a covered employee cannot pay the cost for these tests out of their HSA because this would be an expense already covered by insurance or a group health benefit plan. The departments encourage plans and carriers to advise covered employees and their dependents not to seek reimbursement for this expense from their FSA or HRA.

Employers should be aware of these new FAQs, whether they self-insure or sponsor fully insured plans.

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