February 9, 2022

Additional DOL Guidance on Free Over-the-Counter COVID Tests

This is a supplement to our January 16, 2022 post on the new requirements related to health plans providing free over-the-counter COVID tests.

Last Friday (February 4), the DOL issued additional guidance on this topic, which confirms that a direct to consumer shipping program is required (if a health plan wants to be able to limit reimbursement for OON to $12, as we described in our January 16 post) and also provides a few new wrinkles:

  • At Least One Direct to Consumer Shipping Mechanism Generally Required.  “Q1: Do plans and issuers have flexibility in how they establish a direct-to-consumer shipping program and direct coverage through an in-person network in order to qualify for the safe harbor established in FAQs Part 51, Q2?  Yes. In response to questions raised by stakeholders, the Departments are revising the requirements of the safe harbor established in FAQs Part 51, Q2 to ensure that plans and issuers have significant flexibility in how they provide access to OTC COVID-19 tests under those requirements. In order to meet the requirements of the safe harbor, plans and issuers must provide direct coverage by ensuring participants, beneficiaries, and enrollees have adequate access to OTC COVID-19 tests with no upfront out-of-pocket expenditure. For this purpose, 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. [The Departments recognize that there may be some limited circumstances in which a direct coverage program could provide adequate access, and therefore satisfy the requirements of the safe harbor, without establishing both a direct-to-consumer shipping mechanism and an in-person mechanism. For example, if a small employer’s 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 OTC COVID-19 tests without establishing a direct-to-consumer shipping mechanism.]  “Direct coverage” may be provided through a number of mechanisms, including, but not limited to, a direct-to-consumer shipping program that allows for orders to be placed online or by telephone; the plan’s or issuer’s pharmacy network; other non-pharmacy retailers (including through distribution of coupons for enrollees to receive tests from certain retailers without cost-sharing); and alternative OTC COVID-19 test distribution sites established by, or on behalf of, the plan or issuer (such as a standalone drive-through or walk-up distribution site, including a site that operates independently of a pharmacy or other retailer).”

M&T Commentary:  To the extent that clients are not yet able to provide the direct to consumer shipping program, the bracketed language above – and the “number of mechanisms” language – is what we are going to rely on – on a very temporary basis – to say that we are complying with the safe harbor until the direct to consumer shipping program is up and running.  It is not crystal clear that this works but many other employers and PBMs are working hard to get the direct to consumer shipping program up and running since this guidance was issued so recently.  The example provided above for a “limited circumstance” involving a “small employer” whose employees “live and work in a localized area” without a consumer shipping mechanism available, cannot be used by larger employers to somehow try to bypass the direct to consumer shipping requirement.

  • Plan Participants Must Be Made Aware of Key Information.  In order to facilitate consumer access and provide for a seamless experience in obtaining OTC COVID-19 tests with no upfront out-of-pocket expenditure, plans and issuers should ensure that participants, beneficiaries, and enrollees are aware of key information needed to access OTC COVID-19 testing, such as which tests are available under the direct coverage program, and if the plan or issuer offers different mechanisms for obtaining tests under its direct coverage program, which tests are available under each mechanism.
  • Direct to Consumer Shipping Mechanism Can Take Different Shapes As Long As Individual Can Order and Get at Home.  This FAQ clarifies that a direct-to-consumer shipping mechanism is any program that provides direct coverage of OTC COVID-19 tests for participants, beneficiaries, or enrollees without requiring the individual to obtain the test at an in-person location. A direct-to-consumer shipping mechanism can include online or telephone ordering and may be provided through a pharmacy or other retailer, the plan or issuer directly, or any other entity on behalf of the plan or issuer. A direct-to-consumer shipping program does not have to provide exclusive access through one entity, as long as it allows a participant, beneficiary, or enrollee to place an order for OTC COVID-19 tests to be shipped to them directly. For example, if a plan or issuer has opted to provide direct in-person coverage of OTC COVID-19 tests through specified retailers, and those retailers maintain online platforms where individuals can also order tests to be delivered to them, the Departments will consider the plan or issuer to have provided a direct-to-consumer shipping mechanism.
  • Plan Must Pay Shipping Costs.  When providing OTC COVID-19 tests through a direct-to-consumer shipping program, plans and issuers 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.
  • In Person Mechanism Must Provide Adequate Number of Locations.  When implementing an in-person mechanism, a plan or issuer must ensure that participants, beneficiaries, or enrollees have access to OTC COVID-19 tests through an adequate number of locations (which could include pharmacies and other retailers, or independent distribution sites set up by, or on behalf of, a plan or issuer). As the Departments noted in FAQs Part 51, Q2, whether there is adequate access should be determined based on all relevant facts and circumstances, such as the locality of participants, beneficiaries, or enrollees under the plan or coverage; current utilization of the plan’s or issuer’s pharmacy network by its participants, beneficiaries, or enrollees, when making such coverage available through a pharmacy network; and how the plan or issuer notifies participants, beneficiaries, or enrollees of the retail locations, distribution sites, or other mechanisms for distributing tests, as well as which tests are available under the direct coverage program.
  • Tests Must Be Used and Processed Without Involvement of a Lab or Other Health Care Provider.  To the extent a COVID-19 test is not approved or authorized to be self-administered and self-read without the involvement of a health care provider (such as a test where a consumer collects a specimen at home and sends the specimen to be processed in a laboratory), the safe harbor guidance is not applicable.
  • Temporary Supply Shortage Will Not Destroy Ability to Rely on the Safe Harbor (i.e., the $12 OON cap).  The Departments will not consider a plan or issuer to be out of compliance with the safe harbor in FAQ Part 51, Q2 if it has established a direct coverage program that meets the requirements of that safe harbor as revised by Q1 of these FAQs Part 52 but is temporarily unable to provide adequate access through the program due to a supply shortage. In that circumstance, a plan or issuer that otherwise meets 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.
  • Plan May Disallow Reimbursement for Tests Obtained from a Private Individual.  In order to further discourage problematic behaviors that could limit access to consumers, a plan or issuer may establish a policy that limits coverage of OTC COVID-19 tests purchased without the involvement of a health care provider to tests purchased from established retailers that would typically be expected to sell OTC COVID-19 tests. Specifically, plans and issuers may disallow reimbursement for tests that are purchased by a participant, beneficiary, or enrollee from a private individual via an in-person or online person-to-person sale, or from a seller that uses an online auction or resale marketplace. Such a policy could include requiring reasonable documentation of proof of purchase that clearly identifies the product and seller, such as a UPC code or other serial number, original receipt from the seller of the test, or other documentation for the OTC COVID-19 test to verify that the item qualifies for coverage under section 6001 of FFCRA, or a requirement that the participant, beneficiary, or enrollee attest that the test has not been (and will not be) reimbursed by another source (including through resale). If a plan or issuer implements a policy that disallows reimbursement for OTC COVID-19 tests from certain resellers, the plan or issuer should provide information to participants, beneficiaries, or enrollees regarding the retailers from which purchased tests are generally covered by the plan or issuer and general information about the types of resellers for which participants, beneficiaries, and enrollees are not eligible for reimbursement of purchased tests under the plan or coverage. This does not modify the requirement of FAQs Part 51, Q4 that prohibits a plan or issuer from requiring individuals to submit multiple documents or implementing numerous steps that unduly delay a participant’s, beneficiary’s, or enrollee’s access to, or reimbursement for, OTC COVID-19 tests.

Brandon Long is an experienced, AV Preeminent-rated employee benefits attorney and a member of McAfee & Taft's Employee Benefits and Executive Compensation Group.

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