January 16, 2022

Free Over-the-Counter COVID Tests (if you can find them)

The Families First Coronavirus Response Act (FFCRA) was enacted on March 18, 2020, and generally requires group health plans to provide benefits for certain items and services related to COVID-19 testing when those items or services are furnished on or after March 18, 2020 and during the applicable emergency period.  Plans must provide this coverage without imposing any cost-sharing requirements (including deductibles, copayments, and coinsurance), prior authorization, or medical management requirements.

Less than 10 days later, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) amended the FFCRA to include a broader range of diagnostic items and services that plans must cover without any cost-sharing requirements, prior authorizations, or other medical management requirements.

Then, in June 2020, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) issued guidance stating that plans are required to cover COVID-19 tests intended for at-home testing, when the testing is ordered by an attending health care provider who has determined that the test is medically appropriate.  The Departments noted, at that time, that the Food and Drug Administration (FDA) had not yet authorized any COVID-19 diagnostic tests to be completely used and processed at home.  Since that time, however, the FDA has authorized additional diagnostic tests for COVID-19, including tests that can be self-administered and self-read at home.  These COVID-19 tests are now available over-the-counter (if you can find them) through pharmacies, retail stores, and online retailers (OTC Tests).

Last week, on January 10, 2022, the Departments issued updated guidance stating that the requirement for health plans to cover free OTC Tests is no longer limited to situations in which the individual has an order from a health care provider.  This updated guidance provides the following details:

  1. Free OTC Tests must be provided on or after January 15, 2022 through the end of the public health emergency.
  2. Plans are still not required to provide coverage for COVID-19 tests (including OTC Tests) that are for employment purposes (e.g., testing required under an employer return-to-work policy), as opposed to tests for diagnosis or treatment of COVID-19. Please note, however, that the employer may nonetheless be required to pay for such testing under applicable state law.
  3. A plan cannot limit coverage to OTC Tests that are provided through preferred pharmacies. A plan may, however, arrange for direct coverage of OTC Tests through its pharmacy network and a direct-to-consumer shipping program, and then otherwise limit reimbursement outside of the plan’s arrangement to $12 per test.  This reference to a “direct” arrangement means the participant (which, for this article, includes beneficiaries and other enrollees) is not required to seek post-purchase reimbursement, i.e., the plan must pay the pharmacy or retailer directly with no up-front cost to the participant.  While many plans are looking to set up such an arrangement and direct employees to get their OTC Tests through a preferred network provider (after negotiating a discounted rate from the provider), there is some concern among employers that such an arrangement will result in increased volume and thus increased costs.
  4. If a plan sets up the direct arrangement described above and then only pays $12 for OTC Tests that are obtained outside of the direct arrangement, the $12 per test must be calculated based on the number of tests in a package.
  5. If a plan sets up the direct arrangement described above, plans cannot impose any prior authorization or other medical management requirements on participants, and must take reasonable steps to ensure that participants have adequate access to OTC Tests through an adequate number of retail locations (including both in-person and online).
  6. If a plan sets up the direct arrangement described above, plans must ensure that participants are aware of key information needed to access OTC Tests, such as dates of availability of the direct coverage program and participating retailers or other locations.
  7. Plans can limit the number of OTC Tests covered for each participant, beneficiary, or enrollee to 8 tests per 30-day period or per-calendar month. Please note for example, that if a family has six members covered by the plan, this means the plan must pay for 48 OTC Tests per month.  For employers with a significant workforce, the financial projections – even assuming some actuarial reductions for likely usage – are staggering.
  8. A plan can require an attestation, such as a signature on a brief attestation document, that the OTC Test (a) was purchased by the participant for personal use, not for employment purposes; (b) has not been (and will not be) reimbursed by another source; and (c) is not for resale.

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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