Biden Administration Sets Home COVID-19 Test Coverage Rules

The administration of President Joe Biden announced today that it will require commercial health coverage providers to pay for at least eight home COVID-19 tests per person per month starting Jan. 15.

The rules apply both of health insurers and to self-insured employer health plans.

The administration wants to arrange for as many enrollees as possible to get home test kits at no out-of-pocket cost through in-network pharmacies and other locations.

When enrollees buy tests from other sources, insurers and plans will have to reimburse the enrollees for up to $12 per test.

Administration officials warned insurers and plans in December that a test kit coverage mandate was coming.

Government Plans

The federal government already requires Medicaid plan and Children’s Health Insurance Plans to cover home COVID-19 tests.

The Centers for Medicare and Medicaid Services, the federal agency that regulates Medicare plans, says it lacks the authority to have the traditional Medicare program pay for home COVID-19 tests.

The original Medicare program will pay for one lab test performed without a physician order, without cost-sharing, per patient per year, and Medicare Advantage can set their own home COVID-19 test coverage rules, CMS says.

CMS did not talk about what Medicare supplement insurance providers are planning to do about coverage for home COVID-19 tests.

Why the Urgency?

The number of COVID-19 cases fell sharply in the summer, and public health program managers had hoped that vaccination programs and earlier social distancing efforts had gotten the pandemic under control.

But the COVID-19 delta variant caused a huge spike in hospitalizations and deaths in the fall, and especially among people ages 18 through 64 who had not been vaccinated.

Another, highly infectious variant, the omicron variant, began making headlines in late November. Officials had hoped omicron cases would be variant and have little effect on hospitalization rates or mortality rates, but, in late December, new hospitalization counts soared to record pandemic-period levels in much of the country. Officials now fear mortality rates will also spike, and they are looking for ways to get the omicron wave of cases under control.

“Testing is critically important to help reduce the spread of COVID-19, as well as to quickly diagnose COVID-19 so that it can be effectively treated,” CMS Administrator Chiquita Brooks-LaSure said in comments about the new mandate. “Today’s action further removes financial barriers and expands access to COVID-19 tests for millions of people.”

What the Mandate Means for Insurers

The COVID-19 pandemic has led to a big increase in deaths in the United States and may have led to about $30 billion to $40 billion in extra death benefits payments so far.

If the new test coverage mandate holds down the number of deaths caused by COVID-19, and by pandemic-related health care system stress, it could reduce future life insurer spending on death benefits.

Private health insurers spent about $1.15 trillion on health care in 2020.

Private insurers cover more than 200 million U.S. residents.

If every privately insured U.S. resident bought eight $12 COVID-19 test kits out of network per month, the cost per person would be $96 per month. The cost for all privately insured people would be about $20 billion per month, or about 20% of what health insurers have been spending on health care claims per month.

But there are signs the cost of home COVID-19 tests could cost much less than $12 per kit. The Dutch version of Amazon, for example, sells packages of 25 home tests for only about $3 per kit, and the percentage of people who want to give themselves frequent home COVID-19 tests could be low.

If the average cost of a kit covered by insurers is $3, and only 10% of enrollees use their test kit benefits in a given month, average insurer spending on kit benefits could be less than $700 million per month.

Rule Delivery Mechanics

The administration described the rules through a press release and through a set of answers to frequently asked questions posted on the website of the Centers for Medicare and Medicaid Services, which regulates health insurers, and on the website of the Employee Benefits Security Administration, an arm of the U.S. Department of Labor, which regulates self-insured group health plans.

At press time, the agencies had not put a notice, draft regulation or other document related to the home test coverage mandate on the Federal Register website.

The versions of the test coverage mandate rules available at press time did not provide a mandate end date, or a discussion about the circumstances that would lead the government to end the mandate.

Insurer Reactions

Matt Eyles, the president of America’s Health Insurance Plans, an insurer trade group, said in comments about the Biden administration home test coverage rules announcement that AHIP members will work with the administration to implement the test benefits as quickly as possible, in ways the minimize consumer confusion and challenges.

“Every day, more Americans are being diagnosed with COVID-19,” Eyles said. “From the beginning, health insurance providers have taken decisive action to cover the costs of tests to diagnose and treat COVID-19 – and we continue to do so. We learned a great deal through that commitment and other key actions on COVID-19, and we recognize that the administration’s guidance takes steps to mitigate the real risks of price gouging, fraud, and abuse, which would limit access and reduce affordability for everyone.”

Eyles said the country must emphasize vaccination campaigns as well as testing to protect public health.

“We all know we cannot test our way out of this pandemic,” Eyles said. “COVID-19 vaccines are safe, effective, and free, and we encourage everyone to talk with their clinicians about vaccines and boosters.”

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Chiquita Brooks-LaSure (Photo: House Ways and Means Committee)