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The Devil is in the Details with Biden’s Free COVID Testing Plan

By David A. Simon

Yesterday, President Biden announced a new requirement that private insurers must reimburse purchases of at-home COVID-19 tests.

This represents a significant departure from current policy, which only requires insurance companies to pay for testing at the direction of a healthcare provider. The new policy has yet to take effect — the Department of Health and Human Services (HHS) will release formal guidance for private insurers by January 15th.

Removing the need for clinician approval to access free COVID-19 testing is a noteworthy step; however, the new policy raises a host of questions that remain to be addressed, which are discussed briefly below.

1. Too little, too late? First, it’s worth noting that the new policy has not yet gone into effect and may not for another six weeks. The administration has also specified that the policy will not apply retroactively. As a result, this policy doesn’t seem to encourage frequent and convenient testing now, which is particularly important as we push through the current delta surge with the threat of omicron looming in the background.

More broadly, while it is important to assure all Americans that their insurance companies will pay for at-home COVID-19 testing, it is more important that all Americans be able to test easily and freely. And that goal might be better achieved by some combination of free government run testing clinics and public-private partnerships with health care providers and big-box stores.

For example, early in the pandemic the federal government could have created a seamless network for free COVID-19 testing (and, later, self-testing) by engaging insurance companies and stakeholders like CVS, Walgreens, Walmart, and Target to process ordering, pickup, and billing through existing pharmacy networks. For customers without insurance, it could have partnered with GoodRx or other companies to enable claims to be processed easily and simply. To capture as many individuals as possible, the federal government could have supplemented these public-private partnerships with free distribution sites in communities, such as senior centers, community centers, and schools. Although it would have been optimal to undertake these efforts early in the pandemic, it’s not too late. The federal government could still bring stakeholders together to ensure that all Americans have convenient, ready access to reliable at-home tests.

2. How will reimbursement work? Because the process of submitting reimbursement is often cumbersome and confusing, patients may have their claims denied or may not understand how to file a claim. Some patients may simply decide the hassle of submitting a claim is not worth the effort, particularly if they are required to test multiple times. Others may simply avoid testing altogether because they the process of reimbursement is sufficiently complex and the testing is sufficiently expensive to make the costs unaffordable.

HHS has yet to detail the reimbursement process, but one method that may streamline matters for patients would be to use a prospective reimbursement process. Obtaining reimbursement from an insurance company can be done prospectively or retrospectively. Prospective reimbursement occurs when the insurance company pays directly for the cost of the product when the patient purchases or uses it. This is typically how insurance, including insurance with prescription a drug benefit, works. A health care provider or pharmacy will submit a claim on behalf of the patient, which the insurance company has contractually agreed to reimburse at a certain rate.

Retrospective reimbursement, on the other hand, requires the insured to pay out of pocket for the service or good and submit a claim to the insurance company. Insured patients may be required to obtain retrospective reimbursement for “out of network” services. Usually this requires obtaining a form from the provider and/or completing a specialized claim form and submitting this information to the insurance company.

3. What about deductibles and co-pays? Will the plan require insurance companies to pay for the at-home testing or simply cover it? If it does only the latter, patients may end up paying out of pocket to meet their deductible even if they properly submit insurance claim forms. Once a consumer meets their deductible, will insurance companies be permitted to pass any costs along to them in the form of “co-payments” (fixed payments by the insured required for any service) or “co-insurance” (payments by the insured based on a percentage of the total cost of the service)?

4. What about the uninsured? Despite the Affordable Care Act’s attempts to cover all Americans, millions of Americans don’t have health insurance. Many Americans that do have insurance have high deductible plans. While the White House has said that it would make 50 million tests available for free to uninsured Americans, uptake and accessibility remain to be seen.

5. Why insurance? This raises the question: why use insurance to incentivize individuals to obtain at-home tests? If the goal is to allow people to test frequently, rapidly, and freely, why not simply supply or pay for the tests directly? The federal government, including the U.S. military, is highly adept at logistics. Its vaccination campaign (which was a logistical success) and even its early testing campaign (which was less successful) shows it has the ability and competency to manage large-scale efforts like those required to distribute self-testing kits.

6. What about supply? If this move incentivizes consumers to test more, will at-home test makers have enough supply to meet demand? Currently many stores are limiting the quantity of tests any individual consumer can buy in one shopping visit. If testing increases, will test-makers be able to keep up?

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