On April 11, 2020, the Departments of Labor, Treasury, and Health and Human Services issued joint guidance on certain provisions of the Families First Coronavirus Response Act (“FFCRA”) and the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act relating to health and welfare benefits.  This post analyzes some of the key provisions in the guidance.

What COVID-19-Related Tests, Items, and Services Must Health Plans and Insurers Cover?

As discussed in a previous post, the FFCRA and CARES Act require health plans and insurance issuers to cover, beginning March 18, 2020, certain in vitro diagnostic testing (including the administration of such tests) for the detection of SARS-CoV-2 or diagnosis of COVID-19, as well as items and services furnished during a healthcare provider visit that results in an order for, or administration of, such a test, if the items or services relate to furnishing or administration of the test or to the evaluation of an individual to determine the need for such testing.

The new guidance clarifies that certain antibody serological tests are covered in vitro diagnostic tests and elaborates on whether an item or service meets the criteria for coverage.

  • Antibody Serological Tests: Under the guidance, health plans and issuers must cover serological tests to detect antibodies against SARS-CoV-2, the virus that causes COVID-19.  Although the Food and Drug Administration does not recommend the use of antibody serological tests as the sole basis for diagnosing COVID-19, the tests may contribute to the diagnosis of COVID-19 or the current or past infection with SARS-CoV-2, and meet the FFCRA and CARES Act definition of a covered in vitro diagnostic test.
  • Items and Services: Health plans and issuers must cover items and services that are provided during a healthcare provider visit (including telehealth) that results in an order for, or administration of, a COVID-19 diagnostic test, but only if the items or services relate to a healthcare provider’s evaluation of the need for a COVID-19 diagnostic test or relate to the furnishing or administration of such a test.  The guidance explains that these criteria encompass other tests, such as blood tests or influenza tests, that the healthcare provider orders for the purposes of determining the need for COVID-19 diagnostic testing, but reiterates that the coverage requirement only applies if the visit actually results COVID-19 diagnostic testing.

When the attending healthcare provider determines that a covered item or service is medically appropriate, the item or service must be provided without cost-sharing or prior-authorization or other medical management requirements. The guidance emphasizes that these items must be covered when an individual’s attending healthcare provider, in his or her reasonable medical judgment, determines that the items or services are medically appropriate for the individual.

Must COVID-19-Related Out-of-Network Services Be Covered?

The guidance clarifies that health plans and issuers must cover items and services required by FFCRA and the CARES Act even when they are provided by an out-of-network provider.  As we discussed in a previous post, the CARES Act established reimbursement rates for COVID-19 diagnostic tests and other items and services that FFCRA and the CARES Act require health plans and issuers to cover.

  • If the health plan or issuer had negotiated a rate with a provider prior to January 31, 2020 (the date the Secretary of Health and Human Services declared a public health emergency), then that rate controls throughout the declared health emergency period.
  • In the absence of a pre-negotiated rate, the CARES Act requires health plans and issuers to reimburse providers at the rate posted by the provider on a public website, or at a lower rate if negotiated.

Under the CARES Act, providers of COVID-19 diagnostic tests must post the cash price of a COVID19 diagnostic test on a public website, and may be subject to a civil penalty if they fail to do so.  The guidance does not specifically require out-of-network providers to post on a public website the cost of items and services, other than diagnostic testing, that may be provided during a typical COVID-19 visit.  Accordingly, the guidance does not address any particular reimbursement requirements for items or services other than diagnostic testing when provided by an out-of-network provider if the cost of the items or services are not listed on a public internet site.

May Plan Sponsors and Insurance Issuers Amend Their Plans Now For Changes Related to COVID-19?

Health plans and issuers are required to implement the changes required by FFCRA and the CARES Act effective as of March 18, 2020.  In addition, plans and issuers may wish to adopt voluntary changes during the public health emergency to increase benefits or lower cost-sharing for services related to the diagnosis or treatment of COVID-19.  The new guidance establishes limited non-enforcement policies of advance notice requirements and certain other restrictions that would normally apply in order to facilitate the expansion of COVID-19-related health care benefits.

Generally, health plans or issuers may not materially modify their plans or coverage if the modification would affect the terms of the Summary of Benefits and Coverage unless they provide enrollees with 60 days’ advance notice of the modification.  The Departments will not enforce the 60-day advance notice requirement against health plans and issuers that provide notice of the changes as soon as reasonably practicable.

Further, health insurance issuers are not generally permitted to modify coverage mid-year.  HHS will not enforce the prohibition against mid-year insurance changes that increase benefits or lower cost-sharing for services related to the diagnosis or treatment of COVID-19.

The non-enforcement policies apply to changes made while a public health emergency relating to COVID -19 is in effect.  For this purpose, a public health emergency is one that is declared by HHS or a national emergency declared under the National Emergencies Act.

The guidance cautions that the agencies will take enforcement actions against issuers or insured health plans that seek to offset the costs of increased COVID-19-related coverage, such as by limiting or eliminating other benefits, or increasing cost-sharing.

May COVID-19 Diagnosis and Testing Benefits Be Provided Under an Employee Assistance Program or at an Employer’s On-Site Medical Clinic?

The guidance specifically permits coverage of COVID-19 diagnosis and testing benefits through an employer’s employee assistance plan (“EAP”) or at an employer’s on-site medical clinic.  In order to be “excepted benefits” that are exempt from many requirements that typically apply to group health plans, EAPs must meet several requirements, including that they must not provide benefits that are significant in the nature of medical care in terms of the amount, scope and duration of covered medical services.  The new guidance declares that EAPs will not fail to meet this requirement solely due to providing COVID-19 diagnosis and testing benefits during a declared public health or national emergency related to COVID-19.  The guidance states that there are no limitations on the types of medical services that an on-site medical clinic may offer in order to be an excepted benefit.

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Photo of Kendra L. Roberson Kendra L. Roberson

Kendra Roberson has experience advising clients on a broad spectrum of employee benefits matters including tax-qualified retirement plans, employee stock ownership plans, executive compensation arrangements, stock option and other equity-based compensation plans, cafeteria plans, VEBAs, self-insured medical plans, and other health and welfare…

Kendra Roberson has experience advising clients on a broad spectrum of employee benefits matters including tax-qualified retirement plans, employee stock ownership plans, executive compensation arrangements, stock option and other equity-based compensation plans, cafeteria plans, VEBAs, self-insured medical plans, and other health and welfare plans.  Her experience includes plan design and drafting, regulatory compliance, ERISA litigation, and handling employee benefits matters and plans in corporate transactions.  In addition, Ms. Roberson has extensive experience advising employers and state governments on compliance with the Patient Protection and Affordable Care Act (“PPACA”).

Photo of Sarah Friedman Sarah Friedman

Sarah Friedman helps clients navigate the complex regulatory requirements of ERISA, the Internal Revenue Code, and other applicable federal and state or local laws. Her practice covers all aspects of tax-qualified retirement plans, health and welfare plans, and executive compensation.