Public and Private Efforts to Mitigate the Cost of COVID-19 on Patients
Principal
Day Health Strategies, LLC
As the economy shrinks, job losses mount and new COVID-19 cases continue to rise in many states, the cost impact of this public (and quite personal) health crisis on impacted individuals – including the uninsured and those with employer-sponsored, individual, Medicaid or Medicare coverage – could be significant.
A CHANGING HEALTH INSURANCE LANDSCAPE
According to a recent model created by Health Management Associates (HMA), the economic impact of COVID-19 is expected to significantly alter the landscape of public and private health insurance enrollment across the country. [1] Most concerning is the potential increase in the number of uninsured Americans, from approximately 29M currently to as many as 40M, due primarily to the staggering increase in unemployment.
The public-vs-private payer market is also expected to shift dramatically, with Medicaid expected to assume an increasingly important role in providing health insurance coverage and employer-sponsored coverage decreasing.
Source: HMA Estimates of COVID Impact on Coverage; Health Management Associates; April 3, 2020
With inpatient treatment costs for coronavirus patients with major complications or comorbidities expected to exceed $20,000 [2], keeping and getting people covered is more important than ever. What, then, is being done to mitigate the financial impact on insured and uninsured individuals who need COVID-19 testing and/or treatment?
Much has been done at the state and federal level, and many health insurers have stepped up voluntarily. Following are some of the most significant activities to date.
FEDERAL EFFORTS TO MITIGATE OUT-OF-POCKET COSTS FOR COVID-19
Coverage Safeguards Provided by the Affordable Care Act (ACA)
The ACA established extensive coverage safeguards for millions of Americans. The Centers for Medicare and Medicaid Services (CMS) released an FAQ on March 5th confirming that existing federal rules governing individual and small group health insurance coverage “apply to the diagnosis and treatment of coronavirus (COVID-19)” [3]. Under the ACA’s Essential Health Benefits requirement, services such as diagnostic testing, hospitalization, ambulatory and emergency services, and pharmacy must be covered. Benefits may vary by state and plan, and the requirement does not apply to large insured employers or self-funded plans.
Full Coverage for COVID-19 Testing
The Families First Coronavirus Response Act (H.R.6201), signed into law on March 17, requires nearly all health plans – including insured and self-funded plans, Medicare, and Medicaid – to waive cost sharing (i.e. copays, deductibles, coinsurance) and prior authorization requirements for COVID-19 testing [4]. This includes lab fees and the fees associated with doctor’s office visits, urgent care clinics, or emergency rooms where the test is administered.
The Act does not apply to short-term health plans, healthcare sharing ministry plans, or other health plans that aren’t considered minimum essential coverage.
HDHPs Can Cover the Cost of COVID-19 in Full
Typically, HSA-qualified high-deductible health plans (HDHPs) are not allowed to pay for any services other than preventive care before the minimum annual deductible – as established by the IRS – is met.
On March 11th, the IRS advised that HDHPs can pay for COVID-19-related testing and treatment, without jeopardizing their status [5]. This means that health plans that otherwise qualify as HDHPs will not lose that status merely because they cover the cost of testing for or treatment of COVID-19 before plan deductibles have been met, and individuals with HDHPs that cover these costs may continue to contribute to a health savings account (HSA).
Medicare
Traditional Medicare (Part B) covers COVID-19 testing with no out-of-pocket costs. Medicare also covers all medically necessary hospitalizations.
In early March, CMS issued a memo to Medicare Advantage and Part D plans outlining allowed plan design flexibilities to help prevent the spread of COVID-19 [6]. These flexibilities include:
Waiving cost sharing for COVID-19 tests
Waiving cost sharing for COVID-19 treatments in doctor’s offices or emergency rooms and services delivered via telehealth
Removing prior authorizations requirements
Waiving prescription refill limits
Relaxing restrictions on home or mail delivery of prescription drugs
Expanding access to certain telehealth services
None of these potential changes are mandated at the federal level, so coverage varies by plan.
Medicaid Section 1135 Waivers
At the federal level, Medicaid eligibility and benefits requirements have not changed to address the COVID-19 emergency. However, under Section 1135 of the Social Security Act CMS can waive certain Medicaid, Medicare, and CHIP rules during times of emergency. Many states have been using 1135 waivers to improve access to medical services during the COVID-19 emergency.
Examples of waivers available to states under section 1135 of the Act include [7]:
Temporarily suspend prior authorization requirements
Extend existing authorizations for services through the end of the public health emergency
Modify certain timeline requirements for state fair hearings and appeals
Relax provider enrollment requirements to allow states to more quickly enroll out-of-state or other new providers to expand access to care
Relax public notice and submission deadlines for certain COVID-19 focused Medicaid state plan amendments, enabling states to make changes faster and ensure they can be retroactive to the beginning of the emergency
As of April 15th, CMS has approved waivers for nearly every state [8]. Waivers vary based on each state’s 1135 waiver request.
It should be noted that under federal law Medicaid beneficiaries generally incur minimal out-of-pocket costs for covered services.
Coverage Continuation for Employees Who are Laid Off, Terminated, or Experience Reduced Hours
Most employees (and their covered dependents) working for employers with 20 or more employees who lose employer-sponsored health coverage due to a layoff, termination or reduction in hours (related to COVID-19 or not) are able to continue that coverage through COBRA. COBRA typically doesn’t apply to small businesses, although some states (including our home state of Massachusetts) have similar regulations that apply to small businesses. Under COBRA, employees and their covered dependents can continue coverage for generally up to 18 months if they pay the full premium (COBRA allows employers to charge up to 102% of the premium). Obviously, for the typical employee who loses his/her job, COBRA can be an expensive and perhaps unaffordable option.
Residents of any state in the country who lose employer-sponsored coverage (and do not subsequently become eligible for Medicaid or Medicare) may also have access to subsidized or unsubsidized health insurance coverage through the federal (Healthcare.gov) or a state marketplace Special Enrollment Period (SEP) [9]. SEPs allow enrollment outside of the annual open enrollment period to residents experiencing specific life events (including loss of employer-sponsored coverage).
Covering COVID-19 Costs for the Uninsured
In early April, HHS announced that the federal government will pay healthcare providers for treatment of uninsured COVID-19 patients. The funding will come from a portion of the $100M Coronavirus Aid, Relief and Economic Security (CARES) Act Provider Relief Fund [10]. The government will pay Medicare rates, and in order to be eligible for the funding providers must agree to accept the Medicare rates as payment in full – and not balance bill patients. The arrangement is subject to available funding.
STATE-LEVEL EFFORTS TO EXPAND COVERAGE AND REDUCE OUT-OF-POCKET COSTS
States are playing a significant role in helping mitigate the unexpected costs of COVID-19 testing and treatment on their residents. Numerous state regulations and activities have been implemented over the past several weeks that aim to improve access to testing and treatment for COVID-19.
Expanding Coverage Through State-Based Marketplaces
In addition to standard SEP rules allowing enrollment in marketplace coverage for residents who lose employer-sponsored coverage, nearly all states that run their own marketplaces are currently allowing uninsured residents to enroll in coverage through SEPs. This includes CA, CO, CT, MA, MD, MN, NV, NY, RI, VT, WA as well as DC. Many residents will be eligible for government subsidies. COVID-19 related SEP periods differ by state [11]. Some are currently expected to end in April while others may extend through June. Residents applying for marketplace coverage who are newly eligible for Medicaid will be transferred to the state Medicaid program.
Idaho is the only state-based marketplace not currently allowing a COVID-19 related SEP.
States running their own marketplace have more flexibility in terms of setting enrollment periods and reaching out to current and potential enrollees than the 38 states that rely on the federal platform (Healthcare.gov). Healthcare.gov states are not able to implement their own SEPs and must rely on the federal government for this decision. Healthcare.gov is not currently offering a COVID-19 related SEP.
Reducing Out-of-Pocket Costs for Testing and Treatment
Many states have also implemented policies to increase access to COVID-19 testing and treatment, as well as continued management of other health conditions. For example, DC, MA and NM require that insurers waive cost sharing for COVID-19 treatment, and ID, MI and MN have implemented state-insurer agreements to the same end. Nine states have already indicated that they are requiring insurers to cover a COVID-19 vaccination with no cost sharing if and when one becomes available, 11 states are requiring state-certified insurance carriers to waive prior authorization for testing or testing and treatment, and 17 states require access to early prescription refills [12].
MANY COMMERCIAL INSURERS TAKING ACTION
Throughout the country, national, regional and local health plans are taking action to reduce members’ COVID-19 related costs. This could include:
Waiving cost sharing for testing and treatment
Reducing barriers to telehealth services
Improving access to prescriptions
Offering programs to help reduce anxiety and stress
Connecting members to local services to help address social determinants of health
On April 16th, America’s Health Insurance Plans (AHIP), the national association whose member organizations provide coverage for health care and related services to hundreds of millions of Americans, posted a directory describing actions taken by member plans [13]. It should be noted that actions taken by a plan may not apply to all products they offer. Also, health plans cannot make coverage decisions for self-funded groups. These decisions are up to the plan sponsor, such as an employer.
FUELING THE COVERAGE DEBATE
It is admirable that so many public and private organizations have stepped up to help mitigate the cost impact of this unprecedented health crisis on Americans. However, it underscores the fragmented nature of our health care financing system. Once we emerge from this difficult time, we expect the national coverage debate to pick up momentum. But that’s a discussion for another day. In the meantime, we expect efforts like those described above to evolve as new COVID-19 related challenges emerge and will continue to monitor federal, state and private initiatives.