Health & Group Benefits Update: Additional guidance issued through FAQs on coverage for OTC COVID-19 tests

FAQs released by the Departments of Labor, Health and Human Services, and the Treasury provided additional guidance to group health plans regarding coverage of OTC COVID-19 tests without participant cost sharing.

On February 4, 2022, the Departments of Labor, Health and Human Services, and the Treasury (the Departments) issued another set of FAQs pertaining to the coverage of COVID-19 self-administered or at-home tests (OTC COVID-19 tests) without an order or individualized clinical assessment by an attending healthcare provider.

The intent of this Benefits Update is to provide plan sponsors with information regarding the coverage requirements for OTC COVID-19 tests.

Overview

In March 2020, both the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act were enacted. These Acts contained requirements pertaining to COVID-19 testing coverage for group health plans and health insurance issuers. On January 10, 2022, the Departments issued further guidance through a set of FAQs pertaining to coverage of OTC COVID-19 tests (Part 51). On February 4, 2022, the Departments issued additional FAQs (Part 52).

Beginning with tests purchased on or after January 15, 2022, group health plans are required to cover available OTC COVID-19 tests without an order of individualized clinical assessment by a healthcare provider, provided the particular test’s authorization, clearance, or approval by the U.S. Food and Drug Administration (FDA) does not require such order. Plans must cover such tests without any participant cost sharing, preauthorization, or medical management, similar to how plans have been covering COVID-19 tests when the tests are ordered by an attending healthcare provider. Plans have the option to choose to cover tests that were purchased prior to January 15, 2022. Part 51 provides for two safe harbors:

1. Direct coverage: Plans providing OTC COVID-19 tests by arranging for a direct-to-consumer program through the plan’s pharmacy network and a direct-to-consumer shipping program with no up-front participant cost sharing would only be required to reimburse plan participants up to $12 per test for OTC COVID-19 tests purchased on their own outside of the direct-to-consumer arrangement.
2. Limits on testing: Plans must cover OTC COVID-19 tests without cost sharing, prior authorization, or medical management and limit the number of tests to no fewer than eight per covered individual each 30-day period (or calendar month).

The Departments issued Part 52 to address questions around the safe harbors above.

Direct coverage

Part 52 provides flexibility for plans in how they provide access to tests under the direct coverage safe harbor. At a minimum, tests should be made available with no up-front participant cost sharing through at least one direct-to-consumer shipping mechanism and one in-person mechanism. Plans do not necessarily need to provide access to all OTC COVID-19 tests that are approved, cleared, or authorized for use by the FDA within the direct coverage program, but still must cover all approved tests purchased outside of the program. The $12 maximum reimbursement would be permitted to apply to such tests.

In addition, a direct-to-consumer shipping program should allow an individual to place an order for OTC COVID-19 tests to be shipped to them directly. However, the direct-to-consumer shipping program does not have to be exclusive nor separate from the in-person mechanism. For example, if retailers covered under the direct in-person coverage maintain online platforms where individuals can order tests to be delivered to them, this is considered direct-to-consumer shipping.

Part 52 further notes that:

1. Plans must cover reasonable shipping costs related to covered OTC COVID-19 tests consistent with other items provided by the plan through mail order.
2. Plans should communicate key information to participants, including which tests are available under the direct coverage program and which manufacturer’s tests are available under each direct-to-consumer shipping and in-person mechanism.
3. The Departments will not take action against a plan that caps reimbursement at $12 for tests purchased outside of the direct coverage program as long as the direct coverage program meets the requirements of the safe harbor but is temporarily unable to provide enough access due to short supply.

Note that the above guidance is prospective and effective February 4, 2022.

Limits on testing

Part 52 clarifies the Departments' guidance, allowing a plan to take reasonable steps to prevent, detect, and address fraud and abuse. Part 52 provides that plans can exclude coverage for tests purchased through a person-to-person sale or an online auction or resale marketplace. If the plan were to limit channels through which reimbursement will be provided, it must provide information on which retailers are covered and general information around which types of resellers are not covered.

Part 52 also clarifies what is meant by OTC COVID-19 test for purposes of this guidance. The OTC COVID-19 tests must be approved, cleared, or otherwise authorized by the FDA to be completely used and processed without the involvement of a laboratory or a healthcare provider for Part 51 and Part 52 to apply. If Part 51 and Part 52 are not applicable to a COVID-19 test that can be purchased directly by the consumer, then the test would still need to be covered when ordered by an attending healthcare provider, in accordance with prior guidance.

Furthermore, Part 52 clarifies that, because the plan is required to reimburse participants for the cost of an OTC COVID-19 test, the reimbursable cost from the plan cannot also be reimbursed by a health flexible spending arrangement (FSA) or health reimbursement arrangement (HRA). For similar reasons, reimbursable testing costs paid for by the plan are not considered a qualified medical expense under a health savings account (HSA).

Immediate considerations for plan sponsors

Plan sponsors will need to consider several things as they work to become compliant with the additional guidance issued in Part 51 and Part 52. The most important items to consider immediately are as follows:

1. If the plan is relying on the direct coverage safe harbor:
1. What mechanisms is the vendor using to ensure that individuals have adequate access to OTC COVID-19 tests through both an in-person and a direct-to-consumer channel?
2. Which retailers are included in these mechanisms?
3. Which tests are included in these mechanisms? Do these mechanisms cover a sufficient variety of tests to meet the adequate access requirement?
4. Has the plan or vendor communicated key information to individuals?
2. Does the plan intend to exclude coverage of tests that were purchased from a person-to-person sale or an online auction or resale marketplace? If so, have details on which retailers are covered and general information around which types of resellers are not covered been communicated to plan participants?
3. If the plan is excluding coverage of tests that were purchased from a person-to-person sale or an online auction or resale marketplace, what kind of reasonable documentation will the plan require to confirm this?