Insurers Concern Over Rising COVID-19 Testing Costs

by Peter Johnson

With the COVID-19 pandemic getting worse than ever, health insurers are facing an uncertain level of exposure to testing costs. That's because payers and plan sponsors are on the hook for the entire cost of coronavirus tests and they could be required to pay for even more testing depending on the strategy that the Biden administration plans to pursue.

The Families First Coronavirus Response Act and the Coronavirus Aid, Relief and Economic Security (CARES) Act require plan sponsors to pay all in- and out-of-network claims for diagnostic and antibody testing services. The CARES Act says those claims must be paid at a listed "cash price," which essentially allows labs to name a price for test processing.

And costs for out-of-network testing seem to be increasing, according to a survey of claims data prepared by America's Health Insurance Plans (AHIP). The survey, which was conducted in October, found that the average price for out-of-network COVID-19 tests has increased by 10% since July, and that about 23% of all claims for COVID-19 tests processed by commercial insurers are out-of-network.

Joe Paduda, founder of health care consultancy Health Strategy Associates, tells AIS Health via email that "plans have little to no control over out-of-network entities," and adds that "plans should be actively and assertively educating members about the issue" to keep testing costs down.

Loren Adler, associate director of the USC-Brookings Schaeffer Initiative for Health Policy, agrees that the issue of overcharging for COVID-19 testing is observable, and blames policymakers for allowing it to happen.

"This should be capped. [Typical] lab tests are paid pretty much on par with Medicare [rates], or actually slightly less than Medicare, often, by commercial plans," says Adler. He adds that policymakers in the CARES Act "could have pretty easily chopped off the worst abuses" by pegging COVID-19 testing prices to Medicare rates for normal lab testing.

Adler is uncertain about how high out-of-network testing charges will impact premiums going forward, partly because plans haven’t had to deal with this problem before.

He cautions that testing will not be the same in 2021 and points out that the Biden administration is much more committed to expanding access to testing than the Trump administration. He adds that the imminent vaccine rollout is another factor that makes projecting testing spend difficult.

From Health Plan Weekly