The past week has seen daily action at the state and federal level that seeks to ensure that health plans and insurers are providing unrestricted access to testing for COVID-19 and for related services.  Health plans nationally have responded by adopting copayment and preauthorization waivers even where they have not been mandated.

Here are a few of the headlines:

On March 2, 2020, New York Gov. Andrew Cuomo announced he would require state health insurers to waive fees related to coronavirus testing in the state in order to avoid cost as a barrier to testing.  To implement his directive, Governor Cuomo announced that the New York State Department of Financial Services (“DFS”) will promulgate an emergency regulation that (i) prohibits health insurers from imposing cost-sharing on an in-network provider office visit or urgent care center when the purpose of the visit is to be tested for COVID-19 and (ii) prohibits health insurers from imposing cost-sharing on an emergency room visit when the purpose of the visit is to be tested for COVID-19.  In addition, DFS issued other COVID-19 guidance to New York insurers, including: (a) directing insurers to develop robust telehealth programs with their participating providers, and (b) directing insurers to verify that their provider networks are adequately prepared to handle a potential increase in the need for health care services, including offering access to out-of-network services where appropriate and required.

On March 5, the California Department of Managed Health Care and Department of Insurance both issued communications directing health plans and health insurers to lower cost-sharing to zero for medically necessary COVID-19 screening tests, to expeditiously notify providers that the cost-sharing is waived and reminding health plans to comply with utilization review time frame requirements under state law as well as covering medically necessary emergency care without prior authorization.  Health plans and insurers were strongly encouraged to waive utilization review requirements relating to COVID-19.

Also on March 5, the Washington State Insurance Commissioner issued an emergency order requiring Washington insurers to waive copays and deductibles for COVID-19, allow a one-time refill for prescription drugs, suspend any prior authorization requirement for treatment or testing of COVID-19 and to allow enrollees to access non-contracted providers for testing and treatment for COVID-19 at no additional cost.

Officials in other states, including Vermont, Maryland, Nevada and Oregon, quickly followed with their own similar actions.  At about the same time, major health insurers across the country began announcing that they would voluntarily waive copayments for COVID-19 testing in all states and for all product lines.

IRS and CMS Actions to Address Regulatory Concerns

Waivers of copayments may raise regulatory concerns which, under normal circumstances, could prove as roadblocks to the actions urged by state regulators and implemented by most health insurers.  The Blue Cross Blue Shield Association asked the IRS and Treasury Department to issue guidance about health savings accounts, seeking clarity on insurers’ ability to waive copays in high deductible health plans (HDHPs) paired with health savings accounts (HSAs).  The IRS issued Notice 2020-15 on March 10, 2020 directing that HDHP’s that waive deductible requirements for COVID-19 testing or treatment will not lose their HDHP status under the Internal Revenue Code and individuals covered by the HDHP will not be disqualified from eligibility for making tax-favored contributions to an HSA.

Further, CMS issued a memorandum on March 10, 2020 that allows Medicare Advantage Organizations (MAOs) to make changes that benefit enrollees, such as reductions in cost-sharing and waiving prior authorization, without the normally required 30-day notice in states that have declared a disaster or emergency.  In addition, CMS advised that MAOs may waive or reduce enrollee cost-sharing for COVID-19 laboratory tests, telehealth benefits or other services to address the outbreak provided that such actions are applied consistently for all enrollees.  Also, the March 10 memo advised that CMS had consulted with the HHS Office of Inspector General (OIG) and that OIG advised that cost-sharing reductions otherwise permitted by the CMS memorandum would satisfy the anti-kickback safe harbor set forth at 42 CFR 1001.952(l).  The CMS memorandum does not require MAOs to waive copayments but permits such waivers and also permits waivers of prior authorization requirements that would otherwise apply to tests or services related to COVID-19.  The memorandum provides additional guidance to Part D sponsors regarding flexibility in administration of prescription drug programs, including waivers of prior authorization requirements.

The CMS March 10, 2020 memorandum did not address copayment waivers for COVID-19 or other accommodations for Medicaid managed care plans or the Children’s Health Insurance Program (CHIP).  CMS did publish a memorandum entitled Coverage and Benefits Related to COVID-19 Medicaid and CHIP on March 5, 2020.  Presumably, CMS and OIG would take the same position with respect to voluntary cost-sharing waivers for Medicaid and CHIP plans and additional guidance may be forthcoming.  Many Medicaid plans are already prohibited from including cost-sharing for all or some of their beneficiaries.  The California Department of Health Care Services issued a communication to Medi-Cal Managed Care Plans (MCPs) in California on March 6, 2020 reminding them to cover medically necessary emergency care without prior authorization and to comply with utilization review timeframes.  Additionally, California MCPs are required to waive authorization requirements for services, including screening and testing, related to COVID-19.

The initial flurry of regulatory actions and guidance has focused primarily on ensuring that cost and pre-authorization requirements are not barriers to receiving testing or treatment.   We expect that additional issues may arise related to who should bear the cost for treatment of COVID-19 with health plans, providers participating in risk arrangements and government payors all facing potentially significant financial stresses.