COVID-19 Coverage and Provider Payments Updates


The United States is responding to a global outbreak of respiratory disease named coronavirus disease 2019 (COVID-19). On January 31, 2020, the US Health and Human Services Secretary (the Secretary) declared a public health emergency (PHE) for the US to aid the nation's health care community in responding to the COVID-19 pandemic. On March 13, 2020, President Trump declared the COVID-19 outbreak a national emergency.

The purpose of this Health & Life Sciences Alert is to summarize current information regarding COVID-19-related health benefits coverage and payments to health care providers during this PHE. Such information includes recent protections and requirements contained in the federal Families First Coronavirus Response Act (FFCRA) and Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Coverage for COVID-19 Testing and Test-Related Services

While FFCRA generally required coverage of COVID-19 testing, the CARES Act revised the definition of such testing. Per the CARES Act, the definition of covered diagnostic COVID-19 testing was expanded to include any test: i) approved by the Food and Drug Administration (FDA); ii) for which the developer has requested (or intends to request) emergency use authorization from the FDA; iii) developed in and authorized by a state that has notified the Secretary that it intends to review tests intended to diagnose COVID-19; or iv) the Secretary determines appropriate in guidance.

With respect to commercial coverage, FFCRA requires employer group health plans and health insurance issuers to cover COVID-19 testing (now using the CARES Act definition) without cost-sharing for covered persons and without prior authorization or similar utilization management requirements. Per the CARES Act, this requirement applies to testing services provided by in-network and out-of-network providers. Medicare Part B covers testing for COVID-19 when ordered by a health care provider that accepts Medicare, and Medicare Advantage plans are required to cover all Medicare Part A and Part B services (now including COVID-19 testing).

As a clinical diagnostic laboratory test, no Medicare beneficiary cost sharing exists for COVID-19 testing, and FFCRA has eliminated beneficiary cost sharing for COVID-19 test-related services (including in providers' offices, urgent care centers, emergency departments, and via telehealth visits). FFCRA also waives cost sharing for Medicare Advantage enrollees for both COVID-19 testing and test-related services in the above settings, and further prohibits prior authorization and similar utilization management requirements for such services.

Coverage for COVID-19 Preventive Services and Vaccines

Under the Affordable Care Act (ACA), certain preventive services must be covered without cost-sharing for covered persons, but the process for adding new preventive services can take years. The CARES Act amends the ACA and accelerates the process for qualifying COVID-19 preventive services (including but not limited to COVID-19 vaccines), and requires that employer group health plans and health insurance issuers cover qualifying coronavirus preventive services without cost-sharing for covered persons.

Further such group health plans and health insurance issuers must cover COVID-19 preventive services without cost-sharing and within 15 business days of any COVID-19 preventive service becoming qualified. COVID-19 vaccines will be also covered by Medicare without any cost-sharing and before application of the Part B deductible, and this requirement also applies to Medicare Advantage plans.

Further, many commercial insurers have already agreed to temporarily waive cost-sharing for covered persons for other types of covered COVID-19 treatments. These commercial insurers also encourage their self-funded customers (i.e., a customer which does not buy insurance but uses the insurer to administer claims and coverages using the customer's own funds) to do the same, but waiving cost-shares for other types of COVID-19 treatments is optional for these self-funded group health plans.

Payment for COVID-19 Testing and Test-Related Services

Regarding Medicare payments to providers, new HCPCS and CPT codes have been developed by the Centers for Medicare & Medicaid Services (CMS) for COVID-19 testing:

  • HCPCS code U0001 (with a Medicare payment rate of $35.91 per test) should be used when specimens are sent to Centers for Disease Control and Prevention (CDC) laboratories and CDC-approved local and state health department laboratories;
  • HCPCS code U0002 (with a Medicare payment rate of $51.31 per test) should be used when specimens are sent to commercial laboratories and not to CDC laboratories or CDC-approved local and state health department laboratories; and
  • CPT code 87635 (with a Medicare payment rate of $51.31 per test) became effective Friday, March 13, 2020, for immediate use for testing offered by hospitals, health systems, and laboratories, so long as the method specified by this code is used.

Providers are encouraged to contact applicable Medicare Administrative Contractors (MACs) and payers to determine specific reporting guidelines for these codes.

Regarding commercial payments to providers, the same HCPCS and CPT codes can be used. Further, if an insurer or plan had a negotiated rate with a provider prior to January 31, 2020 (i.e., date of PHE declaration), the CARES Act requires application of that negotiated rate until the end of the PHE. If no such negotiated rate exists, the CARES Act requires the insurer or plan to pay the amount that equals the cash price for such service listed by the provider on a public internet website or the price the parties negotiate if it is less than the cash price. The CARES Act also requires providers of COVID-19 testing to publicize their cash prices for testing on such a website, and authorizes the Secretary to impose a penalty of up to $300 per day for failure to do so.

Practical Tip. For in-network (i.e., contracted) providers, parties should carefully review existing network participation agreements for “catch-all” or “unlisted code” payment provisions which address rates for newly developed codes (now including U0001, U0002, and 87635). The above “negotiated rate” requirement of the CARES Act may apply in the event such payment provisions are in place, and payments thereunder often equal a specified percentage of the contracted provider's billed charges.

COVID-19-Related Efforts to Reduce Financial Strain on Health Care Providers

Sequestration. The CARES Act suspends Medicare sequestration during the period beginning on May 1, 2020, and ending on December 31, 2020. Medicare sequestration is the current application of a mandatory 2% reduction in traditional Medicare fee-for-service payments, and is often addressed in payers' network participation agreements, including but not limited to Medicare Advantage plans.

Practical Tip. Contracted parties should carefully review existing managed care agreements to determine if payments to providers will be affected by such Medicare sequestration suspension for the remainder of 2020. In many instances the related 2% difference in overall reimbursement will be material, and will be driven by specific wording contained in such agreements.

Enhanced DRG Payments. During the PHE, the CARES Act requires the Secretary to increase by 20% the relative weights of diagnosis-related groups (DRG) used when treating COVID-19 patients. The intent of these increases is to compensate hospitals for the larger amounts of resources used when treating such patients.

Expanded Accelerated and Advance Payment Program. The CARES Act also expands benefits and eligibility under the existing CMS Accelerated and Advance Payment Program which expedites and advances Medicare payments to participating providers during claims processing or submission disruptions. Per CMS, participating providers need not meet specific COVID-19-related criteria to qualify for advanced payments, and only need to: i) have billed Medicare within the past 180 days; ii) not be in bankruptcy; iii) not be under active medical review; and iv) not have outstanding delinquent Medicare overpayments.

Most hospitals will be able to request up to 100% of what they would have received for a six-month period, and critical access hospitals can request up to 125%. Other Medicare providers and suppliers, including physician practices, skilled nursing facilities, home health aides, and ambulatory surgery centers, can request up to 100% of their payment amounts for a three-month period. CMS estimates that MACs will be able to issue payments within seven days of providers' requests.

Repayments will begin 120 days after the date of issuance, and most hospitals will have up to one year to repay the balances. Other Medicare Part A providers and Part B suppliers will have 210 days before repayment is due in full.

The Uninsured. Health care providers that accept federal dollars through the CARES Act are prohibited from billing uninsured patients for COVID-19 treatments. However, a portion of CARES Act funding will be used by the Secretary to pay providers for delivering COVID-19 care to uninsured patients at current traditional Medicare fee-for-service rates. Additional details are expected shortly from the Secretary regarding billing and payment for COVID-19 services provided to uninsured patients.

Relatedly, the Trump administration decided not to open a special enrollment period (SEP) under federal ACA marketplace exchanges for uninsured individuals. However, unemployed individuals who recently lost health benefits coverage may secure marketplace coverage under current SEP rules, and certain states have opened enrollment in their own exchanges.

Find Answers to COVID-19 Issues, Impacts and Recommendations from Quarles & Brady.

Quarles & Brady's Health Law Team is continuously monitoring the effects of COVID-19 on the health care industry, and we're here to help. For more information, contact your Quarles & Brady attorney or:

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