By: Taylor Gehrke and Jeanne Stokke

The declaration of COVID-19 as a Public Health Emergency (PHE) in 2020 resulted in a requirement that health insurance plans cover the costs of PCR COVID-19 testing without any prior authorization or cost-sharing requirements to the insured population.
Moreover, in an effort to reduce the transmission of the highly infectious and rapidly-spreading Omicron variant that emerged in the Fall of 2021, additional guidance regarding over-the-counter (OTC) “rapid” antigen testing was issued. This action, effective January 2022, required OTC “rapid” antigen testing, also known as at-home tests, to also become eligible for full reimbursement to consumers. This requirement is to remain in effect as long as the PHE is in place.

With cases and hospitalizations remaining low in the US thus far in Spring 2022, widespread availability of vaccines, and oral treatments that reduce severity of COVID-19 symptoms, the PHE may not be extended again. When evaluating this decision one consideration may be the potential financial impacts on COVID-19 testing from both a consumers’ and health plans’ perspective.

Once the PHE expires, what changes related to the cost of COVID testing could the insured population see?

With the fluid pattern of COVID-19 and potential for new variants, it is difficult to predict the impacts of a potential expiration of the PHE. However, it is likely that the mandated coverage of testing at no cost-sharing to the insured members could come to an end. This means that insureds may be subject to member cost-sharing, which could count towards a deductible and coinsurance or a one-time copay. And because of the common lack of transparency in the total out-of-pocket cost prior to each visit, members may choose to opt for the more convenient OTC “rapid” antigen tests since they can be taken at home at a fixed cost and have the results within minutes, even if they may no longer be covered by insurance with no member cost.

What financial impacts may exist from the health plans’ perspective?

Health plans have been required to cover the full costs of PCR testing at both the negotiated and cash prices. Therefore, insurers will likely need to assess changes in expected COVID-19 testing claims costs compared to their baseline claims experience due to the following (non-exhaustive) cost drivers:

• Limitation on coverage up to a negotiated price as opposed to an unlimited cash price
• Lower utilization in testing due to member cost-sharing and/or shift to non-covered at-home testing
• Lower insurer cost per test due to member cost-sharing
• Lower demand in testing in general if COVID-19 cases become more manageable and predictable
• To the extent that the baseline claims experience includes 2022 data for periods when OTC testing was covered, insurers may need to reflect that OTC “rapid” antigen tests may no longer be covered
  

The history and course of this pandemic, both nationally and internationally, have been unpredictable and ever-changing. Therefore, assumptions for future periods could change based on unexpected developments related to increased or decreased prevalence of COVID-19 cases, the continued effectiveness of vaccines in preventing hospitalization or death, responses from the Federal or state governments (e.g., new legislation that impacts COVID-19 testing), or the increased effectiveness of additional treatments to minimize the severity of COVID-19. We intend to monitor these developments as they take place, and provide timely insights into the potential impacts of the next phase of this evolving pandemic.