On January 10, 2022, the Departments of Health and Human Services (HHS), Labor, and Treasury announced new guidance outlining how insurers and group health plans will be required to cover and reimburse enrollees for up to eight at-home tests for COVID-19 per enrollee per 30-day period. This policy applies to tests purchased beginning on January 15, 2022 through the end of the declared public health emergency.

Healthaffaris.org reports that under the new guidance, insurers are incentivized to use their bargaining power with in-network pharmacies and other retailers to ensure that enrollees can obtain at-home COVID-19 tests without cost sharing (i.e., for free) at the pharmacy or retail counter.

The January 10 guidance clarifies that insurers and plans must cover and reimburse members for up to eight OTC COVID-19 diagnostic tests per enrollee per 30-day period.

In general, insurers and plans cannot limit coverage or reimbursement to only tests purchased at in-network pharmacies and other retailers. Put another way, a member can seek reimbursement no matter where they purchased their test from – whether at an in-network pharmacy or through Amazon.

But HHS strongly encourages insurers and plans to pay manufacturers or sellers directly for OTC COVID-19 tests. To that end, the guidance creates a safe harbor from enforcement for those that set up a “direct coverage” option. Under this option, the insurer or plan will arrange for OTC COVID-19 tests to be free (i.e., with no cost sharing) for enrollees through its in-network pharmacies and other retailers. Insurers and plans cannot impose prior authorization or medical management requirements – and must ensure that members truly have access to COVID-19 tests through an adequate number of retail locations.

Those that offer direct coverage will be allowed to limit reimbursement to $12 per test or the actual price of the test (whichever is lower) when a member purchases a test from a non-network pharmacy or retailer. This $12 limit helps mitigate the risk of price gouging by manufacturers and sellers. If payer reimbursement was uncapped, manufacturers and sellers might be tempted to raise the price of tests significantly, putting COVID-19 tests further out of reach for millions of people.

Insurers and plans can, of course, take reasonable steps to prevent, detect, and address suspected fraud and abuse, and the guidance identifies some examples of permissible activities for doing so.

For instance, an insurer or plan can require an attestation, signature, or proof of purchase to confirm that an OTC COVID-19 test was purchased for the enrollee’s use (as opposed to someone else’s use), has not been reimbursed by another source, and is not for resale.

Insurers and plans can adopt these types of fraud prevention measures so long as they do not create significant barriers for obtaining tests (such as requiring enrollees to submit documents or delaying reimbursement).