Category: Legislative Updates

The federal Transparency in Coverage rules require health plan sponsors to provide pricing disclosures via separate sets of machine-readable files (MRFs) posted on a public website (enforcement begins July 1, 2022). The intent of this aspect of the federal transparency rules is to make public the financial arrangements in place between health plans and providers. These MRFs are not for participant use, but rather the files are designed to be read by a computer system and are intended to be available for researchers and policy makers to have access to health plan costs nationally on an aggregate basis. The health plans (i.e., carriers and third-party administrators) have the information needed to compile the data and create these MRFs, and we have confirmed they will produce and provide access to these files and they will update the MRFs at least monthly.

Effective July 1, 2022, the MRFs must include:

• For In-Network providers, the data file must include the negotiated rates for covered items and services between the plan and in-network providers.

• For Out-of-Network claims,  the data file must include historical allowed amounts and billed charges for covered items and services provided by out-of-network providers.

While the health plans need to provide access to the data files, the rules appear to make it a plan sponsor’s responsibility to publicly post access to the MRFs.

• For plan sponsors that have “fully-insured” health plans, it will be the carrier’s responsibility to post links to the MRFs on their web site. Fully-insured groups do not need to act at this time and can rely on the insurance carrier to satisfy the requirement.

• For plan sponsors that have “self-insured” health plans, it will be the plan sponsors’ responsibility to post access to the MRFs on a publicly available web site that does not require log in or restricted access. Pending further guidance, self-insured sponsors must determine the most appropriate means to meet this requirement.

For self-insured plan sponsors, Conner Strong & Buckelew has created two solutions to assist in complying with these new rules:

• For sponsors with a BenePortal site created by Conner Strong & Buckelew, we will create a new section devoted to the MRF issue and include the appropriate links. There is nothing for groups to do that have a BenePortal site.

• For sponsors who do not have a BenePortal site created by Conner Strong & Buckelew, we will create a simple web-site landing page that will provide links to the health plan MRF files. The sponsor can then host the link to this site on a publicly available web site. Most will simply add the link to their organization’s “information” section on their corporate public facing web site labeled, “Federal Healthcare Transparency Requirements.”

Since the rules and requirements are new, we expect there may be more federal guidance in the future. We will keep you abreast of continued developments. Your Conner Strong & Buckelew account team will work with you to discuss your organization’s specific set-up requirements.

Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

The Biden Administration announced a proposed rule released on April 5 to fix the Affordable Care Act (ACA) “family glitch”. If this proposed rule is finalized, it would mean more individuals will be newly eligible for a premium tax credit (PTC) in 2023 for coverage purchased through the ACA marketplace/Exchange. The proposed rule does not appear to affect the affordability calculation for an employer under the employer shared responsibility (ESR) rules.

Under the ACA, people who do not have access to “affordable” health insurance through their employers may qualify for a PTC to purchase affordable coverage on the ACA’s marketplaces. Current regulations define employer-based health insurance as “affordable” if the coverage solely for the employee, and not for family members, is affordable, making family members ineligible for a PTC. The cost of family members is not taken into account. The new proposed rule is intended to eliminate this “family glitch.” The proposed rule would generally provide that a qualified employer-sponsored plan will be considered affordable for family members (for PTC determination purposes) if the employee’s required contribution for family coverage does not exceed 9.5% (as adjusted annually) of household income.

If the proposed rule is finalized, family members of employees who are offered affordable self-only employer coverage, but unaffordable family coverage, may qualify for PTCs to buy ACA marketplace coverage. It’s important to note that the proposal does not appear to affect the employer mandate or change the affordability calculation under the ESR rules. Thus, the proposal would not allow an employee to access a PTC if the employee’s offer of coverage from the employer is deemed “affordable” under the current ESR standards.

Under the proposal, the rule is expected to be finalized no later than the end of the year, meaning the changes would be enacted January 1, 2023. Conner Strong & Buckelew will provide alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

The Departments of Labor (DOL) and Health and Human Services (HHS) have released their 2022 inflation-adjusted civil monetary penalties that may be assessed on employers for violations of a wide range of federal laws. The Inflation Adjustment Act requires the agencies to annually adjust certain civil money penalty levels for inflation. The increased amounts apply to civil penalties that are assessed by DOL after January 15, 2022 and by HHS after March 17, 2022 (for violations occurring after November 2, 2015).

Congress often adds penalties to laws to encourage greater compliance. According to the DOL, penalty increases are intended to deter violations, which will “provide a significant benefit not only for workers but also for responsible employers who will have a more level playing field when competing with employers who are not following the law.” Plan sponsors should become familiar with the new penalty amounts and review their benefit plan administration to ensure compliance with federal requirements.

This Update addresses adjustments of certain of the penalties applicable to group health plan sponsors, including:

• Forms 5500. The penalty for failing to file a timely Form 5500 increases to $2,400 (from $2,259) for each day that the Form 5500 is late.
• Multiple Employer Welfare Arrangements (MEWAs). The penalty for failing or refusing to meet applicable filing requirements, which include filing a Form M–1, increases to $1,746 per day (up from $1,644).
• CHIP Notice. The penalty for failing to inform employees of the availability of Medicaid or Children’s Health Insurance Program (CHIP) assistance increases to $127 per participant per day (up from $120).
• SBC Notice. The penalty for failing to provide the Summary of Benefits and Coverage (SBC) as required under the Affordable Care Act increases to $1,264 per failure (up from $1,190).
• Documents requested by DOL. Failure to provide plan information to the DOL upon request, such as an SPD or other required plan document, subjects a plan sponsor to a penalty of $171 per day with maximum of $1,713 per request (up from $161 per day with maximum of $1,613 per request).
• HIPAA Administrative Simplification. The indexed penalty amounts for each violation of a HIPAA administrative simplification provision are-
  • Lack of knowledge: Minimum penalty is $127 (up from $120), maximum penalty is $63,973 (up from $60,226), and calendar-year cap is $1,919,173 (up from $1,806,757).
  • Reasonable cause and not willful neglect: Minimum penalty is $1,280 (up from $1,205), maximum penalty is $63,973 (up from $60,226), and calendar-year cap is $1,919,173 (up from $1,806,757).
  • Willful neglect, corrected within 30 days: Minimum penalty is $12,794 (up from $12,045), maximum penalty is $63,973 (up from $60,226), and calendar-year cap is $1,919,173 (up from $1,806,757).
  • Willful neglect, not corrected within 30 days: Minimum penalty is $63,973 (up from $60,226), maximum penalty is $1,919,173 (up from $1,806,757), and calendar-year cap is $1,919,173 (up from $1,806,757).
• Medicare Secondary Payer. The indexed penalty amounts for violations applicable to employer-sponsored health plans are-
  • Penalty for employer that offers incentives to Medicare-eligible individuals not to enroll in a plan that would otherwise be primary: $10,360 (up from $9,753).
  • Penalty for willful or repeated failure to provide requested information regarding group health plan coverage: $1,687 (up from $1,588).
  • Penalty for responsible reporting entities that fail to provide information identifying situations where group health plan is primary: $1,325 (up from $1,247).

Note that in some cases, plan sponsors can pay lower penalties by taking corrective steps. For example, if a plan sponsor fails to timely file Form 5500, the plan sponsor, under certain circumstances, can pay a significantly lower penalty amount by filing the late annual reports through the DOL’s Delinquent Filer Voluntary Compliance (DFVC) Program. Also, not all penalties increase annually. For example, the penalty for failing to furnish certain information requested by participants or beneficiaries was not increased. Therefore, the penalty for such violation remains unchanged at a maximum of $110 per day.

To avoid inadvertent noncompliance and associated financial penalties, plan sponsors are best advised to associate with a trusted adviser that monitors the changing landscape and provides expertise on how to manage it. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions on health and group benefits related matters. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

Congress recently passed a $1.5 trillion governmental funding package that included a provision to permit employers and plan sponsors that offer high deductible health plans (HDHPs) to provide first-dollar telehealth and other remote care services (waive the deductible) for the period from April 1, 2022 through December 31, 2022, without causing participants to lose health savings account (HSA) eligibility. This extension is of interest to employers and plan sponsors with HDHPs who may want to take advantage of this optional relief.

Background: General Rules and Short-term Extensions
Under the general rules, for an individual to be eligible to make or receive contributions to an HSA, the individual must be covered by an HDHP. Typically, this type of HSA-qualified HDHP cannot pay for covered services, except for specified preventive care, until the participant meets the plan’s deductible. Coverage provided under the health plan before the minimum deductible is satisfied would make plan participants ineligible to make or receive HSA contributions. Recent exceptions to the rule are as follows:

• The 2020 CARES Act added an exception permitting sponsors of HDHPs to offer telehealth services at no cost to participants, regardless of the plan’s annual deductible, without impacting participant HSA eligibility, for the period from January 1, 2020 through the last day of the plan year beginning in 2021 (e.g., December 31, 2021 for calendar year plans; June 30, 2022 for a plan year that began July 1, 2021).
• The Consolidated Appropriations Act of 2022 (signed into law on March 15, 2022) now provides for an extension of the CARES Act provision starting April 1, 2022 and through December 31, 2022. For some plan sponsors adopting this extension, this can leave as much as a three-month gap from January 1 through March 31, 2022 in which the standard deductible will still apply. So, for example:
  • Calendar year HDHPs will have a three month gap from January 1 through March 31, 2022 in which the standard deductible will still apply. These plans should have ended the deductible waiver for telehealth services as of December 31, 2021. They can now start the deductible waiver for telehealth services received on or after April 1, 2022 and through December 31, 2022.
  • Non-calendar year HDHPs whose 2021 plan year ended before March 31, 2022 (e.g., March 1, 2021 to February 28, 2022 plan year) will have a gap through March 31, 2022 in which the standard deductible will still apply. These plans should have ended the deductible waiver for telehealth services occurring after the end of the 2021 plan year. They can now start the deductible waiver for telehealth services received on or after April 1, 2022 and through December 31, 2022.
  • Non-calendar year HDHPs whose 2021 plan year ended on or after March 31, 2022 (e.g., May 1, 2021 to April 30, 2022 plan year) will have no gap from January 1 through March 31, 2022 because the original CARES Act waiver of the deductible for telehealth services can now continue until no later than December 31, 2022.

Next Steps
The CARES Act and CAA 2022 relief provisions are optional, so it is left to each employer and plan sponsor with an HDHP to determine whether to extend the deductible waiver for telehealth and other remote care. Insurance carriers will make the determination under a fully insured plan as to whether they will adopt the extension. Self-insured plan sponsors must coordinate with their TPA/stop-loss provider in order to implement the plan design change as deemed appropriate for a portion of the year.

Conner Strong & Buckelew will provide alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

On January 10th, various federal agencies issued guidance in the form of Frequently Asked Questions (FAQs) around the Biden administration’s mandate that group health plans must cover over-the-counter (OTC) COVID-19 tests. On February 4th, additional FAQ guidance was issued providing some flexibility and clarification for plans and insurers. The mandate took effect on January 15th and stipulates that there be no member cost share or copays when purchasing an OTC test.

In a nutshell, health plans must cover eight individual at-home OTC COVID-19 tests per person enrolled in the plan per month. That means a family of four can get 32 tests per month for free. Importantly, this mandate does not include surveillance tests one may need for work.

Below are some key headlines related to the requirement:

• Effective Date: The requirement is effective on January 15, 2022, and continues for the duration of the public health emergency. Coverage may, but is not required to, be provided for OTC tests purchased before January 15, 2022.

• Per Test Dollar Limit/Reimbursement: Plans must provide coverage without out-of-pocket expenses to the participant. The plan can provide the coverage by reimbursing sellers (i.e., CVS, Walgreens, etc.) for tests directly (“direct coverage”) or by requiring participants who purchase an OTC test to submit a claim for reimbursement to the plan. The agencies strongly encourage, but do not require, direct coverage. The requirement stipulates that plan members not be limited to having to use a network pharmacy. Also, under a safe harbor, the agencies provide that plans may limit reimbursement of tests purchased outside the direct coverage (i.e., when one files a claim) to $12 per test or the cost of the test, if lower. CMS has issued Q&As for employees entitled “How to Get Your At-Home Over-the-Counter COVID-19 Test for Free.” These Q&As describe the test cost limits applicable when a plan sets up a network of convenient options such as pharmacies or retailers, including online retailers, in which individuals on their plans can get their tests’ cost covered up front (at the point of sale), versus where a plan does not set up a process through which individuals can obtain tests with no upfront costs.

• Satisfying the Safe Harbor: The February FAQs provided clarification on the $12 safe harbor, and generally require that OTC tests be made available through at least one direct-to-consumer shipping mechanism and at least one in-person mechanism. The FAQs also clarify that when providing tests through a direct-to-consumer shipping program, plans and issuers must cover reasonable shipping costs related to covered tests in a manner consistent with other items or products provided by the plan or issuer via mail order.

• Quantity Limit: Plans may limit the number of tests reimbursed to no less than eight OTC tests per covered individual per 30-day period (or per calendar month). This applies to tests purchased without the involvement of a health care provider.

• Scope of Requirement: Until now, it has been generally understood that group health plans were required to cover COVID-19 “diagnostic” tests when provided by a medical provider. Under the new requirement, there will be no medical provider involved. However, the new requirement continues to only apply to “diagnostic” OTC tests, primarily intended for individualized diagnosis or treatment of COVID-19. Testing that is for employment (surveillance) purposes is not considered diagnostic and so tests for employment purposes do not fall under this new requirement. The requirements allow plans to require attestation that the test was purchased for the covered individual, is not for employment purposes, has not and will not be reimbursed by another source and is not for resale. Plans may also require reasonable documentation of proof of purchase.

• Self-Administered/Provider-Read Tests: Plans are not required to provide coverage for OTC tests that use a self-collected sample, but require processing at a lab or with a health care provider. However, plans and issuers are required to provide coverage for OTC tests when ordered by a health care provider.

• Account Based Plan Reimbursement: An individual cannot be reimbursed more than once for the same qualified medical expense, so an OTC test paid for or reimbursed by a health plan or insurer cannot be submitted for reimbursement to a health flexible spending account (FSA), a health reimbursement arrangement (HRA), or a health savings account (HSA).

Conner Strong & Buckelew continues to assist clients with this mandate and is working with the various health plans and pharmacy benefit managers (“PBMs”) to understand their systems and processes for adhering to this requirement. If you have any immediate questions related to this requirement, please contact your Conner Strong & Buckelew representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

Group health plan sponsors should be aware of the Mental Health Parity and Addiction Equity Act (“MHPAEA”) compliance requirements since enforcement related to MHPAEA is a top priority for the federal agencies and the US Department of Labor (“DOL”), which exercises primary enforcement jurisdiction over MHPAEA for approximately two million health plans covering roughly 136 million Americans. The DOL has signaled they will be aggressively evaluating group health plans for adherence to these complex requirements. Congress, regulators and attorneys are increasingly focused on MHPAEA compliance given COVID-19’s impact on mental health and the opioid epidemic. We have outlined herein what employers and plan sponsors need to be aware of related to the MHPAEA.

What Does MHPAEA Require?
In general, MHPAEA requires that group health plans ensure that the benefits provided for mental health and substance abuse disorders (“MH/SUDs”) are on par with those provided for medical and surgical (“M/S”) benefits. This parity applies to both financial quantitative treatment limitations (“QTLs”) like co-pay and dollar limits or limitations on the number of days of treatment, as well as non-quantitative treatment limitations (“NQTLs”) such as medical necessity requirements, prior authorizations and pre-certification requirements imposed by a group health plan or health insurance issuer.

Recent Guidance on MHPAEA Best Practice
A recent amendment to MHPAEA from the Consolidated Appropriations Act, 2021 (“CAA”), formalized longstanding MHPAEA compliance “best practices” and codified prior guidance. It expressly requires plans and issuers to document comparative analysis by demonstrating that the processes, strategies, evidentiary standards, and other factors used to apply each NQTL to MH/SUD benefits, both as written and in operation, are comparable to and applied no more stringently than those used to apply each NQTL to M/S benefits in the same benefit classification. Health plans and issuers could technically be asked to produce their comparative analysis now based on the regulations. Although the statutory compliance requirements are based on elements in the DOL’s MHPAEA Self-Compliance Tool, there is no uniform standard for how the comparative analysis should be formatted or conducted. The DOL issued additional guidance on April 2, 2021 about what constitutes a minimum, sufficient comparative analysis explaining that carefully applying the Self-Compliance Tool should put plans and issuers in a strong position to comply with the requirements.

The 2022 MHPAEA Report to Congress
A recently released 2022 MHPAEA Report to Congress suggests health plans and health insurance issuers are failing to deliver parity for MH/SUD benefits. The report highlights the recent emphasis on greater MHPAEA enforcement in addition to guidance to correct those failures, and makes recommendations to strengthen MHPAEA’s consumer protections and enhance enforcement abilities. According to the Report, preliminary determinations of non-compliance were made for many plans and issuers, but no final determinations have been made yet. Instead, plans are still able to take corrective action. An enforcement fact sheet summarizes investigations and public inquiries, including complaints related to MHPAEA during fiscal year 2021.

About Adherence and Compliance
Part of the compliance requirements are that each plan sponsor (i.e., Employers, Taft Hartley Funds, etc.) complete a detailed analysis of their plan, both written and in operation. This comparative analysis requires plan sponsors to “show their work” in a very detailed fashion as to how they determined they comply with the law. The analysis must be performed on all vendors offering services under the plan, not just the health plan. For example this includes the health plan TPA, PBM, and other vendors who potentially could play a role in treatment limitations for MH/SUD benefits. This analysis then must be made available both to plan members and the DOL upon request.

The DOL will generally request a copy when they are investigating potential MHPAEA violations or complaints regarding noncompliance with MHPAEA that concern NQTLs, although the law also permits the DOL to request a copy of the report in other circumstances, which could include a routine health plan audit. If the DOL requests the report and determines that it is insufficient, it will tell the plan sponsor what additional information is needed. If the DOL determines that there is a problem in how the NQTLs are being applied to MH/SUD benefits, it will give the plan sponsor 45 days to correct the issue. If the issue is not corrected, the plan will be required to notify its participants that its plan violates the MHPAEA.

How Does This Impact My Plan?
The burden of who must ensure compliance depends on the funding of the group health plan:

• Fully Insured Plans – Plan sponsors that offer fully-insured plans are not responsible to ensure compliance. Rather the carrier is obligated to ensure compliance and prepare the report if requested.
• Self-Funded Plans – Plan sponsors that offer self-insured benefit plans are responsible for ensuring compliance and preparing the report, if requested. Even if not requested, it is expected that plan sponsors have their plans evaluated. The TPA and PBMs may be of some assistance in helping to ensure plan designs are compliant. They may provide support in helping to validate compliance but such help may be limited. In the end, responsibility will be on the employer to ensure compliance and if requested, produce a report documenting compliance.

What Should Self-Insured Plan Sponsors Do?
Self-funded plan sponsors are facing mounting pressure to examine their practices for compliance with NQTL parity requirements in the MHPAEA. As for QTLs, Conner Strong & Buckelew is actively reviewing plan designs for QTL limit issues under self-insured plans. However, that is only a fraction of what needs to be evaluated, as the NQTL review process is complex and time consuming and production of a comparative analysis report requires highly specialized work. Here are some practical items for consideration in terms of next steps:

• Given the lack of a specific, standardized format or template from the regulators for exhibiting a sufficient NQTL comparative analysis, many plans may not move forward at this point to produce a comparative analysis. Many plans have assumed they can rely on their TPA or service providers to provide the analysis. In fact, DOL has recommended that Congress amend ERISA to provide a direct line of attack to enforce parity compliance against service providers, TPAs, or other entities that provide administrative services to ERISA group health plans.
• Some employers and plan sponsors may take a “wait and see” approach as the Biden Administration is expected to publish over the summer a new proposed rule on MHPAEA addressing the recent legislative changes and evolving guidance. It may be that those rules will give clearer instruction on the NQTL comparative analysis and articulate additional standards for certain NQTLs.

Conner Strong & Buckelew will continue to work with our clients to analyze and understand the complex requirements of the MHPAEA, and we can refer our clients to qualified advisors that exclusively specialize in MHPAEA work and the production of NQTL reports that can validate compliance for a self-insured sponsor who has decided, with the advice of their counsel, that they will move forward to prepare an NQTL comparative analysis of their plans.

We will provide alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

Group health plan sponsors that offer prescription drug coverage must, at least annually, notify Medicare Part D eligible individuals and the Centers for Medicare & Medicaid Services (CMS) of their plan’s creditable coverage status. Both disclosures (to Medicare Part D eligible individuals and to CMS) must meet specific form, content and timing requirements as prescribed by CMS.

This update addresses the required disclosure to CMS and reminds plan sponsors that online disclosure should be completed annually no later than 60 days from the beginning of the plan year. This means that an employer with a calendar year plan that began on January 1, 2022 must complete the CMS online reporting no later than March 1, 2022. (For more information on the Medicare Part D disclosure requirement for individuals, please see our update Medicare Part D Notices Due Before October 15th).

Medicare Part D Notice to CMS Rules
Medicare Part D rules generally require that group health plans with a prescription drug benefit must disclose to CMS whether the prescription drug coverage offered is “creditable” or “non-creditable”. “Creditable” prescription drug coverage generally means the actuarial value of prescription drug coverage under the group health plan is equal to (pays out as much) or better than the prescription drug benefits offered under Medicare Part D. “Non-creditable” prescription drug coverage is coverage that is actuarially less in value (expected to pay out less) than the coverage offered under Medicare Part D. This disclosure is required whether the entity’s coverage is primary or secondary to Medicare. A prescription drug plan must use the online CMS Disclosure Form to report its “creditable” or “non-creditable” prescription drug status at the times noted below. Guidance and instructions are provided to assist prescription drug plan sponsors with completing the form.

Disclosure Timing
The CMS disclosure must be made annually and whenever any change occurs that affects whether the prescription drug plan’s coverage is creditable. CMS should receive a creditable coverage disclosure:

• Within 60 days of the beginning of the plan year for which the disclosure is being reported.
• Within 30 days of a change in creditable coverage status.
• Within 30 days of the prescription drug plan’s termination.

A group health plan is not required to submit the online disclosure form to CMS for any plan year where the plan does not offer prescription drug benefits to any Medicare Part D eligible individuals as of the beginning of the plan year. Also, plan sponsors approved for the retiree drug subsidy are exempt from filing the CMS disclosure notice with respect to those qualified covered retirees for whom the sponsor is claiming the subsidy. Note that this creditable coverage reporting is in addition to the mandatory CMS Medicare Secondary Payer (MSP) reporting typically handled by an insurer or third-party administrator for a group health plan (see the CMS site on Mandatory MSP Reporting for more information).

Should you have questions about this or any aspect of group health plan requirements, please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

On Thursday, January 13, 2022 the U.S. Supreme Court blocked the Biden administration from enforcing a vaccine or testing mandate for businesses with at least 100 employees. However, the Court is allowing the administration to proceed with a vaccine mandate for healthcare workers at facilities that receive federal funding.

The Court’s majority concluded that the administration overstepped its authority by seeking to impose the Occupational Safety and Health Administration (OSHA) vaccine or test rule on businesses with at least 100 employees. If upheld, the employer mandate would have required all employers with 100 or more employees to ensure their workforce was fully vaccinated or would have required any workers who remain unvaccinated to produce a negative test result on at least a weekly basis before coming to work.

Employers may still implement their own vaccine and testing mandate if they choose.

Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

On January 10th, various federal agencies issued guidance in the form of Frequently Asked Questions (FAQs) around the Biden administration’s mandate that group health plans must cover over-the-counter (OTC) COVID-19 tests. The mandate takes effect on January 15th and stipulates that there be no member cost share or copays when purchasing an OTC test. In a nutshell, health plans must cover eight individual at-home OTC COVID-19 tests per person enrolled in the plan per month. That means a family of four can get 32 tests per month for free. Importantly, this mandate does not include surveillance tests one may need for work.

Below are some key headlines related to the new requirement:

• Effective Date: The requirement is effective on January 15, 2022, and continues for the duration of the public health emergency. Coverage may, but is not required to, be provided for OTC COVID-19 tests purchased before January 15, 2022.
• Per Test Dollar Limit/Reimbursement: Plans must provide coverage without out-of-pocket expenses to the participant. The plan can provide the coverage by reimbursing sellers (i.e., CVS, Walgreens, etc.) of OTC COVID-19 tests directly (“direct coverage”) or by requiring participants who purchase an OTC COVID-19 test to submit a claim for reimbursement to the plan. The agencies strongly encourage, but do not require, direct coverage. The requirement stipulates that plan members not be limited to having to use a network pharmacy. Also, under a safe harbor, the agencies provide that plans may limit reimbursement of tests purchased outside the direct coverage (i.e., when one files a claim) to $12 per test or the cost of the test, if lower. CMS has issued Q&As for employees entitled “How to Get Your At-Home Over-the-Counter COVID-19 Test for Free.” These Q&As describe the test cost limits applicable when a plan sets up a network of convenient options such as pharmacies or retailers, including online retailers, in which individuals on their plans can get their tests’ cost covered up front (at the point of sale), versus where a plan does not set up a process through which individuals can obtain tests with no upfront costs.
• Quantity Limit: Plans may limit the number of tests reimbursed to no less than eight OTC COVID-19 tests per covered individual per 30-day period (or per calendar month). This applies to OTC COVID-19 tests purchased without the involvement of a health care provider.
• Scope of Requirement: Until now, it has been generally understood that group health plans were required to cover COVID-19 “diagnostic” tests when provided by a medical provider. Under the new requirement, there will be no medical provider involved. However, the new requirement continues to only apply to “diagnostic” OTC COVID-19 tests, primarily intended for individualized diagnosis or treatment of COVID-19. Testing that is for employment (surveillance) purposes is not considered diagnostic and so tests for employment purposes do not fall under this new requirement. The requirements allow plans to require attestation that the test was purchased for the covered individual, is not for employment purposes, has not and will not be reimbursed by another source and is not for resale. Plans may also require reasonable documentation of proof of purchase.

Next Steps
Conner Strong & Buckelew is working with the various health plans and pharmacy benefit managers (“PBMs”) to understand their systems and processes for adhering to this new requirement. Since the requirement takes effect so quickly, we anticipate some health plans and PBMs may experience delays at the onset of the rule.

We are working to provide information on how each health plan and PBM will administer this new mandate and will issue updates accordingly. If you have any immediate questions with this new requirement, please contact your Conner Strong & Buckelew representative toll-free at 1-877-861-3220. For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.