Medicare to Cover Over-the-Counter COVID-19 Tests

Last December, the Centers for Medicare & Medicaid Services (CMS) unveiled a new plan requiring private insurers to pay for at-home COVID-19 tests. The mandate doesn’t cover Medicare due to the complexities involved in changing Medicare coverage regulations. But after a wave of public criticism, CMS has shifted gears and announced that Medicare will cover 100 percent of the costs of over-the-counter (OTC) COVID-19 tests, starting this spring.

Medicare COVID-19 Test Coverage Rules

Under rules that pre-date the pandemic, Medicare covers rapid antigen and PCR diagnostic tests without a beneficiary’s having to pay anything out of pocket, as long as those tests are ordered by a physician or other qualified health care provider and performed by a lab. As the very phrase suggests, at-home OTC COVID-19 tests are neither of the above. Moreover, federal laws that define when Medicare can and can’t pay for services and drugs generally exclude payment of any items sold over the counter. Adding to the difficulty is that there’s no mechanism that Medicare beneficiaries who pay for services and drugs upfront can use to seek reimbursement the way there is with most private health plans. That’s largely because Medicare pays providers, not beneficiaries.

The Public Pushback

Effective Jan. 15, individuals with private health insurance can purchase, either online or at a pharmacy or retail store, any of eight at-home over-the-counter COVID-19 diagnostic tests authorized by the U.S. Food and Drug Administration (FDA) at no cost, via reimbursement or coverage through their insurance. But that plan leaves more than 62 million elderly and disabled Americans with Medicare coverage out in the cold. On Jan. 24, a group of 19 Senate Democrats, including influential senators Debbie Stabenow (MI), who chairs the Democratic conference’s policy committee, and conference vice chairs Elizabeth Warren (MA) and Mark Warner (VA), wrote a public letter “strongly encouraging” Health and Human Services Secretary Xavier Becerra to extend the free coverage policy to Medicare. Current policies leave Medicare beneficiaries “on the hook for potentially significant out-of-pocket costs," according to the letter.

The New Coverage Policy

On Feb. 3, CMS said that Medicare and Medicare Advantage beneficiaries will soon be able to get OTC COVID-19 tests for free. This marks the first time that Medicare has covered an OTC test at no cost to beneficiaries, the CMS notice points out. Changing the rules is far from simple. For one thing, the tests appear to fall into coverage gaps, with Medicare Part A covering hospitalization, Part B generally covering provider-based services like doctor visits and lab tests, and Part D covering drugs. However, according to the agency, “given the importance of expanding access to testing, CMS has identified a pathway.” The new initiative will allow for direct payment from Medicare to pharmacies and other participating entities that sell the covered tests. CMS will announce the details later and expects the free Medicare test option to be available in the early spring.