Medicare Will Pay for Over-the-Counter COVID-19 Tests

Getting people to use rapid, at-home tests that are available without a prescription has been a key element of the Biden administration’s strategy to prevent the spread of COVID-19. To that end, the Centers for Medicare and Medicaid Services (CMS) has required private insurance companies to pay for at-home tests. However, the mandate doesn’t cover Medicare, which leaves more than 62 million elderly and disabled Americans out in the cold. But that’s about to change. CMS has announced that Medicare has changed its rules and will start covering 100 percent of the costs of over-the-counter (OTC) COVID-19 tests, starting this spring.

Medicare COVID-19 Test Coverage Rules

Why did it take so long? The answer goes back to the Medicare testing coverage rules that pre-date the pandemic. Those rules do provide for coverage of rapid antigen and PCR diagnostic tests without a beneficiary’s having to pay anything out of pocket, provided that 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. They’re purchased by consumers without a prescription; and they’re performed at the consumer’s home. In addition, the 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.

With private health plans, there’s typically a mechanism in place that beneficiaries can use to seek reimbursement when they pay for services and drugs upfront. But Medicare doesn’t work that way. Medicare pays providers, not beneficiaries, and there’s no mechanism to provide reimbursements for beneficiaries who pay upfront costs out of their own pockets.

The Biden OTC Testing Plan

Last December, the Biden administration unveiled a new plan requiring private health insurers to cover 100 percent of the cost of at home COVID-19 tests purchased by their members for as long as the public health emergency lasts. 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 US Food and Drug Administration (FDA) at no cost, via reimbursement or coverage through their insurance.

The December plan also calls for the distribution of 500 million free at-home COVID-19 tests, which people can request via a government website. A few weeks later, the administration threw another 500 million tests into the free test kitty. To counter the Medicare coverage gap, the federal government set up more than 10,000 free pharmacy testing sites across the country that Medicare beneficiaries can visit. Additionally, Medicaid and Children’s Health Insurance Plan enrollees are eligible for no-cost at-home COVID-19 tests under the American Rescue Plan Act.

The New Coverage Rule

But none of these efforts directly addressed the Medicare coverage rules. On Jan. 24, a group of 19 Senate Democrats, including influential Senators Debbie Stabenow (Mich.), who chairs the Democratic conference’s policy committee, and conference vice chairs Elizabeth Warren (Mass.) 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.

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.