President Orders Private Payors to Cover At-Home, Rapid COVID-19 Testing

Making at-home testing more accessible and affordable has played a key role in the president’s COVID-19 response strategy. Now, in response to the emergence of the new Omicron variant, the administration is hitting the accelerator by ordering private payors to cover the cost of purchasing new at-home tests. The administration’s new plan provides for making tests available for free to those not covered by private insurance.

Lab Tests & the Biden COVID-19 Strategy

The Biden administration has aggressively promoted widespread lab testing for COVID-19, particularly rapid testing at the point of care. In September, the president outlined a broad COVID-19 action plan that, among other things, provides for accelerated development and use of rapid and at-home tests. Drawing on the federal government’s powers to mobilize private industry under the Defense Production Act (DPA), the plan allowed the government to purchase nearly $2 billion worth of rapid point-of-care and over-the-counter (OTC) at-home tests—280 million total tests—from multiple manufacturers.

To expand test access, the plan also called for cooperating with private business, including major retailers Walmart, Amazon and Kroger for the sale of at-home rapid COVID-19 tests to consumers at cost for three months. In addition, the government is mandating that states’ Medicaid cover at-home tests for free and not establish “arbitrary barriers” to those seeking care.

Meanwhile, the FDA has played a role by providing Emergency Use Authorization (EUA) for eight different OTC COVID-19 tests, including five since the administration published its action plan in September. There were no such tests on the market when the administration took office.

The New Coverage Mandate for Rapid Tests

On Dec. 2, a few days after the World Health Organization officially named Omicron a variant of concern, the Biden administration took additional steps to promote wider use of at-home COVID-19 testing. Under the new plan, private health insurers will have to cover 100 percent of the cost of at-home tests purchased by plan members. The way it will work: By Jan. 15, the Departments of Health and Human Services, Labor and the Treasury, working through the federal rule-making process, will issue guidance on which tests should be covered and at what frequency.

Once the plan takes effect, individuals who purchase OTC COVID-19 diagnostic tests will be able to seek reimbursement from their group health plan or health insurance issuer and have insurance cover the cost for the remainder of the public health emergency. Limitation: Tests purchased before the policy takes effect won’t be covered retroactively.

The reimbursement of rapid tests has been a bone of contention ever since Congress enacted the 2020 CARES Act and FFCRA requiring insurers to cover the full cost of “medically appropriate” COVID-19 tests. The legislation didn’t distinguish among types of tests. However, CMS guidance issued in April 2020 soon after the legislation was enacted clarified that mandatory coverage applied to tests ordered as a result of urgent care visits, emergency room visits and in-person and telehealth visits to a doctor’s office. Tests performed on asymptomatic persons were conspicuously absent from this list. Payors have relied on this loophole to avoid covering rapid and at-home COVID-19 tests.

Other Elements of the Biden Omicron Response Plan

The Biden plan includes other measures designed to quadruple the number of rapid, at-home COVID-19 tests available, as compared to late summer, including:

• Making free rapid, at-home COVID-19 tests available to individuals without private insurance that can be picked up at locations like rural clinics and community health centers and then used at home; and
• Doubling its September commitment to distribute free tests to community sites from 25 million to 50 million.