The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law on March 27, 2020, is a $2 trillion stimulus package passed in response to COVID-19. In addition, on April 11, 2020, the agencies (HHS, DOL, and the IRS) released FAQs About Families First Coronavirus Response Act (FFCRA) and CARES Act regarding implementation of their provisions and other health coverage issues related to COVID-19. This Alert summarizes certain healthcare provisions in the CARES Act and FAQs likely to impact sponsors of group health plans.

• Reimbursement of Over the Counter Medications: After December 31, 2019, health spending accounts (HSAs), flexible spending accounts (FSAs), and health reimbursement accounts (HRAs), can pay for:

• • OTC Medications: Over the counter (OTC) medications as qualifying medical expenses without a prescription.

• • Menstrual Care Products: Expenses incurred for menstrual care products as expenses incurred for medical care. The term “menstrual care product” means a tampon, pad, liner, cup, sponge, or similar product used by individuals with respect to menstruation or other genital tract secretions.

CHEIRON OBSERVATIONS: This change effectively reinstates the OTC coverage rules in effect under the accounts prior to January 1, 2011, when prescriptions were not required.¹ However, this marks the first time that menstrual care products are designated as qualifying medical expenses.

Since these changes are retroactive to January 1, 2020, plan administrators will have to decide whether they will reimburse such expenses and, if so, communicate to participants the documentation requirements for purchases made before enactment of the Act.

• Exemption for Telehealth Services: For plan years beginning on or before December 31, 2021, high-deductible health plans (HDHPs) may offer telehealth and other remote care services benefits without applicable deductibles, and individuals retain HSA eligibility even if the telehealth or other remote care is not provided by an HDHP. For example, the FAQs allow an employer to offer telehealth services through an Employee Assistance Program (EAP).

CHEIRON OBSERVATION: Presumably this means that for plan years beginning after December 31, 2021, HDHPs will not be permitted to telehealth and other remote care without applicable deductibles unless further legislation in enacted.

•  Coverage and Pricing of Diagnostic Testing for COVID-19:

• • Coverage: The Act amends the recently passed Families First Coronavirus Response Act to expand the types of COVID-19 tests that group health plans and health insurance issuers must cover without cost sharing to include those (i) for which the developer has, within a reasonable timeframe, submitted or intends to submit an emergency use authorization request to the FDA (until that request is denied); (ii) developed and authorized by a State that has notified the Secretary of HHS of its intention to review tests intended to diagnose; and (iii) any other test that the Secretary of HHS determines appropriate.

CHEIRON OBSERVATION: This represents a significant expansion as previously only in vitro diagnostic products that had been approved, cleared, or authorized by the FDA were covered.

The FAQs clarify that coverage without cost sharing applies only to the extent that the items or services relate to the furnishing or administration of the test or to the evaluation of such individual for purposes of determining the need of the individual for the product, as determined by the individual’s attending healthcare provider. The FAQs also allow an EAP to provide coverage for diagnosis and testing for COVID-19.

• • Pricing: Group health plans and health insurance issuers are required to reimburse providers of COVID-19 tests as follows:
    • If the health plan or issuer had a negotiated rate in effect with the provider before the COVID-19 public health emergency period (which began January 27, 2020 and ends June 16, 2020, unless extended or terminated earlier), then that negotiated rate will apply.
    • If the health plan or issuer does not have a negotiated rate with such provider, then the plan or issuer must reimburse the provider in an amount that equals the cash price for such service as listed by the provider on a public internet website, or such plan or issuer may negotiate a rate with such provider for less than such cash price.

Q&A 7 of the FAQ makes it clear that the above provisions also apply to out-of-network providers.

The Act also requires (and emphasized in the FAQs) that during the COVID-19 emergency period, all providers of COVID-19 diagnostic tests must publicize the cash price for such tests on their internet websites.

• Rapid Coverage of Preventive Services and Vaccines for Coronavirus: Group health plans and health insurance issuers must cover any qualifying coronavirus preventive service without any cost sharing within 15 business days after the date a ‘‘qualifying coronavirus preventive service’’ is recommended by one of two agencies: the United States Preventive Services Task Force (USPTF) or the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention. The USPTF would include the qualifying coronavirus preventive item, service, or immunization that is intended to prevent or mitigate COVID-19 by listing and rating it as an ‘‘A’’ or ‘‘B’’ in its current recommendations. The Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention recommends the immunization as well as the age group for which it applies. Medicare Part B and Medicare Advantage plans must also provide coverage for a COVID-19 vaccine and its administration without any cost sharing.

CHEIRON OBSERVATION: The Affordable Care Act requires non-grandfathered plans to provide coverage for a new preventive care service by the plan or policy year that begins on or after the date that is one year after the date the recommendation or guideline is issued. The 15-business day requirement for coverage of COVID-19 related preventive care underscores the urgency of this health emergency.

• Temporary Suspension of Medicare Sequestration: For the period May 1 to December 31, 2020, the Act suspends the Medicare sequester that reduces Medicare fee-for-service claims payments to providers by 2%. Note, however, it compensates for this suspension by changing the end date of the sequestration period from 2029 to 2030.

CHEIRON OBSERVATION: Additional guidance will be necessary regarding specifically how the suspension will apply. For example, whether it will be to all Medicare payments made during May 1 to December 31, 2020 or to all Medicare payments made for prescriptions filled from May 1 to December 31, 2020 or some combination.

• Medicare Hospital Inpatient Prospective Payment System Add-On Payment: For discharges occurring during the COVID-19 public health emergency period, the Act increases by 20% the weighting factor that would otherwise apply to the diagnosis-related group to which the discharge is assigned. The Secretary of Health and Human Services (HHS) will identify such discharges through the use of diagnosis codes, condition codes, or such other means as necessary.

CHEIRON OBSERVATION: Hospital reimbursements are often linked directly or indirectly to Medicare reimbursement rates, so self-insured clients may see an increase in hospital charges during the COVID-19 public health emergency period.

The FAQs also confirm that the requirement for group health plans (including grandfathered plans) and insurers to provide COVID-19 testing with no cost-sharing per section 6001 of the Families First Coronavirus Response Act (FFCRA) is effective starting March 18, 2020. The FAQs also allow the following:

• Plan amendments to provide greater coverage without prior 60-day notice.
• An employer to offer diagnosis and testing for COVID-19 at an on-site medical clinic as an excepted benefit.
• Plan amendments to add benefits, or reduce (or eliminate) cost-sharing for telehealth and other remote care without 60-day notice.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.

¹  Per Section 9003 of the Affordable Care Act (ACA), effective Jan. 1, 2011, FSAs, HRAs, and HSAs could reimburse the cost of over-the-counter medicines or drugs only if they were purchased with a prescription. Section 3702 of the Act repealed the changes made by the ACA.