These data do not include bills from hospital labs, but hospital labs should be involved in all three types of testing detailed below. Statistics on billing of flu tests to Medicare patients are calculated from the 2017 Medicare Provider Utilization and Payment Data: Physicians and Other Supplier Public Use File released by the Centers for Medicare and Medicaid Services (CMS). We include comparisons to Medicare billing for flu tests because the testing methods tend to be similar, although there are some key differences, such as the higher likelihood of COVID-19 testing taking place inside a hospital given the higher risk of hospitalization. To better understand what entities might be billing under what circumstances, it is helpful to lay out the different methods to test patients for COVID-19, including both those that exist today and those that are likely to soon be approved for use by the Food and Drug Administration (FDA). There are many possible testing locations: government labs, hospital-run labs, clinician offices, and stand-alone clinical lab facilities including large national chains or small facilities. What Tests Are Performed and Who Bills for Them? Put another way, the CARES Act provision will likely inflate costs for out-of-network COVID-19 testing, but have limited, if any, spillover effects on prices for in-network testing. In each case, insurers can generally steer enrollee testing to in-network providers (discussed in more detail later). Depending on the type of test, COVID-19 testing will predominantly be billed by clinical laboratories, hospitals, and clinician offices. However, the inflationary effects of the CARES Act provision should be relatively limited, particularly after the immediate wave of more emergent testing and once greater testing capacity becomes available.
In that context, such a provision would incentivize providers to increase their unilaterally set list price in order to drive up payment, at the expense of employers, consumers, and taxpayers.Ĭhristen Linke Young and Kathleen Hannick Tuesday, March 24, 2020Īpplied to COVID-19 testing, some unscrupulous actors will surely find ways to exploit the new CARES Act provision that could be avoided if the law is changed to instead require out-of-network payment at Medicare payment rates or even a multiple thereof (unlike most health care services, lab prices for commercial insurers are similar or lower than Medicare rates on average).
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Moreover, in theory the patient can still be surprise balance billed if the provider’s charge is higher than this “cash price,” though it is unclear why any provider would list a “cash price” lower than their charge.Īs a result, this provision can be thought of similar to a surprise billing protection that requires health plans to pay out-of-network providers full billed charges. Nor is there any reason for out-of-network entities to accept any less than this amount (other than a desire to contract in the future with the insurer or fear of a public relations backlash).
#ETHERNET TESTING OUT OF ORDER FREE#
Unfortunately, this “cash price” is not a market-determined price – it is irrelevant to patients because all options have to be made free to them by law, so there is little constraint on how high this is set by testing entities. The rest of this blog details how the CARES Act provision is likely to affect in-network and out-of-network pricing for COVID-19 tests, what the different types of tests are and what entities will be billing, the dynamics of insurer-provider contracting for lab testing, and how the provision should be improved. The law mandates health plans to pay an out-of-network provider of COVID-19 testing “an amount that equals the cash price for such service as listed by the provider on a public internet website.” 3202 of the CARES Act is aimed at addressing this issue and to guarantee out-of-network testing entities receive payment. This provision on its own, however, does nothing to prevent an out-of-network testing entity (e.g., a clinical laboratory, hospital, or clinician’s office) from balance billing a patient for the difference between their list price (also known as their charge), which is unilaterally set and tends to be very high, and what the insurer chooses to pay – a provider practice typically referred to as “surprise billing.” 3201) clarifies a requirement enacted in the Families First Coronavirus Response Act, passed a week earlier, that commercial health insurance plans must cover COVID-19 testing without imposing any cost-sharing on enrollees. Tucked in the Coronavirus Aid, Relief, and Economic Security (CARES) Act – the sweeping economic relief package signed into law on Ma– are a pair of provisions addressing payment for COVID-19 testing.
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