The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which became law on March 27, 2020, requires all providers of COVID-19 diagnostic testing to publish on their public websites the cash price for such testing during the declared emergency.[1] Doing so also allows health care providers to set a reimbursement rate with out-of-network payors for COVID-19 testing. Specifically, Section 3202 of the CARES Act establishes the rate at which group health plans and health insurance issuers (“plans” or “payors”) must reimburse health care providers for COVID-19 diagnostic testing, as set forth in the bullets below. Note that Section 3202 is not restricted to just laboratories, but applies to any “provider of diagnostic testing” for COVID-19.
- In-Network Arrangements (where there is an established rate applicable to COVID-19 testing). If the parties had negotiated a reimbursement rate prior to the emergency declaration by the United States Department of Health and Human Services (January 31, 2020), the plan must pay the provider at that rate. Although existing contracts likely would not have addressed COVID-19 testing explicitly, there could be negotiated rates for, e.g., “all laboratory testing” or “all other services” that might apply, depending on the language of the contract. Note that Medicare increased its reimbursement for certain COVID-19 testing as of March 18, 2020, so any existing contract rate set at a percentage-of-Medicare methodology should have increased as well.
- Out-of-Network Arrangements. If a plan did not have an existing, negotiated rate with a health care provider before January 31, 2020, the plan must pay the provider’s cash price for the test as listed on the provider’s public website. The CARES Act does not define “cash price.” The parties also remain free to negotiate a different reimbursement rate if they choose.
Further, if a provider of a COVID-19 diagnostic test does not publish the cash price for the test on its public website during the public health emergency, it may be subject to a civil monetary penalty of up to $300 per day under the CARES Act.
Practical Takeaways
Providers may set a reimbursement rate with out-of-network payors for COVID-19 testing by posting the cash price on the provider’s website. Payors must reimburse provider either at the rate the parties negotiated before January 31, 2020, or the cash price listed on the provider’s website. Providers have the discretion to set their cash price but should do so reasonably to avoid future scrutiny from payors, the public or the government regarding the fairness of the price.
Questions? We’re here to help. For more information, please contact:
- Amy Mackin at (919) 447-4963 or amackin@wp.hallrender.com;
- Kathryn Costanza at (303) 801-3534 or kcostanza@wp.hallrender.com; or
- Your regular Hall Render attorney.
Special thanks to Macauley Rybar, law clerk, for his assistance in the preparation of this article.
Hall Render’s attorneys and professionals continue to maintain the most up-to-date information and resources, which are available at our COVID-19 Resource page, through our 24/7 COVID‑19 Hotline at (317) 429-3900 or by contacting your regular Hall Render attorney.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
