Self-insured employers across America are faced with a big decision on the heels of announcements from Aetna, Cigna, Humana, and now United HealthCare, that they will waive cost sharing for all COVID-19 care and treatment for insured plan members. While the CARES Act requires first-dollar coverage for testing and vaccines, the mandate does not apply to treatment. The insurers’ rationale for covering COVID-19 treatment at 100% is to remove financial barriers that might cause people to avoid or delay care that is needed both for their own safety and to potentially assure prompt identification and containment of the virus.
Self-insured employers are being asked to choose whether or not to waive cost-sharing, which includes deductibles, coinsurance and co-pays for COVID-19 treatment. This announcement, along with a short deadline for a decision, comes at a time when many companies are already struggling with the business impact of COVID-19 and facing the prospect of furloughs and layoffs. Any decision that is likely to result in additional cost will need to be weighed carefully.
In a Mercer poll of about 650 self-funded employers conducted on April 2, more than a third said they were very likely (24%) or likely (14%) to waive cost sharing, while just under a fourth said they were unlikely (17%) or very unlikely (7%) to do so. But 39% had not yet begun to consider the question. For organizations that haven’t yet decided how to respond, here are some considerations:
- Cost of waiving plan member cost sharing. The majority of people who seek treatment will not be admitted for inpatient care, and employers already assume most of any hospitalization cost because of out-of-pocket maximums that protect the member. While the cost impact will depend on plan design and what services are utilized, the annual financial exposure of making this change under most scenarios ranges from 0.1% to 0.5% increase in claims cost paid by the plan, according to Mercer actuaries.
- HDHP/HSA compliance and Mental Health Parity concerns. The IRS has already relaxed rules for COVID-19 treatment, such that 100% coverage does not impact HSA eligibility. However, covering COVID-19 treatment without co-pays or coinsurance may require plan sponsors to revisit the Mental Health Parity Act testing for the next plan year unless regulators provide relief from this compliance issue.
- Time frame. Cost sharing is waived only until June 1st, which seems somewhat arbitrary. If COVID-19 continues into June or returns at a later date, will you have set a precedent?
- What is in network vs. out-of-network? In some cities, patients may not have a choice of where they go for inpatient care. In New York City, emergency hospitals have been set up in a convention center and in Central Park – are these in-network? How will claims be handled for plans that do not cover out-of-network services? Cigna has said it will pay providers its in-network rates or Medicare rates. As is standard practice in most self-insured plans today, will carriers keep a portion of the “savings” for out-of-network COVID-19 claims paid at in-network or Medicare levels?
- Quality control. With the shortage of providers and supplies in some cities, how will carriers audit for quality or fraud? If all claims are paid at 100%, can employers be sure the adjudication process does not skip important business controls?
- Balance billing. It’s important that patients be shielded from balance billing/surprise bills. Carriers have said there will be no balance billing for their fully insured members covered at 100%. Humana CEO Bruce Broussard said, “We’re going to keep it between the provider and the company.” Will self-insured plan members be protected as well?
Some employers we’ve spoken with have raised the question of equity: How can they justify waiving cost sharing for COVID-19 and not for other serious and life-threatening conditions? While this question can be debated, one important difference is that COVID-19 is a mass contagion with enormous societal impact, and the steps we take to control it benefit all plan members, even those who don’t contract the virus or need to seek treatment. We are all in this together.