Ice Miller LLP: Insights

CARES Act Expands Requirements for Health Plans

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") became law on March 27, 2020. The Act makes important changes for all types of employer group health plans in relation to the COVID-19 pandemic, including:

Expansion of the recent requirement to cover COVID-19 diagnostic testing without cost-sharing;
Clarification of the price plans will pay for COVID-19 diagnostic testing;
Addition of requirement for health plans to cover COVID-19 preventive treatments (such as vaccinations) within 15 days after they are determined to be preventive by specified recommending bodies;
Addition of a temporary statutory safe harbor for high deductible health plans to cover telehealth services; and
Expansion of the types of medical care that can be covered by health savings and flexible spending accounts to include over-the-counter drugs and medicine and menstrual products.

The changes will require health plans to stay informed with regard to guidance from Departments of Health and Human Services ("HHS"), Labor, and the Treasury throughout the COVID-19 public health emergency period.

Expansion of Coverage for COVID-19 Diagnostic Testing

The Families First Coronavirus Response Act ("FFCRA"), which became law on March 18, 2020, required all group health plans (including grandfathered plans) and health insurers of individual or group policies to provide coverage—without any cost sharing, prior authorization, or other medical management requirements—for the following products and services related to testing for COVID-19:

FDA-approved in vitro diagnostic products for the detection of SARS-CoV-2 or the diagnosis of the virus that causes COVID-19, and the administration of these products; and
Items and services furnished during a visit to a provider's office (including via telehealth), urgent care, or an emergency room that results in an order for or administration of an in vitro diagnostic product described above, but only to the extent the item or service relates to: (1) the furnishing or administration of the diagnostic product or (2) the evaluation of the individual to determine need for the diagnostic product.

The coverage requirement applied beginning March 18, 2020, and encompasses testing products and services that are furnished during any portion of the COVID-19 public health emergency. Our prior e-alert discussed this requirement in more detail.

The CARES Act amends the FFCRA to expand this coverage requirement to include diagnostic tests that:

The test developer has requested, or intends to request, emergency use authorization for under the Food, Drug, and Cosmetic Act;
Are developed in and authorized by a state that has notified HHS of its intention to review tests intended to diagnose COVID-19; or
HHS otherwise has approved in guidance.

It is unclear how group health plans will learn that a test developer intends to request emergency use authorization or that a state has notified HHS of its intention to review diagnostic tests. It is likely that HHS will issue guidance on these topics.

Pricing of Coverage of Testing for COVID-19

The CARES Act also clarifies the prices that group health plans and issuers are required to pay for diagnostic tests for which coverage has been mandated. Plans that had applicable negotiated rates in effect before the COVID-19 public health emergency (i.e., prior to January 27, 2020) will pay that negotiated rate. Otherwise, plans will pay the cash price for the service listed by the provider on a public website, unless the plan or issuer can negotiate a lower rate.

The CARES Act requires that providers of diagnostic tests for COVID-19 publicize, during the COVID-19 public health emergency, the cash price for their diagnostic test on a public website. The CARES Act imposes penalties of up to $300/day on any provider of a diagnostic test for COVID-19 that fails to publicize its price as required.

15-Business-Day Coverage Window for New Preventive Services

The CARES Act directs the Departments of HHS, Labor, and the Treasury to require group health plans and issuers of group and individual policies to cover any "qualifying coronavirus preventive service" without cost-sharing. A "qualifying coronavirus preventive service" includes an item, service, or immunization intended to prevent or mitigate the coronavirus disease and that is:

An evidence-based item or service that has in effect a rating of "A" or "B" in the current recommendations of the U.S. Preventive Services Task Force; or
An immunization that has in effect a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved.

The coverage requirement applies 15 business days after the date on which a preventive coverage recommendation is made. The requirement applies to the same plans to which the obligation to cover diagnostic testing without cost-sharing applies.

Plans are already obligated to cover both evidence-based items and services with ratings of "A" or "B" and immunizations with recommendations from the Advisory Committee on Immunization Practices. The Patient Protection and Affordable Care Act ("ACA") added this requirement to Section 2713 of the Public Health Service Act. Under the ACA, plans normally have a year or more to implement newly recommended preventive services. The effect of the new requirement is to clarify that health plans must cover these services within 15 business days after the date a recommendation is made if the services are intended to prevent or mitigate coronavirus. This means that health plans must stay alert and informed throughout the COVID-19 public health emergency, as preventive services can be expected to receive approval on a rolling basis as new evidence emerges.

Temporary Safe Harbor for HDHP Coverage of Telehealth and Remote Services

The CARES Act provides a temporary safe harbor for high deductible health plans ("HDHPs") to cover "telehealth and other remote care services" without a deductible. The relief applies immediately and extends through plan years that begin on or before December 31, 2021. Telehealth visits do not have to be connected with COVID-19 to be eligible for this relief. This change is statutory and follows sub-regulatory guidance from the Internal Revenue Service in Notice 2020-15 that allowed testing and treatment for COVID-19 to be covered under HDHPs without a deductible. We discussed this prior relief in an earlier e-alert.

Individuals who contribute to health savings accounts ("HSAs") must be covered by an HDHP and cannot be covered by any plan that is not an HDHP and that also covers any benefit covered by the HDHP. A plan is not an HDHP if it provides coverage for services without a high deductible, with specified exceptions including preventive care. The CARES Act adds another exception: telehealth and other remote care services. Accordingly, beginning March 27, 2020, HDHPs may provide first-dollar coverage for telehealth and other remote care services without compromising their status as an HDHP. This means participants covered by an HDHP that provides first-dollar coverage for telehealth and remote care services will not lose their eligibility to contribute to HSAs through plan years beginning on or before December 31, 2021.

Expansion of Qualified Medical Care for HSAs, FSAs, HRAs, etc.

The CARES Act expands the types of medical care individuals may purchase with funds from HSAs, medical flexible spending accounts ("FSAs"), health reimbursement arrangements ("HRAs"), and Archer medical savings accounts ("MSAs") to include (1) menstrual care products and (2) over-the-counter medicines and drugs. These changes are effective for expenses incurred and for amounts paid after 2019. The CARES Act does not contain an expiration date for this change, so it appears to be permanent.

Funds in these account-based plans may be used only for "qualified medical expenses," which include amounts paid for medical care under Section 213(d) of the Internal Revenue Code ("Code"). Prior to the CARES Act, "qualified medical expenses" included amounts paid for medicines or drugs only if the medicine or drug was prescribed or was insulin. The CARES Act eliminates the requirement that the medicine or drug be prescribed. This reverses a restriction imposed by the ACA and once again allows over-the-counter medicines and drugs to be reimbursed from these account-based plans.

The CARES Act also clarifies that "qualified medical expenses" include "menstrual care products," which include tampons, pads, liners, cups, sponges, and similar products used for similar purposes.

This expansion allowing coverage of over-the-counter medicine and drugs and menstrual products does not trigger an election change under an FSA allowing an individual to increase an elected contribution to an FSA. The rules under Code Section 125 allowing election changes when coverage is increased under a qualified benefit do not apply to FSAs. On the other hand, those rules do allow prospective election changes to HSAs at any point in the plan year. As a result, HSA participants may wish to increase HSA contributions in response to this expanded coverage.

For more information about the CARES Act and how it might affect your employee benefit plans, please contact Chris Sears, Kathleen Sheil Scheidt, Melissa Proffitt, Tara Sciscoe, Sarah Funke, Gary Blachman, Rob Gauss, Audra Ferguson-Allen, Austin Anderson, or the Ice Miller LLP Employee Benefits attorney with whom you work.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.