Some Medicare Advantage plans already cover at-home COVID-19 tests

While most of Medicare's 63 million beneficiaries are still waiting for no-cost at-home COVID-19 tests, some Medicare Advantage carriers already cover them.

Medicare Advantage plans often include supplemental benefits that pay for things the traditional fee-for-service Medicare program doesn't, including over-the-counter health products. And while big players such as Humana, Cigna and CVS Health's Aetna aren't yet covering OTC COVID-19 tests, competitors including UnitedHealthcare, Kaiser Permanente and SCAN Health Plan are. Those insurers make tests available either as part of their benefit packages or by reimbursing pharmacies for dispensing kits.

Fallon Health, a regional insurer in Massachusetts, for example, will retroactively cover all COVID-19 tests purchased by its 12,500 Medicare Advantage members after Jan. 5. By paying for the tests, the insurer believes it can keep its older enrollees out of emergency departments, improve patient outcomes and decrease costs.

"The goal is to reduce the incidence of the COVID infections," said Dr. David Brumley, Fallon Health's interim chief medical officer. "If there's less transmission, and people get sick less often because they're testing, that's obviously a benefit." The insurer intends to add COVID-19 tests to its pharmacy benefit so customers can obtain them at no cost from drugstores, he said. The insurer and UnitedHealth Group's OptumRx, its pharmacy benefit manager, are still working out details such as how much to pay for the kits.

Fallon Health is ahead of an industry preparing to incorporate over-the-counter COVID-19 tests into their benefits.

The Centers for Medicare and Medicaid Services unveiled a policy this month providing Medicare coverage for at-home COVID-19 tests starting this spring, following pushback from lawmakers and advocates. Previous federal policies required Medicaid, the Children's Health Insurance Plan and private health insurance companies to cover tests.

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While CMS hasn't disclosed much about how Medicare test coverage will work, each beneficiary will be entitled to up to eight kits a month. CMS will use Medicare Part B funds to pay for tests regardless whether enrollees have traditional Medicare or Medicare Advantage.

"The biggest open question right now is just how they're going to roll this out," said Meredith Freed, a senior policy analyst at the Kaiser Family Foundation.

Alliance of Community Health Plans members started exploring OTC COVID-19 test coverage after the federal government began requiring commercial insurance plans to pay for them, said Dan Jones, vice president of federal affairs at the trade association for not-for-profit health insurance companies. Customers had flooded Medicare Advantage plans' phone lines asking why they couldn't get free tests, which prompted some companies to take action, he said.

"It's a great case of Medicare Advantage plans being innovative and flexible," Jones said. "When issues pop up with the pandemic or there's another need for services, they're able to be flexible with their supplemental benefits."

Health insurance carriers that already were covering at-home test for commercial customers have a leg up on peers that weren't, Jones said. So do companies such as UnitedHealth Group that own pharmacy benefit managers, he said. UnitedHealthcare, which has 6.5 million members or 28% of the Medicare Advantage market, estimates that 85% of its Medicare Advantage members have over-the-counter product coverage.

Medicare Advantage plans currently can provide coverage for OTC COVID-19 tests through supplemental benefits, said Gretchen Jacobson, vice president of Medicare at the Commonwealth Fund. Medicare Advantage benchmark payments and rebates could be higher if net Medicare Part B spending rises because of at-home test reimbursements. That, in turn, would lead to additional costs for beneficiaries and taxpayers, she said.

"There's basically some financial trade-offs in how you go about doing it," Jacobson said. "Do you then try to take the money out in future years? How do you ensure basically that they're not paying twice for something that's a one-time thing, depending on how long this is going to go on? It gets complicated."

Correction: This article has been updated to clarify that funds from Medicare Part B will cover the cost of at-home COVID-19 tests. Medicare Advantage carriers will not bear those expenses.