Congress has spent months in stalemate over how best to protect patients from surprise out-of-network medical bills, and lawmakers' efforts to keep COVID-19 tests affordable for patients could prove an informative test case.
Insurers claim that new laws passed in response to COVID-19 could allow out-of-network labs to name astronomically high prices for tests, while labs say that insurers could negotiate to drive payments below what tests cost.
Congress' second COVID-19 relief package forced private health plans, Medicare, Medicaid, Medicare Advantage and other public payers to provide beneficiaries coronavirus testing with no cost-sharing. It also set aside $1 billion to reimburse providers for testing uninsured people.
Lawmakers waded into the issue of testing reimbursement in a massive economic stimulus package that President Donald Trump signed Friday. Early drafts of the bill would have required insurers to pay out-of-network labs the cash price labs posted on their websites. The final bill was tweaked to allow insurers either to pay the posted cash price or negotiate a lower price with out-of-network labs.
Payers and labs disagree about what would happen if an insurer tried to negotiate a lower price, but the two sides were unable to agree.
Pacific Business Group on Health health policy director Shawn Gremminger said it appears that a lab could refuse to negotiate a price, and insurers would then be legally obligated to pay a "cash price" that could have little relationship to the actual cost of a test or to Medicare rates. Medicare has announced it will reimburse around $51 for non-CDC test kits.
But the American Clinical Laboratory Association, which includes testing giants LabCorp and Quest, believes that labs may not have legal recourse to force payment of the public cash price if insurers try to negotiate and the two sides cannot agree.
Georgetown University health law professor and ACA expert Katie Keith noted in a Health Affairs blog that the law does not expressly prohibit labs from balance billing patients even if insurers pay the cash price.
Two leading surprise billing experts said it is unclear exactly how the market dynamics will play out, but that it appears labs have the payment advantage.
Benedic Ippolito, a resident scholar at the right-leaning American Enterprise Institute, called insurers' authority to force a negotiation "nominal."
"If a party has the right to determine what the other must pay, why negotiate?" Ippolito said.
Loren Adler, the associate director of the USC-Brookings Schaeffer Initiative for Health Policy, said the policy will likely mean labs can name their prices for tests.
"This is a pretty blatant giveaway to the labs, at the primary expense of employers," Adler said.
Leading broader surprise billing measures in Congress had at least some mechanism that would tie insurer payments for out-of-network bills to in-network prices in a geographic area. Legislation that would have allowed payments to be based on physician charges was abandoned after the Congressional Budget Office estimated it could cost billions.
The new provision provides no requirement that cash prices resemble in-network market prices, which Adler called "a recipe for price inflation."
The only countervailing force would be public shaming of lab companies. While that may be sufficient to keep prices reasonable for large lab companies, Adler said smaller labs seemingly could post higher prices.
"It's kind of funny that a bill largely aimed at providing financial support to employers simultaneously added a provision encouraging labs to price-gouge employers for COVID-19 testing," Adler said.
How much labs actually choose to charge as a cash price could depend on how much trouble they have getting reimbursed for the tests, Ippolito said.
Adler noted that if labs can get reimbursement for out-of-network tests, there would be less incentive for them to balance bill patients.
Even though Congress mandates that payers cover the tests with no cost-sharing, ACLA says its members have run 405,000 COVID-19 as of Thursday "with no assurance that they will be appropriately or fairly reimbursed for all the tests they are performing."
ACLA President Julie Khani characterized the provision as a "big win for insurance companies" because there is no explicit protection that labs will be paid above the costs of testing.
"Patients are protected, insurers are protected, but labs currently have no protection if payers seek to compensate us below cost or require laboratories to cover a patient's copay for COVID-19 testing," Khani said.
A spokeswoman for ACLA said there is also some concern about reimbursement if insurance information is improperly collected at drive-through testing sites.
Lawmakers are expecting to pass more legislation addressing COVID-19, and Gremminger said the Pacific Business Group on Health is seeking for cash prices to be tied to Medicare reimbursement or a wider provision banning price gouging for products related to COVID-19 testing and treatment.