By John H. Fisher II
April 24, 2020
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) became law on March 27, 2020. One provision that has not received much coverage is the requirement for providers of COVID-19 diagnostic testing to publish the cash price for the test on their website. The requirement appears to last for the duration of the emergency declaration. The requirement also applies to any “provider of diagnostic testing” for the COVID-19 virus and is not limited to clinical laboratories. Test providers who do not publish the cash price for their testing can be subject to imposition of civil monetary penalties of up to $300 per day.
Some contracts might simply reference reimbursement at Medicare rates or a percentage of Medicare rates. Medicare reimbursement for COVID-19 testing was increased last month. The increased rate will apply to Medicare cases and will set the basis for calculating the reimbursement rate where Medicare pricing is referenced in the agreement. This could be yet another area in which payors attempt to tie non-network providers into reference-based pricing using one of the common reference-based pricing schemes that have emerged in recent years as providers attempt to reduce the cost associated with out-of-network care.
Surely one motivation for test providers to publish the rate on their website is to avoid the potential civil fines that can attach to a failure to abide by that requirement. But perhaps the greater reason to publish testing rates is that it permits the provider to set their own “cash price” for the test; that is, the price that applies when the provider does not have a negotiated price arrangement with the payor. The published “cash price” establishes the default reimbursement rate that third-party payors are required to reimburse the test provider in cases where there is no pre-January 31, 2020 agreement regarding the price of COVID-19 testing.
Health plans are required under the CARES Act to honor reimbursement rates that may have been negotiated with providers before the emergency declaration of January 31, 2020. It would be surprising to find many specific negotiated rates for COVID-19 testing in a pre-declaration agreement. However, there could be a rate category included in the negotiated contract potentially applying to COVID-19 testing. For example, there could be a rate established in the agreement for “virus testing,” “flu testing,” “all other tests,” or another category that would include COVID-19 tests. There may or may not be an agreement between the provider and the payor as to whether a more “generic” category was intended by the parties to apply to COVID-19 testing.
Although the CARES Act gives providers of COVID-19 testing a great deal of flexibility to set the “cash price” for their testing services, this should not be treated as an open invitation for test providers to mark up their test prices without limitation. Clearly in this situation, providers who are perceived as price gouging during a pandemic will catch the eye of regulators and the media. It is difficult to know how many tests will provide an opportunity for a testing provider to take advantage of a published “cash price.”
For more information on health care legal and regulatory issues, please contact Health Care and Compliance Attorney, John Fisher. Mr. Fisher is an experienced health care attorney who is also certified in Health Care Compliance and Corporate Compliance and Ethics.
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