February 07, 2022

The new FAQs (Part 52) are, again, high-level guidance intended to allow employer plan sponsors to craft their own solutions to providing OTC tests with their respective vendors and resources. The Departments make very clear in Q#1 that plans will have “significant flexibility in how they provide access to OTC COVID-19 tests under [the] requirements”. Although broad coverage requirement remains intact, these FAQs help narrow the implementation to match the programs that employer plan sponsors can put in place.

By sticking to broad themes of flexibility and not getting into specific scenarios, the Departments are aware that their guidance will not address every scenario and are leaving the door open for additional comments and guidance as needed. After moving forward with initial implementation under Part 51, and making any changes under this Part 52, it may become increasingly difficult for plans to continue to tweak and adjust their programs for future guidance. So, to the extent the existing guidance (Parts 51 & 52) provides a reasonable basis to move forward without clarifications, plans may find themselves needing to do so without getting a specific response to their individual situation. Plans should make sure to consult with their legal counsel or other consultants as they move forward.

Key takeaways from FAQ Part 52

Like the guidance, we are providing high-level points from FAQ Part 52 expected to be be broadly applicable and useful for our members. The specific applicability or challenges for any individual employer plan sponsor will generally depend on their plan arrangements and vendor capabilities and involvement.

Plan communication about direct coverage free OTC tests is paramount

The Departments are clear in these FAQs and in discussions that they want to provide flexibility for plans to use the direct coverage safe harbor (discussed below). However, they are attempting to balance that flexibility against ensuring that covered individuals can obtain free OTC tests when they need them or before they need them without too much difficulty.

The Departments view detailed and timely communication of a plan’s direct coverage program as an extremely important factor in ensuring the adequate availability of tests. Making sure that covered individuals are informed about when, where, and how to receive free OTC tests both in-person and by direct shipping (via phone or online ordering) seems to be strong support for a plan’s claim that the direct coverage safe harbor applies and the covered person has adequate access.

The FAQ Part 51 Q2 “direct coverage” safe harbor should be utilized more easily and based on each plan’s circumstance

Most employer plan sponsors have expressed interested in utilizing the direct coverage safe harbor from FAQ Part 51 Q2. This is the safe harbor that permits plans that provide “direct coverage” (OTC tests with no up-front costs or need to seek reimbursement) to limit their payments for other tests (those outside of the direct coverage arrangement) to a maximum of $12 per test.

To do this, the original FAQs (Part 51) stated that adequate in-person and direct shipping test acquisition options must be available. In these FAQs, the Departments clarify that in most cases plans should have “at least one” way for covered individuals to pick up a free OTC test in-person and “at least one” way for a covered individual to get a free OTC test sent to them through the mail. The new FAQs clarify that these mechanisms can be set up in a number of ways using different vendors or homegrown methods. (Part 52, Q#1)

As examples, it appears the plan may satisfy the direct coverage safe harbor by having free OTC COVID-19 tests available by:

• 1 | At least one of the following (not an exhaustive list):
  • In-person at a retail pharmacy or other non-pharmacy retail provider;
  • In-person at a non-retail supplier that the plan has identified; or
  • In person at the employer plan sponsor’s facility if identified by the plan.

And

• 2 | At least one of the following (also, not an exhaustive list):
  • Directly shipped (ordered by phone or online) from a retail pharmacy supplier;
  • Directly shipped (ordered by phone or online) from a non-pharmacy or non-retail supplier that the plan has identified; or
  • Directly shipped (ordered by phone or online) from the employer plan sponsor as identified by the plan.

For smaller employers, there is an acknowledgement that the adequacy requirements may be satisfied by either 1) in-person OR 2) direct shipping but not both. However, the Departments believe this single method direct coverage mechanism will be of limited use to larger employer plan sponsors. (Part 52, Footnote (FN) 14)

Other direct coverage elements in FAQs Part 52

Allowances for supply chain issues and limitations

The Departments provide assurance that, generally, temporary supply chain issues and a covered individuals’ inability to get all eight tests per covered person at one time will not cause the plan to be out of compliance with the safe harbor. (Part 52, Q#2 and FN 16).

Clarifications about shipping costs and sales tax

In situations where the plan has direct coverage available, but the covered individual buys other OTC tests and submits for reimbursement, plans must cover the total cost of the OTC test (including shipping costs and sales tax) up to $12 per test (or the actual cost, if less). This means if the cost of the test is $12 or more, that no shipping or sales tax amount would need to be reimbursed beyond the $12. But if the test is less than $12 any shipping or sales tax amount incurred would be included in the reimbursement, up to an overall limit of $12 per test. (Part 52, FN 13)

On the other hand, for any directly shipped tests ordered through the plan’s direct coverage mechanism (e.g. a preferred online PBM arrangement) the plan will need to cover (with no cost-sharing) “reasonable shipping costs” for the OTC tests “in a manner consistent with other items or products provided by the plan… via mail order.” This generally means the plan will either need to cover the OTC test shipping or make a broader comparison to other mail order shipping under the plan and apply a reasonable limitation.

Plans may adopt certain restrictions on which OTC tests are covered by direct coverage

In establishing a direct coverage program, plans may limit free OTC tests to those of a specific type or from a limited number of manufacturers as long as the “adequacy” requirements continue to be met. In some cases, this may allow a plan to be more efficient about setting up direct coverage. For example, assume a plan’s vendor procured a large number of OTC tests directly from a manufacturer to then use in the direct shipping component of the direct coverage. Having just one manufacturer’s test readily available upon request may be enough to satisfy direct coverage, depending on the facts and circumstances for that plan.

Important additional fraud and abuse protection – coverage may be limited to only legitimate suppliers and retailers

The Departments clarify in Part 52, Q#3 that plans can restrict reimbursement for OTC tests to those that were obtained from “established retailers that would typically be expected to sell OTC COVID-19 tests.” This is an important clarification because plans were unclear whether claims submitted for OTC tests from resellers, online auctions, or purchased from other individuals were required to be reimbursed. With this FAQ, the Departments unequivocally provide that they do not have to be reimbursed by the plan, and that the plan may adopt reasonable documentation requirements for proof of purchase for the claim. Here again, the Departments emphasize that plans should clearly communicate the requirements and any restrictions to covered individuals.

“Rolling 30-day” clarification on the 8 test per 30-day (or month) limitation

The FAQs specify in FN 12 that the requirement to cover up to 8 tests per 30-day period per covered person may be applied on a “rolling 30-day period” which does not have to coincide with a calendar month. We think this may be important flexibility for employers to consider with their plan advisors and vendors to potentially help close prior-elapsed periods during which no OTC tests were obtained. The applicability and usefulness will depend on the plan design as well as vendor capabilities, but it may be an opportunity help control stockpiling of tests or other undesirable outcomes.

No “double-dipping” under account-based or other plan coverage

Part 52 Q#5 firmly provides that “an individual cannot be reimbursed more than once for the same medical expense.” Therefore, costs covered or reimbursed by the plan cannot be reimbursed or covered by an FSA, HRA, or HSA (albeit in many cases the employer plan sponsor is not involved in HSA claims administration). The FAQ additionally provides information about correcting improper reimbursements.

In discussions with the Departments, it appears there may be lingering confusion about plan sponsors with truly separate medical and pharmacy benefit plans, or situations where someone is covered by multiple plans of different employers (e.g. an individual’s own employer plan and a spouse’s plan). The Departments may provide additional information about these circumstances, but in many cases these situations may be addressed by the FAQ discussion of the medical plan identifying the party, entity, or other source of the tests, or alternatively under existing coordination of benefits mechanisms. Plans with these questions, should discuss with their legal counsel.

Business Group on Health will continue to raise and discuss employer issues with the Departments. Although we expect plans and their vendors to move forward with their coverage implementation and that further guidance may be of limited utility, we welcome member comments regarding remaining challenges. For any questions or comments, please feel free to contact Garrett Hohimer, Director, Policy & Advocacy at [email protected].

We provide this material for informational purposes only; it is not a substitute for legal advice.

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