Health Insurers Push Back On COVID-19 Test Claims

Lawyer says payers are finding multiple ways to question claims from labs for coronavirus tests

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CEO SUMMARY: Under new federal laws, health insurers are required to pay for testing for the novel coronavirus without cost-sharing, prior authorization, or medical management limits, but insurers are questioning these COVID-19 lab test bills and denying many of the claims, a healthcare attorney said. Payers are challenging the medical necessity of COVID-19 tests, such as for patients needing surgery and when nursing homes, long-term care facilities, and other employers test their employees who are asymptomatic, she added.

After Congress passed two laws in March requiring payment for SARSCoV-2 lab tests, clinical laboratory administrators and pathologists may have expected payment for their COVID-19 lab test claims to surely follow. That optimism is proving to be misplaced.

Commercial health insurers have questioned a number of the bills clinical labs have submitted for SARS-CoV-2 tests, according to Danielle Sloane, a member of Bass, Berry and Sims, a law firm in Nashville. One of the first questions health insurers ask is whether the testing for COVID-19 is medically necessary, she said. Early in the pandemic, the problem of denied payment for COVID testing was quite common and it has continued into June, she added.

“Payers are questioning medical necessity for asymptomatic patients receiving COVID-19 tests before elective surgeries, and when employers, nursing homes, and long-term care facilities submit claims after testing their employees—whether such testing is state mandated or not,” she explained. “Payers also are pushing back on claims from out-of-network laboratories or when out-of-network physicians order these tests.”

When commercial health insurance companies deny COVID-19 test claims, Sloane has recommended that her lab clients send appeal letters to the insurers explaining that payment for coronavirus testing is required under two bills that Congress passed and President Trump signed into law in March. Those laws are the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security (the CARES) Act.

Guidance Issue by the Feds

On April 11, three federal departments (Health and Human Services, Labor, and Treasury) issued guidance jointly to implement the COVID-19-related coverage provisions in those two federal laws. The legislation requires comprehensive commercial health insurance plans to cover COVID-19 lab testing and related services without cost-sharing. But ever since that guidance was issued by the three federal agencies, health insurers have denied some COVID-19 lab test claims, Sloane explained. In addition, certain payers are lobbying Congress and the federal agencies to carve back the requirements enacted under the Families First and CARES Acts that mandate payers pay for such testing, she added.

COVID-19 Test Rules

“The problem with writing about these issues is that the rules are changing rapidly—particularly with respect to state mandates for COVID-19 testing and state department of insurance statements about what COVID-19 testing qualifies as medically necessary,” reported Sloane. “Right now, there are good arguments for coverage, but also some risk for clinical laboratories. This is why it is imperative that pathologists and lab managers call their in-house lawyers or outside counsel to understand what COVID-19 tests payers are required to cover.

“This is a big percolating area of concern,” Sloane said in an interview with The Dark Report. “These denials were mostly in the context of early testing for symptomatic patients, but it continues even now, particularly over the issue of medical necessity.

“This problem should be relatively easy to solve with an artfully-drafted letter,” she advised. “For my clients, I have drafted letters to payers saying, ‘You’re obligated under law to pay for this COVID-19 lab testing.’ But these things take time and each case is different.”

Letters Challenge Denials

One problem clinical laboratories face when seeking payment is that health insurers have multiple ways to question their obligations to pay for coronavirus tests. “When a lab performs COVID-19 tests for symptomatic patients, those claims clearly should be covered,” Sloane explained. “But it is also true that SARSCoV-2 testing is starting to evolve into more than one category.”

One such category are patients who need presurgical testing. “A patient about to undergo surgery may be asymptomatic, but if one state mandates COVID-19 testing—or if the hospitals themselves decide that such testing is required—does that mean these new coronavirus tests are medically-necessary as well,” she asked.

“In this situation, payers may challenge whether these tests are appropriate,” Sloane said. “These health insurers want to know if the COVID-19 testing is to protect the patient, the hospital staff, other patients, or the facility itself.”

As a lawyer representing clinical labs, Sloane said that with respect to pre-surgical COVID-19 testing there is likely some argument that the testing is medically-necessary and, as a result, that health insurers are required to pay for those tests. “Otherwise, how would the hospital and staff know if the patient is positive for the COVID illness?” she asked.

Send Appeal Letter to Payer

Therefore, when a payer denies such a claim, an appropriate response is an artfully drafted appeal letter. Often the same template letter can be used repeatedly. Sloan noted that, to date, it seems such letters have produced the desired result: payment to the lab.

Another category of COVID-19 testing that creates problems for clinical laboratories when submitting claims is testing for the purpose of assessing coronavirus infections among workers in nursing homes and long-term care facilities, and for employees returning to work as businesses reopen.

In New York State, for example, employers must test workers for COVID-19 before they can return to offices and worksites. In April, New York Governor Andrew Cuomo issued reopening guidelines requiring that employers do health screenings and symptom checks for workers and essential visitors.

Such screening includes asking about an individual’s symptoms, any positive COVID-19 test results, and any close contact with an individual who is confirmed or suspected to have the illness over the previous 14 days. For nursing home employees, more rigorous testing is required.

“With employer COVID-19 testing programs—such as in New York where testing is mandated in certain cases—health insurers are asking if they need to cover that testing,” Sloane explained. “The payers are likely to take the position that such COVID-19 testing isn’t related to healthcare, but to workplace safety. If it’s workplace safety, then the insurers can argue that payment is a requirement for employers.

“Initially, New York State said it would pay for such COVID-19 testing and it entered into contracts with labs to pay for those tests,” she reported. “But then new guidance came out that suggested the state was expecting payers to cover much of the testing. Under the latest guidance, New York said labs could submit COVID-19 test claims to payers because those tests are considered medically necessary.”

New York’s Shifting Guidance

The shifting guidance in New York shows how regulations have evolved and are rapidly changing. “There are legitimate questions about how New York can deem that the employer-required weekly COVID-19 testing is medically necessary,” noted Sloane. “At the same time, payers are lobbying Congress to carve back the scope of COVID-19 testing that insurers must cover pursuant to the Families First Act.”

Another problem for labs is how health insurers, including the federal Centers for Medicare and Medicaid Services (CMS), define medically-necessary testing.

“CMS has provided a lot of flexibility with respect to COVID-19 testing, but it has not removed its basic requirement that the testing be medically necessary,” Sloane reported. “Also, some states are issuing regulations on such testing, and that means the rules addressing COVID-19 testing are different from state to state.

“If the payers are successful, the next stimulus bill in Congress could include language that rolls back some of the COVID-19 coverage language in the Families First Act and in the CARES Act,” predicted Sloane.

Scope of Coverage Changes

“If that happens, clinical laboratories will need to pay attention to when any scope-of-coverage changes take effect,” she added. “These are all issues that labs need to follow closely or at least confirm that their legal teams are following.

“For clinical laboratories, what matters is who is responsible for paying for COVID-19 tests, because no laboratory wants payers to later attempt to recoup payments made for COVID-19 tests,” concluded Sloane. TDR

New York State Issues Guidance on Payment for COVID-19 Tests That Other States May Copy

IN APRIL, NEW YORK GOVERNOR ANDREW CUOMO issued executive orders about COVID-19 lab testing for employees who work in nursing homes and long-term care facilities. Then, on May 19, two New York State agencies issued guidance related to these testing requirements: the Department of Health (DOH), which regulates lab testing, and the Department of Financial Services (DFS), which regulates health insurers.

“In its guidance, DFS essentially said health insurers may not deny coveragefor SARS-COV-2 testing for personnel at nursing home or adult care facilities,” said Danielle Sloane, a healthcare attorney at Bass, Berry and Sims in Nashville. “This means health insurers must cover COVID-19 testing required by the state, including nursing home workers interactingwith the public every day.

“To say that health insurers can’t deny payment for such COVID-19 testing is significant, because no health insurer can easily refute that they are required to cover the testing,” she added. “It’s importantto note that departments of insurance inother states may follow the lead of the New York DFS by issuing similar rules.

Questioning Necessity

Determining the medical necessity of COVID-19 testing in a nursing home or long-term care facility should not be difficult, she commented. Under New York’s regulations, insurers may not deny coverage for COVID-19 testing of personnel at nursing homes or adult care facilities without considering whether the testing was medically necessary, she added.

“For example, if a worker were exposed to the virus, or were symptomatic and ultimately tested positive for COVID-19, then that testing would be medically necessary,” she commented.

The New York executive order and DOH guidance go into more detail, saying employees who work in nursing homes are required to be tested for SARSCoV-2 twice a week. Labs should note, however, that New York recently updated its requirement to allow facilities to test once per week if they have reached the second phase of New York’s reopening plan. On June 17, Cuomo said New York City could enter phase two of the state’s reopening plan. Other parts of the state have already reopened under phase two.

Medical Necessity

The DOH said that when testing employees, nursing homes can submit COVID-19 test claims to health insurers and those tests would be considered medically necessary under the Coronavirus Aid, Relief, and Economic Security Act, which Congress passed in March. “The guidance contemplates that payers could deny claims and clarifies that facilities must pay for testing if payers refuse,” Sloane noted. But state officials may facilitate payment from the Federal Emergency Management Administration or from another federal funding source, the DOH added.

“For now, testing must be antigen or molecular, although antibody testing may be considered in the future,” Sloane added. “Also, testing should be conducted at least two days apart.

“Employees who had a previous positive diagnostic test or reactive serologic test must still be tested twice per week, but, again, this policy may change in the future,” she noted. “Nursing home or adult-care facility staff who work at two ormore facilities must be tested twice each week, but any facility can use the documentation provided by another facility to comply with this mandate and each facility must maintain the documentation.

Early in Outbreak, Feds Fumble Test Payments

FROM THE START OF THE COVID-19 PANDEMIC,  various federal agencies took actions that slowed the responses the nation’s clinical labs could take to address the needs for large volumes of COVID-19 tests.

That was true at the federal Centers for Medicare and Medicaid Services (CMS). Early in the outbreak, it set the price the Medicare program would reimburse for a molecular COVID-19 test at just $51. It didn’t take news reporters long to discover that this price was below the cost of most labs to perform such tests, along with the fact that many private insurers set their reimbursement rates based on the Medicare Price.

Apparently, the negative news coverage caused CMS officials to rethink that price. On April 14, CMS increased Medicare reimbursement for molecular COVID-19 tests to $100. The COVID Tracking Project reported that its data showed the number of COVID-19 lab tests doubled in the week after this price increase.

Contact Danielle Sloane at 615-742-7763 or



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