DMHC’s emergency regulations on COVID-19 testing are less protective than federal law

September 22, 2020

On July 16, 2020, the Department of Managed Health Care (DMHC) submitted emergency regulations on COVID-19 testing to the California Office of Administrative Law (OAL). DMHC requested a waiver of the five-day comment period, which OAL granted, and the emergency regulations became effective the next day, July 17, 2020. The California Medical Association (CMA) has significant concerns with the emergency regulations.  

Rather than broadening access to COVID-19 testing like the federal law has done, CMA believes the emergency regulations create barriers that will delay medically necessary access to COVID-19 testing and adds confusion about whether the test will be a covered benefit. The emergency regulations are also less protective than federal law.

The emergency regulations create a rigid three-tiered testing prioritization structure that is not responsive to changes in testing capacity in California and creates a conflict with the four-tiered testing prioritization structure created by the California Department of Public Health, which was designed to be responsive and is modified based on changes in conditions.

Additionally, DMHC’s emergency regulations allow payors to impose cost-sharing requirements and prior authorization requirements on COVID-19 testing and limits testing to in-network facilities for certain individuals. The three tiers that result from the DHMC regulations are as follows:

  • Tier 1 –Individuals who are symptomatic or those with known or suspected recent exposure are covered under federal law, which prohibits payors from imposing cost-sharing, prior authorization or other medical management requirements. Federal law also requires payors to reimburse any provider of COVID-19 diagnostic testing, regardless of network status.
  • Tier 2 – This tier applies to individuals the DMHC emergency regulations define as “essential workers.” The regulations deem COVID-19 testing as a medically necessary basic health care service and prohibits plans from requiring prior authorization. However, under Tier 2 payors are allowed to charge cost sharing and individuals are required to obtain testing from an in-network provider as a condition of benefits.
  • Tier 3 – This tier applies to individuals that are not included in tier 1 or tier 2 – those who are asymptomatic, have not had any known exposure and are not defined as essential workers under the emergency regulations. For patients in this tier, the regulations allow payors to charge cost-sharing, require in-network testing as a condition of benefits and allow prior authorization requirements. Additionally, in order to determine whether a prior authorization is required, the regulations place the burden on the physician to determine whether the individual is an essential worker and does not provide guidance on how to report that to the payor.

CMA has significant concerns that the emergency regulation limits and delays access to testing, creates a barrier to accessing diagnostic testing, particularly for minoritized and marginalized communities, and creates an unworkable operational requirement. CMA escalated these concerns in an August 24, 2020, letter to the Newsom Administration.

On September 18, 2020, DMHC issued an All Plan Letter (APL 20-033) to address stakeholder questions regarding the regulation. However, the APL does not alleviate CMA’s concerns.




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