Regulator issues guidance on COVID-19 testing and vaccination reimbursement

May 17, 2022
Area(s) of Interest: Payor Issues and Reimbursement 

A California Medical Association (CMA) sponsored law (SB 510, authored by Senator Richard Pan, M.D.) that took effect on January 1, 2022, requires health plans and insurers to cover COVID-19 testing and vaccine administration with no patient cost-sharing, no prior authorization and regardless of the provider’s network status, retroactive to March 4, 2020.

The new law also prohibits health plans and insurers from shifting the financial responsibility of COVID-19 testing and vaccine administration to contracted providers, including to delegated groups and IPAs, unless both parties have negotiated and agreed to a new contractual provision for the provision of these services.

On April 25, 2022, the California Department of Managed Health Care (DMHC) issued implementation guidance (APL 22-014) that should be helpful for physicians who haven’t been reimbursed or have been underpaid.

Under the regulator’s guidance, a provider is considered to be “in-network” only if the health plan and provider specifically negotiated a payment rate for COVID-19 testing and vaccination administration services. Otherwise, the provider is considered to be “out-of-network” (for reimbursement purposes only).

The guidance clarifies that a provider is considered “out-of-network” for reimbursement purposes if:

  1. The provider doesn’t have a contract with the plan and the two parties have not agreed to a specifically negotiated rate for COVID-19 testing and vaccination administrative services; or
  2. If a plan and a provider had a contract that generally delegated testing or vaccination services to the provider, but the contract did not include a “specifically negotiated rate” for COVID-19 testing and vaccine administration.

For reimbursement of COVID-19 testing and vaccine administration, health plans must reimburse out-of-network providers at a “reasonable" rate, compared to prevailing market rates prevailing market rates. Per the guidance, out-of-network provider reimbursement is considered “reasonable” if the plan reimburses the provider in an amount that is at least 125% of the amount Medicare reimburses on a fee-for-service basis in the geographic region.

Depending on the COVID-19 testing circumstances, federal law may apply, which could alter the reimbursement rate. For more information, see APL 22-014 (page 6).

“Lost” Patient Cost-sharing

SB 510 and the implementing guidance also requires health plans to reimburse providers for any “lost” patient cost-sharing for COVID-19 testing services. For example, where the terms of the patient’s coverage would normally have required the enrollee to pay the provider a cost share (e.g., co-payment), that cost-sharing was waived per federal or state requirements (e.g., COVID-19 testing) and the health plans are financially responsible for reimbursing the provider those amounts.

If a treating physician hasn’t been reimbursed for lost patient cost-sharing, they are entitled to be reimbursed by the plan. Additionally, if a delegated group or IPA has been reimbursing providers for the lost cost-sharing, but the health plan has failed to reimburse the delegated group or IPA, that group or IPA is entitled to receive that lost cost-sharing from the health plan.

Timing of Payment

The guidance requires plans to reimburse providers for applicable services rendered between March 4, 2020, and December 31, 2021, no later than July 1, 2022, or within 45 days of receipt of the claim, whichever is later. If a plan fails to pay by this timeframe, interest and penalties will begin to accrue and plans may be subject to administrative and/or civil penalties.

Claims for dates of service on or after January 1, 2022, should be paid within 30 working days for PPOs or 45 working days for HMOs under current regulations.

Plans must also submit an attestation to DMHC by May 27, 2022, that the plan will negotiate with its contracted providers and agree upon a new contract provision consistent with SB 510 prior to delegating financial risk for these services related to the public health emergency and that the plans will reimburse providers for the “lost” patient cost-sharing.

CMA has confirmed with DMHC that while providers should not be required to resubmit claims to either the delegated group or the health plan, providers are encouraged to reach out to their contracting health plans to understand the most efficient way to ensure all affected claims are reprocessed correctly.

The California Association of Health Plans is challenging SB 510 in the courts, including SB 510’s retroactivity provision. However, the law currently remains in effect and plans are required to comply with the law and the DMHC guidance.

Questions: CMA’s Reimbursement Helpline (888) 401-5911 or economicservices@cmadocs.org.


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