Insurers Withstand Provider’s Claims for Inadequate Reimbursement of COVID-19 Testing

An out-of-network health care provider has sued multiple health insurers for failing to reimburse the full cost of COVID-19 testing as posted on the provider’s public website. As background, group health plans and insurers are required to cover COVID-19 diagnostic testing without cost-sharing, prior authorization, or other medical management requirements. Unless the plan or insurer and the provider have agreed on a negotiated rate, the plan or insurer must pay for the testing at the cash rate posted on the provider’s public website (see our Checkpoint article). After the court dismissed an earlier attempt (see our Checkpoint article), the provider filed new complaints against three insurers asserting violations of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Families First Coronavirus Response Act (FFCRA), and ERISA.

In preliminary decisions, the court reached similar conclusions in all three cases. First, each decision reiterated the previous determination that the CARES Act and FFCRA provide no private right of action, express or implied, for claims of improper reimbursement for COVID-19 testing. With respect to the ERISA claims, the court explained that ERISA § 502(a)(1)(B) allows participants and beneficiaries to recover benefits or enforce rights under a plan. Providers lack “standing” on their own and can bring an action under this provision only with a valid assignment from a plan participant or beneficiary. The provider’s argument that the CARES Act and FFCRA altered ERISA’s statutory standing requirements was rejected, with the court in the Aetna case reasoning that the statutes’ references to ERISA indicated an intent to “harmonize with ERISA’s enforcement scheme,” rather than change it. The ERISA claims were dismissed in all cases but, in two cases, the provider was granted permission to amend its complaint to allege facts that would indicate that patients assigned their benefits to the provider. Other claims under various federal and state laws, including the Racketeer Influenced and Corrupt Organizations Act (RICO), were also dismissed.

EBIA Comment: Conflict seems inevitable under the diagnostic coverage mandate since out-of-network COVID-19 testing providers may set very high prices (as was apparently the case here) and demand full reimbursement. Given that these cases involve major insurers that also provide administrative services for self-insured plans, their resolution could have far-reaching effects. Keep in mind that the diagnostic coverage requirement will remain in effect through the duration of the public health emergency declared by the Secretary of HHS (most recently renewed in mid-October). For more information, see EBIA’s Group Health Plan Mandates manual at Section XVI.C (“COVID-19: Mandated Coverage of Diagnostic and Preventive Services”). See also EBIA’s Self-Insured Health Plans manual at Section XIII.C.11 (“Coverage Mandates Relating to the COVID-19 Pandemic”), EBIA’s Consumer-Driven Health Care manual at Section X.H (“COVID-19 Testing and Treatment”), and EBIA’s ERISA Compliance manual at Section XXXVI.G (“Who Can File ERISA Benefits Litigation?”).

Contributing Editors: EBIA Staff.