Articles Posted in COVID-19

During the COVID-19 pandemic, demand for COVID-19 testing increased dramatically and many clinical laboratories either began operations or rapidly increased testing capacity to meet this demand. As the pandemic ends and the demand for COVID-19 testing fades, clinical labs are scaling back capacity for COVID-19 testing, pursuing other lines of business, or closing down entirely. These transitions may raise several regulatory issues for a clinical lab to consider. Note this is not a comprehensive list, but an overview of some common issues.

Did the lab bill Medicare, the HRSA Uninsured Program, or other federal healthcare programs? Federal authorities have indicated that claims for pandemic-related services or claims to pandemic-related programs will be a focus of fraud, waste, and abuse enforcement actions for years after the pandemic. The end of the pandemic or the end of widespread COVID-19 testing will likely not be the end of the need for regulatory compliance.

Was the lab in-network or out-of-network with payors? Commercial insurers have also increased scrutiny of claims for COVID-19 testing. During the public health emergency (PHE), commercial insurers were required by federal law to cover certain COVID-19 tests and insurers incurred significant costs providing such coverage. However, insurers have begun auditing labs and demanding significant repayments of claims for COVID-19 testing. A lab that is in-network with a payor will likely have rights and obligations in regard to such a dispute dictated by its participation agreement with the payor. However, many labs billed for COVID-19 testing while out-of-network, which may put the lab in a stronger position during a dispute because the payor likely does not have a contractual mechanism to collect an overpayment. Also, labs that stop billing a paying may want to consider formally ending their participation or enrollment with a payor. Especially in the case of Medicare, simply ceasing compliance with enrollment requirements can lead to an involuntary termination or revocation, which can have significant collateral consequences.

More of the long-promised enforcement actions related to COVID-19 pandemic relief and healthcare programs have started to unfold. This time it is demands from the Health Resources and Services Administration (“HRSA”) that providers repay funds they have received for providing COVID-19 testing to the uninsured during the pandemic.

As part of the response to the COVID-19 pandemic, Congress provided funding for testing of patients without health insurance. The funding of testing for the uninsured was overseen by HRSA under the COVID-19 Claims Reimbursement to Health Care Providers and Facilities for Testing, Treatment, and Vaccine Administration for the Uninsured Program. HRSA contracted with Optum to administer the program directly. Generally referred to as “HRSA funding” for testing of the uninsured, this system functioned as a claims reimbursement program wherein eligible healthcare providers submitted claims to HRSA/Optum for reimbursement, made certain attestations, and Optum reimbursed providers’ claims.

Recently, healthcare providers who billed and received reimbursements under this program have begun to receive “assessment” letters from HRSA. HRSA has generally insisted that these are not “audits,” but “assessments.” These letters generally indicate that HRSA made payments to the provider in error and demand that the provider make immediate repayment. The letters generally do not provide denial reasons or explain the nature of the “error,” and do not contain allegations of fraud. They simply demand repayment. The letters also generally do not provide for an appeal process. Where a provider receives a letter, HRSA generally also suspends payment to the provider, pending the completion of an assessment.

As the COVID-19 pandemic continues to recede, efforts by commercial insurance carriers to claw back millions of dollars paid out for COVID-19 testing services are steadily increasing, creating an ongoing audit risk for healthcare providers, especially clinical labs. In many cases, efforts to get people tested, slow the pandemic, and ask questions later have turned into accusations of over-billing and demands that providers repay the insurance carriers.

Early in the pandemic, Congress required commercial insurers to cover certain claims for COVID-19 testing. However, Congress did not provide the insurers with funds to cover the cost of this mandate and some insurers have pushed back against lab claims for COVID-19 testing. As public opinion and political fervor over the urgency of testing has subsided, commercial insurers are taking advantage of the opportunity to audit COVID-19 testing claims, dispute payments they have made to the labs, and demand that labs make repayment, often for significant portions of the lab’s COVID-19 testing volume. These disputes generally focus on the same issues.

First, insurers may audit labs based on the requirement for an “individualized clinical assessment,” including whether the practitioner was authorized, whether the order for testing was within the scope of state law, whether the assessment was conducted by telemedicine or by a questionnaire, whether the ordering provider used a standing order, and what rules apply where a state does not or did not require an order for COVID-19 testing.

On July 15^th, 2022, the U.S. Department of Health and Human Services (HHS) extended the COVID-19 Public Health Emergency by another 90 days. The Public Health Emergency has allowed HHS and various federal agencies to issue waivers of regulatory requirements to ensure that providers have greater flexibility with several issues, including reporting requirements and telehealth reimbursement as the Pandemic grew increasingly dangerous.

The Public Health Emergency has existed since January 27^th of 2020. After the last extension of the Public Health Emergency in April of 2022, HHS Secretary Xavier Becerra assured that there will also be a 60-day notice to providers nationwide when HHS decides to terminate the Public Health Emergency.

Although the Public Health Emergency has been extended, it is important to note that the Centers for Medicare and Medicaid Service (CMS) has already started to end some of the regulatory flexibilities implemented during the Public Health Emergency. We discussed the termination of some of these blanket waivers in a previous blog post. Providers who are relying on any of the regulatory waivers should verify whether the waivers remain in effect or have been ended prior to the end of the Public Health Emergency.

A new study supports the growing perception that clinical laboratories will see an increase in audits from commercial insurance companies as the COVID-19 pandemic recedes. These audits will likely focus on a few particular areas of the COVID-19 testing services that clinical labs have developed and provided over the past two years.

The study reviewed lab revenue in Hawaii from May to December 2020 and is likely applicable to labs in other insurance markets. The study indicated strong growth in lab revenue from PCR tests and significant profit margins from PCR tests. Because federal law, namely the CARES Act, requires commercial insurers to cover COVID-19 testing without co-pays or other costs to the beneficiary, this increase in lab revenue will generally translate to higher costs for insurance companies. Further, when Congress passed the CARES Act, it did not provide funding to insurance companies for this coverage mandate. Many have long predicted that this would lead to increased costs for insurers, which would likely be passed on to members through higher premiums. Many insurance companies have pushed back against this coverage mandate since it was enacted.

Part of the pushback from commercial insurance companies has been to audit labs in an effort to deny claims for COVID-19 testing and to claw-back funds paid to labs for COVID-19 testing. These audits tend to focus on one or more of several issues: testing for a covered purpose, testing for travel, individualized clinical assessments, standing orders, posted cash prices, and collection codes. Some labs are particularly vulnerable to these audits because, during the pandemic, many labs rushed to invest and develop COVID-19 testing capability and capacity. Meanwhile, guidance regarding the CARES Act and the circumstances under which insurance companies are required to cover COVID-19 testing came out piecemeal and changed frequently as it developed. Due to these factors, labs may have high volumes of tests that represent a good-faith, best effort at complying with the CARES Act at the time the tests were performed, but may have compliance vulnerabilities as the law is currently understood.

The COVID-19 pandemic has brought seismic changes to the clinical lab industry. High demand for COVID-19 testing services, tremendous amounts of funding, and rapidly changing government regulations have created opportunity for clinical labs, but also new compliance and audit challenges. As the dust settles and government entities and commercial insurers review lab claims for COVID-19 testing over the past two years, these are some of the audit and compliance challenges labs may face.

Early in the pandemic, Congress required commercial insurers to cover certain claims for COVID-19 testing. However, Congress did not provide the insurers with funds to cover the cost of this mandate and some insurers have pushed back against lab claims for COVID-19 testing. Under the federal coverage mandate, insurers are generally required to cover tests that are for the diagnosis of COVID-19 where there is an “individual clinical assessment” by an authorized provider that testing is appropriate. Testing for travel, return to work/school, and general screening purposes is generally not required to be covered, although insurers may choose to cover it. Insurers that chose to cover only what they are legally required to cover may audit labs for providing testing for an uncovered purpose. Testing for travel is sometimes a contentious issue because, depending on the circumstances, it may constitute uncovered general screening, or, in the case of people who were exposed while travelling or who were unable to social distance per CDC guidelines while traveling, may constitute circumstances where testing would be covered.

Further, insurers may audit labs based on the requirement for an “individualized clinical assessment,” including whether the practitioner was authorized, whether the order for testing was within the scope of state law, whether the assessment was conducted by telemedicine or by a questionnaire, and what rules apply where a state does not or did not require an order for COVID-19 testing.