MA Members Could See High Out-of-Pocket Costs For COVID-19

High out-of-pocket costs may dissuade some Medicare Advantage beneficiaries from seeking COVID-19 care as payers eliminate cost-sharing waivers, according to a new American Journal of Preventive Medicine study that calls for legislation to mandate insurers cover hospitalizations from the virus.

While most payers currently cover COVID-19 hospitalization costs in full for Medicare Advantage (MA) beneficiaries, some insurers have started to roll back cost-sharing waivers, which may suggest that coverage for COVID-19 hospitalizations is on its way out.

“Insurers may choose to extend their waivers for enrollees with Medicare Advantage and private insurance coverage,” said Kao-Ping Chua, MD, PhD, the study’s first author and an assistant professor at the University of Michigan Medical School. “But if they don’t, patients will be faced not only with the physical and emotional toll of COVID-19 hospitalizations, but also the financial toll.”

The researchers analyzed out-of-pocket costs for 14,278 MA beneficiaries hospitalized from influenza during 2018, one of the worst flu years in recent history, to gain a handle on potential COVID-19 hospitalization costs should  cost-sharing waivers be eliminated.

Chua noted that the although COVID-19 has had far more of an impact on the country, influenza is the closest option available to make out-of-pocket cost predictions for MA beneficiaries, as the flu disproportionately affects the elderly and involves similar kinds of care as COVID-19.

In addition, members hospitalized for the flu had an average stay of six days, and one in three beneficiaries required intensive care. These averages are around the same or slightly lower than those of hospitalized adults over 65 with COVID-19.

Mean out-of-pocket cost for flu hospitalizations for MA members in 2018 was $987. About three percent of beneficiaries faced out-of-pocket costs over $2,500 and a few faced costs up to $4,000.

The study noted that in 2018, 40 percent of Americans lacked enough savings to pay for a $400 emergency. With the pandemic putting significant economic pressure on Americans, affording COVID-19 hospital care could be even more difficult.

The researchers called for payers with cost-sharing waivers in place to consider extending them indefinitely. Additionally, the researchers called for policymakers to pass legislation that mandates payers to cover COVID-19 hospitalizations.

Americans over age 65 have a high chance of needing hospital-level care if they are infected with COVID-19, and 40 percent of those in this age group are covered by Medicare Advantage. If payers eliminate cost-sharing waivers, thousands of elderly, low-income Americans could be responsible for out-of-pocket costs that they cannot afford.

A COVID-19 hospitalization coverage policy would not only relieve these individuals of extreme financial burdens, but it would also encourage people to seek COVID-19 emergency or inpatient services without the worry of out-of-pocket costs and affordability, the researchers said.

Chua and his co-author Rena Conti, PhD, of Boston University’s Institute for Health System Innovation and Policy, noted that previous studies estimating potential cost-sharing for COVID-19 hospitalizations have mainly focused on nonelderly, privately insured members.

For example, a 2020 study analyzed out-of-pocket spending for privately insured individuals hospitalized between 2016 and 2019 for respiratory infections in order to estimate costs for COVID-19 hospitalizations among this group.

The Johns Hopkins study, published in the American Journal of Preventive Medicine, found that on average, privately insured Americans’ out-of-pocket costs for respiratory infection hospitalization was $1,961.

Chua and Conti said that the results of the Johns Hopkins study may overestimate potential cost sharing for COVID-19 hospitalizations among elderly MA beneficiaries, as most privately insured individuals have high-deductible health plans, leading to higher out-of-pocket costs.

However, even though MA beneficiaries may face lower out-of-pocket COVID-19 costs compared to the privately insured, Chua and Conti explained that the burden of the costs may affect those low-income Americans enrolled in MA more severely than the privately insured.