Out-of-Network COVID-19 Tests Are Susceptible to Price Gouging

The coronavirus pandemic has highlighted many of the problems in the healthcare system including the practice of price gouging, according to a recent America’s Health Insurance Plans (AHIP) survey.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act and  Families First Coronavirus Response Act (FFCRA) were supposed to ensure that most Americans would have access to coronavirus testing without cost-sharing.

As a result, most payers cover  coronavirus testing costs.

“The CARES Act also requires health insurance providers to pay the listed cash price for COVID-19 tests in the absence of a contract, thus eliminating their ability to negotiate more affordable test prices,” AHIP explained.

However, a previous survey, which AHIP conducted in July 2020, found that providers were engaging in price gouging. Because so many patients were visiting out-of-network providers to get tested, payers had no power to negotiate lower test prices when providers hiked prices above the in-network cost, AHIP argued.

The October 2020 AHIP survey found that in-network coronavirus tests in the commercial market cost around $130. When a provider is administering the test out-of-network, however, providers might charge an additional $55 or more resulting in a price tag of $185 or higher.

Some tests end up costing triple what the average coronavirus test actually costs. Anywhere from nine percent to 16 percent of out-of-network coronavirus tests cost over $390.

This is not an isolated incident, AHIP found.

Nearly half of diagnostic tests cost much more than the in-network price. Similar trends emerged for one-third of antibody and antigen tests.

The survey identified that most of the higher-priced out-of-network tests were from lab tests. Outpatient hospitals produced the second highest share of higher-priced out-of-network tests. Physician offices and clinics followed, respectively.

Specifically, standalone labs accounted for 58 percent of the high-priced, out-of-network testing, while hospital and outpatient settings produced another 18 percent of these tests, and various other locations such as provider offices and clinics also produced 18 percent.

Nearly half of all out-of-network diagnostic (PCR) testing (47 percent) exceeded $185, with 12 percent costing over $390.

Meanwhile, 34 percent of out-of-network antibody (serologic) tests exceeded $185, with 16 percent costing more than $390. And 33 percent of out-of-network antigen tests cost over $185, with nine percent exceeding $390.

“Compared to the results of the first (July 2020) survey, plans reported a higher share of COVID-19 tests being administered out-of-network and a higher share of claims for COVID-19 tests with costs far exceeding the average,” AHIP stated.

Comparing results from payers that participated in both the July 2020 and the October 2020 surveys, the number of coronavirus tests that are considered out-of-network increased by 14 percent. Twenty-three percent of coronavirus tests delivered are considered out-of-network.

Moreover, the price has increased since the first time AHIP conducted this survey about four months ago. The $185 bill is 10 percent higher than the typical bill seen in July.

The payer organization had four suggestions for stopping these high and escalating costs. AHIP recommended that more federal funding go toward covering coronavirus testing and that Congress fix a benchmark for out-of-network testing.

“Policymakers should accelerate the availability of consumer-friendly, rapid, and accurate tests that lower costs and mitigate the capacity and supply constraints of providers and labs,” AHIP added.

Finally, the payer organization suggested that the Administration evaluate whether coronavirus tests comply with standards for accuracy.

Providers are not the only ones capable of price gouging.

In recent months, a bill passed in the House of Representatives that aimed at amending a law that protects payers from certain anti-trust regulations. Those in favor of the bill argued that the old law enabled payers’ ability to use price gouging.

In this case, price gouging was related to industry consolidation, not the coronavirus pandemic, but it has nonetheless been impacted by the pandemic. Contrary to what one might expect, the coronavirus pandemic has not stopped payer consolidation, making the legislation still relevant.

Payers argued that this bill would undermine states’ rights to regulate insurance.