Key COVID-19 Claim Denial Trends Arising from the CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was developed to provide the healthcare resources needed to fight COVID-19. Signed into law March 27, 2020, the Act was designed to provide fast and direct economic assistance for US workers and their families, small businesses, and to preserve jobs.

Under the CARES Act, group health plans and health insurance payers are required to cover, without deductibles or other cost-sharing, "qualifying coronavirus preventive services," including items, services, and immunizations intended to prevent or mitigate COVID-19. The Act also covers COVID-19 testing and testing-related visits for uninsured individuals, as well as treatment for uninsured individuals with a primary COVID-19 diagnosis.

In short, under the CARES Act, private health plans are required to eliminate co-pays, deductibles, and claim denials for COVID-19-related diagnostics and care. However, data from XIFIN, Inc. shows that some payers continue to charge co-pays and deductibles and deny eligible COVID-19-related claims, particularly for the serology test for antibodies.

Based on XIFIN claim data, in March and the beginning of April, there was an approximately 22 percent improper denial rate. This has been managed with most of the payers and is down to approximately 8 percent, half of which can still be resolved with a phone call. The other half must go through an appeals process.

Improper denials have posed more of a problem for the COVID-19 antibody tests. In March and the beginning of April, there was an approximately 43 percent improper denial or mispayment rate. This has been managed down to approximately 25 percent. But there is still work to be done there.

Mispayments have been a problem because pre-existing CPT codes are being used for the antibody tests, and despite Medicare setting a price point for COVID-related antibody tests in the $40s, a number of payers are paying far below that amount.

Laboratories can continue to lower denial rates by promptly calling payers and educating them on the CARES Act and asking them to reprocess claims, which generally results in corrective action to the adjudication system for future claims. In cases where payer reimbursements for the COVID diagnostic test are below the Medicare reimbursement rate, labs need to contact the payer’s contracting department to negotiate a rate specific to COVID-19 testing.

One issue that has not yet been resolved is the Blues payers' policy to pay the patient directly for out-of-network (OON) claims. Most providers are still reluctant to generate any billing to COVID-19 patients to avoid a CARES Act compliance risk. The Blues, however, have interpreted the CARES Act requirement to not bill a COVID-19 patient as strictly applying to co-insurance and deductible. The Blues payers argue that labs should bill the patient directly when the Blues pay the patient.

The Blues' interpretation of the CARES Act is problematic for a number of reasons:

1. It is an added burden for the provider because the provider cannot know when a patient has been paid due to a lack of payor feedback to the provider
2. Labs do not want to get caught up billing COVID-19 patients during an ongoing public health and economic crisis
3. With bad debt rates as high as 50 percent on direct patient billing and the added costs involved with identifying a direct patient payment, it is not prudent for the Blues to take a position of penalizing labs that are OON during a time when testing capacity is still in demand at the state and local levels

Another outstanding issue is reimbursement for COVID-19 tests that are part of back-to-work testing. A June announcement stated that payers will not be required to cover COVID-19 screening tests that employers may require as they bring employees back to work.

The American Clinical Laboratory Association (ACLA) and others have stated this decision creates widespread gaps in coverage and undermines the intent of the CARES Act, which was designed to promote covered COVID-19 testing at many sites without a physician's order.

Undoubtedly this issue will require clarification and careful tracking, as different payers will set different coverage policies.

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About the Sponsor

XIFIN is a San Diego, California-based health information technology company with solutions (XIFIN RPM, XIFIN LIS, XIFIN ProNet, and VisualStrata) that span the diagnostic RCM, laboratory information systems (LIS), precision medicine informatics, and digital pathology consultation spaces. XIFIN RPM is used by seven of the top 10 largest labs and supports four of the five largest integrated delivery networks in the United States.