E2 – Get the Facts on COVID-19: Patient Out-of-Pocket Costs

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Tune into the second episode of our podcast series that focuses on COVID-19. In episode 2, Avalere experts discuss how Medicare, Medicaid, and commercial plans will address the patient out of pocket costs associated with COVID-19 testing and treatment. They also acknowledge how commercial manufacturers are addressing the shortage of tests and turnaround for COVID-19 testing in the US.
Please note: This is an archived post. Some of the information and data discussed in this article may be out of date. It is preserved here for historical reference but should not be used as the basis for business decisions. Please see our main Insights section for more recent posts.
“Medicare will cover COVID-19 testing. There are no out-of-pocket costs for the beneficiary. Medicare also covers any necessary hospitalizations related to COVID-19 and the need to stay in the hospital longer under quarantine. The National Emergency Declaration enables CMS to grant state and territorial Medicaid agencies a wider range of flexibilities under the 1135 waivers.” Danielle Showalter


Chris Sloan , Principal, Policy

Chris Sloan advises a number of clients, including pharmaceutical manufacturers, health plans, providers, and patient groups on key policy issues facing the healthcare industry.

Jay Jackson , Principal, Commercialization & Regulatory Strategy

Jay Jackson conducts evidence-based assessments of the regulatory and policy environments for approval of and market access for medical products.

Danielle Showalter , Principal, Commercialization & Regulatory Strategy

Danielle Showalter advises clients on reimbursement, policy, and market access strategies for diagnostic, medical device, and pharmaceutical companies.

This interview was originally published as a podcast. The audio is no longer available, but you can read the transcript below. For updates on our newly released content, visit our Insight Subscription page.

Explore Other Interviews in This Series

E1 – Vaccination Affordability and Access


Chris: Hello and welcome to Avalere’s second episode in a series of podcasts focused on COVID-19. My name is Chris Sloan, and I am an associate principal in the policy practice. I am joined today by my colleagues Jay Jackson and Danielle Showalter, who sit in Avalere’s Commercial and Regulatory Strategy Market Access teams at Avalere. In today’s episode, we are going to be talking about the costs associated with COVID-19 for patients, specifically with out-of-pocket costs and what health plans are doing to address these issues. Danielle, we’ll start with you. Can you speak to why policy makers and public health advocates are so focused on patient out of pocket cost?

Danielle: Sure. Thanks, Chris. There are a couple of issues at play here:

First, the US healthcare system is a patch work system with a varying degree of coverage and payments of service based on individual plans.

Second, for COVID-19, the symptoms greatly range, which translates to people interfacing with the healthcare system with different needs and levels.

Speaking on those varying degrees of levels, you are seeing patients with mild viral symptoms to respiratory issues ranging from shortness of breath to full respiratory failure. These patients may incur costs associated with the system–whether it’s testing and services–like visits to emergency departments or urgent care centers. According to the US Centers for Disease Control (CDC), older adults and people who have severe chronic medical conditions seem to be at a higher risk for more serious versions of the COVID-19 illness, which puts beneficiaries with Medicare as the higher risk population.

When you think of the workup involved with this and therefore the cost, things like additional testing—like for the COVID-19 test, flu, blood work, CT, or other imaging to serious patient needs like intubation and mechanical ventilator—may lead to patient’s hospitalizations which incurs costs associated with those services. This can obviously become very expensive very quickly. Even patients with insurance can start to get into the out-of-pocket costs, ranging in the thousands of dollars.

Chris: You mentioned Medicare patients as a higher risk population. What does out-of-pocket cost sharing look like for Medicare beneficiaries when they are going to get treatment or tested?

Danielle: For starters, Medicare will cover the cost of the lab test. They are covering COVID-19 test. There are no out-of-pocket costs for the beneficiary. Medicare also covers any necessary hospitalizations related to COVID-19 and the need to stay in the hospital longer under quarantine. However, as with all Medicare services for the most part, including inpatient services, there are going to be costs associated with being admitted to the hospital. When you think about being admitted in the in-patient setting, each [Medicare] beneficiary for each benefit period would have a deductible of $1,400 and, depending on how long they’re staying, their coinsurance could vary.

For days 1–60 there is $0 coinsurance, and days 61–90 of an inpatient stay could have around a $352 coinsurance per day of each benefit period.

So that could stack up the costs. When you think of beneficiaries who have Medicare Advantage, they have access and coverage for the same benefits as traditional Medicare, but since those Medicare Advantage plans are managed by commercial payers, they are also going to vary by plan in terms of cost. And I know Jay can talk toward that more and what the commercial market is doing shortly.

Chris: We talked of the implications for cost sharing with Medicare patients. What else has Centers for Medicare & Medicaid Services (CMS) done to ease the burden for patients? Also, how has CMS eased the burden for providers?

Danielle: I think CMS is taking several actions to allow for greater flexibility, following President Trump’s declaration for a national emergency from COVID-19. More of those flexibilities are for expanding items for providers and allowing greater access to the system than easing the financial burden. But so far to date, under Medicare these items have included:

  • Waving the requirement for skilled nursing facilities (SNF) to provide temporary emergency coverage for a SNF stay.
  • Allowing for greater number of beds and extended stay for critical access hospitals.
  • Expanding telehealth and virtual check ins, which is another topic we will cover in more depth in another podcast.

Chris: How about on the Medicaid side. What is CMS doing there?

Danielle: Great question. CMS includes both Medicare and Medicaid. In addition to Medicare, on the Medicaid side, CMS has issued guidance noting that the COVID-19 test itself meets the mandatory criteria for laboratory service and that states may waive cost sharing costs for the test through either a state plan amendment or through a waiver. The National Emergency Declaration also enables CMS to grant state and territorial Medicaid agencies a wider range of flexibilities under the 1135 waivers. To date [March 18, 2020], FL has been the first state to submit and gain approval for one of those waivers in response to the COVID-19 emergency. The flexibilities are going to vary but so far for FL, it includes items such as allowing the state to waive prior authorization requirements to remove barriers to needed services and streamlining provider enrollment processes to insurance access to care for beneficiaries.

Chris: Great. Now I’ll pivot from that. We’ve talked about Medicare and CMS. Jay, I want to go to you to talk about what commercial health plans are doing to ensure patients have access to diagnostic tests and their general response to what’s going on with COVID-19.

Jay: Sure, Chris. Thanks! I think the commercial insurers have been very responsive to what’s going on out there. Many large insurers have announced coverage for the test. Several large insurers have committed to first dollar coverage for initial COVID-19 testing in a white house meeting last week. So while a large portion of commercial insurance consists of what we call self-insured employer plans, that may be able to opt out of some of these coverage or cost-sharing requirements, we expect that many insurers will provide coverage for testing, and that may include first dollar coverage for testing as well.

Chris: That’s obviously testing. But I imagine if you go get a test and you’re diagnosed as positive, what’s the story for treatment costs? What are plans doing to help patients respond to the actual treatment costs?

Jay: Yes, that’s what we think through in the commercial market. The commercial insurance market is going to be more complicated than the Medicare market, and we think the commercial cost sharing is going to be highly variable depending on the insurance carrier and the enrollees’ specific plan, which again is a big difference from Medicare. That said, there is a big push for insurance [companies] to cover testing on a first dollar basis. With that being said, no payer, whether it’s commercial or Medicare, is committing to no cost-sharing requirements for subsequent treatment–whether that’s long term care treatment (LTCs) or other treatment in the hospital–so we expect a high level of variation in out of pocket costs for patients who go to urgent care or emergency department or those admitted into the hospital. This is a highly evolving space with many dynamics, so we expect additional updates from commercial insurance plans over the coming days.

Chris: So, Jay, I know the CDC and state public health labs have been running a lot of the COVID-19 tests being performed. Do you expect that to continue going forward or any changes to that dynamic?

Jay: Yes, definitely, Chris. Public health labs and the CDC have done everything they can to run as many tests as they can. We know that 11,000 tests have been performed in those types of labs and we know that those tests are free to cost-sharing patients as well. There needs to be a higher throughput of testing in this country, and I think they recognize that.

I think that’s why US Food and Drug Administration has relaxed its oversight of commercial lab testing in what we call quo-certified labs. We are also seeing increased rollout in kits from commercial testing manufacturers. With those two things going on, we expect more commercial quo-certified labs to begin running the tests at a much higher throughput. Manufacturers of these kits that are being sent out to these labs are reporting the ability to make hundreds of thousands to a million test kits per week. We certainly expect to see the number of tests ramping up over the coming weeks, which is a big improvement. I think everyone will acknowledge the US got a slow start in our testing capabilities, so the degree in which our testing ability increases for COVID-19 in the US, those rates and turn around on tests will continue to drive our response to the outbreak and ultimately our success in flattening that curve.

Chris: Great, thanks for that insight, Jay and Danielle. We’re going to wrap it up there. Thanks to all of you for joining the podcast on out-of-pocket costs for COVID-19. Stay tuned for more in the series from Avalere Health as we explore other topics around this pandemic. Watch for those in the coming days. Thank you!

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