Out-of-network providers appear to be inflating the price of COVID-19 diagnostic and antibody tests, according to a recent America’s Health Insurance Plans (AHIP) survey. The October 2020 survey reports that out-of-network providers, as a whole, were charging higher prices for nearly half of the COVID-19 diagnostic tests and a third of antibody and antigen tests—a 10% increase since July. As the AHIP reports, nearly half of all out-of-network diagnostic testing exceeded $185, with between 9% and 16% of out-of-network test claims charging “more than $390 (three times the average cost).”) The amount of COVID-19 tests administered out of network has also increased since July, by 14%.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted on March 27, 2020, provides that insurance plans must “provide coverage, and shall not impose any cost-sharing (including deductibles, copayments, and coinsurance) requirements or prior authorization or other medical management requirements,” on COVID-19 testing. The Act requires test providers to publicize the “cash price” for COVID-19 diagnostic tests – though it does not set pricing benchmarks for reasonable pricing. (In practice, major commercial labs have reported posted prices that range from $95-$209 for diagnostic tests.) Should providers not comply with the requirement to publicize the “cash price,” the Secretary of Health and Human Services is authorized to impose a civil fine of up to $300 per day that the information is unpublicized.

Unless insurers have negotiated their own reimbursement rates with providers, the CARES Act requires health plans to reimburse up to that “cash price,” “as listed by the provider on a public internet website.” From the providers’ point of view, as AHIP notes, the requirement that providers reimburse the cash price “eliminates their ability to negotiate more affordable test prices.”

From the consumers’ perspective, the CARES Act does not set forth billing procedures, and, in particular, does not prohibit out-of-network providers from billing patients directly for the COVID-19 test. This can lead to confusion for consumers, who may be eligible for reimbursement from their health plan under the CARES Act, but may not be aware of their eligibility. Some states have stepped in to interrupt this practice. In Washington, for example, the insurance commissioner issued an emergency order that bans labs for billing insureds.

Policymakers may take action to constrain prices, or perhaps an increase in testing availability and options will help lower costs. In the meantime, in addition to the federal protections under the CARES Act, states can also take action on perceived price gouging related to COVID-19 diagnostic tests.

Some state price gouging laws clearly apply to COVID-19 testing. For example, Virginia’s statute explicitly applies to “medical supplies and services.” Even more directly, the Florida Attorney General issued a statement on the commodities covered under the state of emergency that includes “COVID-19 test kits, swabs, and related consumable medical supplies used in administering tests.” (Indeed, the state initiated a price gouging investigation of a Florida hospital for high-priced COVID-19 tests, though the hospital was eventually cleared of wrongdoing.).

While the form of their response varies, high testing prices are triggering state action. Politico has reported that several states have taken steps to either cap costs or provide more guidance as to what insurance should pay for COVID-19 testing; at the same time some insurers, who are supposed to cover these tests but are balking at high prices, “have tried to get out of paying lab claims even for those patients showing symptoms.” We expect states to continue to take an interest in this area, and to take additional steps and pursue investigations as appropriate.

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Visit Proskauer on Price Gouging for antitrust insights on COVID-19.

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Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

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Photo of Kelly Landers Hawthorne Kelly Landers Hawthorne

Kelly Landers Hawthorne is an associate in the Litigation Department and a member of the Antitrust and Product Liability groups. She represents clients in litigations and due diligence across a range of industries, including consumer products, life sciences, healthcare, education, hospitality, sports and…

Kelly Landers Hawthorne is an associate in the Litigation Department and a member of the Antitrust and Product Liability groups. She represents clients in litigations and due diligence across a range of industries, including consumer products, life sciences, healthcare, education, hospitality, sports and entertainment.

Kelly also maintains a diverse pro bono practice. She received Proskauer’s Golden Gavel Award for excellence in pro bono work in 2019.

She is a frequent contributor to Proskauer’s Minding Your Business blog, where she authors articles related to price gouging issues.

Kelly is also a member of the Proskauer Women’s Alliance Steering Committee, where she serves on subcommittees focused on highlighting and providing professional development opportunities for women at the firm.

Prior to her legal career, Kelly was a Teach For America corps member and taught middle school in Washington, DC.

While at Columbia Law School, Kelly served as an articles editor of the Columbia Journal of Law & the Arts and interned for the Honorable Sandra Townes of the U.S. District Court for the Eastern District of New York.

Photo of John R. Ingrassia John R. Ingrassia

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating…

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating to competition and antitrust, CFIUS or foreign investment issues.

For more than 25 years, John has counselled businesses facing the most challenging antitrust issues and helped them stay out of the crosshairs — whether its distribution, pricing, channel management, mergers, acquisitions, joint ventures, or price gouging compliance.

John’s practice focuses on the analysis and resolution of CFIUS and antitrust issues related to mergers, acquisitions, and joint ventures, and the analysis and assessment of pre-merger CFIUS and HSR notification requirements. He advises clients on issues related to CFIUS national security reviews, and on CFIUS submissions when non-U.S. buyers seek to acquire U.S. businesses that have national security sensitivities.  He also regularly advises clients on international antitrust issues arising in proposed acquisitions and joint ventures, including reportability under the EC Merger Regulation and numerous other foreign merger control regimes.

His knowledge, reputation and extensive experience with the legal, practical, and technical requirements of merger clearance make him a recognized authority on Hart-Scott-Rodino antitrust merger review. John is regularly invited to participate in Federal Trade Commission and bar association meetings and takes on the issues of the day.

Photo of Christopher E. Ondeck Christopher E. Ondeck

Chris Ondeck is co-chair of the Firm’s Antitrust Group and co-head of the Washington DC office. He represents clients in complex antitrust and consumer protection litigation, defends mergers and acquisitions before the U.S. antitrust agencies, represents companies involved in government investigations, and counsels…

Chris Ondeck is co-chair of the Firm’s Antitrust Group and co-head of the Washington DC office. He represents clients in complex antitrust and consumer protection litigation, defends mergers and acquisitions before the U.S. antitrust agencies, represents companies involved in government investigations, and counsels on antitrust compliance. Chris is also the founder and leader of the firm’s Price Gouging Practice, and is one of the key thought leaders in this space.

Chris handles antitrust matters for clients in a number of industries, including food and agriculture, financial services, media, telecom, technology, e-commerce, consumer products, natural resources, oil and gas, chemicals, and pharmaceuticals.  He also serves as outside counsel to a large number of industry groups, including trade associations and cooperatives.

Chris has been recognized as a leading antitrust practitioner by Chambers, noting that clients describe him as “our primary thought partner – he’s very good at explaining the complex issues and making them easy to understand” and praising “his strong advocacy skills”; by The National Law Review as a “Go To Thought Leader 2020”; by Acritas as a “Star” in multiple years; by Benchmark Litigation as a National Litigation Star 2021; and by The Legal 500 United States for Antitrust: Civil Litigation/Class Actions.