Commercialization of COVID-19 Vaccines, Treatments, and Tests: Implications for Access and Coverage

Medicare paid providers for COVID-19 vaccine administration, but not for the vaccine itself, since the vaccine was free to providers through the US government purchased inventory.

With the government-purchased inventory of COVID-19 vaccines now superseded by new commercial products, Medicare determines payment rates and allowances for providers, based on 95% of the average wholesale price, and pays providers for the vaccine itself along with administration of the vaccine.

Vaccine providers participating in the CDC COVID-19 Vaccination Program (i.e., those receiving federally-purchased vaccine doses) were allowed to seek reimbursement from private health insurers for the cost of administering the vaccine, but they were prohibited from billing patients even if the patient’s health plan did not reimburse the provider or did not cover the full cost of the vaccine administration. Most private insurers reimbursed vaccine providers for administration costs, in part because the Affordable Care Act (ACA) requires most plans to cover preventive services, including any vaccine recommended by the CDC’s Advisory Committee on Immunization Practices (ACIP), as all COVID-19 vaccines in the U.S. are. While the ACA requires coverage of ACIP-recommended vaccines no later than one year after their recommendation, the CARES Act shortened this to 15 days for COVID-19 vaccines. This is irrespective of whether the vaccine is under an emergency use authorization or fully approved by the FDA.

Even in cases when the insurer was not subject to the ACA coverage requirement (e.g. for out-of-network care or grandfathered health plans), the patient could not be billed for the vaccine, its administration, or the associated visit when the vaccine dose was purchased by the federal government.

In cases when private plans did not cover or did not fully cover the cost of administering the vaccine, vaccine providers were at one point able to submit claims for reimbursement from the federal government. However, due to a lack of funding, the federal government stopped accepting these claims on April 5, 2022.

Under the ACA, people enrolled in non-grandfathered plans (i.e., the vast majority of people with private insurance) continue to pay nothing for recommended COVID-19 vaccines and associated appointments, so long as they receive this care from an in-network provider. The requirement that private plans/issuers cover out-of-network COVID-19 vaccines without cost sharing ended when the PHE ended. However, in the unusual event the enrollee is unable to access a vaccine at any in-network provider, the ACA requires plans to cover out-of-network delivery of preventive services.

The ACA’s preventive services coverage requirement does not apply to grandfathered plans and Short-Term Limited Duration (STLD) plans. Therefore, these plans may impose cost sharing or decide not to cover vaccines at all.

Private insurers will be required to take on more of the cost of vaccines (including paying for the doses themselves in the commercial market), which could have a small upward effect on premiums.

Medicare beneficiaries with COVID-19 who received remdesivir during an inpatient stay did not pay separately for the drug, since what patients pay for inpatient hospital stays is generally unrelated to the cost of any services they receive. (Traditional Medicare beneficiaries pay a $1,632 deductible in 2024 and daily copays for extended stays. Medicare Advantage enrollees typically pay a flat amount for each hospital stay and/or day.)

Medicare paid providers for COVID-19 monoclonal antibody treatments (when it was not received by the provider for free through the US government purchased inventory) and made a separate payment for its administration. Medicare did not provide payment for the monoclonal antibody products to treat COVID-19 that health care providers received for free, as was the case upon the product’s initial availability in response to the PHE. While physicians and other Medicare providers and suppliers could not bill Medicare for the product they receive for free, they could be paid for its administration.

During the PHE, oral antiviral medications for COVID-19 were purchased by the US government and distributed directly to pharmacies. As such, there was no direct payment to providers under Medicare for these treatments. CMS issued guidance to Part D plans that they were permitted to pay dispensing fees to pharmacies that submit claims for these products, but not for the product itself if obtained from the federally-purchased supply.

Typically, Part D does not cover drugs that are not approved by the FDA, such as oral antiviral drugs to treat COVID-19 that were authorized for use by the FDA under an Emergency Use Authorization (EUA) prior to receiving full approval by the FDA. The Consolidated Appropriations Act (CAA), 2023 made a temporary change in the definition of a covered Part D drug to explicitly include oral antiviral drugs (such as Paxlovid) authorized for use under an EUA but this coverage will end on December 31, 2024.

The federal government will continue to provide federally-procured Paxlovid for free to Medicare beneficiaries through the end of 2024, whether through Part D plans or a standalone patient assistance program run by the manufacturer (Pfizer). Thereafter, it will only be covered for Medicare beneficiaries in Part D plans, and they may face cost sharing. More generally, oral antivirals are covered by Part D, but beneficiaries may face cost sharing. This is the case for Lagevrio, for which there is no patient assistance program available to Medicare beneficiaries.

Based on changes in the CAA 2023, oral antivirals are covered whether they are authorized for emergency use or approved by the FDA, although the allowance for coverage of drugs available under EUA expires at the end of 2024. Once the supply of oral antivirals fully transitions to the commercial market, Part D plans will pay for the cost of the drug and its administration, and Part D enrollees are expected to face varying cost sharing amounts, since costs vary across Part D plans.

Medicare pays providers who administer COVID-19 treatments for commercially purchased products for both the treatment and its administration.

Early in the pandemic, most insurers voluntarily waived out-of-pocket costs for COVID-19 treatment. However, most insurers began to reimplement cost sharing by late-2021. Still, oral antivirals were purchased by the federal government during this period and were provided free of charge.

As the federal supply of Paxlovid has been directed toward people who are insured through public programs or uninsured, privately insured individuals now face cost-sharing for these oral antivirals in accordance with their health plan requirements.  Paxlovid’s manufacturer (Pfizer) will operate a copay assistance program for those who are commercially insured through 2028.

With commercialization, private insurers will take on more of the cost of medications like Paxlovid that had previously been supplied by the federal government, and this transition could have a small upward effect on premiums.

In addition, under a Biden Administration initiative, beneficiaries in traditional Medicare and Medicare Advantage had no cost sharing for COVID-19 at-home testing (up to eight tests per month) during the PHE.

A provision in the Families First Coronavirus Response Act (FFCRA) eliminated beneficiary cost sharing for COVID-19 testing-related services, including the associated physician visit or other outpatient visit (such as hospital observation, E-visit, or emergency department services). A testing-related service is a medical visit furnished during the PHE that results in ordering or administering a COVID-19 lab test. The law also eliminated cost sharing for Medicare Advantage enrollees for both the COVID-19 lab test and testing-related services and prohibited the use of prior authorization or other utilization management requirements for these services during the PHE.

Beneficiaries in Medicare Advantage plans may face cost sharing for clinical diagnostic testing for COVID-19, depending on whether their plan charges cost sharing for this service, and face cost sharing for testing-related services. Some Medicare Advantage plans may cover the cost of at-home COVID-19 tests through an over-the-counter benefit or other coverage approach.

If the COVID-19 test was considered to be medically appropriate (e.g., for diagnostic purposes or out of a reasonable concern for COVID-19 exposure), private health plans – including grandfathered plans  were required to cover the cost of the test and the associated visit without cost sharing for the duration of the PHE. This coverage requirement applied to both rapid antigen and PCR COVID-19 tests performed or ordered by a provider. During the PHE there was no limit to the number of tests an individual can receive if deemed medically appropriate. Insurers were also required to reimburse for tests performed by out-of-network providers during the PHE.

Additionally, beginning January 15, 2022 and lasting for the duration of the PHE, people with private insurance plans were able to order or seek reimbursement for eight (8) FDA-authorized rapid at-home COVID-19 tests per month. No prescription or medical management was required. Federal guidance allowed for a reimbursement cap of $12 per test in certain circumstances.

If testing was done for a reason that was not medically indicated (e.g., a work-place testing requirement or for public health surveillance purposes), the health plan was allowed to apply cost sharing or refuse to cover the cost of the test altogether. Through the end of the PHE, providers were required to make public the cash price of COVID-19 tests on their websites.

The COVID-19 testing coverage requirements did not apply to Short-Term Limited Duration (STLD) plans, as enrollees in these plans are considered uninsured.

The Affordable Care Act (ACA) requires non-grandfathered plans sold to individuals and small businesses to cover laboratory services as an Essential Health Benefit (EHB), which includes lab-based or provider administered COVID-19 testing. However, the ACA allows insurers to impose cost sharing (deductibles, coinsurance, and copayments). Insurers may also limit coverage of COVID-19 testing to in-network providers, require a prescription or physician’s order for COVID-19 testing, and impose cost sharing for the associated physician visit. Insurers may also limit the number of tests that are covered.

Although the ACA requires non-grandfathered health plans to cover without cost sharing any preventive service with an “A” or “B” rating from the U.S. Preventive Services Task Force (USPSTF), to date, the USPSTF has not considered, for purposes of rating, any COVID-19 test, meaning that plans may impose cost sharing for the test and the associated visit.

Grandfathered plans are exempt from both the ACA’s EHB and preventive service coverage requirements. With the end of the PHE, these plans can impose cost sharing or stop covering the cost of COVID-19 tests. STLD plans are exempt from the requirement.