Several health plans have announced that for certain services related to COVID-19 they are waiving patient financial responsibility – e.g., copays, coinsurance, deductibles, etc. The federal government has encouraged these waivers on the commercial side and permitted them on the Medicare Advantage side. Some of the health plans have said they will accept the financial responsibility for capitated providers. This leaves unanswered what the plans intend to do regarding these waivers for providers who are paid on a fee-for-service basis. Will the health plans pay providers the waived amount or try to have the providers incur the difference?
The correct answer may depend on the terms of either the contract that the health plan has with a provider or, separately, the contract that the plan has with the member. We anticipate that the answer for most providers will be that the health plan owes the waived amount to the provider. Contracted providers typically have contract rates that are separate from the amount paid by the health plan, with the difference between the rate and the health plan payment being the patient’s financial responsibility. In these situations, when the plan waives the patient’s financial responsibility it just means the plan has decided not to require the patient to pay that amount. In other words, the contract rate itself has not changed, only who pays it.
Similarly, for noncontracted providers, the various formulas used by health plans, statutes and/or regulations for determining what a health plan owes typically set forth standards and methods to determine the overall amount owed, which the health plans then implement by paying all but the portion owed by the patients. For example, the health plan policy with the member might tie payment to a usual, customary and reasonable amount, or to a median contracted rate, or to a percentage of original Medicare, etc. None of these things change when copayments are waived by a health plan. All the waivers mean is that the patient does not have to contribute to the amount owed to the provider. It does not change the formula for the overall amount owed.
Our hope is that health plans will honor their obligations to pay providers what is owed. It is a good thing for health plans to waive their members’ patient financial responsibility for these services. The results of these waivers will be to encourage members who might otherwise not seek testing or treatment to do so sooner, which can reduce illness and save lives. However, health plans should not try to shift this expense onto providers. Health plans continue to get paid premiums and/or capitation from the members, employers and government sources. The health plans also benefit from earlier detections and treatments by reduced overall medical expenses. They no doubt will get some good press from these waivers too. The flip side is that they typically have to accept the financial responsibility of the waivers.