COVID-19 testing and vaccinations

What Happens When The Federal Government Stops Paying For Covid-19 Tests, Vaccines And Treatments?

Throughout the pandemic, the federal government has provided Americans with Covid-19 tests, vaccines, and treatments free of charge, but this will soon change.

As the pandemic moves past the crisis phase, the Biden Administration says it’s transitioning those Covid-19-related costs to public and private markets, including health insurers and pharmacies. White House Covid-19 Response Team coordinator Dr. Ashish Jha said his “hope is that in 2023, you’re going to see the commercialization of almost all of these products.”

Since the beginning of the Covid-19 pandemic, the federal government is the predominant purchaser of Covid-19 pharmaceuticals, making it possible for population-wide access to testing, vaccination, and treatments. The shift towards commercialization, expected to begin in Autumn, will come in stages, with protections in place in both the Medicaid and Medicare programs. Here’s what to expect.

We caught a glimpse of things to come when in August, Eli Lilly announced it was about to begin “commercial sales” of its Covid-19 monoclonal antibody bebtelovimab. Previously, the treatment was sold to the federal government, which oversaw its distribution to states and pharmacies and guaranteed free usage to patients.

One product that will not be impacted by this change in procurement policy is the updated Omicron BA.5-specific vaccine. The Biden Administration has signed purchase agreements for these vaccine doses. Therefore, these will still be available this autumn universally, as with previous vaccines and boosters.

Fully reimbursed access to products like bebtelovimab will no longer be guaranteed to all. The uninsured will be the most affected by the change in policy, followed by the commercially insured. There will be mitigated impacts in the public sectors of Medicare and Medicaid.

Medicare and Medicaid will reimburse vaccinations for their beneficiaries between now and December 31st. Afterward, under a provision of the Inflation Reduction Act, Medicare will continue to pay for vaccinations in full, but not necessarily all tests or treatments. The Inflation Reduction Act eliminates Medicare beneficiary cost sharing for adult vaccines covered under Medicare Part D, as of 2023, Starting January 1, 2023, all Medicare Part D plans will be required to cover all adult vaccines recommended by the CDC’s Advisory Committee on Immunization Practices, with no cost-sharing, even if the beneficiary is in the deductible phase of the benefit.

Once the Public Health Emergency (PHE) expires – which it may as soon as next month – many Medicare plans may drop near-universal coverage of Covid-19 tests. Instead, measures will likely be instituted such as quantity limits and perhaps even prior authorization protocols as a precondition of coverage.

During the Covid-19 PHE and for one year after it ends, Medicaid is required to cover Covid-19 testing, vaccinations, and treatment for practically all enrollees, free of charge.

The commercial insurance sector – largely responsible for coverage of the 18-65 age group (except for disabled people and those who are Medicaid-eligible – will make individual decisions on coverage of tests, vaccines, and treatments. Most commercial insurers will discontinue universal coverage of tests. In lieu of blanket coverage, they will likely establish conditions of reimbursement, such as patient cost-sharing, quantity limits and prior authorization protocols which may prevent people from reimbursed access to tests under certain circumstances.

For vaccines, some commercial insurers could introduce patient cost-sharing for enrollees considered not at risk but impose no cost-sharing for at-risk groups. For treatments, there will be patient cost-sharing for most enrollees, as is the case for virtually all prescription drugs. There may also be age and other restrictions on the use of treatments, such as the anti-viral Paxlovid (nirmatrelvir/ritonavir).

As a result of the halt to federal government purchasing of Covid-19 tests, vaccines, and treatments, the most impacted sub-population will be the 8% of the U.S. population who are uninsured. They will no longer have free access. Perhaps the federal and state governments will intervene to finance access for the uninsured. Indeed, the Biden Administration is considering ways to ensure that the uninsured will still be able to obtain fully reimbursed Covid-19 resources. But, at present, this is far from certain, as Congressional funding would be necessary.

However, in both Medicare and the commercial sector there will no longer be blanket coverage of tests, vaccines, and treatments, without, in certain instances, accompanying conditions of reimbursement, such as cost sharing and the institution of prior authorization protocols. Furthermore, one year after the PHE terminates, Medicaid will no longer be obligated to cover all these products without restrictions. In turn, inequities – typically inherent to the U.S. healthcare system – will inevitably arise.

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