As cost-sharing waivers for COVID-19 expire, many patients who’ve been hospitalized are finding themselves paying out of pocket for medical costs relating to COVID-19, a recent study by researchers at the University of Michigan and Boston University found.
Cost-sharing is the sharing of medical expenses between a patient and their insurance company, usually in the form of a deductible or copay. Due to the COVID-19 pandemic, some insurance companies implemented waivers, which would allow customers to receive treatment and not pay their share of costs — the insurance company covers it all.
The COVID-19 pandemic has encouraged federal legislation that requires insurance companies to waive cost-sharing for COVID-19 testing, meaning insurance companies pick up the entire COVID-19 testing tab, but no such precautions exist for COVID-19 hospitalizations outside the state of Massachusetts.
Cost-sharing waivers are not required by all insurance companies and are sometimes only temporary. If a patient is hospitalized for COVID-19 before the waivers expire, all costs would be covered by insurance. Insurance companies such as Aetna, Cigna and Capital BlueCross initially extended cost-sharing waivers during the COVID-19 pandemic to expire during January 2021. Other companies such as Priority Health and Blue Cross Blue Shield of Michigan extended the expiration to March 2021.
The study conducted by University researcher Dr. Kao-Ping Chua and Boston University researcher Dr. Rena Conti found that for 14,278 Medicare Advantage patients hospitalized for influenza in 2018, the median out-of-pocket cost was $973. Medicare Advantage is a form of Medicare that is offered through private-sector insurance companies.
The median length of hospitalizations for influenza patients is shorter compared to that for COVID-19 patients, though both are contagious respiratory diseases. Since the length of stay is associated with a higher out-of-pocket bill, COVID-19 costs are expected to be higher than what was observed for influenza in the study.
In the study, Chua predicts the out-of-pocket costs for hospitalized COVID-19 patients after the expiration of temporary cost-sharing waivers to be upwards of $1,000. If a patient was admitted to the Intensive Care Unit or had a longer stay, their bills could be over $2,500. Currently, in the U.S., there are more than 25,000 patients in the ICU due to a COVID-19 related hospitalization.
Chua wrote in an email to The Michigan Daily that public relations might play into insurance companies’ decisions to let these waivers expire.
“Now that there are effective vaccines, and now that both COVID-19 cases and hospitalizations are declining, insurers may think that now is the right time to pull the plug on waivers because they will face less blowback from the public,” Chua wrote.
Based on his findings, Dr. Chua and his team hope federal policymakers work towards extending or indefinitely implementing cost-sharing waivers for COVID-19 hospitalizations to support patients facing long hospitalizations.
Public Health senior Megan Lydon agreed with Dr. Chua’s idea and called for more action on the part of federal lawmakers to implement mandatory cost-sharing waiver policies for COVID-19 related hospitalizations.
“(D.C.) has made it mandatory, . . . at least at some point they did, for some private insurance companies to have those waivers for cost-sharing,” Lyndon said. “But I think for it to be more overarching, probably federal action needs to be taken.”
The Affordable Care Act’s Medical Loss Ratio rule requires insurers to provide rebates to clients if insurers do not reach the threshold of spending insurers are required to put towards helping their customers with the cost of healthcare services. To minimize these often hefty rebates, many companies are open to waiving cost-sharing. However, for most insurance companies, waiving cost-sharing completely for COVID-19 hospitalizations can result in losses in future years.
But due to safety concerns and hospital regulations, many potential patients have decided to delay or forgo elective procedures during the pandemic, reducing the number of claims insurance companies have to process. The lower volume of claims means insurance companies don’t have to cover as many health care costs, making them relatively profitable during these pandemic years.
Dr. Richard Hirth, professor of health management and policy at the University, emphasized that the huge decrease in elective medical care and general non-COVID-19 care helps drive profits up for insurance companies.
“We saw, starting in March and running through the spring and into the summer . . . a huge decrease in non-COVID related medical care happening,” Hirth said. “Hospitalization rates for other things plummeted both as all elective care was canceled for a while and as people sort of avoided seeking care for other things because of fear of COVID. It’s sort of a paradoxical situation where a major health crisis caused a decrease in healthcare spending. That’s not what you would normally expect to see.”
Hirth also said cost-sharing waivers may have to make a comeback if another spike in COVID-19 cases were to occur.
“What might change things if we get a large second spike,” Hirth said. “I don’t see, if absent another large spike coming, a lot of pressure either for insurers to make that decision on their own, or if policymakers haven’t done it yet, to extend that (waivers). Now, if there is a significant next spike . . . that could change very rapidly.”
Lydon said she believes the future of cost-sharing waivers might depend on the Medical Loss Ratio threshold.
“At the end of the day, private companies, they want to make a profit, and if they have to give a bunch of money back to their consumers, . . . that’s not good for them,” Lydon said.
Daily News Contributor Maanasa Bommineni can be reached at maanasab@umich.edu.
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