In June 2020, Texas resident Travis Warner received a bill of $54,000 for a COVID-19 diagnostic PCR test. Across the country, prices of COVID-19 tests have been reported to range from $20 to $1,419 per single test. Laws issued by Congress suggested testing for COVID-19 should be free, given the public health concern that is the pandemic, which raises the question of: are the costs of PCR tests fair or simply a sign of price-gouging?
Travis Warner’s Case
Travis Warner’s story began after he discovered an employee from his company tested positive for COVID-19. Warner and his wife immediately went on to search for an available COVID-19 testing site. Ultimately, they managed to receive PCR tests at a free-standing emergency room in Lewisville, Texas, 30 minutes from their home city of Dallas. In addition to the diagnostic PCR test, Warner received a rapid antigen test at the SignatureCare emergency center. The negative test results alleviated Warner and his wife’s worries, but their relief was only temporary as they received a bill of their total costs adding up to a whopping price of $56,384. Warned managed to negotiate the price down to $16,915.20, which his insurer fully paid, but the most notable aspect of his experience is that such high prices for PCR tests are entirely legal.
Increase in Cost of PCR Tests
Associate Director of the USC-Brookers Schaeffer Initiative for Health Policy reported to NPR news that in regards to coronavirus tests, “there is no cap to what providers can charge.” Circumstances like these were facilitated by the provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act instated in response to the economic fallout of the COVID-19 pandemic. The provision was intended to keep the costs of COVID-19 tests from becoming a factor in people’s choice not to get tested out of fear of not being able to cover them. To this end, the legislation required providers to administer diagnostic testing despite patients’ inability to pay and mandated for private insurers to cover the costs of the tests.
It is with this requirement when the issue of the high costs of COVID-19 tests arises. Under the CARES Act, insurers have to pay the “cash price” out-of-network providers list for their testing services regardless of how high the price may be. A study from America’s Health Insurance Plans revealed an increase from 21% to 27% in the proportion of coronavirus tests conducted at out-of-network facilities between April 2020 and March 2021. Additionally, also during March 2021, more than 54% of COVID-19 tests were reported to cost a price of more than $185. The rationality of these prices is placed in question when compared to the costs of at-home tests, which can be as low as $24.
The provision widens the scope for providers to charge extremely high prices for their services as they know insurers are required to cover the costs, and patients are less likely to complain. However, this may drive insurers to increase their policy premiums, which means individuals will end up paying more for these premiums. The risk for uninsured patients is even higher. Researchers declared that “Providers that have tested uninsured patients can choose to either seek reimbursement from the Department of Health and Human Services or bill uninsured patients at a self-determined price, which equals the charge unless the provider offers a discount.”
The CARES act itself does not guarantee patients, especially those uninsured, will not receive a bill for the increasingly high costs of PCR tests. Out-of-network testing entities may choose to bill a patient for the difference between their listed price, and the portion of the cost insurers opt to cover. There is little constraint on how high this listed price may be and absolutely no federal regulation of the price of COVID-19 tests outside of the Medicare program. The CARES Act’s attempt to reduce the price of COVID-19 tests may unintentionally cause the price of insurance to increase and patients to incur surprise charges, leading them to encounter a financial strain because of the uncertainty surrounding the legislation.