COVID vaccine coverage questions abound for health insurers

First, they’re not free. That’s the point that Amesh Adalja, M.D., a senior scholar at the Johns Hopkins Center for Health Security, wants to emphasize.

He’s responding to the Biden administration’s decision to have the federal government stop providing (and paying for) COVID-19 vaccines and tests and shifting that responsibility over to health insurance plans. Many experts and policymakers worry the move will prove to be a financial burden to health insurers, providers and patients.

After all, nothing beats free.

“But they’re not getting the vaccines and tests for free,” Adalja told Fierce Healthcare. “It’s coming out of your taxes.”

Unlike many experts, Adalja doesn’t believe health plans will face any undue financial burden once they have to start administering COVID-19 vaccines and providing tests; insurers routinely cover other vaccines, and he doesn’t see any reason why such routine coverage should be any different for COVID-19.

“It’s not as if this is unprecedented,” he said.

Perhaps, but health insurers aren’t the only stakeholders involved. The role pharmaceutical companies will play in pricing COVID-19 vaccines cannot be understated, according to Ceci Connolly, president and CEO of the Alliance of Community Health Plans, which represents not-for-profit health insurance companies.

“We’ve seen what happens when there are no protections in place to prevent price-gouging by Big Pharma,” Connolly told Fierce Healthcare. “When labs had free rein to bill consumers and payers for COVID-19 testing, they hiked prices to outrageous rates.”

Connolly alludes to a report issued in July 2021 by America’s Health Insurance Plans, which represents commercial health insurance plans. It showed that many out-of-network providers charged at least 50% more for COVID-19 tests than the average rate at the start of the pandemic.  

“And with the drug industry’s track record of arbitrarily raising prices, there’s reason to believe we will see the cost of vaccines and treatments skyrocket,” Connolly said.

She points out that health plans are already locked into contracts with drugmakers. They won’t be able to negotiate the prices for COVID-19 vaccines and therapeutics separately.

“And with rates already set for 2023, it will be difficult for plans to adjust appropriately to any price hikes,” said Connolly. “It’s imperative that price protections are put in place so that patients across the country don’t lose access to affordable, lifesaving vaccines and treatments.”

Brian Newell, the deputy vice president of public affairs at the Pharmaceutical Research and Manufacturers of America, the association representing drug manufacturers, says that he can’t comment on specific products. “But it’s disappointing to see insurers making excuses to potentially stymie access to treatments and vaccines for COVID-19,” Newell tells Fierce Healthcare. “These biomedical breakthroughs are saving lives and saving costs throughout the healthcare system, including keeping more people out of the hospital. All of us—including the insurance industry—need to work together to make sure these lifesaving products are available to all Americans who need them.”

Peter Kongstvedt, M.D., is a nationally recognized authority on the healthcare industry and a senior health policy faculty member in the Department of Health Administration and Policy at George Mason University.

He told Fierce Healthcare that current federal regulations culled together in the early days of the pandemic will need to be changed in order for health plans to avoid possible price gouging that consumers and plans have been protected from up until now.

“There are companies that you could go to for COVID testing and that wouldn’t cost you anything, but their posted internet price would be $500 or something totally unreasonable like that.”

The regulation allowing consumers to go out of network for testing needs to change, said Kongstvedt.

“If it doesn’t change than health plans are going to be getting these bills for COVID testing from companies that are just outrageous. But if the government eliminates that requirement and tells health plans, ‘Yes, you have to cover testing, but you can do it on an in-network basis’, then the plan can negotiate a reasonable price for itself," he said.

Regarding COVID-19 vaccines, Kongstvedt points out that there are a lot of data out there concerning uptake. “Once the plan actuaries know what the pricing is going to be, they’ll be able to build that into the rates. They’ll know what it’s going to cost them overall in total.”

Which is not good news for consumers. In this, Kongstvedt echoes Adalja in saying, “Nothing’s for free.”

For his part, Adalja says that the political divisions that infused much of the debate over how the U.S. handled the pandemic will play a role in this transition as well. For a lot of people, their political identity influences their behavior.

Adalja believes that vaccine uptake might have been better if commercial health plans had been in charge of the vaccination process from the beginning, thereby preventing it from becoming a political issue.

“The lack of uptake may have been accelerated by people refusing to take the vaccine because it was seen as a government project and some people don’t like the government telling them what to do,” said Adalja. “The government doesn’t tell people to get the shingles vaccine and yet people line up to get the shingles vaccine every time there’s a shortage.”

He also noted that Gardasil 9, the HPV vaccine, costs about $250, “and you don’t see people protesting that.”

Adalja believes that in the end, health plans and patients will pay as much for COVID-19 vaccines as they do for vaccines for influenza. Medicare will pay 95% of the average wholesale price for an influenza vaccination, which for this flu season ranges anywhere from about $11 to about $72, depending on the manufacturer, according to the Centers for Medicare & Medicaid Services.

The two main manufacturers of COVID-19 vaccines—Pfizer and Moderna—won’t want to price them so high that people won’t take them. “They have to justify their prices to their shareholders,” Adalja said, and many health plans have to answer to shareholders as well.

“Both groups are going to want to maximize their returns,” said Adalja.