Minnesota health insurers passing more COVID costs to patients

Minnesota health insurers are passing more costs of COVID care to patients as health plans start treating some expenses from pandemic illness like those with other ailments.

The move means a growing number of Minnesotans sickened by the virus are joining patients across the country in paying for a portion of their pandemic health care out-of-pocket.

Since Jan. 1, the state's nonprofit insurers have been requiring patients covered by individual and certain employer-group health plans to make co-pay, deductible and co-insurance payments when seeking care for COVID-19.

The wide availability of vaccines, which are proven to help people avoid serious illness and hospitalizations, prompted the recent change, health plans say.

"COVID vaccinations are a good way for Minnesotans to safeguard their health, stay out of the hospital and avoid the potentially large bill," the Minnesota Council of Health Plans, a trade group for the nonprofit insurers, said in a statement.

These fees were previously waived due to an agreement made in April 2020 between the state and the insurers. Such fees are described as "cost-sharing" by the insurance industry.

The shift doesn't mean the pandemic is over.

Health plan enrollees are continuing to receive COVID-19 tests without cost-sharing. The industry trade group says some people in Medicare and Medicaid health plans will continue to see cost-sharing fees waived for acute COVID-19 treatment and hospitalizations until the public health emergency ends. And there's no cost-sharing for patients in any plan who receive certain monoclonal antibody treatments that can prevent the worst of the disease.

Even so, the decision by the Minnesota health plans matches the national trend to reinstate cost-sharing in several areas, said Cynthia Cox, a vice president at the California-based Kaiser Family Foundation.

"Only a relative handful of insurers were still waiving costs by the end of 2021, so I would be surprised if there are many left that are still waiving these costs now," Cox said in an e-mail.

"The issue of cost-sharing during the pandemic raises questions about fairness," she added. "On one hand, if so many people are susceptible to a potentially serious viral infection, is it fair for insurers to make patients face a deductible? On the other hand, why should a cancer patient have to pay their deductible if a COVID-19 patient doesn't?"

Waiving cost-sharing was necessary early in the pandemic to remove barriers to treatment for patients, said Lucas Nesse, the chief executive of the Minnesota Council of Health Plans. Now that vaccines are widely available, it makes sense to reinstate co-pays, deductibles and co-insurance fees because they help moderate the cost of monthly premiums, he said.

"The lower the premiums, the more enrollment there will be," Nesse said. "Having broader enrollment leads to stable pools of insurance and broader access to care."

Plus, by continuing to waive cost-sharing, insurers might worry they're creating a "moral hazard," said Sayeh Nikpay, a health economist at the University of Minnesota.

If patients know health insurers won't make them pay out-of-pocket for COVID-19 care, Nikpay said, they might be less motivated to get vaccinated.

Though that moral hazard doesn't apply to everyone, she said.

"There are going to be some folks who will continue to get severely ill when they contract COVID, even when they've been fully vaccinated and received a booster because they have underlying comorbid conditions," Nikpay said in an e-mail. "So, this policy is kind of a blunt instrument — some people could be nudged into getting vaccinated, but others will face increased financial risk from cost sharing for COVID-related treatment."

In the early days of the pandemic, the Kaiser Family Foundation estimated people with employer coverage who were admitted for COVID-19 treatment in hospitals could routinely face out-of-pocket costs that exceed $1,300. At the time, insurers had several possible motivations for eliminating this financial risk, Cox said.

Some likely viewed it as the right thing to do, she said, while others saw that some excess profits at the time would have to be returned to consumers anyway in the form of rebates.

COVID-19 can result in a wide range of expenses depending on the severity of illness.

From 2020 to 2021, the estimate in Minnesota for the median amount paid by health plans for outpatient COVID-19 treatment was about $975, according to an analysis by FAIR Health, a New York-based nonprofit group. The estimate factors laboratory, physician and urgent care services for patients diagnosed with COVID-19 who don't require hospitalization, according to a December report.

The medical bills skyrocket when cases become more severe. In Minnesota, the median for COVID-19 patients requiring noncomplex inpatient hospital care was $17,906. For patients hospitalized with complex cases, the statewide median jumped to $87,451.

Complex inpatient care for the most serious COVID-19 cases refers to patients admitted to a hospital and requiring a ventilator and/or intensive care unit stay, according to FAIR Health. The group uses claims data to estimate what insurers pay to health care providers for medical services.

At Minnetonka-based Medica, inpatient admissions racked up about $83 million in COVID-19 spending between October 2020 and September 2021. On average, Medica pays about 92% of the cost for medical claims, while patients pay the remaining 8% through cost-sharing payments directly to health care providers.

So, the decision to waive cost-sharing by COVID-19 patients resulted in an expense to the health insurer, since Medica paid the fees to doctors, clinics and hospitals, said Dr. John Piatkowski, a medical director at the health plan. Medica doesn't yet have full data on its COVID-19 costs for 2021.

Medica started requiring patients to pay cost-sharing on Oct. 1 given the widespread availability of vaccines, he said.

"[We] really felt that as it was controllable and we saw the different populations being able to control their risk, that it really started to look more like some of our other medical conditions," Piatkowski said. "We just wanted to be consistent across our policyholders."

Eagan-based Blue Cross says it's paid about $200 million in COVID-19 treatments with the vast majority going to inpatient hospital care.

"Because vaccines are now widely available and proven to drastically reduce the likelihood of serious illness, we felt that it was an appropriate time to transition COVID-19 treatment coverage to standard coverage," Blue Cross said in a statement to the Star Tribune. "While the omicron variant has led to more breakthrough infections, vaccines are still proving to be highly effective at preventing serious illness — including hospitalization and death — from the COVID-19 virus."

The six nonprofit health plans in Minnesota — Blue Cross and Blue Shield of Minnesota, HealthPartners, Hennepin Health, Medica, Sanford Health Plan and UCare — are taking different approaches to COVID-19 cost-sharing within Medicare and Medicaid health plans.

Patients with questions should contact their insurer.