Hospitalized COVID-19 patients may have paid $4,000 in out-of-pocket costs despite waivers

Despite waivers implemented by insurance companies for treatment related to COVID-19 for much of 2020, some hospitalized patients still paid thousands in out-of-pocket costs, a new study finds.

When the pandemic struck last year, insurance companies waived a majority of costs related to the virus in a show of both good will towards customers and also a way to dodge health care premium rebates mandated by Obamacare. 

But researchers from the University of Michigan Ann Arbor found that not all waivers were all-inclusive, however. 

This means privately insured patients still faced bills of up to $4,000 and Medicare Advantage patients were looking at $1,500 in out-of-pocket costs. 

Some privately insured patients still faced bills of up to $4,000 and Medicare Advantage patients were looking at $1,500 in out-of-pocket costs, a new study finds. Pictured: Healthcare worker Demetra Ransom comforts a patient in the COVID-19 ward at United Memorial Medical Center in Houston, December 2020

A majority of private insurance patients, 71.2%, faced out-of-pocket costs related to COVID-19 treatment despite cost waivers by insurance companies (right). The patients who paid the most were those charged facility fees, which 5% of patients were charged (left)

A majority of private insurance patients, 71.2%, faced out-of-pocket costs related to COVID-19 treatment despite cost waivers by insurance companies (right). The patients who paid the most were those charged facility fees, which 5% of patients were charged (left)

The researchers, who published their findings of Monday in JAMA Network Open, gathered data from 7.7 million private insurance patients and 1.1 million people on Medicare Advantage plans.

Just over 4,000 patients in the study group were hospitalized with the virus at some point from March to September 2020.

Of the 1,377 private insurance patients, 981, or 71.2 percent, paid an average of $788 in out-of-pocket costs.

But nearly five percent of those on private insurance were billed a large amount for facility services with an average of $3,840 in out-of-pocket costs.

About two percent of patients on private insurance ended up paying over $4,000 out-of-pocket, mainly because of the facility costs.

‘Facility services’ includes hospital accommodations, laboratory and pharmacy services, the researchers write in the study. 

These are the most expensive services, and researchers note that they were covered within the out-of-pocket waivers for a large portion of insurance plans.

‘If the absence of out-of-pocket spending for facility services is an indicator of the presence of an insurer cost-sharing waiver for these services (an assumption supported by our analyses), most study hospitalizations were covered by insurers that at least waived cost sharing for facility services,’ researchers wrote.

‘If this was true, the high incidence of out-of-pocket spending for professional and ancillary services suggests that many insurer cost-sharing waivers may have failed to capture all hospitalization-related care.’

Other ancillary and professional charges patients faced includes use of an ambulance, services provided by a clinician and other miscellaneous claims such as the use of medical equipment.

Since the waivers were applied by private insurers themselves – instead of being mandated by the federal government had they not done so – they did not have to be all-inclusive.

Whether the waivers were intentionally un-inclusive can not be determined by the researchers, though.

‘Whether this failure was intentional is unclear,’ researchers wrote. 

‘In contrast to COVID-19 testing and vaccination, there is no federal mandate for insurers to waive cost sharing for COVID-19 hospitalizations. Consequently, insurer waivers could be heterogeneous, with some applying only to facility services and others applying to hospitalization care more broadly.’

Some of the out-of-pocket charges patients faced could have also been the result of administrative errors.

‘Even if insurers intend for waivers to capture all hospitalization-related care, implementation problems may occur,’ the team wrote.

‘For example, patients may be billed erroneously if insurers do not link clinician inpatient evaluation and management bills to the COVID-19 hospitalization.’

While Medicare Advantage patients paid less, many also faced out-of-pocket charges despite the cost waiver.

Most patients paid an average of $277 when billed by clinicians.

But, when billed hospitals, the average cost was $1,536 with 0.2 percent of patients being charged over $4,000.

The waivers were implemented early in the pandemic, and served a few jobs for insurance companies.

First, it was a show of good-will early in the pandemic, when the lives of millions were plunged into uncertainty.

Second, it helped increase the amount that the insurance companies were spending in ‘medical losses’.

Part of the Affordable Care Act, the 2010 law often dubbed ‘Obamacare’, was a provision that insurance companies must spend at least 80 percent of revenue brought in via premiums on medical expenses.

Any amount the company falls short of the 80 percent must be paid back to customer via insurance rebates.

This is to avoid insurance companies driving premium costs up extremely high and spending a majority of funds on internal administrative costs. 

Insurance companies still failed to reach 80 percent despite the waivers, though, with $2.1 billion in rebates being owed to customers after 2020.

These waivers have largely disappeared in 2021, with people who are hospitalized this late in the pandemic facing thousands in out-of-pocket costs to receive treatment.

‘The findings suggest that out-of-pocket spending for COVID-19 hospitalizations may be substantial if insurers allow cost-sharing waivers to expire,’ the team wrote.