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Covid-19 Testing Doesn’t Come Cheap for Companies Embracing It

Nov. 4, 2021, 3:00 PM

Companies considering whether to give workers the option of being tested for Covid-19 instead of getting vaccinated face wildly variable testing costs that can run into the thousands of dollars.

The testing cost issue stands to become more important under the Biden administration’s mandate that companies with at least 100 employees require workers to be vaccinated or tested at least weekly by Jan. 4. The rule was published Thursday by the Occupational Safety and Health Administration.

Workers are expected to pay for their own masks and tests, unless an employer opts to pay or is required to by other laws or collective bargaining agreements. The provision is likely to prompt more workers to get free vaccinations rather than pricey tests.

The “vast majority” of self-insured employers have paid about $100 per polymerase chain reaction (PCR) test, according to records of about 112,000 test costs collected by Dallas health-care data analytics company Converging Health, CEO Scott Conard said in an interview.

But one company was billed $25,000 by an out-of-network lab in early September, though it ended up paying about $5,000 plus $3,000 to the health insurance administrator that negotiated the discount, Conard said. He said he couldn’t identify the company for confidentiality reasons.

“Medical companies can bill whatever they want to,” Conard said. An employer can end up paying thousands for a Covid-19 test plus another large fee to its insurance company thanks to negotiation clauses in most contracts that award insurers a percentage of a negotiated discount, he said.

“Companies have got to be careful it’s not happening to them,” Conard said.

Utz’s Experience

The issue of Covid-19 prevention, at many companies, has come down to requiring vaccination vs. testing—even though testing is considered less effective at preventing the disease and generally costs employers more than free vaccines.

Negative tests don’t guarantee than an employee isn’t carrying Covid-19—and can’t infect others—because carriers may test negative if enough time hasn’t passed for them to build up a viral load sufficient for detection.

That’s why testing workers shouldn’t replace vaccination, Ross Goldberg, vice chairman for the department of surgery at Valleywise Health medical facilities in Mesa, Ariz., said in a recent webinar sponsored by the National Alliance of Healthcare Purchaser Coalitions.

For employers, costs depend on whether they require vaccination—and risk losing workers opposed to getting the jab—or allow employees to be tested as an alternative. Those decisions will likely be informed by the OSHA rule.

Until now, many companies have been footing the bill for tests—and may continue to do so.

Snack food company Utz Inc., based in Hanover, Pa., has about 3,500 employees throughout the U.S. and has been fully covering testing costs through its health plan, Health Promotion Manager Ginger Miller said in an interview. Utz is self-insured, meaning it covers its employees’ health-care costs itself.

Tests usually run $50 to $100 but sometimes jump to $150, with outliers running as high as $500 or more, Miller said.

Now the company is weighing whether to get mail-in testing or home testing kits—and whether to require unvaccinated workers to cover their own testing costs.

“We’re battling that out right now,” Miller said. “I don’t have that perfect solution yet.”

But one thing is clear. Miller says it won’t require every worker to be vaccinated—even though just about half of the company’s workforce is vaccinated—because of the potential for labor issues, such as people quitting rather than submitting to mandatory vaccination.

Companies, meanwhile, that prefer mandatory vaccination have the authority to impose such a policy as long as accommodations are provided for medical and religious exemptions, Jo Ellen Whitney, a shareholder in the Des Moines, Iowa, office of law firm Dentons, said in an interview.

Construction workers, for instance, may be required to get shots to prevent tetanus, a rare but potentially fatal infection caused by bacteria entering the body through breaks in the skin.

“There have been other vaccine mandates,” Whitney said. Companies have “always had that right if they can make a business case” for it.

But typically, health insurance “doesn’t pay for things that aren’t driven by a health condition,” Whitney said. “And Covid testing of that type is not driven by a health condition. It’s driven by the fact that you’re not vaccinated.”

Tests Aren’t Free

Companies that choose to allow Covid testing rather than mandate vaccination can face large bills.

Data compiled by the Peterson Center on Healthcare and the Kaiser Family Foundation in April found PCR-listed Covid-19 test prices at 93 hospitals ranged from $20 to $1,419, with a median cost of $148.

Wayne Rawlins, chief medical office of Wellspark Health, which works with companies on disease prevention and wellness, estimates that testing 500 employees would cost about $74,000 per week—and nearly $890,000 over a 12-week period.

By contrast, “The Covid vaccine is free,” he said. “And the testing, if employers do this, it’s not a zero cost. There are other costs that employers need to understand if they go ahead and look at testing as an option for their employees.”

In addition, employers should understand the medical costs of caring for unvaccinated employees, Rawlins said. The cost of hospitalization may range from $15,000 to $100,000, not including rehabilitation or post-hospitalization activities, which would potentially affect their medical claims costs, Rawlins said.

“If you’re vaccinated, it’s unlikely that you’re going to be hospitalized or get real sick with Covid. If you’re unvaccinated, that likelihood rises significantly,” he said.

Employers, though, are “trying to meet the unique needs of their employees,” based on where they are and the type of business they’re in, Rawlins said.

Even though data shows that mandates are effective, leading to vaccination rates above 90%, “There are some employers who really feel concerned about mandating things,” Rawlins said. “And they are likely to allow the option of testing for people who don’t want to get vaccinated.”

VIDEO: President Biden’s vaccine mandate rule for companies, the likely legal challenges and what to expect next.

Connecticut’s Cost

In Connecticut, the state is paying for testing through its health plan for about 6,000 state government employees, or about 19% of the state’s 31,000 employees, Josh Geballe, chief operating officer in the office of Gov. Ned Lamont (D), said in an interview. The rest of the state’s employees have been vaccinated, he said.

Lamont has issued executive orders requiring health-care workers in the state to be vaccinated without a testing option.

Other state employees can elect weekly testing on their own time but must go to sites “scattered around the state"—an inconvenience the state hopes will motivate more employees to get vaccinated, Geballe said.

“The governor is of the view that this is an important investment to ensure the health and safety of our offices and our workforce, and also it does set a positive example for other employers to help adopt vaccine mandates, even if it does have a testing option, to help ease employees into the vaccine requirement,” Geballe said.

The state is paying an average of $119 per test and has covered more than 165,000 tests from March 2020 through June 30, 2021, Tyler Van Buren, director of communications for Connecticut’s Office of the State Comptroller, said in an email.

The state government hasn’t experienced any cost outliers, and Connecticut’s health plan, administered by Anthem Inc., will cover out-of-network costs under a labor agreement reached after the mandate was put in place, Van Buren said.

Prior to the mandate, employees were reimbursed up to $200 a test if they got an out-of-network test, he said.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bloomberglaw.com

To contact the editors responsible for this story: Brent Bierman at bbierman@bloomberglaw.com, Melissa B. Robinson at mrobinson@bloomberglaw.com

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