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About $10 million Utah could have spent to help people pay rent or business owners keep their companies afloat was used to pay for TestUtah coronavirus tests that insurance and other sources likely would have covered, an analysis by The Salt Lake Tribune shows.
Touting its approach as a disruptor that streamlines access to health care, Nomi Health does not ask test seekers whether they have insurance. It instead bills only the state of Utah, under contracts for its work at TestUtah sites.
The Tribune’s analysis shows that strategy has shifted costs from private insurance to taxpayers. It also means the state has spent flexible federal COVID-19 relief dollars on some expenses that other dedicated government funding, such as Medicaid, would cover.
Relief funding could have gone to contact tracing, protective equipment for teachers or health care workers, economic relief or other needs, confirmed Jennifer Napier-Pearce, spokesperson for Gov. Spencer Cox.
“The state had broad latitude in how to spend the funds,” she said, “so long as the expense was related to the state’s COVID response.”
Nomi Health and Napier-Pearce point out that the “no questions asked” policy ensures coronavirus tests are free for individuals.
If the state had sought insurance reimbursement, paying only for those tests not eligible for coverage, the tests still would have cost nothing for patients — while freeing up more of Utah’s coronavirus relief funds to help others.
Tallying the costs, a year later
Traditional health systems have provided Utahns with the majority of COVID-19 tests. For example, Intermountain Healthcare has performed about 1.1 million, with another 417,000 by University of Utah Health. Testing sites operated by state health officials and the Utah National Guard have performed more than 290,000 tests.
Meanwhile, Nomi had conducted about 230,000 of Utah’s roughly 3 million coronavirus tests as of mid-January, with 212,000 of those in 2020, according to state data obtained by The Tribune.
Nomi received at least $17.5 million from the state for those 2020 tests. Its state-assigned lab partner, California-based Fulgent Therapeutics, received another $7.5 million to process TestUtah’s tests from August to Jan. 1.
That amounts to more than $25 million for TestUtah tests in 2020 — a figure that doesn’t include the cost of rapid antigen tests the state bought for Nomi’s sites at a price of $18 per test. State officials said they could not immediately provide the number of antigen tests Nomi performed in 2020.
Since TestUtah launched in the spring, about two-thirds of the patients tested at its sites had at least one symptom, according to state data. Since they were feeling ill, these patients likely would have qualified to have the cost of their coronavirus test reimbursed to the state — through a federal fund set aside to cover the uninsured or through their health insurance. Federal legislation passed last spring generally requires insurers to cover COVID-19 tests when people have symptoms.
TestUtah’s tests have cost more than $100 each. If all 150,000 tests of patients with symptoms could have gotten full reimbursement, that coverage would have been worth more $15 million.
That’s unrealistic, though; commercial insurance typically does not reimburse health care providers for the full expense of services, even when the patient is shielded from costs as federal rules require for coronavirus tests
For example, at University of Utah Hospital, coronavirus tests cost $94, which is usually billed to the patient’s insurer. On average, commercial insurers have paid half of that, or $52 per test, said Kathy Dellis, the hospital’s administrative director.
Meanwhile, Intermountain Healthcare received on average $98 per $100 lab-processed PCR test from commercial insurers, said Jess Gomez, spokesman for the hospital system. Intermountain’s antigen tests, which cost $75, also were reimbursed at 98% on average.
Government coverage — through Medicaid, for example, or the federal funds that cover uninsured patients who get tested — has paid $100 per test.
If TestUtah’s patients were insured at the same levels as the entire state, about a third would have been reimbursed at government rates, with the rest being covered by private insurance or public employees’ plans.
Using the U.’s reimbursement averages as the more conservative benchmark, that would mean the tests for about 100,000 patients with symptoms at TestUtah likely could have been reimbursed at commercial rates — around $50 each, with the remaining 50,000 eligible for government reimbursement at $100 per test.
That amounts to around $10 million in reimbursement the state did not collect, instead paying Nomi and Fulgent with CARES Act funding — money that, unlike Medicaid or federal funds dedicated for health costs of uninsured Americans, was granted by Congress with very few strings attached.
Reimbursement may have been lower if a large number of patients with symptoms received rapid antigen tests — but TestUtah’s turnaround data on the state coronavirus website suggest the vast majority of its tests in 2020 were lab-processed, like the U.’s tests.
And on the other hand, the state doesn’t record how many TestUtah patients who didn’t have symptoms had required testing because they had been exposed to an infected person — another circumstance where federal rules require insurers to cover testing. The Tribune’s estimate doesn’t include potential reimbursement for those tests.
‘A terrible deal for the state’
As Nomi Health’s testing got underway last spring, state Department of Health staff sent up a warning about the financial impact of its approach, according to emails obtained by The Tribune.
“This arrangement is a terrible deal for the state and won’t allow us to take advantage of the fact that these tests are covered 100% by insurance, Medicaid, and even for the uninsured,” Nate Checketts, a deputy health department director, wrote in an April email shortly after Nomi launched TestUtah sites.
“We need to require that TestUtah collect insurance information,” Checketts wrote, “so the state can bill these tests appropriately later.”
Other state officials also asked whether Utah was entitled to insurance reimbursement for tests it performed.
The Governor’s Office of Management and Budget authorized the contracts for TestUtah with minimal communication with health officials, emails show.
But later, the office also asked Checketts whether the state should be looking into insurance reimbursement for the tests — after Nomi itself asked state officials about possible coverage under Medicare or Medicaid.
“TestUtah is not collecting insurance information or Social Security Numbers and only recently began collecting date of birth,” Checketts replied on April 17. “It may be difficult for the [s]tate to try to process these tests on behalf of TestUtah as billable insurance claims that Medicaid or other insurance would pay.”
When state Rep. Suzanne Harrison (D-Draper) asked in May why TestUtah wasn’t billing insurance to save taxpayer dollars, Checketts and state epidemiologist Dr. Angela Dunn each replied: “I don’t know.”
A simple message: Your test is free
Nomi Health points out that TestUtah was designed to make it simple for Utahns to get tested; patients, Nomi and the state could avoid dealing with insurance companies, in billing or in coverage disputes.
“Via TestUtah, Utahns have had access to free testing from the beginning of the pandemic,” wrote Nomi spokeswoman Jenny Olson in response to questions from The Tribune. “Nomi does not believe insurance should ever be a barrier to COVID testing access.”
Although state health department officials were raising concerns in emails last April and May, Napier-Pearce said the department was consulted before the state backed the plan to have Nomi skip asking questions about insurance status.
“Billing insurance companies would have slowed down the testing process and the Governor’s Office in consultation with the Department of Health decided accelerating testing was more important than recouping costs for testing,” Napier-Pearce said. “It was also important to let the public know the test was free, regardless of their insurance status.
Utah Department of Health spokesman Tom Hudachko also focuses on the benefit to individual Utahns. ”We ... wanted to operate a testing program that was truly free for all Utah residents and to be able to communicate that program simply,” Hudachko said.
The state has since signed new TestUtah contracts with Nomi Health, which continues to not seek information that would allow insurance or government reimbursement for tests. Sites operated by state health officials and the Utah National Guard also do not ask for insurance information.
Testing healthy Utahns
That policy has also helped extend testing to patients who do not have symptoms, Olson and Hudachko said.
“... We helped the State stand up one of this country’s very few burden-free testing programs, not requiring a doctor’s note, the presence of symptoms, cost or insurance,” Olson said.
But testing of people who had no symptoms was an early point of contention between Nomi and state health officials last April. While economic officials for then-Gov. Gary Herbert wanted unrestricted testing to continue, emails show, Dunn, the state epidemiologist, did not.
The accuracy of tests in patients without symptoms was not known at that time, she explained, and health officials were wary of the risk of both false negatives and false positives. State testing guidelines were then requiring patients to have at least one symptom to receive a test.
Under federal rules established early in the pandemic, insurers are required to cover coronavirus tests that a health care provider deems “medically appropriate” — virtually all hospital-administered tests except those needed to clear a patient for travel, said Jess Gomez, spokesman for Intermountain Healthcare.
However, the Trump administration in July clarified that insurers were not required to cover tests conducted for more general screening, such as public health surveillance or tests that employers may require for employees to return to work.
That could create a barrier to testing Utahns who don’t have symptoms, which the state now wants to do in order to control the virus, Hudachko noted.
“Insurance companies may not cover the costs of tests that are determined to be non-medically necessary,” he said. “This would have potentially prevented us from offering the targeted asymptomatic testing we have been able to offer through [TestUtah].”
Still, widespread, asymptomatic testing didn’t begin until September, Hudachko acknowledged.
The costs of billing
Not seeking insurance reimbursement, or the information from patients that would allow it, also avoids headaches, Napier-Pearce said.
“Both Intermountain Health and University of Utah Health chose to bill insurance, but the administrative efforts slowed them down and they still lost money on the tests,” she said.
Billing didn’t slow patients’ access to tests, Gomez said — apart from filling out a few extra lines of information on forms at testing sites.
But he and a spokesperson for the U. confirmed that billing insurers for coronavirus testing has posed a massive task. Intermountain still is trying to catch up with the paperwork tied to reimbursement for coronavirus tests, Gomez said, even as the number of people being tested drops.
“We are still continuing to bill from last year,” Gomez said. “From an administrative standpoint, we’re behind.”
COVID-19 tests, specifically, are a “high-volume, low-dollar” service, which has created an unusually large administrative burden, Dellis confirmed.
“Due to the sheer volume of COVID testing and the associated billing requirements, there are definitely additional overhead costs.“
And both Intermountain and the U. are large health care providers, already set up for a high flow of billing. The state would have had to devote extensive staff hours to processing bills and reimbursement, had it sought insurance coverage for the more than 230,000 tests performed at TestUtah sites, Hudachko said.
The state would have recouped some of its costs, he acknowledged, but he added that, “this overhead would create additional administrative costs in both time and money.”
If insurance reimbursement is so onerous that it was worth millions of dollars for the state to bypass it altogether, it begs another question: Why wouldn’t the same logic apply to other types of health care? Might it be more efficient for the state to provide more health services directly, rather than patients obtaining care through a complicated nexus of private insurers and providers?
”That is one of the perks of Medicare and Medicaid,” said Stacy Stanford, health policy analyst for the Utah Health Policy Project. “It is more centralized, the state has more idea what’s going on, and the ability to create policies and regulate things.”
The state’s decision to bypass insurance with TestUtah for coronavirus testing, she said, “highlights that the state can recognize the barriers that are inherent with these administrative burdens.”
”They’re saying, ‘Well, that’s a barrier that keeps people from getting care,’” Stanford said. “Exactly! You get it!”