Office of Administrative Law Approves Department of Managed Healthcare’s Emergency Regulation Regarding COVID-19 Diagnostic Testing

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By Alex Ruf

On July 15, 2020, the Department of Managed Health Care (DMHC) published a notice of emergency rulemaking action with respect to its intent to adopt section 1300.67.01, Title 28 of the California Code of Regulations (CCR), pertaining to COVID-19 Diagnostic Testing.  DMHC’s finding of emergency contains a rare “non-delay statement,” citing the Director of the Department’s determination that a typical five-day notice period for public comment was not feasible because “the emergency situation addressed by this proposed emergency regulation clearly poses such an immediate and serious harm that delaying action to allow public comment would be inconsistent with the public interest.” DMHC also petitioned the Office of Administrative Law (OAL) to similarly waive its typical five-day notice period and expedite the effective date of the proposed regulation.  According to DMHC, “Time is of the essence in this instance because the State of California is in the midst of a global pandemic due to the SARS-CoV-2 virus, which causes COVID-19.”  Citing the recent surge in COVID-19 cases in California, the Department went on to state:

Testing for COVID-19 is essential to identifying people with COVID-19 and stopping the spread of the virus. The proposed emergency regulation will clarify when California health plans must cover testing, how quickly they must provide testing to their enrollees, and how health plans must reimburse providers for performing COVID-19 testing. Prompt reimbursement of providers will allow them to continue to provide testing to their patients. Any delay in the promulgation of this regulation will increase confusion as to when and how enrollees can obtain a test and intensify the spread of COVID-19 in California, resulting in more cases, more hospitalizations, and ultimately, more deaths from the virus.

The newly-adopted text classifies COVID-19 diagnostic testing as “a medically necessary basic health care service” for all essential workers and prevents delays in testing and claims payments specifically related to essential workers.  For enrollees who are not essential workers, the new regulation permits a health plan to impose ordinary utilization management procedures allowed by the Knox-Keene Act when determining whether a COVID-19 test is medically necessary for an enrollee unless otherwise specified by state or federal law.

According to DMHC’s finding of emergency, the regulation is necessary to increase diagnostic testing to slow the spread of COVID-19 and to provide health plans, consumers, providers, and other stakeholders with “clear direction on requirements for coverage of COVID-19 diagnostic testing and claims reimbursement.”

On July 17, 2020, OAL approved the proposed emergency regulation, effective that day, and issued an amended order on August 27.

On July 23, 2020, Sarah Ream, Acting General Counsel for DMHC, issued an All Plan Letter to all full-service commercial health care service plans, detailing the emergency regulation. On September 18, 2020, Ms. Ream issued another All Plan Letter addressing common questions from stakeholders regarding the implementation of the emergency regulation. The emergency regulation is set to expire on May 15, 2021.

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