It is no question the role freestanding emergency rooms, otherwise known as freestanding ERs, played in administering COVID-19 tests during the pandemic. In Texas, freestanding ERs had the testing capability and resources to provide the COVID-19 testing patients were seeking when few tests were available during the pandemic. Patients who sought a COVID-19 test could easily access COVID-19 tests and receive their results within a few days.
The United States Congress passed legislation through the CARES Act and FFCRA to ensure that patients had access to testing and vaccines without shouldering the costs. Both the CARES Act and FFCRA mandated that insurance cover the cost of COVID-19 testing and the costs related to testing. In later guidance, the Centers for Medicare & Medicaid Services provided further clarification that insurance companies would be required to cover the costs of the administration of COVID-19 vaccines.
Freestanding ERs do not exist in most states, with Texas being one of the few that allow freestanding ERs. Freestanding ERs were one of the primary facilities where patients could access COVID-19 tests and vaccines. However, there have been some debates between freestanding ERs and insurance companies regarding the billed charges for COVID-19 tests and vaccine administration. Freestanding ERs are held to the same licensing standards as hospitals, and often can provide the same laboratory tests and exams as a hospital, unlike urgent care centers. Further, when patients suspected they had been exposed to or had COVID-19, they often went to the nearest freestanding ER. This led to complaints by insurance companies regarding the charges for COVID-19 tests and vaccines and the related costs charges to insurers.
The Texas Legislature passed SB 2038 to regulate what the legislature saw as overcharges by the freestanding ERs related to COVID-19 tests or vaccines. The legislature expressed the intent of the legislation was to regulate the pricing of COVID-19 tests and vaccines. Generally, SB 2038 is written in two sections. Section 1 of the Bill applies to freestanding ERs which are associated with hospitals, with some exceptions, and Section 2 of the bill applies to freestanding ERs. Provided below is a general summary of what SB 2038 entails:
- Certain Fees Prohibited. If a patient receives a COVID test or vaccine from their vehicle, then the facility cannot charge a facility or observation fee either to the patient or a third-party payor.
- Disclosure of certain prices and fees. The facilities are required to disclose to patients the prices the facility charges for the test or vaccine, facility fees, supply costs, or other costs associated with the test or vaccine.
- Unconscionable Costs. The legislation requires that during a state of disaster, facilities cannot charge an “unconscionable price” and caps the amount a facility can charge. In the Bill Analysis, both the Senate and House expressed concerns about price gouging of fees related to COVID tests and vaccines. “Unconscionable price” is defined as a price that is more than 200% of the average cost of a similar product or service in the same geographical area. A facility may not charge an individual an unconscionable price for a product or service provided at the facility or knowingly or intentionally charge a third-party payor a price higher than the price charged to an individual for the same product or service. However, the legislature built in an exception where a facility may still offer uninsured patients a cash discount for a particular product or service or accepting from a patient full payment for services if the patient is insured (i.e. if the patient does not want to submit a claim to their insurance).
- First violation: administrative penalty of $10,000
- Second violation: administrative penalty of $50,000 and suspension of person’s license for 30 days
- Third violation: permanent revocation of the person’s license.
Governor Abbot signed SB 2038 on June 18, 2021, the law will go into effect on September 1, 2021. It is unclear the effect of the law as demand for COVID-19 tests and vaccinations has declined in the state.