Achieving and Sustaining Herd Immunity: Coverage Policies for COVID-19 Vaccination in 2021 and Beyond

Thursday, March 18, 2021

The arrival of the long-awaited COVID-19 vaccine in the United States marked a critical point in the country’s response to the pandemic. However, the rollout is only one part of reaching a level of herd immunity that will meaningfully mitigate transmission, infection, disabling events, and deaths caused by the COVID-19 virus. Another step toward achieving immunity came in fall 2020, with the release of a CMS interim final rule stipulating how vaccines will be covered by insurance and building on existing efforts to help people secure coverage for COVID-19 treatment and testing.

What are the Key Provisions of the Interim Final Rule?

Vaccine Coverage. The interim final rule requires all health plans and insurers to waive the cost of the COVID-19 vaccine—both the vaccine itself and the cost of administering it—for consumers once the Advisory Committee on Immunization Practices recommended a vaccine. This rule extends to both in and out-of-network coverage, and it also makes clear that the vaccine will be covered without cost-sharing for those enrolled in Medicare.

Medicaid Enrollment. As part of the COVID-relief packages Congress passed in spring 2020, states were able to receive a temporary 6.2 percent increase in federal matching funds for Medicaid. In order to receive these funds, states were required to maintain coverage for people enrolled in Medicaid for the duration of the public health emergency. Under the interim final rule, CMS provides guidance allowing states to move those enrolled in Medicaid among three different tiers of coverage:

  1. Coverage that meets minimum essential coverage criteria and covers COVID-19 treatment and testing;
  2. Coverage that does not qualify as minimal essential coverage but covers treatment and testing; and
  3. Coverage that does not meet minimal essential coverage criteria and does not cover treatment and testing.    

1332 Innovation Waivers. The rule allows the departments of HHS and Treasury to modify some of the public notice requirements that are part of the 1332 waiver process. 1332 waivers allow states to implement programs that aim to improve the value and cost of health coverage. To date, most states have used this authority to implement a state-based reinsurance program. The interim final rule allows a state to slightly expedite its waiver request by offering flexibilities around public notice procedures during the duration of the public health emergency.  

Price Transparency of COVID-19 Diagnostic Tests. The Coronavirus Aid, Relief, and Economic Security Act included several requirements related to the coverage and payment of COVID-19 diagnostic tests, one being a requirement that providers publicize the cost of tests. The interim final rule makes clear that providers are required to make this information available on their website, through signage, or in writing, when requested. The rules also stipulate the actions CMS should take to enforce the requirement if a provider does not comply. Punishments include financial penalties and the initiation of corrective action plans.

Enhanced Medicare Payments. To give hospitals an incentive to provide COVID-19 treatment, the interim final rule details new, enhanced Medicare payments for COVID-19 inpatient treatment and also allows for separate payment of COVID-19 drugs and biologics when treatment is provided in an outpatient setting.

Vaccine Coverage: Just One Piece of the Puzzle

Mandating coverage of the vaccine at no cost to consumers addresses some of the conditions for ongoing, effective vaccination. Beyond financing the administration of the vaccine, this coverage mandate also gives the public confidence that they will be able to afford the vaccine, a key factor for general adoption. For instance, recent research shows that Black Americans are more likely than white Americans to be concerned about having the financial resources or insurance to get a COVID-19 vaccination. However, this is not the only factor in vaccine hesitancy among Black Americans, and vaccination efforts must include a sincere acknowledgement and engagement with the legacy of abuse and underservice that members of this community have endured historically.

Needs for an ongoing, effective vaccination program

Additional Considerations and the Road Ahead

While addressing the cost implications for individuals in the short term improves the chances of achieving herd immunity over the course of 2021, other considerations and ambiguities could affect achievement of this goal. Initial rollout of the vaccine has been slow, and state and regional leadership has been left largely without federal guidance on how to achieve a high volume of vaccinations.

Beyond 2021, new questions arise. The creation of the vaccines is a one-time step; even with the emergence of new variants, mRNA-based vaccines like the Pfizer and Moderna COVID-19 vaccines are thought to be adaptable to new variants when needed. However, it will be important to start setting the groundwork for considering the longer-term cost implications of providing and administering COVID vaccines on a potentially recurring basis. At this point in the pandemic, we do not have firm evidence on how long immunity lasts in the average vaccinated individual, how soon we will see dents in transmission as uptake grows, what the future costs of the vaccine will be, and how much additional funding is still needed to sustain a regular vaccination program. The federal government’s Operation Warp Speed program has purchased the currently reserved doses from Pfizer, Johnson & Johnson, and Moderna (as well as other likely to-be-approved vaccines) but this does not guarantee future prices and the government’s ability to pay them beyond the public health emergency, as far as we know. Sarah Kaminer Bourland, Legislative Director of Patients for Affordable Drugs, commented on future vaccine prices: "Most of the promises made were limited to the ‘pandemic emergency’ so after the emergency is over — and especially if the vaccine becomes annual like flu vaccines — we expect pharmaceutical companies to raise prices significantly. Even with these promises drug companies are already making handsome profits on COVID vaccines and treatments.” 

Regulators have few ways to limit the impact of any potential increase in the price of the COVID-19 vaccine. And, without sufficient oversight, insurers and providers could modify networks and coverage policies and make other changes to compensate for any costs accumulated over the course of the public health emergency.

Policymakers at the federal and state level have been grappling with how to pay for the administration of the initial release and dissemination of the COVID-19 vaccines. However, the CMS interim final rule will fall very short of a sustained assurance of herd immunity and funding. This rule ensures consumers will not need to pay for the vaccine and or its administration, but for many people, this coverage will only be available for the length of the public health emergency.

IMPAQ will continue to monitor vaccination efforts and the progress of this interim final rule.