Skip to main content
Premium Trial:

Request an Annual Quote

Court Ruling Could Bring Back Cost Sharing for Preventive Services Recommended by USPSTF


NEW YORK – A recent court ruling could impact insurance coverage of various preventive services as well as clinical laboratories and diagnostics companies that provide testing related to those services.

On March 30, Judge Reed O'Connor of the Federal District Court for the Northern District of Texas ruled that insurers cannot be required under the Affordable Care Act to cover without cost-sharing preventive services recommended by the United States Preventive Services Task Force.

The US Department of Justice has said it will appeal the decision, but if it stands, insurers will once again be allowed to charge copays and deductibles for these members using these services. The DOJ could also ask for a stay of the ruling, which would keep it from taking effect as the decision is appealed.

The USPSTF is a volunteer panel of medical experts housed within the US Department of Health and Human Services' Agency for Healthcare Research and Quality. The task force is charged with assessing the benefits of preventive services like cancer screenings and making recommendations as to whether they are effective and in which patient populations.

The organization has been around since 1984, but its recommendations gained new import following passage of the ACA, which mandated that any service the USPSTF rated either "A" or "B" — meaning, respectively, a high certainty that its benefits are substantial, or a high certainty its benefits are moderate — must be covered by insurers without any cost sharing on the part of members.

In 2020, Katy, Texas-based Braidwood Management, a self-insured management services firm, sued the Secretary of Health & Human Services (as well as the Secretary of the Treasury and the Secretary of Labor) arguing that it should not have to cover without cost sharing for its employees preexposure prophylaxis (PrEP) treatment for those at high risk of contracting HIV, a service rated "A" by the USPSTF.

Braidwood (joined by a second plaintiff, Kelley Orthodontics) argued against covering PrEP both on religious freedom grounds, which the court dismissed, and on the grounds that it violated the appointments clause of the Constitution, which holds that government decisions must come from officials appointed by the president or department heads. The plaintiffs asserted that because USPSTF members are independent from HHS and the department does not have the power to overrule their decisions, they cannot be considered department appointees. They similarly asserted that insurers cannot be required under the ACA to cover without cost sharing services recommended by the Advisory Committee on Immunization Practices (ACIP) and the Health Resources and Services Administration (HRSA).

In September 2022, O'Connor issued a mixed decision, determining that while ACIP and HRSA members did qualify as officials appointed by HHS, the USPSTF members did not, and so the requirement that insurers cover USPSTF recommended services without cost sharing did, in fact, violate the appointments clause. With his decision last month, O'Connor's ruling against required coverage of USPSTF recommended services goes into effect nationwide.

While many argue preventive services reduce healthcare and payor costs long term by preventing or detecting diseases early when they can be more easily and effectively treated, Justin Giovannelli, an associate research professor and project director at the Center on Health Insurance Reforms at Georgetown University, said that "absolutely some payors would begin imposing cost sharing on any and all manner of these items."

He noted that "the reason lawmakers put this [provision] in the ACA in the first place is that payors were not at any sort of critical mass doing this voluntarily."

"Payors are making decisions based on their own bottom lines at the end of the day, and preventive care … has significant benefits for the people who receive it, and some of that can translate into [payor] cost savings in the long run, but in the short term it is not necessarily cheaper to provide this kind of care, and so if you're not required to provide it, oftentimes you're not going to. That's certainly what we saw pre-ACA."

Bruce Pyenson, an actuary at actuarial and consulting firm Milliman who studies preventive services and has served on the Medicare Payment Advisory Commission, was more circumspect.

"For the most part, I think most plans are going to maintain their current nominal coverage," he said.

However, Pyenson said, in actual practice, payors are inconsistent in how they implement these policies. "There are constant battles that patients have over cost sharing for what are obviously covered services that should have been covered without cost sharing," he said. "There is persistent confusion in how to code whether something is diagnostic," in which case it would not be covered without cost sharing under ACA, "or preventive," in which case it would, he said, adding that reports of such incidents are at this point "beyond anecdotal."

"The administrative sloppiness of health plans has been an issue before this court case, and it is probably going to get even worse," he said.

American Health Insurance Plans (AHIP), an advocacy and trade organization representing the health insurance industry, said in a statement it issued following the ruling that as it "review[s] the decision and its potential impact with regard to the preventive services recommended by the United States Preventive Services Task Force, we want to be clear: Americans should have peace of mind there will be no immediate disruption in care or coverage."

It declined further comment.

The rule could potentially impact numerous parts of the clinical lab and diagnostics industry as it would affect coverage of services including BRCA testing to assess cancer risk; cervical cancer screening, including via molecular testing for the human papillomavirus; testing for certain sexually transmitted diseases, as well as infectious diseases including hepatitis; and colorectal cancer screening, including via Exact Sciences' Cologuard test.

Under the ruling, only USPSTF guidelines not in place when Congress passed the ACA would be impacted, meaning individuals recommended for particular services prior to March 23, 2010, will still be able to access those services without cost sharing under the law. Insurers could impose cost sharing on services recommended by USPSTF or patient populations added to recommendations after that date as well as on new services added in the future.

The ruling's potential impact on labs and diagnostic firms offering tests recommended by the USPSTF is uncertain. In a note to investors following the decision, Canaccord Genuity analyst Kyle Mikson looked specifically at its implications for Exact Sciences' Cologuard test. He suggested that concerns about uptake of the product are "overblown" and noted that in conversations with Exact, the firm said it believed that if the ruling stands most payors will continue to cover Cologuard.

Mikson added that Cologuard is included in the Healthcare Effectiveness Data and Information Set (HEDIS) measures, a set of metrics used by the National Committee for Quality Assurance to assess the quality of health insurance plans. Many insurers prioritize uptake of tests and services included in the HEDIS measures, meaning they will have an incentive to make patient access to these tests and services as robust as possible, even if they aren't required to under the ACA. Many of the services recommended by the USPSTF are also included in the HEDIS measures.

Mikson suggested, however, that the ruling could present issues for new and future tests and technologies, noting that "generally, payors are more likely to continue coverage of a product rather than cover a new modality." That could prove significant for a molecular diagnostics industry that has in recent years invested billions of dollars in developing new screening technologies like blood-based cancer early detection tests.

In a statement following the court decision, the American Clinical Laboratory Association said it "is deeply concerned by the decision" and that it will "jeopardize access to clinical laboratory and other screening services central to healthcare delivery that improve and save lives" while also reducing "access to critical screening services for underserved populations, who already bear an outsized burden of disease for many illnesses for which screening is recommended."

Many other patient and provider groups have also criticized the ruling.

As for the ruling's prospects moving forward, Andrew Twinamatsiko, associate director of the Health Policy and the Law Initiative at the O'Neill Institute for National and Global Health at Georgetown University, said that while he was not sure how the plaintiff's argument about the appointments clause will hold up under appeal, "at least for now, there is a little bit of bite there."

"I think the main question is going to be to what extent is the USPSTF under the [HHS] Secretary's oversight, and what can courts do to rectify that, or is it something that needs to be fixed by Congress and not the courts," he said.

Twinamatsiko noted that O'Connor has previously embraced arguments attacking the ACA's constitutionality. In a separate case in 2018, O'Connor determined that the entire law was unconstitutional after Congress eliminated the tax penalty for individuals who did not obtain insurance coverage. That decision was ultimately overturned by the US Supreme Court in a 7-2 decision.

In recent rulings, the Supreme Court "has taken a more anti-administrative state stance where they are less friendly toward deference to experts and the schemes that Congress has used to delegate authority," Twinamatsiko said, suggesting that this could be problematic for the defendants if the case ultimately makes it to the Supreme Court.

"It falls within the same type of pedigree of cases that the court would seem to look at with a little bit more scrutiny," he said, adding he expects both sides to appeal O'Connor's ruling.

Additionally, the case could expand upon appeal to bring other plaintiff arguments against the law back into play. The plaintiffs argued that the requirement that services recommended by the USPSTF, ACIP, and HRSA violated not only the appointments clause but also the non-delegation doctrine, which holds that Congress cannot delegate its legislative powers to outside entities. O'Connor ruled that the requirement does not violate this doctrine, but Twinamatsiko said that Supreme Court Justice Clarence Thomas has in previous comments taken issue with the amount of authority given by Congress to the HRSA.

"At least one justice feels that Congress has given too much power to HRSA, and that needs to be looked at," he said. "And so if this case goes up to appeal, you might find some sympathies with some of the justices that are against that form of delegation of authority."