Rule issued on CAA prescription drug and healthcare cost reporting

The departments of Health and Human Services, Labor and Treasury have released an interim final rule with request for comments (IFC) titled “Prescription Drug and Health Care Spending.” Under the transparency provisions of the Consolidated Appropriations Act, 2021 (CAA), group health plans and health insurance issuers must report to the departments certain information about prescription drug and healthcare spending. The departments will use that information to issue public reports every two years on prescription drug pricing trends and the impact prescription drug costs have on premiums and out-of-pocket costs, starting in 2023.

Group health plans and issuers must start submitting information to the departments beginning December 27, 2021, and by June 1 each year thereafter (i.e., calendar year 2021 information by June 1, 2022; calendar year 2022 information by June 1, 2023; and so on); however, the departments are temporarily deferring enforcement of those deadlines. A group health plan or issuer that submits the required information for 2020 and 2021 by December 27, 2022, will not be penalized.

Comments on the IFC are due by January 24, 2022.

Applicability

For purposes of the IFC, “group health plans” include ERISA group health plans (fully insured and self-insured), non-federal governmental plans (e.g., plans sponsored by states and local governments) subject to the Public Health Service Act, church plans and Affordable Care Act grandfathered plans. Not subject to the rules are account-based plans (e.g., health reimbursement accounts [including individual coverage health reimbursement arrangements], health flexible spending accounts and health savings accounts); plans that qualify as “excepted benefits”; and short-term, limited-duration insurance. For the IFC, “individual health insurance coverage” includes coverage offered in the individual market, through or outside of an exchange, as well as student health insurance coverage.

Reporting entities

To increase flexibility and reduce administrative burdens, the IFC states third parties — such as issuers, third-party administrators (TPAs) and pharmacy benefit managers (PBMs) — may submit some or all the required information on behalf of a plan or issuer, provided a written agreement is in effect. Group health plans are not prohibited from reporting on their own, but most are expected to report through third parties. The rules also state that for fully insured plans, the responsibility for a failure to comply is on the issuer, while for self-insured plans, it is on the group health plan sponsor (whether using a third party or not). 

Required information

The IFC requires that group health plans and issuers provide the following information:

• General information regarding the plan or coverage:
  • Name and Federal Employer Identification Number (FEIN) and other relevant identification numbers, for plans, issuers, plan sponsors and any other reporting entities
  • The beginning and end dates of the plan year that ended on or before the last day of the reference year
  • The number of participants, beneficiaries and enrollees, as applicable, covered on the last day of the reference year
  • Each state in which the plan or coverage is offered
• Healthcare spending:
  • Enrollment and premium information, including average monthly premiums paid by employees versus employers
  • Total healthcare spending, broken down by type of cost (hospital care; primary care; specialty care; prescription drugs; and other health care costs, including wellness services), including prescription drug spending by enrollees versus employers and issuers
• Prescription drug information:
  • The 50 most frequently dispensed brand prescription drugs
  • The 50 costliest prescription drugs by total annual spending
  • The 50 prescription drugs with the greatest increase in plan or coverage expenditures from the previous year
  • Prescription drug rebates, fees and other remuneration paid by drug manufacturers to the plan or issuer in each therapeutic class of drugs, as well as for each of the 25 drugs that yielded the highest amount of rebates
  • The impact of prescription drug rebates, fees and other remuneration on premiums and out-of-pocket costs

Data submissions

Group health plans and issuers generally will be required to submit much of the information aggregated at the state/market level rather than separately for each plan.

Reporting entities will be able to submit the required data through an internet portal. More technical detail on each data element will be provided in the collection system instructions. The system will allow multiple reporting entities to submit different subsets of the required information on behalf of the same group health plan or issuer.

Going forward

Employers must decide whether to gather and submit these reports for their group health plans themselves or have their TPAs, insurers, PBMs or other entities submit the information:

• Employers choosing to have other entities submit the information should enter into written agreements with those entities (including the cost to be passed on to the employer to complete the submission) to begin reporting for 2020 and 2021 no later than December 27, 2022.
• Employers choosing to report the information themselves should create a process for gathering and submitting the required information for 2020 and 2021 no later than December 27, 2022.