The Department of Labor, Health and Human Services and the IRS recently released an interim final rule with a request for comment, Prescription Drug and Health Care Spending. The rule implements another phase of the transparency provisions of the Consolidated Appropriations Act, 2021 (CAA), and is open for public comment through Jan. 24, 2022.
This most recent rule requires reporting entities—group health plans, both fully insured and self-funded, and issuers of insured group health plans or individual coverage—to report annually information about prescription drug and health care spending.
Unlike the Affordable Care Act (ACA), the CAA does not include exceptions for grandfathered plans. The interim final rule, however, does not apply to health reimbursement accounts (HRAs); other account-based group health plans such as individual coverage HRAs (ICHRAs); coverage consisting solely of excepted benefits such as dental or vision plans; or short-term, limited-duration insurance coverage.
The departments designed these rules to solicit data that would allow an accurate comparison of apples to apples across all the reporting entities. The interim final rule includes specific instructions concerning:
- Calculation of covered lives.
- What to do if a merger occurs.
- The timeframe (reference year, aka, calendar year) for the data calculations, regardless of the plan year.
The data the plans and insurance issuers must submit ranges from general plan identifying information and the states in which the plans operate to more precise information, e.g.:
- The top 50 most often dispensed prescription drugs and the number of paid claims for each drug.
- The top 50 most costly drugs by total annual spending and the total annual spending by the plan for each drug.
- The top 50 drugs with the greatest increase in plan expenditures over the previous year and each drug's increased amount.
- Other data required includes total spending on health care services by the plan broken down by type: hospital, specialty, primary care, specialty care, prescription drugs and wellness.
- Total spending by plan and participant on premiums and prescription drugs.
- Impact on premiums of rebates, fees, and other remuneration paid by drug manufacturers to the plan or issuer or its administrators or service providers.
- The top 25 drugs yielding the highest amounts of rebate or other remuneration during the Reference Year for each therapeutic class of drugs.
- Any reduction in premiums or out-of-pocket costs associated with the rebates or other remuneration.
The level of information sounds daunting, and the departments acknowledge the magnitude of the burden for each plan to collect and report this information on an annual basis.
Plans and insurers may collect and submit the data themselves, or they may rely on another party (third-party administrator, pharmacy benefit manager, health insurance providers, etc.), pursuant to a written agreement, to report the data on their behalf.
Regardless of who submits the data, the plan or issuer is ultimately responsible for complying with the interim final rule's reporting requirements. The departments plan to build a portal to ease the submission burden on the reporting entities. The departments must then assemble an aggregate report from the submitted data and publish it on the internet within 18 months of the first submission deadline and biannually after that.
This brings us to the deadlines by which the reporting entities must submit the mass of data. The interim final rule states the first deadline for plans and insurers for 2020 data is one year after the enactment of the CAA, which was Dec. 27, 2021. The deadline for 2021 data is June 1, 2022, and each subsequent year's data is due on each following June 1.
Fortunately, the departments have the discretion to defer the enforcement of deadlines. They have elected to defer enforcement of the deadline for 2020 and 2021 data submission until Dec. 27, 2022, when reporting for both years is due.
The departments strongly encourage reporting entities to work on their procedures now. Meanwhile, the departments will build the reporting portal and provide further instructions for the actual data submission, which will provide reporting entities with the level of detail the departments expect in the submissions.
The Bottom Line
- All group and individual health plans are subject to this interim final rule.
- The required information is extensive and detailed.
- Plans may enlist other entities to submit the required data on their behalf pursuant to a written agreement.
- The ultimate deadline for compliance is Dec. 27, 2022, which must include the submission for reference years 2020 and 2021. The deadline for reference year 2022 will be due June 1, 2023.
- The departments will assemble and aggregate the information into a public report published on the internet. The report should help plan sponsors and individuals see where their healthcare dollars are used year over year.
The departments have now deferred several deadlines into 2022, adding to other employee benefit deadlines already required in 2022. We previously published information on upcoming deadlines to assist with planning, but this means the year ahead is shaping into another busy year for plan sponsors.
Stephanie O. Zorn is an attorney in the St. Louis, Missouri, office of Jackson Lewis P.C. Kathryn W. Wheeler, CEBS, is an attorney in the firm's Overland Park, Kansas, office. © 2022 Jackson Lewis P.C. All rights reserved. Republished with permission.
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Fee Disclosure Requirements for Health Plan Advisors Shed Light on Conflicts, SHRM Online, January 2022
Agencies Delay Health Plan Price Transparency Disclosures, SHRM Online, August 2021
Health Plan and Provider Price Transparency Obligations Can't Be Ignored, SHRM Online, July 2021