Agencies Seek Employers' Comments on Reporting Drug Costs

Health plans must submit first report before end of 2021

Stephen Miller, CEBS By Stephen Miller, CEBS June 25, 2021
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Agencies Seek Employers Comments on Reporting Drug Costs

​Federal agencies are seeking feedback on how a new law requiring employer-sponsored health plans to provide data on their prescription drug cost coverage will affect health plan sponsors and insurance issuers.

The request for information (RFI), Reporting on Pharmacy Benefits and Prescription Drug Costs, published June 23 in the Federal Register, seeks information on how group health plans and insurers may report on employees' pharmacy benefits and prescription drug costs under the transparency provisions of the Consolidated Appropriations Act, 2021 (CAA). The agencies also seek input on the level of detail that is feasible to report and the associated burdens and potential compliance costs involved with reporting this information.

The agencies will use comments from employers and insurers to inform future rulemaking involving how information is collected and reported. The first report is due by Dec. 27, 2021, which is one year after enactment of the CAA. Each subsequent report is due by June 1 each year.

[Want to learn more about health care and reporting requirements? Join us at the SHRM Annual Conference & Expo 2021, taking place Sept. 9-12 in Las Vegas and virtually.]

New Reporting Requirements

The CAA updated the Employee Retirement Income Security Act, the Public Health Services Act and the tax code to require group health plans to report certain information related to prescription drugs to the secretaries of the departments of Health and Human Services, Labor, and the Treasury, including:

  • The plan year, number of enrollees and each state in which the plan is offered.
  • The top 50 brand prescription drugs paid for by the plan, and the total number of paid claims for each drug.
  • The top 50 most expensive prescription drugs paid for by the plan by total annual spending, and the annual amount spent by the plan for each drug.
  • The 50 prescription drugs with the greatest increase in plan expenditures since the prior plan year, and the change in amounts spent for each drug.
  • The total spending on health care services by plan, broken down into specific categories, including hospital costs, primary care costs, specialty care costs and prescription drug costs.
  • Average monthly premiums paid by employers and by participants.
  • The effect on premiums by rebates and fees paid by drug manufacturers to the plan or its administrators or service providers, including any reduction in premiums and out-of-pocket costs associated with the rebates and fees.

The agencies, along with the Office of Personnel Management, will use the reported information to analyze trends in overall spending on prescription drugs and other health care services by employers that sponsor self-funded health plans and by insurers that provide fully insured health plans. The agencies said they will then publish the analysis in a format that will enable plans and issuers to negotiate fairer rates and ultimately lower costs for participants, beneficiaries and enrollees.

[Related SHRM article: 2021 Appropriations Act Increases Employee Health Plan Transparency]

Preparing Now

"Given the volume of information and the expectation that reporting will be required before the end of 2021, plan sponsors and health plan issuers will need to begin considering putting in place mechanisms to ensure the appropriate data will be collected in order to complete the required reporting," advised Steve Flores and Susan Nash, partners in the Chicago office of law firm Winston.

They added, "It is likely that vendor agreements, such as pharmacy benefit management and administrative services agreements, will need to be revisited to ensure data collection and reporting expectations are appropriately reflected and necessary protections are in place. Despite the additional reporting burden, plan sponsors may find the public reporting helpful in benchmarking and managing drug costs."

Actuarial and advisory firm Cheiron noted: "It will likely be difficult for many plans to comply with the reporting requirements because only their pharmacy benefits managers (PBM) will know the rebates, fees, and other remuneration by drug or therapeutic class of drugs, and their contract with their PBM may not allow them access to this information."

Jessica Kuester, an attorney in the Indianapolis office of Ogletree Deakins, advised that "facing these new compliance obligations, plan sponsors may want to consider how to comply and whether they may need to engage their service providers to gather necessary information."

Submitting Comments

The agencies are accepting comments in response to their RFI through July 23, 2021. Comments can be submitted at https://www.regulations.gov by following the "submit a comment" instructions.

[Related SHRM article: Final Rule Requires Health Plans to Disclose Prices for 'Shoppable' Care]


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