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New Group Health Plan Prescription Drug Reporting to Begin in December 2022

The 2021 Consolidated Appropriations Act established new transparency requirements for group health plans to report specific information about prescription drugs and health care spending. This data submission is called the “RxDC” report. The Rx stands for prescription drug and the DC stands for data collection. The first RxDC report is due by December 27, 2022, and covers data for both the 2020 and 2021 “reference years.” Plans must then submit data for the 2022 reference year by June 1, 2023, and by June 1 annually thereafter. For plans that are fully insured, most of the reporting will be handled by your insurer. For plans that are self-funded, more is required. Outlined herein is another summary of what is required.

Self-Insured Plans Responsible for Reporting

The RxDC reporting requirement applies to both fully insured and self-insured plans, however fully insured carriers will handle the reporting for their clients. Self-insured plans are responsible for their own reporting. Self-insured employers may use third-party administrators (TPAs), pharmacy benefit managers (PBMs) or other third parties to submit the RxDC reports on their behalf. Although employers can submit these reports on their own, it is expected that it will be rare for employers to do so. For self-insured plan sponsors, this effort will require coordination between the TPA, the plan sponsor and any PBM. Self-insured employers will look primarily to their broker for guidance and management of the employer’s compliance and reporting and should also monitor TPA and PBM compliance.

Information to Be Reported Plans must submit information about:

  • Spending on prescription drugs and health care services

  • Prescription drugs that account for the most spending

  • Drugs that are prescribed most frequently

  • Prescription drug rebates from drug manufacturers

  • Premiums and cost-sharing that patients pay

Plans must specifically submit identifying plan information in conjunction with eight data files. The complete reporting is a collection of ten total files that are submitted together:

  • One plan level summary file (P2)

  • Eight different data files (D1-D8)

  • One narrative file explaining the data submitted (from carrier, TPA, PBM)

How Information Is to Be Submitted, Used and Released The Centers for Medicare and Medicaid Services (CMS) is collecting the RxDC information on behalf of the Departments of Health and Human Services, Labor, and Treasury. The data is uploaded electronically by a “reporting entity” to a CMS website called HIOS. There could be multiple reporting entities involved in compiling and submitting data for an employer self-insured plan, and various vendors are taking different approaches. Some may report aggregated data directly to CMS and others may provide the data to the employer for submission. For example, some vendors will submit all files except the D1 file that includes membership data, employer/employee contributions, and ASO and stop-loss costs. If an employer/plan is required to submit any data themselves, they must first set up their organization with a HIOS account (see HIOS User Manual and Guide and HIOS Portal Quick Guide for step-by-step instructions). CMS has issued detailed helpful and easy to follow RxDC reporting/submission instructions which can be found on a CMS RxDC website where FAQs, templates for the data files, and much more information is posted. The CMS help desk is available to provide assistance with the RxDC reporting/submission process (access them by email or telephone at 855-267-1515).

The data submitted will help to:

  • Identify major drivers of increases in prescription drug and health care spending

  • Understand how prescription drug rebates impact premiums and out-of-pocket costs

  • Promote transparency in prescription drug pricing

The information being submitted will not be available to the public. Rather CMS intends to eventually publish a report on the data that will be available to the public with aggregated observations and findings about prescription drug pricing trends and the impact of prescription drug rebates on patient out-of-pocket costs.

Recent Guidance Issued Recently CMS has been issuing new FAQs providing administrative clarity, including six new FAQs issued in late September providing guidance for scenarios where a plan sponsor has multiple reporting entities and/or when a plan sponsor experiences a change in reporting entity from the prior year. This newest guidance provides a degree of flexibility to plan sponsors with these types of circumstances. As compliance related questions and issues continue to surface from vendors and employers, we are hopeful that the vendor industry will continue to evolve their processes to provide maximum assistance to the employer community and also that the Departments will continue to provide further guidance, clarifications, and support as we approach the December reporting due date. CMS recognizes the practical filing considerations and continues to address the administrative burdens to comply for employers and the industry.

Employer Next Steps Employers with fully insured medical plans should confirm with their insurance carriers that they will be timely processing the RxDC reporting. For self-insured employers, the RxDC regulations permit the employer to rely on their TPA and PBM to submit the RxDC report on their behalf, even though the obligation technically lies with the employer. Self-insured plans should confirm that their TPA or PBM will be completing the RxDC report on behalf of the plan, and promptly respond to any questionnaires received from the vendors to assist with compiling some of the basic plan information needed in addition to the main content handled by the vendor. Being proactive and communicating with vendor partners to coordinate reporting responsibilities is an essential aspect of this process.

Conner Strong & Buckelew is working directly with health insurance carriers, TPAs, PBMs and others to monitor guidance and confirm vendor approaches to assist our clients in remaining compliant with these RxDC requirements. Plan sponsors, who may also have difficulty obtaining cooperation or information from their vendors, would obviously benefit greatly from relief granted for good faith efforts offered by the Departments in advance of the first reporting deadline. This would be appropriate given the sweeping nature of the requested data, the many reporting challenges associated with this requirement, and the Departments’ recognition that self-insured plan sponsors do not possess much of the requested data. We will provide alerts and updates as new information becomes available. Please contact your Conner Strong & Buckelew account representative toll-free at 1-877-861-3220 with any questions.

For a complete list of Legislative Updates issued by Conner Strong & Buckelew, visit our online Resource Center.

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