New Instructions for RxDC Reporting Have Been Released - Here's What to Know

Under the Consolidated Appropriations Act, 2021 (CAA), group health plans and health insurers offering group or individual health insurance coverage must annually submit information about prescription drug and healthcare spending to the Internal Revenue Service (IRS), the Department of Labor (DOL), and the Department of Health and Human Services (HHS).

At the beginning of February, the Center for Medicare and Medicaid Services (CMS) released new instructions for the annually-required prescription drug data collection (RxDC) reports due June 1, 2024. The most significant changes are summarized below.

Summary of RxDC Reporting Changes

• Simplified calculation of average monthly premium to use total annual premium divided by 12 instead of the average monthly premium on a per-member basis;
• Simplified calculation of premium equivalents by removing restrictions on reporting on a cash basis and using paid claims rather than incurred claims;
• Provided additional details about amounts that should be included or excluded from premium equivalents;
• Updated instructions for populating the benefit carve-out field in P2;
• Clarified that medical devices, nutritional supplements, and over-the-counter drugs are excluded from prescription drug lists unless the NDC for the product is on the CMS Drug and Therapeutic Class Crosswalk;
• Provided instructions to reporting entities on how to report information on retained rebates when exact amounts are unknown;
• Provided instructions on how to submit data when plan list or data files exceed the maximum allowable size limit;
• Announced enforcement of the aggregation restriction;
• Added a column to D6 to collect enrollment.

Additional RxDC Reporting Information for Employers

The enforcement of the aggregation restriction may be the biggest change affecting plan sponsors. In the first two submissions, plan sponsors could rely on an aggregate submission of pharmacy data. Beginning June 1, 2024, plan level data must be submitted. The aggregation restriction prevents plans from submitting medical premium and life years data on D1 and pharmacy data on D3-D8 at a less “granular level” than D2 medical benefit data. Therefore, if D2 submissions are done at the plan level, D1 and D3-D8 must also be submitted at plan level. Because most employers contract with multiple vendors, they will need to make sure that all plan data is included on their D2 form if all vendors do not agree to submit the data as part of an aggregated file. Because this D2 form data will be at plan level, the aggregation rule dictates that D1 and D3-D8 data must also be plan level.

Similar to prior RxDC reporting cycles, issuers, Third-Party Administrators (TPAs), Administrative Services Only Providers (ASOs), PBMs, or other third-party vendors (collectively referred to as “TPAs”) may agree to submit RxDC Data on a plan’s behalf. Carriers/Issuers and other TPAs who agree or plan on submitting RxDC Data on their client’s behalf will need to collect certain information from Plans to facilitate its RxDC Reporting.

Currently, carriers and TPAs are notifying plans of their process to collect such information by sending out “Request for Information” (“RFI”) letters to their clients.  Within these notices, carriers and TPAs are imposing deadlines for plans to remit applicable information to them. Employers should be mindful of these carrier and TPA imposed deadlines for remitting applicable information if they want the carrier/TPA to submit RxDC Data on the plan’s behalf. If a plan fails to comply with these deadline, then the plan will be required to submit its RxDC Report on its own through CMS’s HIOS system by June 1, 2024. 

Employers should reach out to their consultants and TPAs regarding the upcoming RxDC reporting deadline.  Employers should: (1) “Look out” for these RFI letters or notices and/or (2) reach out to the applicable TPA and inquire about their process, if any, of performing RxDC reporting for their client, and  (3) if applicable, note TPA’s internal deadline to collect RxDC Data and provide information timely. 

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