Prescription Drug Transparency Reporting Is on the Horizon – Are You Ready?

An upcoming series of new prescription drug reporting and requirements instituted by the Consolidated Appropriations Act of 2021 (CAA) is due at the end of 2022. The CAA’s No Surprises Act requires health plans and issuers to report prescription drug data for the years 2020 and 2021 by December 27, 2022.

Beginning in 2023, data must be submitted annually.

Who has to comply?

The rule applies to group health plans and insurance issuers offering group or individual insurance coverage. The rule applies to insured and self-insured group health plans subject to ERISA, including grandfathered health plans, plans sponsored by state and local governments subject to the Public Health Service Act, and church plans subject to the Internal Revenue code.

What information must be reported?

Group health plans and issuers will need to submit information into two separate categories, Plan Lists and Data Lists. Plan Lists include general information unique to the group health plan, including:

• Identifying plan information (e.g., plan number, issuer name, plan sponsor, reporting entity)
• Beginning and end dates of the plan year
• Number of participants and beneficiaries covered on the last day of the plan year
• Each state in which the plan or coverage is offered

The Data List will include the following for each state and market segment:

• Enrollment and premium information, including average monthly premiums paid by employees versus employers
• Total health care spending, broken down by type of cost (hospital care, primary care, specialty care, prescription drugs, wellness services), including prescription drug spending by enrollees versus employers and issuers
• The 50 most frequently dispensed brand prescription drugs (according to the total number of paid claims for prescriptions filled during the plan year)
• The 50 most costly prescription drugs with the greatest increase in plan or coverage expenditures from the previous year as determined by total annual spending on each drug
• The 50 prescription drugs with the greatest increase in expenditures between the year immediately preceding the plan year and the reference plan 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

The information must be aggregated at the state/market level rather than separately for each plan. See the interim final rule for specific standards and definitions on dosage strength, packet size, etc.

How do plan sponsors and issuers report the information?

The Center for Medicare & Medicaid Services (CMS) has developed an internet portal where plan sponsors and issuers can report the required information. New users will need to create an account before they can submit information.

What should employers be doing now?

For fully insured plans, plan sponsors can satisfy the reporting requirements by entering into a written agreement requiring the health insurer to report the required information. If the insurer fails to report, the insurer, not the plan, violates the reporting requirements.

For self-insured plans, the general reporting requirements may be satisfied if the plan sponsor or insurer has entered into a written agreement with a third-party reporting entity (e.g., PBM or TPA) to report some or all of the information required. However, if the third-party reporting entity fails to follow through with the reporting, the plan sponsor may be held liable for the failure.

If a plan sponsor transitioned to another pharmacy benefit provider during the reporting period requirement, we encourage them to reach out to all respective vendors for assistance with collecting the requested information.

If you haven’t already, consider revising your service provider agreements to clearly state which party is responsible for information gathering, reporting, and accuracy. Many fully insured plans may have already heard from their health insurer on how reporting will be done, but they should still work to get a confirmation in writing that the insurer will be responsible for all required reporting.

Self-insured plans should also begin working with their vendors (e.g., PBMs, TPAs) that administer claims for prescription drugs and other health care costs to identify information needed to meet the reporting requirement. Plan sponsors may also want to enter into written contractual agreements from applicable vendors regarding which party will gather and submit the required information to meet the requirements.

With open enrollment in full swing and fast approaching for many companies, use the time now to make sure you and your service providers are clear on their responsibilities and prepare to identify and compile the required information needed to report.

If you have questions about this new report, contact your OneDigital consultant. Download the Compliance InfoBrief: Prescription Drug and Health Care Spending Reporting to review the latest regulations on reporting requirements.