Employers and their benefit administrators have more detail and a more convenient way to submit “top 50” lists and other data—but no more time to comply with—daunting prescription drug cost reporting requirements in the Consolidated Appropriations Act, 2021 (CAA), under new interim final regulations.
The interim final regulations, published November 23, 2021, in the Federal Register by the U.S. Department of Health and Human Services (HHS), U.S. Department of Labor (DOL), and U.S. Department of the Treasury—also confirmed earlier guidance that initial reporting for 2020 and 2021 will be due by December 27, 2022. Under the CAA, initial reporting would have been due a year earlier (i.e., this month).
The new interim final rules also clarify that only limited data must be reported at the plan level. Instead, insurers, third-party administrators (TPAs), and pharmacy benefit managers (PBMs) may aggregate much of the drug cost data by state and by market segment (such as individual health coverage and large self-insured groups) within the state.
Specific Data to Be Reported
Under the interim rules, which implement section 725 of the Employee Retirement Income Security Act (ERISA), added by the CAA, group health plans and insurers are required to provide the following information:
This information is required for each specific individual plan or insurer. Other required data may be aggregated. The interim final regulations allow reporting entities such as TPAs and PBMs to aggregate data for multiple health plans by providing the information below for each state and market segment (e.g., individual, insured small group plans, and self-insured large employers). The required data includes the following:
Release of Data
Under the guidance, HHS, the DOL, and the Treasury Department will publish a biannual report regarding prescription drug reimbursements, trends, and impacts on premiums. While some states have their own laws and guidance on reporting prescription drug and health care spending data, the federal agencies do not believe that these rules would have a substantial impact on how states collect data, or that the rules would impose direct costs on states or preempt state laws. The agencies anticipate that the first report will be released in June 2023.
Reporting Entity Responsibility
Under the interim final rules, if a fully insured group health plan requires its health insurer to report the required information pursuant to a written agreement, any failure to do so falls on the insurer. The guidance holds that the insurer, and not the plan, would be the entity in violation of the reporting requirements. By contrast, if a PBM or other reporting entity has agreed to report the data for a self-insured plan, but fails to do so properly, the plan itself will be deemed to violate the rules.
Under the rules, “prescription drug rebates, fees, and other remuneration” is defined as “all remuneration received by or on behalf of a plan or issuer, its administrator or service provider … with respect to prescription drugs prescribed to participants, beneficiaries, or enrollees in the plan or coverage.” This includes “remuneration received by and on behalf of entities providing pharmacy benefit management services to the plan or issuer, with respect to prescription drugs prescribed to participants, beneficiaries, or enrollees in the plan or coverage, … regardless of the source of the remuneration.” The agencies listed a number of examples of remuneration, including “discounts, chargebacks or rebates, cash discounts, free goods contingent on a purchase agreement, up-front payments, coupons, goods in kind, free or reduced-price services, grants, or other price concessions or similar benefits.”
Bona fide service fees are also included in the definition. The agencies defined such fees as those “paid by a drug manufacturer to an entity providing pharmacy benefit management services to the plan or issuer that represent fair market value for a bona fide, itemized service actually performed on behalf of the manufacturer that the manufacturer would otherwise perform (or contract for) in the absence of the service arrangement, and that are not passed on in whole or in part to a client or customer of the entity, whether or not the entity takes title to the drug.”
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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