Among the various transparency rules contained within the Consolidated Appropriations Act is a requirement for employers to provide certain plan information about prescription drugs. The deadline for that reporting is December 27 of this year, but preparations are beginning now.
Employers, particularly those with self-funded plans, should start working with their health and prescription drug providers now, if they haven't already, to ensure their program’s reporting readiness capability.
As we previously reported, interim final rules released last year provided initial detail about the reporting requirements. More recently, and specifically regarding prescription drugs, the Centers for Medicare and Medicaid Services (“CMS”) has provided additional detail on what information must be included.
In addition to some general plan information, reportable prescription drug information includes:
- Premiums and Life Years – Premiums include all money paid for plan coverage, whether by employees, dependents, or the employer. This amount includes fees or any other contributions associated with the coverage. CMS defines “Life Years" as the average number of members (both participants and beneficiaries) covered throughout the year. Life Years looks at the number of individuals covered every month, adds those together, and divides by 12.
- Spending by Category – This reporting requirement primarily relates to medical benefits, not prescription drugs offered under the prescription drug portion of the plan. It will, however, include detailed information about prescription drugs covered under the medical benefit portion of the plan (which are typically in-patient hospital drugs).
- Top 50 Most Frequent Brand Drugs – This requires mandated reporting about the brand name drugs most frequently dispensed during the reporting year.
- Top 50 Most Costly Drugs – These should be tracked and measured for the reporting year.
- Top 50 Drugs by Spending Increase – This reporting category highlights apples-to-apples Rx spending compared to the prior year.
- Rx Totals – These are comprehensive gross payments under the plan or policy for the year.
- Rx Rebates by Therapeutic Class.
- Rx Rebates for the Top 25 Drugs – This reporting element spotlights the 25 drugs with the highest rebate amounts.
Note that each listed item carries additional nuanced details that must be reported. This reporting is due by December 27 of this year and must include information for the 2020 and 2021 calendar years, regardless of the plan or policy year. After this year, reporting will be due by June 1 for the prior calendar year (so reporting for 2022 will be due by June 1, 2023).
Excepted benefits (e.g., stand-alone vision or dental, among others) that are generally exempt from Affordable Care Act requirements are also exempt from this reporting. Additionally, account-based plans, like health reimbursement arrangements (HRAs) and health care flexible spending accounts (FSAs), are not required to report. Finally, short-term limited duration insurance (which is typically an individual market product) is also exempt.
Fully-insured employers may contract with their insurance carriers to provide prescription drug reporting on their behalf. Contracting should be fairly straightforward and likely does not present a special challenge apart from the need to explicitly contract with the carrier.
For employers with a self-funded plan where medical and pharmacy benefits are handled by the same administrative services only/third party administrator (“TPA”), the employer will need to contract with its TPA to provide this reporting.
Some TPAs are willing to handle all the reporting. However, others are saying that certain data elements (such as the first two bulleted items above as well as some general plan information) may require additional coordination with outside parties. As a result, such reportable items would become the employer’s responsibility. This may mean the employer must handle some reporting, which could require registering with CMS’s Health Insurance Oversight System (“HIOS”), or to work with other vendors to provide this reporting.
For employers with a self-funded plan where pharmacy is carved out and handled by a separate pharmacy benefit manager (“PBM”), the PBM will likely handle most of the reporting. However, here again, the employer may be responsible for certain data elements (like 1 and 2 above as well as some general plan information) which may require a registration with HIOS. It may also be possible for the employer to contract with the TPA to handle any additionally required reporting.
Given the short timeframe between now and the looming reporting due date, employers should work with their insurance carriers, TPAs, PBMs, and other service providers to ensure prescription drug reporting is accurately handled and timely submitted.
If local circumstances require that the employer directly report certain information on its own plan's behalf, the employer should familiarize itself with the reporting instructions released by CMS and available here (which also includes links to other resources). The rules can be complex, so careful attention is warranted.
If you have any questions, please contact your HUB Advisor. You can view more compliance articles in our Compliance Directory.
NOTICE OF DISCLAIMER JP Griffin Group, Hub International Limited, nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.