Recently, the Department of Health & Human Services (HHS) released updated Prescription Drug Data Collection (RxDC) Reporting Instructions for the 2022 calendar year reporting, which is due June 1, 2023. The revised instructions are quite detailed and provide guidance that may be useful to employer plan sponsors. In addition to highlighting changes from the prior year’s instructions, the below also discusses employer responsibility related to complying with this reporting requirement, even when a carrier or third-party administrator (TPA) is completing reporting on the employer’s behalf.
The Consolidated Appropriations Act of 2021 (CAA) amended the Public Health Service Act (PHSA) to require group health plans and carriers to submit general and spending information about the plan, primarily related to prescription drug expenditures (“Pharmacy Reporting”). In turn, the Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) must use this data to publish public reports on prescription drug reimbursements, pricing trends, and the impact of prescription drug costs on premium costs. See our blog, Prescription Drug Cost Reporting Requirement: Due Date Approaching, for information on this requirement generally.
Reporting was initially due for calendar years 2020 and 2021 by January 31, 2023 (after multiple extensions), with all subsequent years’ reporting due June 1st following the close of the calendar year. As such, reporting for calendar year 2022 is due June 1, 2023.
The Centers for Medicare & Medicaid Services (CMS) provides detailed instructions to assist with this reporting requirement, which includes updated guidance for 2022 reporting. Highlights of the changes from the prior year are as follows:
- An additional option for multiple vendors to submit the same data file on behalf of the same plan, issuer, or carrier has been added;
- Columns in the D1-D8 data files are renamed to emphasize that data can be aggregated at the plan sponsor, carrier, reporting entity, or other company level (rather than at the issuer or TPA level only);
- Clarifies that (1) prescription drug rebates should be subtracted from premium equivalents in D1 regardless of whether the rebate received in the reporting year applies retroactive or prospectively; (2) stop-loss reimbursements should be subtracted from premium equivalents in D1, but not subtracted from the total spend in D2; and (3) rebates expected but not yet received should be subtracted from total spending; and
- RxDC reporting does not apply to retiree-only plans.
While carriers, TPAs, and pharmacy benefit managers (PBMs) are able to (and generally are) assisting employer plan sponsors with the reporting requirement, employers may still be responsible for providing their carriers/TPAs/PBMs with certain data timely to help complete the reporting required. For example, employers are being asked to provide data that the reporting party likely does not have access to, such as:
- P2 RxDC Data: This will include group health plan name and related information such as group health plan number, Form 5500 plan number, plan year start and end date, plan sponsor name, and plan sponsor EIN.
- Without further guidance, it is recommended employers reference their ERISA wrap plan document, which will include plan name, plan number, and plan year (and can also reference information in the most recent Form 5500 filing, if applicable, which can be found here).
- P2 data also includes enrollment of covered persons, states in which the plan is offered, and market segment information, although the reporting entity likely has access to this information.
- D1 RxDC Data: Reporting parties are requesting the average monthly premium (or premium equivalents) paid by members (per member per month, PMPM). “Members” for these purposes include anyone enrolled in health coverage, such as employees, enrollees, dependents, and COBRA participants. The instructions clarify that the PMPM is calculated using the actual spend by members during the applicable year (and not based on the premium rates charged to the member), based on the calendar year. In addition, the average monthly premium paid PMPM by employers is requested, which is also based on actual spend (not based on averaging premium rates).
- For self-insured plans, the total premium paid by employers is total premium equivalents (including claims, stop-loss premiums, and related administrative fees), excluding the premium paid by members.
Further details on how to calculate the average premium is provided in Section 6 of the reporting instructions.
Employers should confirm with their carriers, TPAs, or PBMs that they will be completing the RxDC requirement as the reporting entity on the plan’s behalf (and should also request any reporting entity confirm filing completion). Importantly, employers sponsoring fully insured plans should consider entering into a written agreement requiring their carrier to complete this reporting (as employers will not be held liable for any failure to report when a written agreement is in place).
In anticipation of the June 1, 2023, due date, many carriers/TPAs are reaching out directly to employers for any necessary data and are specifying timeframes in which employers must respond. As such, employers should be mindful to respond to TPA/carrier data requests to ensure that reporting is completed timely to avoid any related penalty.
- RxDC Reporting Instructions
- CMS RxDC Website
- Introduction to RxDC (Topics: P1 and D2 Data)
- RxDC FAQs
- Interim Final Rule
- Sequoia Foreword: Prescription Drug Cost Reporting Requirement: Due Date Approaching
Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2023 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved