Updated Prescription Drug Data Collection (RxDC) Reporting Instructions for the 2023 calendar year reporting are now available. Practically speaking, this updated guidance will be most helpful to carriers and third-party administrators (TPA) who are completing the reporting on an employer’s behalf; however, the instructions can also be useful to employer plan sponsors, as employers may still have some responsibility related to this requirement, discussed further below.


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 more information on this requirement.

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 2023 is due June 1, 2024.

Updated Instructions

The Centers for Medicare & Medicaid Services (CMS) provide detailed instructions to assist with this reporting requirement, which includes updated guidance for 2023 reporting. Some highlights of the changes from the prior year are as follows (see the instructions for a full list of changes and additional details):

  • 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;
  • Additional details about amounts that should be included or excluded from premium equivalents;
  • Instructions on how to submit data when plan list or data files exceed the maximum allowable size limit in the Health Insurance Oversight System (HIOS); and
  • Instructions to reporting entities on how to report information on retained rebates when exact amounts are unknown.

Employer Responsibility

While carriers, TPAs, and pharmacy benefit managers (PBMs) are generally 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. For example, employers are being asked to provide data that the reporting party likely does not have access to, such as:

  • D1 RxDC Data: Reporting parties are requesting the “average monthly premium” (or premium equivalents) paid by members. “Members” for these purposes include anyone enrolled in health coverage, such as employees, enrollees, dependents, and COBRA participants. The instructions clarify that the average monthly premium is calculated by taking the total annual premium (or premium equivalents) paid by members during the reference year and dividing by 12 (even if the coverage was not in effect for the entire calendar year). Note this calculation is different than instructed for reporting submitted prior to the 2023 reference year (which calculated on a per-employee-per-month basis). In addition, the average monthly premium paid by employers is requested, which is calculated the same as the average monthly premium paid by members described above. Further details on how to calculate the average premium is provided in Section 6 of the reporting instructions.
  • 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 summary plan description and/or plan document, which should include the 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 by searching the DOL website).
    • 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.

Employer Action

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).

  • Fully insured: Employers 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).
  • Self-insured: Employers should identify and contract with a TPA/PBM to fulfill this requirement on the plan’s behalf. Note that self-insured employers are ultimately liable for any failure to report, regardless of whether they enter into a written agreement with their TPA/PBM to complete reporting. However, employers may still consider entering into a written agreement that requires their TPA/PBM to complete the reporting to protect itself contractually against a potential vendor failure.

In anticipation of the June 1, 2024, 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 any TPA/carrier data requests in a timely manner to ensure that reporting is completed and to avoid any related penalty.

Additional Resources

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. © 2024 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved

Diane Cross — Diane is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Diane enjoys spending time with her family, live music, and cycling.