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Agencies Issue Regulations Implementing Prescription Drug and Health Care Spending Reporting Requirements, Including Rules for Aggregating Data


· 5 minute read


· 5 minute read

Interim Final Rule: Prescription Drug and Health Care Spending, 26 CFR Part 54, 29 CFR Part 2590, 45 CFR Part 149, 86 Fed. Reg. 66662 (Nov. 23, 2021); Fact Sheet: Prescription Drug and Health Care Spending Interim Final Rule With Request for Comments (Nov. 17, 2021)


Fact Sheet

News Release

The DOL, HHS, and IRS have issued interim final regulations implementing the requirement that group health plans and insurers report prescription drug and health care spending, premiums, and enrollment information to the government. As background, a transparency provision included in the Consolidated Appropriations Act, 2021 (CAA) requires plans to annually submit health care and drug cost reports to the agencies (see our Checkpoint article). According to the CAA, the first reporting deadline is December 27, 2021, and subsequent deadlines are June 1st of each succeeding year. However, recognizing that plans may need additional time to comply, the agencies deferred enforcement of the first two reporting deadlines pending the issuance of regulations and encouraged plans to work toward reporting the required information with respect to 2020 and 2021 data by December 27, 2022 (see our Checkpoint article). These regulations, which are generally applicable beginning December 27, 2021, describe the content and timing requirements for the reports. Here are highlights:

  • Who Must Report? Group health plans, including grandfathered plans, and group health insurers must report; excepted benefits and account-based plans (such as HRAs) need not report. Insured plans may 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 insured and self-insured plans, the requirements may be satisfied if the plan or insurer has a written agreement with a third-party reporting entity (such a PBM or TPA). But if the third-party reporting entity fails to report the required information, the plan or insurer violates the reporting requirements.
  • Timing. The agencies interpret the CAA to require plans and insurers to submit information based on the “reference year,” which the regulations define as the calendar year immediately preceding the calendar year in which the data submission is due. Calendar year 2020 information is required to be submitted by December 27, 2021; calendar year 2021 information by June 1, 2022 calendar year 2022 information by June 1, 2023; and so on. However, in recognition of concerns about the feasibility of meeting the first two statutory reporting deadlines, the agencies will not initiate enforcement actions against plans or insurers that submit the required data for the 2020 and 2021 reference years by December 27, 2022. The agencies urge plans and insurers to start working to ensure that they are be able to report by December 27, 2022, and they encourage plans and insurers to submit by either the December 27, 2021 or June 1, 2022 deadlines if they are able.
  • Content. In addition to general identifying information such as the beginning and end dates of the plan year, the number of enrollees covered, and each state in which the plan is offered, a broad range of health care spending information must be reported. For instance, the average monthly premium paid by employees versus employers must be reported, as well as the total health care spending broken down by type (such as hospital care, primary care, and specialty care) and prescription drug spending by enrollees versus employers and insurers. Plans and insurers must also report the 50 most frequently dispensed brand prescription drugs, the 50 costliest prescription drugs by total annual spending, and the 50 prescription drugs with the greatest increase in plan or coverage expenditures from the previous year. And prescription drug rebates and fees must be reported with some specificity, along with their impacts on premiums and out-of-pocket costs.
  • Data Aggregation. Notably, the agencies advise that plans, insurers, and third-party reporting entities may submit most of the required information on an aggregate basis. The only plan-level information collected will be the general plan information. Aggregated reporting is generally done by state, with insurers reporting aggregated experience by the state where the policies are issued and TPAs for self-insured plans reporting aggregated experience by the state of the plan sponsors’ principal place of business. If a reporting entity submits data on behalf of more than one group health plan in a state, the reporting entity may aggregate data for the group health plans for each market segment in the state. Insured and self-insured plans are considered separate market segments, and those segments are further divided by employer size. Detailed rules are provided on aggregation entities and acceptable aggregation methods, and the agencies intend to provide a portal where reporting entities can submit the required data.

EBIA Comment: These regulations usher in sweeping new reporting requirements for group health plans. The inclusion of rules for aggregating data will certainly come as a relief to employers, administrators, and advisors. For more information, see EBIA’s Health Care Reform manual at Section XXXVI.I (“Pharmacy Benefit and Drug Cost Reporting”). See also EBIA’s Self-Insured Health Plans manual at Section XXIX.D.4 (“Pharmacy Benefit and Drug Cost Reporting”) and EBIA’s ERISA Compliance manual at Section XXI.C (“Caution Regarding Additional Obligations”). You may also be interested in our upcoming webinar, “Group Health Plans Year-End Update and Looking Ahead to 2022” (live on 12/16/21).

Contributing Editors: EBIA Staff.

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