The Departments of Labor, Health and Human Services, and the Treasury (collectively, the Departments) have issued Frequently Asked Question (FAQ) set 56 to provide group health plans with some relief – including a grace period until January 31, 2023 – from the reporting requirement for prescription drugs under section 204 of Title II of Division BB of the Consolidated Appropriations Act, 2021 (section 204). Without the relief, the reporting was due on December 27, 2022. FAQ set 56 was issued Friday evening December 23, 2022 and can be found at https://www.cms.gov/files/document/aca-part-56.pdf.

In general, FAQ set 56 provides that a submission based upon a good faith, reasonable interpretation of the rules will be accepted, and provides other flexibilities with respect to the reporting. The flexibilities are discussed further below.

Background

Section 204 added sections to the Internal Revenue Code, the Employee Retirement Income Security Act, and the Public Health Service Act that require group health plans and health insurance issuers to report to the Departments certain information related to prescription drug reporting and total health care spending. The prescription drug reporting included the 50 most frequently dispensed brand prescription drugs, the 50 most costly prescription drugs by spending, and the 50 prescription drugs with the greatest increase in spending over the preceding plan year.

The Departments issued interim final rules on November 23, 2021 and allowed the reporting for 2020 and 2021 to be delayed until to December 27, 2022. Reporting instructions were issued in November 2021 that required the data to be submitted to HHS through the Health Insurance Oversight System (HIOS). The instructions were revised in June 2022 to reflect various issues and questions that had been received by the Departments. As the deadline neared, the Departments continued to receive questions with respect to how the requirements applied to various situations.

Relief Provided

The Departments will not take enforcement action with respect to group health plans (or health insurance issuers) that use a good faith, reasonable interpretation of the regulations and the Prescription Drug Data Collection (RxDC) Reporting Instructions in making its submission. The Departments also are providing a submission grace period through January 31, 2023.

FAQ set 56 also provided the following flexibilities:

1. Multiple Submissions by Same Reporting Entity – The reporting instructions had allowed a reporting entity (such as a consultant, a third-party administrator, or pharmacy benefit manager) only one submission, which had to include all plans for which a report was being made. Now, a reporting entity can make multiple submissions instead of including data for all plans in one submission.
2. Submissions by Multiple Reporting Entities Allowed – Now more than one reporting entity can submit the same data file type, instead of working together to consolidate all the data into a single data file.
3. Aggregation Restriction Suspended – The data submitted by multiple reporting entities for 2020 and 2021 does not have to be aggregated to the same aggregation level (e.g., national vs. state levels) as the level used for total annual spending data.
4. Submission of Premium and Life-Years Date by Email Available for Certain Group Health Plans – Plans (and health insurance issuers) were instructed to premium and life-years data along with the RxDC submission. Now, a group health plan that is submitting only the plan list, premium and life-years data, and narrative response, and is not submitting other data) may submit the file via email to RxDCsubmissions@cms.hhs.gov instead. Certain information must be included in the name of each file.
5. Reporting on Vaccines Optional - The RxDC reporting was supposed to include vaccines in the list of drugs taken into account. Now, reporting entities are not required to (but may) incorporate vaccines in the data files.
6. Reporting Amounts Not Applied to the Deductible or Out-of-Pocket Maximum Optional – Reporting entities now do not have to report a value for the “Amounts not applied to deductibles or out-of-pocket maximum” field in the D2 file and can just leave it blank. Similarly, the “Rx Amounts not applied to the deductible or out-of-pocket maximum” field in the D6 file can be left blank.

Cheiron Observation: The relief provided by FAQ set 56 is helpful to any group health plan that has not been able to submit their data to HHS. The relief also provides that submissions already made will not be considered out of compliance if they reflect a good faith, reasonable interpretation of the rule.

Cheiron health consultants can assist you in making the section 204 reporting.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are not attorneys, accountants, or clinicians. Accordingly, we do not provide legal services, tax advice, or medical advice.