Departments Provide Submission Grace Period (Ending Jan. 31, 2023) and Good Faith Reporting Relief for CAA-21 Prescription Drug Cost Reporting Rules

Practical Law Legal Update w-038-0747 (Approx. 6 pages)

Departments Provide Submission Grace Period (Ending Jan. 31, 2023) and Good Faith Reporting Relief for CAA-21 Prescription Drug Cost Reporting Rules

by Practical Law Employee Benefits & Executive Compensation

Pharmacy Benefit and Prescription Drug Cost Reporting Under the CAA-21

The CAA-21 requires group health plans, health insurers, and insurers under the Federal Employee Health Benefits (FEHB) Program to annually report certain information about pharmacy benefits and prescription drug costs (CAA-21, Div. BB, Title II, § 204; Public Health Service Act (PHSA) § 2799A-10 (42 U.S.C. § 300gg-120); ERISA § 725 (29 U.S.C. § 1185n); Section 9825 of the Internal Revenue Code (26 U.S.C. § 9825)). For 2021, the information was initially required to be reported by December 27, 2021.

Under the CAA-21, plans and insurers must report the following information to the Departments:

The beginning and end dates of the plan year.
The number of participants and beneficiaries.
Each state(s) in which the plan is offered.
The 50 brand prescription drugs that are most frequently dispensed by pharmacies for claims paid by the plan, and the total number of claims paid for each drug.
The 50 most costly prescription drugs by total annual spending and the annual amount spent by the plan for each drug.
The 50 prescription drugs with the highest increases in plan expenditures (relative to the prior plan year) and the change in amounts spent by the plan for each drug for the year.
Total health care spending by the plan, broken down by:
- the types of costs (including hospital costs, health provider and clinical service costs (with primary and specialty cases reported separately), prescription drug costs, and other medical costs (for example, wellness services)); and
- amounts spent on prescription drugs by the plan—and also by participants and beneficiaries.
Average monthly premiums paid by:
- employers on behalf of participants and beneficiaries; and
- participants and beneficiaries.

For prescription drugs prescribed to participants and beneficiaries, the reporting also must include the effect on premiums of any rebates, fees, and any other remuneration paid to the plan (or to its administrators or service providers) by drug manufacturers. This includes amounts paid for:

Each therapeutic class of drugs.
Each of the 25 drugs that resulted in the highest amount of rebates (or other remuneration) under the plan from drug manufacturers.

Finally, the reporting must include any reduction in premiums and out-of-pocket costs related to the above drug manufacturer rebates, fees, or other remuneration.

In addition to these reporting requirements, the CAA-21 requires the Departments to publish an online report (on the DOL's website) addressing prescription drug reimbursements under group health plans, prescription drug pricing trends, and the effects of prescription drug costs on premium increases (or decreases).

For more information on the CAA-21's disclosure requirements for group health plans, see Practice Note, Health Plan Disclosure Requirements Under the CAA-21.

Good Faith Compliance Relief and Submission Grace Period: Until January 31, 2023

In November 2021, the Departments issued interim final regulations (IFRs) regarding the CAA-21's prescription drug reporting requirements (see Practice Note, Prescription Drug and Health Care Spending Reporting Requirements for Health Plans and Insurers Under the CAA-21: Implementing Regulations (Nov. 2021)). The IFRs indicated that the Departments would not take enforcement action against a plan or insurer that:

Did not report the required information by the first statutory deadline for reporting (December 27, 2021) or the second statutory deadline for reporting (June 1, 2022).
Instead submitted the required information for the 2020 and 2021 reference years by December 27, 2022.

In their December 2022 FAQs, however, the Departments acknowledged the significant operational challenges that plans and insurers have faced in complying with the prescription reporting requirements. These challenges have included:

Arranging and coordinating plan and insurer data submissions across multiple reporting entities.
Accurately classifying, compiling, and validating the required data.

The Departments also recognized concerns that—owing to the reporting requirements' newness and complexity—there could be errors or other issues with the first round of data submissions, despite good faith compliance efforts by plans and insurers.

As a result, for the 2020 and 2021 data submissions that were due by December 27, 2022, the Departments announced in the December 2022 FAQs that they will not take enforcement action regarding plans or insurers that use a good faith, reasonable interpretation of the IFRs and Prescription Drug Data Collection (RxDC) Reporting Instructions in making their submissions.

In addition, the FAQs included a submission grace period through January 31, 2023, under which the Departments will not consider a plan or insurer to be noncompliant with the prescription drug reporting requirements if a good faith submission of 2020 and 2021 data is made on or before that date.

Additional Prescription Drug Reporting Clarifications Under December 2022 FAQs

To further assist the submission process, the Departments—in their December 2022 FAQs—announced several clarifications regarding the prescription drug reporting requirements (including operational requirements within the Health Insurance Oversight System (HIOS) reporting system) for the 2020 and 2021 data. These clarifications are discussed below.

Multiple Submissions by Same Reporting Entity Allowed

The November 2021 IFRs included provisions to avoid unnecessary duplication of reporting efforts (see Practice Note, Prescription Drug and Health Care Spending Reporting Requirements for Health Plans and Insurers Under the CAA-21: Reporting Entities and Rules to Avoid Duplication). As a general rule, moreover, reporting entities should create only one submission in HIOS.

However, the December 2022 FAQs clarified that if a reporting entity submits on behalf of more than one plan or insurer for a reference year, it may create more than one submission for that reference year—as opposed to including the data of all clients in a single set of plan lists and data files for the year. The Departments will consider these multiple submissions to be valid and not duplicate submissions.

Submissions by Multiple Reporting Entities Allowed

The December 2022 FAQs also provide that one reporting entity may submit the same data file type on behalf of the same plan or insurer. In other words, reporting entities need not work together to consolidate all of a plan's or insurer's data into a single data file for each type of data.

Aggregation Restriction Suspended

Under the IFRs, if multiple reporting entities submit required data on behalf of one or more plans or insurers in a state and market segment, the data submitted by each of these reporting entities must be aggregated to at least the aggregation level used by the reporting entity that submits data on the total annual spending on health care services on behalf of those plans or insurers (45 C.F.R. § 149.730(b)(2); 29 C.F.R. § 2590.725-3(b)(2); 26 C.F.R. § 54.9825-5T(b)(2); see Practice Note, Prescription Drug and Health Care Spending Reporting Requirements for Health Plans and Insurers Under the CAA-21: Aggregated Reporting of Most Information).

For 2020 and 2021 data only, however, the December 2022 FAQs permit a reporting entity (within each state and market segment) to aggregate at a less granular level than that used by the reporting entity that submits the total annual spending data.

Submission of Premium and Life-Years Data by Email Available for Certain Plans

Under the RxDC reporting instructions, plans and insurers were directed to submit information using the HIOS RxDC module (see Practice Note, Prescription Drug and Health Care Spending Reporting Requirements for Health Plans and Insurers Under the CAA-21: RxDC Reporting Instructions). The December 2022 FAQs indicate, however, that if a plan or its reporting entity is submitting only the plan list, premium and life-years data, and narrative response—and is not submitting any other data—it may submit the file by email to [email protected] (instead of submitting in HIOS). The emailed submission must include:

The plan list file.
The premium and life-years data (data file D1).
A narrative response.

The submission may include optional supplemental documents.

In addition, the name of each file should include:

The reference year of the submission.
The plan list or data file type (for example, P2, D1).
The name of the group health plan sponsor.

Reporting on Vaccines Optional

As a general rule, plans and insurers should report information on drug names and codes using the CMS drug and therapeutic class crosswalk (see Practice Note, Prescription Drug and Health Care Spending Reporting Requirements for Health Plans and Insurers Under the CAA-21: Therapeutic Class).

In the December 2022 FAQs, the Departments noted that the CMS drug name and therapeutic class crosswalk was updated on October 3, 2022, to include National Drug Codes (NDCs) for vaccines. The FAQs clarify that reporting entities may—but are not required to—incorporate these vaccine NDCs in their data files.

Reporting Amounts Not Applied to the Deductible or Out-of-Pocket Maximum Optional

Under the December 2022 FAQs, reporting entities need not report a value for:

Amounts not applied to the deductible or out-of-pocket (OOP) maximum.
Rx amounts not applied to the deductible or OOP maximum.

Reporting entities should not remove these columns from data files D2 and D6. Rather, reporting entities should leave blank the data fields in these columns. However, plans and insurers should continue to work in good faith to fully comply with these requirements.

Departments Provide Submission Grace Period (Ending Jan. 31, 2023) and Good Faith Reporting Relief for CAA-21 Prescription Drug Cost Reporting Rules | Practical Law