This alert was updated on August 23, 2021.
“Employers that sponsor group health plans of any size, including government employers, should keep their eye on the developing rules for this upcoming reporting that begins in December 2021.”
-Danielle Capilla, Vice President, Compliance, Employee Benefits, Alera Group
In December of 2020, a stimulus relief bill (the Consolidated Appropriations Act, 2021) was signed into law, which provided relief for health FSAs and DCAPs, among other things. The CAA was quite lengthy and included many employee benefits-related provisions. Of note, Section 2799A–10 of the CAA creates a new, complex reporting requirement that applies to group health plans of any size (except for church plans). This means it will apply to any group health plan that is fully insured, self-funded, sponsored by a government or municipality, grandfathered, or grandmothered. There is no exclusion for “small plans” or groups under 100.
The reporting was originally due on December 27, 2021. Beginning in 2022, the reporting will be due annually by June 1st. The reporting will be sent to the tri-agencies – Health and Human Services, the Department of Labor, and the Department of Treasury. However, on August 20th, 2021, the DOL released an FAQ on the implementation of this rule and indicated that the agencies intend to release regulations on this reporting, and until then, encourages plan sponsors to begin gathering the data necessary to report 2020 and 2021 data by December of 2022.
To date, federal regulators have not released details on the specifics of reporting. It is anticipated that the E-FAST system (used for annual 5500 reporting) will be leveraged, but to date, no information has been provided on the reporting format, submission process, consequences for reporting error, or general guidance. In June of 2021, the agencies issued a request for information (RFI) regarding the reporting requirements.
The reports will be required to include the following:
- The plan year;
- The number of plan participants;
- A list of each state in which the plan is offered;
- The 50 drugs prescribed most frequently along with the total number of prescriptions filled for each;
- The 50 drugs the plan spent the most on and the amount spent for each;
- The 50 drugs that increased the most in cost relative to the prior plan year and the change in expenditure for each drug relative to the prior plan year;
- Total plan spending on healthcare services broken down by:
- The type of cost (including hospital costs, health care provider and clinical service cost for primary care, and health care provider and clinical service costs for specialty care);
- Costs for prescription drugs (broken down by plan payments versus participant responsibility); and
- Other medical costs, including wellness services.
- Average monthly premium and the associated employer/participant responsibilities; and
- Any impact on premiums or out-of-pocket costs relating to rebates, fees, etc. paid by drug manufacturers, including:
- The amount of such payments for each therapeutic class of drugs; and
- The amount of such payments for the 25 drugs yielding the highest such payments.
Then, within 18 months of first collecting this information, the agencies are required to publish a report on their website on prescription drug reimbursements under group health plans and individual health insurance coverage.
Employers should watch closely for additional information on this reporting requirement, and if applicable, speak with their carriers and PBMs to see what, if any, assistance they will be providing. Two PBMs have filed lawsuits challenging this rule, which could impact the timing of additional regulatory guidance.
The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such. Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice. This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.
This article was last reviewed and up to date as of 08/23/21.