Agencies Issue Interim Rule Regarding Transparency in Prescription Drug Spending

On November 23, 2021, the IRS, HHS and EBSA published interim final rules related to prescription drug and health care spending reports. The rules are the latest in a series implementing the transparency provisions of the Consolidated Appropriations Act, 2021 (CAA).

The CAA requires health insurers and group health plans to report certain information regarding spending on prescription drugs and health care treatment. The rules do not apply to HRAs (including ICHRAs), health FSAs, or stand-alone vision or dental plans. The insurer is responsible for reporting on a fully insured plan. The employer plan sponsor will be responsible for a self-insured plan if a third-party administrator is not contracted to perform such service. Insurers and administrators are permitted to aggregate spending information across all market segments as long as the general plan information is provided for each specific policy included in the reporting (see the initial three bullet points below).

The rules clarify that the reporting is based on calendar-year data, not policy or plan year data. This is to help facilitate comparison between plans. The annual report must include:

• Beginning and end dates of the plan year.
• The number of enrollees covered.
• Each state in which the plan is offered.
• Average monthly premium paid by employees versus employers.
• Total health care spending broken down by type (including hospital costs; health care provider and clinical service costs, for primary care and specialty care separately; costs for prescription drugs; and other medical costs, including wellness services).
• Prescription drug spending by enrollees versus employers and insurers.
• The 50 most frequently dispensed brand prescription drugs and the total number of paid claims for each.
• The 50 costliest prescription drugs by total annual spending and amount spent for each.
• The 50 prescription drugs with the greatest increase in plan or coverage expenditures from the previous year.

In addition, prescription drug rebates and fees received by the plan or participant must be reported if it impacts premiums or cost-sharing. This includes discounts, chargebacks or rebates, cash discounts, free goods contingent on a purchase agreement, up-front payments, coupons, goods in kind, free or reduced-price services, grants or other price concessions.

Initially, the report for 2020 data was to be due December 27, 2021, and 2021 data due June 1, 2022. If an insurer, administrator or plan sponsor is prepared to report by those dates, the departments are ready to receive the data. However, the rules provide relief in respect to the reporting deadlines. Reports on 2020 and 2021 data will be accepted until December 27, 2022. Future reports will be due on June 1 following the data year. For example, the 2023 report will be due June 1, 2024.

Again, fully-insured plan sponsors will not be required to report but may need to work with the insurer on collecting data. Employer plan sponsors of self-insured plans should review agreements with third party administrators to determine reporting responsibility.

Interim Final Rules »