Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE

On December 23, 2022, the Departments of Labor, Health and Human Services and Treasury (the “Departments”) issued FAQs providing relief from prescription drug and health care spending reporting requirements. The FAQs are available here: https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-56.

As part of the Consolidated Appropriations Act, 2021, group health plans and issuers must annually report to the Departments certain prescription drug and health care information, including but not limited to the:

  • 50 most frequently dispensed brand prescription drugs and the total number of paid claims for each such drug;
  • 50 most costly prescription drugs by total annual spending, and the annual amount spent by the plan or coverage for each such drug;
  • 50 prescription drugs with the greatest increase in plan or coverage expenditures from the previous plan year;
  • total spending on health care services by the plan or coverage broken down by the type of costs; and
  • impact on premiums and out of pocket costs from rebates, fees, and any other remuneration paid by drug manufacturers to the plan or its administrators or service providers, including the amount paid for therapeutic classes of drugs and amounts paid for each of the 25 drugs that yield the highest amounts of rebates and other remuneration from drug manufactures during the plan year. 

According to the FAQs, the Departments will not take enforcement action against a plan or issuer that uses a good faith, reasonable interpretation of the regulations and reporting instructions. In addition, plans and issuers now have until January 31, 2023 to provide a good faith submission of 2020 and 2021 data through the Health Insurance Oversight System. The deadline for 2020 and 2021 submissions were previously December 27, 2022.

The prescription drug and health care spending reporting obligation falls on the group health plan. Insured plans may satisfy the reporting requirements by entering into a contract with the carrier to provide the required information. If the carrier fails to meet the reporting requirements, the carrier, not the insured plan, violates the reporting obligations. Self-insured plans, on the other hand, cannot contract around the reporting obligations. While a self-insured plan may contract with a third-party to report the data, if the third-party fails to do so, the self-insured plan is ultimately liable for the reporting failure. 

Plan sponsors should continue working with their service providers to ensure required reporting for 2020 and 2021 is completed by the January 31, 2023 deadline. The Departments indicated they will continue to monitor stakeholder efforts to comply with reporting requirements to determine whether additional guidance is needed before future submission deadlines.  The deadline for submitting 2022 prescription and health care spending data is June 1, 2023.