By: HUB’s EB Compliance Team

In November, the Departments of Health and Human Services, Treasury, and Labor (the “Departments”) issued interim final rules on prescription drug and health care spending reporting (a fact sheet is available here).    These rules create a new reporting obligation on group health plans. Sponsors of both insured and self-funded health plans will need to contract with their carriers or third-party administrators (“TPAs”) to facilitate this reporting.

What the Rules Require

At a high level, the rules require the following information to be reported to the Departments:

  • General information regarding the plan or coverage, including:
    • The name of the plan, the carriers (if applicable), the plan sponsors, and any other reporting entity;
    • The beginning and end dates of the plan year that ended in the prior calendar year;
    • Each state in which the plan or coverage is offered;
  • Enrollment and premium information, including average monthly premiums paid by employees versus employers;
  • Total health care spending, broken down by type of cost (hospital care; primary care; specialty care; prescription drugs; and other medical costs, including wellness services), including prescription drug spending by enrollees versus employers and issuers;
  • The 50 most frequently dispensed brand prescription drugs;
  • The 50 costliest prescription drugs by total annual spending;
  • The 50 prescription drugs with the greatest increase in plan or coverage expenditures from the previous year;
  • Prescription drug rebates, fees, and other remuneration paid by drug manufacturers to the plan or issuer in each therapeutic class of drugs, as well as for each of the 25 drugs that yielded the highest amount of rebates; and
  • The impact of prescription drug rebates, fees, and other remuneration on premiums and out-of-pocket costs.

The data will be reported on a calendar year basis, even for plans that do not have a calendar plan year. Employers will not have most of this information (although they will have the premium information and general information about the plan or coverage), so they will need to contract with their carriers and TPAs to provide this reporting.

The rules require reporting entities to submit the data around spending on an aggregate basis. This means that, if an employer contracts with their carrier or TPA to report on their behalf, the only specific information tied to their plan will be the general information regarding the plan or coverage and enrollment and premium information. The other factors will be disclosed across the carrier’s or TPA’s book of business for a particular state.

When to Report

The first reporting is technically due by December 27 of this year for 2020. After that, reporting is required annually by June 1 of the following year. However, as HUB previously reported, the Departments are exercising enforcement discretion so that the first reporting (which can include both 2020 and 2021) will not be required until December 27, 2022.  Even with that extension, plans are encouraged to report as soon as they can.

Which Plans Are Not Required to Report

The regulations make clear that excepted benefits (e.g., stand alone vision or dental, among others) that are generally exempt from Affordable Care Act requirements are also exempt from this. Additionally, account-based plans, like health reimbursement arrangements and health FSAs, are not required to report. Finally, short-term limited duration insurance (which is typically and individual market product) is also exempt.

Contracting with the Carrier/TPA

Notably, the interim final rules state that employers with insured plans can contract with their insurance carriers to provide this reporting. For most employers, this will effectively be mandatory since they will not have access to much of this information from carriers. If the carrier does not complete the reporting, then the carrier will be responsible for the non-compliance.

By contrast, self-funded employers may contract with their TPAs to provide the reporting. However, if the TPA fails to adequately report, the responsibility will fall back on the plan sponsor.

The Departments addressed carve-out arrangements, such as where a pharmacy benefit manager is handling pharmacy claims while another TPA handles the medical claims. In those cases, the PBM and TPA can each report separately on the aspects of the plan that they handle. For employers with these arrangements, it will likely mean separate contracts with each carved-out vendor.

Either way, employers should work with their HUB Advisor to get contracts in place with their carriers or TPAs to facilitate this reporting (some carriers or TPAs may have already reached out). Additionally, they need to work with their carrier or TPA(s) to discuss how the employer will provide the plan-specific information to the carrier or TPA(s) so they can report on the employer’s behalf.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.

NOTICE OF DISCLAIMER

Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.