CAA’s Prescription Drug Data Collection (RxDC) Requirements For Health Plans

The Consolidated Appropriations Act (CAA) of 2021 created a myriad of new compliance requirements for health plans, insurance issuers, insurance agents, and providers – all aimed to promote transparency. While the law was signed on December 27, 2020, many of its requirements and deadlines are approaching now.

One of the new CAA requirements is for group health plans and health insurance issuers to produce annual reports related prescription drugs and health care spending. These reports are submitted to the Centers for Medicare and Medicaid Services (CMS). They will be used by CMS to create reports on prescription drug trends, prescription drug rebates, and health care pricing for Congress, the Department of Labor (DOL), Department of the Treasury, and Department of Health and Human Services (HHS).

While the focus of this column is for health plans in the fully insured group market, these requirements also apply to employers’ self-funded plans, Individual and Family Plan (IFP) market plans, student plans, etc. There is no group size requirement for compliance; almost all health plans are subject to these new rules. The requirement even applies to church plans and Federal Employees Health Benefits (FEHB), which are normally exempted from many standard health plan compliance obligations under ERISA.

The good news for fully insured group health plans is that there is very little – if anything – for an employer to do. The health insurance carrier/issuer will facilitate the reporting in almost all circumstances because the employer does not have access to the information that must be reported.

However, insurance carriers may confirm employer- and employee-contribution data to facilitate some reporting, especially for compliance in 2023. Ideally, an employer should seek written confirmation from its health plan that it intends to comply with these requirements. Interestingly, there is no way for employers to obtain copies of their plans’ reports, because the plan and data files are aggregated with the insurance carriers’ other health plans.

Word & Brown has polled its medical carrier partners to gain clarity on how they are complying with this requirement, including how to obtain written documentation about compliance. The document will be available soon and can be accessed through your W&B Sales Representative or the Word & Brown Compliance team. Most carriers have sent electronic communications documenting their statements to comply with these new federal items.

CAA’s Pharmacy Reporting Requirements

Beginning with the 2020 and 2021 calendar years (called “reference years” in the regulations), plans must report required prescription drug data on several files by December 27, 2022. Then, for each calendar year thereafter, reports are due on/before June 1st annually. So, reports for the 2022 calendar year are due by June 1, 2023 – and each year thereafter.

The law requires insurance companies to produce the required data and reports, but also bestows a duty onto the employer to make sure the reporting is facilitated. For the self-funded market, the requirement falls onto the health plan itself – which will work with its Third-Party Administrator (TPA), Pharmacy Benefit Manager (PBM), and/or Administrative Services Only (ASO) partners to facilitate this reporting.

Fully insured carriers (insurance issuers) will create the following new reports to facilitate compliance with the CAA’s pharmaceutical reporting:

  • * P2 File – This plan file lists the carrier’s identifying information and the employer’s identifying information. It includes the plan name, plan sponsor, Employer Identification Number (EIN), insurance issuer, etc. It also lists the plan year effective date, the state(s) in which the coverage is available, and the number of members (employees, dependents, COBRA beneficiaries, and retiree participants, as applicable) covered by the plan on the last day of the reference year (December 31st annually). Health insurance carriers/issuers will aggregate all their employer plans’ data by policyholders, by market segment, and state on their P2 Files. Because of this aggregation (and other HIPAA items), employers with fully insured plans will not have access to these files. Side note: Individual plans file similar information on a “P1 File” and Federal Employee Health Benefit (FEHB) plans file similar information on a “P3 File.”
  • * D1 File – This data file lists aggregate premium amounts and life-years. This file lists the gross (net) premiums for the plans, including the employers’ and the employees’ contributions for such premiums. Fully insured carriers may reach out to employers to confirm their contribution amounts, or they may simply report the contribution amount listed on the master application/group contract with the employer. For D1 File only, compliance is optional for years 2020 and 2021. If the carrier has the information, it should be reported. If the carrier does not have the information, the enforcing departments will not assess noncompliance for these years only. However, the requirement is mandatory and will be enforced beginning with year 2022, which is due by June 1, 2023.
  • * D2 File – This data file lists spending on health care expenses. This file lists total health care spending for the plan, broken into categories of health care costs. These costs include hospital costs, health care provider and clinical services costs (separate reports must be created for primary care and specialists), costs for prescription drugs, and other medical costs such as wellness services, etc. Insurance issuers produce these reports on an aggregate basis, correlated with the P2 filing information.
  • * D3 File – This data file lists the top 50 most-frequently dispensed brand name drugs for the reference year. Fully insured plans will produce this on an aggregate basis, organized by both state and market segment (IFP, Small Group, Large Group).
  • * D4 File – This data file lists the top 50 most-costly drugs (according to number of paid claims for prescriptions during the corresponding calendar year). Fully insured plans will produce this on an aggregate basis, by state and market segment (IFP, Small Group, Large Group).
  • * D5 File – This data file lists the top 50 drugs by spending increase. This is based on the calendar year preceding the reporting/reference year. Fully insured plans will produce this on an aggregate basis, by state and market segment (IFP, Small Group, Large Group).
  • * D6 File – This data file lists Rx totals. Fully insured plans will produce this on an aggregate basis, by state and market segment (IFP, Small Group, Large Group). The data reported includes total annual spending by the plan, total annual spending by enrolled participants, the number of participants with a paid Rx drug claim, the dosage of Rx drug units dispensed, and the total number of paid claims.
  • * D7 File – This data file lists Rx rebates by therapeutic class. Fully insured plans will produce this on an aggregate basis, by state and market segment (IFP, Small Group, Large Group). This lists total prescription drug rebates, fees, etc., sorted by drug therapeutic class.
  • * D8 File – This data file lists Rx rebates for the top 25 drugs with the highest amount of drug rebates or price concessions for the reporting year. Fully insured plans will produce this on an aggregate basis, by state and market segment (IFP, Small Group, Large Group).
  • * Narrative Response Files – These files are to be completed as applicable (using Microsoft Word or PDF), corresponding to any of the eight data files. These describe any impact of prescription drug rebates on premium and cost sharing and other pertinent Rx drug reporting information. Some data files may require additional context with file submissions, which are detailed in length in the CMS’s Prescription Drug Data Collection (RxDC) Reporting Instructions guide. These narrative response files can describe how the plan accounted for net payments from federal or state reinsurance and cost sharing reduction programs as applicable, etc. Unlike P Files and D Files, there is not a template for filing narrative response files.

Health insurance carriers will submit this information to CMS using its Health Insurance and Oversight System (HIOS). Self-insured plans and their TPAs will submit their reporting data using the same system. Like most electronic filing systems for such information, registration is required and can take a few weeks to complete. Employers with fully insured plans will not have to register or submit information unless their insurance carrier does not facilitate for them.

While CMS is the receiving entity for these Plan Files and Data Files, enforcement for compliance falls upon the DOL and HHS. Non-compliance penalties of $100/day may be issued by the Internal Revenue Service (IRS) for health plans that do not comply as required.

Health insurance brokers do not have any direct responsibility for compliance with this law, however many are informing their employer clients about this information as it is being reported, and as updates from carriers regarding compliance are sent to employer clients.

Keep in mind that this will be an annual reporting requirement due by June 1st beginning in 2023, and that CMS will release a forthcoming report on its findings as the Plan and Data files are received, reviewed, and assessed.


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