Federal Regulators Offer Employer Health Plans Last-Minute Relief on Prescription Drug Reporting

Employers have a reprieve from the challenging December 27, 2022, deadline for reporting 2020 and 2021 prescription drug cost information to the U.S. Department of Health and Human Services (HHS).

In frequently asked question (FAQ) guidance issued late on December 23, 2022, just before the Christmas holidays, the three federal agencies that enforce private-sector health benefit laws—HHS, along with the U.S. Department of Labor and U.S. Department of the Treasury—provided group health plans and health insurers with relief on two key points: good faith compliance and a grace period.

• First, the regulators indicated that they would not take enforcement action against a group health plan or health insurer that uses a good faith interpretation of the regulations and instructions for Prescription Drug Data Collection (RxDC).
• Second, the FAQ guidance provides a grace period through January 31, 2023, to provide a good faith submission of 2020 and 2021 prescription drug data.

The reporting requirement comes from the Consolidated Appropriations Act, 2021 (CAA), and involves a range of data including the fifty most frequently dispensed brand drugs, the fifty drugs with the highest annual plan spending, and the fifty drugs with the highest increase in plan expenditures from the prior year. Interim final regulations issued in 2021 had simplified the requirements for employers by providing that most RxDC data could be aggregated by reporting entities rather than reported by each individual plan or insurer. The initial deadline set by the CAA had already been delayed twice.

The FAQ guidance also provides “clarifications and flexibilities” on a number of narrower RxDC issues that had been adding to year-end stress for employers:

• Certain information can now be submitted by email, rather than through the Health Insurance Oversight System (HIOS) reporting module. Email submission is only available for certain data elements: plan list files, premium and life-years data, and narrative responses. This option is available only for plans that submit all these data elements and no other data.
• Reporting entities such as third-party administrators and pharmacy benefit managers can make more than one submission for a reference year. Earlier guidance had encouraged reporting entities to include the data of all of their clients within a single HIOS submission for the relevant year.
• More than one reporting entity may submit the same data file through HIOS on behalf of the same plan or health insurer, rather than needing to consolidate all of the plan or health insurer’s data into a single data file for each type of data.
• Reporting entities do not have to report values for amounts not applied to a deductible or out-of-pocket maximum.

Though the FAQ relief is welcome news, employers will need to remain vigilant. RxDC reporting for 2022 data is due to HHS on June 1, 2023, and new instructions and other guidance are likely before then.