Is it Just the Acronyms or Is It All Confusing to Employers?  Part 2

Published in the March 2023 issue of America’s Benefit Specialist

Reporting Deadlines

This mandate will require that plans/issuers report for 2020 and 2021 calendar years by December 27, 2022, and annually thereafter on June 1:

• The 50 brand prescription drugs most frequently dispensed by pharmacies;
• The 50 most costly prescription drugs; and
• The 50 prescription drugs with the greatest increase in plan expenditures

In addition, plans/issuers must report total spending; spending on prescription drugs by the plan as well as by participants/beneficiaries; and the average monthly premiums paid by participants/beneficiaries and by employers on behalf of participants/beneficiaries.  Plans/issuers must report rebates, fees, and any other remuneration paid by drug manufacturers for each reporting period.  For subsequent years, entities must report for 2022 calendar year by June 1, 2023, and then must report for each calendar year thereafter by following June 1.  

Applicability

What health plans and issuers are required to submit include the following:  Fully-insured and self-funded group health plans, including Health insurance issuers offering group coverage, Non-federal governmental plans, such as plans sponsored by state and local government, Church plans that are subject to the Internal Revenue Code, and Federal Employees Health Benefits (FEHB) plans.  Health insurance issuers offering individual market coverage include : a) Student health plans; b) Plans sold through the Exchanges; c) Plans sold outside of the Exchanges; and d) Individual coverage issued through an association.

Plans or coverage NOT required to submit includes the following:  a) Account-based plans, such as health reimbursement arrangements; b) Excepted benefits including but not limited to: Short-term limited-duration insurance, Hospital or other fixed indemnity insurance, Disease-specific insurance; c) Medicare Advantage and Part D plans; d) Medicaid plans; e) State children’s health insurance program plans; f) Basic Health Program plans.

Who, What, Where to Submit?

First, it’s important to note that multiple parties will likely be involved in submitting data, and CMS is set up to receive data from multiple parties for each health plan.   If you’re fully insured, your carrier will likely submit most if not all of the information (but keep reading because employer plan sponsors still have action items they must complete), but some may require employers to submit on their own or through other vendors some of the plan-level data, which I’ll discuss below.  Keep an eye out for emails or letters or notices on billings of items related to the CAA Pharmacy Reporting requirements from carriers, as they will vary greatly.

“Much of this data about prescription drugs will be in the hands of the PBM,” stated Marilyn.  “For example, they will know the 50 brand Rx drugs most frequently dispensed, but there is other data, like the total spending on health care, that is probably not going to be known by the PBM; it’s going to be known by your TPA.  Also, the PBM will not know the premium cost for the plan, but either the TPA or the employer will. These are perfect examples of how the parties need to work together to get the information to the powers that be in a timely manner.”

Self-Funded Plans

If you’re self-funded, it’s likely that several parties will submit data, including your TPA or ASO provider, your Pharmacy Benefit Manager (PBM), or others, such as your broker (for example, ABC has set up an account and will be working with employer clients and TPAs to gather and submit portions of the data), as Marilyn mentioned previously.  Also, keep in mind that some plans may have more than one PBM in multiple states or if special needs exist for multiple PBMs.

So how do you submit data?  CMS has an online Enterprise Portal and RX Data Collection using their Health Insurance Oversight System (HIOS).  There is a multifactor authentication and Identity Management System within the portal for security.  Multiple outside vendors may submit data into the portal (again, which will likely include, at a minimum, your TPA and your PBM).

The portal is not easy, and not fast.  You need to plan ahead, register well in advance as it takes time to be approved to be an eligible party to submit data into the portal for another entity, and then be prepared to submit data later.  The portal and submission process has employers, administrators and PBMs scratching their heads and wondering how to learn and become efficient with this system.

“I do agree [it’s a difficult process] but there are a couple of pointers I’d like to give you,” stated Marilyn.  “If you decide to register on your own and not use a third party for part of the process, I’d like to remind people that this is not like filing your taxes with Tax Cut.  It’s going to take a bit of time.  If you’ve done it before, like ABC has, it’s going to be easier than if you’ve never done it before, but it is going to take a little bit of time, like it takes time to register and file with the IRS your 1094 and 1095 forms.  Don’t wait until noon on December 27^th to register.  You can register early, even if the forms and data aren’t ready to file, so you’ll have that part of the process out of the way.”

Fully Insured Plans

Again, if your plan is fully insured, your carrier will do most of the reporting, but it is your responsibility as an employer plan sponsor to 1) have a written agreement with them that specifies that they will perform the duties related to the pharmacy reporting requirements and 2) watch for updates from emails, letters, notes on billings, etc. from your carrier, as one of these may have information related to these requirements, and you may receive a notice of a contract change or other, stating that they will do these things on your behalf.  To be safe, we are sending written agreements on our fully insured clients’ behalf to all of our clients’ carriers, so that we can have documented correspondence with them.  Some may not accept these agreements (as they have thousands of plan sponsors and may not want to have individual agreements), but if/when they respond, we can capture their responses for our clients’ files.  Again, carriers may simply just send plan sponsors a contract change by email or mail.  It is the plan sponsor’s responsibility to keep that in their contract file.

What Data Is Reported?

In summary, for fully insured employers, group health plan data will typically be reported by the issuer (as the “reporting entity”)—but the issuer will typically need certain “plan-level” data from the employer.  For self-funded employers, group health plan data will typically be reported by one or more third party vendors (such as a TPA, PBM, ASO)—but these “reporting entities” will need certain “plan-level” data from the employer. When the data is filed by the issuer or TPA, plan-level data for each plan is included (P2), along with “aggregated” data for the issuer or TPA’s book of business (but broken down by market segment and state) (D1-D8).  Note that data is reported on a calendar year, or ”reference year” basis.

For both fully insured and self-funded plans, employer must have a contract/written agreement with the reporting entity or entities. 

The employer plan sponsor may be in possession of some items that your carrier or issuer, or if self-funded, your TPA or ASO provider simply won’t have.  This is called “Plan-Level Data.”  The specific plan file that you may hear of is the P2 Data File, which may or may not be known by other parties, and includes:  Identifying information such as plan name; plan number(s); plan sponsor; plan sponsor EIN; and issuer, TPA, and PBM names and EINs; Beginning and end dates of the plan year that ended on/before the last day of the reference year; the number of participants and beneficiaries (“members”) covered on the last day of reference year; and each state in which the plan or coverage is offered.

There are also items needed from the employer health plan that needs to be submitted with the aggregated data; the D-1 file in particular.  The D-1 file includes premium amounts, including:  the average monthly premium amount paid by employers and other plan sponsors on behalf of participants and beneficiaries (ie the carrier may have the total premium collected, but they may not have the split between what is paid by the employer and what is paid by the plan participants in employee contributions to the plan); the average monthly premium amount paid by participants and beneficiaries; and the total annual premium amount and the total number of life-years.  The Life-Years are the total number of members covered on a given day of each month of the reference year, divided by 12.  Be advised that for premium data, enforcement relief was offered for 2020 and 2021 reference years.

So, again in summary, the information that outside parties may not have but will need from employers includes all or part of what is needed for the P1 and D1 information, whether you are fully insured or self-funded.

Aggregated Data That Needs to Be Reported

The aggregated data, again, is provided by the carrier for all of their block of business, or by the TPA or ASO for their block of business, aggregated into one or more files that will be reported.  The chart below summarizes the contents of each Data File that contains aggregated data.

AGGREGATED DATA FOR EACH STATE AND MARKET SEGMENT

The 50 brand prescription drugs most frequently dispensed by pharmacies.  (D3) (The most frequently dispensed drugs must be determined according to total number of paid claims for prescriptions filled during the reference year for each drug.)	Total annual spending on health care services by the plan or coverage and by participants and beneficiaries, broken down by the type of costs (D2), including— Hospital costs; Health care provider and clinical service costs, for primary care and specialty care separately; Costs for prescription drugs, separately for drugs covered by the plan’s or issuer’s pharmacy benefit and drugs covered by the plan’s or issuer’s hospital or medical benefit; and Other medical costs, including wellness services.
The 50 most costly prescription drugs. (D4) (The most costly drugs must be determined according to total annual spending on each drug.)	Prescription drug spending and utilization (D6), including— Total annual spending by the plan or coverage; Total annual spending by the participants and beneficiaries enrolled in the plan or coverage; The number of participants and beneficiaries, as applicable, with a paid prescription drug claim; Total dosage units dispensed; and The number of paid claims.
The 50 prescription drugs with the greatest increase in expenditures between the year immediately preceding the reference year and the reference year. (D5)	Premium amounts (D1), including— Average monthly premium amount paid by employers and other plan sponsors on behalf of participants and beneficiaries; Average monthly premium amount paid by participants and beneficiaries; and Total annual premium amount and the total number of life-years.
Prescription drug rebates, fees, and other remuneration, including– Total prescription drug rebates, fees, and other remuneration, and the difference between total amounts that the plan or issuer pays the entity providing pharmacy benefit management services to the plan or issuer and total amounts that such entity pays to pharmacies. Prescription drug rebates, fees, and other remuneration, excluding bona fide service fees, broken down by the amounts passed through to the plan or issuer, the amounts passed through to participants and beneficiaries, and the amounts retained by the entity providing pharmacy benefit management services to the plan or issuer— For each therapeutic class (D7); and For each of the 25 prescription drugs with the greatest amount of total prescription drug rebates and other price concessions for the reference year (D8).	The impact of prescription drug rebates, fees, and other remuneration on premium and cost sharing amounts. (Narrative)
The method used to allocate prescription drug rebates, fees, and other remuneration, if applicable. (Narrative)

 

The Process

Again, the data is submitted to CMS through its Health Insurance and Oversight System (HIOS).  Plans must submit one or more plan lists (P1 – P3), eight data files (D1-D8) and a narrative response.

One or more third parties or vendors (“reporting entity”) may submit on behalf of the employer’s plan—each submits a P file (so CMS can identify by plan), along with the 8 data files.

Many resources were provided by CMS, including:

CMS has issued, “Prescription Drug Data Collection (RxDC) Reporting Instructions,” templates for each data file, “RxDC Data Dictionary for the 2020 and 2021 Reference Years,” “Health Insurance Oversight System (HIOS) Prescription Drug Data Collection (RxDC) User Manual,” and FAQs.  In addition, CMS provides webinars, resources, FAQs, and other educational tools through the Registration and Technical Assistance Portal (REGTAP—registration required), and there is also a phone number and email address to submit questions.  See their website at:   https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/Prescription-Drug-Data-Collection.

Because some individual understand the process better with tools such as a chart, we have created the following chart for the process, for plan lists and data files.

Subject	Plan Lists	Data Files
File Name	P stands for Plan: • P1 Individual and student market plan list • P2 Group health plan list • P3 FEHB plan list P stands for Plan: • P1 Individual and student market plan list • P2 Group health plan list • P3 FEHB plan list P stands for Plan: • P1 Individual and student market plan list • P2 Group health plan list • P3 FEHB plan list	D stands for Data: • D1 Premium and Life-Years • D2 Spending by Category • D3 Top 50 Most Frequent Brand Drugs • D4 Top 50 Most Costly Drugs • D5 Top 50 Drugs by Spending Increase • D6 Rx Totals • D7 Rx Rebates by Therapeutic Class • D8 Rx Rebates for the Top 25 Drugs
Purpose	The plan lists identify the plans in a submission. The plan lists also collect plan-level information required by statute, such as the beginning and end dates of the plan year, the number of members, and the states in which the plan or coverage is offered.	The data files collect premium and spending information at an aggregate level.
Requirement	• P1 is required for plans in the individual or student market • P2 is required for employer-based health plans (not FEHB plans) • P3 is required for FEHB plans	All 8 data files are required
File Format	Comma Separated Values (CSV)	Comma Separated Values (CSV)
File Format – Narrative	MS Word or PDF	MS Word or PDF

 

The Narrative

In addition to the plan and data files (P and D), a narrative response is required. In it, parties submitting data must describe the impact of prescription drug rebates on premium and cost sharing, and address other topics that may be described in places throughout the Instructions.  The narrative response file format must be Portable Document Format (.pdf) or Microsoft Word (.doc or .docx).  You can, but do not have to, submit additional information about your submission using PDF or Word documents.  “It’s not a problem if multiple reporting entities upload different narrative responses on behalf of the same plan, issuer, or carrier.”

“The narrative response is going to be a word or PDF document that you are going to file along with the P and D files, that provides some clarifying or explanatory information,” Marilyn explained.  “It’s also used as a kind of a catch-all, so if there is an area in your reporting where you have to explain a methodology, then you add the explanation for this in the narrative response. “

When filing, the narrative must include, at a minimum, the following:  Employer size for self-funded plans, net payments from federal or state reinsurance or cost-sharing reduction programs, drugs missing from the CMS crosswalk, medical benefit drugs, prescription drug rebate descriptions, allocation methods for prescription drug rebates, and impact of prescription drug rebates. The narrative response is also used to describe certain methodologies chosen (for examples, see Instructions).

The Pharmacy Benefit Reporting Written Agreement

Just like the TiC MRF requirements, the CAA Pharmacy Benefit reporting requirements have a requirement for a written agreement.

“That written agreement mandate, that same structure that applies to the MRFs, also applies to the prescription drug reporting requirement,” stated Marilyn.  “Whether you’re fully insured or self-funded, you can outsource this to your insurance company, your TPA, your ASO, or your PBM, but you have to have a written agreement in place.”

To summarize the action items and to provide a conclusion, the most important thing for an employer to do is get a written agreement in place with your vendors as soon as possible, to identify who is doing what, and to get your vendors to commit to complying by the due dates.

For Fully Insured Plans:  If your plan is fully insured, the plan satisfies the reporting mandate if the plan requires the health insurance issuer offering the coverage to provide the information pursuant to a written agreement.  I asked Marilyn to comment on the written agreement for fully insured plans and explain why it’s so important.  “With regard to fully insured plans, much of the filing has to be done by the insurance company, but you still have to have a written agreement with an insurance company.  If you have that written agreement and the insurance company fails to perform, it will be the insurance company, not the employer, who will be deemed to be out of compliance.”

For Self-Funded Plans:  If your plan is self-funded, the plan may satisfy the mandate if the plan enters into a written agreement under which another party (such as a third-party administrator or health care claims clearinghouse) will provide the information.  But, if the third-party fails to provide the information, the plan violates the reporting requirement.  Marilyn also provided her insight here.  “If you are self-funded, then you can outsource it to 1 or more outside vendors, but you need to have a written agreement with each of those outside vendors, to make sure they agree to be in compliance.”

Marilyn continued: “Here is the little twist for self-funded entities…  And that is that although you’re required to enter into a written agreement, if you do so and the third parties fail to perform, unlike with a fully insured plan, the employer still remains responsible and could still be found to be liable if the third parties fail to perform.  So, you need that written agreement.”

Note that the form of the written agreement is not defined by the regulations.  Be sure to cover Liability Protections in your written agreements:  Particularly for self-funded plans, review the full agreement to ensure it provides the protections the plan and employer needs.

“You can combine and have one written agreement to address all of these mandates, RxDC, TiC, Self-Service Tool, and Air Ambulance Reporting, or you can break them up,” informed Marilyn Monahan.  “They haven’t specified what form the written agreement needs to be in.  We have seen written contracts, we have seen amendments, we have seen email confirmation of amendments, etc., so they take different forms…”

Action Items for Employers: 

For All Plans:  Be sure to calendar compliance dates.  The initial RX reporting date is December 27, 2022 and annual dates for 2022 and after calendar years will be June 1 after the calendar year ends.  For Fully Insured plans:  Enter into a written agreement with issuer; timely provide any plan-level or other data required by issuer .  For Self-Funded plans:  Self-funded plans must either comply or outsource to a TPA or ASO; if you’re outsourcing, you need to enter into a written agreement to assure that they timely provide any plan-level or other data required by the third party.  You need the written agreements to lessen employer liability, period.

It is important to note that the written agreement requirement also applies to the TiC Final Rule (both MRF and on-line self-service tool mandates) and the CAA air ambulance reporting requirement.  Our ABC contracts include all of these items and allows us to customize for each client and delete unneeded items in each circumstance.

You may have already been receiving some emails or other correspondence from your carriers, administrators or PBMs on this.  Do not ignore them.  Our clients have of course already been informed on the role we will play in this to assist them through the entire process.

Marilyn Monahan felt our approach was a good one.  “Dorothy, when we were talking about the TiC final rule,  I think it’s very prudent as you stated, to reach out to your carrier. Don’t assume they are going to reach out to you. Take the affirmative step, reach out to them, offer them a contract or amendment and see where they stand on this, and then move forward, and keep that paper trail. Then, if any questions ever arise, you can establish the steps you took to try and meet your fiduciary obligations in the administration of your group health plan, and you did the best you could to make sure you were in compliance with the rules…. Keep a copy of these records and hold on to them.”

I hope your eyes will indeed reflect knowledge and understanding on these topics in the months to come….  Best of luck with it all, and happy reporting!

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Author’s Note:  I’d like to thank Marilyn Monahan of Monahan Law Office for her assistance with this article and our related seminars and webinars.  I can be reached at (714) 693-9754 x 3, or by email at dmcociu@advancedbenefitconsulting.com.  Marilyn can be reached by email at marilyn@monahanlawoffice.com.

Reference Sources:  ACA FAQs, Part 49; DOL:  No Surprises Act; https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/no-surprises-act; CMS:  Website on Surprise Billing: https://www.cms.gov/nosurprises; CMS:  Model Disclosure Notice Regarding Patient Protections Against Surprise Billing:  https://www.cms.gov/files/document/model-disclosure-notice-patient-protections-against-surprise-billing-providers-facilities-health.pdf; CMS: No Surprises Act Final Rule FAQ: https://www.cms.gov/nosurprises/policies-and-resources/overview-of-rules-fact-sheets; For CAA RX Reporting:  CMS has issued, “Prescription Drug Data Collection (RxDC) Reporting Instructions,” templates for each data file, “RxDC Data Dictionary for the 2020 and 2021 Reference Years,” “Health Insurance Oversight System (HIOS) Prescription Drug Data Collection (RxDC) User Manual,” and FAQs; CMS provides webinars, resources, FAQs, and other educational tools through the Registration and Technical Assistance Portal (REGTAP); Website: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/Prescription-Drug-Data-Collection.