Did you know the new Rx reporting includes wellness programs? 

June 08, 2022

CMS has made a number of updates to the prescription drug reporting mandate instructions, including clarifying which wellness services are required to be reported. Read this post to learn more: Updated CMS Instructions Limit Rx Reporting for Wellness Services

A new prescription drug reporting mandate, adopted as part of the 2021 Consolidated Appropriations Act (CAA), requires group health plans and health insurers to report detailed data about prescription drug pricing and healthcare spending. The first reports for 2020 and 2021 are due by Dec. 27, 2022, then annually each June thereafter. Interim final rules (IFR) detail the data to report for the prescription drug data collection (RxDC) and reporting instructions from the Centers for Medicare & Medicaid Services (CMS) describe the reporting process. Stay tuned, as CMS plans to add more details to the instructions and offer training webinars and Q&A sessions through its Registration and Technical Assistance Portal (REGTAP), starting as early as this month.

Wellness services covered by mandate. The instructions require plans and insurers to report to CMS a wide variety of information on overall plan spending that goes well beyond prescription drugs. The CAA explicitly lists “other medical costs, including wellness services” as a subcategory of total annual healthcare spending information to report. Given the wide variety of programs under the “wellness” umbrella, exactly which wellness programs or expenses must be reported is unclear. In fact, some wellness vendors may be unaware that prescription drug reporting includes wellness programs.

Wellness expenses subject to reporting. While the IFR does not define wellness programs, the instructions state that the report should include wellness expenses for services primarily designed to implement, promote, and increase health and wellness. One example provided is a public health education campaign conducted with state or local health departments, which suggests reporting is not limited to wellness programs that provide medical care. Other examples include wellness/lifestyle coaching programs designed to achieve specific and measurable improvements, coaching programs for people with chronic disease, and coaching or education programs and health promotion activities to change behavior.

Since the reporting obligation applies to insurers and group health plans, employers might argue that a wellness program independent of a group health plan is not subject to reporting. However, the instructions appear to require reporting on such a program, stating that a wellness expense that cannot be “tied to” a plan, insurer, state or market segment should be reported using a “reasonable method” to allocate the expense across states and market segments. Clarification from regulators would be helpful on this issue.

Wellness expenses exempt from reporting. The instructions carve out from reporting the cost of a wellness service or activity that is not a quality improvement expense (as defined by the latest medical loss ratio (MLR) reporting form instructions). While insurers may have experience classifying costs for MLR reporting, employers with self-funded group health plans may find it challenging to apply the MLR reporting instructions to the wide variety of wellness programs offered to employees.

Employers should review their full array of wellness programs and analyze whether cost reporting is required. The instructions require reporting actual rewards, incentives, bonuses or cost-sharing reductions that are not reflected in premiums or claims. However, the administrative fees of a wellness program appear to be excluded. Only wellness incentives actually paid out need to be reported; plan sponsors need not report the value of unearned incentives.

Reporting mechanics. CMS is encouraging third-party administrators (TPAs) that administer self-funded plans to report aggregate data on those plans’ behalf because doing so “will result in fewer submissions” and reduce “the total amount of data uploaded.” A group health plan can allow multiple reporting entities to submit on its behalf, but more than one entity apparently can’t submit the same data file for a plan (e.g., the D-2 Spending by Category data file). As a result, employer plan sponsors may end up aggregating the data from multiple vendors (e.g., the TPA and the wellness vendor) to complete certain fields that require group health plan and wellness data. In addition to uploading the plan-specific and aggregate data files, plans and insurers must submit a separate narrative file in either Word (docx) or Acrobat (pdf) format that describes, among other items, wellness services related to the expenses reported. A template for the narrative file has not been provided.

Gathering wellness data. Employers should determine whether the insurer or vendor administering the wellness program will assist with the reporting. Wellness program vendors can submit this data on behalf of each of their clients’ group health plan(s). However, employers with multiple wellness programs may need to aggregate the data, as discussed above. Employers should consider whether their TPAs or pharmacy benefit managers (PBMs) have access to the wellness program information. If not, employers should prepare to report this data or provide the wellness program information to the vendor to include with its report. If an employer’s wellness program is integrated with the self-funded medical plan and the same TPA administers both, the employer should confirm that the TPA will include the wellness program in the plan reporting.

Employers should prepare immediately to file the RxDC report. Employers usually have the ultimate responsibility to make sure RxDC reporting data is submitted and accurate, even if plan vendors submit the data. However, the instructions indicate that if an employer sponsoring a fully insured group health plan contracts with an insurer to report that plan’s data, the reporting responsibility shifts to the insurer. CMS has no way to notify employers that their RxDC data has been submitted, so employers will need to confirm submission with plan vendors. Employers may need to submit plan-specific data if the wellness vendor, TPA or PBM won’t or can’t do it for them. This would involve creating an account in the CMS Enterprise Portal, requesting access to and registering with the Health Insurance Oversight System (HIOS), and uploading data to the RxDC module within HIOS.

Employers should quickly make plans to identify who (if anyone) is reporting each required data element for their group health plans — including data for any wellness programs offered. If a vendor is not reporting a particular data element on an employer’s behalf, the employer apparently will need to move rapidly to take these steps: gather the required data; register for the HIOS application; and complete the reporting.