New employer Rx reporting mandate is quickly approaching 

With open enrollment approaching, and other July health plan obligations just barely in the rearview mirror, it’s time for employers to focus on the next major health plan transparency deadline. A new prescription drug reporting mandate, adopted as part of the 2021 Consolidated Appropriations Act, requires group health plans and health insurers to report detailed data about prescription drug pricing and healthcare spending to the federal government. The first reports are due by December 27, 2022. 

Although most required information resides with plan vendors, employer plan sponsors are on the hook. The new reporting requirement is likely to be particularly challenging for self-funded plan sponsors with carve-out and point-solution programs, or multiple third-party administrators (TPAs) and pharmacy benefit managers (PBMs). Employers that have changed vendors or had recent M&A activity may also have extra work to comply. It is critical to assess this obligation now – identify impacted plans, discuss reporting with all relevant vendors, flag complexities and create a plan to meet the December 27 deadline. 

Some good news – the reporting obligation also applies directly to insurers, and employers with fully insured plans may shift all liability for reporting failures to the insurer if the employer and insurer execute a written agreement requiring the insurer to report the information.   

Unfortunately, self-funded plan sponsors don’t have the same option. And, unlike insurers, TPAs and PBMs are not directly subject to the reporting rules, though they necessarily play a key role in the reporting, and may be able to do much of the heavy lifting. Employers will need to engage in an interactive process with each vendor to determine what assistance it will provide. 

Many vendors have already reached out to employers, asking for an accelerated decision about whether the employer intends to report its own data directly to CMS or rely on the vendor’s reporting. Most plan sponsors want to rely on their vendors’ reporting, but many face obstacles under the current guidance (or, in some cases, due to vendor limitations). For example, in some cases, employers with multiple vendors may be required to self-report their data due to apparent limits on file submissions by the government.   

Questions to review in order to determine if an employer might need to self-report plan data: 

• Is the plan administered by more than one TPA or PBM? 
• Are there point solutions with medical benefit data that will not be submitted by the TPA? 
• Is the TPA or PBM unwilling or unable to submit aggregate data? 
• Has the TPA or PBM changed since 2019? 
• Were there any acquisitions since 2019? 

Employers that address these questions, and coordinate with plan vendors regarding assistance with reporting, will be well positioned to meet the December deadline. An eleventh-hour scramble is the last thing HR departments need in this busy fall season.