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Prescription Drug Data Collection (RxDC)

All, Employee Benefits

The Consolidated Appropriations Act of 2021 (CAA) included several new reporting requirements for health plans. One of those transparency requirements is reporting on pharmacy and drug costs, known as Prescription Drug Data Collection (RxDC).

These new requirements were effective on December 27, 2021, but the federal Departments of the Treasury, Labor, and Health and Human Services delayed enforcement of the new reporting requirements until December 27, 2022 to allow health plans and sponsors more time to comply with the requirements.

The new reporting requirements include providing information which is intended to identify the major drivers of increases in prescription drug and healthcare costs; additionally increasing understanding of how prescription drug rebates impact premiums and out-of-pocket costs. Finally, the reporting requirements are meant to increase the transparency of prescription drug pricing.

The new reporting requirements require group health plans and organizations with self-funded health insurance to report the following:

  • The date the plan year begins and ends
  • The number of plan enrollees
  • The states in which the plan or coverage is offered
  • The top fifty (50) most frequently dispensed brand prescription drugs and total of paid claims for each drug
  • The top fifty (50) costliest prescription drugs by total annual spending and the annual amount spent for each drug
  • The top fifty (50) prescription drugs with the greatest increase in expenditure compared to the previous year and the change in amount spent on each drug

Additionally health plans and issuers must report the following:

  • Total spending on health care services broken down by:
    • Type of costs including hospital costs, health care provider and clinical service costs for primary and specialty care separately, prescription drug costs and other medical costs including wellness services
    • Spending on prescription drugs by health plan or coverage and enrollees
  • The average monthly premium paid by:
    • Employers on behalf of enrollees
    • Enrollees
  • The impact on premiums of any rebates, fees, and other remuneration for prescription drugs paid by drug manufacturers to the plan or its providers for prescription drugs prescribed to enrollees including:
    • Amounts paid for each therapeutic class
    • Amounts paid for the twenty five (25) drugs which generated the greatest amount of rebates or other remunerations
  • Any reductions in premiums or out-of-pocket costs associated with rebates, fees and other remunerations mentioned above

The first reporting deadline is December 27, 2022. The report must contain the required data for calendar years 2020 and 2021. Subsequent reports are due on June 1 each year and must contain data for the previous calendar year. For example, the required prescription drug data for 2022 will be due June 1, 2023. If an entity which needs to report data is acquired by another entity, the acquirer needs to ensure that the data from the acquired entity is reported.

Compliance obligations will depend on whether your organization sponsors a fully insured or a self-funded health plan as outlined below:

Fully insured plans

Organizations who leverage fully insured health plans should work with their insurance carrier to confirm the carrier is planning to report the necessary information. Organizations would be well-served to enter into written agreements with their carrier which places the responsibility of reporting on the carrier. With a written agreement in place, any reporting failures will be the carrier’s liability, rather than the organizations.

Self-funded plans

Organizations that sponsor self-funded health insurance plans can submit the necessary data themselves or work with their plan third party administrator (TPA) or another third party such as a Pharmacy Benefit Manager (PBM) to report the required data. If an organization decides to work with the TPA, PBM or another third party, a written agreement with the TPA, third party or PBM should detail the information being reported as some third parties may not have all the necessary reporting data. For example, a self-funded organization may work with both a TPA and a PBM, both of which have some of the required data, but not all. It will be important to know who is reporting what information to make certain all the required data is submitted.

Additionally, self-funded organizations may have data that the entities reporting on their behalf do not have access to. These organizations will need to ensure they are providing the reporting entity with any required information. Organizations that work with more than one third party to administer their health insurance should ensure that all the required data is being reported. Unlike fully insured entities, organizations that sponsor self-funded health insurance are liable for any failures to report data, even if a third party was supposed to report the data on their behalf.

Key Takeaway

Organizations should review these reporting requirements and work with the appropriate partners to ensure that their health plans remain complaint. Being proactive and communicating with your partners to coordinate reporting responsibilities appears to be a vital piece of this process. This includes working with health insurance carriers, third party administrators, and pharmacy benefit managers amongst others to remain compliant with all applicable regulations.

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