New Instructions For June 2024 RxDC Reporting

The Consolidated Appropriations Act of 2021 (CAA 2021) added a reporting requirement for group health plans and insurance companies that enables the federal government to monitor prescription drug and health care utilization and spending trends. This information must be submitted to the Centers for Medicare and Medicaid Services (CMS) by June 1 each year via the “RxDC report” using CMS’ Health Insurance Oversight System (HIOS). CMS recently released updated instructions for data submission for the upcoming reporting period and includes changes that could be beneficial to employers. This reporting period covers the 2023 calendar year and is due on June 1, 2024.

Reporting Refresher

Fully insured and self-funded group health plans, including church plans and nonfederal governmental plans, are required to complete these filings annually. Account-based plans, such as health reimbursement accounts, health flexible spending accounts (FSAs), and excepted benefit plans like standalone dental and vision plans, are not required to report any plan data.

The data being submitted covers a wide range of categories, including a list of most frequently dispensed prescription drugs paid under the plan, the costliest prescription drugs covered by the plan, and information on rebates from drug manufacturers. In addition, plans must report data showing health care spending on hospital, primary and specialty care, other medical costs and services, as well as information about premiums and average participant contributions.

This reporting requirement can be challenging for plan sponsors. Unfortunately, group health plan sponsors rarely have access to much of the required information and they must work with their insurance carrier, third-party administrator (TPA), and pharmacy benefit manager (PBM) to coordinate and report this data.

Employers with fully insured group plans typically have a lighter burden since their insurance carrier has access to most of the necessary information and will handle the reporting on their behalf. Employers with self-funded plans or with plans that include carve-out vendors such as a standalone PBM, or standalone behavioral health provider, must coordinate with each vendor to ensure they are completing the reporting process, and have the necessary data and information about each reporting entity. In some cases, the employer is required to file information directly on the HIOS system, if their carrier, TPA or other vendor is unable to submit all the required information.

What is New for 2024?

Generally, the updated instructions mirror those from the prior reporting cycles. One important change to note is that the group health plan’s plan list (known as the P2 file) must identify any carve-out benefits (i.e., medical, pharmacy, fertility, behavioral health) being offered, when cost data attributable to the carved-out benefit is being reported separately. This information was optional previously.

Additionally, the process for calculating average monthly premiums and premium equivalents has been simplified. Beginning with the 2023 reference year, the average monthly premium will no longer be reported on a per-member basis. Instead, plans will divide the annual premium amounts by 12 rather than dividing by member-months, a welcome change for plan sponsors who struggled with this calculation previously.

Similarly, self-funded plans are required to report on the plan’s total plan costs, referred to in the instructions as the “premium equivalent.” The instructions clarify that for RxDC reporting purposes, the premium equivalent is not the plan’s COBRA premium equivalent but should include the following components:

Employers with self-funded plans will need to provide this information to their TPA if the TPA submits the D1 file on their behalf.

Another change impacting the reporting process is the enforcement of the “aggregation restriction” provision, which was suspended for the first two reporting cycles. Under the reporting rules, plans, insurers, and third-party reporting entities may submit most of the required information on either an aggregated or plan-specific basis. In most cases, the only data collected on a “plan level” is the general plan information while all data files are submitted with aggregated information. However, data may be submitted on a plan level basis for all of the required reporting if it is available.

Beginning with the 2024 reporting, if any medical benefit data (via file D2) is reported at the plan level, all other data, including premium spending and pharmacy benefit reporting must also be reported on the plan level. If aggregated data is reported on file D2, all other reporting may be done at the plan level or aggregated at the vendor level.

Plan level reporting for pharmacy data provides employers with an opportunity to gain insight into data that is not typically provided to plan sponsors, including information on drug rebates, manufacturer cost-sharing assistance, and PBM profit. Gaining access to this information would be beneficial for employers for plan management and to help meet their ERISA fiduciary duties. At this time, it appears most insurers, TPAs, and PBMs are not providing plan level detail but if it is available, self-funded plan sponsors may consider completing their own reporting at the plan level so they can access this valuable medical and pharmacy data.

What is Next?

With the June 1, 2024 reporting deadline coming in about three months, most insurers, TPAs, and other third-party reporting entities have started to gather information needed to file on behalf of the plan.

Some have begun sending their data requests to plan sponsors and most have a fairly short turnaround time. Employers with fully insured plans administered entirely through a single insurance carrier have the easiest road ahead but must respond to any data requests by any carrier-imposed deadline in order to ensure their data is filed timely. Failure to meet the insurer’s deadline will likely result in having to f ile the P2 plan file and D1 data file on their own, using CMS’ HIOS system, which entails an extensive setup process.

Employers with self-funded plans or fully insured plans who utilize a standalone PBM, or other carve-out vendor should begin working on this project now to develop a plan for reporting. It is critical to identify all vendors to be included in the reporting, confirm that those entities will report on behalf of the employer, and respond to any data requests by the specified deadline. Plans that find their vendors or insurance carriers will not complete all of the required filings on their behalf should review the RxDC information page for more information and reporting instructions to ensure they understand these reporting requirements.