A transparency provision included in the Consolidated Appropriations Act (CAA) requires group health plans to annually submit health care and drug cost reports to the U.S. Department of Labor, Department of Health and Human Services, and the IRS.
Recently, these agencies issued interim final regulations implementing the CAA requirement that group health plans and insurers report health care and prescription drug spending, premium amounts, and enrollment data to the agencies mentioned. Here are some highlights of the regulations.
Who Must Report?
Group health plans, including grandfathered plans and group health insurers, must report. Excepted benefits and account-based plans, such as Health Reimbursement Arrangements, need not be reported.
Insured plans may satisfy the reporting requirements by entering into a written agreement with their health insurers for the insurer to report the required information. If the insurer fails to report, the insurer — not the plan — will have violated the requirements.
For insured and self-insured plans, the requirements may be satisfied if the plan or insurer has a written agreement with a third-party reporting entity. However, if the third-party entity fails to report the required information, the plan or insurer will have violated the requirements.
When Are The Deadlines?
The agencies interpret the CAA to require plans and insurers to submit information based on the “reference year.” This is defined as the calendar year immediately preceding the calendar year in which the data submission is due. Thus, calendar year 2020 information is due by December 27, 2021; calendar year 2021 information is due by June 1, 2022; calendar year 2022 information is due by June 1, 2023; and so on.
However, in recognition of concerns about the feasibility of meeting the first two statutory reporting deadlines, the agencies won’t initiate enforcement actions against plans or insurers that submit the required data for the 2020 and 2021 reference years by December 27, 2022. The agencies urge plans and insurers to start working to ensure that they can report by this date, and they encourage plans and insurers to submit by either the December 27, 2021 or June 1, 2022 deadlines if possible.
What Must Be Reported?
A broad range of health care spending data must be reported, including general identifying information such as:
- The beginning and end dates of the plan year
- The number of enrollees covered
- Each state in which the plan is offered
In addition, the average monthly premium paid by employees versus employers must be reported, as well as the total health care spending broken down by type (such as hospital care, primary care, and specialty care), and prescription drug spending by enrollees versus employers and insurers.
Also, plans and insurers need to report the 50 most frequently dispensed brand prescription drugs, the 50 costliest prescription drugs by total annual spending, and the 50 prescription drugs with the greatest increase in plan or coverage expenditures from the previous year. Prescription drug rebates and fees must be reported as well, with some specificity, along with their impacts on premiums and out-of-pocket costs.
Is There A Way To Make It Easier?
Indeed, there is. The agencies have announced that plans, insurers, and third-party reporting entities may submit most of the required information on an aggregate basis. The only plan-level information collected will be the general data.
Aggregated reporting is generally done by state. Insurers typically report aggregated experience by the state where their policies are issued while third-party administrators for self-insured plans commonly report aggregated experience by the state of plan sponsors’ principal place of business. If a reporting entity submits data on behalf of more than one group health plan in a state, the reporting entity may aggregate data for the group health plans for each market segment in the state.
Insured and self-insured plans are considered separate market segments, and those segments are further divided by employer size. The final regulations include detailed rules on aggregation entities and acceptable aggregation methods. The agencies intend to provide a portal where reporting entities can submit the required data.
Start Preparing Now
These final regulations usher in sweeping new reporting requirements for group health plans. On the bright side, the inclusion of rules for aggregating data will come as a relief to employers, third-party administrators, and advisors. For further information, contact us.