Seyfarth Synopsis: Plans have been scrambling to gather data and work with providers in preparation for the December 27, 2022 deadline to report prescription drug and health care spending information. Just in time for the holidays, the Departments of Labor, Health and Human Services, and Treasury (the “Departments”) have issued FAQs related to Prescription Drug and Health Care Spending Reporting under Title II (the “Transparency Requirements”) of the Consolidated Appropriations Act of 2021 (CAA). The FAQs grant extensions to various reporting and compliance deadlines and good faith relief relating to the Transparency Requirements.

The Transparency Requirements require group health plans to report to the Departments certain information related to prescription drug and other health care spending. For example, group health plans must report to the Departments the 50 most frequently dispensed brand prescription drugs; the 50 most costly prescription drugs by total annual spending; the 50 prescription drugs with the greatest increase in plan expenditures over the preceding plan year; and the impact on premiums of rebates, fees, and any other remuneration paid by drug manufacturers to the plan or coverage or its administrators or service providers .

Some Transparency Requirements under the CAA applicable to group health plans overlap with the “transparency in coverage” cost-sharing disclosures under the Affordable Care Act. In November of 2020, the Departments issued Final Transparency in Coverage Rules (TiC Rules) which require group health plans and health insurance issuers to disclose cost-sharing information to participants, beneficiaries, and, in some cases, the public. Additionally, Title I of the CAA (No Surprises Act) which protects plan participants from surprise medical bills for services provided by out-of-network or nonparticipating providers and facilities, contains extensive provisions regarding reporting and disclosure of charges and benefits. For more information regarding the TiC Rules and No Surprises Act, see our prior posts here and here.

In August 2021, the Departments issued FAQs related to the TiC Rules, No Surprises Act, and Transparency Requirements which extended various compliance deadlines. The Departments announced that they would not bring enforcement actions against group health plans that complied with the Transparency Requirements for the 2020 and 2021 reference years by December 27, 2022. For more information regarding previous FAQ guidance from the Departments which extended compliance deadlines, see our prior post here.

On December 23, 2022, just four days before the reporting deadline for the 2020 and 2021 reference years, the Departments issued FAQs related to Prescription Drug and Health Care Spending Reporting. The key takeaways from the FAQs are:

  • Nonenforcement Policy. The Departments will not take enforcement action with respect to any plan that uses a good faith, reasonable interpretation of the regulations and the Prescription Drug and Health Care Sending Reporting instructions in making its submission for the 2020 and 2021 years by December 27, 2022.
  • Good Faith Relief and Grace Period. There will be a submission grace period through January 31, 2023 in which a plan will not be considered out of compliance if a good faith submission of 2020 and 2021 data is made on or before January 31, 2023.
  • Flexibilities for 2020 and 2021 Data. The following clarifications and flexibilities apply for the 2020 and 2021 reference years:
    • Multiple submissions are permitted for the same reporting entity;
    • Multiple reporting entities can submit the same data file type on behalf of the same plan;
    • If there are multiple reporting entities, aggregation may be conducted at a less granular level than that used by the reporting entity that is submitting the total annual spending data;
    • Group health plans or their reporting entity that submit only the plan list, premium and life-years data, and narrative response may make a submission by email;
    • Vaccine reporting is optional; and
    • Reporting entities do not need to report a value for “Amounts not applied to the deductible or out-of-pocket maximum” and the “Rx Amounts not applied to the deductible or out-of- pocket maximum.”

These compliance deadline extensions, clarifications, and flexibilities are welcome relief for group health plans that are required to complete Prescription Drug and Health Care Spending Reporting under the Transparency Requirements. For assistance with these reporting obligations, please reach out to the employee benefits attorney at Seyfarth Shaw LLP with whom you usually work. To stay up to date with future guidance related to the TiC Rules, No Surprises Act, and Transparency Requirements, be on the lookout for additional Seyfarth Legal Updates.