As a group health plan sponsor, you must report information on prescription drugs, health care spending, and premiums you and your plan participants pay (RxDC reporting). Learn about your annual reporting obligations and how your service provider can help.
Section 204 of the Consolidated Appropriations Act of 2021 requires insurance companies and employer-sponsored health plans to submit information about prescription drugs, health care spending, and premiums paid by plan participants and sponsors. This is known as RxDC reporting. (Rx stands for prescription drugs; DC stands for data collection.)
The stated intent of RxDC reporting is to ensure the Department of Labor, Department of Health and Human Services, and Department of the Treasury have enough information regarding prescription drugs to understand where plan assets are being spent.
The statute requires these agencies to report on:
- Prescription drug reimbursements under group health plans
- Prescription drug pricing trends
- The role of prescription drugs in premium increases or decreases under such plans
The agencies must post this information twice a year on a public website.
Read on for an overview of RxDC reporting as it relates to group health plans.
Information you must report
Every year, insurance companies and employer-sponsored health plans must report the following data points for the previous calendar year. This is known as the “reference year.” You must submit the following information through the Centers for Medicare and Medicaid Services (CMS) Health Insurance Oversight System by June 1. (CMS collects the data on behalf of the three agencies listed above.)
| P2: Plan list — plan and reconciliation information | • The beginning and end dates of the plan year • The number of participants, aka “members”Each state in which the plan or coverage is offered |
| D1: Premium and life years | • The average monthly premium you pay on behalf of participants • The average monthly premium your participants pay • The total premium or premium equivalentThe total administration fees and stop-loss premiums |
| D2: Spending by category | The total spending on health care services, categorized by the type of costs, including: • Hospital costs • Health care provider and clinical service costs, for primary care and specialty care separately • Costs for prescription drugs covered by the medical benefit Other medical costs |
| D3: Top 50 most frequent brand drugs | • The 50 brand prescription drugs most frequently dispensed by pharmacies for claims paid by the plan or coverage • The total number of paid claims for each of these |
| D4: Top 50 most costly drugs | • The 50 most costly prescription drugs with respect to the plan or coverage by total annual spending • The annual amount spent by the plan or coverage for each such drug |
| D5: Top 50 drugs by spending increase | • The 50 prescription drugs with the greatest increase in plan expenditures • The change in amounts expended by the plan or coverage for the plan year |
| D6: Drug rebates, fees and remuneration totals | Any impact on premiums due to rebates, fees or other remuneration drug manufacturers paid to the plan or coverage, or its administrators or service providers, with respect to drugs prescribed to enrollees in the plan or coverage. |
| D7: Drug rebates by therapeutic class | The amounts paid for each therapeutic class of drugs and any reduction in premiums and out-of-pocket costs associated with rebates, fees or other remuneration. |
| D8: Drug rebates for the top 25 drugs | The amounts paid for each of the 25 drugs with the highest amount of rebates and other remuneration under the plan or coverage from drug manufacturers during the plan year. |
| Narrative response | • A description of the market segment determination (size) • A description of how net payments from federal or state reinsurance and cost-sharing reduction programs are accounted for • The drugs missing from the CMS Plan Crosswalk, including the name and class • The methods used to determine the estimated portion of bundled arrangements attributed to drugs covered under the medical benefit • The types of rebates, fees and remuneration included or excluded for the top 25 drugs • The methods used to allocate rebates, fees and remuneration • The impact of rebates on premiums and cost-sharing |
Your service provider can help you meet your reporting obligations
With some exceptions, RxDC reporting applies to public and private group health plans and issuers, regardless of grandfathered or funding status.
Unfortunately, group health plan sponsors generally do not have the requisite information to complete RxDC reporting without coordinated efforts. You may have to rely on your service provider to facilitate your compliance obligations.
Fully insured plans
Issuers are technically responsible for compliance with RxDC reporting. The issuer is the keeper of the plan, and plan sponsors rent selected benefits from the issuers. However, issuers have shifted compliance reporting duties to plan sponsors, particularly with respect to premium and life years. (See D1 above.)
The issuer usually has every data point except the average monthly premium paid by members and employers on behalf of members. In response to this missing data, many insurance carriers sent surveys during early spring requesting contribution information.
For plan sponsors that received and responded to the surveys in a timely manner, carrier compliance was relatively easy to satisfy. However, for plan sponsors that didn’t reply or never received the survey, carriers responded by informing plan sponsors that they must find another solution for filing their D1.
Self-insured plans
Plan sponsors of self-insured plans (including level-funded plans and partially self-insured plans) are responsible for RxDC reporting. However, varying plan designs make compliance more complex.
This is especially true for plans that are not based on the calendar year and plans that do not have the same service provider managing their medical claims, pharmacy benefits and stop-loss reinsurance. Plan sponsors must coordinate with the third-party administrators (TPAs) and pharmacy benefit managers (PBMs) they engaged during the reference year.
Service providers have responded to the demand in different ways. For example, carriers of traditional level-funded plans generally take a similar approach as they do with their respective fully insured books.
Some TPAs coordinate with their preferred PBMs and may or may not charge a fee. Most service providers do not provide plan sponsors with the data necessary to complete the filing themselves. In short, there is little to no transparency.
RxDC reporting can help defend you against litigation
As a plan sponsor, you have a fiduciary responsibility to ensure the plan is operating according to the terms of the plan document, your service providers are meeting their contractual obligations, and you are paying your service providers a reasonable fee for their services. Data files D2-D8 provide germane information and can help you defend yourself against heightened scrutiny and litigation.
Preparing for your reporting obligations
Here are a few steps worth considering at renewal:
- When reviewing service agreements, take note of how RxDC reporting is addressed.
- Negotiate that data files be provided to you upon completion and filed at the plan level.
- Ensure you have access to claims data and pharmaceutical claims information.
- Understand how rebates are apportioned and negotiate that they flow back to the plan.
Need help?
For help with your RxDC reporting, contact your plan administrator or OneGroup’s Employee Benefits Team. You can also find resources on the CMS’ RxDC landing page.
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.
Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem.
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