The deadline for Plan Sponsors to submit considerable and illusive drug spend data required under the Consolidated Appropriations Act (“CAA”) is December 27, 2022. The CAA requires group health plans and health insurers to submit prescription drug cost and other health care data to the U.S. Department of Treasury (“DOT”), Department of Law (“DOL”) and the Department of Health and Human Services (“HHS”) (collectively, “Agencies”).
What Type of Plan Sponsors Are Subject to CAA Reporting Requirements?
The CAA applies to Plan Sponsors that are: (i) fully insured and self-funded group health plans; (ii) insurers offering group coverage; (iii) insurers offering individual health plans; (iv) grandfathered plans; (v) grandmothered plans; and (vi) Federal Employees Health Benefits Program plans.
What Needs to be Reported?
Plan Sponsors are required to submit plan-specific information and aggregate data. These include, without limitation, the following:
- The 50 brand name prescription drugs for which the Plan most frequently paid claims and the total number of claims paid for each of those drugs.
- The 50 prescription drugs for which the Plan had the greatest expenditures and the amount paid for each of those drugs.
- The 50 prescription drugs for which the amount of expenditures increased the most over the previous year and the amount of the increase for each drug.
- The impact of rebates and similar amounts paid by drug manufacturers, including the amounts paid for each therapeutic class of drugs and for the 25 drugs for which the amounts paid were the largest.
- Premium spending information.
When is the Deadline?
The upcoming deadline of December 27, 2022 is for reference years 2020 and 2021. For 2022 and subsequent years, the filing deadline will be June 1 of the following year.
Are There any Penalties for Failing to Submit the Requested Data?
Currently, there are no codified penalties for failing to report. However, it is expected that Plans would be penalized pursuant to the terms of other federal reporting statutes. The Agencies will presumably look to existing enforcement measures to ensure compliance by Plan Sponsors (with the potential for daily penalties of $100 per participant per day for noncompliance).
Critically, in most (if not all) instances, Plan Sponsors do not have the requested drug datapoints to report CAA data to the Agencies. That’s because PBMs do not provide data on spread pricing and rebate aggregators. Plan Sponsors must require cooperation from their PBMs for CAA compliance. However, it is unlikely that PBMs will voluntarily provide such data to Plans. Even if PBMs do provide data, Plan Sponsors must assure that the PBM data is accurate. Ultimately, Plan Sponsors are the ones statutorily subject to accurate reporting requirements, not PBMs.
PBMs are in exclusive control of the drug spread and drug rebate data, and PBMs do not want to reveal the secretive world of: PBM-owned rebate aggregators; and the amounts PBMs secretly pay to benefits brokers. The CAA also requires brokers/consultants to disclose “fees” paid to them by plans and issuers, directly or indirectly.
How Frier Levitt Can Help
Frier Levitt’s Plan Sponsor Practice Group provides a host of legal services including reviewing and analyzing PBM contracts, negotiating and drafting PBM contracts, auditing (and where necessary, litigating against) PBMs to verify that PBMs are abiding by the terms set forth in the PBM contracts, and guiding on regulatory and compliance matters (e.g., Consolidated Appropriations Act). If your organization is a Plan Sponsor, contact us to learn more about your contractual rights and obligations.
