Summary: The Centers for Medicare and Medicaid Services (CMS) recently released updated RxDC reporting instructions for the 2023 reference year, which is due on June 1, 2024. These updated instructions highlight noteworthy reporting changes applicable to employers sponsoring group health plans.
Read on for more information.
RxDC Reporting Background
The CAA, passed by Congress in December 2020, included a requirement for group health plans (and health insurers) to submit detailed prescription drug pricing and healthcare spending data to CMS. This data, referred to as the RxDC reporting, is collected and aggregated by CMS to publish public reports on prescription drug pricing trends starting this year. Click here and here for prior Risk Strategies articles with more details.
Many employer group health plan sponsors relied on their reporting entity vendors, such as plan carriers, third-party administrators (TPAs), and/or pharmacy benefit managers (PBMs), to submit the required RxDC reporting data to CMS for the prior year reporting deadlines in 2022 (2020 and 2021 reference years) and 2023 (2022 reference year). These reporting entity vendors compile and maintain the required data on behalf of the plans and are in the best position to complete the technical requirements for RxDC reporting.
Group health plan sponsors should continue this approach for their 2023 reference year reporting as the June 1, 2024 deadline approaches.
Updated RxDC Reporting Instructions
The table below captures the highlights of the updated RxDC reporting instructions for the 2023 reference year that are most relevant to employer plan sponsors as potentially impacting their 2023 filing [1]:
|
Data File Name
|
Column
|
Change for 2023 Reference Years
|
Notes
|
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D1 — Premium and Life-Years
|
E — average monthly premium paid by members
|
Calculate the average monthly premium (or premium equivalent for self-funded plan) by dividing the total annual premium (or premium equivalents) paid by members during the reference year by 12.
Include:
- Member payments for COBRA coverage, including the 2%. administrative fee.
- Spousal and tobacco surcharges.
- Amounts paid for coverage of an owner of an S-Corporation or a partnership if the owner works for the business and pays their premium from personal funds.
|
Updates found in Section 6.2 of updated instructions
|
|
D1 — Premium and Life-Years
|
F — average monthly premium paid by employers
|
Calculate the average monthly premium (or premium equivalent for self-funded plan) by dividing the total annual premium (or premium equivalents) paid on behalf of members during the reference year by 12.
|
|
|
D1 — Premium and Life-Years
|
I — premium equivalents (total cost for self-funded coverage)
|
Premium equivalents may now be reported on a cash basis using paid claims or on a retrospective basis using incurred claims.
|
Updates found in Section 6.2 of updated instructions
|
|
P2 — Group Health Plan List
|
C — Carve-Out Description
|
Enter one of the following for those specific carve-out benefits being reported:
- Pharmacy only
- Medical only
- Behavioral health only
- Fertility only
- Specialty drugs only
- Hospital only
- Other
|
Updates found in Section 4.2 of updated instructions
As a reminder, this field is required when a reporting entity is submitting data for a carved-out benefit (often carved-out pharmacy benefits) and a different reporting entity reports on the majority of the plan’s other benefits.
|
Plan Sponsor Level Reporting Examples
The instructions provide two helpful examples at the plan sponsor level for a plan that has more than one reporting entity vendor to report.
Example 1: Plan sponsor A offers a fully insured plan with one behavioral health benefit carrier and a different carrier administering the other benefits. See the table below to illustrate Example 1 reporting in certain fields:
|
Company Name (Column A)
|
Avg Monthly Premium Paid by Members (Column E)
|
Life-Years
(Column G)
|
Earned Premium
(Column H)
|
|
Plan Sponsor A
|
Add annual amount from both carriers and then divide by 12
|
Combined life-years from both carriers (Don’t double count members covered by both benefits.)
|
Sum of premiums paid to both carriers
|
Example 2: Plan sponsor B offers a self-funded plan with a TPA administering the medical benefit, a PBM administering the pharmacy benefit, and Plan Sponsor B purchasing stop-loss coverage from a carrier. See the table below to illustrate Example 2 reporting in certain fields:
|
Company Name (Column A)
|
Avg Monthly Premium Paid by Members (Column E)
|
Life-Years
(Column G)
|
Premium Equivalent (Column I)
|
Admin Fees (Column J)
|
Stop-loss Premium (Column K)
|
|
Plan Sponsor B
|
Add annual amounts from the TPA and PBM (including member portion of TPA/ PBM fees & stop-loss) and then divide by 12
|
Combined life-years from the TPA and PBM (Don’t double count members covered by both benefits.)
|
Total plan costs including TPA and PBM admin fees stop-loss.
|
Sum of fees paid to the TPA and PBM
|
Stop-loss premiums paid to carrier
|
Employer Next Steps
As the June 1, 2024 deadline approaches for the 2023 reference year RxDC reporting, some reporting entity vendors have already reached out to plan sponsor employers with requests for the required information to complete the required data fields, particularly in the wake of these recently updated RxDC reporting instructions for the 2023 reference year.
Employers are advised to take note of the June 1, 2024 reporting deadline and promptly respond to vendor requests with the required information to ensure timely completion and submission of their 2023 reference year RxDC reporting.
As a reminder for those employers whose vendors will not submit all of the required RxDC reporting data on their behalf, they will need to register directly through the CMS reporting module called Health Insurance Oversight System (HIOS) to submit the required data. Instructions on how to create an account in the HIOS module can be accessed here. Click here for CMS-issued guidance and resource materials with detailed information on the RxDC reporting process. Since the HIOS registration process can take some time, employer plan sponsors who must report data directly to CMS are advised to begin the HIOS registration process as soon as possible to avoid unnecessary reporting delays and issues.
Risk Strategies is closely tracking any new developments for 2023 RxDC reporting and will provide updates when available. Reach out to your Risk Strategies representative with any questions or contact us directly at benefits@risk-strategies.com.
[1] These are several additional reporting instructions updates that are more applicable to reporting entity vendors, such as carriers, TPAs, and PBMs. These particular updates will be not detailed for the purposes of this article.
