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New Rule Requires Reporting of Medical and Prescription Drug Costs

On Nov. 17, 2021, federal agencies released an interim final rule requiring health plans and issuers to report information regarding the cost of prescription drugs and certain medical expenses. This rule is a continuation of the Biden administration’s efforts to promote greater transparency in health care spending.

Overview of the Interim Final Rule

This rule requires plans and issuers in the group and individual markets to submit certain information on prescription drug and other health care spending to federal agencies annually, including:

• General information regarding the plan or coverage;
  Enrollment and premium information;
• Total health care spending by enrollees versus employers and issuers;
• 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 expenditures from the previous year;
• Prescription drug rebates, fees and other compensation paid to the plan or issuer; and
• The impact of prescription drug rebates, fees, and other compensation on premiums and out-of-pocket costs.

For 2020 and 2021 information, reporting must be submitted by Dec. 27, 2022, and by June 1 of each year thereafter. Starting in 2023, federal agencies will issue biennial public reports on prescription drug pricing trends as well as the impact of prescription drug costs on premiums and out-of-pocket costs.

Each year, Medicare Part D requires group health plan sponsors to disclose whether the health plan’s prescription drug coverage is creditable to individuals eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS).

Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2021—the start date of the annual enrollment period for Medicare Part D. CMS has provided model disclosure notices for employers to use.

Medicare beneficiaries who do not have creditable prescription drug coverage and do not enroll in Medicare Part D when first eligible will likely pay higher premiums if they enroll at a later date. Although there are no specific penalties associated with the notice requirement, failing to provide the notice may be detrimental to employees.