Capital Rx
What is the Consolidated Appropriations Act, and Why is it Causing a Stir?
According to CMS, the Consolidated Appropriations Act of 2021 (CAA) established protections for consumers related to surprise billing and transparency in healthcare. The goal of the Act is consistent with the federal government’s desire to reduce the inflation of healthcare spending by giving a clearer line of sight into a variety of opaque healthcare cost drivers, including those that have driven persistent inflation in pharmacy cost trend for plan sponsors.
At Capital Rx, we have frequent opportunities to interact with a wide variety of stakeholders involved in delivering pharmacy benefits. Lately, conversations have increasingly turned towards the CAA. As we’ll discuss shortly, new reporting requirements are on the near-term horizon prompting group health plans and health insurers to prepare for the changes they are facing.
We reviewed countless publications, watched several videos and webinars, and spoke with our internal and outside counsel, external consultants, and industry stakeholders about the CAA and Prescription Drug Data Collection (RxDC). To put it mildly, we’re concerned that fiduciaries may not be adequately prepared to meet the pharmacy benefit-related reporting requirements.
"After ten years of kicking the can down the road on an ACA provision, officially, legislation that gives employers what’s needed to manage and understand the total costs of healthcare vendors effectively is here, and the Government is rolling out the audits to make sure everything is enforced. We pride ourselves on being a PBM/PBA solutions provider that gives plan fiduciaries the tools necessary to comply with the CAA and maximize the value of health plan assets spent on pharmacy benefits.” Kristin Begley, Chief Growth Officer, Capital Rx
New Responsibilities Under the Consolidated Appropriations Act
The CAA, which includes the No Surprises Act (NSA) in Title I of the CAA and certain provisions in Title II (Transparency), Division BB, including the prohibition on gag clauses and Section 408(b)(2) compensation disclosures are not new. The Transparency in Coverage (TIC) rule is also not new; it was passed in November 2020. Gag clauses should have been removed from service provider contracts by now, compensation disclosure requirements went into effect as of December 27, 2021, and CMS is requiring all plan issuers and employer group plan sponsors to submit comprehensive medical and drug cost reports to various federal agencies by December 27, 2022.
With fiduciary responsibility comes the requirement for plan fiduciaries to implement the necessary process(es) to evaluate, understand, and report on the details of their benefits program and monitor plan service providers. Like retirement programs, plan sponsors must be prudent stewards of health plan assets and ensure those plan assets are used for the sole purpose of providing benefits to plan participants and beneficiaries. That includes a fiduciary obligation to pay only reasonable fees to service providers.
For group health plan fiduciaries, these new rules bring many new responsibilities and will lead to decisions about what constitutes a “reasonable use” of plan assets, including whether to allow spread pricing when other options are available, according to legal experts we’ve spoken with. The CAA requires all group health plans to make an attestation to the proper federal agency in 2022 that all gag clauses have been removed from contracts with service providers, and fiduciaries for ERISA-covered health plans will also have to attest that they received the appropriate 408(b)(2) compensation disclosures.
Reporting Under the Consolidated Appropriations Act
The CAA also requires group health plans and health insurers to report detailed data about prescription drug pricing and healthcare spending to the Departments of Labor, Health & Human Services, and the Treasury (the Agencies). A Supporting Statement (CMS-10788/OMB control number 0938-NEW) issued by the Agencies reflects the assumption that for self-funded group health plans, prescription drug information will be submitted on behalf of plans, issuers, and FEHB [1] carriers, and the costs incurred are likely to be passed on to plans, issuers, and FEHB carriers. The first report is due on December 27, 2022, and information for plan years 2020 and 2021 must be included; future reports will be submitted annually on June 1.
The report must contain the following information:
- Beginning and end dates of the plan year
- Number of plan participants and beneficiaries
- Each state in which the plan is offered
- The 50 brand prescription drugs most frequently dispensed, including the number of paid claims for those drugs
- The 50 most costly prescription drugs by annual spend, including the annual spend amount for those drugs
- The 50 prescription drugs with the greatest increase in plan expenditures
- Data on total health care spending
- Average monthly premium paid by employers and employees in fully insured plans/premium equivalents in self-funded plans
- Prescription drug rebates, fees, and other remuneration paid to the plan or issuer in each therapeutic class of drugs, as well as for each of the 25 drugs that yielded the highest amount of rebates and
- The impact of prescription drug rebates, fees, and other compensation on premiums and out-of-pocket costs.
Capital Rx is Ready
Capital Rx’s clients will be happy to know that we were transparent before it was required by law. Freestanding disclosures will be provided to new clients and in advance of the renewal of existing contracts, so that group health plan fiduciaries will be able to comply with their obligations under the CAA. If a Capital Rx client would like our reporting support, we are prepared to provide reports for the applicable calendar years using the data available since initiating service with us.
Capital Rx’s executive team has a wealth of experience working with benefits directors, health plan executives, brokers, and consultants, and JUDI® is designed to offer the flexibility and reporting necessary to meet the requirements upstream and downstream. If Capital Rx is not your PBM, maybe now is the time to take a closer look at what we can do to help your organization manage pharmacy cost and ensure CAA compliance?
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[1] Federal Employees Health Benefits (FEHB).