Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury (the Departments) have issued technical guidance on the Consolidated Appropriation Act’s (CAA) reporting requirements for prescription drug and healthcare spending.
The good news for most employers: they don’t need to worry about the minutiae of this guidance. This is because most employers will rely on their insurers and TPAs to actually file the reports. Employers that intend to self-file these reports should ignore the rest of this article and go directly to CMS’ website for the nitty-gritty details.
Guidance Worth Noting
First, employers with fully insured plans can protect themselves from any liability for failing to properly file the reports by entering into a written agreement with their insurers obligating the latter to assume the responsibility. The guidance highlights a few nuances:
- Minimum premium arrangements are considered fully insured. The guidance does not delve into the details of these “arrangements” other than to note they “generally have regular fixed premium or funding payments, often based on past experience, and limit the plan sponsor’s liability for claims.” Employers: confer with carriers regarding reporting obligations.
- Level-funded plans are considered self-insured. Defining characteristics of such plans are not outlined.
- MEWA arrangements: confirm responsibility for reporting. Employers covered under MEWAs will be responsible for reporting (as fully or self-insured, as applicable) where the plan is sponsored at the employer level. If the plan is sponsored at the MEWA level, the MEWA should handle the reporting.
Second, employers with self-insured plans: review agreements with all entities that administer those plans. Typically, these will include TPAs and PBM. They may also include entities administering other carve out services such as mental health and substance use disorders and wellness benefits.
- Employers: ensure that contracts cover reporting obligations and pay special attention to indemnification for reporting errors. Contracts should also provide for confirmation that reports have been timely and accurately filed. The guidance notes that CMS does not have a mechanism for notifying plans that data has been submitted on their behalf, and that (except for fully insured plans) the plan has the ultimate responsibility for ensuring that its data has been accurately submitted.
Third, TPAs and other service providers may reasonably expect additional compensation for these reporting services. The guidance offers the Departments’ cost estimates for service providers to develop the necessary reporting capacity. TPAs will not be filing individual reports on each of their clients, but will aggregate reports of all clients by employer size and state. PBMs will aggregate based on TPA, employer size, and state.
Last, employers (as plan sponsors) are ultimately responsible for oversight of service providers. Though insurers and TPAs are likely to file reports, employers with both self-insured and fully insured plans should have already reviewed, discussed, and updated existing agreements confirming who does what when.