February 4, 2023

Feds require health plans to report drug costs under new rule

Payers, employers and other group health plan sponsors must report prescription drug and health coverage costs for consumers under a federal regulation published Wednesday.

Plans and issuers must begin reporting information by Dec. 27, 2021 and submit their information each following year by June 1. However, the rule says enforcement actions won’t be taken against plans or issuers that submit their 2020 and 2021 information by Dec. 27, 2022.

The interim final rule is the fourth regulation to date implementing the No Surprises Act. The Health and Human Services Department, Labor Department, Treasury Department and Office of Personnel Management promulgated the regulation.

“Life-saving prescription drugs should not cost anyone their life savings,” HHS Secretary Xavier Becerra said in a news release. “Today the Biden-Harris Administration is taking additional steps to make healthcare more accessible and affordable for patients. By collecting key data on the costs of prescription drugs, we are promoting competition and transparency in the healthcare industry as we continue to curb the rising costs of drugs and surprise medical bills.”

In addition to general information on their enrollment and total health spending, payers and issuers on the individual markets will have to submit prescription drug spending information to each of the federal departments implementing the rule, including average monthly premiums paid by employees compared to employers.

Plans and issuers will also need to report 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 plan or coverage spending from the prior year. Prescription drug rebates and fees paid to the plan or issuer by manufacturers in each class of therapeutics will need to be reported as well, along with the impact of these rebates and fees on premiums and out-of-pocket costs.

Plan sponsors, issuers and Federal Employees Health Benefits Program carriers will submit this information for the state or market level instead of separately for each plan, CMS says.

Once this information is submitted, HHS will publish a report on prescription drug pricing trends and rebates and how they impact consumer costs. The administration expects these reports, which will be updated biannually, to clarify prescription drugs’ role in increased healthcare spending and costs.

The rule notes that information will also offer insight into competition and market concentration in pharmaceutical and healthcare industries. The data can help the administration tackle high prices driven by industry concentration and other anti-competitive behaviors, which President Joe Biden pledged to fight in an executive order issued in July.

Wednesday’s prescription drug transparency policy is part of the administration’s implementation of the No Surprises Act, passed by Congress as part of last year’s end-of-year spending package. The law aims to make it so patients only have to pay in-network rates for out-of-network emergency services or air ambulance trips. Payers and providers will have 30 days to settle discrepancies and bills that remain unsettled will go through an arbitration process.

Stakeholders reacted with skepticism of the policy to outright opposition toward it, and they largely haven’t appreciated how the administration has chosen to implement the policy either. Lawmakers with medical degrees have also criticized the implementation, saying it goes against Congress’ intent for the No Surprises Act.

The first rule to implement the No Surprises Act, released in July, banned surprise medical bills for emergency services, air ambulance services and certain non-emergency services. Throughout the fall, the Biden administration released other policies laying out the process to settle disputes and requiring plans and issuers to submit information about air ambulance services and require agents to disclose compensation for enrolling people in certain health coverage.

The Association of Air Medical Services sued the federal government to block these regulations on Tuesday.

Comments on Wednesday’s interim final rule are due by Jan. 24.