The CAA Transparency Rules Will Let Plans and Participants Know. The Department of Labor, Health and Human Services, and the IRS (collectively the Departments) recently released the Interim Final Rules with a request for Comment (IFC), Prescription Drug and Health Care Spending. These rules implement Section 204, Title II, another phase of the transparency provisions of the Consolidated Appropriations Act (CAA) of 2021. The IFC is open for public comment through January 24, 2022.
This most recent IFC requires Reporting Entities — group health plans, both fully insured and self-funded, and issuers of insured group health plans or individual coverage — to report annually information about prescription drug and health care spending. Unlike the Affordable Care Act (ACA), the CAA does not include exceptions for grandfathered plans. Instead, the CAA rules apply broadly to grandfathered plans, church plans, non-federal government plans, and individual coverage through or outside of an exchange. This IFC, however, does NOT apply to Health Reimbursement Accounts (HRAs), other account-based group health plans, e.g., Individual Coverage Health Reimbursement Accounts (ICHRAs), coverage consisting solely of excepted benefits, e.g., dental or vision plans, or short-term, limited-duration insurance coverage.
The Departments designed these rules to solicit data that would allow an accurate comparison of apples to apples across all the Reporting Entities. The IFC includes specific instructions concerning:
The data the plans and insurance issuers must submit ranges from general plan identifying information and the states in which the plans operate to more precise information, e.g.:
Other data required includes:
The level of information sounds daunting, and the Departments acknowledge the magnitude of the burden for each plan to collect and report this information on an annual basis. Plans and insurers may collect and submit the data themselves, or they may rely on another party (TPA, PBM, health insurance providers, etc.), pursuant to a written agreement, to report the data on their behalf. Regardless of who submits the data, the plan or issuer is ultimately responsible for complying with the IFC’s reporting requirements. The Departments plan to build a portal to ease the submission burden on the Reporting Entities. The Departments must then assemble an aggregate report from the submitted data and publish it on the internet within 18 months of the first submission deadline and biannually after that.
This brings us to the deadlines by which the Reporting Entities must submit the mass of data. The IFC states the first deadline for plans and insurers for 2020 data is one year after the enactment of the CAA, which would be December 27, 2021. The deadline for 2021 data is June 1, 2022, and each subsequent year’s data is due on each following June 1st. Fortunately, the Departments have the discretion to defer the enforcement of deadlines. They have elected to defer enforcement of the deadline for 2020 and 2021 data submission until December 27, 2022, when reporting for both years is due. The Departments strongly encourage Reporting Entities to work on their procedures now. Meanwhile, the Departments will build the reporting portal and provide further instructions for the actual data submission, which will provide Reporting Entities with the level of detail the Departments expect in the submissions.
The Bottom Line:
The Departments have now deferred several deadlines into 2022, adding to other employee benefit deadlines already required in 2022. We previously published information on upcoming deadlines to assist with planning, but this means the year ahead is shaping into another busy year for plan sponsors. We are available to help plan sponsors and administrators understand and implement the IFC requirements and other deadlines in the year(s) ahead.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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