2024 compliance checklist: RxDC Is Back!
In mid-February, CMS released revised instructions for the highly anticipated third RxDC reports, which encompass the 2023 calendar year and are due…
There is a “first,” however. For the first time, CMS will enforce the aggregation restriction, a provision that CMS had suspended for the first two reporting cycles. The cause for concern here is that plan sponsors cannot rely on their PBM’s aggregate submission of pharmacy data. Instead, they will have to submit plan-level Rx data. So, if this already sounds like a migraine waiting to happen, let’s pause and refresh for a moment.
Related: Mental Health Parity and Addiction Equity Act, part 1: How it began
The aggregation restriction prohibits plans from having vendors submit the medical premium and life years data reported on file D1 and the pharmacy benefit data reported on files D3 through D8 “at a less granular level” than the medical benefit data reported on file D2. So, as stated, if D2 is submitted on a plan-level basis, D1 and D3-D8 must follow suit.
From a fiduciary perspective, implementing this aggregation restriction can be a boon for employers. By submitting pharmacy files at the plan level, employers can obtain specific data about their plan, such as their PBM’s profit margin, drug level rebates for the top 25 drugs, and manufacturer cost-sharing assistance, that they didn’t have access to when PBMs submitted data files in aggregate. We should note right here that employers can still rely on their vendor’s aggregate medical benefit submissions while submitting pharmacy files at the plan level to gain access to critical financial prescription drug data. In other words, the aggregation restriction does not prohibit medical benefit data from being less granular than the medical premium, life years, and pharmacy benefit data.
Considering the spotlight recently shed on fiduciary duties and the risks associated with not complying with those duties, the additional insight plan-level filings provide can help fiduciaries stay on course in fulfilling their responsibilities.
Why are we telling you all of this now? We’re already nearing the end of April, and time tends to creep up on us. Preparing to implement the new requirements will ease some of your burden when the filing is due.
There isn’t a robust amount of new information in these instructions, but changes we’ve noted in addition to the aggregation restriction enforcement include:
- Additional data elements to report. New for this year, one of the pharmacy benefit files (the D6) asks for pharmacy enrollment information. Also, a group health plan’s plan list (P2) file must identify the types of carve-out benefits (i.e., pharmacy, medical, fertility, behavioral health). This information was optional last year.
- Simplifications to the average monthly premium and premium equivalent calculations. The average monthly premium calculations are more straightforward because they are no longer reported on a per-member basis. Additionally, CMS has clarified that COBRA contributions and spousal and tobacco surcharges should be included in the average monthly premium paid by members. Finally, the instructions simplify the calculation of premium equivalents by removing restrictions on reporting on a cash basis.
You might be asking yourself, “Why should I start now?” Here’s why: no good faith relief is available for this third reporting submission. In addition, no deadline extension is available, even though June 1, 2024, falls on a Saturday. As we said, time flies, so plan sponsors should begin working on their reporting strategy now. We encourage plan sponsors to:
- Start to identify all your vendors with the required data;
- Confirm the reporting entities for every data file and
- Respond to all vendor surveys by the specified deadline.
Be sure to stay updated to help you navigate this new maze of RxDC reporting.
David Mordo is senior compliance officer at MZQ Consulting.