Prescription Drug and Health Care Spending, 66662-66704 [2021-25183]

Download as PDF 66662 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations OFFICE OF PERSONNEL MANAGEMENT 5 CFR Part 890 RIN 3206–AO27 DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 54 [TD 9958] RIN 1545–BQ10 DEPARTMENT OF LABOR Employee Benefits Security Administration 29 CFR Part 2590 RIN 1210–AC07 DEPARTMENT OF HEALTH AND HUMAN SERVICES 45 CFR Part 149 [CMS–9905–IFC] RIN 0938–AU66 Prescription Drug and Health Care Spending Office of Personnel Management; Internal Revenue Service, Department of the Treasury; Employee Benefits Security Administration, Department of Labor; Centers for Medicare & Medicaid Services, Department of Health and Human Services. ACTION: Interim final rules with request for comments. AGENCY: This document sets forth interim final rules implementing provisions of the Internal Revenue Code (the Code), the Employee Retirement Income Security Act (ERISA), and the Public Health Service Act (PHS Act), as enacted by the Consolidated Appropriations Act, 2021 (CAA). These provisions are applicable to group health plans and health insurance issuers offering group or individual health insurance coverage. These interim final rules add provisions to existing rules under the Code, ERISA, and the PHS Act. These interim final rules implement provisions of the Code, ERISA, and PHS Act that increase transparency by requiring group health plans and health insurance issuers in the group and individual markets to submit certain information about prescription drugs and health care spending to the Department of Health lotter on DSK11XQN23PROD with RULES2 SUMMARY: VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 and Human Services (HHS), the Department of Labor (DOL), and the Department of the Treasury (collectively, the Departments). The Departments are issuing these interim final rules with largely parallel provisions that apply to group health plans and health insurance issuers offering group or individual health insurance coverage. The Office of Personnel Management (OPM) is also issuing interim final rules that require Federal Employees Health Benefits (FEHB) carriers to report information about prescription drugs and health care spending in the same manner as a group health plan or health insurance issuer offering group or individual health insurance coverage. DATES: Effective date: These regulations are effective on December 23, 2021. Applicability date: The regulations are generally applicable beginning December 27, 2021. The OPM-only regulations that apply to health benefits plans and carriers under the FEHB Program are applicable beginning December 27, 2021. However, as discussed in section II.C.1.b. of this preamble, the Departments will provide temporary and limited deferral of enforcement during the first year of applicability and this temporary and limited deferral of enforcement will apply, in the same manner, to FEHB plans and carriers. Comment date: To be assured consideration, comments must be received at one of the addresses provided below, by January 24, 2022. Please see section V.E. of this preamble for information regarding submission of comments on the information collection requirements. ADDRESSES: Written comments may be submitted to the addresses specified below. In commenting, refer to file code CMS–9905–IFC. Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed): 1. Electronically. You may submit electronic comments on this regulation at https://www.regulations.gov by entering the file code in the search window and then clicking on ‘‘Comment.’’ 2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–9905–IFC, P.O. Box 8016, Baltimore, MD 21244–8016. PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. By express or overnight mail. You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–9905–IFC, Mail Stop C4–26–05, 7500 Security Boulevard, Baltimore, MD 21244–1850. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Padma Babubhai Shah, Office of Personnel Management, at 202–606– 4056. Christopher Dellana, Internal Revenue Service, Department of the Treasury, at 202–317–5500. Matthew Litton or Shannon Hysjulien, Employee Benefits Security Administration, Department of Labor, at 202–693–8335. Christina Whitefield, Centers for Medicare & Medicaid Services, Department of Health and Human Services, at 301–492–4172. Customer Service Information: Information from OPM on health benefits plans offered under the FEHB Program can be found on the OPM website (www.opm.gov/healthcareinsurance/healthcare/). Individuals interested in obtaining information from DOL concerning employment-based health coverage laws may call the Employee Benefits Security Administration (EBSA) Toll-Free Hotline at 1–866–444–EBSA (3272) or visit DOL’s website (www.dol.gov/ebsa). In addition, information from HHS on private health insurance coverage and coverage provided by non-federal governmental group health plans can be found on the Centers for Medicare & Medicaid Services (CMS) website (www.cms.gov/cciio), and information on health care reform can be found at www.HealthCare.gov. SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. The Departments generally post all comments received before the close of the comment period on the following website as soon as possible after they have been received: http:// www.regulations.gov. Follow the search instructions on that website to view public comments. The Departments will not post on Regulations.gov public comments that make threats to E:\FR\FM\23NOR2.SGM 23NOR2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations individuals or institutions or suggest that the individual will take actions to harm the individual. The Departments continue to encourage individuals not to submit duplicative comments. The Departments will post acceptable comments from multiple unique commenters even if the content is identical or nearly identical to other comments. lotter on DSK11XQN23PROD with RULES2 I. Background A. Prescription Drug and Health Care Spending Transparency Under the Consolidated Appropriations Act, 2021 On December 27, 2020, the Consolidated Appropriations Act, 2021 (Pub. L. 116–260) (CAA) was enacted. Section 204 of Title II of Division BB of the CAA added parallel provisions at section 9825 of the Internal Revenue Code (the Code), section 725 of the Employee Retirement Income Security Act (ERISA), and section 2799A–10 of the Public Health Service Act (PHS Act), which require group health plans and health insurance issuers offering group or individual health insurance coverage to annually submit to the Departments certain information about prescription drug and health care spending. The statute provides that data shall be reported not later than 1 year after the date the CAA was enacted, and not later than June 1 of each year thereafter. The data submission required under section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A– 10(a) of the PHS Act (section 204 data submissions) includes general information on the plan or coverage, such as the beginning and end dates of the plan year, the number of participants, beneficiaries, or enrollees, as applicable, and each state in which the plan or coverage is offered. Plans and issuers must also report the 50 most frequently dispensed brand prescription drugs, and the total number of paid claims for each such drug; the 50 most costly prescription drugs by total annual spending, and the annual amount spent by the plan or coverage for each such drug; and the 50 prescription drugs with the greatest increase in plan or coverage expenditures from the plan year preceding the plan year that is the subject of the report, and, for each such drug, the change in amounts expended by the plan or coverage in each such plan year (top 50 lists). Additionally, plans and issuers must report total spending on health care services by the plan or coverage broken down by the type of costs (including hospital costs; health care provider and clinical service costs, for primary care and specialty care separately; costs for prescription VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 drugs; and other medical costs, including wellness services); spending on prescription drugs by the plan or coverage as well as by participants, beneficiaries, and enrollees, as applicable; and the average monthly premiums paid by participants, beneficiaries, and enrollees and paid by employers on behalf of participants, beneficiaries, and enrollees, as applicable. Plans and issuers must report any impact on premiums by rebates, fees, and any other remuneration paid by drug manufacturers to the plan or coverage or its administrators or service providers, including the amount paid with respect to each therapeutic class of drugs and for each of the 25 drugs that yielded the highest amounts of rebates and other remuneration under the plan or coverage from drug manufacturers during the plan year (top 25 list). Finally, plans and issuers must report any reduction in premiums and out-ofpocket costs associated with these rebates, fees, or other remuneration. The Departments intend to provide greater technical detail regarding each data element in the section 204 data submission in the instructions for the information collection instrument. The Departments also intend to provide an internet portal where reporting entities can submit the required data. Section 9825(b) of the Code, section 725(b) of ERISA, and section 2799A– 10(b) of the PHS Act additionally require the Departments to publish on the internet a report on prescription drug reimbursements for plans and coverage, prescription drug pricing trends, and the role of prescription drug costs in contributing to premium increases or decreases under these plans or coverage, with information that is aggregated so that no drug or plan specific information is made public (section 204 public report). This section 204 public report must be published no later than 18 months after the date on which plans and issuers are required to first submit the information and biannually thereafter. The section 204 public report may not include any confidential or trade secret information submitted to the Departments, pursuant to section 9825(c) of the Code, section 725(c) of ERISA, and section 2799A– 10(c) of the PHS Act. These interim final rules implement section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act. The Departments seek comment on all aspects of these interim final rules. Under the FEHB Act, 5 U.S.C. 8901 et seq., OPM is charged with administering the FEHB Program and maintains oversight and enforcement authority PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 66663 with respect to FEHB plans, which are federal governmental plans. Pursuant to 5 U.S.C. 8910, OPM is joining the Departments to require the submission of prescription drug and health care spending data from FEHB plans in the same manner as plans and issuers must provide such data under section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act. On July 9, 2021, President Biden issued Executive Order 14036, ‘‘Promoting Competition in the American Economy.’’ 1 Executive Order 14036 directed the federal government to ‘‘enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony.’’ The data collection required by these interim final rules will provide valuable information about competition and market concentration in the pharmaceutical and health care industries. Policymakers can use the prescription drug and health care spending data to make informed decisions in support of the goals of Executive Order 14036, including identifying any excessive pricing of prescription drugs driven by industry concentration and monopolistic behaviors, promoting the use of lowercost generic drugs, and addressing the impact of pharmaceutical manufacturer rebates, fees, and other remuneration on prescription drug prices and on plan, issuer, and consumer costs. The Departments are issuing regulations implementing provisions of Title I (No Surprises Act) and Title II (Transparency) of Division BB of the CAA in several phases. On July 13, 2021, the Departments and OPM issued interim final rules entitled, ‘‘Requirements Related to Surprise Billing; Part I’’ 2 which generally apply to group health plans and health insurance issuers offering group or individual health insurance coverage (including grandfathered health plans) with respect to plan years (in the individual market, policy years) beginning on or after January 1, 2022; FEHB health benefits plans with respect to contract years beginning on or after January 1, 2022; and health care providers and facilities, and providers of air ambulance services beginning on January 1, 2022 (July 2021 interim final rules). The July 2021 interim final rules implement sections 9816(a)–(b) and 9817(a) of the Code; sections 716(a)–(b) 1 https://www.federalregister.gov/documents/ 2021/07/14/2021-15069/promoting-competition-inthe-american-economy. 2 86 FR 36872 (July 13, 2021). Public comments on this rule were due by September 7, 2021. E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 66664 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations and 717(a) of ERISA; sections 2799A– 1(a)–(b), 2799A–2(a), 2799B–1, 2799B– 2, 2799B–3, and 2799B–5 of the PHS Act; and 5 U.S.C. 8902(p), to protect consumers from surprise medical bills for emergency services, air ambulance services furnished by nonparticipating providers of air ambulance services, and non-emergency services furnished by nonparticipating providers at participating facilities in certain circumstances. Among other requirements, the July 2021 interim final rules require emergency services to be covered without any prior authorization, without regard to whether the health care provider or facility furnishing the emergency services is a participating provider or a participating emergency facility with respect to the services, and without regard to any other term or condition of the plan or coverage other than the exclusion or coordination of benefits or a permitted affiliation or waiting period. With respect to emergency services furnished by nonparticipating providers or facilities, air ambulance services furnished by nonparticipating providers of air ambulance services, and non-emergency services furnished by nonparticipating providers at certain participating facilities, the July 2021 interim final rules generally limit cost sharing for out-of-network services to in-network levels, require such cost sharing to count toward any in-network deductibles and out-of-pocket maximums, and prohibit balance billing in certain circumstances. Balance billing refers to the practice of out-of-network providers billing patients for the difference between: (1) The provider’s billed charges; and (2) the amount collected from the plan or issuer plus the amount collected from the patient in the form of cost sharing (such as a copayment, coinsurance, or amounts paid toward a deductible). On September 16, 2021, the Departments and OPM issued proposed rules entitled, ‘‘Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement.’’ 3 These proposed rules propose to implement section 9823 of the Code; section 723 of ERISA; and sections 2723(b), 2746, 2799A–8, and 2799B–4 of the PHS Act; as well as sections 106(a) and 106(e) of the No Surprises Act. These proposed rules would implement certain provisions of the No Surprises Act that would increase transparency by requiring group health plans and health insurance issuers in the group and individual markets, and FEHB carriers, to submit certain information about air ambulance services to the Departments and OPM, as applicable, and by requiring providers of air ambulance services to submit certain information to the Secretaries of HHS and Transportation. These proposed rules also include HHSonly provisions that would increase transparency by requiring a health insurance issuer offering individual health insurance coverage or short-term, limited-duration insurance to disclose to policyholders and to report to HHS any direct or indirect compensation provided by the issuer to an agent or broker associated with enrolling individuals in such coverage. The HHSonly proposed rules would additionally provide the process by which HHS would investigate complaints and potential violations of PHS Act provisions and, if warranted, take enforcement action, including the imposition of civil money penalties, against providers and facilities, including providers of air ambulance services. These proposed rules would amend existing regulations to clarify the process to investigate complaints and potential violations of the PHS Act and impose civil money penalties against plans and issuers. These proposed rules would also establish the process by which HHS would impose civil money penalties if a provider of air ambulance services fails to submit some or all required data to HHS. On October 7, 2021, the Departments and OPM published interim final rules entitled, ‘‘Requirements Related to Surprise Billing; Part II,’’ 4 which generally apply to certified independent dispute resolution (IDR) entities; selected dispute resolution (SDR) entities; group health plans and health insurance issuers offering group or individual health insurance coverage and FEHB carriers; and providers, facilities, and providers of air ambulance services beginning on or after January 1, 2022, with the exception of certain provisions that apply beginning on October 7, 2021 (October 2021 interim final rules). The October 2021 interim final rules implement sections 9816(c) and 9817(b) of the Code; sections 716(c) and 717(b) of ERISA; and sections 2799A–1(c), 2799A–2(b), 2799B–6(1), 2799B–6(2)(B), and 2799B–7 of the PHS Act. The October 2021 interim final rules implement provisions of the No Surprises Act that establish a federal IDR process that group health plans, 3 86 FR 51730 (Sept. 16, 2021). Public comments on this rule were due by October 18, 2021. 4 86 FR 55980 (October 7, 2021). Public comments on this rule are due by December 6, 2021. VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 health insurance issuers offering group or individual health insurance coverage, and FEHB carriers; and nonparticipating providers, facilities, and providers of air ambulance services may use following the end of an unsuccessful open negotiation period to determine the outof-network rate for items or services that are emergency services, nonemergency services furnished by nonparticipating providers at participating facilities, and air ambulance services furnished by nonparticipating providers of air ambulance services, under certain circumstances. In addition, HHS-only provisions of the October 2021 interim final rules address good faith estimates of health care items or services for uninsured or self-pay individuals and the associated patient-provider dispute resolution process. The October 2021 interim final rules also amend final regulations issued by the Departments in 2015 related to external review in order to implement section 110 of the No Surprises Act. Division BB of the CAA also includes: Provisions regarding transparency in plan and insurance identification cards (section 107); continuity of care (section 113); accuracy of provider network directories (section 116); and prohibition on gag clauses (section 201) that are applicable for plan years beginning on or after January 1, 2022. The Departments intend to undertake rulemaking to fully implement these provisions, with the exception of section 201 of Title II of Division BB of the CAA, prohibition on gag clauses, which is self-implementing. On August 20, 2021, the Departments issued guidance regarding implementation of each of these sections of Division BB of the CAA.5 Until rulemaking fully implementing these provisions is finalized and effective, plans and issuers are expected to implement the requirements using a good faith, reasonable interpretation of the statute. B. Stakeholder Consultation and Input The Departments and OPM published a Request for Information (RFI) in the June 23, 2021 Federal Register (86 FR 32813). The RFI solicited comments from the public regarding implementation considerations for the data collection required by section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act and the associated impact on plans and issuers. The Departments sought input on specific data elements to be 5 FAQs about Affordable Care Act and Consolidated Appropriations Act, 2021, Implementation Part 49 (Aug. 20, 2021), available at https://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/Downloads/FAQs-Part-49.pdf. E:\FR\FM\23NOR2.SGM 23NOR2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations collected, including the level of detail that is feasible for entities subject to the data collection requirements to report and the associated burdens and potential compliance costs. In the RFI, the Departments indicated that public comments would inform the Departments’ and OPM’s implementation of the statutory requirements through rulemaking and the establishment of processes to receive the required information. The Departments also sought comment from the public regarding information to include in the Departments’ biannual section 204 public report. OPM sought input from the public regarding implementation considerations for the data collection as it pertains to FEHB carriers. The Departments also held several listening sessions with employers, group health plans, issuers, and pharmacy benefit managers (PBMs) to gather public input on each aspect of the data submission requirements as well as the biannual section 204 public reports. OPM also held a listening session with FEHB carriers. The Departments consulted with stakeholders through regular contact with states, issuers, plans, trade groups, employers, and other interested parties. The Departments and OPM considered all public input received in the development of these interim final rules. The Departments and OPM also took into account the objectives of Executive Order 14036 to promote competitiveness in the health care and pharmaceutical markets and lower the price of and improve access to prescription drugs and biologics. lotter on DSK11XQN23PROD with RULES2 II. Overview of the Interim Final Rules—Departments of HHS, Labor, and the Treasury A. Applicability These interim final rules add 26 CFR 54.9825–2T and amend 29 CFR 2590.716–2 and 45 CFR 149.20 to include a reference to the new regulations added by these interim final rules.6 These interim final rules include the prescription drug and health care spending data submission requirements for plans and issuers required under section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act. These interim final rules generally apply to group health plans and health insurance issuers offering group or individual health insurance coverage. The term ‘‘group health plan’’ includes 6 The amendment to 29 CFR 2590.716–2 also includes a technical edit to correct a cross-reference in 29 CFR 2590.716–2(a)(2). VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 both insured and self-funded group health plans, and includes private employment-based group health plans subject to ERISA, non-federal governmental plans (such as plans sponsored by states and local governments) subject to the PHS Act, and church plans subject to the Code. Individual health insurance coverage includes coverage offered in the individual market, through or outside of an Exchange, and includes student health insurance coverage as defined at 45 CFR 147.145. As discussed further in section III. of this preamble, OPM interim final rules require FEHB carriers to comply with these interim final rules, with respect to prescription drug and health care spending data submission requirements, subject to OPM regulation and contract provisions. Section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act (and all provisions of the No Surprises Act that are applicable to group health plans and health insurance issuers offering group or individual health insurance coverage) apply to grandfathered health plans. Section 1251 of the Affordable Care Act provides that grandfathered health plans are not subject to certain provisions of the Code, ERISA, or the PHS Act, as added by the Affordable Care Act, for as long as they maintain their status as grandfathered health plans. For example, grandfathered health plans are subject neither to the requirement to cover certain preventive services without cost sharing under section 2713 of the PHS Act, nor to the annual limitation on cost sharing set forth under section 2707(b) of the PHS Act. If a plan or coverage loses its grandfathered status, it is required to comply with both provisions, in addition to certain other requirements of the Affordable Care Act. However, the CAA does not include an exception for grandfathered health plans that is comparable to the exception contained in section 1251 of the Affordable Care Act. Therefore, the provisions of these interim final rules that apply to plans and issuers also apply to grandfathered health plans (as defined in 26 CFR 54.9815–1251, 29 CFR 2590.715–1251, and 45 CFR 147.140). These interim final rules do not apply to health reimbursement arrangements (HRAs), or other account-based group health plans, as described in 26 CFR 54.9815–2711(d)(6)(i), 29 CFR 2590.715–2711(d)(6)(i), and 45 CFR 147.126(d)(6)(i), that make reimbursements subject to a maximum fixed dollar amount for a period, because the benefit design of these plans makes the prescription drug and health PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 66665 care spending data reporting concepts under section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act inapplicable. The Departments expect that account-based group health plans typically will be integrated with other coverage that will be required to report such information (such as in the case of individual coverage HRAs (ICHRAs), for which the issuer of the individual coverage will be required to report the information) or will be otherwise exempt from these requirements (such as excepted benefit HRAs). Therefore, under these interim final rules, the reporting requirements do not apply to HRAs (including ICHRAs) and other account-based group health plans. This approach is consistent with many other requirements that apply to group health plans and the existing applicability provisions in 26 CFR 54.9816–2T, 29 CFR 2590.716–2, and 45 CFR 149.20 with respect to other requirements of Division BB of the CAA. Excepted benefits are exempt from the requirements in chapter 100 of the Code, part 7 of ERISA, and Part A and Part D of title XXVII of the PHS Act.7 Under section 2791(b)(5) of the PHS Act, short-term, limited-duration insurance is excluded from the definition of individual health insurance coverage and is, therefore, exempt from the new requirements established in section 2799A–10 of the PHS Act. Therefore, short-term, limitedduration insurance (as defined in 26 CFR 54.9801–2, 29 CFR 2590.701–2, and 45 CFR 144.103) and coverage that consists solely of excepted benefits (as described in section 9832(c) of the Code, section 733(c) of ERISA, and section 2791(c) of the PHS Act) are not subject to the data submission requirements set forth in these interim final rules. The Departments seek comment as to whether there are any other plans with unique benefit designs that should be exempt from these interim final rules. B. Definitions (26 CFR 54.9825–3T, 29 CFR 2590.725–1, 45 CFR 149.710) The Departments adopt terms and definitions applicable to the data submission requirements set forth in these interim final rules in 26 CFR 54.9825–3T, 29 CFR 2590.725–1, and 45 CFR 149.710. In addition, the 7 See section 9831 of the Code, section 732 of ERISA, and section 2722 of the PHS Act. The CAA amended the PHS Act statutory exemption for these products to include the new requirements established under new Part D of the PHS Act. See section 102(a)(3)(B) of the No Surprises Act, which made conforming amendments to add the phrase ‘‘and Part D’’ to section 2722(b), (c)(1), (c)(2), and (c)(3) of the PHS Act. E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 66666 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations definitions in 26 CFR 54.9816–3T, 29 CFR 2590.716–3, and 45 CFR 149.30 apply to these interim final rules. In general, these interim final rules do not define terms that are commonly used in the health care and health insurance industry. Reference Year. Section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act require plans and issuers to submit information ‘‘with respect to the health plan or coverage in the previous plan year.’’ To help ensure uniformity of data across plans and coverage and increase the usability of the data for purposes of the section 204 public report, the Departments are requiring plans and issuers to submit information based on the ‘‘reference year,’’ defined in these interim final rules as the calendar year immediately preceding the calendar year in which the section 204 data submissions are due. Collecting data for the immediately preceding calendar year, rather than the previous plan year, better accounts for the timing of when newly introduced drugs—including new brand prescription drugs, newly available generic versions of brand prescription drugs, and biosimilars—become available and the fact that some group health plans and health insurance coverage have plan years that do not correspond to calendar years. If data are collected based on the plan year, newly introduced drugs would be reflected in the data for some plans and coverage but not others. If data are collected based on the calendar year, newly introduced drugs will be reflected in the data for every plan, regardless of the start and end date of the plan year. Newly introduced drugs, such as biologics, are often very costly and may impact the ranking of the 50 most costly prescription drugs. Similarly, when a generic or biosimilar version of a drug becomes available, the brand version will be prescribed less frequently, which may impact the ranking of the top 50 most frequently dispensed brand prescription drugs. Therefore, if the Departments were to collect information regarding the top 50 drugs by plan or policy year as specified in plan or coverage documents, without additional specification about the measurement period, there would be inconsistency among data submissions that would make them difficult to compare to each other. Collection of all data on a calendar-year basis will enable the Departments to effectively analyze the data and understand the impact of a newly introduced drug consistently across plans and coverage, market segments, and years. In addition, using VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 the calendar year as the reference year will enable the Departments to produce consistent data analyses across group health plans and group health insurance coverage (which may be offered on a non-calendar basis) and individual health insurance coverage (which is generally offered on a calendar-year basis) for purposes of the section 204 public report. Second, using the calendar year as the reference year is consistent with other HHS rules and data collections related to prescription drug and health care spending. For example, similar to section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act, section 2718(a) of the PHS Act requires issuers to report Medical Loss Ratio (MLR) data ‘‘with respect to each plan year.’’ However, issuers report calendar year information to HHS for the MLR data collection instead.8 The National Association of Insurance Commissioners (NAIC), which section 2718(c) of the PHS Act directs to make recommendations to HHS regarding definitions for the MLR data collection, recommended that the term ‘‘plan year’’ in section 2718(a) of the PHS Act be interpreted to refer to the calendar year, rather than the year specified in particular plan or policy documents.9 The NAIC recommended this interpretation because any other definition would have precluded meaningful comparison of the reported data, reduced the reliability of the data, and increased reporting burdens. The Departments are of the view that the same rationales apply with respect to the section 204 data submissions. In addition, the prescription drug data collection with respect to qualified health plans (QHPs), required under section 1150A of the Social Security Act related to collection of information ‘‘for a contract year,’’ also involves the submission of data on a calendar-year basis.10 Likewise, the Medicare program, in which some Medicare Part D plans and Medicare Advantage Plans offering a prescription drug plan have non-calendar year contract years, analyzes prescription drug and prescription drug rebate data on a calendar-year basis and generally collects data in a manner that permits 8 See 45 CFR 158.103, which defines the MLR reporting year as a calendar year during which group or individual health insurance coverage is provided by an issuer. 9 https://www.naic.org/documents/committees_ ex_mlr_reg_asadopted.pdf. 10 Pharmacy Benefit Manager Transparency for Qualified Health Plans information collection, available at https://www.cms.gov/regulations-andguidancelegislationpaperworkreductionactof 1995pra-listing/cms-10725. PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 calendar year-based analysis.11 Similarly, the Medicaid program, where some managed care plans have noncalendar year contract years, analyzes prescription drug and prescription drug rebate data on a calendar-year basis.12 In addition, state data collections related to prescription drug spending and rebates, including certain state All-Payer Claims Databases, generally collect data on a calendar-year basis.13 Collection of calendar-year data will allow the Departments to evaluate the consistency and validity of the data and compare trends across multiple data sources as well as between publicly- and privatelysponsored health coverage. Prior to issuing these interim final rules, the Departments received comment letters from several stakeholders recommending that the Departments collect data on a calendaryear basis, including for non-calendar year plans or coverage. The Departments also solicited comment on using calendar year as the basis for the section 204 data submissions in the RFI, and the overwhelming majority of commenters that responded to this RFI question supported the calendar-year approach. Commenters stated that calendar-year data would be more meaningful when comparing trends in the group markets (where plan years may not align with the calendar year) to those in the individual market (where policy years are generally on a calendar-year basis), because all of the data would be based on the same period. Issuers additionally advised that reporting calendar-year data for purposes of the section 204 data submissions would reduce compliance burdens because issuers submit other 11 See, e.g., 42 CFR part 423; see also https:// www.cms.gov/newsroom/fact-sheets/medicare-partd-direct-and-indirect-remuneration-dir. 12 See, e.g., https://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-andReports/Information-on-Prescription-Drugs/ Medicaid. 13 See, e.g., Colorado Prescription Drug Rebate Data Submission Manual (Sept. 8, 2020), https:// www.civhc.org/wp-content/uploads/2020/10/ Colorado-APCD-2020-Drug-Rebate-DataSubmission-Manual_09.08.2020.pdf; Maine Uniform Reporting System for Prescription Drug Price Data Sets, 90–590 C.M.R. ch. 570, https:// mhdo.maine.gov/_finalStatutesRules/Chapter570Rx DrugPricing_2020Feb4.docx; Massachusetts Payer Reporting of Prescription Drug Rebates Data Specification Manual (Apr. 2020), https:// www.chiamass.gov/assets/docs/p/prescriptiondrug-rebate/Prescription-Drug-Rebate-DataSpecification-Manual-2020.pdf; Minnesota Commerce Department, Public Pharmacy Benefit Manager (PBM) Transparency Report (Dec. 1, 2020), https://mn.gov/commerce-stat/pdfs/pbmtransparency-report.pdf; Texas Pharmaceutical Benefits Reporting (Dec. 2020): Health benefit plan issuer and Pharmacy benefit manager reporting forms, https://www.tdi.texas.gov/health/ documents/hbpi.pdf and https://www.tdi.texas.gov/ health/documents/pbm.pdf. E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations related data to state and federal regulators on a calendar-year basis. The Departments share the views of these commenters. Student Market. In these interim final rules, for purposes of section 204 data submissions, the term ‘‘student market’’ has the meaning given in 45 CFR 158.103. Under 45 CFR 149.30, the definitions in 45 CFR 144.103 apply to the provisions of 45 CFR part 149 unless otherwise specified. The definitions of many terms in 45 CFR 144.103 and 45 CFR 158.103 are identical. However, the term ‘‘student market’’ is not defined in 45 CFR 144.103, but is defined in 45 CFR 158.103 as the market for student health insurance coverage. Consistency of the definition of ‘‘student market’’ in these interim final rules with the definition in 45 CFR 158.103 will enable the Departments to validate data quality and produce consistent analyses across data submitted under section 2718(a) of the PHS Act for purposes of MLR reporting and section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act for purposes of the section 204 public report.14 Consistency with the definition of ‘‘student market’’ in 45 CFR 158.103 will also reduce compliance burdens for plans and issuers in the fully-insured markets, because plans and issuers subject to the requirements of 45 CFR part 158 have already created group size and market determination processes and have modified systems to track data using the definitions in 45 CFR 158.103 for purposes of MLR reporting. The Departments recognize that self-funded group health plans generally are not subject to as many requirements that are based on employer size as fully-insured group health plans. Consequently, selffunded plans are likely to face more challenges in determining employer size and providing that information to thirdparty administrators (TPAs) that submit data on behalf of self-funded plans. Therefore, reasonable approximations for employer size determinations of selffunded group health plans will be allowed. The instructions for the information collection instrument will provide examples of approximation methods that the Departments will consider to be reasonable. FEHB Line of Business. In these interim final rules, the term ‘‘FEHB line of business’’ refers to all health benefits plans that are offered to eligible enrollees pursuant to a contract between an FEHB Program carrier and OPM. Such plans are Federal governmental 14 All other relevant definitions in 45 CFR 158.103 have the same meaning or functional effect as the definitions in 45 CFR 144.103. VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 plans offered pursuant to 5 U.S.C. chapter 89. Market Segment. In these interim final rules, the term ‘‘market segment’’ means each of the following: The individual market (excluding the student market), the student market, the fully-insured small group market, the fully-insured large group market (excluding the FEHB line of business), self-funded plans offered by small employers, self-funded plans offered by large employers, and the FEHB line of business. Mixedfunded plans, which generally self-fund some health benefits and fully insure other health benefits, should attribute information reported to a market segment based on the source of funding for the benefits included in the report. For example, self-funded pharmacy benefits might be attributed to the market for self-funded group health plans offered by large employers while the reporting for the medical component of the same plan is attributed to the fully-insured large group market, if the medical benefits are funded through an insurance contract. ‘‘Minimum premium’’ plans and similar hybrid arrangements that mimic key aspects of fully-insured arrangements or that are required to comply with state laws regarding mandated benefits must be included in the fully-insured small group and large group market segments. ‘‘Minimum premium’’ plans generally feature regular fixed-premium payments and limit the plan sponsor’s monthly or annual liability for claims, similar to fully-insured coverage. Finally, because student health insurance coverage is designed, marketed, and priced for a unique and narrower population than other individual health insurance coverage, collecting student market data separately for purposes of section 204 data submissions will allow the Departments to better analyze prescription drug usage and costs in this market. In addition, issuers of coverage subject to 45 CFR part 158 already track and report data for the student market policies separately from other individual market policies. Enrollee. In these interim final rules, in the context of provisions of section 2799A–10(a) of the PHS Act, the term ‘‘enrollee’’ means an individual who is enrolled, within the meaning of 45 CFR 144.103, in group health insurance coverage, or an individual who is covered by individual health insurance coverage, at any time during the reference year, and includes dependents. Life-years. In these interim final rules, the term ‘‘life-years’’ means the total number of months of coverage for PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 66667 participants and beneficiaries, or for enrollees, as applicable, divided by 12. Brand Prescription Drug. In these interim final rules, the term ‘‘brand prescription drug’’ means a drug for which an application is approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(c)), or under section 351 of the PHS Act (42 U.S.C. 262), and that is generally marketed under a proprietary, trademark-protected name. The term ‘‘brand prescription drug’’ includes a drug with Emergency Use Authorization issued pursuant to section 564 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb–3), and that is generally marketed under a proprietary, trademark-protected name. The term ‘‘brand prescription drug’’ includes drugs that the U.S. Food and Drug Administration (FDA) determines to be interchangeable biosimilar products under sections 351(i)(3) and 351(k)(4) of the PHS Act (42 U.S.C. 262). Prescription Drug or Drug. In these interim final rules, the term ‘‘prescription drug’’ or ‘‘drug’’ means a set of pharmaceutical products, including biologics, that have been assigned a National Drug Code (NDC) by FDA and are grouped by name and ingredient in the manner specified by the Departments.15 The Departments anticipate specifying that pharmaceutical products must be grouped by name and active ingredient, separately for brand products and generic products or certain biosimilar products. Products with the same name and active ingredient will thus be considered, for the purpose of these interim final rules, to be the same prescription drug even if they have a different dosage strength, package size, mode of delivery, or, for generic products, different manufacturers.16 The Departments chose to group pharmaceutical products by name and ingredient because this approach will produce more meaningful top 50 and top 25 lists of prescription drugs. If products are not grouped according to name and ingredient, the same drug could occupy several spots on the top 50 or top 25 lists. For example, providers may prescribe a drug that comes in the form of pills in different strengths, such as 10 mg or 20 mg, or a drug may sometimes be dispensed as a 30-day supply and sometimes as a 9015 https://www.fda.gov/drugs/drug-approvalsand-databases/national-drug-code-directory. 16 This definition of the term ‘‘prescription drug’’ and ‘‘drug’’ and characterization of the term ‘‘same prescription drug’’ are used only for purposes of these interim final rules and are not intended to reflect or suggest any such definition or characterization of these terms by FDA. E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 66668 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations day supply. In addition, several different companies may manufacture the same generic drug. If each variation of the drug were considered separately, the drug could occupy several spots on a top 50 list, which would be redundant and would not clearly indicate the full scope and variety of drugs in the top 50 list. Or, conversely, the variations could disperse the frequency across so many different products that the drug would not end up making the top 50 list despite its prevalence, even if it would be included in the list if categorized by ingredient or name. This definition is consistent with stakeholder recommendations. Although a number of commenters responding to the RFI suggested that the Departments rely on the NDC with regard to the definition of ‘‘prescription drug,’’ the majority of commenters advised the Departments to classify prescription drugs according to characteristics such as the drug’s name and active ingredient and not solely by the NDC, which distinguishes products by dosage strength, form of delivery, package size, and manufacturer. Commenters generally recommended that the Departments adopt a definition of ‘‘prescription drug’’ consistent with this approach to ensure that different formulations and dosages of the same drug do not appear on the top 50 lists multiple times. Commenters also suggested that the Departments either use a common commercially available database to group prescription drugs by name, active ingredient, and therapeutic class, or provide a new uniform mapping for how prescription drugs must be grouped and classified. Therapeutic Class. In these interim final rules, the term ‘‘therapeutic class’’ means a group of pharmaceutical products that have similar mechanisms of action or treat the same types of conditions, grouped in the manner specified by the Departments in guidance.17 The Departments may specify in guidance the technical specifications for how plans and issuers must classify drugs, and may specify that plans and issuers must do so according to a commonly available public or commercial therapeutic classification system that maps prescription drugs to therapeutic classes, a therapeutic classification system provided by the Departments through guidance, or a combination thereof. The Departments will require all plans and issuers to use the same 17 This definition of the term ‘‘therapeutic class’’ is used only for purposes of these interim final rules and is not intended to reflect or suggest any such definition or characterization of this term by FDA. VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 classification system. This definition is consistent with stakeholder recommendations. Commenters responding to the questions in the RFI regarding the definition of ‘‘therapeutic class’’ advised that regulated entities use a variety of commercially available therapeutic classification systems. Many commenters urged the Departments to provide a uniform mapping system for therapeutic classes. Commenters generally requested that the Departments provide clear instructions and provide adequate implementation time, including by allowing plans and issuers to phase in adoption of a new uniform classification system. Prescription Drug Rebates, Fees, and Other Remuneration. In these interim final rules, the term ‘‘prescription drug rebates, fees, and other remuneration’’ means all remuneration received by or on behalf of a plan or issuer, its administrator or service provider, including remuneration received by and on behalf of entities providing pharmacy benefit management services to the plan or issuer, with respect to prescription drugs prescribed to participants, beneficiaries, or enrollees in the plan or coverage, as applicable, regardless of the source of the remuneration (for example, pharmaceutical manufacturer, wholesaler, retail pharmacy, or vendor). Prescription drug rebates, fees, and other remuneration also include, for example, discounts, chargebacks or rebates, cash discounts, free goods contingent on a purchase agreement, upfront payments, coupons, goods in kind, free or reduced-price services, grants, or other price concessions or similar benefits. Prescription drug rebates, fees, and other remuneration include bona fide service fees. Bona fide service fees mean fees paid by a drug manufacturer to an entity providing pharmacy benefit management services to the plan or issuer that represent fair market value for a bona fide, itemized service actually performed on behalf of the manufacturer that the manufacturer would otherwise perform (or contract for) in the absence of the service arrangement, and that are not passed on in whole or in part to a client or customer of the entity, whether or not the entity takes title to the drug. Some commenters responding to the RFI regarding the definition of prescription drug rebates, fees, and other remuneration recommended definitions that are identical or substantially similar to the definition of prescription drug rebates and other price concessions in the MLR regulations at 45 CFR 158.103 (which generally require issuers, among other requirements, to report premiums, PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 prescription drug and medical expenses, and administrative expenses to HHS). Some commenters recommended that the definition include significantly more detailed illustrative examples. Many commenters encouraged the Departments to collect detailed information on the various types of prescription drug rebates, fees, and other remuneration, including at the level of detail consistent with the specifications for the data collection requirements under the Exchange Establishment rule 18 and the PBM Transparency rule 19 (which generally require certain entities to submit to HHS prescription drug data with respect to QHPs). In these interim final rules, the Departments are adopting a definition of prescription drug rebates, fees, and other remuneration that overlaps with the definition in the MLR regulations at 45 CFR 158.103 to the extent consistent with section 9825(a)(9) of the Code, section 725(a)(9) of ERISA, and section 2799A–10(a)(9) of the PHS Act. As the types of prescription drug rebates, fees, and other remuneration continue to evolve, the Departments intend to provide additional examples in the instructions for the information collection instrument as may be necessary. The Departments intend to specify the level of detail at which prescription drug rebates, fees, and other remuneration must be reported in section 204 data submissions in the instructions for the information collection instrument. The Departments intend to specify a level of detail that will assist plans, issuers, and other reporting entities in correctly determining the total amount of prescription drug rebates, fees, and other remuneration, and that will be generally consistent with the categories of rebates, fees, and other remuneration specified in the data collection requirements under the Exchange Establishment rule and the PBM Transparency rule. A number of commenters urged the Departments to include bona fide service fees in the definition of ‘‘prescription drug rebates, fees, and other remuneration,’’ stating that the statute did not provide an exception for any fees paid by manufacturers to PBMs and other service providers, and that disclosure of these fees is necessary to ensure transparency and to ensure that rebates and other fees are not improperly mischaracterized as bona fide service fees. In contrast, other commenters urged the Departments to exclude bona fide service fees from the 18 77 19 86 E:\FR\FM\23NOR2.SGM FR 18308 (March 27, 2012). FR 24140 (May 5, 2021). 23NOR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations definition of ‘‘prescription drug rebates, fees, and other remuneration,’’ stating that these fees do not affect drug costs or impact premiums, and should be excluded for consistency with the requirements under the MLR rule, the Exchange Establishment rule and the PBM Transparency rule, as well as the definitions used by the Medicare and Medicaid programs. The Departments interpret section 9825(a)(9)–(10) of the Code, section 725(a)(9)–(10) of ERISA, and section 2799A–10(a)(9)–(10) of the PHS Act to require plans and issuers to report the total amount of rebates, fees, and any other remuneration, and separately, the extent to which rebates, fees, and any other remuneration impact premiums and out-of-pocket costs. The Departments note that section 9825(a)(9) of the Code, section 725(a)(9) of ERISA, and section 2799A–10(a)(9) of the PHS Act require plans and issuers to report rebates, fees, and any other remuneration paid by drug manufacturers to the plan or coverage or its administrators or service providers, with respect to prescription drugs prescribed to participants, beneficiaries, or enrollees, as applicable, in the plan or coverage, and do not provide for the exclusion of bona fide service fees or any other fees. However, the Departments recognize that bona fide service fees may not always be intended to directly affect the cost or utilization of specific prescription drugs, and generally are not passed through to plans and issuers or to participants, beneficiaries, and enrollees. Therefore, the Departments will require reporting of only the total amount of bona fide service fees, but will not require these fees to be reported separately for each therapeutic class or for each drug on the top 25 list. This approach will help reduce compliance burden by enabling plans, issuers, TPAs, and PBMs to leverage some of the reporting capabilities they have already built to meet the requirements of section 1150A of the Social Security Act, which requires QHP issuers, Medicare Advantage Organizations offering plans with Medicare Part D, and Part D plan sponsors and PBMs that manage prescription drug coverage under contracts with these entities to report certain prescription drug benefit and rebate information to HHS and to exclude bona fide service fees in such reporting. A number of commenters urged the Departments to exclude drug manufacturer cost-sharing assistance to participants, beneficiaries, and enrollees, such as coupons and copay cards, from the definition of VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 prescription drug rebates because these amounts are not credited to the plan or coverage or its administrators or service providers. The Departments agree with this view, and in these interim final rules, the definition of prescription drug rebates and other price concessions excludes drug manufacturer costsharing assistance provided to participants, beneficiaries, or enrollees, as applicable. However, to the extent these amounts impact total annual spending by health plans or issuers, or by participants, beneficiaries, and enrollees, these interim final rules include drug manufacturer cost-sharing assistance in the definition of ‘‘total annual spending,’’ as discussed in more detail later in this section of this preamble. Dosage Unit. In these interim final rules, the term ‘‘dosage unit’’ means the smallest form in which a pharmaceutical product is administered or dispensed. Common dosage units include a pill, tablet, capsule, ampule, or measurement of grams or milliliters.20 Premium Amount. In these interim final rules, the term ‘‘premium amount’’ with respect to individual health insurance coverage and fully-insured group health plans has the meaning given to the term ‘‘earned premium’’ in 45 CFR 158.130, excluding the adjustments specified in 45 CFR 158.130(b)(5), which currently encompass payments and receipts related to the risk adjustment program that would not be relevant for purposes of the section 204 data submissions. Several commenters responding to the RFI requested that the Departments clarify how premiums must be reported for self-funded plans or recommended the use of premium equivalents to ensure consistent reporting between fully-insured and self-funded plans. To accurately capture the concept of premiums and the full costs of maintaining health coverage with respect to self-funded group health plans and other arrangements that do not rely exclusively or primarily on premiums, in these interim final rules, the term ‘‘premium amount’’ with respect to these plans includes premium equivalent amounts that represent the total cost of providing and maintaining coverage, such as the cost of claims, administrative costs, and stop-loss premiums. Reporting Entity. In these interim final rules, the term ‘‘reporting entity’’ 20 This definition of the term ‘‘dosage unit ’’ is used only for purposes of these interim final rules and is not intended to reflect or suggest any such definition or characterization of this term by FDA. PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 66669 means an entity that submits some or all of the information required under these interim final rules to the Departments with respect to a plan or issuer. The term also includes entities, other than plans and issuers, that submit the information on behalf of plans and issuers, as allowed by these interim final rules. Many commenters responding to the RFI regarding potential types of reporting entities requested clarification as to which entities are responsible for section 204 data submissions. Commenters generally indicated that plans and issuers expect that issuers and TPAs will report the information on behalf of most group health plans, including selffunded group health plans. Therefore, the Departments are allowing multiple types of reporting entities to submit the required information to provide plans and issuers with flexibility and to reduce administrative burdens. Some commenters requested that the Departments require TPAs and PBMs to report the information to or on behalf of self-funded group health plans. Although the Departments understand that these entities will make the section 204 data submissions on behalf of most self-funded group health plans in the vast majority of cases, the Departments note that section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act make plans and issuers responsible for providing the required information to the Departments. Therefore, the Departments do not require TPAs and PBMs to submit the information. In addition, many commenters urged the Departments to design a data collection system that would allow multiple reporting entities to submit different subsets of the required information with respect to the same plan or issuer. Commenters advised that a single reporting entity may not possess all of the information required to be reported under section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act. For example, plans and issuers indicated that a significant amount of information on prescription drug rebates is generally maintained primarily by PBMs, while other information is only known to plan sponsors, issuers, and TPAs. Commenters also advised that a segmented data collection system would reduce compliance burden by reducing the need for the reporting entities to transfer the data among themselves before submitting it to the Departments. The Departments intend to build a data collection system that will allow multiple reporting entities to submit E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 66670 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations different subsets of the required information with respect to the same plan or issuer. Total Annual Spending. In these interim final rules, the term ‘‘total annual spending’’ means incurred claims, as that term is defined in 45 CFR 158.140, excluding the adjustments specified in 45 CFR 158.140(b)(1)(i), 45 CFR 158.140(b)(2)(iv), and 45 CFR 158.140(b)(4), and including cost sharing but net of prescription drug rebates, fees, and other remuneration. Consistent with the definition in 45 CFR 158.140, plans and issuers must calculate the components of incurred claims based on claims incurred during the reference year and paid through March 31 of the year immediately following the reference year. The adjustments specified in 45 CFR 158.140(b)(2)(iv) currently encompass claims payments recovered through fraud reduction efforts and thus do not constitute spending, while the adjustments specified in 45 CFR 158.140(b)(4) currently encompass payments and receipts related to the risk adjustment program that would not be relevant for purposes of the section 204 data submissions. The adjustments specified in 45 CFR 158.140(b)(1)(i) currently encompass prescription drug rebates and other price concessions as that term is defined in 45 CFR 158.103. However, the definition of prescription drug rebates, fees, and other remuneration adopted in these interim final rules differs in several ways from the definition of prescription drug rebates and other price concessions in 45 CFR 158.103. Similar to the definition in 45 CFR 158.140, total annual spending with respect to prescription drugs means the spending net of prescription drug rebates, fees, and other remuneration, as that term is defined in these interim final rules, in lieu of the adjustments specified in 45 CFR 158.140(b)(1)(i) for prescription drug rebates and other price concessions, as that term is defined in 45 CFR 158.103. The Departments are choosing this definition of incurred claims to be generally consistent with the financial reporting requirements in the MLR data collection under 45 CFR part 158, which will reduce compliance burdens for issuers and TPAs. Further, defining ‘‘total annual spending’’ to mean spending net of prescription drug rebates, fees, and other remuneration will enable the Departments to undertake more meaningful and accurate comparisons of the costs of different prescription drugs, by capturing the actual costs for different plans and issuers, as well as for the VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 participants, beneficiaries, and enrollees, as applicable, of different plans and issuers. In addition, as noted earlier in this section of this preamble regarding the definition of ‘‘prescription drug rebates, fees, and other remuneration,’’ a number of commenters that responded to the RFI urged the Departments to exclude drug manufacturer cost-sharing assistance to participants, beneficiaries, and enrollees, such as coupons and copay cards, from the definition of prescription drug rebates. Nonetheless, many commenters also urged the Departments to collect information regarding drug manufacturer costsharing assistance, particularly to the extent this assistance is excluded from the annual limitation on cost sharing, while a few commenters opposed collection of such information. The Departments note that section 9825(a)(7)(B) of the Code, section 725(a)(7)(B) of ERISA, and section 2799A–10(a)(7)(B) of the PHS Act direct plans and issuers to report information on prescription drug spending by the plan or coverage and by participants, beneficiaries, and enrollees, as applicable. To the extent drug manufacturer cost-sharing assistance reduces spending by the health plan or coverage or by participants, beneficiaries, and enrollees, and to the extent information regarding the amount of these reductions is available to plans, issuers, their administrators, or their service providers such as PBMs (for example, when the drug manufacturer cost-sharing assistance is excluded from the annual limitation on cost sharing) and thus can be reported to the Departments, the Departments intend to collect data on these reductions separately and incorporate such reductions into the analysis conducted for the section 204 public report. The Departments seek comment on these definitions, including whether other terms should be defined. C. Reporting Requirements 1. Reporting Requirements Related to Prescription Drug and Health Care Spending (26 CFR 54.9825–4T, 29 CFR 2590.725–2, and 45 CFR 149.720) a. General Requirement Section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A– 10(a) of the PHS Act require plans and issuers to submit annually to the Departments certain information on prescription drug and health care spending, premiums, and enrollment under the plan or coverage. This general requirement is being codified at 26 CFR PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 54.9825–4T(a), 29 CFR 2590.725–2(a), and 45 CFR 149.720(a). b. Timing and Form of Report Section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A– 10(a) of the PHS Act require plans and issuers to provide the first section 204 data submissions to the Departments not later than 1 year after the date of enactment of the CAA, which would be December 27, 2021, with respect to the plan or coverage in the previous plan year, and by June 1 of each year thereafter. In these interim final rules, consistent with the discussion in section II.A of this preamble regarding the definition of ‘‘reference year,’’ the Departments interpret these statutory provisions to require plans and issuers to submit calendar year 2020 information by December 27, 2021, calendar year 2021 information by June 1, 2022, calendar year 2022 information by June 1, 2023, and so forth. Therefore, these interim final rules provide that the report for the 2020 reference year must be submitted to the Secretaries of the Treasury, Labor, and HHS (Secretaries of the Departments) by December 27, 2021, and that beginning with the 2021 reference year, the report for each reference year is due by June 1 of the year following the reference year. These interim final rules also require that the report must be submitted in the form and manner prescribed jointly by the Secretaries of the Departments. These requirements are being codified at 26 CFR 54.9825–4T(b), 29 CFR 2590.725– 2(b), and 45 CFR 149.720(b). Stakeholders expressed significant concerns about the feasibility of complying with the data submission deadlines specified in the statute. Specifically, stakeholders explained that they would need between 6 months to a year to comply with the reporting requirements after: (1) These interim final rules are issued; (2) technical guidance is provided by the Departments (such as instructions for the information collection instrument); and (3) the specifications for the data collection system are published by the Departments. Stakeholders explained that they would need this time to modify contractual agreements to enable disclosure and transfer of the required data between various reporting entities; to develop internal processes and procedures; and to implement the identification, compilation, preparation, and validation of the required data. Stakeholders further noted that they are concurrently implementing measures to comply with numerous other complex requirements and near-term deadlines imposed by the other provisions in the E:\FR\FM\23NOR2.SGM 23NOR2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations No Surprises Act and Title II of Division BB of the CAA, as well as the Transparency in Coverage final rule.21 As noted in FAQs about Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 49, published by the Departments on August 20, 2021, the Departments recognize the significant operational challenges that regulated entities may face in meeting the initial deadlines for the section 204 data submissions.22 Accordingly, the Departments are exercising discretion to defer enforcement in connection with the December 27, 2021 and the June 1, 2022 deadlines for the section 204 data submissions for the 2020 and 2021 reference years, respectively. More specifically, the Departments will not initiate enforcement action against a plan or issuer that does not report the required information by the first statutory deadline for reporting on December 27, 2021 or the second statutory deadline for reporting on June 1, 2022, and that instead submits the section 204 data submissions for the 2020 and 2021 reference years by December 27, 2022.23 However, the Departments strongly encourage plans and issuers to start working to ensure that they are in a position to be able to report the required information with respect to the 2020 and 2021 reference years by December 27, 2022. The Departments further encourage plans and issuers that are able to submit the required information by either the December 27, 2021 or June 1, 2022 statutory deadlines to do so. A number of commenters responding to the RFI additionally recommended that the Departments allow for a longer 21 85 FR 72158 (Nov. 12, 2020). about Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 49 (Aug. 20, 2021), Q12, available at https://www.cms.gov/CCIIO/Resources/ Fact-Sheets-and-FAQs/Downloads/FAQs-Part49.pdf. 23 Under section 2723 of the PHS Act, states have the opportunity to be the primary enforcers of section 2799A–10 of the PHS Act with respect to health insurance issuers. However, on September 16, 2021, the Departments and OPM published a proposed rule entitled, Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement (86 FR 51730), in which HHS proposed to have direct enforcement authority for newly enacted provisions of the PHS Act that require health insurance issuers to submit certain information to HHS or the Departments, including section 2799A–10 of the PHS Act, unless the state notifies HHS of its intent to enforce. HHS solicited comment on this approach. Public comments on this proposed rule were due by October 18, 2021. HHS is considering public comments and intends to address the issue of enforcement of section 2799A–10 of the PHS Act enforcement in the Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement final rule. lotter on DSK11XQN23PROD with RULES2 22 FAQs VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 run-out period for prescription drug claims and rebates than allowed by the annual June 1 statutory deadline. Some commenters therefore recommended that the Departments establish regular reporting deadlines of between 4 and 18 months after the end of the reference year. The Departments recognize that longer run-out periods could lead to the submission of more accurate data, but note that section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act prescribe the annual reporting deadline of June 1. The Departments further note that the deadline for the section 204 data submissions must balance the need for accuracy with the need for timely access to the data and the statutory deadlines for the biannual section 204 public report. The Departments are confident that regulated entities will be able to produce reasonably accurate estimates of the payable and receivable prescription drug rebate, fee, and other remuneration amounts by the June 1 statutory deadlines, similar to how issuers and other reporting entities currently determine such amounts for other federal and state financial reporting purposes. However, to ensure that the Departments receive complete and accurate data and are able to evaluate the reliability of the estimates and trends, the Departments will also collect restated amounts for prescription drug rebates, fees, and other remuneration for the preceding reference year. c. Transfer of Business To capture meaningful and accurate information required under section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act with respect to group or individual health insurance coverage provided by an issuer, these interim final rules require issuers that acquire a line or block of business from another issuer during a reference year to submit the required information and report for the acquired business, including for the part of the reference year that was prior to the acquisition. This requirement mirrors the existing requirements for issuers to report the premium, claims, and other expenditures with respect to purchased business for MLR data reporting purposes in 45 CFR 158.110(c). This requirement is being codified at 26 CFR 54.9825–4T(c), 29 CFR 2590.725–2(c), and 45 CFR 149.720(c). The sale or transfer of blocks of policies between issuers is a common practice in the health insurance industry and could lead to inconsistencies in the reporting required PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 66671 under section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act. For example, if part of the data for a given reference year with respect to a block of business were reported by the selling issuer, and the other part was reported by the acquiring issuer, the split reporting could result in distortions and inconsistencies in the list of the top 50 most frequently dispensed brand prescription drugs, the report on the impact of cost-sharing amounts, the report on average monthly premium amounts, and other required data elements. The Departments seek comment on whether these interim final rules should be amended through future rulemaking to require reporting of any data elements that would address the impact of mergers, splits, and similar transactions on prescription drug costs to the extent such transactions increase market concentration. d. Reporting Entities and Special Rules To Prevent Unnecessary Duplication As discussed in section II.B of this preamble regarding the definition of ‘‘reporting entity,’’ the Departments are allowing plans and issuers to satisfy their reporting obligations under these interim final rules by having third parties, such as issuers, TPAs, or PBMs, submit some or all of the required information on their behalf, provided a plan or issuer enters into a written agreement with the third party that is providing the information on its behalf in accordance with these interim final rules. The Departments expect that it will be rare for group health plans to report the required information on their own, but nothing in these interim final rules prohibits them from doing so. For fully-insured group health plans, these interim final rules at 26 CFR 54.9825–4T(d)(1), 29 CFR 2590.725– 2(d)(1), and 45 CFR 149.720(d)(1) provide that, to the extent coverage under a group health plan consists of group health insurance coverage, the plan may satisfy the section 204 data submission requirements if the plan requires the health insurance issuer offering the coverage to report the required information in compliance with these interim final rules, pursuant to a written agreement. Under this provision, if the issuer fails to report the required information, then the issuer, not the plan, violates the reporting requirements. For both fully-insured and self-funded group health plans, as well as health insurance issuers offering group or individual health coverage, these interim final rules at 26 CFR 54.9825– 4T(d)(2), 29 CFR 2590.725–2(d)(2), and E:\FR\FM\23NOR2.SGM 23NOR2 66672 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations 45 CFR 149.720(d)(2) provide that the plan or issuer may also satisfy the section 204 data submission requirements with respect to the required information that the plan or issuer, as applicable, requires another party (such as another issuer, a PBM, a TPA, or other third party) to report in compliance with these interim final rules, pursuant to a written agreement. Under this provision, if the third-party reporting entity fails to report the required information, the plan or issuer violates the reporting requirements. The Departments solicit comment on this approach. 2. Required Information (26 CFR 54.9825–6T, 29 CFR 2590.725–4, and 45 CFR 149.740) lotter on DSK11XQN23PROD with RULES2 a. General Information The provisions of these interim final rules that address the general information that plans and issuers must submit for each plan or coverage at the plan or coverage level are being codified at 26 CFR 54.9825–6T(a), 29 CFR 2590.725–4(a), and 45 CFR 149.740(a). Plans and issuers must ensure that the information they report, or the information that is reported on their behalf, includes identifying information at the plan or coverage level, such as name and Federal Employer Identification Number (FEIN) and other relevant identification numbers, for plans, issuers, plan sponsors, and any other reporting entities. Plan- and coverage-level identifying information is necessary for the Departments to verify receipt of data from all plans and issuers subject to the section 204 data submission requirements. The identifying information will also allow the Departments to ensure that reporting entities do not submit duplicate information, and that different reporting entities do not reflect the data of the same health plan or coverage in different market segments when a plan or issuer engages multiple reporting entities to report information on its behalf. For example, if a self-funded group health plan engages a TPA to report health care spending and a PBM to report prescription drug spending, the Departments will need to verify that both reporting entities reported the data and included the data for the plan in the appropriate market segment. The identifying information will further enable the Departments to crossreference the data to other data submitted by plans and issuers to the Departments, such as the MLR data submitted by issuers to HHS and the Form 5500 Annual Returns/Reports of Employee Benefit Plan data submitted VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 by group health plans to DOL and the Department of the Treasury. In addition, plans and issuers must ensure that the information they report, or that is reported on their behalf, includes the following data elements, which are required by section 9825(a)(1)–(3) of the Code, section 725(a)(1)–(3) of ERISA, and section 2799A–10(a)(1)–(3) of the PHS Act, at the plan level, regardless of whether they submit the other required information at the aggregate level, as described in section II.C.3. of this preamble: (1) The beginning and end dates of the plan year that ended on or before the last day of the reference year; (2) the number of participants, beneficiaries, and enrollees, as applicable, covered on the last day of the reference year; and (3) each state in which the plan or coverage is offered. The number of participants, beneficiaries, and enrollees, as applicable, can be measured in multiple ways, such as the average number over the course of a year, or a number at a point in time, such as at the beginning or end of the year, all of which convey different and valuable information. To ensure data consistency, these interim final rules require plans and issuers to report at the plan level the number of participants, beneficiaries, and enrollees, as applicable, covered only on the last day of the reference year. This approach will provide the Departments with the most recent information regarding enrollment at the plan level. To reduce the reporting burdens, these interim rules require plans and issuers to report the life-years attributable to the participants, beneficiaries, and enrollees, as applicable, over the course of the reference year only in total, at the state and market segment aggregate level, as described in section II.C.3. of this preamble. This approach will provide enrollment metrics that are most relevant to the other data elements collected at the aggregate level and will enable the Departments to analyze trends such as average annual spending per person. Issuers subject to MLR reporting requirements under 45 CFR part 158 will be able to leverage the lifeyears they compile at the state and market segment level for MLR reporting purposes. In accordance with the requirements in section 9825(b) of the Code, section 725(b) of ERISA, and section 2799A– 10(b) of the PHS Act regarding the treatment of plan-specific information in the section 204 public report, the Departments will not publicly disclose this information in a manner by which any plan can be identified. PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 b. Health Care Spending Section 9825(a)(7) of the Code, section 725(a)(7) of ERISA, and section 2799A– 10(a)(7) of the PHS Act require plans and issuers to report the total annual spending on health care services, broken down by the types of cost, including: (1) Hospital costs; (2) health care provider and clinical service costs, for primary care and specialty care separately; (3) costs for prescription drugs; and (4) other medical costs, including wellness services. For prescription drug spending, plans and issuers must report separately the costs incurred by the plan or coverage and the costs incurred by participants, beneficiaries, and enrollees, as applicable. The provisions related to these requirements are being codified at 26 CFR 54.9825–6T(b)(4) through (5), 29 CFR 2590.725–4(b)(4) through (5), and 45 CFR 149.740(b)(4) through (5). Stakeholders requested that the Departments provide specific instructions for which expenses must be reported in each category. Several commenters responding to the RFI made technical suggestions regarding how the Departments should specify these expense categories. These interim final rules set forth general requirements, and the Departments intend to provide detailed technical guidance in the instructions to the information collection instrument regarding reporting by health care service type that aligns with these general requirements and provides examples of the costs that should be reported in each category. To promote consistency and reduce the reporting burden, the Departments may leverage specific data elements used in the MLR Annual Reporting Form and the Unified Rate Review Template that issuers file with HHS.24 The Departments solicit comments on the use of MLR and rate review definitions of health care spending cost elements. Many commenters responding to the RFI urged the Departments to exclude prescription drugs covered under the hospital or medical benefit from the section 204 data submissions due to the complexity of obtaining these data, longer run-out periods associated with these drugs, and differences in the relevant pricing mechanisms and underlying cost drivers (such as different supply chains and procurement mechanisms). Commenters 24 See, e.g., https://www.cms.gov/CCIIO/ Resources/Forms-Reports-and-Other-Resources/ Downloads/2019-MLR-Form-Instructions.pdf and https://www.cms.gov/CCIIO/Resources/FormsReports-and-Other-Resources/Downloads/URR_ v5.3-instructions.pdf. E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations additionally noted that these drugs may be subject to different cost-sharing requirements than drugs dispensed by retail or mail-order pharmacies, and may present consumers with fewer opportunities to choose among drugs. The Departments acknowledge these concerns, but note that section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act do not create an exemption for prescription drugs covered under a plan’s or coverage’s hospital or medical benefit. The Departments further note that prescription drugs covered under a hospital or medical benefit constitute a significant proportion of the total prescription drug spending in the U.S., and include some of the more costly drugs. Therefore, these interim final rules require reporting of the total annual spending on prescription drugs administered in a hospital, clinic, provider’s office, or other provider setting and covered under the hospital or medical benefit of a plan or coverage (which may be a subset of, and already reported with, the total spending on hospital or other medical costs), separately from the total annual spending on drugs covered under the pharmacy benefit of a plan or coverage. Separate reporting of spending on drugs covered under the pharmacy benefit and on drugs covered under the hospital or medical benefit will assist the Departments in evaluating prescription drug trends with respect to the setting in which the drugs are administered. However, in recognition of stakeholders’ concerns regarding the compliance burdens associated with reporting information on drugs covered under the hospital or medical benefit, these interim final rules do not, at this time, require plans and issuers to report data elements other than total annual spending, as required under section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act, such as the top 50 and top 25 lists, for drugs covered under the hospital or medical benefit. Instead, these data elements should reflect only the drugs covered under the pharmacy benefit. Once the Departments begin to receive the section 204 data submissions and have the opportunity to evaluate the prescription drug data, the Departments will further review and analyze the merits of this approach and may modify the provisions regarding the information to be collected on drugs covered under the hospital or medical benefit in future rulemaking. Finally, the Departments recognize that for drugs covered under the hospital or medical benefit, the cost of the prescription drugs included in VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 some bundled payment arrangements and other alternative payment arrangements may not be readily available to the plan or issuer. In these situations, the plan or issuer is required to separately report the total annual spending attributable to the prescription drugs included in the bundle or other alternative payment arrangement in good faith and to the best of its ability. The Departments seek comment on all aspects of collecting only some of the information on drugs covered under the hospital or medical benefit. The Departments also seek comment on whether reporting flexibilities for drugs included in bundled and other alternative payment arrangements may contribute to prescription drug spending increases or facilitate anti-competitive practices. These interim final rules require plans and issuers to separately report total annual spending on health care services by the plan or coverage, and total annual spending on health care services by participants, beneficiaries, and enrollees, as applicable. Collecting total annual spending on health care services at this level of detail will ensure consistency with the other data elements required by section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act, such as total annual spending on prescription drugs and average monthly premium amounts, which are collected separately with respect to a plan or coverage and with respect to participants, beneficiaries, and enrollees, as applicable. Consistency across the data elements will enhance the usability of the data and enable the Departments to conduct meaningful data analysis. These interim final rules additionally require plans and issuers to report, for each drug in the top 50 and top 25 lists, as well as for each therapeutic class, prescription drug spending and utilization, including: (1) Total annual spending by the plan or coverage; (2) total annual spending by participants, beneficiaries, and enrollees enrolled in the plan or coverage, as applicable; (3) the number of participants, beneficiaries, and enrollees, as applicable, with a paid prescription drug claim; (4) total dosage units dispensed; and (5) the number of paid claims. The Departments intend to collect cost-sharing amounts to obtain the total annual spending by participants, beneficiaries, and enrollees, as applicable. Inclusion of identical data elements in each of the top 50 and top 25 lists and the therapeutic class list will streamline reporting and reduce compliance PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 66673 burdens. Collecting these amounts for each of the top 50 and top 25 lists, as well as for each therapeutic class, will enable the Departments to include in the section 204 public report an analysis regarding the overlap (or lack thereof) and the causes of any such overlap, among the lists of the most frequently dispensed drugs, the most costly drugs, the drugs with the greatest cost increases, and the drugs generating the greatest amount of rebates. This analysis may include analysis of the differences and similarities in these five spending and utilization data elements across drugs in the top 50, top 25, and the therapeutic class lists. This analysis may further include analysis of how prescription drug spending increases are distributed among plans and issuers as compared to the participants, beneficiaries, and enrollees. The total annual spending on prescription drugs and total dosage units dispensed will enable the Departments to conduct the required analysis of prescription drug pricing trends for purposes of the section 204 public report, and to compare trends across multiple data sources as well as between publicly and privately-sponsored health coverage. The number of paid claims and the unique number of individuals with paid prescription drug claims will allow the Departments to compute average per person cost sharing, and evaluate the average impact, if any, of prescription drug spending increases and rebates on participants, beneficiaries, and enrollees, as well as analyze whether spending increases are driven by increases in drug prices or utilization. The Departments seek comment on the use of identical prescription drug data elements for each of the top 50 and top 25 lists and the therapeutic class list. c. Premium Amounts Section 9825(a)(8) of the Code, section 725(a)(8) of ERISA, and section 2799A– 10(a)(8) of the PHS Act require plans and issuers to report the average monthly premium paid by employers on behalf of participants, beneficiaries, and enrollees, as applicable, as well as the average monthly premium paid by participants, beneficiaries, and enrollees, as applicable. The provisions related to this requirement are being codified at 26 CFR 54.9825–6T(b)(6), 29 CFR 2590.725–4(b)(6), and 45 CFR 149.740(b)(6). Stakeholders expressed concerns about this requirement. Employers expressed concern that reporting this information would be burdensome and suggested that the Departments utilize the information regarding the taxdeductible portion of premiums shown E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 66674 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations on the Forms W–2. Issuers and TPAs expressed concern that information regarding the employer and participant, beneficiary, and enrollee contributions to premiums is currently only known to employers, and that it would be timeconsuming and burdensome for issuers and TPAs to obtain this information from employers. Issuers and TPAs also anticipated that some employers may not want to disclose this information to issuers and TPAs. Issuers and TPAs requested that the Departments allow them to report estimated average monthly premium amounts based on a sample of employers or based on publicly available survey data. The Departments acknowledge these concerns but note that plans and issuers are required to report this information under section 9825(a)(8) of the Code, section 725(a)(8) of ERISA, and section 2799A–10(a)(8) of the PHS Act. Furthermore, the Departments are of the view that the information on the trends in the employer versus employee contributions to premium amounts is integral to analyzing the extent to which the impact of prescription drug costs on premiums affects employers versus employees. Plans, employers, participants, beneficiaries, and enrollees experience premium increases driven by increases in prescription drug spending or, conversely, premium decreases driven by prescription drug rebates, proportionately to their share of total premium amounts, as well as the changes in this proportion over time. Existing data on premium amounts paid by employers versus by participants, beneficiaries, and enrollees are not complete for each state and market segment defined in these interim final rules. Furthermore, premium information shown on the Forms W–2 includes information related to plans that are not subject to these interim final rules (such as account-based group health plans). Therefore, these interim final rules require plans and issuers to submit the actual average monthly premium amounts separately with respect to payments by employers on behalf of participants, beneficiaries, and enrollees, and payments by participants, beneficiaries, and enrollees. For purposes of these interim final rules, to accurately capture premium amounts with respect to all types of group health plan sponsors, the average monthly premium amount paid by employers on behalf of participants, beneficiaries, and enrollees, as applicable, includes premium amounts paid by plan sponsors that do not directly employ individuals (for example, employee organizations or employer groups and associations acting VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 in the interest of their members and considered an ‘‘employer’’ within the meaning of section 3(5) of ERISA) but that nonetheless make payments of premiums or premium equivalents on behalf of participants, beneficiaries, and enrollees, as applicable. These interim final rules also require plans and issuers to report total annual premium amounts and the total number of life-years. Section 9825(a)(9)–(10) of the Code, section 725(a)(9)–(10) of ERISA, and section 2799A–10(a)(9)— (10) of the PHS Act require plans and issuers to report any impact on premiums and reductions in premiums and out-of-pocket costs associated with rebates, fees, or other remuneration paid by drug manufacturers to the plan or coverage or its administrators or service providers. In addition, the section 204 public report required by section 9825(b) of the Code, section 725(b) of ERISA, and section 2799A–10(b) of the PHS Act must include information on the role of prescription drug costs in contributing to premium increases or decreases. Collecting total annual premium amount information will provide the Departments with important context to understand the impact of rebates, fees, and other remuneration. For example, if the impact of rebates, fees, and other remuneration resulted in a premium decrease of $100,000 for the reference year, it is important for the Departments to know whether the reduction is based on total annual premium amounts of $1,000,000 or $10,000,000. Similarly, collection of the total number of life-years will enable the Departments to estimate the combined average premium, as well as to estimate an average impact at the per person level for the participants, beneficiaries, and enrollees, as applicable, whose premiums or out-of-pocket costs may be affected by prescription drug costs and prescription drug rebates, fees, and other remuneration. The Departments seek comment on all aspects of the data submission requirements regarding premium amounts. d. Top 50 Drug Lists Section 9825(a)(4)–(6) of the Code, section 725(a)(4)–(6) of ERISA, and section 2799A–10(a)(4)—(6) of the PHS Act require plans and issuers to report, respectively: (1) The 50 brand prescription drugs most frequently dispensed by pharmacies for claims paid by the plan or coverage, and the total number of paid claims for each such drug; (2) the 50 most costly prescription drugs with respect to the plan or coverage by total annual spending, and the annual amount spent PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 by the plan or coverage for each such drug; and (3) the 50 prescription drugs with the greatest increase in plan or coverage expenditures over the plan year preceding the plan year that is the subject of the report, and, for each such drug, the change in amounts expended by the plan or coverage in each such plan year. The provisions related to these requirements are being codified at 26 CFR 54.9825–6T(b)(1) through (3), 29 CFR 2590.725–4(b)(1) through (3), and 45 CFR 149.740(b)(1) through (3). In accordance with these interim final rules, the top 50 drugs must be determined separately for each aggregation level described in 26 CFR 54.9825–5T, 29 CFR 2590.725–3, and 45 CFR 149.730, as described in section II.C.3 of this preamble. For example, if an issuer acts as the reporting entity, has health insurance business or acts as a TPA in multiple states and market segments, and aggregates the data at the state and market segment level, then the issuer must prepare the three top 50 lists for each market segment within each state. Each of these lists must be based on the combined experience of all plans or policies included in the relevant aggregation. The Departments expect that it will be rare for self-funded plans to report these lists on their own using their own claims experience to determine the top 50 drugs, but to the extent a self-funded plan does so, any TPA that administers benefits for the plan should not include that plan’s experience in the TPA’s aggregated report. As noted in section II.C.2.b. of this preamble, at this time, to simplify reporting and analysis and to reduce the reporting burden, these interim final rules require the information on the top 50 lists to include only the drugs covered under the pharmacy benefit of a plan or coverage, and exclude drugs administered in a hospital, clinic, provider’s office, or other provider setting and covered under the hospital or medical benefit of a plan or coverage. Stakeholders requested that drugs covered under the hospital or medical benefit be excluded from the section 204 data submissions because these drugs may have different supply chains and procurement mechanisms, be subject to different pricing mechanisms and costsharing requirements than drugs dispensed by retail or mail-order pharmacies, and may present consumers with fewer opportunities to choose among drugs. As a result, the dispensing frequency, total spending, and prescription drug rebates, which are used to rank the top 50 and top 25 lists, are likely to be different for drugs covered under the pharmacy benefit and E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations for drugs covered under the hospital or medical benefit. Consequently, combining drugs covered under the pharmacy benefit with the hospital or medical benefit could lead to distorted ranking of the top 50 lists. Commenters responding to the RFI further pointed to the operational challenges of combining the data on drugs covered under the pharmacy benefit and the hospital or medical benefit to produce the top 50 lists, given that these data come from separate sources and may be reported by different reporting entities. The Departments will continue to review the validity of this approach and whether it adequately fulfills the objectives of section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A– 10(a) of the PHS Act, and the Departments may modify the reporting requirements for the top 50 lists to include drugs covered under the hospital or medical benefit, or to require separate top 50 lists for drugs covered under the pharmacy benefit and under the hospital or medical benefit, in future rulemaking. The Departments solicit comment on this approach. Top 50 Most Frequently Dispensed Brand Prescription Drugs. Plans, issuers, and other reporting entities must determine the most frequently dispensed brand prescription drugs based on the total number of paid claims for prescriptions filled during the reference year for each drug. For each of the top 50 most frequently dispensed brand prescription drugs, the section 204 data submission must include the data elements listed in 26 CFR 54.9825–6T(b)(5), 29 CFR 2590.725–4(b)(5), and 45 CFR 149.740(b)(5) (required prescription drug data elements), which include: (1) Total annual spending by the plan or coverage; (2) total annual spending by participants, beneficiaries, and enrollees enrolled in the plan or coverage, as applicable; (3) the number of participants, beneficiaries, and enrollees, as applicable, with a paid prescription drug claim; (4) total dosage units dispensed; and (5) the number of paid claims. The rationale for collecting the required prescription drug data elements for each of the top 50 most frequently dispensed brand prescription drugs is described in section II.C.2.b. of this preamble. Top 50 Most Costly Drugs. Plans, issuers, and other reporting entities must determine the 50 most costly drugs based on total annual spending per drug. Total annual spending, as defined in these interim final rules and as described in section II.B. of this preamble, must be net of prescription drug rebates, fees, and other VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 remuneration and must include cost sharing as well as, to the extent available, drug manufacturer costsharing assistance. For each of the top 50 most costly drugs, the section 204 data submissions must include the required prescription drug data elements. The statute requires reporting of the top 50 most costly drugs by total annual spending with respect to the plan or coverage, which the Departments interpret to mean all spending under the plan or coverage, including both amounts spent by the plan or coverage as well as cost sharing and other amounts paid by participants, beneficiaries, and enrollees. The statute additionally requires reporting of the amounts spent only by the plan or coverage for each such drug. Because cost sharing generally corresponds to the difference between total annual spending and the amounts spent by the plan or coverage, the Departments chose to capture the amounts spent by the plan or coverage through requiring reporting of the total cost sharing paid under the plan or coverage. Reporting of total cost sharing will provide the Departments with information equivalent to that specified in the statute but will be more convenient for data analysis. The rationale for collecting the required prescription drug data elements for each of the top 50 drugs with the highest total annual spending is described in section II.C.2.b. of this preamble. Top 50 Drugs with the Greatest Increase in Expenditures. Plans, issuers, and other reporting entities must determine the top 50 drugs with the greatest increase in expenditures based on the dollar amount of the increase in total annual spending over the preceding year. The statute requires reporting of the top 50 drugs with the greatest year-over-year increase in plan expenditures, which the Departments interpret to mean all spending under the plan or coverage, including both amounts spent by the plan or coverage as well as cost sharing and other amounts paid by participants, beneficiaries, and enrollees. This interpretation is consistent with the interpretation of the reporting methodology for the top 50 most costly drugs. A number of commenters responding to the RFI recommended that the Departments define the increase in expenditures based on the absolute amount of the increase rather than the percentage increase because the former value would enable the Departments to analyze which drugs are driving the increases in total spending on prescription drugs and would provide PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 66675 the Departments a better sense of the magnitude of the increases in this spending. The Departments agree with this rationale. For each of the top 50 drugs with the greatest increase in expenditures, the section 204 data submissions must include: (1) The required prescription drug data elements for the year immediately preceding the reference year; and (2) the required prescription drug data elements for the reference year. The rationale for collecting the information on the year-over-year changes in the required prescription drug data elements for each of the top 50 drugs with the greatest increases in expenditures is described in section II.C.2.b. of this preamble. Only drugs that were approved for marketing and/ or issued an Emergency Use Authorization by FDA for the entire year immediately preceding the reference year and for the entire reference year should be included in this top 50 list.25 This approach will ensure that the cost increase is based on year-over-year changes and is not distorted by the inclusion of new drugs released in the market later in a calendar year. The Departments seek comment on all aspects of the data submission requirements regarding the top 50 drug lists. e. Prescription Drug Rebates, Fees, and Other Remuneration Section 9825(a)(9) of the Code, section 725(a)(9) of ERISA, and section 2799A– 10(a)(9) of the PHS Act require plans and issuers to report prescription drug rebates, fees, and any other remuneration paid by drug manufacturers to the plan or coverage or its administrators or service providers, with respect to prescription drugs prescribed to participants, beneficiaries, or enrollees, as applicable, in the plan or coverage. The statute requires these amounts to be reported for each therapeutic class of drugs, as well as for each of the 25 drugs that yielded the highest amount of rebates and other remuneration under the plan or coverage from drug manufacturers during the plan year.26 The provisions related to these requirements are being codified at 26 CFR 54.9825–6T(b)(7) through (9), 29 CFR 2590.725–4(b)(7) through (9), and 45 CFR 149.740(b)(7) through (9). 25 This includes an Emergency Use Authorization issued pursuant to section 564 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb–3) for an unapproved use of an otherwise-approved drug. 26 As discussed in section II.B. of this preamble, in this instance, the Departments are interpreting ‘‘plan year’’ to mean ‘‘reference year.’’ E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 66676 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations As discussed in section II.B. of this preamble regarding the definition of ‘‘prescription drug rebates, fees, and other remuneration,’’ the Departments intend to generally align the categories of rebates, fees, and other remuneration in the section 204 data submissions with the categories specified in the data collection requirements under the Exchange Establishment rule 27 and the PBM Transparency rule 28 to reduce compliance burdens by allowing reporting entities to leverage some of the reporting capabilities they have already built to meet the requirements of these other HHS rules. For consistency with the Exchange Establishment rule and the PBM Transparency rule, these interim final rules further require reporting of total prescription drug rebates, fees, and other remuneration with respect to amounts passed through to the plan or issuer, amounts passed through to participants, beneficiaries, or enrollees, as applicable, and amounts retained by the PBM. Similarly, consistent with the information collected under the Exchange Establishment rule and the PBM Transparency rule, these interim final rules require reporting of the difference between total amounts that the plan or issuer pays the PBM and total amounts that the PBM pays pharmacies. One commenter responding to the RFI opposed collection of the difference between total amounts that the plan or issuer pays the PBM and total amounts that the PBM pays pharmacies, as well as collection of other details regarding prescription drug rebates, fees, and other remuneration consistent with the Exchange Establishment rule and the PBM Transparency rule; however, the commenter also recommended using the same definition for prescription drug rebates, fees, and other remuneration as used in the Exchange Establishment rule and the PBM Transparency rule. In contrast, several other commenters expressed concern with the impact on the market participants and on prescription drug pricing of the difference between total amounts that the plan or issuer pays the PBM and total amounts that the PBM pays pharmacies, and recommended that the Departments collect this information. The Departments are of the view that collection of this information is integral to the Departments’ ability to analyze prescription drug reimbursements, pricing trends, and the impact of prescription drug rebates, fees, and other remuneration on premiums and cost sharing for purposes of developing 27 77 28 86 FR 18308 (Mar. 27, 2012). FR 24140 (May 5, 2021). VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 the section 204 public report. This information will inform the Departments’ analyses because, similar to prescription drug rebates, fees, and other remuneration, the difference between total amounts that the plan or issuer pays the PBM and total amounts that the PBM pays pharmacies is a factor that contributes to the differences between the payments for prescription drugs made by plans, issuers, enrollees, participants, and beneficiaries, and the portion of those payments captured by pharmacies and drug manufacturers, and thus impacts the cost of prescription drugs to plans, issuers, enrollees, participants, and beneficiaries. However, similar to bona fide service fees, these interim final rules provide for the submission of these amounts only in total and not at the drug or therapeutic class level. This approach will help reduce compliance burden by enabling plans, issuers, TPAs, and PBMs to leverage some of the reporting capabilities they have already built to meet the requirements of section 1150A of the Social Security Act, and will ensure that the information will be collected only to the extent that the Departments currently view that as necessary for their analysis. Last, the rationale for collecting the required prescription drug data elements for each therapeutic class and for each of the top 25 drugs that yielded the highest amount of rebates is described in section II.C.2.b. of this preamble. Section 9825(a)(9)–(10) of the Code, section 725(a)(9)–(10) of ERISA, and section 2799A–10(a)(9)—(10) of the PHS Act additionally require plans and issuers to report the impact of the prescription drug rebates, fees, and other remuneration from drug manufacturers on premiums and out-ofpocket costs. For internal consistency, these interim final rules capture the impact on out-of-pocket costs by requiring reporting of the impact of prescription drug rebates, fees, and other remuneration on cost sharing. A number of commenters responding to the RFI indicated that plans and issuers may not know or be able to quantify the impact of prescription drug rebates on premiums or cost sharing. These commenters recommended that the Departments allow plans and issuers to provide qualitative descriptions of how prescription drug rebates, fees, and other remuneration generally provide savings to participants, beneficiaries, and enrollees, instead of attempting to collect drug-level impact amounts. The Departments intend to design the information collection instrument in a manner that would enable plans and PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 issuers to provide both quantitative and qualitative information regarding the impact of prescription drug rebates on premiums and cost sharing. The Departments seek comment on all aspects of the data submission requirements regarding prescription drug rebates, fees, and other remuneration. 3. Aggregate Reporting (26 CFR 54.9825–5T, 29 CFR 2590.725–3, and 45 CFR 149.730) a. General Requirement Section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A– 10(a) of the PHS Act require plans and issuers to submit the information in section 204 data submissions to the Departments ‘‘with respect to the health plan or coverage.’’ Some of the information described in these statutory provisions pertains specifically to each group health plan, such as the beginning and end dates of the plan year, the number of participants, beneficiaries, and enrollees, as applicable, and each state where the plan or coverage is offered. However, the Departments are of the view that section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act do not strictly prescribe that every data element outlined in these provisions must be reported separately by each unique group health plan. After careful consideration of whether aggregate or plan-level information would be more appropriate to facilitate development of the section 204 public report as well as feedback received from stakeholders, the Departments have determined that plans and issuers (or other entities reporting on their behalf) may submit the majority of the information required under these interim final rules on an aggregate basis. The only plan-level information collected will be the following: (1) Identifying information for plans and issuers and other reporting entities; (2) the beginning and end dates of the plan year that ended on or before the last day of the reference year; (3) the number of participants, beneficiaries, or enrollees, as applicable, covered on the last day of the reference year; and (4) each state in which a plan or coverage is offered. There are several reasons for collecting the majority of the information in the section 204 data submissions on an aggregate basis. First, collecting aggregate data is necessary for the Departments to be able to draw conclusions about market trends for purposes of developing a meaningful and accurate section 204 public report. The Departments would E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations not be able to accurately combine planspecific top 50 lists to determine aggregate prescription drug trends within market segments, within states, and across the country. The Departments would not be able to accurately combine plan-specific top 50 lists because the statute only requires plans and issuers to report information for the top 50 drugs and not for all drugs. As a result, the Departments would not have access to the utilization and spending information for drugs that may not make the top 50 lists of every group health plan, but which may have higher combined utilization or spending across all group health plans than the drugs appearing on the plan-specific top 50 lists. Consequently, collection of plan-specific data could impair the Departments’ ability to comply with the statutory requirement to produce the section 204 public report on prescription drug reimbursement and pricing trends. As a simplified example of the problems with collecting planspecific data, suppose that the statute requires reporting of only the top 3 most frequently dispensed brand prescription drugs, rather than the top 50 drugs. Also, suppose that there is only one issuer offering two plans in a specific state and market segment. For Plan One, the four brand prescription drugs with the highest number of paid claims are Drug A with 100 claims, Drug B with 80 claims, Drug C with 75 claims, and Drug Z with 70 claims. For Plan Two, the four brand prescription drugs with the highest number of paid claims are Drug D with 110 claims, Drug E with 105 claims, Drug F with 90 claims, and Drug Z with 85 claims. If the Departments collected the top 3 brand prescription drugs at the plan level, Drug Z would be missing from the issuer’s submission because it is not in the top 3 list for either plan. However, if the issuer aggregated the data at the state and market segment level before submitting it, Drug Z would have 155 paid claims and the Departments would correctly identify it as the most frequently dispensed drug in this state and market segment. The inability to correctly identify trends in prescription drug reimbursements, pricing, and impact on premiums from the plan-specific data would inhibit the Departments’ ability to comply with the requirements in section 9825(b) of the Code, section 725(b) of ERISA, and 2799A–10(b) of the PHS Act to develop and issue a public report on these trends. Collecting aggregate data will significantly reduce the possibility of such scenarios. In addition, the data underlying the top 50 lists need to be of sufficient size VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 for the Departments to be able to draw conclusions about market trends for purposes of developing a meaningful and accurate section 204 public report. The majority of group health plans have a relatively small number of participants, beneficiaries, or enrollees. If the Departments were to collect the top 50 lists separately for each group health plan, most of these lists would be based on small sample sizes and consequently could provide a distorted view of the market. This is because plan-specific lists would tend to be driven by the utilization of specific participants, beneficiaries, or enrollees of a given plan, which may not be representative of the market and may obscure broader trends. For example, a top 50 list for a plan with five participants and beneficiaries may contain only two steroid drugs, both purchased by a single participant to treat a skin condition. These drugs would appear as the first and second drugs on this plan-specific list. The top 50 list for another small employer plan may contain only three drugs—two drugs used to treat a rare autoimmune disease of one participant, and another drug used to manage post-surgery pain of another participant—which would likewise appear as the first, second, and third drugs on that plan-specific list. However, neither of these plan-specific lists is likely to be representative of the broader market; and, as described in the preceding paragraph, the Departments would not be able to combine the data from plan-specific top 50 lists in the manner needed to arrive at accurate totals for any given drug across states, market segments, or the country. Another reason to collect aggregate data is to protect personally identifiable information and protected health information. Many comments received in response to the RFI stated that collection of plan-level data would raise significant privacy concerns because, as illustrated in the example above, it would not be difficult to discern which drugs and which claims were attributable to specific participants, beneficiaries, or enrollees in plan-level data. These comments argued that aggregate reporting would reduce the likelihood of collecting and transmitting personally identifiable information and protected health information, and thus the risk of inadvertent or inappropriate disclosure. The Departments share this concern and agree that aggregate reporting will better ensure that personally identifiable information and protected health information are protected from disclosure. Specifically, allowing aggregation of data will PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 66677 provide a larger population sample of participants, beneficiaries, or enrollees from which the data are drawn so that it is difficult to determine if a prescription drug or therapeutic class can be associated with a specific individual. In addition, HHS, which will collect the information on behalf of the Departments and OPM, intends to collect and maintain the information using information technology (IT) systems that are designed to meet all of the security standards protocols established under federal law or by HHS that are relevant to such information.29 The Departments and OPM will further analyze the collected information to evaluate whether additional steps may be taken to ensure consumer privacy. An additional reason to collect aggregate data is that prescription drug rebates, fees, and other remuneration generally are not negotiated separately for each plan; rather, they tend to be driven by sales volume and other considerations at the PBM level. Therefore, it is the Departments’ understanding that plan-specific prescription drug rebate data generally is rarely available. Consequently, planspecific lists of prescription drug rebates for each therapeutic class and for the top 25 drugs with the highest amount of rebates largely would be based on allocation calculations, and therefore plan-specific data would create little value beyond that created by aggregated reporting. Plan-specific lists might have some value for plans, but for purposes of the Departments’ analysis of the data for the section 204 public report, there is no compelling policy reason to require plans and issuers to engage in a complex and burdensome allocation exercise, particularly because lists based on allocation calculations would not provide useful information about any specific plan. Last, the overwhelming majority of commenters on the RFI encouraged the Departments to adopt an aggregate approach to data collection. They noted that an aggregate approach would be significantly less burdensome and urged the Departments to collect data at the highest possible aggregation level. They also raised similar concerns as those described earlier in this section of this 29 HHS’ enterprise-wide information security and privacy program was launched in FY 2003, to help protect HHS against potential IT threats and vulnerabilities. The program ensures compliance with federal mandates and legislation, including the Federal Information Security Management Act and the President’s Management Agenda. The HHS Cybersecurity Program plays an important role in protecting HHS’s ability to provide mission-critical operations. In addition, the HHS Cybersecurity Program is the cornerstone of the HHS IT Strategic Plan. E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 66678 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations preamble regarding small sample sizes, usability of plan-specific data, and disclosure of personally identifiable information and protected health information. In addition, stakeholders noted that some cost elements are not tracked separately for each group health plan. Some commenters did, however, identify potential benefits of planspecific reporting of data. One commenter noted the increased transparency that would result from plans receiving plan-specific information about prescription drugs from PBMs. The commenter also stated that plan-specific reporting would be more valuable for identifying trends than overly aggregated data. Other commenters noted that certain reporting requirements under section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act are plan-specific and asserted that aggregated reporting would present operational challenges if, for example, a TPA were the reporting entity for all of the required information and it serviced different types of plans but did not have access to all of the required information for each plan. One commenter had concerns about plans being held responsible for the TPA’s or PBM’s failure to accurately report aggregated data. The Departments are of the view that collection of aggregate data will substantially reduce the burdens for both the reporting entities and the federal government. The Departments estimate that reporting every data element separately for each group health plan would require plans and issuers to prepare and submit a combined total of several million reports. In contrast, reporting aggregate data would result in a combined total of approximately 2,000 reports, requiring plans and issuers to spend significantly less effort and fewer resources on calculations, validation, submission, and storage of the data while still providing a sufficiently large data pool from which to identify trends and variations in prescription drug use and costs. To the extent a TPA is the reporting entity for all of the required information for numerous plans but does not have access to all of the required information for each plan, it can either obtain it from the plan or require the plan to submit that information. As noted in this preamble, plans may need to revise their services agreements with TPAs to address liability for and the accuracy of the information that the TPA or PBM reports and the ways in which the plan can review such reporting to confirm its accuracy. VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 The smaller number of aggregate data reports submitted to the Departments would also reduce the Departments’ burden for collecting, storing, securing, and analyzing the data. For these reasons, these interim final rules require data to be aggregated in the section 204 data submissions for the reference year at the state and market segment levels. This general requirement is being codified at 26 CFR 54.9825–5T(a), 29 CFR 2590.725–3(a), and 45 CFR 149.730(a). Within each state and market segment, the data of fully-insured plans may be aggregated according to the issuer of the coverage provided to these plans or the FEHB carrier, as applicable, that acts as a reporting entity for these plans. The data of self-funded plans may be aggregated according to the TPA that acts as a reporting entity for these plans. The Departments are of the view that overall, aggregation at the reporting entity, state, and market segment level will capture statistics based on sufficiently large pools of underlying data while also providing a sufficient level of detail for the analysis and reporting required under section 9825(b) of the Code, section 725(b) of ERISA, and section 2799A–10(b) of the PHS Act, and is therefore the optimal aggregation level to enable the Departments to draw meaningful conclusions from the data. Aggregation at the state level will allow for the analysis of geographic variations in prescription drug trends. Aggregation at the market segment level will also allow for the analysis of variations in prescription drug trends among certain distinct populations subject to distinct plan and coverage design considerations, such as employees of small and large employers. Aggregation at the reporting entity level will allow for consistency in the data with respect to cost drivers such as negotiated rates for the provider networks used by a particular issuer or TPA, or the formulary design and prescription drug rebate agreements utilized by a particular PBM. For health insurance coverage, aggregation at the reporting entity, state, and market segment levels is also largely consistent with the aggregation rules for the MLR data collection in 45 CFR 158.120, which will minimize the health care spending reporting burden for issuers. The Departments are of the view that, at this time, the clear benefits of the aggregate data approach outweigh the potential drawbacks. However, the Departments solicit comment on the general use and the specific aspects of this data aggregation approach versus a plan-specific data collection approach. PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 In addition, after the Departments begin to receive section 204 data submissions and have the opportunity to evaluate the efficacy and adequacy of the aggregate data approach, the Departments will further review and analyze the merits of this approach and may modify the approach in future rulemaking if necessary or appropriate. b. Aggregation by Reporting Entity The requirements related to aggregation by reporting entity are being codified at 26 CFR 54.9825–5T(b), 29 CFR 2590.725–3(b), and 45 CFR 149.730(b). Specifically, 26 CFR 54.9825–5T(b)(1), 29 CFR 2590.725– 3(b)(1), and 45 CFR 149.730(b)(1) provide that if a reporting entity submits data on behalf of more than one group health plan in a state and market segment, the reporting entity may aggregate the data required in 26 CFR 54.9825–6T(b), 29 CFR 2590.725–4(b), and 45 CFR 149.740(b) for the group health plans for each market segment in the state. As discussed in sections II.C.3.a. and II.B. of this preamble, the Departments intend to make available a data collection system that will allow multiple reporting entities to submit different subsets of the required information for a single plan or issuer. These interim rules at 26 CFR 54.9825– 5T(b)(2)(i), 29 CFR 2590.725–3(b)(2)(i), and 45 CFR 149.730(b)(2)(i) provide that if multiple reporting entities submit the required data related to one or more plans or issuers in a state and market segment, the data submitted by each of these reporting entities may not be aggregated at a less granular level than the aggregation level used by the reporting entity that submits the data on total annual spending on health care services in 26 CFR 54.9825–6T(b)(4), 29 CFR 2590.725–4(b)(4), and 45 CFR 149.740(b)(4) on behalf of these plans or issuers. Under this approach, the data may not, for example, be aggregated at a less granular level than the aggregation level used by the issuer providing the coverage to fully-insured plans, the TPA acting as a reporting entity for selffunded plans, or the plan sponsor acting as a reporting entity for the self-funded plans it sponsors. For example, if a TPA is the reporting entity for the total annual spending on health care data for 20 self-funded plans in a state and market segment and aggregates the data of those plans, and a PBM is the reporting entity for the top 25 list for the same 20 self-funded plans, then the PBM must aggregate the data of only these 20 self-funded plans in the state and market segment to produce the top 25 list for these 20 self-funded E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations plans. If the PBM also serves as the top 25 list reporting entity for 30 other selffunded plans that utilize a different TPA for the section 204 data submission, then the PBM must additionally aggregate the data of only these 30 other self-funded plans in the state and market segment and produce a separate top 25 list for these 30 self-funded plans. However, the PBM cannot aggregate the data for all 50 self-funded plans to produce and submit a single top 25 list for the state and market segment. Conversely, a single data submission by a TPA may be associated with more than one corresponding data submission by several PBMs if the selffunded group health plans for which the TPA acts as a reporting entity do not all utilize the same PBM. Based on the Departments’ estimate, discussed in section V of this preamble, that 473 issuers and 205 TPAs, but only 66 PBMs, will be involved in making section 204 data submissions, the Departments estimate that it is highly likely that a single PBM would submit data that complement data submissions of many issuers and TPAs. As a result, if a PBM aggregated data across multiple issuers and TPAs, this could significantly reduce the consistency between the prescription drug and rebate data submitted by the PBM and the health care spending, premium, and enrollment data submitted by issuers and TPAs. However, based on the estimated number of issuers, TPAs, and PBMs, the Departments anticipate that it is significantly less likely that multiple PBMs would submit data that complement the data submission of a single issuer or TPA. Therefore, the Departments are of the view that the disadvantage of the modest inconsistencies that may result from the approach adopted in these interim final rules is outweighed by the benefit of reduced compliance burdens. The Departments solicit comment on this aggregation approach. These interim final rules additionally provide that the Departments may specify in guidance alternative or additional aggregation methods for data submitted by multiple reporting entities. In choosing alternative or additional aggregation methods, the Departments will seek to reduce compliance burdens for the reporting entities while ensuring that the aggregated data facilitate the development of the biannual public report required under section 9825(b) of the Code, section 725(b) of ERISA, and section 2799A–10(b) of the PHS Act. For example, the Departments may choose to allow data submitted by affiliated issuers to be aggregated at the holding VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 group level within a state and market segment. Aggregation at the holding group level may further reduce compliance burden, but may obscure differences between different business models, such as preferred provider organizations and health maintenance organizations. The Departments may also choose to allow data submitted by PBMs to be aggregated at a higher level than at the level of each issuer and TPA. Aggregation of prescription drug and rebate data at the PBM level may likewise reduce compliance burdens and may enable more robust trend analysis. However, as discussed previously in this section of this preamble, this approach could significantly reduce the consistency between the prescription drug and rebate data and the health care spending, premium, and enrollment data, potentially impairing some of the analyses the Departments intend to undertake for purposes of the section 204 public report. The Departments will issue any such guidance sufficiently in advance of the data submission deadline to enable plans, issuers, and other reporting entities to adjust their processes. The Departments seek comment on which alternative aggregation methods should be considered and their respective merits and drawbacks. As noted in section II.C.3.a. of this preamble, data submitted by reporting entities that are issuers, TPAs, or other plan service providers must be aggregated at the state and market segment level. For example, if an issuer is the reporting entity, the issuer must report the data separately for each state where it offered coverage, and within each state must aggregate the data separately for the individual market (excluding student policies), the student market, the fully-insured small group market, the fully-insured large group market (excluding FEHB plans), and the FEHB line of business, as applicable. If the issuer also provides TPA services to self-funded group health plans in the same state, the issuer must additionally aggregate the data separately for all of the self-funded plans offered by small employers and all of the self-funded plans offered by large employers for which the issuer acts as a TPA and as the reporting entity in the state. In addition, these interim final rules at 26 CFR 54.9825–5T(b)(3), 29 CFR 2590.725–3(b)(3), and 45 CFR 149.730(b)(3) provide that when a group health plan, regardless of funding type, involves health coverage obtained from two affiliated issuers, one, often a health maintenance organization, providing innetwork coverage only and the second, PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 66679 usually a preferred provider or similar organization, providing out-of-network coverage only, then for purposes of aggregating data at the reporting entity level, the plan’s out-of-network experience may be treated as if it were all related to the contract provided by the in-network issuer. This approach ensures that in this situation the experience of employees of a single employer can be aggregated under a single reporting issuer in the same section 204 data submission, which is a reasonable approach because the coverage is priced and marketed to group health plans as one single product. In addition, this provision enables issuers to leverage existing reporting processes that they use for purposes of MLR reporting under 45 CFR part 158. The Departments solicit comment on all aspects of the data aggregation by reporting entity approach. c. Aggregation by State The provisions related to aggregation by state are being codified at 26 CFR 54.9825–5T(c), 29 CFR 2590.725–3(c), and 45 CFR 149.730(c). These interim final rules at 26 CFR 54.9825–5T(c)(1), 29 CFR 2590.725– 3(c)(1), and 45 CFR 149.730(c)(1) and 26 CFR 54.9825–5T(c)(2), 29 CFR 2590.725–3(c)(2), and 45 CFR 149.730(c)(2) specify, respectively, that for purposes of aggregating data at the state level, the experience of fullyinsured coverage must be attributed to the state where the contract was issued, while the experience of self-funded group health plans must be attributed to the state where the plan sponsor has its principal place of business, with certain exceptions. These requirements will ensure consistent reporting across plans, issuers, and other reporting entities, and are similar to the requirements in 45 CFR 158.120 for the MLR data collection. Attribution of experience to a state in this manner, rather than, for example, to the state where the individual obtaining health care services or prescription drugs works or resides, will significantly reduce the reporting burden because the data elements required in these interim final rules generally are not tracked based on the situs of the individual. The Departments are of the view that attribution of experience to a state in this manner is unlikely to significantly affect the data trends at the state level given that the Departments expect most if not all reporting entities to aggregate the required data, which will mitigate the possibility of an outsized impact of any given plan’s experience on the top 50 lists and trends in a state. E:\FR\FM\23NOR2.SGM 23NOR2 66680 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations lotter on DSK11XQN23PROD with RULES2 Individuals sometimes obtain, and employers sometimes provide, health coverage through associations, trusts, or multiple employer welfare arrangements (MEWAs). Coverage issued through an association, but not in connection with a group health plan, is not group health insurance coverage for purposes of the PHS Act and is instead individual market coverage. These interim final rules at 26 CFR 54.9825–5T(c)(3), 29 CFR 2590.725–3(c)(3), and 45 CFR 149.730(c)(3) provide that the experience of individual market business sold through an association must be attributed to the issue state of the certificate of coverage. For employment-based association coverage subject to ERISA, group health plans may exist at the individual employer level (a non-plan MEWA) or at the association level, if the association qualifies as an employer under ERISA section 3(5) (a plan MEWA).30 These interim final rules at 26 CFR 54.9825– 5T(c)(4), 29 CFR 2590.725–3(c)(4), and 45 CFR 149.730(c)(4) provide that the experience of health coverage provided through a group trust or a MEWA must be attributed to the state where the individual employer (if the plan is at the individual employer level) or the association (if the association qualifies as an employer under ERISA section 3(5)), respectively, has its principal place of business or the state where the association is incorporated, if the association has no principal place of business. These provisions apply in the same manner to group health plans covering employees in multiple states. For example, the experience of a fullyinsured group health plan covering employees in multiple states must be attributed to the state in which the contract for health insurance coverage is issued or delivered as stated in the contract (except for coverage provided through an association). If the plan contracted for coverage with a different issuer in each state, then the relevant experience must be attributed to each of these states. Similarly, the experience of a self-funded group health plan providing benefits to employees in multiple states must be attributed to the 30 Under ERISA section 3(5), an employer is ‘‘any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity.’’ For more information, see Multiple Employer Welfare Arrangements under the Employee Retirement Income Security Act (ERISA): A Guide to Federal and State Regulation, available at https://www.dol.gov/sites/dolgov/files/ebsa/ about-ebsa/our-activities/resource-center/ publications/mewa-under-erisa-a-guide-to-federaland-state-regulation.pdf. VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 state in which the plan sponsor has its principal place of business (or, in the case of an association with no principal place of business, the state where the association is incorporated), as applicable. The Departments solicit comments on all aspects of the data aggregation by state approach. III. Overview of the Interim Final Rules—Office of Personnel Management A. Authority for Data Collection OPM solicited comments on the capability of FEHB carriers to complete this reporting and if there should be any considerations taken into account specific to reporting by FEHB carriers. A few comments raised concerns about OPM’s authority to require this reporting or questioned whether it was appropriate to apply section 204 to FEHB carriers. Under 5 U.S.C. 8910(a), OPM must make a continuing study of the operation and administration of the FEHB Program, including surveys and reports on FEHB plans and on the experience of these plans. Under 5 U.S.C. 8910(b), each contract between OPM and an FEHB carrier must contain provisions requiring carriers to furnish such reasonable reports as OPM deems necessary to carry out its functions under the FEHB Act. Accordingly, OPM’s contract with each FEHB carrier requires the carrier to furnish reports that OPM finds necessary to properly administer the FEHB Program.31 In addition, 5 U.S.C. 8910(c) requires government agencies to furnish OPM with such information and reports as may be necessary to enable OPM to administer the FEHB Program. On the basis of this statutory authority, OPM will require FEHB carriers to report information about pharmacy benefits and health care spending, consistent with section 204 of Title II of Division BB of the CAA and the Departments’ interim final rules. In response to comments requesting clarification of carriers’ reporting responsibilities, OPM has worked with the Departments to facilitate carriers’ reporting by establishing that where an entity does not possess all of the information required to be reported, another reporting entity may be responsible for the data submission on the carriers’ behalf. Reporting by FEHB carriers is 31 In addition to this statutory authority and parallel contract language, FEHB carrier contracts incorporate FEHB regulations found at 5 CFR parts 890 through 894. As part of this rulemaking, OPM amends FEHB regulations to direct carriers to comply with requirements of 45 CFR 149.710 through 149.740. PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 expected to help accomplish the CAA’s intended purposes of achieving national health data transparency and lowering costs both for the FEHB Program and for the health benefits industry. B. Reporting and Display of Data Several RFI commenters also raised concerns about duplicative reporting or requested that OPM reconcile its current reporting requirements with any reporting required under section 204 of Title II of Division BB of the CAA. While OPM does require its FEHB carriers to submit certain data directly to OPM, the specific type of reporting diverges from section 204 of Title II of Division BB of the CAA in terms of the nature of the reporting as well as its purpose. The OPM interim final rules amend existing 5 CFR 890.114(a) to include references to the Department of the Treasury, DOL, and HHS interim final rules to clarify that, pursuant to 5 U.S.C. 8910, FEHB carriers are required to report prescription drug and health care spending as set forth in those regulations with respect to FEHB carriers in the same manner as those provisions apply to a group health plan or health insurance issuer offering group or individual health insurance coverage, subject to 5 U.S.C. 8902(m)(1) and the provisions of the carrier’s contract. As provided at 5 CFR 890.114(f), the OPM Director will coordinate with the Departments in matters regarding FEHB carriers’ reporting on prescription drug and health care spending, and with respect to oversight of reporting by FEHB carriers. Carriers must report FEHB plan prescription drug and health care spending data to the Departments as a part of the section 204 collection of information consistent with 45 CFR 149.720. Carriers will need to include the information identified in 45 CFR 149.740 and aggregate the data consistent with 45 CFR 149.730. Several corrections have been made to 5 CFR 890.114. First, paragraph (a) has been revised to remove inadvertently added cross-references to 26 CFR 54.9816–7T and 29 CFR 2590.716–7, which relate to the Department of the Treasury’s and DOL’s complaints processes. Second, paragraph (d)(1) has been revised to change the phrase ‘‘intent to initiate’’ to ‘‘initiation of’’ the Federal IDR process. Third, paragraph (d)(2) has been revised so that crossreferences to 26 CFR 54.9816– 8T(c)(4)(vi)(A)(1), 29 CFR 2590.716– 8(c)(4)(vi)(A)(1), and 45 CFR 149.510(c)(4)(vi)(A)(1) now cite paragraph (vii) instead (vi), and the term ‘‘misrepresentation’’ now reads ‘‘material misrepresentation.’’ E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations IV. Waiver of Proposed Rulemaking Section 9833 of the Code, section 734 of ERISA, and section 2792 of the PHS Act authorize the Secretaries of the Departments to promulgate any interim final rules that they determine are appropriate to carry out the provisions of chapter 100 of the Code, part 7 of subtitle B of title I of ERISA, and title XXVII of the PHS Act. Consistent with the provisions at section 9833 of the Code, section 734 of ERISA, and section 2792 of the PHS Act, the Secretaries of the Departments and the OPM Director have determined that it is appropriate to issue these interim final rules to enable regulated entities sufficient time to design processes and systems necessary to comply with the data submission requirements of section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act, and to enable the Departments to comply with the public reporting requirements of section 9825(b) of the Code, section 725(b) of ERISA, and section 2799A–10(b) of the PHS Act, as explained further in this section of this preamble. Although these provisions constitute the Departments’ primary authority for issuing these interim final rules, the Departments also note that section 553(b) of the Administrative Procedure Act (5 U.S.C. 551, et seq.) (APA), provides that a general notice of proposed rulemaking is not required when an agency for good cause finds that notice and comment procedures are impracticable, unnecessary, or contrary to the public interest and incorporates a statement of the finding and its reasons in the rule issued. In addition, subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act or CRA) requires a 60-day delay in the effective date for major rules unless an agency finds good cause that notice and public procedure are impracticable, unnecessary, or contrary to the public interest, in which case the rule shall take effect at such time as the agency determines. 5 U.S.C. 801(a)(3), 808(2). The Secretaries of the Departments and the OPM Director have determined that these interim final rules meet the exception to the default requirement of notice and comment rulemaking under section 553(b) of the APA. Specifically, the Secretaries of the Departments and the OPM Director have determined that it would be impracticable and contrary to the public interest to delay putting the provisions in these interim final rules in place until a full public notice and comment process has been completed, as explained further in this section of this preamble. The Secretaries VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 of the Departments and the OPM Director also find that there is good cause to waive the delay in effective date for these interim final rules. The time period between enactment of the CAA and the date by which plans and issuers must comply with the provisions of section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act, as added by the CAA, is insufficient to permit the Departments and OPM to pursue notice and comment rulemaking. The CAA was enacted on December 27, 2020. Section 204 of Title II of Division BB of the CAA requires plans and issuers to begin submitting the required prescription drug and health care spending information to the Departments by December 27, 2021, and to submit this information by June 1 of each year thereafter. Due to the novelty and complexity of the requirements in section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act, the Departments and OPM determined it necessary to issue an RFI to inform the Departments’ and OPM’s implementation of the statutory requirements through rulemaking. Following an analysis of the statutory provisions, the technical and regulatory issues surrounding the concepts, definitions, and reporting related to prescription drugs, and industry practices related to prescription drug costs and data reporting processes and capabilities, among other things, the Departments and OPM published the RFI on June 23, 2021 with a 30-day comment period.32 In their responses to the RFI, regulated entities and other interested parties indicated that they would need significant time to come into compliance after final rules implementing the requirements in section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act are issued. In implementing these requirements, these interim final rules require plans, issuers, and FEHB carriers to establish complex internal data compilation and reporting processes, and may require plans, issuers, FEHB carriers, TPAs, PBMs, and drug manufacturers to modify various contracts and arrangements and to coordinate data compilation and sharing among themselves in order to enable submission of complete and accurate data to the Departments in accordance with the requirements in these interim final rules. All of these entities will require time to implement the changes necessary to comply with these new requirements. In response to the RFI, 32 86 PO 00000 FR 32813. Frm 00021 Fmt 4701 Sfmt 4700 66681 although several commenters stated that they would be able to submit the required data 6 months after the Departments and OPM published the final rules, the instructions for the information collection instrument, and the technical specifications for the data collection system, the overwhelming majority of commenters advised that they would need 12 months to comply. Commenters advised that they could not begin renegotiating contracts and investing in the necessary IT systems modifications prior to the final rules, the instructions for the information collection instrument, and the technical specifications for the data collection system being issued. In recognition of stakeholders’ concerns about the feasibility of meeting the first two statutory reporting deadlines of December 27, 2021 and June 1, 2022, as discussed in section II.C.1.b. of this preamble, the Departments are exercising discretion to not initiate enforcement actions against plans or issuers that submit the section 204 data submissions for the 2020 and 2021 reference years by December 27, 2022. Although this deferred enforcement may have allowed for the promulgation of regulations with notice and comment before the Departments would consider taking enforcement action, doing so nonetheless would not have provided sufficient time for the regulated entities to come into compliance with the requirements by December 27, 2022. Issuing these rules as proposed rules would have resulted in the final rules and final technical specifications becoming available to the regulated entities no earlier than June 2022, leaving them only 6 months—well short of the 12 months that most commenters advised is necessary—to complete the complex tasks required to come into compliance. In addition, deferred enforcement does not alter the statutory deadlines, and therefore the Departments must promulgate final rules that become effective no later than December 27, 2021, and must promulgate final rules timely to enable plans and issuers to rely on these rules and adhere to the law by the December 27, 2021 and June 1, 2022 statutory deadlines. The Departments strongly encourage plans and issuers that are able to submit the required information by either the December 27, 2021 or June 1, 2022 statutory deadlines to do so. Further, although deferring enforcement for an additional period of time beyond December 27, 2022 could have provided sufficient time to issue these rules as proposed rules, the Departments are of the view that any additional delays in collecting the E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 66682 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations information required under section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act would be inappropriate and contrary to the public interest. First, section 9825(b) of the Code, section 725(b) of ERISA, and section 2799A– 10(b) of the PHS Act require the Departments to publish biannual section 204 public reports, with the first such report due no later than 18 months after the date on which the first section 204 data submission is required. Consequently, deferring enforcement further than December 27, 2022 would foreclose the Departments’ ability to prepare and timely publish the first section 204 public report. Thus, the Departments are of the view that additional delays related to the section 204 data submissions would risk causing undue and cascading delays in the publication of the section 204 public reports, potentially delaying important legislative and policymaking initiatives that may be spurred by the section 204 public reports and depriving the public of the benefit of any such initiatives. Second, any additional delays related to the section 204 data submissions could require plans and issuers to submit 3, rather than 2, years of data at once (for example, if the Departments were to defer enforcement until June 1, 2023— the statutory deadline for submission of the 2022 data—then plans and issuers would have to submit the data for 2020, 2021, and 2022 by that date). This would place a significant burden on plans and issuers and would lead to lower-quality 2022 data because plans, issuers, and other reporting entities would lose the opportunity to incorporate lessons learned from preparation and submission of the 2020 and 2021 data, and the Departments would lose the ability to provide feedback or guidance to the regulated entities based on challenges or inconsistencies identified in the 2020 and 2021 data submissions. In addition, the Departments will require time to design, build, and test a fully operational data collection system, which cannot be done prior to the definitions and requirements in these interim final rules being finalized. The reporting entities will in turn require time to familiarize themselves with the data collection system and to adapt their processes to the technical specifications prescribed for the data collection system. Therefore, issuing these rules as interim final rules, rather than as proposed rules, will allow the Departments to develop and operationalize the data collection system and will allow the reporting VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 entities to provide feedback on the design of this system to the Departments and to incorporate the specifications of the data collection system into their processes. It is therefore necessary, appropriate, and in the public interest that plans, issuers, FEHB carriers, TPAs, PBMs, and the Departments have certainty regarding the standards of these requirements in order to begin implementation. Accordingly, to allow plans, issuers, FEHB carriers, TPAs, PBMs, and the Departments sufficient time to implement these new requirements and any changes necessary to comply with these new requirements, these interim final rules must be published and available to the public well in advance of the December 27, 2022 enforcement date for the initial data collection. Allowing time for a full notice and comment process prior to the requirements taking effect would not provide sufficient time for the reporting entities to comply with the requirements, and would risk collection of inaccurate and low-quality data, thwarting the statute’s objective of producing an actionable section 204 public report on prescription drug pricing and its impact on premiums. Finally, although these interim final rules reflect public comments submitted in response to the RFI, the Departments and OPM intend to expeditiously and thoroughly review and analyze the public comments that will be submitted on the specific provisions of these interim final rules, as well as any additional feedback that may be provided by reporting entities and other stakeholders following publication of these interim final rules and the information collection requirements. The Departments and OPM intend to promptly issue final rules based on these public comments. For the foregoing reasons, the Departments and OPM have determined that it is necessary, appropriate, and in the public interest to issue these interim final rules to allow regulated entities to timely comply with the statutory data submission requirements. The Departments and OPM have further determined that it would be impracticable and contrary to the public interest to engage in full notice and comment rulemaking before putting these interim final rules into effect. V. Regulatory Impact Analysis A. Summary These interim final rules implement the provisions of section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act as enacted by PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 section 204 of Title II of Division BB of the CAA. These provisions are applicable to group health plans and health insurance issuers offering group or individual health insurance coverage. These interim final rules implement section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act, which increase transparency by requiring plans and issuers to annually submit to the Departments information about prescription drugs and health care spending. Section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A– 10(a) of the PHS Act require plans and issuers to submit certain information to the Departments on prescription drug and health care spending, including, but not limited to, average monthly premium amounts (paid by participants, beneficiaries, and enrollees and paid by employers on behalf of participants, beneficiaries, and enrollees, as applicable), and the number of participants, beneficiaries, and enrollees, as applicable, with respect to the plan or coverage in the previous plan year. Additionally, plans and issuers must report prescription drug rebates, fees, and any other remuneration paid by drug manufacturers and any impact on premiums and out-of-pocket costs associated with these rebates, fees, or other remuneration. Pursuant to 5 U.S.C. 8910, OPM is joining the Departments to require the submission of prescription drug and health care spending data from FEHB plans in the same manner as plans and issuers must provide such data under section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act. The Departments and OPM highlight that nothing prevents a TPA or a PBM from reporting the required information on behalf of plans, issuers, and FEHB carriers, or the subset of the required information that is available to them. Section 9825(b) of the Code, section 725(b) of ERISA, and section 2799A– 10(b) of the PHS Act require the Departments to publish on the internet biannual reports on prescription drug reimbursements under group health plans and group and individual health insurance coverage, prescription drug pricing trends, and the role of prescription drug costs in contributing to premium increases or decreases under these plans or coverage, aggregated in such a way that no drug or plan specific information is made public. The Departments and OPM have examined the effects of these interim final rules as required by Executive Order 13563 (76 FR 3821, January 21, E:\FR\FM\23NOR2.SGM 23NOR2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations 2011, Improving Regulation and Regulatory Review); Executive Order 12866 (58 FR 51735, October 4, 1993, Regulatory Planning and Review); the Regulatory Flexibility Act (September 19, 1980, Pub. L. 96–354); section 1102(b) of the Social Security Act (42 U.S.C. 1102(b)); section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995, Pub. L. 104–4); Executive Order 13132 (64 FR 43255, August 10, 1999, Federalism); and the Congressional Review Act (5 U.S.C. 804(2)). B. Executive Order 12866 and 13563 Executive Order 12866 directs agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. A regulatory impact analysis (RIA) must be prepared for rules with economically significant effects ($100 million or more in any 1 year). Section 3(f) of Executive Order 12866 defines a ‘‘significant regulatory action’’ as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any one year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as ‘‘economically significant’’); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the Executive Order. An RIA must be prepared for major rules with economically significant effects (for example, $100 million or more in any one year), and a ‘‘significant’’ regulatory action is subject to review by the Office of Management and Budget (OMB). The Departments anticipate that this regulatory action is likely to have economic impacts of $100 million or more in at least 1 year, and thus meets the definition of a ‘‘significant rule’’ under Executive Order 12866. Therefore, the Departments and OPM have provided an assessment of the potential costs, benefits, and transfers associated with these interim final rules. In accordance with the provisions of Executive Order 12866, these interim final rules were reviewed by OMB. 1. Need for Regulatory Action There is currently limited information available about how prescription drug costs influence premiums and out-ofpocket costs. There is also limited information available on the prescription drug rebates, fees, and other remuneration paid by drug manufacturers to plans and issuers (or 66683 to their administrators or service providers) and the impact of these reimbursements on premiums and outof-pocket costs. The data submission requirements in these interim final rules will provide the Departments and OPM with a better understanding of prescription drug and health care spending in the United States. Further, these interim final rules are necessary to meet the statutory requirements of section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act. Plans, issuers, FEHB carriers, and other reporting entities will incur costs related to the data submission requirements set forth in these interim final rules. However, in accordance with Executive Order 12866, the Departments determined that the benefits of these interim final rules justify the costs. 2. Summary of Impacts In accordance with OMB Circular A– 4, Table 1 depicts an accounting statement summarizing the Departments’ and OPM’s assessment of the benefits, costs, and transfers associated with these interim final rules. The Departments and OPM are unable to quantify all benefits, costs, and transfers associated with these interim final rules but have sought, where possible, to describe these nonquantified impacts below. The effects in Table 1 reflect non-quantified impacts and estimated direct monetary costs resulting from the data submission requirements in these interim final rules. TABLE 1—ACCOUNTING STATEMENT Benefits: lotter on DSK11XQN23PROD with RULES2 Qualitative: • Production of a dataset that satisfies the requirements in section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act and informs the development of the section 204 public reports, which will increase transparency about prescription drugs and health care spending and potentially promote more competitive health care markets. • The ability of the Departments and OPM to identify the factors contributing to changes in plan expenditures, including prescription drug costs, hospital costs, health care provider and clinical service costs, and other medical costs, which may inform future policymaking that addresses health care costs. • The ability of the Departments and OPM to identify the most frequently dispensed brand prescription drugs and the most costly prescription drugs covered by plans and issuers and the corresponding expenditures, which may inform future policymaking that addresses prescription drug costs. • Improved understanding of prescription drug pricing trends by the Departments and OPM. • Improved understanding by the public and the Departments and OPM of the impact of prescription drug rebates, fees, and other remuneration paid by drug manufacturers to plans, issuers, or FEHB carriers (or to their administrators or service providers) on premiums and out-of-pocket costs. • Potential to inform Congress and shape future policymaking that could benefit consumers and employers. Estimate (million) Costs Annualized Monetized ($/year) ........................................................................ Year dollar $363.63 361.09 2021 2021 Quantitative: VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 E:\FR\FM\23NOR2.SGM 23NOR2 Discount rate (percent) 7 3 Period covered 2021–2025 2021–2025 66684 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations Estimate (million) Costs Year dollar Discount rate (percent) Period covered • One-time costs to issuers, FEHB carriers, TPAs, and PBMs to design, develop, and implement needed IT systems changes and submit required information, in 2022, estimated to be approximately $1,034 million. • One-time costs to issuers, FEHB carriers, TPAs, and PBMs to update and maintain their IT systems and submit required information in 2023, estimated to be approximately $290 million. • Annual recurring costs to issuers, FEHB carriers, TPAs, and PBMs to maintain their IT systems and report data in 2024, and yearly thereafter, estimated to be approximately $211 million. • One-time costs to issuers, FEHB carriers, TPAs, and PBMs to prepare standard operating procedures and provide training to staff, in 2022, estimated to be approximately $4.7 million. • One-time costs to issuers, FEHB carriers, TPAs, and PBMs to modify existing contracts, in 2022, estimated to be approximately $8 million. • Costs to the federal government to build and maintain a system to receive, store, and analyze data submitted by issuers, FEHB carriers, TPAs, and PBMs, and to prepare section 204 reports, of approximately $4.4 million in 2021, $8.5 million in 2022, $7.3 million in 2023, $7.4 million in 2024, and $7.9 million in 2025. Transfers: lotter on DSK11XQN23PROD with RULES2 Non-Quantified: • Potential transfers from providers, facilities, pharmaceutical manufacturers, and PBMs to plans, issuers, and FEHB carriers if plans, issuers, and FEHB carriers are able to achieve greater negotiating power due to improved understanding of prescription drug costs. a. Benefits The reporting requirements in these interim final rules will lead to the development of a dataset that satisfies the requirements in section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act. This dataset will inform the development of the biannual section 204 public reports by the Departments regarding prescription drug and health care spending. The prescription drug and health care spending data collection and the resultant section 204 public reports will benefit plans, issuers, FEHB carriers, employers, and policymakers by advancing their understanding of prescription drug costs and the impact of prescription drug rebates, fees, and other remuneration on premiums and out-of-pocket costs. Consumers could potentially benefit from the section 204 public reports if plans, issuers, and FEHB carriers are able to negotiate lower prescription drug prices and those reductions are passed on to the consumer in the form of reduced out-ofpocket costs and lower premiums. The section 204 data submissions will allow the Departments and OPM to identify the most frequently dispensed brand prescription drugs and the costliest prescription drugs covered by plans, issuers, and FEHB carriers along with the prescription drugs that have contributed to the greatest annual increases in plan expenditures, and the prescription drugs that have generated the highest prescription drug rebates, fees, and other remuneration. These reports will provide the Departments and OPM with an improved understanding of prescription drug costs. The dataset will also allow the Departments and OPM to identify other major drivers of increases in health care spending, including hospital costs, primary and specialty health care provider and clinical service costs, and other medical costs. The data may also allow the Departments and OPM to examine variation in health care costs across the country. Policymakers will be able to use the information provided in the section 204 public reports to set policies that may result in lower premiums, reduced outof-pocket costs, and decreased labor costs. Policymakers will also be able to use this information to set policies that may promote transparency and more competition in health care and prescription drug markets, consistent with the goals of Executive Order 14036. 33 Based on data from MLR annual reports for the 2019 MLR reporting year, available at https:// www.cms.gov/CCIIO/Resources/Data-Resources/ mlr. 34 Estimates for Non-issuer TPAs are based on data derived from the 2016 Benefit Year reinsurance program contributions. 35 Source: National Association of Insurance Commissioners, last updated on March 16, 2021. Available at https://content.naic.org/cipr_topics/ topic_pharmacy_benefit_managers.htm. 36 May 2020 Bureau of Labor Statistics, Occupational Employment Statistics, National Occupational Employment and Wage Estimates, VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 b. Costs The Departments and OPM estimate the burden to report the information will be the time and effort necessary for plans, issuers, FEHB carriers, and other reporting entities to submit the required information in the required format to the Departments. The Departments and OPM assume that issuers, TPAs, and PBMs will submit the required information on behalf of group health plans or FEHB carriers. The Departments and OPM acknowledge that TPAs and PBMs are likely to pass on any related costs to plans, issuers, PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 and FEHB carriers. The Departments and OPM estimate there are 473 health insurance issuers offering individual and group health insurance,33 205 TPAs 34 (generally submitting on behalf of self-funded group health plans), 46 FEHB carriers, and 66 PBMs 35 (submitting on behalf of plans, issuers, and FEHB carriers) that will submit the required information annually. The Departments and OPM assume that all costs will be incurred in 2022 and beyond, since reporting entities are unlikely to begin implementation in the last month of 2021. The costs related to these information collection requirements are estimated to be $1,033,758,440 in 2022, $289,786,640 in 2023, and $211,128, 360 in 2024 and onward, as discussed in detail later in section V.D. (Paperwork Reduction Act) of this preamble. These total costs have a tendency toward overestimation because the estimate does not reflect process efficiencies for FEHB carriers that are also issuers. Issuers, FEHB carriers, TPAs, and PBMs will incur additional costs related to the data submission. To estimate these costs, the Departments and OPM used data from the Bureau of Labor Statistics (BLS) to derive average labor costs (including a 100 percent increase for fringe benefits and overhead).36 As explained in section V.D.1. (Paperwork Reduction Act) of this preamble, the Departments and OPM used a different data set to estimate costs related to the information collection requirements. available at https://www.bls.gov/oes/current/oes_ nat.htm. E:\FR\FM\23NOR2.SGM 23NOR2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations 66685 TABLE 2—ADJUSTED HOURLY WAGE RATES Occupational code Occupation title Chief Executives .............................................................................................. General and Operations Managers ................................................................. Computer and Information Systems Managers ............................................... Lawyers ............................................................................................................ Paralegals and Legal Assistants ..................................................................... Executive Secretaries and Executive Administrative Assistants ..................... Legal Secretaries and Administrative Assistants ............................................ Business Operations Specialists ..................................................................... Computer Programmers .................................................................................. Secretaries and Administrative Assistants ...................................................... Issuers, FEHB carriers, TPAs, and PBMs will incur costs associated with contract modifications regarding these reporting requirements. The Departments and OPM assume that each of the 473 issuers, 46 FEHB carriers, and 205 TPAs will need to modify or enter into contracts with PBMs for the PBMs to provide information on prescription drug rebates, or other required information, that is generally maintained primarily by PBMs. The Departments and OPM estimate that a total of 724 contracts will be modified. The Departments assume that the contract modifications will involve the time of chief executives, general and operations managers, lawyers, paralegals and legal assistants, executive 11–1011 11–1021 11–3021 23–1011 23–2011 43–6011 43–6012 13–1198 15–1251 43–6014 secretaries and executive administrative assistants, and legal secretaries and administrative assistants from both entities. The adjusted hourly wages (which incorporate a 100 percent markup for fringe benefits and overhead costs) for those involved in contract modifications are presented in Table 2. The Departments and OPM estimate that in order to negotiate contract revisions between issuers, FEHB carriers, TPAs, and their PBMs, for each issuer, FEHB carrier, TPA, and PBM, a chief executive will need 1 hour, general and operations managers will need 2 hours, lawyers will need 20 hours, paralegals will need 20 hours, administrative assistants will need 2 hours, and legal secretaries will need 20 hours for a total of 65 hours, at a cost Mean hourly wage ($/hour) $95.12 60.45 77.76 71.59 27.22 31.36 25.36 40.53 45.98 19.43 Fringe benefits and overhead ($/hour) $95.12 60.45 77.76 71.59 27.22 31.36 25.36 40.53 45.98 19.43 Adjusted hourly wage ($/hour) $190.24 120.90 155.52 143.18 54.44 62.72 50.72 81.06 91.96 38.86 of approximately $5,524 for each entity negotiating a contract revision. The total burden related to each contract negotiation between issuers, FEHB carriers, TPAs, and their PBMs is estimated to be 130 hours, with an associated cost of approximately $11,049. The total burden for all 724 contract modifications is estimated to be approximately 94,120 hours, with an associated cost of approximately $7,999,157.37 The Departments and OPM assume that this cost will be incurred in 2022. The calculations and the total burden and cost associated with these contract modifications are presented in Table 3. The Departments and OPM seek comment on these estimates. TABLE 3—BURDEN AND COSTS TO ISSUERS, FEHB CARRIERS, TPAS, AND PBMS ASSOCIATED WITH CONTRACT MODIFICATIONS 2022 Occupation Adjusted hourly wage ($/hour) lotter on DSK11XQN23PROD with RULES2 Chief Executives .......................................................................................................................... General and Operations Managers ............................................................................................. Lawyers ........................................................................................................................................ Paralegals and Legal Assistants ................................................................................................. Executive Secretaries and Executive Administrative Assistants ................................................. Legal Secretaries and Administrative Assistants ........................................................................ Time (hours) Estimated labor cost $190.24 120.90 143.18 54.44 62.72 50.72 1 2 20 20 2 20 $190.24 241.80 2,863.60 1,088.80 125.44 1,014.40 Burden and Cost for Each Issuer, FEHB Carrier, TPA, and PBM .................................................................. 65 5,524.28 Total Burden and Cost for Each Contract Negotiation Between an Issuer, FEHB Carrier, or TPA and Their PBM .............................................................................................................................................................. 130 11,048.56 Total Burden and Cost for All Contract Negotiations ....................................................................................... 94,120 7,999,157.44 37 The total hour burden and equivalent cost of burden were calculated as follows: Burden Hours per Contract Modification × Number of Contract Modifications = Total Burden Hours (130 × 724 = 94,120); Total Cost per Contract Modification × VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 Number of Contract Modifications = Equivalent Total Cost ($11,049 × 724 = $7,999,157). PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 E:\FR\FM\23NOR2.SGM 23NOR2 66686 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations All reporting entities will incur costs associated with developing standard operating procedures and training staff responsible for submitting the required data. The Departments and OPM assume that each of the 473 issuers, 46 FEHB carriers, 205 TPAs, and 66 PBMs will require the time of general and operations managers, computer and information systems managers, business operation specialists, computer programmers, and secretaries and administrative assistants to develop new standard operating procedures and deliver or receive training. The adjusted hourly wages for those involved in these changes in standard operating procedures and training requirements are presented in Table 2. The Departments and OPM estimate that for each issuer, FEHB carrier, TPA, and PBM, it will take 8 hours for general managers, 8 hours for information system managers, 40 hours for business operation specialists, 4 hours for computer programmers, and 4 hours for administrative assistants to prepare new standard operating procedures and train staff regarding the data submission requirements. The total burden for each issuer, FEHB carrier, TPA, and PBM will be 64 hours with an associated cost of approximately $5,977. The total estimated burden of changing standard operating procedures and training staff for all 790 issuers, FEHB carriers, TPAs, and PBMs is 50,560 hours, with an associated equivalent cost of $4,721,862.38 The Departments and OPM assume that this cost will be incurred in 2022. The calculations and the total burden and cost associated with developing standard operating procedures and training staff are presented in Table 4. The Departments and OPM seek comment on these estimates. TABLE 4—BURDEN AND COSTS TO ISSUERS, FEHB CARRIERS, TPAS, AND PBMS ASSOCIATED WITH DEVELOPING STANDARD OPERATING PROCEDURES AND TRAINING STAFF 2022 Occupation Adjusted hourly wage ($/hour) lotter on DSK11XQN23PROD with RULES2 General and Operations Managers ............................................................................................. Computer and Information Systems Managers ........................................................................... Project Management Specialists and Business Operations Specialists, All Other ..................... Computer Programmers .............................................................................................................. Secretaries and Administrative Assistants, Except Legal, Medical, and Executive ................... Time (hours) Estimated labor cost $120.90 155.52 81.06 91.96 38.86 8 8 40 4 4 $967.20 1,244.16 3,242.40 367.84 155.44 Burden and Cost for Each Issuer, FEHB Carrier, TPA, and PBM .................................................................. 64 5,977.04 Total Burden and Cost Associated with Developing Standard Operating Procedures and Training Staff ..... 50,560 4,721,861.60 The federal government will incur costs of approximately $4.4 million in 2021, $8.5 million in 2022, $7.3 million in 2023, $7.4 million in 2024, and $7.9 million in 2025 to build and maintain a system to receive and store the information submitted by issuers, FEHB carriers, TPAs, and PBMs, to analyze the data, and to prepare section 204 public reports. could also potentially lead to transfers from pharmaceutical manufacturers, PBMs, and/or plans, issuers, and FEHB carriers to consumers in the form of lower prescription drug prices. The Departments and OPM seek comment on any potential transfers that may occur as a result of the data submission requirements in these interim final rules. c. Transfers C. Regulatory Alternatives These interim final rules could potentially lead to transfers from providers, facilities, pharmaceutical manufacturers, and/or PBMs to plans, issuers, and FEHB carriers if plans, issuers, and FEHB carriers are able to achieve greater negotiating power because of improved understanding of prescription drug costs. If consumers are able to make informed plan selections or prescription drug purchases in response to improved understanding of prescription drug costs (including trends in prescription drug prices and the impact of pharmaceutical manufacturer rebates, fees, and other remuneration on premiums and out-ofpocket costs), these interim final rules In developing these interim final rules, the Departments considered various alternative approaches. Aggregation. The Departments and OPM considered requiring plans, issuers, and FEHB carriers to submit all of the required information on a planby-plan basis, rather than allowing reporting entities to submit aggregated data. However, as explained in section II.C.3. of this preamble, this approach would impose a large administrative burden on regulated entities and would also result in less accurate and meaningful top 50 and top 25 lists, which would inhibit the Departments’ ability to produce accurate and meaningful section 204 public reports as required by the statute. Collecting the top 50 lists separately for each group health plan could produce a distorted view of the market due to the small sample sizes that would underlie these top 50 lists, and due to the Departments’ inability to combine data from such plan-specific top 50 lists to determine aggregate prescription drug and rebate trends nationwide and within market segments. Collecting the top 25 rebate list for each group health plan would produce an inaccurate view of rebates, fees, and other remuneration as these rebates are not provided at the individual prescription level, and often not even at the plan level; thus, TPAs and issuers would have to speculate as to actual amounts of rebates and any price concessions for each plan. In addition, this approach would be inconsistent with the approach taken in other HHS data collections. Further, collecting plan-level, drug-specific data would increase the likelihood of collecting and transmitting patient health data and personally identifiable information, and the attendant risk of inadvertent or inappropriate disclosure of this information. 38 The total hour burden and equivalent cost of burden were calculated as follows: Burden Hours per Entity × Number of Entities = Total Burden Hours (64 × 790 = 50,560); Total Cost per Entity × Number of Entities = Equivalent Total Cost ($5,977 × 790 = $4,721,862). VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations However, as noted in section II.C.3. of this preamble, the Departments and OPM will continue to review the merits of this alternative approach and may modify the approach to aggregation in future rulemaking. Plan Year. The Departments and OPM considered requiring plans, issuers, and FEHB carriers to submit the required data by plan or coverage year determined according to the effective dates of each plan or policy. However, this approach is inconsistent with other HHS data collections and would limit the Departments’ ability to compare trends among group and individual market segments, public- and privatesponsored health coverage, and multiple data sources. Evaluation of market trends is important both for policy development and for the required section 204 public report. Definition of Drug. The Departments and OPM considered several different classification systems to define a drug for the purposes of section 204 data submissions. The NDC is very granular, containing information on the labeler, active ingredient, form, strength, and packaging of drugs, and would provide robust information if the Departments could collect data for every code. However, section 9825 of the Code, section 725 of ERISA, and section 2799A–10 of the PHS Act give the Departments authority to collect only the information on the top 50 or top 25 drugs, as applicable, by plan or coverage. Given this limited scope of the data collection, a lower level of granularity is preferable for obtaining the most representative information possible, since multiple variations of essentially the same drug 39 are unique NDCs. With access to only the top 50 NDCs, the Departments therefore would not have the data for all NDCs associated with a given prescription drug, and thus would not be able to consolidate the NDC information to identify meaningful trends in the prescription drug markets. The Departments and OPM also considered using the RxNorm Concept Unique Identifier (RxCUI), which is slightly less granular than the NDC, but RxCUI-level data collection suffers from many of the same limitations as NDC-level data collection, and commenters responding to the RFI overwhelmingly advised against collecting the data based on RxCUI because it is not widely used by reporting entities. Instead, many public reports, such as the 2020 Report to Congress on Prescription Drug Pricing 39 This characterization is used only for purposes of these interim final rules and is not intended to reflect or suggest any such characterization by FDA. VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 prepared by the HHS Office of the Assistant Secretary for Planning and Evaluation (ASPE),40 use a name and ingredient system that identifies drugs at a higher level, rather than granular systems such as NDC or RxCUI, to compare drug information across markets and across time. Most commenters responding to the RFI also recommended the use of a classification that would ensure that the same drug in various formulations or dosages would not appear on the top 50 lists multiple times, such as a classification based on name and ingredient. Ultimately, the Departments and OPM determined that the most useful data would be collected if prescription drug information is grouped by name and ingredient. Most Costly Drugs. The Departments and OPM considered requiring plans, issuers, and FEHB carriers to rank the 50 most costly drugs based on spending per dosage unit rather than based on total annual spending. Per-unit spending would reflect drug prices and capture in the top 50 list the cost of the drug without the influence of the number of times a drug was prescribed. In contrast, total spending may capture the top 50 list inexpensive generic drugs that are frequently prescribed and purchased. However, the statutory language suggests that in the section 204 data submission requirements, Congress sought to identify the drugs that drive the overall prescription drug expenditure in the United States, rather than the drugs with the highest unit prices. Ranking the top 50 most costly drugs by total annual spending will provide a more informative comparison to the top 25 drugs that yielded the highest amount of prescription drug rebates because both lists would be based on total, rather than per-unit, dollar amounts. Leveraging Similar Data Collections under the PHS Act. The Departments analyzed the reporting requirements under several existing PHS Act provisions related to prescription drug and health care spending to determine whether any of the data required under section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A– 10(a) of the PHS Act are already available to the Departments pursuant to other reporting requirements. The data collection requirements under section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act have some similarities to the requirements under section 2718(a) of the PHS Act implemented in the MLR 40 https://aspe.hhs.gov/system/files/aspe-files/ 263451/2020-drug-pricing-report-congress-final.pdf. PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 66687 rules,41 as well as section 1150A of the Social Security Act, which is implemented in the Exchange Establishment rule and the PBM Transparency rule. However, there are several important distinctions. Section 2718(a) of the PHS Act addresses clear accounting for the costs of health insurance coverage, including health care spending, and generally requires issuers to submit annual MLR reports to HHS. HHS implemented these reporting requirements in the MLR rules, codified at 45 CFR part 158. Similar to section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act, the MLR rules require issuers to report data on premiums 42 and claims, including prescription drug claims and rebates.43 However, unlike the requirements in section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A– 10(a) of the PHS Act, the MLR rules do not require that premiums be broken down by amounts paid by employers versus employees; do not break down health care spending costs, other than prescription drug costs, by type; do not break down prescription drug costs by amounts paid by the plan or issuer versus participants, beneficiaries, and enrollees; and do not require reporting of drug-level prescription drug and rebate data. Therefore, while the total amounts for certain items reported under section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act and the MLR rules may match, the amounts currently reported by issuers under the MLR rules cannot be used to satisfy all of the relevant requirements of section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act. Additionally, the MLR rules do not apply to self-funded group health plans (although issuers report certain aggregate information with respect to the experience of self-funded group health plans for which issuers provide administrative services), and data attributable to FEHB plans is not separated out under the MLR rules. Section 1150A of the Social Security Act requires a health benefit plan or a PBM that manages prescription drug coverage under a contract with a QHP issuer to provide certain prescription drug information to the Secretary of 41 75 FR 74863 (Dec. 1, 2010); see also 76 FR 76573 (Dec. 7, 2011), 77 FR 28790 (May 16, 2012), 78 FR 15409 (Mar. 11, 2013), 79 FR 30339 (May 27, 2014), 80 FR 10749 (Feb. 27, 2015), 85 FR 29164 (May 14, 2020), 86 FR 24140 (May 5, 2021). 42 45 CFR 158.130. 43 45 CFR 158.140. E:\FR\FM\23NOR2.SGM 23NOR2 66688 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations HHS.44 This information includes: (a) The percentage of prescriptions dispensed through retail versus mail order pharmacies; (b) the percentage of prescriptions for generic drugs; (c) the amount and type of rebates, discounts, or price concessions (excluding bona fide service fees) that the PBM negotiates that are attributable to utilization under the plan; (d) the amount of rebates, discounts, or price concessions passed through to the plan sponsor; (e) the total number of prescriptions that were dispensed; and (f) the difference between the amount that the plan pays the PBM and the amount that the PBM pays pharmacies. HHS implemented these reporting requirements as they apply to QHP issuers in the Exchange Establishment rule,45 and implemented these reporting requirements as they apply to PBMs in the PBM Transparency rule.46 Section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A– 10(a) of the PHS Act, the Exchange Establishment rule, and the PBM Transparency rule require issuers to report some of the same information regarding prescription drug rebates. However, section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act apply to all plans and issuers, whereas the Exchange Establishment rule and the PBM Transparency rule only apply to individual and small group market QHPs and their PBMs. Therefore, reporting under the Exchange Establishment rule and PBM Transparency rule will not fully satisfy the relevant requirements of section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act. However, as discussed in lotter on DSK11XQN23PROD with RULES2 44 QHPs are offered in the individual and small group markets. Section 1150A(a) of the Social Security Act also applies to Medicare Part D plans and Medicare Advantage plans offering a prescription drug plan, and PBMs that manage prescription drug coverage under contract with a prescription drug plan sponsor of a prescription drug plan or a Medicare Advantage organization offering a Medicare Advantage prescription drug plan. 45 77 FR 18308 (Mar. 27, 2012). 46 86 FR 24140 (May 5, 2021). VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 section II.C.2.e. of the preamble, to reduce reporting burden, these interim final rules align collection of certain data elements in the section 204 data submissions with the data elements collected under the Exchange Establishment rule and the PBM Transparency rule. D. Paperwork Reduction Act— Department of Health and Human Services Under the Paperwork Reduction Act of 1995 (PRA), the Departments and OPM are required to provide 60-day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. These interim final rules contain information collection requirements (ICRs) that are subject to review by OMB. A description of these provisions is given in the following paragraphs with an estimate of the annual burden, summarized in Table 18. To fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the PRA requires that the Departments and OPM solicit comment on: • The need for the information collection and its usefulness in carrying out the proper functions of the agency; • The accuracy of the Departments’ estimate of the information collection burden; • The quality, utility, and clarity of the information to be collected; and • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques. The Departments and OPM are soliciting public comment on each of the required issues under section 3506(c)(2)(A) of the PRA for the following ICRs. Contemporaneously with the publication of these interim final rules, HHS has submitted a request for a new ICR containing the information collection requirements for the prescription drug and health care PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 spending requirements created by section 204 of Title II of Division BB of the CAA. HHS has requested emergency review and approval in accordance with 5 CFR 1320.13(a)(2)(i) and (iii) of the PRA. The Secretaries of the Departments and the OPM Director have determined that public harm is likely to result and the collection of information is likely to be delayed if normal clearance procedures are followed. The ICR will be available at https://www.RegInfo.gov. The Departments and OPM will be requesting approval of the emergency review requests by the effective date of these interim final rules. The Departments and OPM will be seeking approval for the ICRs for 180 days, the maximum allowed for an ICR approved using an emergency review. These interim final rules also serve as the notice providing the public with a 60day period to submit written comments on the ICRs as part of the normal clearance process under the PRA. 1. Wage Estimates The Departments and OPM have chosen to use the Contract Awarded Labor Category (CALC) 47 database tool to derive the hourly rates for the burden and cost estimates in these interim final rules to derive estimates of costs related to the ICR. The Departments and OPM chose to use wages derived from the CALC database because, even though the BLS data set is valuable to economists, researchers, and others that would be interested in larger, more macro-trends in parts of the economy, the CALC data set is meant to help market research based on existing government contracts in determining how much a project/product will cost based on the required skill sets needed and it includes some occupation types that are not available in the BLS data set. 47 The CALC tool (https://calc.gsa.gov/) was built to assist acquisition professionals with market research and price analysis for labor categories on multiple U.S. General Services Administration (GSA) & Veterans Administration (VA) contracts. Wages obtained from the CALC database are fully burdened to account for fringe benefits and overhead costs. E:\FR\FM\23NOR2.SGM 23NOR2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations 66689 TABLE 5—CALC HOURLY WAGES USED IN BURDEN ESTIMATES Hourly wage rate Occupation: Project Manager/Team Lead ................................................................................................................................................................................................ Scrum Master ........................................................................................................................................................................................................................ Senior Business Analysis ...................................................................................................................................................................................................... Technical Architect/Sr. Developer ......................................................................................................................................................................................... DevOps Engineer/Security Engineer .................................................................................................................................................................................... Application Developer ........................................................................................................................................................................................................... lotter on DSK11XQN23PROD with RULES2 2. ICRs Regarding Reporting of Prescription Drug and Health Care Spending (45 CFR 149.720, 149.730, and 149.740) As discussed in section II.C. of this preamble, section 9825(a) of the Code, section 725(a) of ERISA, and section 2799A–10(a) of the PHS Act require plans and issuers to annually submit to the Departments certain information about prescription drugs and health care spending, including, but not limited to, average monthly premium amounts, and the number of participants, beneficiaries, and enrollees, as applicable, with respect to the plan or coverage in the previous plan year. In these interim final rules, OPM also directs FEHB carriers to comply with these requirements with respect to an FEHB plan in the same manner as such provisions apply to a group health plan or health insurance issuer offering group or individual health insurance coverage. The burden estimates are based on the expected time and effort for reporting entities to prepare and submit the required data. The Departments assume that for self-funded group health plans, the costs will be incurred by TPAs and that prescription drug information will be submitted by PBMs on behalf of plans and issuers. Costs incurred by TPAs and PBMs are likely to be passed on to plans, issuers, and FEHB carriers. The Departments acknowledge that some large self-funded plans may seek VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 $110 110 134 207 143 111 to make needed IT changes and report the required information to HHS without the use or assistance of a TPA or other third-party entity. In those instances, the self-funded plan will directly incur the burden and cost to meet the requirements of these interim final rules. The Departments are unable to determine how many self-funded plans may choose to develop their IT systems and report the required information to HHS and seek comment as to the number of plans that may choose to do so. The Departments assume that all costs will be incurred in 2022 and beyond. The Departments and OPM estimate there are 473 issuers and 46 FEHB carriers offering group and individual and health insurance coverage, 205 TPAs (generally on behalf of self-funded group health plans), and 66 PBMs (on behalf of plans, issuers, and FEHB carriers) that will submit the required data annually. In 2022, reporting entities will incur a one-time cost to make changes to their IT systems to include the development of programs, processes, and systems for reporting the data. In 2023 and beyond, each entity will incur annual costs to update and maintain reporting capabilities and to report the required data to the Departments. For issuers and FEHB carriers, the Departments and OPM estimate that in 2022, each issuer and FEHB carrier will incur a one-time first-year cost and hour burden to design, develop, and implement needed IT systems changes to collect and submit the required data to the Departments as set forth in these interim final rules, including obtaining employer and employee premium contributions from employers providing group health coverage. The Departments and OPM estimate that for each issuer and FEHB carrier, on average, it will take Project Managers/Team Leads 2,080 hours (at $110 per hour), Scrum Masters 1,560 hours (at $110 per hour), Senior Business Analysts 1,040 hours (at $134 per hour), Technical Architects/Sr. Developers 2,080 hours (at $207 per hour), Application Developers 2,080 hours (at $111 per hour), and DevOps Engineers/Security Engineers 520 hours (at $143 per hour) to complete this task. The Departments and OPM estimate the total burden per issuer will be approximately 9,360 hours, with an equivalent cost of approximately $1,275,560. For all 519 issuers and FEHB carriers, the total first-year burden is estimated to be 4,857,840 hours with an equivalent total cost of approximately $662,015,640.48 48 Calculation of totals was done as follows: Burden Hours per Respondent × Number of Respondent = Total Burden Hours (9,360 × 519 = 4,857,840). Total Cost per Respondent × Number of Respondents = Total Cost ($1,275,560 × 519 = $662,015,640). PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 E:\FR\FM\23NOR2.SGM 23NOR2 66690 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations TABLE 6—ESTIMATED TOTAL FIRST-YEAR COST AND HOUR BURDEN FOR ISSUERS AND FEHB CARRIERS TO DESIGN, DEVELOP AND IMPLEMENT NEEDED IT SYSTEM CHANGES AND SUBMIT REQUIRED DATA Number of respondents Number of responses Burden hours per respondent Total burden hours Total cost 519 .................................................................................................................................................... 519 9,360 4,857,840 $662,015,640 In addition to the one-time first-year cost and burden estimated in the previous section of this preamble, issuers and FEHB carriers will incur an additional one-time cost and burden in the second year of implementation to maintain and update their IT systems and to submit the required data to the Departments. The Departments and OPM estimate that for each issuer and FEHB carrier it will take Project Managers/Team Leads 520 hours (at $110 per hour), Scrum Masters 260 hours (at $110 per hour), Senior Business Analysts 260 hours (at $134 per hour), Technical Architects/Sr. Developers 520 hours (at $207 per hour), Application Developers 520 hours (at $111 per hour), and DevOps Engineers/Security Engineers 260 hours (at $143 per hour) to perform these tasks. The Departments and OPM estimate the total second-year burden for each issuer will be 2,340 hours, with an equivalent cost of approximately $323,180. For all 519 issuers and FEHB carriers, the total one-time second-year implementation and reporting burden is estimated to be 1,214,460 hours with an equivalent total cost of approximately $167,730,420. The cost and burden associated with the second year will be incurred in 2023.49 TABLE 7—ESTIMATED ONE-TIME SECOND-YEAR COST AND HOUR BURDEN FOR ISSUERS AND FEHB CARRIERS TO UPDATE AND MAINTAIN IT SYSTEMS AND SUBMIT REQUIRED DATA Number of respondents Number of responses Burden hours per respondent Total burden hours Total cost 519 ................................................................................................................... 519 2,340 1,214,460 $167,730,420 In addition to the one-time first-year and second-year costs and burdens estimated earlier in this section of this preamble, issuers and FEHB carriers will incur ongoing annual costs, to be incurred from 2024 onward, related to ensuring submission accuracy, providing quality assurance, conducting maintenance and making updates, enhancing or updating any needed security measures, and submitting the required data to the Departments. The Departments and OPM estimate that for each issuer and FEHB carrier it will take Project Managers/Team Leads 520 hours (at $110 per hour), Scrum Masters 260 hours (at $110 per hour), Senior Business Analyst 40 hours (at $134 per hour), Technical Architects/Sr. Developers 520 hours (at $207 per hour), Application Developers 260 hours (at $111 per hour), and DevOps Engineers/Security Engineers 260 hours (at $143 per hour) to perform these tasks. The total annual burden for each issuer and FEHB carrier will be 1,860 hours, with an equivalent cost of approximately $264,840. For all 519 issuers and FEHB carriers, the total annual maintenance and reporting burden is estimated to be 965,340 hours with an equivalent total cost of approximately $137,451,960.50 The Departments and OPM consider this to be an upper-bound estimate and expect maintenance costs to decline in succeeding years as issuers gain efficiencies and experience in updating, managing, and submitting the required data. lotter on DSK11XQN23PROD with RULES2 TABLE 8—ESTIMATED ANNUAL COST AND HOUR BURDEN FOR MAINTENANCE AND REPORTING FOR ALL ISSUERS Number of respondents Number of responses Burden hours per respondent Total burden hours Total cost 519 ................................................................................................................... 519 1,860 965,340 $137,451,960 The Departments and OPM estimate the three-year average annual total burden for all 519 issuers and FEHB carriers to develop, build, and maintain needed IT systems changes to collect and aggregate the required data, and submit that data to the Departments, will be 2,345,880 hours with an average annual total cost of $322,399,340. The total annual burden for all respondents is likely overestimated because the estimate does not reflect process efficiencies for FEHB carriers that are also issuers. As HHS, DOL, the Department of the Treasury, and OPM share jurisdiction, HHS will account for 45 percent of the burden, or approximately 1,055,646 burden hours with an equivalent cost of approximately $145,079,703. The Departments and OPM seek comment on these estimates. 49 Calculation of totals was done as follows: Burden Hours per Respondent × Number of Respondent = Total Burden Hours (2,340 × 519 = 1,214,460). Total Cost per Respondent × Number of Respondents = Total Cost ($323,180 × 519 = $167,730,420). 50 Calculation of totals was done as follows: Burden Hours per Respondent × Number of Respondent = Total Burden Hours (1,860 × 519 = 965,340). Total Cost per Respondent × Number of Respondents = Total Cost ($264,840 × 519 = $137,451,960). VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 E:\FR\FM\23NOR2.SGM 23NOR2 66691 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations TABLE 9—ANNUAL BURDEN FOR ISSUERS AND FEHB CARRIERS IN THE INDIVIDUAL AND GROUP MARKETS Estimated number of respondents Estimated number of responses Burden per response (hours) Total estimated annual burden (hours) Total estimated labor cost ($) 2022 ..................................................................................... 2023 ..................................................................................... 2024 ..................................................................................... 234 234 234 234 234 234 9,360 2,340 1,860 2,186,028 546,507 434,403 $297,907,038 75,478,689 61,853,382 Three-year average ...................................................... 234 234 4,520 1,055,646 145,079,703 For TPAs, the Departments and OPM estimate that in 2022, each TPA will incur a one-time first-year cost and burden to design, develop, and implement needed IT systems changes to collect and submit, generally on behalf of self-funded group health plans, the data required under these interim final rules, including obtaining employer and employee premium contributions from employers providing group health coverage. The Departments and OPM estimate that for each TPA, on average, it will take Project Managers/ Team Leads 2,080 hours (at $110 per hour), Scrum Masters 1,560 hours (at $110 per hour), Senior Business Analysts 1,040 hours (at $134 per hour), Technical Architects/Sr. Developers 2,080 hours (at $207 per hour), Application Developers 2,080 hours (at $111 per hour), and DevOps Engineers/ Security Engineers 520 hours (at $143 per hour) to complete this task. The Departments and OPM estimate the total burden per TPA will be approximately 9,360 hours, with an equivalent cost of approximately $1,275,560. For all 205 TPAs, the total one-time first-year implementation and reporting burden is estimated to be 1,918,800 hours with an equivalent total cost of approximately $261,489,800.51 TABLE 10—ESTIMATED TOTAL ONE-TIME FIRST-YEAR COST AND HOUR BURDEN FOR TPAS TO DESIGN, DEVELOP, AND IMPLEMENT NEEDED IT SYSTEMS CHANGES AND SUBMIT REQUIRED DATA Number of respondents Number of responses Burden hours per respondent Total burden hours Total cost 205 ................................................................................................................... 205 9,360 1,918,800 $261,489,800 In addition to the one-time first-year cost and burden estimated in the previous section of this preamble, TPAs will incur an additional one-time cost and burden in the second year of implementation to maintain and update their IT systems and to submit the data to the Departments. The Departments and OPM estimate that for each TPA it will take Project Managers/Team Leads 520 hours (at $110 per hour), Scrum Masters 260 hours (at $110 per hour), Senior Business Analysts 260 hours (at $134 per hour), Technical Architects/Sr. Developers 520 hours (at $207 per hour), Application Developers 520 hours (at $111 per hour), and DevOps Engineers/Security Engineers 260 hours (at $143 per hour) to perform these tasks. The total second-year burden for each TPA will be 2,340 hours, with an equivalent cost of approximately $323,180. For all 205 TPAs, the total one-time second-year implementation and reporting burden is estimated to be 479,700 hours with an equivalent total cost of approximately $66,251,900.52 The cost and burden associated with the second year will be incurred in 2023. lotter on DSK11XQN23PROD with RULES2 TABLE 11—ESTIMATED ONE-TIME SECOND-YEAR COST AND HOUR BURDEN FOR TPAS TO UPDATE AND MAINTAIN IT SYSTEMS AND SUBMIT REQUIRED DATA Number of respondents Number of responses Burden hours per respondent Total burden hours Total cost 205 ................................................................................................................... 205 2,340 479,700 $66,251,900 In addition to one-time first-year and second-year costs and burdens estimated in the previous sections of this preamble, TPAs will incur ongoing annual costs, in 2024 and subsequent years, related to ensuring submission accuracy, providing quality assurance, conducting maintenance and making updates, enhancing or updating any needed security measures, and submitting the required data to the Departments. The Departments and OPM estimate that for each TPA it will take Project Managers/Team Leads 520 hours (at $110 per hour), Scrum Masters 260 hours (at $110 per hour), Senior Business Analysts 40 hours (at $134 per hour), Technical Architects/Sr. Developers 520 hours (at $207 per hour), Application Developers 260 hours (at $111 per hour), and DevOps Engineers/Security Engineers 260 hours (at $143 per hour) to perform these tasks. The total annual burden for each TPA will be 1,860 hours, with an equivalent cost of approximately $264,480. For all 205 TPAs, the total 51 Calculation of totals was done as follows: Burden Hours per Respondent × Number of Respondent = Total Burden Hours (9,360 × 205 = 1,918,800). Total Cost per Respondent × Number of Respondents = Total Cost ($1,275,560 × 205 = $261,489,800). 52 Calculation of totals was done as follows: Burden Hours per Respondent × Number of Respondent = Total Burden Hours (2,340 × 205 = 479,700). Total Cost per Respondent × Number of Respondents = Total Cost ($323,180 × 205 = $66,251,900). VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 E:\FR\FM\23NOR2.SGM 23NOR2 66692 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations annual ongoing maintenance and reporting burden is estimated to be 381,300 hours with an equivalent total cost of approximately $54,292,200.53 The Departments and OPM consider this to be an upper-bound estimate and expect maintenance costs to decline in succeeding years as issuers gain efficiencies and experience in updating, managing, and submitting the required data. TABLE 12—ESTIMATED ANNUAL COST AND HOUR BURDEN FOR MAINTENANCE AND REPORTING FOR ALL TPAS Number of respondents Number of responses Burden hours per respondent Total burden hours Total cost 205 ................................................................................................................... 205 1,860 381,300 $54,292,200 The Departments and OPM estimate the 3-year average annual total burden for all 205 TPAs to develop, build, and maintain needed IT systems changes to collect and aggregate the required data, and submit that data to the Departments, will be 926,600 hours with an average annual total cost of $127,344,633. As HHS, DOL, the Department of the Treasury, and OPM share jurisdiction, HHS will account for 45 percent of the burden, or approximately 416,970 burden hours with an equivalent cost of approximately $57,305,085. The Departments and OPM seek comment on these burden estimates. TABLE 13—ANNUAL BURDEN FOR TPAS TO DEVELOP AND MAINTAIN NEEDED IT SYSTEMS CHANGES AND SUBMIT REQUIRED DATA Estimated number of respondents Estimated number of responses Burden per response (hours) Total estimated annual burden (hours) Total estimated labor cost ($) 2022 ..................................................................................... 2023 ..................................................................................... 2024 ..................................................................................... 92 92 92 92 92 92 9,360 2,340 1,860 863,460 215,865 171,585 $117,670,410 19,813,355 24,431,490 Three-year Average ...................................................... 92 92 4,520 416,970 57,305,085 For PBMs, the Departments and OPM estimate that in 2022, each PBM will incur a one-time first-year cost and burden to design, develop, and implement needed IT systems changes to collect and submit, on behalf of plans and issuers, the data required under these interim final rules. The Departments and OPM estimate that for each PBM, on average, it will take Project Managers/Team Leads 2,080 hours (at $110 per hour), Scrum Masters 2,080 hours (at $110 per hour), Senior Business Analysts 1,560 hours (at $134 per hour), Technical Architects/Sr. Developers 2,080 hours (at $207 per hour), Application Developers 4,160 hours (at $111 per hour), and DevOps Engineers/Security Engineers 780 hours (at $143 per hour) to complete this task. The Departments and OPM estimate the total burden per PBM will be approximately 12,740 hours, with an equivalent cost of approximately $1,670,500. For all 66 PBMs, the total one-time first-year implementation and reporting burden is estimated to be 840,840 hours with an equivalent total cost of approximately $110,253,000.54 lotter on DSK11XQN23PROD with RULES2 TABLE 14—ESTIMATED TOTAL ONE-TIME FIRST-YEAR COST AND HOUR BURDEN FOR PBMS TO DESIGN, DEVELOP, AND IMPLEMENT NEEDED IT SYSTEMS CHANGES AND SUBMIT REQUIRED DATA Number of respondents Number of responses Burden hours per respondent Total burden hours Total cost 66 ..................................................................................................................... 66 12,740 840,840 $110,253,000 In addition to the one-time first-year cost and burden estimated in the previous section of this preamble, PBMs will incur additional one-time cost and burden in the second year of implementation to maintain and update their IT systems and to submit the required data to the Departments. The Departments and OPM estimate that for each PBM it will take Project Managers/ Team Leads 1,040 hours (at $110 per hour), Scrum Master 1,040 hours (at $110 per hour), Senior Business Analysts 780 hours (at $134 per hour), Technical Architects/Sr. Developers 1,040 hours (at $207 per hour), Application Developers 2,340 hours (at $111 per hour), and DevOps Engineers/ Security Engineers 260 hours (at $143 per hour) to perform these tasks. The total second-year burden for each PBM will be 6,500 hours, with an equivalent cost of approximately $845,520. For all 66 PBMs, the total one-time second-year implementation and reporting burden is estimated to be 429,000 hours with an 53 Calculation of totals was done as follows: Burden Hours per Respondent × Number of Respondent = Total Burden Hours (1,860 × 205 = 381,300). Total Cost per Respondent × Number of Respondents = Total Cost ($264,480 × 205 = $54,292,200). 54 Calculation of totals was done as follows: Burden Hours per Respondent × Number of Respondents = Total Burden Hours (12,740 × 66 = 840,840). Total Cost per Respondent × Number of Respondents = Total Cost ($1,670,500 × 66 = $110,253,000). VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 E:\FR\FM\23NOR2.SGM 23NOR2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations 66693 equivalent total cost of approximately $55,804,320.55 TABLE 15—ESTIMATED ONE-TIME SECOND-YEAR COST AND HOUR BURDEN FOR PBMS TO UPDATE AND MAINTAIN IT SYSTEMS AND SUBMIT REQUIRED DATA Number of respondents Number of responses Burden hours per respondent Total burden hours Total cost 66 ..................................................................................................................... 66 6,500 429,000 $55,804,320 In addition to the one-time first-year and second-year costs and burdens estimated in the previous sections of this preamble, PBMs will incur ongoing annual costs related to ensuring submission accuracy, providing quality assurance, conducting maintenance and making updates, enhancing or updating any needed security measures, and submitting the required data to the Departments. The Departments and OPM estimate that for each PBM it will take Project Managers/Team Leads 520 hours (at $110 per hour), Scrum Masters 260 hours (at $110 per hour), Senior Business Analysts 40 hours (at $134 per hour), Technical Architects/Sr. Developers 520 hours (at $207 per hour), Application Developers 520 hours (at $111 per hour), and DevOps Engineers/Security Engineers 260 hours (at $143 per hour) to perform these tasks. The Departments and OPM estimate the total annual burden for each PBM will be 2,120 hours, with an equivalent cost of approximately $293,700. For all 66 PBMs, the total annual maintenance and submission burden is estimated to be 139,920 hours with an equivalent total cost of approximately $19,384,200.56 The Departments and OPM consider this to be an upper-bound estimate and expect maintenance costs to decline in succeeding years as PBMs gain efficiencies and experience in updating, managing, and submitting the required data. TABLE 16—ESTIMATED ANNUAL COST AND HOUR BURDEN FOR MAINTENANCE AND REPORTING FOR ALL PBMS Number of respondents Number of responses Burden hours per respondent Total burden hours Total cost 66 ..................................................................................................................... 66 2,120 139,920 $19,384,200 The Departments and OPM estimate the three-year average annual total burden for all 66 PBMs to develop, build, and maintain needed IT systems changes to collect and aggregate the required data, and submit that data to the Departments, will be 469,920 hours with an average annual total cost of $61,813,840. As HHS, DOL, the Department of the Treasury, and OPM share jurisdiction, HHS will account for 45 percent of the burden, or approximately 211,464 hours, with an equivalent cost of approximately $27,816,228. The Departments and OPM seek comment on these burden estimates. TABLE 17—ANNUAL BURDEN FOR PBMS TO DEVELOP AND MAINTAIN NEEDED IT SYSTEMS CHANGES AND SUBMIT REQUIRED DATA lotter on DSK11XQN23PROD with RULES2 Estimated number of respondents Estimated number of responses Burden per response (hours) Total estimated annual burden (hours) Total estimated labor cost ($) 2022 ..................................................................................... 2023 ..................................................................................... 2024 ..................................................................................... 30 30 30 30 30 30 12,740 6,500 2,120 378,378 193,050 62,964 $49,613,850 25,111,944 8,722,890 Three-year Average ...................................................... 30 30 7,120 211,464 27,816,228 Plans will need to provide information on the average monthly premiums paid by participants, beneficiaries, and enrollees, as applicable, and paid by employers on behalf of participants, beneficiaries, and enrollees, as applicable, to issuers and TPAs, so that issuers and TPAs can report this information to the Departments on behalf of plans. This information is compiled by plans for other reporting purposes and should be readily available. The Departments and OPM assume that plans will be able to provide the information to issuers, FEHB carriers, and TPAs at minimal cost. In developing the cost and burden estimates in this ICR, the Departments and OPM recognize that while there may be various reporting entities that submit the required information, IT development will require varying 55 Calculation of totals was done as follows: Burden Hours per Respondent × Number of Respondents = Total Burden Hours (6,500 × 66 = 429,000). Total Cost per Respondent × Number of Respondents = Total Cost ($845,520 × 66 = $55,804,320). 56 Calculation of totals was done as follows: Burden Hours per Respondent × Number of Respondent = Total Burden Hours (2,120 × 66 = 139,920). Total Cost per Respondent × Number of Respondents = Total Cost ($293,700 × 66 = $19,384,200). VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 E:\FR\FM\23NOR2.SGM 23NOR2 66694 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations degrees of effort across the reporting entities. The Departments and OPM also recognize that some reporting entities will have mature in-house engineering teams and systems that can quickly respond to the requirements in these interim final rules, while others may have contracts with external firms and may require contract negotiation to develop and build the IT systems needed to meet the requirements. There may also be process efficiencies for issuers that are also FEHB carriers. Additionally, software and system maintenance will depend on various factors such as: The maturity of software in use; the ability to access data; software development resources or ability; any dependency upon thirdparty developers; the size of the reporting entity; and the number of plans. Due to these unknown factors, the estimates in these ICRs are the average cost and burden each entity will assume to develop and build an IT system from scratch. The Departments and OPM seek comment on these assumptions and what barriers reporting entities may face in developing their IT systems to meet the requirements in these interim final rules. HHS is seeking an OMB control number and approval for the proposed information collection (OMB control number: 0938–NEW (Prescription Drug and Health Care Spending (CMS–10788))). 3. Summary of Annual Burden Estimates for Information Collection Requirements TABLE 18—ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS Total cost ($) 0938–NEW ........ 0938–NEW ........ 0938–NEW ........ 234 92 30 234 92 30 4,520 4,520 7,120 1,055,646 416,970 211,464 $137 137 132 $145,079,703 57,305,085 27,816,228 Total ................................................... ........................... 356 356 ........................ 1,684,080 ........................ 230,201,016 E. Paperwork Reduction Act— Department of Labor, Department of the Treasury, and the Office of Personnel Management lotter on DSK11XQN23PROD with RULES2 Hourly labor cost of reporting 45 CFR 149.720, 730, 740—issuer .......... 45 CFR 149.720, 730, 740—TPA ............. 45 CFR 149.720, 730, 740—PBM ............ The Departments and OPM submitted a copy of these interim final rules to OMB for review of the rules’ information collection and recordkeeping requirements. These requirements are not effective until they have been approved by OMB. To obtain copies of the supporting statement and any related forms for the proposed collections discussed above, please visit www.cms.hhs.gov/ PaperworkReductionActof1995 or call the Reports Clearance Office at 410– 786–1326. The Departments and OPM invite public comments on these potential information collection requirements. If you wish to comment, please submit your comments electronically as specified in the ‘‘Addresses’’ section of these rules and identify the rule (CMS– 9905–IFC) and the ICR’s CFR citation. ICR-related comments are due January 24, 2022. As part of the continuing effort to reduce paperwork and respondent burden, the Departments and OPM conduct a preclearance consultation program to provide the general public and federal agencies with an opportunity to comment on proposed and continuing collections of information in accordance with the VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 Responses Total annual burden (hours) OMB control No. 4. Submission of PRA-Related Comments Respondents Burden per response (hours) Regulation PRA. This process helps to ensure that the public understands the Departments’ and OPM’s collection instructions, respondents can provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the Departments and OPM can properly assess the impact of collection requirements on respondents. Contemporaneously with the publication of these interim final rules, HHS as the host agency has submitted a request for a new common form ICR containing the information collection requirements for the prescription drug and health care spending requirements created by section 204 of Title II of Division BB of the CAA. Once HHS has obtained OMB approval for the information collection, DOL, the Department of the Treasury, and OPM will seek OMB approval to use the common form ICR by providing its agency-specific information to OMB. Under the PRA, an agency may not conduct or sponsor, and an individual is not required to respond to, a collection of information unless it displays a valid OMB control number. The information collections are summarized as follows: 1. ICRs Regarding Reporting of Prescription Drug and Health Care Spending (26 CFR 54.9825–1T—6T, 29 CFR 2590.725–1—4) As discussed earlier in the HHS Paperwork Reduction Act section (V.D.2) of this preamble, issuers, FEHB PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 carriers, TPAs, and PBMs will incur costs to submit the required information to the Departments. The Departments and OPM estimate the three-year average annual total burden, for all 519 issuers and FEHB carriers to develop, build, and maintain needed IT systems changes to collect and aggregate the required information, and submit that information to the Departments, will be 2,345,880 hours with an average annual total cost of $322,399,340. The threeyear average annual total burden, for all 205 TPAs to develop, build, and maintain needed IT systems changes to collect and aggregate the required information, and submit that information to the Departments, is estimated to be 926,600 hours with an average annual total cost of $127,344,633. In addition, the three-year average annual total burden, for all 66 PBMs to develop, build, and maintain needed IT systems changes to collect and aggregate the required information, and submit that information to the Departments, will be 469,920 hours with an average annual total cost of $61,813,840. As DOL, the Department of the Treasury, OPM, and HHS share jurisdiction, HHS will account for 45 percent of the burden, DOL will account for 25 percent, the Department of the Treasury will account for 25 percent, and OPM will account for 5 percent. The burden accounted for by DOL and the Department of the Treasury each is presented in Table 19 and the burden accounted for by OPM is presented in Table 20. E:\FR\FM\23NOR2.SGM 23NOR2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations 66695 TABLE 19—ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS FOR DOL AND THE DEPARTMENT OF THE TREASURY Number of respondents Respondent Number of responses Total annual burden (hours) Total labor cost of reporting FEHB carrier .................................................................................................... TPA .................................................................................................................. PBM ................................................................................................................. 130 51 17 130 51 17 586,470 231,650 117,480 $80,599,835 31,836,158 15,453,460 Total .......................................................................................................... 198 198 935,600 127,889,453 Agency: DOL–EBSA, Treasury–IRS, OPM–FEHB. Type of Review: New information collection. Title: Reporting of Prescription Drug and Health Care Spending. OMB Control Number: NEW. Affected Public: Businesses or other for-profits; not-for-profit institutions. Forms: Estimated Total Respondents: 198. Estimated Total Responses: 198. Frequency of Response: Annual. Estimated Total Burden Hours: 935,600 (DOL—425,273, Treasury— 425,273, OPM—85,055). Estimated Total Cost Burden: $127,889,453 (DOL—$58,131,570, Treasury—$58,131,570, OPM— $11,626,314). TABLE 20—ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS FOR OPM Number of respondents lotter on DSK11XQN23PROD with RULES2 Respondent Number of responses Total annual burden (hours) Total labor cost of reporting FEHB Carrier ................................................................................................... TPA .................................................................................................................. PBM ................................................................................................................. 26 10 3 26 10 3 117,294 46,330 23,496 $16,119,967 6,367,232 3,090,692 Total .......................................................................................................... 39 39 187,120 25,577,891 F. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) requires agencies to analyze options for regulatory relief of small entities to prepare an initial regulatory flexibility analysis to describe the impact of the proposed rule on small entities, unless the head of the agency can certify that the rule will not have a significant economic impact on a substantial number of small entities. The RFA generally defines a ‘‘small entity’’ as (1) a proprietary firm meeting the size standards of the Small Business Administration (SBA), (2) a not-forprofit organization that is not dominant in its field, or (3) a small government jurisdiction with a population of less than 50,000. States and individuals are not included in the definition of ‘‘small entity.’’ HHS uses a change in revenues of more than 3 to 5 percent as its measure of significant economic impact on a substantial number of small entities. Individuals and states are not included in the definition of a small entity. These interim final rules are not preceded by a general proposed rule, and thus the requirements of the RFA do not apply. G. Unfunded Mandates Reform Act Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 costs and benefits and take certain other actions before issuing a proposed rule or any final rule for which a general proposed rule was published that includes any federal mandate that may result in expenditures in any 1 year by state, local, or Tribal governments, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. In 2021, that threshold is approximately $158 million. These interim final rules were not preceded by a general proposed rule, and thus the requirements of UMRA do not apply. H. Federalism Executive Order 13132 outlines fundamental principles of federalism. It requires adherence to specific criteria by federal agencies in formulating and implementing policies that have ‘‘substantial direct effects’’ on the states, the relationship between the national government and states, or on the distribution of power and responsibilities among the various levels of government, including policies that impose direct costs on states or preempt state laws. Federal agencies promulgating regulations that have these federalism implications must consult with state and local officials, and describe the extent of their consultation and the nature of the PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 concerns of state and local officials in the preamble to the interim final rules. These interim final rules require plans, issuers, and FEHB carriers to submit prescription drug and health care spending data to the Departments, which will be used to inform a biannual public report that will be issued by the Departments regarding prescription drug reimbursements, trends, and impact on premiums. A number of states currently have laws, regulations, or guidance related to the reporting of prescription drug and health care spending data, although there is no consistency among these states in the data elements collected or the definitions used for those data elements. It is the Departments’ and OPM’s view that these interim final rules will not have substantial direct effects on states’ ability to collect such prescription drug and health care spending data as the states may deem necessary. The rules do not impose direct costs on states or preempt state laws. While developing these interim final rules, the Departments consulted with the states and attempted to balance the states’ interests in regulating health insurance issuers with the need to ensure transparency in the prescription drug and health care market and collect data on a consistent basis in order to inform nationwide analyses. By doing E:\FR\FM\23NOR2.SGM 23NOR2 66696 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations so, the Departments complied with the requirements of Executive Order 13132. Reporting and recordkeeping requirements, Retirement. I. Congressional Review Act These interim final rules are subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.) and will be transmitted to the Congress and to the Comptroller General for review in accordance with such provisions. Under the Congressional Review Act, the Office of Information and Regulatory Affairs designated these interim final rules as a ‘‘major rule’’ as that term is defined in 5 U.S.C. 804(2), because it is likely to result in an annual impact on the economy of $100 million or more. 26 CFR Part 54 Statutory Authority The Office of Personnel Management regulations are adopted pursuant to the authority contained in 5 U.S.C. 8910 and 5 U.S.C. 8913. The Department of the Treasury regulations are adopted pursuant to the authority contained in sections 7805 and 9833 of the Code. The Department of Labor regulations are adopted pursuant to the authority contained in 29 U.S.C. 1002, 1135, 1182, 1185d, 1191a, 1191b, and 1191c; Secretary of Labor’s Order 1–2011, 77 FR 1088 (Jan. 9, 2012). The Department of Health and Human Services regulations are adopted pursuant to the authority contained in sections 2792 and 2799A–10 of the Public Health Service Act (42 U.S.C. 300gg–92 and 300gg–120). Edward DeHarde, Acting Associate Director, Healthcare and Insurance, Office of Personnel Management. Douglas W. O’Donnell, Deputy Commissioner for Services and Enforcement, Internal Revenue Service. Lily L. Batchelder, Assistant Secretary of the Treasury (Tax Policy). Signed at Washington, DC, this 12th day of November, 2021. Ali Khawar, Acting Assistant Secretary, Employee Benefits Security Administration, Department of Labor. Dated: November 12, 2021. Xavier Becerra, Secretary, Department of Health and Human Services. lotter on DSK11XQN23PROD with RULES2 List of Subjects 5 CFR Part 890 Administrative practice and procedure, Government employees, Health facilities, Health insurance, Health professions, Hostages, Iraq, Kuwait, Lebanon, Military personnel, VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 Excise taxes, Health care, Health insurance, Pensions, Reporting and recordkeeping requirements. 29 CFR Part 2510 Employee benefit plans, Pensions. 29 CFR Part 2590 Continuation coverage, Disclosure, Employee benefit plans, Group health plans, Health care, Health insurance, Medical child support, Reporting and recordkeeping requirements. 45 CFR Part 149 Balance billing, Health care, Health insurance, Reporting and recordkeeping requirements, Surprise billing, State regulation of health insurance, Transparency in coverage. OFFICE OF PERSONNEL MANAGEMENT For the reasons stated in the preamble, the Office of Personnel Management amends 5 CFR part 890 as follows: PART 890—FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM 1. The authority citation for part 890 continues to read as follows: ■ Authority: 5 U.S.C. 8913; Sec. 890.102 also issued under sections 11202(f), 11232(e), and 11246 (b) of Pub. L. 105–33, 111 Stat. 251; Sec. 890.111 also issued under section 1622(b) of Pub. L. 104–106, 110 Stat. 521 (36 U.S.C. 5522); Sec. 890.112 also issued under section 1 of Pub. L. 110–279, 122 Stat. 2604 (2 U.S.C. 2051); Sec. 890.113 also issued under section 1110 of Pub. L. 116–92, 133 Stat. 1198 (5 U.S.C. 8702 note); Sec. 890.301 also issued under section 311 of Pub. L. 111– 3, 123 Stat. 64 (26 U.S.C. 9801); Sec. 890.302(b) also issued under section 1001 of Pub. L. 111–148, 124 Stat. 119, as amended by Pub. L. 111–152, 124 Stat. 1029 (42 U.S.C. 300gg–14); Sec. 890.803 also issued under 50 U.S.C. 3516 (formerly 50 U.S.C. 403p) and 22 U.S.C. 4069c and 4069c–1; subpart L also issued under section 599C of Pub. L. 101– 513, 104 Stat. 2064 (5 U.S.C. 5561 note), as amended; and subpart M also issued under section 721 of Pub. L. 105–261 (10 U.S.C. 1108), 112 Stat. 2061. 2. Amend § 890.114 by revising the section heading and paragraphs (a) and (d) and adding reserved paragraph (e) and paragraph (f) to read as follows: ■ § 890.114 Surprise billing and transparency. (a) A carrier must comply with requirements described in 26 CFR 54.9816–3T through 54.9816–6T, 54.9816–8T, 54.9817–1T, 54.9817–2T, PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 54.9822–1T, and 54.9825–3T through 6T; 29 CFR 2590.716–3 through 2590.716–6, 2590.716–8, 2590.717–1, 2590.717–2, 2590.722, 2590.725–1 through 2590.725–4; and 45 CFR 149.30, 149.110 through 149.140, 149.310, 149.510 and 520, and 149.710 through 149.740 in the same manner as such provisions apply to a group health plan or health insurance issuer offering group or individual health insurance coverage, subject to 5 U.S.C. 8902(m)(1), and the provisions of the carrier’s contract. For purposes of application of such sections, all carriers are deemed to offer health benefits in the large group market. * * * * * (d)(1) In addition to notification to the Department per 26 CFR 54.9816– 8T(b)(2)(iii), 29 CFR 2590.716– 8(b)(2)(iii), and 45 CFR 149.510(b)(2)(iii), a carrier must notify the Director of its initiation of the Federal IDR process, or its receipt of written notice that a provider, facility, or provider of air ambulance services has initiated the Federal IDR process, upon sending or receiving such notice. (2) The Director will coordinate with the Departments in resolving matters under 26 CFR 54.9816– 8T(c)(4)(vii)(A)(1), 29 CFR 2590.716– 8(c)(4)(vii)(A)(1), or 45 CFR 149.510(c)(4)(vii)(A)(1) where fraud or material misrepresentation are presented, and matters involving 26 CFR 54.9816–8T(c)(4)(vii)(A)(2), 29 CFR 2590.716–8(c)(4)(vii)(A)(2), and 45 CFR 149.510(c)(4)(vii)(A)(2). The Director will coordinate with the Departments in oversight of reports submitted by certified IDR entities with respect to carriers pursuant to 26 CFR 54.9816– 8T(f), 29 CFR 2590.716–8(f), or 45 CFR 149.510(f). (e) [Reserved] (f) The Director will coordinate with the Departments in oversight of prescription drug and health care spending with respect to FEHB carriers pursuant to 45 CFR 149.710 through 149.740. INTERNAL REVENUE SERVICE Amendments to the Regulations Accordingly, 26 CFR part 54 is amended as follows: PART 54—PENSION EXCISE TAXES Paragraph 3. The authority citation for part 54 continues to read, in part, as follows: ■ Authority: 26 U.S.C. 7805. Par. 4. Sections 54.9825–1T through 54.9825–6T are added to read as follows: ■ E:\FR\FM\23NOR2.SGM 23NOR2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations Sec. * * * * * 54.9825–1T Basis and scope (temporary). 54.9825–2T Applicability (temporary). 54.9825–3T Definitions (temporary). 54.9825–4T Reporting requirements related to prescription drug and health care spending (temporary). 54.9825–5T Aggregate reporting (temporary). 54.9825–6T Required information (temporary). * * * § 54.9825–1T (temporary). * * Basis and scope (a) Basis. This section and §§ 54.9825–2T through 54.9825–6T implement subchapter B of chapter 100 of the Internal Revenue Code of 1986. (b) Scope. This part establishes standards for group health plans with respect to surprise medical bills, transparency in health care coverage, and additional patient protections. § 54.9825–2T Applicability (temporary). (a) In general. The requirements in §§ 54.9825–4T through 54.9825–6T apply to group health plans (including grandfathered health plans as defined in § 54.9815–1251), except as specified in paragraph (b) of this section. (b) Exceptions. The requirements in §§ 54.9825–4T through 54.9825–6T do not apply to the following: (1) Excepted benefits as described in § 54.9831–1(c). (2) Short-term, limited-duration insurance as defined in § 54.9801–2. (3) Health reimbursement arrangements or other account-based group health plans as described in § 54.9815–2711(d). lotter on DSK11XQN23PROD with RULES2 § 54.9825–3T Definitions (temporary). The definitions in § 54.9816–3T apply to §§ 54.9825–4T through 54.9825–6T unless otherwise specified. In addition, for purposes of §§ 54.9825–4T through 54.9825–6T, the following definitions apply: Brand prescription drug means a drug for which an application is approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(c)), or under section 351 of the PHS Act (42 U.S.C. 262), and that is generally marketed under a proprietary, trademark-protected name. The term ‘‘brand prescription drug’’ includes a drug with Emergency Use Authorization issued pursuant to section 564 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb–3), and that is generally marketed under a proprietary, trademark-protected name. The term ‘‘brand prescription drug’’ includes drugs that the U.S. Food and Drug Administration determines to be VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 interchangeable biosimilar products under sections 351(i)(3) and 351(k)(4) of the PHS Act (42 U.S.C. 262). Dosage unit means the smallest form in which a pharmaceutical product is administered or dispensed, such as a pill, tablet, capsule, ampule, or measurement of grams or milliliters. Federal Employees Health Benefits (FEHB) line of business refers to all health benefit plans that are offered to eligible enrollees pursuant to a contract between the Office of Personnel Management and Federal Employees Health Benefits (FEHB) Program carriers. Such plans are Federal governmental plans offered pursuant to 5 U.S.C. chapter 89. Life-years means the total number of months of coverage for participants and beneficiaries, as applicable, divided by 12. Market segment means one of the following: The individual market (excluding the student market), the student market, the fully-insured small group market, the fully-insured large group market (excluding the FEHB line of business), self-funded plans offered by small employers, self-funded plans offered by large employers, and the FEHB line of business. Premium amount means, with respect to individual health insurance coverage and fully-insured group health plans, earned premium as that term is defined in 45 CFR 158.130, excluding the adjustments specified in 45 CFR 158.130(b)(5). Premium amount means, with respect to self-funded group health plans and other arrangements that do not rely exclusively or primarily on payments of premiums as defined in 45 CFR 158.130, the premium equivalent amount representing the total cost of providing and maintaining coverage, including claims costs, administrative costs, and stop-loss premiums, as applicable. Prescription drug (drug) means a set of pharmaceutical products that have been assigned a National Drug Code (NDC) by the Food and Drug Administration and are grouped by name and ingredient in the manner specified by the Secretary, jointly with the Secretary of Labor and the Secretary of Health and Human Services. Prescription drug rebates, fees, and other remuneration means all remuneration received by or on behalf of a plan or issuer, its administrator or service provider, including remuneration received by and on behalf of entities providing pharmacy benefit management services to the plan or issuer, with respect to prescription drugs prescribed to participants and beneficiaries in the plan or coverage, as PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 66697 applicable, regardless of the source of the remuneration (for example, pharmaceutical manufacturer, wholesaler, retail pharmacy, or vendor). Prescription drug rebates, fees, and other remuneration also include, for example, discounts, chargebacks or rebates, cash discounts, free goods contingent on a purchase agreement, upfront payments, coupons, goods in kind, free or reduced-price services, grants, or other price concessions or similar benefits. Prescription drug rebates, fees, and other remuneration include bona fide service fees. Bona fide service fees mean fees paid by a drug manufacturer to an entity providing pharmacy benefit management services to the plan or issuer that represent fair market value for a bona fide, itemized service actually performed on behalf of the manufacturer that the manufacturer would otherwise perform (or contract for) in the absence of the service arrangement, and that are not passed on in whole or in part to a client or customer of the entity, whether or not the entity takes title to the drug. Reference year means the calendar year immediately preceding the calendar year in which data submissions under this section are required. Reporting entity means an entity that submits some or all of the information required under §§ 54.9825–4T through 54.9825–6T with respect to a plan or issuer, and that may be different from the plan or issuer that is subject to the requirements of §§ 54.9825–4T through 54.9825–6T. Student market has the meaning given in 45 CFR 158.103. Therapeutic class means a group of pharmaceutical products that have similar mechanisms of action or treat the same types of conditions, grouped in the manner specified by the Secretary, jointly with the Secretary of Labor and the Secretary of Health and Human Services, in guidance. The Secretary may require plans and issuers to classify drugs according to a commonly available public or commercial therapeutic classification system, a therapeutic classification system provided by the Secretary of Health and Human Services, or a combination thereof. Total annual spending means incurred claims, as that term is defined in 45 CFR 158.140, excluding the adjustments specified in 45 CFR 158.140(b)(1)(i), (b)(2)(iv), and (b)(4), and including cost sharing. With respect to prescription drugs, total annual spending is net of prescription drug rebates, fees, and other remuneration. E:\FR\FM\23NOR2.SGM 23NOR2 66698 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations lotter on DSK11XQN23PROD with RULES2 § 54.9825–4T Reporting requirements related to prescription drug and health care spending (temporary). (a) General requirement. A group health plan or a health insurance issuer offering group health insurance coverage must submit an annual report to the Secretary, the Secretary of Health and Human Services, and the Secretary of Labor, on prescription drug and health care spending, premiums, and enrollment under the plan or coverage. (b) Timing and form of report. The report for the 2020 reference year must be submitted to the Secretary by December 27, 2021. Beginning with the 2021 reference year, the report for each reference year is due by June 1 of the year following the reference year. The report must be submitted in the form and manner prescribed by the Secretary, jointly with the Secretary of Health and Human Services and the Secretary of Labor. (c) Transfer of business. Issuers that acquire a line or block of business from another issuer during a reference year are responsible for submitting the information and report required by this section for the acquired business for that reference year, including for the part of the reference year that was prior to the acquisition. (d) Reporting entities and special rules to prevent unnecessary duplication—(1) Special rule for insured group health plans. To the extent coverage under a group health plan consists of group health insurance coverage, the plan may satisfy the requirements of paragraph (a) of this section if the plan requires the health insurance issuer offering the coverage to report the information required by this section in compliance with this subpart pursuant to a written agreement. Accordingly, if a health insurance issuer and a group health plan sponsor enter into a written agreement under which the issuer agrees to provide the information required under paragraph (a) of this section in compliance with this section, and the issuer fails to do so, then the issuer, but not the plan, violates the reporting requirements of paragraph (a) of this section with respect to the relevant information. (2) Other contractual arrangements. A group health plan or health insurance issuer offering group health insurance coverage may satisfy the requirements under paragraph (a) of this section by entering into a written agreement under which one or more other parties (such as health insurance issuers, pharmacy benefit managers, third-party administrators, or other third parties) report some or all of the information required under paragraph (a) of this VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 section in compliance with this section. Notwithstanding the preceding sentence, if a group health plan or health insurance issuer chooses to enter into such an agreement and the party with which it contracts fails to provide the information in accordance with paragraph (a) of this section, the plan or issuer violates the reporting requirements of paragraph (a) of this section. (e) Applicability date. The provisions of this section are applicable beginning December 27, 2021. § 54.9825–5T (temporary). Aggregate reporting (a) General requirement. A group health plan or a health insurance issuer offering group health insurance coverage must submit, or arrange to be submitted, the information required in § 54.9825–6T(b) separately for each State in which group health coverage or group health insurance coverage was provided in connection with the group health plan or by the health insurance issuer. The report must include the experience of all plans and policies in the State during the reference year covered by the report, and must include the experience separately for each market segment as defined in § 54.9825– 3T. (b) Aggregation by reporting entity— (1) In general. If a reporting entity submits data on behalf of more than one group health plan in a State and market segment, the reporting entity may aggregate the data required in § 54.9825–6T(b) for the group health plans for each market segment in the State. (2) Multiple reporting entities. (i) If multiple reporting entities submit the required data related to one or more plans or issuers in a State and market segment, the data submitted by each of these reporting entities must not be aggregated at a less granular level than the aggregation level used by the reporting entity that submits the data on total annual spending on health care services, as required by § 54.9825– 6T(b)(4), on behalf of these plans or issuers. (ii) The Secretary, jointly with the Secretary of Health and Human Services and the Secretary of Labor, may specify in guidance alternative or additional aggregation methods for data submitted by multiple reporting entities, to ensure a balance between compliance burdens and a data aggregation level that facilitates the development of the biannual public report required under section 9825(b) of the Code. (3) Group health insurance coverage with dual contracts. If a group health PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 plan involves health insurance coverage obtained from two affiliated issuers, one providing in-network coverage only and the second providing out-of-network coverage only, the plan’s out-of-network experience may be treated as if it were all related to the contract provided by the in-network issuer. (c) Aggregation by State. (1) Experience with respect to each fullyinsured policy must be included on the report for the State where the contract was issued, except as specified in paragraphs (c)(3) and (4) of this section. (2) Experience with respect to each self-funded group health plan must be included on the report for the State where the plan sponsor has its principal place of business. (3) For individual market business sold through an association, experience must be attributed to the issue State of the certificate of coverage. (4) For health coverage provided to plans through a group trust or multiple employer welfare arrangement, the experience must be included in the report for the State where the employer (if the plan is sponsored at the individual employer level) or the association (if the association qualifies as an employer under ERISA section 3(5)) has its principal place of business or the state where the association is incorporated, in the case of an association with no principal place of business. (d) Applicability date. The provisions of this section are applicable beginning December 27, 2021. § 54.9825–6T (temporary). Required information (a) Information for each plan or coverage. The report required under § 54.9825–4T must include the following information for each plan or coverage, at the plan or coverage level: (1) The identifying information for plans, issuers, plan sponsors, and any other reporting entities. (2) The beginning and end dates of the plan year that ended on or before the last day of the reference year. (3) The number of participants and beneficiaries, as applicable, covered on the last day of the reference year. (4) Each State in which the plan or coverage is offered. (b) Information for each state and market segment. The report required under § 54.9825–4T must include the following information with respect to plans or coverage for each State and market segment for the reference year, unless otherwise specified: (1) The 50 brand prescription drugs most frequently dispensed by pharmacies, and for each such drug, the E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations data elements listed in paragraph (b)(5) of this section. The most frequently dispensed drugs must be determined according to total number of paid claims for prescriptions filled during the reference year for each drug. (2) The 50 most costly prescription drugs and for each such drug, the data elements listed in paragraph (b)(5) of this section. The most costly drugs must be determined according to total annual spending on each drug. (3) The 50 prescription drugs with the greatest increase in expenditures between the year immediately preceding the reference year and the reference year, and for each such drug: The data elements listed in paragraph (b)(5) of this section for the year immediately preceding the reference year, and the data elements listed in paragraph (b)(5) of this section for the reference year. The drugs with the greatest increase in expenditures must be determined based on the increase in total annual spending from the year immediately preceding the reference year to the reference year. A drug must be approved for marketing or issued an Emergency Use Authorization by the Food and Drug Administration for the entirety of the year immediately preceding the reference year and for the entirety of the reference year to be included in the data submission as one of the drugs with the greatest increase in expenditures. (4) Total annual spending on health care services by the plan or coverage and by participants and beneficiaries, as applicable, broken down by the type of costs, including— (i) Hospital costs; (ii) Health care provider and clinical service costs, for primary care and specialty care separately; (iii) Costs for prescription drugs, separately for drugs covered by the plan’s or issuer’s pharmacy benefit and drugs covered by the plan’s or issuer’s hospital or medical benefit; and (iv) Other medical costs, including wellness services. (5) Prescription drug spending and utilization, including— (i) Total annual spending by the plan or coverage; (ii) Total annual spending by the participants and beneficiaries, as applicable, enrolled in the plan or coverage, as applicable; (iii) The number of participants and beneficiaries, as applicable, with a paid prescription drug claim; (iv) Total dosage units dispensed; and (v) The number of paid claims. (6) Premium amounts, including— (i) Average monthly premium amount paid by employers and other plan VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 sponsors on behalf of participants and beneficiaries, as applicable; (ii) Average monthly premium amount paid by participants and beneficiaries, as applicable; and (iii) Total annual premium amount and the total number of life-years. (7) Prescription drug rebates, fees, and other remuneration, including— (i) Total prescription drug rebates, fees, and other remuneration, and the difference between total amounts that the plan or issuer pays the entity providing pharmacy benefit management services to the plan or issuer and total amounts that such entity pays to pharmacies. (ii) Prescription drug rebates, fees, and other remuneration, excluding bona fide service fees, broken down by the amounts passed through to the plan or issuer, the amounts passed through to participants and beneficiaries, as applicable, and the amounts retained by the entity providing pharmacy benefit management services to the plan or issuer; and the data elements listed in paragraph (b)(5) of this section— (A) For each therapeutic class; and (B) For each of the 25 prescription drugs with the greatest amount of total prescription drug rebates and other price concessions for the reference year. (8) The method used to allocate prescription drug rebates, fees, and other remuneration, if applicable. (9) The impact of prescription drug rebates, fees, and other remuneration on premium and cost sharing amounts. (c) Applicability date. The provisions of this section are applicable beginning December 27, 2021. 66699 Labor’s Order 1–2011, 77 FR 1088 (Jan. 9, 2012). Subpart D—Surprise Billing and Transparency Requirements 6. Section 2590.716–1 is amended by revising paragraph (a) to read as follows: ■ § 2590.716–1 Basis and scope. (a) Basis. Sections 2590.716–1 through 2590.725–4 implement sections 716–725 of ERISA. * * * * * ■ 7. Section 2590.716–2 is amended by revising paragraph (a) and paragraph (b) introductory text to read as follows: § 2590.716–2 Applicability. Employee Benefits Security Administration (a) In general. (1) The requirements in §§ 2590.716–4 through 2590.716–7, 2590.717–1, 2590.722, and 2590.725–1 through 2590.725–4 apply to group health plans and health insurance issuers offering group health insurance coverage (including grandfathered health plans as defined in § 2590.715– 1251), except as specified in paragraph (b) of this section. (2) The requirements in §§ 2590.716– 8 and 2590.717–2 apply to certified IDR entities and group health plans and health insurance issuers offering group health insurance coverage (including grandfathered health plans as defined in § 2590.715–1251) except as specified in paragraph (b) of this section. (b) Exceptions. The requirements in §§ 2590.716–4 through 2590.716–8, 2590.717–1, 2590.717–2, 2590.722, and 2590.725–1 through 2590.725–4 do not apply to the following: * * * * * ■ 8. Add §§ 2590.725–1, 2590.725–2, 2590.725–3, and 2590.725–4 to read as follows: 29 CFR Chapter XXV Sec. DEPARTMENT OF LABOR For the reasons set forth in the preamble, the Department of Labor amends 29 CFR part 2590 as set forth below: PART 2590—RULES AND REGULATIONS FOR GROUP HEALTH PLANS * * * * * * § 2590.725–1 5. The authority citation for part 2590 continues to read as follows: ■ Authority: 29 U.S.C. 1027, 1059, 1135, 1161–1168, 1169, 1181–1183, 1181 note, 1185, 1185a–n, 1191, 1191a, 1191b, and 1191c; sec. 101(g), Pub. L. 104–191, 110 Stat. 1936; sec. 401(b), Pub. L. 105–200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 110–343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111–148, 124 Stat. 119, as amended by Pub. L. 111–152, 124 Stat. 1029; Division M, Pub. L. 113–235, 128 Stat. 2130; Pub. L. 116–260 134 Stat. 1182; Secretary of PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 * * 2590.725–1 Definitions. 2590.725–2 Reporting requirements related to prescription drug and health care spending. 2590.725–3 Aggregate reporting. 2590.725–4 Required information. * * Definitions. For purposes of this section, the following definitions apply in addition to the definitions in § 2590.716–3: Brand prescription drug means a drug for which an application is approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(c)) or under section 351 of the Public Health Service Act (42 U.S.C. 262), and that is generally marketed under a proprietary, trademarkprotected name. The term ‘‘brand E:\FR\FM\23NOR2.SGM 23NOR2 lotter on DSK11XQN23PROD with RULES2 66700 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations prescription drug’’ includes a drug with Emergency Use Authorization issued pursuant to section 564 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb–3), and that is generally marketed under a proprietary, trademark-protected name. The term ‘‘brand prescription drug’’ includes drugs that the U.S. Food and Drug Administration determines to be interchangeable biosimilar products under sections 351(i)(3) and 351(k)(4) of the PHS Act (42 U.S.C. 262). Dosage unit means the smallest form in which a pharmaceutical product is administered or dispensed, such as a pill, tablet, capsule, ampule, or measurement of grams or milliliters. Federal Employees Health Benefits (FEHB) line of business refers to all health benefit plans that are offered to eligible enrollees pursuant to a contract between the Office of Personnel Management and Federal Employees Health Benefits (FEHB) Program carriers. Such plans are Federal governmental plans offered pursuant to 5 U.S.C. chapter 89. Life-years means the total number of months of coverage for participants and beneficiaries, as applicable, divided by 12. Market segment means one of the following: The individual market (excluding the student market), the student market, the fully-insured small group market, the fully-insured large group market (excluding the FEHB line of business), self-funded plans offered by small employers, self-funded plans offered by large employers, and the FEHB line of business. Premium amount means, with respect to fully-insured group health plans, earned premium as that term is defined in 45 CFR 158.130, excluding the adjustments specified in 45 CFR 158.130(b)(5). Premium amount means, with respect to self-funded group health plans and other arrangements that do not rely exclusively or primarily on payments of premiums as defined in 45 CFR 158.130, the premium equivalent amount representing the total cost of providing and maintaining coverage, including claims costs, administrative costs, and stop-loss premiums, as applicable. Prescription drug (drug) means a set of pharmaceutical products that have been assigned a National Drug Code (NDC) by the Food and Drug Administration and are grouped by name and ingredient in the manner specified by the Secretary, jointly with the Secretary of the Treasury and the Secretary of Health and Human Services. VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 Prescription drug rebates, fees, and other remuneration means all remuneration received by or on behalf of a plan or issuer, its administrator or service provider, including remuneration received by and on behalf of entities providing pharmacy benefit management services to the plan or issuer, with respect to prescription drugs prescribed to participants or beneficiaries in the plan or coverage, as applicable, regardless of the source of the remuneration (for example, pharmaceutical manufacturer, wholesaler, retail pharmacy, or vendor). Prescription drug rebates, fees, and other remuneration also include, for example, discounts, chargebacks or rebates, cash discounts, free goods contingent on a purchase agreement, upfront payments, coupons, goods in kind, free or reduced-price services, grants, or other price concessions or similar benefits. Prescription drug rebates, fees, and other remuneration include bona fide service fees. Bona fide service fees mean fees paid by a drug manufacturer to an entity providing pharmacy benefit management services to the plan or issuer that represent fair market value for a bona fide, itemized service actually performed on behalf of the manufacturer that the manufacturer would otherwise perform (or contract for) in the absence of the service arrangement, and that are not passed on in whole or in part to a client or customer of the entity, whether or not the entity takes title to the drug. Reference year means the calendar year immediately preceding the calendar year in which data submissions under this section are required. Reporting entity means an entity that submits some or all of the information required under this section with respect to a plan or issuer, and that may be different from the plan or issuer that is subject to the requirements of this section. Student market has the meaning given in 45 CFR 158.103. Therapeutic class means a group of pharmaceutical products that have similar mechanisms of action or treat the same types of conditions, grouped in the manner specified by the Secretary, jointly with the Secretary of the Treasury and the Secretary of Health and Human Services, in guidance. The Secretary may require plans and issuers to classify drugs according to a commonly available public or commercial therapeutic classification system, a therapeutic classification system provided by the Secretary of Health and Human Services, or a combination thereof. PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 Total annual spending means incurred claims, as that term is defined in 45 CFR 158.140, excluding the adjustments specified in 45 CFR 158.140(b)(1)(i), (b)(2)(iv), and (b)(4), and including cost sharing. With respect to prescription drugs, total annual spending is net of prescription drug rebates, fees, and other remuneration. § 2590.725–2 Reporting requirements related to prescription drug and health care spending. (a) General requirement. A group health plan or a health insurance issuer offering group health insurance coverage must submit an annual report to the Secretary, the Secretary of the Treasury, and the Secretary of Health and Human Services, on prescription drug and health care spending, premiums, and enrollment under the plan or coverage. (b) Timing and form of report. The report for the 2020 reference year must be submitted to the Secretary by December 27, 2021. Beginning with the 2021 reference year, the report for each reference year is due by June 1 of the year following the reference year. The report must be submitted in the form and manner prescribed by the Secretary, jointly with the Secretary of the Treasury and the Secretary of Health and Human Services. (c) Transfer of business. Issuers that acquire a line or block of business from another issuer during a reference year are responsible for submitting the information and report required by this section for the acquired business for that reference year, including for the part of the reference year that was prior to the acquisition. (d) Reporting entities and special rules to prevent unnecessary duplication—(1) Special rule for insured group health plans. To the extent coverage under a group health plan consists of group health insurance coverage, the plan may satisfy the requirements of paragraph (a) of this section if the plan requires the health insurance issuer offering the coverage to report the information required by this section in compliance with this subpart pursuant to a written agreement. Accordingly, if a health insurance issuer and a group health plan sponsor enter into a written agreement under which the issuer agrees to provide the information required under paragraph (a) of this section in compliance with this section, and the issuer fails to do so, then the issuer, but not the plan, violates the reporting requirements of paragraph (a) of this section with respect to the relevant information. E:\FR\FM\23NOR2.SGM 23NOR2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations (2) Other contractual arrangements. A group health plan or health insurance issuer offering group health insurance coverage may satisfy the requirements under paragraph (a) of this section by entering into a written agreement under which one or more other parties (such as health insurance issuers, pharmacy benefit managers, third-party administrators, or other third parties) report some or all of the information required under paragraph (a) of this section in compliance with this section. Notwithstanding the preceding sentence, if a group health plan or health insurance issuer chooses to enter into such an agreement and the party with which it contracts fails to provide the information in accordance with paragraph (a) of this section, the plan or issuer violates the reporting requirements of paragraph (a) of this section. (e) Applicability date. The provisions of this section are applicable beginning December 27, 2021. lotter on DSK11XQN23PROD with RULES2 § 2590.725–3 Aggregate reporting. (a) General requirement. A group health plan or a health insurance issuer offering group health insurance coverage must submit, or arrange to be submitted, the information required in § 2590.725–4(b) of this section separately for each State in which group health coverage or group health insurance coverage was provided in connection with the group health plan or by the health insurance issuer. The report must include the experience of all plans and policies in the State during the reference year covered by the report, and must include the experience separately for each market segment as defined in § 2590.725–1 of this section. (b) Aggregation by reporting entity— (1) In general. If a reporting entity submits data on behalf of more than one group health plan in a State and market segment, the reporting entity may aggregate the data required in § 2590.725–4(b) of this section for the group health plans for each market segment in the State. (2) Multiple reporting entities. (i) If multiple reporting entities submit the required data related to one or more plans or issuers in a State and market segment, the data submitted by each of these reporting entities must not be aggregated at a less granular level than the aggregation level used by the reporting entity that submits the data on total annual spending on health care services, as required by § 2590.725– 4(b)(4), on behalf of these plans or issuers. (ii) The Secretary, jointly with the Secretary of the Treasury and the VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 Secretary of Health and Human Services, may specify in guidance alternative or additional aggregation methods for data submitted by multiple reporting entities, to ensure a balance between compliance burdens and a data aggregation level that facilitates the development of the biannual public report required under section 725(b) of ERISA. (3) Group health insurance coverage with dual contracts. If a group health plan involves health insurance coverage obtained from two affiliated issuers, one providing in-network coverage only and the second providing out-of-network coverage only, the plan’s out-of-network experience may be treated as if it were all related to the contract provided by the in-network issuer. (c) Aggregation by State. (1) Experience with respect to each fullyinsured policy must be included on the report for the State where the contract was issued, except as specified in paragraphs (c)(3) and (4) of this section. (2) Experience with respect to each self-funded group health plan must be included on the report for the State where the plan sponsor has its principal place of business. (3) For individual market business sold through an association, experience must be attributed to the issue State of the certificate of coverage. (4) For health coverage provided to plans through a group trust or multiple employer welfare arrangement, the experience must be included in the report for the State where the employer (if the plan is sponsored at the individual employer level) or the association (if the association qualifies as an employer under ERISA section 3(5)) has its principal place of business or the state where the association is incorporated, in the case of an association with no principal place of business. (d) Applicability date. The provisions of this section are applicable beginning December 27, 2021. § 2590.725–4 Required information. (a) Information for each plan or coverage. The report required under § 2590.725–2 must include the following information for each plan or coverage, at the plan or coverage level: (1) The identifying information for plans, issuers, plan sponsors, and any other reporting entities. (2) The beginning and end dates of the plan year that ended on or before the last day of the reference year. (3) The number of participants and beneficiaries, as applicable, covered on the last day of the reference year. PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 66701 (4) Each State in which the plan or coverage is offered. (b) Information for each state and market segment. The report required under § 2590.725–2 must include the following information with respect to plans or coverage for each State and market segment for the reference year, unless otherwise specified: (1) The 50 brand prescription drugs most frequently dispensed by pharmacies, and for each such drug, the data elements listed in paragraph (b)(5) of this section. The most frequently dispensed drugs must be determined according to total number of paid claims for prescriptions filled during the reference year for each drug. (2) The 50 most costly prescription drugs and for each such drug, the data elements listed in paragraph (b)(5) of this section. The most costly drugs must be determined according to total annual spending on each drug. (3) The 50 prescription drugs with the greatest increase in expenditures between the year immediately preceding the reference year and the reference year, and for each such drug: The data elements listed in paragraph (b)(5) of this section for the year immediately preceding the reference year, and the data elements listed in paragraph (b)(5) of this section for the reference year. The drugs with the greatest increase in expenditures must be determined based on the increase in total annual spending from the year immediately preceding the reference year to the reference year. A drug must be approved for marketing or issued an Emergency Use Authorization by the Food and Drug Administration for the entirety of the year immediately preceding the reference year and for the entirety of the reference year to be included in the data submission as one of the drugs with the greatest increase in expenditures. (4) Total annual spending on health care services by the plan or coverage and by participants and beneficiaries, as applicable, broken down by the type of costs, including— (i) Hospital costs; (ii) Health care provider and clinical service costs, for primary care and specialty care separately; (iii) Costs for prescription drugs, separately for drugs covered by the plan’s or issuer’s pharmacy benefit and drugs covered by the plan’s or issuer’s hospital or medical benefit; and (iv) Other medical costs, including wellness services. (5) Prescription drug spending and utilization, including— (i) Total annual spending by the plan or coverage; E:\FR\FM\23NOR2.SGM 23NOR2 66702 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations (ii) Total annual spending by the participants and beneficiaries, as applicable, enrolled in the plan or coverage, as applicable; (iii) The number of participants and beneficiaries, as applicable, with a paid prescription drug claim; (iv) Total dosage units dispensed; and (v) The number of paid claims. (6) Premium amounts, including— (i) Average monthly premium amount paid by employers and other plan sponsors on behalf of participants and beneficiaries, as applicable; (ii) Average monthly premium amount paid by participants and beneficiaries, as applicable; and (iii) Total annual premium amount and the total number of life-years. (7) Prescription drug rebates, fees, and other remuneration, including— (i) Total prescription drug rebates, fees, and other remuneration, and the difference between total amounts that the plan or issuer pays the entity providing pharmacy benefit management services to the plan or issuer and total amounts that such entity pays to pharmacies. (ii) Prescription drug rebates, fees, and other remuneration, excluding bona fide service fees, broken down by the amounts passed through to the plan or issuer, the amounts passed through to participants and beneficiaries, as applicable, and the amounts retained by the entity providing pharmacy benefit management services to the plan or issuer; and the data elements listed in paragraph (b)(5) of this section— (A) For each therapeutic class; and (B) For each of the 25 prescription drugs with the greatest amount of total prescription drug rebates and other price concessions for the reference year. (8) The method used to allocate prescription drug rebates, fees, and other remuneration, if applicable. (9) The impact of prescription drug rebates, fees, and other remuneration on premium and cost sharing amounts. (c) Applicability date. The provisions of this section are applicable beginning December 27, 2021. DEPARTMENT OF HEALTH AND HUMAN SERVICES lotter on DSK11XQN23PROD with RULES2 For the reasons set forth in the preamble, the Department of Health and Human Services amends 45 CFR part 149 as set forth below: PART 149—SURPRISE BILLING AND TRANSPARENCY REQUIREMENTS 9. The authority citation for part 149 continues to read as follows: ■ Authority: 42 U.S.C. 300gg–111 through 300gg–139, as amended. VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 10. Amend § 149.20 by revising paragraph (a)(1) and paragraph (b) introductory text to read as follows: ■ § 149.20 Applicability. (a) * * * (1) The requirements in subparts B, D, and H of this part apply to group health plans and health insurance issuers offering group or individual health insurance coverage (including grandfathered health plans as defined in § 147.140 of this subchapter), except as specified in paragraph (b) of this section. * * * * * (b) Exceptions. The requirements in subparts B, D, E, F, and H of this part do not apply to the following: * * * * * ■ 11. Add subpart H to read as follows: Subpart H—Prescription Drug and Health Care Spending Sec. 149.710 Definitions. 149.720 Reporting Requirements Related to Prescription Drug and Health Care Spending. 149.730 Aggregate Reporting. 149.740 Required Information. Subpart H—Prescription Drug and Health Care Spending § 149.710 Definitions. For purposes of this subpart, the following definitions apply in addition to the definitions in § 149.30: Brand prescription drug means a drug for which an application is approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(c)), or under section 351 of the PHS Act (42 U.S.C. 262), and that is generally marketed under a proprietary, trademark-protected name. The term ‘‘brand prescription drug’’ includes a drug with Emergency Use Authorization issued pursuant to section 564 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb–3), and that is generally marketed under a proprietary, trademark-protected name. The term ‘‘brand prescription drug’’ includes drugs that the U.S. Food and Drug Administration determines to be interchangeable biosimilar products under sections 351(i)(3) and 351(k)(4) of the PHS Act (42 U.S.C. 262). Dosage unit means the smallest form in which a pharmaceutical product is administered or dispensed, such as a pill, tablet, capsule, ampule, or measurement of grams or milliliters. Enrollee means an individual who is enrolled, within the meaning of § 144.103 of this subchapter, in group health insurance coverage, or an PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 individual who is covered by individual health insurance coverage, at any time during the reference year, and includes dependents. Federal Employees Health Benefits (FEHB) line of business refers to all health benefit plans that are offered to eligible enrollees pursuant to a contract between the Office of Personnel Management and Federal Employees Health Benefits (FEHB) Program carriers. Such plans are Federal governmental plans offered pursuant to 5 U.S.C. chapter 89. Life-years means the total number of months of coverage for participants and beneficiaries, or for enrollees, as applicable, divided by 12. Market segment means one of the following: The individual market (excluding the student market), the student market, the fully-insured small group market, the fully-insured large group market (excluding the FEHB line of business), self-funded plans offered by small employers, self-funded plans offered by large employers, and the FEHB line of business. Premium amount means, with respect to individual health insurance coverage and fully-insured group health plans, earned premium as that term is defined in § 158.130 of this subchapter, excluding the adjustments specified in § 158.130(b)(5). Premium amount means, with respect to self-funded group health plans and other arrangements that do not rely exclusively or primarily on payments of premiums as defined in § 158.130 of this subchapter, the premium equivalent amount representing the total cost of providing and maintaining coverage, including claims costs, administrative costs, and stop-loss premiums, as applicable. Prescription drug (drug) means a set of pharmaceutical products that have been assigned a National Drug Code (NDC) by the Food and Drug Administration and are grouped by name and ingredient in the manner specified by the Secretary, jointly with the Secretary of the Treasury and the Secretary of Labor. Prescription drug rebates, fees, and other remuneration means all remuneration received by or on behalf of a plan or issuer, its administrator or service provider, including remuneration received by and on behalf of entities providing pharmacy benefit management services to the plan or issuer, with respect to prescription drugs prescribed to participants, beneficiaries, or enrollees in the plan or coverage, as applicable, regardless of the source of the remuneration (for example, pharmaceutical manufacturer, E:\FR\FM\23NOR2.SGM 23NOR2 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations lotter on DSK11XQN23PROD with RULES2 wholesaler, retail pharmacy, or vendor). Prescription drug rebates, fees, and other remuneration also include, for example, discounts, chargebacks or rebates, cash discounts, free goods contingent on a purchase agreement, upfront payments, coupons, goods in kind, free or reduced-price services, grants, or other price concessions or similar benefits. Prescription drug rebates, fees, and other remuneration include bona fide service fees. Bona fide service fees mean fees paid by a drug manufacturer to an entity providing pharmacy benefit management services to the plan or issuer that represent fair market value for a bona fide, itemized service actually performed on behalf of the manufacturer that the manufacturer would otherwise perform (or contract for) in the absence of the service arrangement, and that are not passed on in whole or in part to a client or customer of the entity, whether or not the entity takes title to the drug. Reference year means the calendar year immediately preceding the calendar year in which data submissions under this section are required. Reporting entity means an entity that submits some or all of the information required under this subpart with respect to a plan or issuer, and that may be different from the plan or issuer that is subject to the requirements of this subpart. Student market has the meaning given in § 158.103 of this subchapter. Therapeutic class means a group of pharmaceutical products that have similar mechanisms of action or treat the same types of conditions, grouped in the manner specified by the Secretary, jointly with the Secretary of the Treasury and the Secretary of Labor, in guidance. The Secretary may require plans and issuers to classify drugs according to a commonly available public or commercial therapeutic classification system, a therapeutic classification system provided by the Secretary, or a combination thereof. Total annual spending means incurred claims, as that term is defined in § 158.140 of this subchapter, excluding the adjustments specified in § 158.140(b)(1)(i), (b)(2)(iv), and (b)(4), and including cost sharing. With respect to prescription drugs, total annual spending is net of prescription drug rebates, fees, and other remuneration. § 149.720 Reporting requirements related to prescription drug and health care spending. (a) General requirement. A group health plan or a health insurance issuer offering group or individual health insurance coverage must submit an VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 annual report to the Secretary, the Secretary of the Treasury, and the Secretary of Labor, on prescription drug and health care spending, premiums, and enrollment under the plan or coverage. (b) Timing and form of report. The report for the 2020 reference year must be submitted to the Secretary by December 27, 2021. Beginning with the 2021 reference year, the report for each reference year is due by June 1 of the year following the reference year. The report must be submitted in the form and manner prescribed by the Secretary, jointly with the Secretary of the Treasury and the Secretary of Labor. (c) Transfer of business. Issuers that acquire a line or block of business from another issuer during a reference year are responsible for submitting the information and report required by this section for the acquired business for that reference year, including for the part of the reference year that was prior to the acquisition. (d) Reporting entities and special rules to prevent unnecessary duplication—(1) Special rule for insured group health plans. To the extent coverage under a group health plan consists of group health insurance coverage, the plan may satisfy the requirements of paragraph (a) of this section if the plan requires the health insurance issuer offering the coverage to report the information required by this section in compliance with this subpart pursuant to a written agreement. Accordingly, if a health insurance issuer and a group health plan sponsor enter into a written agreement under which the issuer agrees to provide the information required under paragraph (a) of this section in compliance with this section, and the issuer fails to do so, then the issuer, but not the plan, violates the reporting requirements of paragraph (a) of this section with respect to the relevant information. (2) Other contractual arrangements. A group health plan or health insurance issuer offering group or individual health insurance coverage may satisfy the requirements under paragraph (a) of this section by entering into a written agreement under which one or more other parties (such as health insurance issuers, pharmacy benefit managers, third-party administrators, or other third parties) report some or all of the information required under paragraph (a) of this section in compliance with this section. Notwithstanding the preceding sentence, if a group health plan or health insurance issuer chooses to enter into such an agreement and the party with which it contracts fails to provide the information in accordance PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 66703 with paragraph (a) of this section, the plan or issuer violates the reporting requirements of paragraph (a) of this section. (e) Applicability date. The provisions of this section are applicable beginning December 27, 2021. § 149.730 Aggregate reporting. (a) General requirement. A group health plan or a health insurance issuer offering group or individual health insurance coverage must submit, or arrange to be submitted, the information required in § 149.740(b) separately for each State in which group health coverage or group or individual health insurance coverage was provided in connection with the group health plan or by the health insurance issuer. The report must include the experience of all plans and policies in the State during the reference year covered by the report, and must include the experience separately for each market segment as defined in § 149.710. (b) Aggregation by reporting entity— (1) In general. If a reporting entity submits data on behalf of more than one group health plan in a State and market segment, the reporting entity may aggregate the data required in § 149.740(b) for the group health plans for each market segment in the State. (2) Multiple reporting entities. (i) If multiple reporting entities submit the required data related to one or more plans or issuers in a State and market segment, the data submitted by each of these reporting entities must not be aggregated at a less granular level than the aggregation level used by the reporting entity that submits the data on total annual spending on health care services, as required by § 149.740(b)(4), on behalf of these plans or issuers. (ii) The Secretary, jointly with the Secretary of the Treasury and the Secretary of Labor, may specify in guidance alternative or additional aggregation methods for data submitted by multiple reporting entities, to ensure a balance between compliance burdens and a data aggregation level that facilitates the development of the biannual public report required under section 2799A–10(b) of the PHS Act. (3) Group health insurance coverage with dual contracts. If a group health plan involves health insurance coverage obtained from two affiliated issuers, one providing in-network coverage only and the second providing out-of-network coverage only, the plan’s out-of-network experience may be treated as if it were all related to the contract provided by the in-network issuer. (c) Aggregation by State. (1) Experience with respect to each fully- E:\FR\FM\23NOR2.SGM 23NOR2 66704 Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / Rules and Regulations insured policy must be included on the report for the State where the contract was issued, except as specified in paragraphs (c)(3) and (4) of this section. (2) Experience with respect to each self-funded group health plan must be included on the report for the State where the plan sponsor has its principal place of business. (3) For individual market business sold through an association, experience must be attributed to the issue State of the certificate of coverage. (4) For health coverage provided to plans through a group trust or multiple employer welfare arrangement, the experience must be included in the report for the State where the employer (if the plan is sponsored at the individual employer level) or the association (if the association qualifies as an employer under ERISA section 3(5)) has its principal place of business or the State where the association is incorporated, in the case of an association with no principal place of business. (d) Applicability date. The provisions of this section are applicable beginning December 27, 2021. § 149.740 Required information. lotter on DSK11XQN23PROD with RULES2 (a) Information for each plan or coverage. The report required under § 149.720 must include the following information for each plan or coverage, at the plan or coverage level: (1) The identifying information for plans, issuers, plan sponsors, and any other reporting entities. (2) The beginning and end dates of the plan year that ended on or before the last day of the reference year. (3) The number of participants, beneficiaries, and enrollees, as applicable, covered on the last day of the reference year. (4) Each State in which the plan or coverage is offered. (b) Information for each state and market segment. The report required under § 149.720 must include the following information with respect to plans or coverage for each State and market segment for the reference year, unless otherwise specified: (1) The 50 brand prescription drugs most frequently dispensed by pharmacies, and for each such drug, the VerDate Sep<11>2014 20:10 Nov 22, 2021 Jkt 256001 data elements listed in paragraph (b)(5) of this section. The most frequently dispensed drugs must be determined according to total number of paid claims for prescriptions filled during the reference year for each drug. (2) The 50 most costly prescription drugs and for each such drug, the data elements listed in paragraph (b)(5) of this section. The most costly drugs must be determined according to total annual spending on each drug. (3) The 50 prescription drugs with the greatest increase in expenditures between the year immediately preceding the reference year and the reference year, and for each such drug: The data elements listed in paragraph (b)(5) of this section for the year immediately preceding the reference year, and the data elements listed in paragraph (b)(5) of this section for the reference year. The drugs with the greatest increase in expenditures must be determined based on the increase in total annual spending from the year immediately preceding the reference year to the reference year. A drug must be approved for marketing or issued an Emergency Use Authorization by the Food and Drug Administration for the entirety of the year immediately preceding the reference year and for the entirety of the reference year to be included in the data submission as one of the drugs with the greatest increase in expenditures. (4) Total annual spending on health care services by the plan or coverage and by participants, beneficiaries, and enrollees, as applicable, broken down by the type of costs, including— (i) Hospital costs; (ii) Health care provider and clinical service costs, for primary care and specialty care separately; (iii) Costs for prescription drugs, separately for drugs covered by the plan’s or issuer’s pharmacy benefit and drugs covered by the plan’s or issuer’s hospital or medical benefit; and (iv) Other medical costs, including wellness services. (5) Prescription drug spending and utilization, including— (i) Total annual spending by the plan or coverage; (ii) Total annual spending by the participants, beneficiaries, and enrollees, as applicable, enrolled in the plan or coverage, as applicable; PO 00000 Frm 00044 Fmt 4701 Sfmt 9990 (iii) The number of participants, beneficiaries, and enrollees, as applicable, with a paid prescription drug claim; (iv) Total dosage units dispensed; and (v) The number of paid claims. (6) Premium amounts, including— (i) Average monthly premium amount paid by employers and other plan sponsors on behalf of participants, beneficiaries, and enrollees, as applicable; (ii) Average monthly premium amount paid by participants, beneficiaries, and enrollees, as applicable; and (iii) Total annual premium amount and the total number of life-years. (7) Prescription drug rebates, fees, and other remuneration, including— (i) Total prescription drug rebates, fees, and other remuneration, and the difference between total amounts that the plan or issuer pays the entity providing pharmacy benefit management services to the plan or issuer and total amounts that such entity pays to pharmacies. (ii) Prescription drug rebates, fees, and other remuneration, excluding bona fide service fees, broken down by the amounts passed through to the plan or issuer, the amounts passed through to participants, beneficiaries, and enrollees, as applicable, and the amounts retained by the entity providing pharmacy benefit management services to the plan or issuer; and the data elements listed in paragraph (b)(5) of this section— (A) For each therapeutic class; and (B) For each of the 25 prescription drugs with the greatest amount of total prescription drug rebates and other price concessions for the reference year. (8) The method used to allocate prescription drug rebates, fees, and other remuneration, if applicable. (9) The impact of prescription drug rebates, fees, and other remuneration on premium and cost sharing amounts. (c) Applicability date. The provisions of this section are applicable beginning December 27, 2021. [FR Doc. 2021–25183 Filed 11–17–21; 4:15 pm] BILLING CODE 6523–63–P; 4830–01–P; 4510–29–P; 4120–01–P E:\FR\FM\23NOR2.SGM 23NOR2

Agencies

[Federal Register Volume 86, Number 223 (Tuesday, November 23, 2021)]
[Rules and Regulations]
[Pages 66662-66704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25183]



[[Page 66661]]

Vol. 86

Tuesday,

No. 223

November 23, 2021

Part III





Office of Personnel Management





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5 CFR Part 890





Department of the Treasury





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Internal Revenue Service





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26 CFR Part 54





Department of Labor





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Employee Benefits Security Administration





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29 CFR Part 2590





Department of Health and Human Services





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45 CFR Part 149





Prescription Drug and Health Care Spending; Interim Final Rule

Federal Register / Vol. 86, No. 223 / Tuesday, November 23, 2021 / 
Rules and Regulations

[[Page 66662]]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206-AO27

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[TD 9958]
RIN 1545-BQ10

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

RIN 1210-AC07

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 149

[CMS-9905-IFC]
RIN 0938-AU66


Prescription Drug and Health Care Spending

AGENCY: Office of Personnel Management; Internal Revenue Service, 
Department of the Treasury; Employee Benefits Security Administration, 
Department of Labor; Centers for Medicare & Medicaid Services, 
Department of Health and Human Services.

ACTION: Interim final rules with request for comments.

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SUMMARY: This document sets forth interim final rules implementing 
provisions of the Internal Revenue Code (the Code), the Employee 
Retirement Income Security Act (ERISA), and the Public Health Service 
Act (PHS Act), as enacted by the Consolidated Appropriations Act, 2021 
(CAA). These provisions are applicable to group health plans and health 
insurance issuers offering group or individual health insurance 
coverage. These interim final rules add provisions to existing rules 
under the Code, ERISA, and the PHS Act. These interim final rules 
implement provisions of the Code, ERISA, and PHS Act that increase 
transparency by requiring group health plans and health insurance 
issuers in the group and individual markets to submit certain 
information about prescription drugs and health care spending to the 
Department of Health and Human Services (HHS), the Department of Labor 
(DOL), and the Department of the Treasury (collectively, the 
Departments). The Departments are issuing these interim final rules 
with largely parallel provisions that apply to group health plans and 
health insurance issuers offering group or individual health insurance 
coverage. The Office of Personnel Management (OPM) is also issuing 
interim final rules that require Federal Employees Health Benefits 
(FEHB) carriers to report information about prescription drugs and 
health care spending in the same manner as a group health plan or 
health insurance issuer offering group or individual health insurance 
coverage.

DATES: 
    Effective date: These regulations are effective on December 23, 
2021.
    Applicability date: The regulations are generally applicable 
beginning December 27, 2021. The OPM-only regulations that apply to 
health benefits plans and carriers under the FEHB Program are 
applicable beginning December 27, 2021. However, as discussed in 
section II.C.1.b. of this preamble, the Departments will provide 
temporary and limited deferral of enforcement during the first year of 
applicability and this temporary and limited deferral of enforcement 
will apply, in the same manner, to FEHB plans and carriers.
    Comment date: To be assured consideration, comments must be 
received at one of the addresses provided below, by January 24, 2022. 
Please see section V.E. of this preamble for information regarding 
submission of comments on the information collection requirements.

ADDRESSES: Written comments may be submitted to the addresses specified 
below.
    In commenting, refer to file code CMS-9905-IFC.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation at https://www.regulations.gov by entering the file code in 
the search window and then clicking on ``Comment.''
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-9905-IFC, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-9905-IFC, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Padma Babubhai Shah, Office of 
Personnel Management, at 202-606-4056.
    Christopher Dellana, Internal Revenue Service, Department of the 
Treasury, at 202-317-5500.
    Matthew Litton or Shannon Hysjulien, Employee Benefits Security 
Administration, Department of Labor, at 202-693-8335.
    Christina Whitefield, Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, at 301-492-4172.
    Customer Service Information: Information from OPM on health 
benefits plans offered under the FEHB Program can be found on the OPM 
website (www.opm.gov/healthcare-insurance/healthcare/). Individuals 
interested in obtaining information from DOL concerning employment-
based health coverage laws may call the Employee Benefits Security 
Administration (EBSA) Toll-Free Hotline at 1-866-444-EBSA (3272) or 
visit DOL's website (www.dol.gov/ebsa). In addition, information from 
HHS on private health insurance coverage and coverage provided by non-
federal governmental group health plans can be found on the Centers for 
Medicare & Medicaid Services (CMS) website (www.cms.gov/cciio), and 
information on health care reform can be found at www.HealthCare.gov.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. The Departments generally 
post all comments received before the close of the comment period on 
the following website as soon as possible after they have been 
received: http://www.regulations.gov. Follow the search instructions on 
that website to view public comments. The Departments will not post on 
Regulations.gov public comments that make threats to

[[Page 66663]]

individuals or institutions or suggest that the individual will take 
actions to harm the individual. The Departments continue to encourage 
individuals not to submit duplicative comments. The Departments will 
post acceptable comments from multiple unique commenters even if the 
content is identical or nearly identical to other comments.

I. Background

A. Prescription Drug and Health Care Spending Transparency Under the 
Consolidated Appropriations Act, 2021

    On December 27, 2020, the Consolidated Appropriations Act, 2021 
(Pub. L. 116-260) (CAA) was enacted. Section 204 of Title II of 
Division BB of the CAA added parallel provisions at section 9825 of the 
Internal Revenue Code (the Code), section 725 of the Employee 
Retirement Income Security Act (ERISA), and section 2799A-10 of the 
Public Health Service Act (PHS Act), which require group health plans 
and health insurance issuers offering group or individual health 
insurance coverage to annually submit to the Departments certain 
information about prescription drug and health care spending. The 
statute provides that data shall be reported not later than 1 year 
after the date the CAA was enacted, and not later than June 1 of each 
year thereafter.
    The data submission required under section 9825(a) of the Code, 
section 725(a) of ERISA, and section 2799A-10(a) of the PHS Act 
(section 204 data submissions) includes general information on the plan 
or coverage, such as the beginning and end dates of the plan year, the 
number of participants, beneficiaries, or enrollees, as applicable, and 
each state in which the plan or coverage is offered. Plans and issuers 
must also report the 50 most frequently dispensed brand prescription 
drugs, and the total number of paid claims for each such drug; the 50 
most costly prescription drugs by total annual spending, and the annual 
amount spent by the plan or coverage for each such drug; and the 50 
prescription drugs with the greatest increase in plan or coverage 
expenditures from the plan year preceding the plan year that is the 
subject of the report, and, for each such drug, the change in amounts 
expended by the plan or coverage in each such plan year (top 50 lists). 
Additionally, plans and issuers must report total spending on health 
care services by the plan or coverage broken down by the type of costs 
(including hospital costs; health care provider and clinical service 
costs, for primary care and specialty care separately; costs for 
prescription drugs; and other medical costs, including wellness 
services); spending on prescription drugs by the plan or coverage as 
well as by participants, beneficiaries, and enrollees, as applicable; 
and the average monthly premiums paid by participants, beneficiaries, 
and enrollees and paid by employers on behalf of participants, 
beneficiaries, and enrollees, as applicable. Plans and issuers must 
report any impact on premiums by rebates, fees, and any other 
remuneration paid by drug manufacturers to the plan or coverage or its 
administrators or service providers, including the amount paid with 
respect to each therapeutic class of drugs and for each of the 25 drugs 
that yielded the highest amounts of rebates and other remuneration 
under the plan or coverage from drug manufacturers during the plan year 
(top 25 list). Finally, plans and issuers must report any reduction in 
premiums and out-of-pocket costs associated with these rebates, fees, 
or other remuneration. The Departments intend to provide greater 
technical detail regarding each data element in the section 204 data 
submission in the instructions for the information collection 
instrument. The Departments also intend to provide an internet portal 
where reporting entities can submit the required data.
    Section 9825(b) of the Code, section 725(b) of ERISA, and section 
2799A-10(b) of the PHS Act additionally require the Departments to 
publish on the internet a report on prescription drug reimbursements 
for plans and coverage, prescription drug pricing trends, and the role 
of prescription drug costs in contributing to premium increases or 
decreases under these plans or coverage, with information that is 
aggregated so that no drug or plan specific information is made public 
(section 204 public report). This section 204 public report must be 
published no later than 18 months after the date on which plans and 
issuers are required to first submit the information and biannually 
thereafter. The section 204 public report may not include any 
confidential or trade secret information submitted to the Departments, 
pursuant to section 9825(c) of the Code, section 725(c) of ERISA, and 
section 2799A-10(c) of the PHS Act. These interim final rules implement 
section 9825 of the Code, section 725 of ERISA, and section 2799A-10 of 
the PHS Act. The Departments seek comment on all aspects of these 
interim final rules.
    Under the FEHB Act, 5 U.S.C. 8901 et seq., OPM is charged with 
administering the FEHB Program and maintains oversight and enforcement 
authority with respect to FEHB plans, which are federal governmental 
plans. Pursuant to 5 U.S.C. 8910, OPM is joining the Departments to 
require the submission of prescription drug and health care spending 
data from FEHB plans in the same manner as plans and issuers must 
provide such data under section 9825 of the Code, section 725 of ERISA, 
and section 2799A-10 of the PHS Act.
    On July 9, 2021, President Biden issued Executive Order 14036, 
``Promoting Competition in the American Economy.'' \1\ Executive Order 
14036 directed the federal government to ``enforce the antitrust laws 
to combat the excessive concentration of industry, the abuses of market 
power, and the harmful effects of monopoly and monopsony.'' The data 
collection required by these interim final rules will provide valuable 
information about competition and market concentration in the 
pharmaceutical and health care industries. Policymakers can use the 
prescription drug and health care spending data to make informed 
decisions in support of the goals of Executive Order 14036, including 
identifying any excessive pricing of prescription drugs driven by 
industry concentration and monopolistic behaviors, promoting the use of 
lower-cost generic drugs, and addressing the impact of pharmaceutical 
manufacturer rebates, fees, and other remuneration on prescription drug 
prices and on plan, issuer, and consumer costs.
---------------------------------------------------------------------------

    \1\ https://www.federalregister.gov/documents/2021/07/14/2021-15069/promoting-competition-in-the-american-economy.
---------------------------------------------------------------------------

    The Departments are issuing regulations implementing provisions of 
Title I (No Surprises Act) and Title II (Transparency) of Division BB 
of the CAA in several phases.
    On July 13, 2021, the Departments and OPM issued interim final 
rules entitled, ``Requirements Related to Surprise Billing; Part I'' 
\2\ which generally apply to group health plans and health insurance 
issuers offering group or individual health insurance coverage 
(including grandfathered health plans) with respect to plan years (in 
the individual market, policy years) beginning on or after January 1, 
2022; FEHB health benefits plans with respect to contract years 
beginning on or after January 1, 2022; and health care providers and 
facilities, and providers of air ambulance services beginning on 
January 1, 2022 (July 2021 interim final rules). The July 2021 interim 
final rules implement sections 9816(a)-(b) and 9817(a) of the Code; 
sections 716(a)-(b)

[[Page 66664]]

and 717(a) of ERISA; sections 2799A-1(a)-(b), 2799A-2(a), 2799B-1, 
2799B-2, 2799B-3, and 2799B-5 of the PHS Act; and 5 U.S.C. 8902(p), to 
protect consumers from surprise medical bills for emergency services, 
air ambulance services furnished by nonparticipating providers of air 
ambulance services, and non-emergency services furnished by 
nonparticipating providers at participating facilities in certain 
circumstances.
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    \2\ 86 FR 36872 (July 13, 2021). Public comments on this rule 
were due by September 7, 2021.
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    Among other requirements, the July 2021 interim final rules require 
emergency services to be covered without any prior authorization, 
without regard to whether the health care provider or facility 
furnishing the emergency services is a participating provider or a 
participating emergency facility with respect to the services, and 
without regard to any other term or condition of the plan or coverage 
other than the exclusion or coordination of benefits or a permitted 
affiliation or waiting period. With respect to emergency services 
furnished by nonparticipating providers or facilities, air ambulance 
services furnished by nonparticipating providers of air ambulance 
services, and non-emergency services furnished by nonparticipating 
providers at certain participating facilities, the July 2021 interim 
final rules generally limit cost sharing for out-of-network services to 
in-network levels, require such cost sharing to count toward any in-
network deductibles and out-of-pocket maximums, and prohibit balance 
billing in certain circumstances. Balance billing refers to the 
practice of out-of-network providers billing patients for the 
difference between: (1) The provider's billed charges; and (2) the 
amount collected from the plan or issuer plus the amount collected from 
the patient in the form of cost sharing (such as a copayment, 
coinsurance, or amounts paid toward a deductible).
    On September 16, 2021, the Departments and OPM issued proposed 
rules entitled, ``Requirements Related to Air Ambulance Services, Agent 
and Broker Disclosures, and Provider Enforcement.'' \3\ These proposed 
rules propose to implement section 9823 of the Code; section 723 of 
ERISA; and sections 2723(b), 2746, 2799A-8, and 2799B-4 of the PHS Act; 
as well as sections 106(a) and 106(e) of the No Surprises Act. These 
proposed rules would implement certain provisions of the No Surprises 
Act that would increase transparency by requiring group health plans 
and health insurance issuers in the group and individual markets, and 
FEHB carriers, to submit certain information about air ambulance 
services to the Departments and OPM, as applicable, and by requiring 
providers of air ambulance services to submit certain information to 
the Secretaries of HHS and Transportation. These proposed rules also 
include HHS-only provisions that would increase transparency by 
requiring a health insurance issuer offering individual health 
insurance coverage or short-term, limited-duration insurance to 
disclose to policyholders and to report to HHS any direct or indirect 
compensation provided by the issuer to an agent or broker associated 
with enrolling individuals in such coverage. The HHS-only proposed 
rules would additionally provide the process by which HHS would 
investigate complaints and potential violations of PHS Act provisions 
and, if warranted, take enforcement action, including the imposition of 
civil money penalties, against providers and facilities, including 
providers of air ambulance services. These proposed rules would amend 
existing regulations to clarify the process to investigate complaints 
and potential violations of the PHS Act and impose civil money 
penalties against plans and issuers. These proposed rules would also 
establish the process by which HHS would impose civil money penalties 
if a provider of air ambulance services fails to submit some or all 
required data to HHS.
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    \3\ 86 FR 51730 (Sept. 16, 2021). Public comments on this rule 
were due by October 18, 2021.
---------------------------------------------------------------------------

    On October 7, 2021, the Departments and OPM published interim final 
rules entitled, ``Requirements Related to Surprise Billing; Part II,'' 
\4\ which generally apply to certified independent dispute resolution 
(IDR) entities; selected dispute resolution (SDR) entities; group 
health plans and health insurance issuers offering group or individual 
health insurance coverage and FEHB carriers; and providers, facilities, 
and providers of air ambulance services beginning on or after January 
1, 2022, with the exception of certain provisions that apply beginning 
on October 7, 2021 (October 2021 interim final rules). The October 2021 
interim final rules implement sections 9816(c) and 9817(b) of the Code; 
sections 716(c) and 717(b) of ERISA; and sections 2799A-1(c), 2799A-
2(b), 2799B-6(1), 2799B-6(2)(B), and 2799B-7 of the PHS Act.
---------------------------------------------------------------------------

    \4\ 86 FR 55980 (October 7, 2021). Public comments on this rule 
are due by December 6, 2021.
---------------------------------------------------------------------------

    The October 2021 interim final rules implement provisions of the No 
Surprises Act that establish a federal IDR process that group health 
plans, health insurance issuers offering group or individual health 
insurance coverage, and FEHB carriers; and nonparticipating providers, 
facilities, and providers of air ambulance services may use following 
the end of an unsuccessful open negotiation period to determine the 
out-of-network rate for items or services that are emergency services, 
nonemergency services furnished by nonparticipating providers at 
participating facilities, and air ambulance services furnished by 
nonparticipating providers of air ambulance services, under certain 
circumstances. In addition, HHS-only provisions of the October 2021 
interim final rules address good faith estimates of health care items 
or services for uninsured or self-pay individuals and the associated 
patient-provider dispute resolution process. The October 2021 interim 
final rules also amend final regulations issued by the Departments in 
2015 related to external review in order to implement section 110 of 
the No Surprises Act.
    Division BB of the CAA also includes: Provisions regarding 
transparency in plan and insurance identification cards (section 107); 
continuity of care (section 113); accuracy of provider network 
directories (section 116); and prohibition on gag clauses (section 201) 
that are applicable for plan years beginning on or after January 1, 
2022. The Departments intend to undertake rulemaking to fully implement 
these provisions, with the exception of section 201 of Title II of 
Division BB of the CAA, prohibition on gag clauses, which is self-
implementing. On August 20, 2021, the Departments issued guidance 
regarding implementation of each of these sections of Division BB of 
the CAA.\5\ Until rulemaking fully implementing these provisions is 
finalized and effective, plans and issuers are expected to implement 
the requirements using a good faith, reasonable interpretation of the 
statute.
---------------------------------------------------------------------------

    \5\ FAQs about Affordable Care Act and Consolidated 
Appropriations Act, 2021, Implementation Part 49 (Aug. 20, 2021), 
available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQs-Part-49.pdf.
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B. Stakeholder Consultation and Input

    The Departments and OPM published a Request for Information (RFI) 
in the June 23, 2021 Federal Register (86 FR 32813). The RFI solicited 
comments from the public regarding implementation considerations for 
the data collection required by section 9825 of the Code, section 725 
of ERISA, and section 2799A-10 of the PHS Act and the associated impact 
on plans and issuers. The Departments sought input on specific data 
elements to be

[[Page 66665]]

collected, including the level of detail that is feasible for entities 
subject to the data collection requirements to report and the 
associated burdens and potential compliance costs. In the RFI, the 
Departments indicated that public comments would inform the 
Departments' and OPM's implementation of the statutory requirements 
through rulemaking and the establishment of processes to receive the 
required information. The Departments also sought comment from the 
public regarding information to include in the Departments' biannual 
section 204 public report. OPM sought input from the public regarding 
implementation considerations for the data collection as it pertains to 
FEHB carriers.
    The Departments also held several listening sessions with 
employers, group health plans, issuers, and pharmacy benefit managers 
(PBMs) to gather public input on each aspect of the data submission 
requirements as well as the biannual section 204 public reports. OPM 
also held a listening session with FEHB carriers. The Departments 
consulted with stakeholders through regular contact with states, 
issuers, plans, trade groups, employers, and other interested parties. 
The Departments and OPM considered all public input received in the 
development of these interim final rules. The Departments and OPM also 
took into account the objectives of Executive Order 14036 to promote 
competitiveness in the health care and pharmaceutical markets and lower 
the price of and improve access to prescription drugs and biologics.

II. Overview of the Interim Final Rules--Departments of HHS, Labor, and 
the Treasury

A. Applicability

    These interim final rules add 26 CFR 54.9825-2T and amend 29 CFR 
2590.716-2 and 45 CFR 149.20 to include a reference to the new 
regulations added by these interim final rules.\6\ These interim final 
rules include the prescription drug and health care spending data 
submission requirements for plans and issuers required under section 
9825 of the Code, section 725 of ERISA, and section 2799A-10 of the PHS 
Act.
---------------------------------------------------------------------------

    \6\ The amendment to 29 CFR 2590.716-2 also includes a technical 
edit to correct a cross-reference in 29 CFR 2590.716-2(a)(2).
---------------------------------------------------------------------------

    These interim final rules generally apply to group health plans and 
health insurance issuers offering group or individual health insurance 
coverage. The term ``group health plan'' includes both insured and 
self-funded group health plans, and includes private employment-based 
group health plans subject to ERISA, non-federal governmental plans 
(such as plans sponsored by states and local governments) subject to 
the PHS Act, and church plans subject to the Code. Individual health 
insurance coverage includes coverage offered in the individual market, 
through or outside of an Exchange, and includes student health 
insurance coverage as defined at 45 CFR 147.145. As discussed further 
in section III. of this preamble, OPM interim final rules require FEHB 
carriers to comply with these interim final rules, with respect to 
prescription drug and health care spending data submission 
requirements, subject to OPM regulation and contract provisions.
    Section 9825 of the Code, section 725 of ERISA, and section 2799A-
10 of the PHS Act (and all provisions of the No Surprises Act that are 
applicable to group health plans and health insurance issuers offering 
group or individual health insurance coverage) apply to grandfathered 
health plans. Section 1251 of the Affordable Care Act provides that 
grandfathered health plans are not subject to certain provisions of the 
Code, ERISA, or the PHS Act, as added by the Affordable Care Act, for 
as long as they maintain their status as grandfathered health plans. 
For example, grandfathered health plans are subject neither to the 
requirement to cover certain preventive services without cost sharing 
under section 2713 of the PHS Act, nor to the annual limitation on cost 
sharing set forth under section 2707(b) of the PHS Act. If a plan or 
coverage loses its grandfathered status, it is required to comply with 
both provisions, in addition to certain other requirements of the 
Affordable Care Act. However, the CAA does not include an exception for 
grandfathered health plans that is comparable to the exception 
contained in section 1251 of the Affordable Care Act. Therefore, the 
provisions of these interim final rules that apply to plans and issuers 
also apply to grandfathered health plans (as defined in 26 CFR 54.9815-
1251, 29 CFR 2590.715-1251, and 45 CFR 147.140).
    These interim final rules do not apply to health reimbursement 
arrangements (HRAs), or other account-based group health plans, as 
described in 26 CFR 54.9815-2711(d)(6)(i), 29 CFR 2590.715-
2711(d)(6)(i), and 45 CFR 147.126(d)(6)(i), that make reimbursements 
subject to a maximum fixed dollar amount for a period, because the 
benefit design of these plans makes the prescription drug and health 
care spending data reporting concepts under section 9825 of the Code, 
section 725 of ERISA, and section 2799A-10 of the PHS Act inapplicable. 
The Departments expect that account-based group health plans typically 
will be integrated with other coverage that will be required to report 
such information (such as in the case of individual coverage HRAs 
(ICHRAs), for which the issuer of the individual coverage will be 
required to report the information) or will be otherwise exempt from 
these requirements (such as excepted benefit HRAs). Therefore, under 
these interim final rules, the reporting requirements do not apply to 
HRAs (including ICHRAs) and other account-based group health plans. 
This approach is consistent with many other requirements that apply to 
group health plans and the existing applicability provisions in 26 CFR 
54.9816-2T, 29 CFR 2590.716-2, and 45 CFR 149.20 with respect to other 
requirements of Division BB of the CAA.
    Excepted benefits are exempt from the requirements in chapter 100 
of the Code, part 7 of ERISA, and Part A and Part D of title XXVII of 
the PHS Act.\7\ Under section 2791(b)(5) of the PHS Act, short-term, 
limited-duration insurance is excluded from the definition of 
individual health insurance coverage and is, therefore, exempt from the 
new requirements established in section 2799A-10 of the PHS Act. 
Therefore, short-term, limited-duration insurance (as defined in 26 CFR 
54.9801-2, 29 CFR 2590.701-2, and 45 CFR 144.103) and coverage that 
consists solely of excepted benefits (as described in section 9832(c) 
of the Code, section 733(c) of ERISA, and section 2791(c) of the PHS 
Act) are not subject to the data submission requirements set forth in 
these interim final rules.
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    \7\ See section 9831 of the Code, section 732 of ERISA, and 
section 2722 of the PHS Act. The CAA amended the PHS Act statutory 
exemption for these products to include the new requirements 
established under new Part D of the PHS Act. See section 
102(a)(3)(B) of the No Surprises Act, which made conforming 
amendments to add the phrase ``and Part D'' to section 2722(b), 
(c)(1), (c)(2), and (c)(3) of the PHS Act.
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    The Departments seek comment as to whether there are any other 
plans with unique benefit designs that should be exempt from these 
interim final rules.

B. Definitions (26 CFR 54.9825-3T, 29 CFR 2590.725-1, 45 CFR 149.710)

    The Departments adopt terms and definitions applicable to the data 
submission requirements set forth in these interim final rules in 26 
CFR 54.9825-3T, 29 CFR 2590.725-1, and 45 CFR 149.710. In addition, the

[[Page 66666]]

definitions in 26 CFR 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30 
apply to these interim final rules. In general, these interim final 
rules do not define terms that are commonly used in the health care and 
health insurance industry.
    Reference Year. Section 9825(a) of the Code, section 725(a) of 
ERISA, and section 2799A-10(a) of the PHS Act require plans and issuers 
to submit information ``with respect to the health plan or coverage in 
the previous plan year.'' To help ensure uniformity of data across 
plans and coverage and increase the usability of the data for purposes 
of the section 204 public report, the Departments are requiring plans 
and issuers to submit information based on the ``reference year,'' 
defined in these interim final rules as the calendar year immediately 
preceding the calendar year in which the section 204 data submissions 
are due.
    Collecting data for the immediately preceding calendar year, rather 
than the previous plan year, better accounts for the timing of when 
newly introduced drugs--including new brand prescription drugs, newly 
available generic versions of brand prescription drugs, and 
biosimilars--become available and the fact that some group health plans 
and health insurance coverage have plan years that do not correspond to 
calendar years. If data are collected based on the plan year, newly 
introduced drugs would be reflected in the data for some plans and 
coverage but not others. If data are collected based on the calendar 
year, newly introduced drugs will be reflected in the data for every 
plan, regardless of the start and end date of the plan year.
    Newly introduced drugs, such as biologics, are often very costly 
and may impact the ranking of the 50 most costly prescription drugs. 
Similarly, when a generic or biosimilar version of a drug becomes 
available, the brand version will be prescribed less frequently, which 
may impact the ranking of the top 50 most frequently dispensed brand 
prescription drugs. Therefore, if the Departments were to collect 
information regarding the top 50 drugs by plan or policy year as 
specified in plan or coverage documents, without additional 
specification about the measurement period, there would be 
inconsistency among data submissions that would make them difficult to 
compare to each other. Collection of all data on a calendar-year basis 
will enable the Departments to effectively analyze the data and 
understand the impact of a newly introduced drug consistently across 
plans and coverage, market segments, and years. In addition, using the 
calendar year as the reference year will enable the Departments to 
produce consistent data analyses across group health plans and group 
health insurance coverage (which may be offered on a non-calendar 
basis) and individual health insurance coverage (which is generally 
offered on a calendar-year basis) for purposes of the section 204 
public report.
    Second, using the calendar year as the reference year is consistent 
with other HHS rules and data collections related to prescription drug 
and health care spending. For example, similar to section 9825 of the 
Code, section 725 of ERISA, and section 2799A-10 of the PHS Act, 
section 2718(a) of the PHS Act requires issuers to report Medical Loss 
Ratio (MLR) data ``with respect to each plan year.'' However, issuers 
report calendar year information to HHS for the MLR data collection 
instead.\8\ The National Association of Insurance Commissioners (NAIC), 
which section 2718(c) of the PHS Act directs to make recommendations to 
HHS regarding definitions for the MLR data collection, recommended that 
the term ``plan year'' in section 2718(a) of the PHS Act be interpreted 
to refer to the calendar year, rather than the year specified in 
particular plan or policy documents.\9\ The NAIC recommended this 
interpretation because any other definition would have precluded 
meaningful comparison of the reported data, reduced the reliability of 
the data, and increased reporting burdens. The Departments are of the 
view that the same rationales apply with respect to the section 204 
data submissions.
---------------------------------------------------------------------------

    \8\ See 45 CFR 158.103, which defines the MLR reporting year as 
a calendar year during which group or individual health insurance 
coverage is provided by an issuer.
    \9\ https://www.naic.org/documents/committees_ex_mlr_reg_asadopted.pdf.
---------------------------------------------------------------------------

    In addition, the prescription drug data collection with respect to 
qualified health plans (QHPs), required under section 1150A of the 
Social Security Act related to collection of information ``for a 
contract year,'' also involves the submission of data on a calendar-
year basis.\10\ Likewise, the Medicare program, in which some Medicare 
Part D plans and Medicare Advantage Plans offering a prescription drug 
plan have non-calendar year contract years, analyzes prescription drug 
and prescription drug rebate data on a calendar-year basis and 
generally collects data in a manner that permits calendar year-based 
analysis.\11\ Similarly, the Medicaid program, where some managed care 
plans have non-calendar year contract years, analyzes prescription drug 
and prescription drug rebate data on a calendar-year basis.\12\ In 
addition, state data collections related to prescription drug spending 
and rebates, including certain state All-Payer Claims Databases, 
generally collect data on a calendar-year basis.\13\ Collection of 
calendar-year data will allow the Departments to evaluate the 
consistency and validity of the data and compare trends across multiple 
data sources as well as between publicly- and privately-sponsored 
health coverage.
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    \10\ Pharmacy Benefit Manager Transparency for Qualified Health 
Plans information collection, available at https://www.cms.gov/regulations-and-guidancelegislationpaperworkreductionactof1995pra-listing/cms-10725.
    \11\ See, e.g., 42 CFR part 423; see also https://www.cms.gov/newsroom/fact-sheets/medicare-part-d-direct-and-indirect-remuneration-dir.
    \12\ See, e.g., https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Information-on-Prescription-Drugs/Medicaid.
    \13\ See, e.g., Colorado Prescription Drug Rebate Data 
Submission Manual (Sept. 8, 2020), https://www.civhc.org/wp-content/uploads/2020/10/Colorado-APCD-2020-Drug-Rebate-Data-Submission-Manual_09.08.2020.pdf; Maine Uniform Reporting System for 
Prescription Drug Price Data Sets, 90-590 C.M.R. ch. 570, https://mhdo.maine.gov/_finalStatutesRules/Chapter570RxDrugPricing_2020Feb4.docx; Massachusetts Payer Reporting 
of Prescription Drug Rebates Data Specification Manual (Apr. 2020), 
https://www.chiamass.gov/assets/docs/p/prescription-drug-rebate/Prescription-Drug-Rebate-Data-Specification-Manual-2020.pdf; 
Minnesota Commerce Department, Public Pharmacy Benefit Manager (PBM) 
Transparency Report (Dec. 1, 2020), https://mn.gov/commerce-stat/pdfs/pbm-transparency-report.pdf; Texas Pharmaceutical Benefits 
Reporting (Dec. 2020): Health benefit plan issuer and Pharmacy 
benefit manager reporting forms, https://www.tdi.texas.gov/health/documents/hbpi.pdf and https://www.tdi.texas.gov/health/documents/pbm.pdf.
---------------------------------------------------------------------------

    Prior to issuing these interim final rules, the Departments 
received comment letters from several stakeholders recommending that 
the Departments collect data on a calendar-year basis, including for 
non-calendar year plans or coverage. The Departments also solicited 
comment on using calendar year as the basis for the section 204 data 
submissions in the RFI, and the overwhelming majority of commenters 
that responded to this RFI question supported the calendar-year 
approach. Commenters stated that calendar-year data would be more 
meaningful when comparing trends in the group markets (where plan years 
may not align with the calendar year) to those in the individual market 
(where policy years are generally on a calendar-year basis), because 
all of the data would be based on the same period. Issuers additionally 
advised that reporting calendar-year data for purposes of the section 
204 data submissions would reduce compliance burdens because issuers 
submit other

[[Page 66667]]

related data to state and federal regulators on a calendar-year basis. 
The Departments share the views of these commenters.
    Student Market. In these interim final rules, for purposes of 
section 204 data submissions, the term ``student market'' has the 
meaning given in 45 CFR 158.103. Under 45 CFR 149.30, the definitions 
in 45 CFR 144.103 apply to the provisions of 45 CFR part 149 unless 
otherwise specified. The definitions of many terms in 45 CFR 144.103 
and 45 CFR 158.103 are identical. However, the term ``student market'' 
is not defined in 45 CFR 144.103, but is defined in 45 CFR 158.103 as 
the market for student health insurance coverage. Consistency of the 
definition of ``student market'' in these interim final rules with the 
definition in 45 CFR 158.103 will enable the Departments to validate 
data quality and produce consistent analyses across data submitted 
under section 2718(a) of the PHS Act for purposes of MLR reporting and 
section 9825 of the Code, section 725 of ERISA, and section 2799A-10 of 
the PHS Act for purposes of the section 204 public report.\14\ 
Consistency with the definition of ``student market'' in 45 CFR 158.103 
will also reduce compliance burdens for plans and issuers in the fully-
insured markets, because plans and issuers subject to the requirements 
of 45 CFR part 158 have already created group size and market 
determination processes and have modified systems to track data using 
the definitions in 45 CFR 158.103 for purposes of MLR reporting. The 
Departments recognize that self-funded group health plans generally are 
not subject to as many requirements that are based on employer size as 
fully-insured group health plans. Consequently, self-funded plans are 
likely to face more challenges in determining employer size and 
providing that information to third-party administrators (TPAs) that 
submit data on behalf of self-funded plans. Therefore, reasonable 
approximations for employer size determinations of self-funded group 
health plans will be allowed. The instructions for the information 
collection instrument will provide examples of approximation methods 
that the Departments will consider to be reasonable.
---------------------------------------------------------------------------

    \14\ All other relevant definitions in 45 CFR 158.103 have the 
same meaning or functional effect as the definitions in 45 CFR 
144.103.
---------------------------------------------------------------------------

    FEHB Line of Business. In these interim final rules, the term 
``FEHB line of business'' refers to all health benefits plans that are 
offered to eligible enrollees pursuant to a contract between an FEHB 
Program carrier and OPM. Such plans are Federal governmental plans 
offered pursuant to 5 U.S.C. chapter 89.
    Market Segment. In these interim final rules, the term ``market 
segment'' means each of the following: The individual market (excluding 
the student market), the student market, the fully-insured small group 
market, the fully-insured large group market (excluding the FEHB line 
of business), self-funded plans offered by small employers, self-funded 
plans offered by large employers, and the FEHB line of business. Mixed-
funded plans, which generally self-fund some health benefits and fully 
insure other health benefits, should attribute information reported to 
a market segment based on the source of funding for the benefits 
included in the report. For example, self-funded pharmacy benefits 
might be attributed to the market for self-funded group health plans 
offered by large employers while the reporting for the medical 
component of the same plan is attributed to the fully-insured large 
group market, if the medical benefits are funded through an insurance 
contract. ``Minimum premium'' plans and similar hybrid arrangements 
that mimic key aspects of fully-insured arrangements or that are 
required to comply with state laws regarding mandated benefits must be 
included in the fully-insured small group and large group market 
segments. ``Minimum premium'' plans generally feature regular fixed-
premium payments and limit the plan sponsor's monthly or annual 
liability for claims, similar to fully-insured coverage. Finally, 
because student health insurance coverage is designed, marketed, and 
priced for a unique and narrower population than other individual 
health insurance coverage, collecting student market data separately 
for purposes of section 204 data submissions will allow the Departments 
to better analyze prescription drug usage and costs in this market. In 
addition, issuers of coverage subject to 45 CFR part 158 already track 
and report data for the student market policies separately from other 
individual market policies.
    Enrollee. In these interim final rules, in the context of 
provisions of section 2799A-10(a) of the PHS Act, the term ``enrollee'' 
means an individual who is enrolled, within the meaning of 45 CFR 
144.103, in group health insurance coverage, or an individual who is 
covered by individual health insurance coverage, at any time during the 
reference year, and includes dependents.
    Life-years. In these interim final rules, the term ``life-years'' 
means the total number of months of coverage for participants and 
beneficiaries, or for enrollees, as applicable, divided by 12.
    Brand Prescription Drug. In these interim final rules, the term 
``brand prescription drug'' means a drug for which an application is 
approved under section 505(c) of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 355(c)), or under section 351 of the PHS Act (42 U.S.C. 
262), and that is generally marketed under a proprietary, trademark-
protected name. The term ``brand prescription drug'' includes a drug 
with Emergency Use Authorization issued pursuant to section 564 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb-3), and that is 
generally marketed under a proprietary, trademark-protected name. The 
term ``brand prescription drug'' includes drugs that the U.S. Food and 
Drug Administration (FDA) determines to be interchangeable biosimilar 
products under sections 351(i)(3) and 351(k)(4) of the PHS Act (42 
U.S.C. 262).
    Prescription Drug or Drug. In these interim final rules, the term 
``prescription drug'' or ``drug'' means a set of pharmaceutical 
products, including biologics, that have been assigned a National Drug 
Code (NDC) by FDA and are grouped by name and ingredient in the manner 
specified by the Departments.\15\ The Departments anticipate specifying 
that pharmaceutical products must be grouped by name and active 
ingredient, separately for brand products and generic products or 
certain biosimilar products. Products with the same name and active 
ingredient will thus be considered, for the purpose of these interim 
final rules, to be the same prescription drug even if they have a 
different dosage strength, package size, mode of delivery, or, for 
generic products, different manufacturers.\16\
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    \15\ https://www.fda.gov/drugs/drug-approvals-and-databases/national-drug-code-directory.
    \16\ This definition of the term ``prescription drug'' and 
``drug'' and characterization of the term ``same prescription drug'' 
are used only for purposes of these interim final rules and are not 
intended to reflect or suggest any such definition or 
characterization of these terms by FDA.
---------------------------------------------------------------------------

    The Departments chose to group pharmaceutical products by name and 
ingredient because this approach will produce more meaningful top 50 
and top 25 lists of prescription drugs. If products are not grouped 
according to name and ingredient, the same drug could occupy several 
spots on the top 50 or top 25 lists. For example, providers may 
prescribe a drug that comes in the form of pills in different 
strengths, such as 10 mg or 20 mg, or a drug may sometimes be dispensed 
as a 30-day supply and sometimes as a 90-

[[Page 66668]]

day supply. In addition, several different companies may manufacture 
the same generic drug. If each variation of the drug were considered 
separately, the drug could occupy several spots on a top 50 list, which 
would be redundant and would not clearly indicate the full scope and 
variety of drugs in the top 50 list. Or, conversely, the variations 
could disperse the frequency across so many different products that the 
drug would not end up making the top 50 list despite its prevalence, 
even if it would be included in the list if categorized by ingredient 
or name.
    This definition is consistent with stakeholder recommendations. 
Although a number of commenters responding to the RFI suggested that 
the Departments rely on the NDC with regard to the definition of 
``prescription drug,'' the majority of commenters advised the 
Departments to classify prescription drugs according to characteristics 
such as the drug's name and active ingredient and not solely by the 
NDC, which distinguishes products by dosage strength, form of delivery, 
package size, and manufacturer. Commenters generally recommended that 
the Departments adopt a definition of ``prescription drug'' consistent 
with this approach to ensure that different formulations and dosages of 
the same drug do not appear on the top 50 lists multiple times. 
Commenters also suggested that the Departments either use a common 
commercially available database to group prescription drugs by name, 
active ingredient, and therapeutic class, or provide a new uniform 
mapping for how prescription drugs must be grouped and classified.
    Therapeutic Class. In these interim final rules, the term 
``therapeutic class'' means a group of pharmaceutical products that 
have similar mechanisms of action or treat the same types of 
conditions, grouped in the manner specified by the Departments in 
guidance.\17\ The Departments may specify in guidance the technical 
specifications for how plans and issuers must classify drugs, and may 
specify that plans and issuers must do so according to a commonly 
available public or commercial therapeutic classification system that 
maps prescription drugs to therapeutic classes, a therapeutic 
classification system provided by the Departments through guidance, or 
a combination thereof. The Departments will require all plans and 
issuers to use the same classification system. This definition is 
consistent with stakeholder recommendations. Commenters responding to 
the questions in the RFI regarding the definition of ``therapeutic 
class'' advised that regulated entities use a variety of commercially 
available therapeutic classification systems. Many commenters urged the 
Departments to provide a uniform mapping system for therapeutic 
classes. Commenters generally requested that the Departments provide 
clear instructions and provide adequate implementation time, including 
by allowing plans and issuers to phase in adoption of a new uniform 
classification system.
---------------------------------------------------------------------------

    \17\ This definition of the term ``therapeutic class'' is used 
only for purposes of these interim final rules and is not intended 
to reflect or suggest any such definition or characterization of 
this term by FDA.
---------------------------------------------------------------------------

    Prescription Drug Rebates, Fees, and Other Remuneration. In these 
interim final rules, the term ``prescription drug rebates, fees, and 
other remuneration'' means all remuneration received by or on behalf of 
a plan or issuer, its administrator or service provider, including 
remuneration received by and on behalf of entities providing pharmacy 
benefit management services to the plan or issuer, with respect to 
prescription drugs prescribed to participants, beneficiaries, or 
enrollees in the plan or coverage, as applicable, regardless of the 
source of the remuneration (for example, pharmaceutical manufacturer, 
wholesaler, retail pharmacy, or vendor). Prescription drug rebates, 
fees, and other remuneration also include, for example, discounts, 
chargebacks or rebates, cash discounts, free goods contingent on a 
purchase agreement, up-front payments, coupons, goods in kind, free or 
reduced-price services, grants, or other price concessions or similar 
benefits. Prescription drug rebates, fees, and other remuneration 
include bona fide service fees. Bona fide service fees mean fees paid 
by a drug manufacturer to an entity providing pharmacy benefit 
management services to the plan or issuer that represent fair market 
value for a bona fide, itemized service actually performed on behalf of 
the manufacturer that the manufacturer would otherwise perform (or 
contract for) in the absence of the service arrangement, and that are 
not passed on in whole or in part to a client or customer of the 
entity, whether or not the entity takes title to the drug.
    Some commenters responding to the RFI regarding the definition of 
prescription drug rebates, fees, and other remuneration recommended 
definitions that are identical or substantially similar to the 
definition of prescription drug rebates and other price concessions in 
the MLR regulations at 45 CFR 158.103 (which generally require issuers, 
among other requirements, to report premiums, prescription drug and 
medical expenses, and administrative expenses to HHS). Some commenters 
recommended that the definition include significantly more detailed 
illustrative examples. Many commenters encouraged the Departments to 
collect detailed information on the various types of prescription drug 
rebates, fees, and other remuneration, including at the level of detail 
consistent with the specifications for the data collection requirements 
under the Exchange Establishment rule \18\ and the PBM Transparency 
rule \19\ (which generally require certain entities to submit to HHS 
prescription drug data with respect to QHPs). In these interim final 
rules, the Departments are adopting a definition of prescription drug 
rebates, fees, and other remuneration that overlaps with the definition 
in the MLR regulations at 45 CFR 158.103 to the extent consistent with 
section 9825(a)(9) of the Code, section 725(a)(9) of ERISA, and section 
2799A-10(a)(9) of the PHS Act. As the types of prescription drug 
rebates, fees, and other remuneration continue to evolve, the 
Departments intend to provide additional examples in the instructions 
for the information collection instrument as may be necessary. The 
Departments intend to specify the level of detail at which prescription 
drug rebates, fees, and other remuneration must be reported in section 
204 data submissions in the instructions for the information collection 
instrument. The Departments intend to specify a level of detail that 
will assist plans, issuers, and other reporting entities in correctly 
determining the total amount of prescription drug rebates, fees, and 
other remuneration, and that will be generally consistent with the 
categories of rebates, fees, and other remuneration specified in the 
data collection requirements under the Exchange Establishment rule and 
the PBM Transparency rule.
---------------------------------------------------------------------------

    \18\ 77 FR 18308 (March 27, 2012).
    \19\ 86 FR 24140 (May 5, 2021).
---------------------------------------------------------------------------

    A number of commenters urged the Departments to include bona fide 
service fees in the definition of ``prescription drug rebates, fees, 
and other remuneration,'' stating that the statute did not provide an 
exception for any fees paid by manufacturers to PBMs and other service 
providers, and that disclosure of these fees is necessary to ensure 
transparency and to ensure that rebates and other fees are not 
improperly mischaracterized as bona fide service fees. In contrast, 
other commenters urged the Departments to exclude bona fide service 
fees from the

[[Page 66669]]

definition of ``prescription drug rebates, fees, and other 
remuneration,'' stating that these fees do not affect drug costs or 
impact premiums, and should be excluded for consistency with the 
requirements under the MLR rule, the Exchange Establishment rule and 
the PBM Transparency rule, as well as the definitions used by the 
Medicare and Medicaid programs. The Departments interpret section 
9825(a)(9)-(10) of the Code, section 725(a)(9)-(10) of ERISA, and 
section 2799A-10(a)(9)-(10) of the PHS Act to require plans and issuers 
to report the total amount of rebates, fees, and any other 
remuneration, and separately, the extent to which rebates, fees, and 
any other remuneration impact premiums and out-of-pocket costs. The 
Departments note that section 9825(a)(9) of the Code, section 725(a)(9) 
of ERISA, and section 2799A-10(a)(9) of the PHS Act require plans and 
issuers to report rebates, fees, and any other remuneration paid by 
drug manufacturers to the plan or coverage or its administrators or 
service providers, with respect to prescription drugs prescribed to 
participants, beneficiaries, or enrollees, as applicable, in the plan 
or coverage, and do not provide for the exclusion of bona fide service 
fees or any other fees. However, the Departments recognize that bona 
fide service fees may not always be intended to directly affect the 
cost or utilization of specific prescription drugs, and generally are 
not passed through to plans and issuers or to participants, 
beneficiaries, and enrollees. Therefore, the Departments will require 
reporting of only the total amount of bona fide service fees, but will 
not require these fees to be reported separately for each therapeutic 
class or for each drug on the top 25 list. This approach will help 
reduce compliance burden by enabling plans, issuers, TPAs, and PBMs to 
leverage some of the reporting capabilities they have already built to 
meet the requirements of section 1150A of the Social Security Act, 
which requires QHP issuers, Medicare Advantage Organizations offering 
plans with Medicare Part D, and Part D plan sponsors and PBMs that 
manage prescription drug coverage under contracts with these entities 
to report certain prescription drug benefit and rebate information to 
HHS and to exclude bona fide service fees in such reporting.
    A number of commenters urged the Departments to exclude drug 
manufacturer cost-sharing assistance to participants, beneficiaries, 
and enrollees, such as coupons and copay cards, from the definition of 
prescription drug rebates because these amounts are not credited to the 
plan or coverage or its administrators or service providers. The 
Departments agree with this view, and in these interim final rules, the 
definition of prescription drug rebates and other price concessions 
excludes drug manufacturer cost-sharing assistance provided to 
participants, beneficiaries, or enrollees, as applicable. However, to 
the extent these amounts impact total annual spending by health plans 
or issuers, or by participants, beneficiaries, and enrollees, these 
interim final rules include drug manufacturer cost-sharing assistance 
in the definition of ``total annual spending,'' as discussed in more 
detail later in this section of this preamble.
    Dosage Unit. In these interim final rules, the term ``dosage unit'' 
means the smallest form in which a pharmaceutical product is 
administered or dispensed. Common dosage units include a pill, tablet, 
capsule, ampule, or measurement of grams or milliliters.\20\
---------------------------------------------------------------------------

    \20\ This definition of the term ``dosage unit '' is used only 
for purposes of these interim final rules and is not intended to 
reflect or suggest any such definition or characterization of this 
term by FDA.
---------------------------------------------------------------------------

    Premium Amount. In these interim final rules, the term ``premium 
amount'' with respect to individual health insurance coverage and 
fully-insured group health plans has the meaning given to the term 
``earned premium'' in 45 CFR 158.130, excluding the adjustments 
specified in 45 CFR 158.130(b)(5), which currently encompass payments 
and receipts related to the risk adjustment program that would not be 
relevant for purposes of the section 204 data submissions. Several 
commenters responding to the RFI requested that the Departments clarify 
how premiums must be reported for self-funded plans or recommended the 
use of premium equivalents to ensure consistent reporting between 
fully-insured and self-funded plans. To accurately capture the concept 
of premiums and the full costs of maintaining health coverage with 
respect to self-funded group health plans and other arrangements that 
do not rely exclusively or primarily on premiums, in these interim 
final rules, the term ``premium amount'' with respect to these plans 
includes premium equivalent amounts that represent the total cost of 
providing and maintaining coverage, such as the cost of claims, 
administrative costs, and stop-loss premiums.
    Reporting Entity. In these interim final rules, the term 
``reporting entity'' means an entity that submits some or all of the 
information required under these interim final rules to the Departments 
with respect to a plan or issuer. The term also includes entities, 
other than plans and issuers, that submit the information on behalf of 
plans and issuers, as allowed by these interim final rules. Many 
commenters responding to the RFI regarding potential types of reporting 
entities requested clarification as to which entities are responsible 
for section 204 data submissions. Commenters generally indicated that 
plans and issuers expect that issuers and TPAs will report the 
information on behalf of most group health plans, including self-funded 
group health plans. Therefore, the Departments are allowing multiple 
types of reporting entities to submit the required information to 
provide plans and issuers with flexibility and to reduce administrative 
burdens. Some commenters requested that the Departments require TPAs 
and PBMs to report the information to or on behalf of self-funded group 
health plans. Although the Departments understand that these entities 
will make the section 204 data submissions on behalf of most self-
funded group health plans in the vast majority of cases, the 
Departments note that section 9825 of the Code, section 725 of ERISA, 
and section 2799A-10 of the PHS Act make plans and issuers responsible 
for providing the required information to the Departments. Therefore, 
the Departments do not require TPAs and PBMs to submit the information.
    In addition, many commenters urged the Departments to design a data 
collection system that would allow multiple reporting entities to 
submit different subsets of the required information with respect to 
the same plan or issuer. Commenters advised that a single reporting 
entity may not possess all of the information required to be reported 
under section 9825(a) of the Code, section 725(a) of ERISA, and section 
2799A-10(a) of the PHS Act. For example, plans and issuers indicated 
that a significant amount of information on prescription drug rebates 
is generally maintained primarily by PBMs, while other information is 
only known to plan sponsors, issuers, and TPAs. Commenters also advised 
that a segmented data collection system would reduce compliance burden 
by reducing the need for the reporting entities to transfer the data 
among themselves before submitting it to the Departments. The 
Departments intend to build a data collection system that will allow 
multiple reporting entities to submit

[[Page 66670]]

different subsets of the required information with respect to the same 
plan or issuer.
    Total Annual Spending. In these interim final rules, the term 
``total annual spending'' means incurred claims, as that term is 
defined in 45 CFR 158.140, excluding the adjustments specified in 45 
CFR 158.140(b)(1)(i), 45 CFR 158.140(b)(2)(iv), and 45 CFR 
158.140(b)(4), and including cost sharing but net of prescription drug 
rebates, fees, and other remuneration. Consistent with the definition 
in 45 CFR 158.140, plans and issuers must calculate the components of 
incurred claims based on claims incurred during the reference year and 
paid through March 31 of the year immediately following the reference 
year. The adjustments specified in 45 CFR 158.140(b)(2)(iv) currently 
encompass claims payments recovered through fraud reduction efforts and 
thus do not constitute spending, while the adjustments specified in 45 
CFR 158.140(b)(4) currently encompass payments and receipts related to 
the risk adjustment program that would not be relevant for purposes of 
the section 204 data submissions. The adjustments specified in 45 CFR 
158.140(b)(1)(i) currently encompass prescription drug rebates and 
other price concessions as that term is defined in 45 CFR 158.103. 
However, the definition of prescription drug rebates, fees, and other 
remuneration adopted in these interim final rules differs in several 
ways from the definition of prescription drug rebates and other price 
concessions in 45 CFR 158.103. Similar to the definition in 45 CFR 
158.140, total annual spending with respect to prescription drugs means 
the spending net of prescription drug rebates, fees, and other 
remuneration, as that term is defined in these interim final rules, in 
lieu of the adjustments specified in 45 CFR 158.140(b)(1)(i) for 
prescription drug rebates and other price concessions, as that term is 
defined in 45 CFR 158.103. The Departments are choosing this definition 
of incurred claims to be generally consistent with the financial 
reporting requirements in the MLR data collection under 45 CFR part 
158, which will reduce compliance burdens for issuers and TPAs. 
Further, defining ``total annual spending'' to mean spending net of 
prescription drug rebates, fees, and other remuneration will enable the 
Departments to undertake more meaningful and accurate comparisons of 
the costs of different prescription drugs, by capturing the actual 
costs for different plans and issuers, as well as for the participants, 
beneficiaries, and enrollees, as applicable, of different plans and 
issuers.
    In addition, as noted earlier in this section of this preamble 
regarding the definition of ``prescription drug rebates, fees, and 
other remuneration,'' a number of commenters that responded to the RFI 
urged the Departments to exclude drug manufacturer cost-sharing 
assistance to participants, beneficiaries, and enrollees, such as 
coupons and copay cards, from the definition of prescription drug 
rebates. Nonetheless, many commenters also urged the Departments to 
collect information regarding drug manufacturer cost-sharing 
assistance, particularly to the extent this assistance is excluded from 
the annual limitation on cost sharing, while a few commenters opposed 
collection of such information. The Departments note that section 
9825(a)(7)(B) of the Code, section 725(a)(7)(B) of ERISA, and section 
2799A-10(a)(7)(B) of the PHS Act direct plans and issuers to report 
information on prescription drug spending by the plan or coverage and 
by participants, beneficiaries, and enrollees, as applicable. To the 
extent drug manufacturer cost-sharing assistance reduces spending by 
the health plan or coverage or by participants, beneficiaries, and 
enrollees, and to the extent information regarding the amount of these 
reductions is available to plans, issuers, their administrators, or 
their service providers such as PBMs (for example, when the drug 
manufacturer cost-sharing assistance is excluded from the annual 
limitation on cost sharing) and thus can be reported to the 
Departments, the Departments intend to collect data on these reductions 
separately and incorporate such reductions into the analysis conducted 
for the section 204 public report.
    The Departments seek comment on these definitions, including 
whether other terms should be defined.

C. Reporting Requirements

1. Reporting Requirements Related to Prescription Drug and Health Care 
Spending (26 CFR 54.9825-4T, 29 CFR 2590.725-2, and 45 CFR 149.720)
a. General Requirement
    Section 9825(a) of the Code, section 725(a) of ERISA, and section 
2799A-10(a) of the PHS Act require plans and issuers to submit annually 
to the Departments certain information on prescription drug and health 
care spending, premiums, and enrollment under the plan or coverage. 
This general requirement is being codified at 26 CFR 54.9825-4T(a), 29 
CFR 2590.725-2(a), and 45 CFR 149.720(a).
b. Timing and Form of Report
    Section 9825(a) of the Code, section 725(a) of ERISA, and section 
2799A-10(a) of the PHS Act require plans and issuers to provide the 
first section 204 data submissions to the Departments not later than 1 
year after the date of enactment of the CAA, which would be December 
27, 2021, with respect to the plan or coverage in the previous plan 
year, and by June 1 of each year thereafter. In these interim final 
rules, consistent with the discussion in section II.A of this preamble 
regarding the definition of ``reference year,'' the Departments 
interpret these statutory provisions to require plans and issuers to 
submit calendar year 2020 information by December 27, 2021, calendar 
year 2021 information by June 1, 2022, calendar year 2022 information 
by June 1, 2023, and so forth. Therefore, these interim final rules 
provide that the report for the 2020 reference year must be submitted 
to the Secretaries of the Treasury, Labor, and HHS (Secretaries of the 
Departments) by December 27, 2021, and that beginning with the 2021 
reference year, the report for each reference year is due by June 1 of 
the year following the reference year. These interim final rules also 
require that the report must be submitted in the form and manner 
prescribed jointly by the Secretaries of the Departments. These 
requirements are being codified at 26 CFR 54.9825-4T(b), 29 CFR 
2590.725-2(b), and 45 CFR 149.720(b).
    Stakeholders expressed significant concerns about the feasibility 
of complying with the data submission deadlines specified in the 
statute. Specifically, stakeholders explained that they would need 
between 6 months to a year to comply with the reporting requirements 
after: (1) These interim final rules are issued; (2) technical guidance 
is provided by the Departments (such as instructions for the 
information collection instrument); and (3) the specifications for the 
data collection system are published by the Departments. Stakeholders 
explained that they would need this time to modify contractual 
agreements to enable disclosure and transfer of the required data 
between various reporting entities; to develop internal processes and 
procedures; and to implement the identification, compilation, 
preparation, and validation of the required data. Stakeholders further 
noted that they are concurrently implementing measures to comply with 
numerous other complex requirements and near-term deadlines imposed by 
the other provisions in the

[[Page 66671]]

No Surprises Act and Title II of Division BB of the CAA, as well as the 
Transparency in Coverage final rule.\21\
---------------------------------------------------------------------------

    \21\ 85 FR 72158 (Nov. 12, 2020).
---------------------------------------------------------------------------

    As noted in FAQs about Affordable Care Act and Consolidated 
Appropriations Act, 2021 Implementation Part 49, published by the 
Departments on August 20, 2021, the Departments recognize the 
significant operational challenges that regulated entities may face in 
meeting the initial deadlines for the section 204 data submissions.\22\ 
Accordingly, the Departments are exercising discretion to defer 
enforcement in connection with the December 27, 2021 and the June 1, 
2022 deadlines for the section 204 data submissions for the 2020 and 
2021 reference years, respectively. More specifically, the Departments 
will not initiate enforcement action against a plan or issuer that does 
not report the required information by the first statutory deadline for 
reporting on December 27, 2021 or the second statutory deadline for 
reporting on June 1, 2022, and that instead submits the section 204 
data submissions for the 2020 and 2021 reference years by December 27, 
2022.\23\ However, the Departments strongly encourage plans and issuers 
to start working to ensure that they are in a position to be able to 
report the required information with respect to the 2020 and 2021 
reference years by December 27, 2022. The Departments further encourage 
plans and issuers that are able to submit the required information by 
either the December 27, 2021 or June 1, 2022 statutory deadlines to do 
so.
---------------------------------------------------------------------------

    \22\ FAQs about Affordable Care Act and Consolidated 
Appropriations Act, 2021 Implementation Part 49 (Aug. 20, 2021), 
Q12, available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQs-Part-49.pdf.
    \23\ Under section 2723 of the PHS Act, states have the 
opportunity to be the primary enforcers of section 2799A-10 of the 
PHS Act with respect to health insurance issuers. However, on 
September 16, 2021, the Departments and OPM published a proposed 
rule entitled, Requirements Related to Air Ambulance Services, Agent 
and Broker Disclosures, and Provider Enforcement (86 FR 51730), in 
which HHS proposed to have direct enforcement authority for newly 
enacted provisions of the PHS Act that require health insurance 
issuers to submit certain information to HHS or the Departments, 
including section 2799A-10 of the PHS Act, unless the state notifies 
HHS of its intent to enforce. HHS solicited comment on this 
approach. Public comments on this proposed rule were due by October 
18, 2021. HHS is considering public comments and intends to address 
the issue of enforcement of section 2799A-10 of the PHS Act 
enforcement in the Requirements Related to Air Ambulance Services, 
Agent and Broker Disclosures, and Provider Enforcement final rule.
---------------------------------------------------------------------------

    A number of commenters responding to the RFI additionally 
recommended that the Departments allow for a longer run-out period for 
prescription drug claims and rebates than allowed by the annual June 1 
statutory deadline. Some commenters therefore recommended that the 
Departments establish regular reporting deadlines of between 4 and 18 
months after the end of the reference year. The Departments recognize 
that longer run-out periods could lead to the submission of more 
accurate data, but note that section 9825(a) of the Code, section 
725(a) of ERISA, and section 2799A-10(a) of the PHS Act prescribe the 
annual reporting deadline of June 1. The Departments further note that 
the deadline for the section 204 data submissions must balance the need 
for accuracy with the need for timely access to the data and the 
statutory deadlines for the biannual section 204 public report. The 
Departments are confident that regulated entities will be able to 
produce reasonably accurate estimates of the payable and receivable 
prescription drug rebate, fee, and other remuneration amounts by the 
June 1 statutory deadlines, similar to how issuers and other reporting 
entities currently determine such amounts for other federal and state 
financial reporting purposes. However, to ensure that the Departments 
receive complete and accurate data and are able to evaluate the 
reliability of the estimates and trends, the Departments will also 
collect restated amounts for prescription drug rebates, fees, and other 
remuneration for the preceding reference year.
c. Transfer of Business
    To capture meaningful and accurate information required under 
section 9825(a) of the Code, section 725(a) of ERISA, and section 
2799A-10(a) of the PHS Act with respect to group or individual health 
insurance coverage provided by an issuer, these interim final rules 
require issuers that acquire a line or block of business from another 
issuer during a reference year to submit the required information and 
report for the acquired business, including for the part of the 
reference year that was prior to the acquisition. This requirement 
mirrors the existing requirements for issuers to report the premium, 
claims, and other expenditures with respect to purchased business for 
MLR data reporting purposes in 45 CFR 158.110(c). This requirement is 
being codified at 26 CFR 54.9825-4T(c), 29 CFR 2590.725-2(c), and 45 
CFR 149.720(c).
    The sale or transfer of blocks of policies between issuers is a 
common practice in the health insurance industry and could lead to 
inconsistencies in the reporting required under section 9825(a) of the 
Code, section 725(a) of ERISA, and section 2799A-10(a) of the PHS Act. 
For example, if part of the data for a given reference year with 
respect to a block of business were reported by the selling issuer, and 
the other part was reported by the acquiring issuer, the split 
reporting could result in distortions and inconsistencies in the list 
of the top 50 most frequently dispensed brand prescription drugs, the 
report on the impact of cost-sharing amounts, the report on average 
monthly premium amounts, and other required data elements. The 
Departments seek comment on whether these interim final rules should be 
amended through future rulemaking to require reporting of any data 
elements that would address the impact of mergers, splits, and similar 
transactions on prescription drug costs to the extent such transactions 
increase market concentration.
d. Reporting Entities and Special Rules To Prevent Unnecessary 
Duplication
    As discussed in section II.B of this preamble regarding the 
definition of ``reporting entity,'' the Departments are allowing plans 
and issuers to satisfy their reporting obligations under these interim 
final rules by having third parties, such as issuers, TPAs, or PBMs, 
submit some or all of the required information on their behalf, 
provided a plan or issuer enters into a written agreement with the 
third party that is providing the information on its behalf in 
accordance with these interim final rules. The Departments expect that 
it will be rare for group health plans to report the required 
information on their own, but nothing in these interim final rules 
prohibits them from doing so.
    For fully-insured group health plans, these interim final rules at 
26 CFR 54.9825-4T(d)(1), 29 CFR 2590.725-2(d)(1), and 45 CFR 
149.720(d)(1) provide that, to the extent coverage under a group health 
plan consists of group health insurance coverage, the plan may satisfy 
the section 204 data submission requirements if the plan requires the 
health insurance issuer offering the coverage to report the required 
information in compliance with these interim final rules, pursuant to a 
written agreement. Under this provision, if the issuer fails to report 
the required information, then the issuer, not the plan, violates the 
reporting requirements.
    For both fully-insured and self-funded group health plans, as well 
as health insurance issuers offering group or individual health 
coverage, these interim final rules at 26 CFR 54.9825-4T(d)(2), 29 CFR 
2590.725-2(d)(2), and

[[Page 66672]]

45 CFR 149.720(d)(2) provide that the plan or issuer may also satisfy 
the section 204 data submission requirements with respect to the 
required information that the plan or issuer, as applicable, requires 
another party (such as another issuer, a PBM, a TPA, or other third 
party) to report in compliance with these interim final rules, pursuant 
to a written agreement. Under this provision, if the third-party 
reporting entity fails to report the required information, the plan or 
issuer violates the reporting requirements.
    The Departments solicit comment on this approach.
2. Required Information (26 CFR 54.9825-6T, 29 CFR 2590.725-4, and 45 
CFR 149.740)
a. General Information
    The provisions of these interim final rules that address the 
general information that plans and issuers must submit for each plan or 
coverage at the plan or coverage level are being codified at 26 CFR 
54.9825-6T(a), 29 CFR 2590.725-4(a), and 45 CFR 149.740(a).
    Plans and issuers must ensure that the information they report, or 
the information that is reported on their behalf, includes identifying 
information at the plan or coverage level, such as name and Federal 
Employer Identification Number (FEIN) and other relevant identification 
numbers, for plans, issuers, plan sponsors, and any other reporting 
entities. Plan- and coverage-level identifying information is necessary 
for the Departments to verify receipt of data from all plans and 
issuers subject to the section 204 data submission requirements. The 
identifying information will also allow the Departments to ensure that 
reporting entities do not submit duplicate information, and that 
different reporting entities do not reflect the data of the same health 
plan or coverage in different market segments when a plan or issuer 
engages multiple reporting entities to report information on its 
behalf. For example, if a self-funded group health plan engages a TPA 
to report health care spending and a PBM to report prescription drug 
spending, the Departments will need to verify that both reporting 
entities reported the data and included the data for the plan in the 
appropriate market segment. The identifying information will further 
enable the Departments to cross-reference the data to other data 
submitted by plans and issuers to the Departments, such as the MLR data 
submitted by issuers to HHS and the Form 5500 Annual Returns/Reports of 
Employee Benefit Plan data submitted by group health plans to DOL and 
the Department of the Treasury.
    In addition, plans and issuers must ensure that the information 
they report, or that is reported on their behalf, includes the 
following data elements, which are required by section 9825(a)(1)-(3) 
of the Code, section 725(a)(1)-(3) of ERISA, and section 2799A-
10(a)(1)-(3) of the PHS Act, at the plan level, regardless of whether 
they submit the other required information at the aggregate level, as 
described in section II.C.3. of this preamble: (1) The beginning and 
end dates of the plan year that ended on or before the last day of the 
reference year; (2) the number of participants, beneficiaries, and 
enrollees, as applicable, covered on the last day of the reference 
year; and (3) each state in which the plan or coverage is offered. The 
number of participants, beneficiaries, and enrollees, as applicable, 
can be measured in multiple ways, such as the average number over the 
course of a year, or a number at a point in time, such as at the 
beginning or end of the year, all of which convey different and 
valuable information. To ensure data consistency, these interim final 
rules require plans and issuers to report at the plan level the number 
of participants, beneficiaries, and enrollees, as applicable, covered 
only on the last day of the reference year. This approach will provide 
the Departments with the most recent information regarding enrollment 
at the plan level. To reduce the reporting burdens, these interim rules 
require plans and issuers to report the life-years attributable to the 
participants, beneficiaries, and enrollees, as applicable, over the 
course of the reference year only in total, at the state and market 
segment aggregate level, as described in section II.C.3. of this 
preamble. This approach will provide enrollment metrics that are most 
relevant to the other data elements collected at the aggregate level 
and will enable the Departments to analyze trends such as average 
annual spending per person. Issuers subject to MLR reporting 
requirements under 45 CFR part 158 will be able to leverage the life-
years they compile at the state and market segment level for MLR 
reporting purposes.
    In accordance with the requirements in section 9825(b) of the Code, 
section 725(b) of ERISA, and section 2799A-10(b) of the PHS Act 
regarding the treatment of plan-specific information in the section 204 
public report, the Departments will not publicly disclose this 
information in a manner by which any plan can be identified.
b. Health Care Spending
    Section 9825(a)(7) of the Code, section 725(a)(7) of ERISA, and 
section 2799A-10(a)(7) of the PHS Act require plans and issuers to 
report the total annual spending on health care services, broken down 
by the types of cost, including: (1) Hospital costs; (2) health care 
provider and clinical service costs, for primary care and specialty 
care separately; (3) costs for prescription drugs; and (4) other 
medical costs, including wellness services. For prescription drug 
spending, plans and issuers must report separately the costs incurred 
by the plan or coverage and the costs incurred by participants, 
beneficiaries, and enrollees, as applicable. The provisions related to 
these requirements are being codified at 26 CFR 54.9825-6T(b)(4) 
through (5), 29 CFR 2590.725-4(b)(4) through (5), and 45 CFR 
149.740(b)(4) through (5).
    Stakeholders requested that the Departments provide specific 
instructions for which expenses must be reported in each category. 
Several commenters responding to the RFI made technical suggestions 
regarding how the Departments should specify these expense categories. 
These interim final rules set forth general requirements, and the 
Departments intend to provide detailed technical guidance in the 
instructions to the information collection instrument regarding 
reporting by health care service type that aligns with these general 
requirements and provides examples of the costs that should be reported 
in each category. To promote consistency and reduce the reporting 
burden, the Departments may leverage specific data elements used in the 
MLR Annual Reporting Form and the Unified Rate Review Template that 
issuers file with HHS.\24\ The Departments solicit comments on the use 
of MLR and rate review definitions of health care spending cost 
elements.
---------------------------------------------------------------------------

    \24\ See, e.g., https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/2019-MLR-Form-Instructions.pdf 
and https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/URR_v5.3-instructions.pdf.
---------------------------------------------------------------------------

    Many commenters responding to the RFI urged the Departments to 
exclude prescription drugs covered under the hospital or medical 
benefit from the section 204 data submissions due to the complexity of 
obtaining these data, longer run-out periods associated with these 
drugs, and differences in the relevant pricing mechanisms and 
underlying cost drivers (such as different supply chains and 
procurement mechanisms). Commenters

[[Page 66673]]

additionally noted that these drugs may be subject to different cost-
sharing requirements than drugs dispensed by retail or mail-order 
pharmacies, and may present consumers with fewer opportunities to 
choose among drugs. The Departments acknowledge these concerns, but 
note that section 9825(a) of the Code, section 725(a) of ERISA, and 
section 2799A-10(a) of the PHS Act do not create an exemption for 
prescription drugs covered under a plan's or coverage's hospital or 
medical benefit. The Departments further note that prescription drugs 
covered under a hospital or medical benefit constitute a significant 
proportion of the total prescription drug spending in the U.S., and 
include some of the more costly drugs. Therefore, these interim final 
rules require reporting of the total annual spending on prescription 
drugs administered in a hospital, clinic, provider's office, or other 
provider setting and covered under the hospital or medical benefit of a 
plan or coverage (which may be a subset of, and already reported with, 
the total spending on hospital or other medical costs), separately from 
the total annual spending on drugs covered under the pharmacy benefit 
of a plan or coverage. Separate reporting of spending on drugs covered 
under the pharmacy benefit and on drugs covered under the hospital or 
medical benefit will assist the Departments in evaluating prescription 
drug trends with respect to the setting in which the drugs are 
administered. However, in recognition of stakeholders' concerns 
regarding the compliance burdens associated with reporting information 
on drugs covered under the hospital or medical benefit, these interim 
final rules do not, at this time, require plans and issuers to report 
data elements other than total annual spending, as required under 
section 9825(a) of the Code, section 725(a) of ERISA, and section 
2799A-10(a) of the PHS Act, such as the top 50 and top 25 lists, for 
drugs covered under the hospital or medical benefit. Instead, these 
data elements should reflect only the drugs covered under the pharmacy 
benefit. Once the Departments begin to receive the section 204 data 
submissions and have the opportunity to evaluate the prescription drug 
data, the Departments will further review and analyze the merits of 
this approach and may modify the provisions regarding the information 
to be collected on drugs covered under the hospital or medical benefit 
in future rulemaking. Finally, the Departments recognize that for drugs 
covered under the hospital or medical benefit, the cost of the 
prescription drugs included in some bundled payment arrangements and 
other alternative payment arrangements may not be readily available to 
the plan or issuer. In these situations, the plan or issuer is required 
to separately report the total annual spending attributable to the 
prescription drugs included in the bundle or other alternative payment 
arrangement in good faith and to the best of its ability. The 
Departments seek comment on all aspects of collecting only some of the 
information on drugs covered under the hospital or medical benefit. The 
Departments also seek comment on whether reporting flexibilities for 
drugs included in bundled and other alternative payment arrangements 
may contribute to prescription drug spending increases or facilitate 
anti-competitive practices.
    These interim final rules require plans and issuers to separately 
report total annual spending on health care services by the plan or 
coverage, and total annual spending on health care services by 
participants, beneficiaries, and enrollees, as applicable. Collecting 
total annual spending on health care services at this level of detail 
will ensure consistency with the other data elements required by 
section 9825(a) of the Code, section 725(a) of ERISA, and section 
2799A-10(a) of the PHS Act, such as total annual spending on 
prescription drugs and average monthly premium amounts, which are 
collected separately with respect to a plan or coverage and with 
respect to participants, beneficiaries, and enrollees, as applicable. 
Consistency across the data elements will enhance the usability of the 
data and enable the Departments to conduct meaningful data analysis. 
These interim final rules additionally require plans and issuers to 
report, for each drug in the top 50 and top 25 lists, as well as for 
each therapeutic class, prescription drug spending and utilization, 
including: (1) Total annual spending by the plan or coverage; (2) total 
annual spending by participants, beneficiaries, and enrollees enrolled 
in the plan or coverage, as applicable; (3) the number of participants, 
beneficiaries, and enrollees, as applicable, with a paid prescription 
drug claim; (4) total dosage units dispensed; and (5) the number of 
paid claims. The Departments intend to collect cost-sharing amounts to 
obtain the total annual spending by participants, beneficiaries, and 
enrollees, as applicable. Inclusion of identical data elements in each 
of the top 50 and top 25 lists and the therapeutic class list will 
streamline reporting and reduce compliance burdens. Collecting these 
amounts for each of the top 50 and top 25 lists, as well as for each 
therapeutic class, will enable the Departments to include in the 
section 204 public report an analysis regarding the overlap (or lack 
thereof) and the causes of any such overlap, among the lists of the 
most frequently dispensed drugs, the most costly drugs, the drugs with 
the greatest cost increases, and the drugs generating the greatest 
amount of rebates. This analysis may include analysis of the 
differences and similarities in these five spending and utilization 
data elements across drugs in the top 50, top 25, and the therapeutic 
class lists. This analysis may further include analysis of how 
prescription drug spending increases are distributed among plans and 
issuers as compared to the participants, beneficiaries, and enrollees. 
The total annual spending on prescription drugs and total dosage units 
dispensed will enable the Departments to conduct the required analysis 
of prescription drug pricing trends for purposes of the section 204 
public report, and to compare trends across multiple data sources as 
well as between publicly and privately-sponsored health coverage. The 
number of paid claims and the unique number of individuals with paid 
prescription drug claims will allow the Departments to compute average 
per person cost sharing, and evaluate the average impact, if any, of 
prescription drug spending increases and rebates on participants, 
beneficiaries, and enrollees, as well as analyze whether spending 
increases are driven by increases in drug prices or utilization. The 
Departments seek comment on the use of identical prescription drug data 
elements for each of the top 50 and top 25 lists and the therapeutic 
class list.
c. Premium Amounts
    Section 9825(a)(8) of the Code, section 725(a)(8) of ERISA, and 
section 2799A-10(a)(8) of the PHS Act require plans and issuers to 
report the average monthly premium paid by employers on behalf of 
participants, beneficiaries, and enrollees, as applicable, as well as 
the average monthly premium paid by participants, beneficiaries, and 
enrollees, as applicable. The provisions related to this requirement 
are being codified at 26 CFR 54.9825-6T(b)(6), 29 CFR 2590.725-4(b)(6), 
and 45 CFR 149.740(b)(6).
    Stakeholders expressed concerns about this requirement. Employers 
expressed concern that reporting this information would be burdensome 
and suggested that the Departments utilize the information regarding 
the tax-deductible portion of premiums shown

[[Page 66674]]

on the Forms W-2. Issuers and TPAs expressed concern that information 
regarding the employer and participant, beneficiary, and enrollee 
contributions to premiums is currently only known to employers, and 
that it would be time-consuming and burdensome for issuers and TPAs to 
obtain this information from employers. Issuers and TPAs also 
anticipated that some employers may not want to disclose this 
information to issuers and TPAs. Issuers and TPAs requested that the 
Departments allow them to report estimated average monthly premium 
amounts based on a sample of employers or based on publicly available 
survey data.
    The Departments acknowledge these concerns but note that plans and 
issuers are required to report this information under section 
9825(a)(8) of the Code, section 725(a)(8) of ERISA, and section 2799A-
10(a)(8) of the PHS Act. Furthermore, the Departments are of the view 
that the information on the trends in the employer versus employee 
contributions to premium amounts is integral to analyzing the extent to 
which the impact of prescription drug costs on premiums affects 
employers versus employees. Plans, employers, participants, 
beneficiaries, and enrollees experience premium increases driven by 
increases in prescription drug spending or, conversely, premium 
decreases driven by prescription drug rebates, proportionately to their 
share of total premium amounts, as well as the changes in this 
proportion over time. Existing data on premium amounts paid by 
employers versus by participants, beneficiaries, and enrollees are not 
complete for each state and market segment defined in these interim 
final rules. Furthermore, premium information shown on the Forms W-2 
includes information related to plans that are not subject to these 
interim final rules (such as account-based group health plans). 
Therefore, these interim final rules require plans and issuers to 
submit the actual average monthly premium amounts separately with 
respect to payments by employers on behalf of participants, 
beneficiaries, and enrollees, and payments by participants, 
beneficiaries, and enrollees.
    For purposes of these interim final rules, to accurately capture 
premium amounts with respect to all types of group health plan 
sponsors, the average monthly premium amount paid by employers on 
behalf of participants, beneficiaries, and enrollees, as applicable, 
includes premium amounts paid by plan sponsors that do not directly 
employ individuals (for example, employee organizations or employer 
groups and associations acting in the interest of their members and 
considered an ``employer'' within the meaning of section 3(5) of ERISA) 
but that nonetheless make payments of premiums or premium equivalents 
on behalf of participants, beneficiaries, and enrollees, as applicable.
    These interim final rules also require plans and issuers to report 
total annual premium amounts and the total number of life-years. 
Section 9825(a)(9)-(10) of the Code, section 725(a)(9)-(10) of ERISA, 
and section 2799A-10(a)(9)--(10) of the PHS Act require plans and 
issuers to report any impact on premiums and reductions in premiums and 
out-of-pocket costs associated with rebates, fees, or other 
remuneration paid by drug manufacturers to the plan or coverage or its 
administrators or service providers. In addition, the section 204 
public report required by section 9825(b) of the Code, section 725(b) 
of ERISA, and section 2799A-10(b) of the PHS Act must include 
information on the role of prescription drug costs in contributing to 
premium increases or decreases. Collecting total annual premium amount 
information will provide the Departments with important context to 
understand the impact of rebates, fees, and other remuneration. For 
example, if the impact of rebates, fees, and other remuneration 
resulted in a premium decrease of $100,000 for the reference year, it 
is important for the Departments to know whether the reduction is based 
on total annual premium amounts of $1,000,000 or $10,000,000. 
Similarly, collection of the total number of life-years will enable the 
Departments to estimate the combined average premium, as well as to 
estimate an average impact at the per person level for the 
participants, beneficiaries, and enrollees, as applicable, whose 
premiums or out-of-pocket costs may be affected by prescription drug 
costs and prescription drug rebates, fees, and other remuneration.
    The Departments seek comment on all aspects of the data submission 
requirements regarding premium amounts.
d. Top 50 Drug Lists
    Section 9825(a)(4)-(6) of the Code, section 725(a)(4)-(6) of ERISA, 
and section 2799A-10(a)(4)--(6) of the PHS Act require plans and 
issuers to report, respectively: (1) The 50 brand prescription drugs 
most frequently dispensed by pharmacies for claims paid by the plan or 
coverage, and the total number of paid claims for each such drug; (2) 
the 50 most costly prescription drugs with respect to the plan or 
coverage by total annual spending, and the annual amount spent by the 
plan or coverage for each such drug; and (3) the 50 prescription drugs 
with the greatest increase in plan or coverage expenditures over the 
plan year preceding the plan year that is the subject of the report, 
and, for each such drug, the change in amounts expended by the plan or 
coverage in each such plan year. The provisions related to these 
requirements are being codified at 26 CFR 54.9825-6T(b)(1) through (3), 
29 CFR 2590.725-4(b)(1) through (3), and 45 CFR 149.740(b)(1) through 
(3).
    In accordance with these interim final rules, the top 50 drugs must 
be determined separately for each aggregation level described in 26 CFR 
54.9825-5T, 29 CFR 2590.725-3, and 45 CFR 149.730, as described in 
section II.C.3 of this preamble. For example, if an issuer acts as the 
reporting entity, has health insurance business or acts as a TPA in 
multiple states and market segments, and aggregates the data at the 
state and market segment level, then the issuer must prepare the three 
top 50 lists for each market segment within each state. Each of these 
lists must be based on the combined experience of all plans or policies 
included in the relevant aggregation. The Departments expect that it 
will be rare for self-funded plans to report these lists on their own 
using their own claims experience to determine the top 50 drugs, but to 
the extent a self-funded plan does so, any TPA that administers 
benefits for the plan should not include that plan's experience in the 
TPA's aggregated report.
    As noted in section II.C.2.b. of this preamble, at this time, to 
simplify reporting and analysis and to reduce the reporting burden, 
these interim final rules require the information on the top 50 lists 
to include only the drugs covered under the pharmacy benefit of a plan 
or coverage, and exclude drugs administered in a hospital, clinic, 
provider's office, or other provider setting and covered under the 
hospital or medical benefit of a plan or coverage. Stakeholders 
requested that drugs covered under the hospital or medical benefit be 
excluded from the section 204 data submissions because these drugs may 
have different supply chains and procurement mechanisms, be subject to 
different pricing mechanisms and cost-sharing requirements than drugs 
dispensed by retail or mail-order pharmacies, and may present consumers 
with fewer opportunities to choose among drugs. As a result, the 
dispensing frequency, total spending, and prescription drug rebates, 
which are used to rank the top 50 and top 25 lists, are likely to be 
different for drugs covered under the pharmacy benefit and

[[Page 66675]]

for drugs covered under the hospital or medical benefit. Consequently, 
combining drugs covered under the pharmacy benefit with the hospital or 
medical benefit could lead to distorted ranking of the top 50 lists. 
Commenters responding to the RFI further pointed to the operational 
challenges of combining the data on drugs covered under the pharmacy 
benefit and the hospital or medical benefit to produce the top 50 
lists, given that these data come from separate sources and may be 
reported by different reporting entities. The Departments will continue 
to review the validity of this approach and whether it adequately 
fulfills the objectives of section 9825(a) of the Code, section 725(a) 
of ERISA, and section 2799A-10(a) of the PHS Act, and the Departments 
may modify the reporting requirements for the top 50 lists to include 
drugs covered under the hospital or medical benefit, or to require 
separate top 50 lists for drugs covered under the pharmacy benefit and 
under the hospital or medical benefit, in future rulemaking. The 
Departments solicit comment on this approach.
    Top 50 Most Frequently Dispensed Brand Prescription Drugs. Plans, 
issuers, and other reporting entities must determine the most 
frequently dispensed brand prescription drugs based on the total number 
of paid claims for prescriptions filled during the reference year for 
each drug.
    For each of the top 50 most frequently dispensed brand prescription 
drugs, the section 204 data submission must include the data elements 
listed in 26 CFR 54.9825-6T(b)(5), 29 CFR 2590.725-4(b)(5), and 45 CFR 
149.740(b)(5) (required prescription drug data elements), which 
include: (1) Total annual spending by the plan or coverage; (2) total 
annual spending by participants, beneficiaries, and enrollees enrolled 
in the plan or coverage, as applicable; (3) the number of participants, 
beneficiaries, and enrollees, as applicable, with a paid prescription 
drug claim; (4) total dosage units dispensed; and (5) the number of 
paid claims. The rationale for collecting the required prescription 
drug data elements for each of the top 50 most frequently dispensed 
brand prescription drugs is described in section II.C.2.b. of this 
preamble.
    Top 50 Most Costly Drugs. Plans, issuers, and other reporting 
entities must determine the 50 most costly drugs based on total annual 
spending per drug. Total annual spending, as defined in these interim 
final rules and as described in section II.B. of this preamble, must be 
net of prescription drug rebates, fees, and other remuneration and must 
include cost sharing as well as, to the extent available, drug 
manufacturer cost-sharing assistance. For each of the top 50 most 
costly drugs, the section 204 data submissions must include the 
required prescription drug data elements. The statute requires 
reporting of the top 50 most costly drugs by total annual spending with 
respect to the plan or coverage, which the Departments interpret to 
mean all spending under the plan or coverage, including both amounts 
spent by the plan or coverage as well as cost sharing and other amounts 
paid by participants, beneficiaries, and enrollees. The statute 
additionally requires reporting of the amounts spent only by the plan 
or coverage for each such drug. Because cost sharing generally 
corresponds to the difference between total annual spending and the 
amounts spent by the plan or coverage, the Departments chose to capture 
the amounts spent by the plan or coverage through requiring reporting 
of the total cost sharing paid under the plan or coverage. Reporting of 
total cost sharing will provide the Departments with information 
equivalent to that specified in the statute but will be more convenient 
for data analysis. The rationale for collecting the required 
prescription drug data elements for each of the top 50 drugs with the 
highest total annual spending is described in section II.C.2.b. of this 
preamble.
    Top 50 Drugs with the Greatest Increase in Expenditures. Plans, 
issuers, and other reporting entities must determine the top 50 drugs 
with the greatest increase in expenditures based on the dollar amount 
of the increase in total annual spending over the preceding year. The 
statute requires reporting of the top 50 drugs with the greatest year-
over-year increase in plan expenditures, which the Departments 
interpret to mean all spending under the plan or coverage, including 
both amounts spent by the plan or coverage as well as cost sharing and 
other amounts paid by participants, beneficiaries, and enrollees. This 
interpretation is consistent with the interpretation of the reporting 
methodology for the top 50 most costly drugs. A number of commenters 
responding to the RFI recommended that the Departments define the 
increase in expenditures based on the absolute amount of the increase 
rather than the percentage increase because the former value would 
enable the Departments to analyze which drugs are driving the increases 
in total spending on prescription drugs and would provide the 
Departments a better sense of the magnitude of the increases in this 
spending. The Departments agree with this rationale.
    For each of the top 50 drugs with the greatest increase in 
expenditures, the section 204 data submissions must include: (1) The 
required prescription drug data elements for the year immediately 
preceding the reference year; and (2) the required prescription drug 
data elements for the reference year. The rationale for collecting the 
information on the year-over-year changes in the required prescription 
drug data elements for each of the top 50 drugs with the greatest 
increases in expenditures is described in section II.C.2.b. of this 
preamble. Only drugs that were approved for marketing and/or issued an 
Emergency Use Authorization by FDA for the entire year immediately 
preceding the reference year and for the entire reference year should 
be included in this top 50 list.\25\ This approach will ensure that the 
cost increase is based on year-over-year changes and is not distorted 
by the inclusion of new drugs released in the market later in a 
calendar year.
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    \25\ This includes an Emergency Use Authorization issued 
pursuant to section 564 of the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 360bbb-3) for an unapproved use of an otherwise-approved 
drug.
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    The Departments seek comment on all aspects of the data submission 
requirements regarding the top 50 drug lists.
e. Prescription Drug Rebates, Fees, and Other Remuneration
    Section 9825(a)(9) of the Code, section 725(a)(9) of ERISA, and 
section 2799A-10(a)(9) of the PHS Act require plans and issuers to 
report prescription drug rebates, fees, and any other remuneration paid 
by drug manufacturers to the plan or coverage or its administrators or 
service providers, with respect to prescription drugs prescribed to 
participants, beneficiaries, or enrollees, as applicable, in the plan 
or coverage. The statute requires these amounts to be reported for each 
therapeutic class of drugs, as well as for each of the 25 drugs that 
yielded the highest amount of rebates and other remuneration under the 
plan or coverage from drug manufacturers during the plan year.\26\ The 
provisions related to these requirements are being codified at 26 CFR 
54.9825-6T(b)(7) through (9), 29 CFR 2590.725-4(b)(7) through (9), and 
45 CFR 149.740(b)(7) through (9).
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    \26\ As discussed in section II.B. of this preamble, in this 
instance, the Departments are interpreting ``plan year'' to mean 
``reference year.''

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[[Page 66676]]

    As discussed in section II.B. of this preamble regarding the 
definition of ``prescription drug rebates, fees, and other 
remuneration,'' the Departments intend to generally align the 
categories of rebates, fees, and other remuneration in the section 204 
data submissions with the categories specified in the data collection 
requirements under the Exchange Establishment rule \27\ and the PBM 
Transparency rule \28\ to reduce compliance burdens by allowing 
reporting entities to leverage some of the reporting capabilities they 
have already built to meet the requirements of these other HHS rules. 
For consistency with the Exchange Establishment rule and the PBM 
Transparency rule, these interim final rules further require reporting 
of total prescription drug rebates, fees, and other remuneration with 
respect to amounts passed through to the plan or issuer, amounts passed 
through to participants, beneficiaries, or enrollees, as applicable, 
and amounts retained by the PBM. Similarly, consistent with the 
information collected under the Exchange Establishment rule and the PBM 
Transparency rule, these interim final rules require reporting of the 
difference between total amounts that the plan or issuer pays the PBM 
and total amounts that the PBM pays pharmacies. One commenter 
responding to the RFI opposed collection of the difference between 
total amounts that the plan or issuer pays the PBM and total amounts 
that the PBM pays pharmacies, as well as collection of other details 
regarding prescription drug rebates, fees, and other remuneration 
consistent with the Exchange Establishment rule and the PBM 
Transparency rule; however, the commenter also recommended using the 
same definition for prescription drug rebates, fees, and other 
remuneration as used in the Exchange Establishment rule and the PBM 
Transparency rule. In contrast, several other commenters expressed 
concern with the impact on the market participants and on prescription 
drug pricing of the difference between total amounts that the plan or 
issuer pays the PBM and total amounts that the PBM pays pharmacies, and 
recommended that the Departments collect this information. The 
Departments are of the view that collection of this information is 
integral to the Departments' ability to analyze prescription drug 
reimbursements, pricing trends, and the impact of prescription drug 
rebates, fees, and other remuneration on premiums and cost sharing for 
purposes of developing the section 204 public report. This information 
will inform the Departments' analyses because, similar to prescription 
drug rebates, fees, and other remuneration, the difference between 
total amounts that the plan or issuer pays the PBM and total amounts 
that the PBM pays pharmacies is a factor that contributes to the 
differences between the payments for prescription drugs made by plans, 
issuers, enrollees, participants, and beneficiaries, and the portion of 
those payments captured by pharmacies and drug manufacturers, and thus 
impacts the cost of prescription drugs to plans, issuers, enrollees, 
participants, and beneficiaries. However, similar to bona fide service 
fees, these interim final rules provide for the submission of these 
amounts only in total and not at the drug or therapeutic class level. 
This approach will help reduce compliance burden by enabling plans, 
issuers, TPAs, and PBMs to leverage some of the reporting capabilities 
they have already built to meet the requirements of section 1150A of 
the Social Security Act, and will ensure that the information will be 
collected only to the extent that the Departments currently view that 
as necessary for their analysis. Last, the rationale for collecting the 
required prescription drug data elements for each therapeutic class and 
for each of the top 25 drugs that yielded the highest amount of rebates 
is described in section II.C.2.b. of this preamble.
---------------------------------------------------------------------------

    \27\ 77 FR 18308 (Mar. 27, 2012).
    \28\ 86 FR 24140 (May 5, 2021).
---------------------------------------------------------------------------

    Section 9825(a)(9)-(10) of the Code, section 725(a)(9)-(10) of 
ERISA, and section 2799A-10(a)(9)--(10) of the PHS Act additionally 
require plans and issuers to report the impact of the prescription drug 
rebates, fees, and other remuneration from drug manufacturers on 
premiums and out-of-pocket costs. For internal consistency, these 
interim final rules capture the impact on out-of-pocket costs by 
requiring reporting of the impact of prescription drug rebates, fees, 
and other remuneration on cost sharing. A number of commenters 
responding to the RFI indicated that plans and issuers may not know or 
be able to quantify the impact of prescription drug rebates on premiums 
or cost sharing. These commenters recommended that the Departments 
allow plans and issuers to provide qualitative descriptions of how 
prescription drug rebates, fees, and other remuneration generally 
provide savings to participants, beneficiaries, and enrollees, instead 
of attempting to collect drug-level impact amounts. The Departments 
intend to design the information collection instrument in a manner that 
would enable plans and issuers to provide both quantitative and 
qualitative information regarding the impact of prescription drug 
rebates on premiums and cost sharing.
    The Departments seek comment on all aspects of the data submission 
requirements regarding prescription drug rebates, fees, and other 
remuneration.
3. Aggregate Reporting (26 CFR 54.9825-5T, 29 CFR 2590.725-3, and 45 
CFR 149.730)
a. General Requirement
    Section 9825(a) of the Code, section 725(a) of ERISA, and section 
2799A-10(a) of the PHS Act require plans and issuers to submit the 
information in section 204 data submissions to the Departments ``with 
respect to the health plan or coverage.'' Some of the information 
described in these statutory provisions pertains specifically to each 
group health plan, such as the beginning and end dates of the plan 
year, the number of participants, beneficiaries, and enrollees, as 
applicable, and each state where the plan or coverage is offered. 
However, the Departments are of the view that section 9825(a) of the 
Code, section 725(a) of ERISA, and section 2799A-10(a) of the PHS Act 
do not strictly prescribe that every data element outlined in these 
provisions must be reported separately by each unique group health 
plan. After careful consideration of whether aggregate or plan-level 
information would be more appropriate to facilitate development of the 
section 204 public report as well as feedback received from 
stakeholders, the Departments have determined that plans and issuers 
(or other entities reporting on their behalf) may submit the majority 
of the information required under these interim final rules on an 
aggregate basis. The only plan-level information collected will be the 
following: (1) Identifying information for plans and issuers and other 
reporting entities; (2) the beginning and end dates of the plan year 
that ended on or before the last day of the reference year; (3) the 
number of participants, beneficiaries, or enrollees, as applicable, 
covered on the last day of the reference year; and (4) each state in 
which a plan or coverage is offered.
    There are several reasons for collecting the majority of the 
information in the section 204 data submissions on an aggregate basis.
    First, collecting aggregate data is necessary for the Departments 
to be able to draw conclusions about market trends for purposes of 
developing a meaningful and accurate section 204 public report. The 
Departments would

[[Page 66677]]

not be able to accurately combine plan-specific top 50 lists to 
determine aggregate prescription drug trends within market segments, 
within states, and across the country. The Departments would not be 
able to accurately combine plan-specific top 50 lists because the 
statute only requires plans and issuers to report information for the 
top 50 drugs and not for all drugs. As a result, the Departments would 
not have access to the utilization and spending information for drugs 
that may not make the top 50 lists of every group health plan, but 
which may have higher combined utilization or spending across all group 
health plans than the drugs appearing on the plan-specific top 50 
lists. Consequently, collection of plan-specific data could impair the 
Departments' ability to comply with the statutory requirement to 
produce the section 204 public report on prescription drug 
reimbursement and pricing trends. As a simplified example of the 
problems with collecting plan-specific data, suppose that the statute 
requires reporting of only the top 3 most frequently dispensed brand 
prescription drugs, rather than the top 50 drugs. Also, suppose that 
there is only one issuer offering two plans in a specific state and 
market segment. For Plan One, the four brand prescription drugs with 
the highest number of paid claims are Drug A with 100 claims, Drug B 
with 80 claims, Drug C with 75 claims, and Drug Z with 70 claims. For 
Plan Two, the four brand prescription drugs with the highest number of 
paid claims are Drug D with 110 claims, Drug E with 105 claims, Drug F 
with 90 claims, and Drug Z with 85 claims. If the Departments collected 
the top 3 brand prescription drugs at the plan level, Drug Z would be 
missing from the issuer's submission because it is not in the top 3 
list for either plan. However, if the issuer aggregated the data at the 
state and market segment level before submitting it, Drug Z would have 
155 paid claims and the Departments would correctly identify it as the 
most frequently dispensed drug in this state and market segment.
    The inability to correctly identify trends in prescription drug 
reimbursements, pricing, and impact on premiums from the plan-specific 
data would inhibit the Departments' ability to comply with the 
requirements in section 9825(b) of the Code, section 725(b) of ERISA, 
and 2799A-10(b) of the PHS Act to develop and issue a public report on 
these trends. Collecting aggregate data will significantly reduce the 
possibility of such scenarios.
    In addition, the data underlying the top 50 lists need to be of 
sufficient size for the Departments to be able to draw conclusions 
about market trends for purposes of developing a meaningful and 
accurate section 204 public report. The majority of group health plans 
have a relatively small number of participants, beneficiaries, or 
enrollees. If the Departments were to collect the top 50 lists 
separately for each group health plan, most of these lists would be 
based on small sample sizes and consequently could provide a distorted 
view of the market. This is because plan-specific lists would tend to 
be driven by the utilization of specific participants, beneficiaries, 
or enrollees of a given plan, which may not be representative of the 
market and may obscure broader trends. For example, a top 50 list for a 
plan with five participants and beneficiaries may contain only two 
steroid drugs, both purchased by a single participant to treat a skin 
condition. These drugs would appear as the first and second drugs on 
this plan-specific list. The top 50 list for another small employer 
plan may contain only three drugs--two drugs used to treat a rare 
autoimmune disease of one participant, and another drug used to manage 
post-surgery pain of another participant--which would likewise appear 
as the first, second, and third drugs on that plan-specific list. 
However, neither of these plan-specific lists is likely to be 
representative of the broader market; and, as described in the 
preceding paragraph, the Departments would not be able to combine the 
data from plan-specific top 50 lists in the manner needed to arrive at 
accurate totals for any given drug across states, market segments, or 
the country.
    Another reason to collect aggregate data is to protect personally 
identifiable information and protected health information. Many 
comments received in response to the RFI stated that collection of 
plan-level data would raise significant privacy concerns because, as 
illustrated in the example above, it would not be difficult to discern 
which drugs and which claims were attributable to specific 
participants, beneficiaries, or enrollees in plan-level data. These 
comments argued that aggregate reporting would reduce the likelihood of 
collecting and transmitting personally identifiable information and 
protected health information, and thus the risk of inadvertent or 
inappropriate disclosure. The Departments share this concern and agree 
that aggregate reporting will better ensure that personally 
identifiable information and protected health information are protected 
from disclosure. Specifically, allowing aggregation of data will 
provide a larger population sample of participants, beneficiaries, or 
enrollees from which the data are drawn so that it is difficult to 
determine if a prescription drug or therapeutic class can be associated 
with a specific individual. In addition, HHS, which will collect the 
information on behalf of the Departments and OPM, intends to collect 
and maintain the information using information technology (IT) systems 
that are designed to meet all of the security standards protocols 
established under federal law or by HHS that are relevant to such 
information.\29\ The Departments and OPM will further analyze the 
collected information to evaluate whether additional steps may be taken 
to ensure consumer privacy.
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    \29\ HHS' enterprise-wide information security and privacy 
program was launched in FY 2003, to help protect HHS against 
potential IT threats and vulnerabilities. The program ensures 
compliance with federal mandates and legislation, including the 
Federal Information Security Management Act and the President's 
Management Agenda. The HHS Cybersecurity Program plays an important 
role in protecting HHS's ability to provide mission-critical 
operations. In addition, the HHS Cybersecurity Program is the 
cornerstone of the HHS IT Strategic Plan.
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    An additional reason to collect aggregate data is that prescription 
drug rebates, fees, and other remuneration generally are not negotiated 
separately for each plan; rather, they tend to be driven by sales 
volume and other considerations at the PBM level. Therefore, it is the 
Departments' understanding that plan-specific prescription drug rebate 
data generally is rarely available. Consequently, plan-specific lists 
of prescription drug rebates for each therapeutic class and for the top 
25 drugs with the highest amount of rebates largely would be based on 
allocation calculations, and therefore plan-specific data would create 
little value beyond that created by aggregated reporting. Plan-specific 
lists might have some value for plans, but for purposes of the 
Departments' analysis of the data for the section 204 public report, 
there is no compelling policy reason to require plans and issuers to 
engage in a complex and burdensome allocation exercise, particularly 
because lists based on allocation calculations would not provide useful 
information about any specific plan.
    Last, the overwhelming majority of commenters on the RFI encouraged 
the Departments to adopt an aggregate approach to data collection. They 
noted that an aggregate approach would be significantly less burdensome 
and urged the Departments to collect data at the highest possible 
aggregation level. They also raised similar concerns as those described 
earlier in this section of this

[[Page 66678]]

preamble regarding small sample sizes, usability of plan-specific data, 
and disclosure of personally identifiable information and protected 
health information. In addition, stakeholders noted that some cost 
elements are not tracked separately for each group health plan. Some 
commenters did, however, identify potential benefits of plan-specific 
reporting of data. One commenter noted the increased transparency that 
would result from plans receiving plan-specific information about 
prescription drugs from PBMs. The commenter also stated that plan-
specific reporting would be more valuable for identifying trends than 
overly aggregated data. Other commenters noted that certain reporting 
requirements under section 9825(a) of the Code, section 725(a) of 
ERISA, and section 2799A-10(a) of the PHS Act are plan-specific and 
asserted that aggregated reporting would present operational challenges 
if, for example, a TPA were the reporting entity for all of the 
required information and it serviced different types of plans but did 
not have access to all of the required information for each plan. One 
commenter had concerns about plans being held responsible for the TPA's 
or PBM's failure to accurately report aggregated data.
    The Departments are of the view that collection of aggregate data 
will substantially reduce the burdens for both the reporting entities 
and the federal government. The Departments estimate that reporting 
every data element separately for each group health plan would require 
plans and issuers to prepare and submit a combined total of several 
million reports. In contrast, reporting aggregate data would result in 
a combined total of approximately 2,000 reports, requiring plans and 
issuers to spend significantly less effort and fewer resources on 
calculations, validation, submission, and storage of the data while 
still providing a sufficiently large data pool from which to identify 
trends and variations in prescription drug use and costs. To the extent 
a TPA is the reporting entity for all of the required information for 
numerous plans but does not have access to all of the required 
information for each plan, it can either obtain it from the plan or 
require the plan to submit that information. As noted in this preamble, 
plans may need to revise their services agreements with TPAs to address 
liability for and the accuracy of the information that the TPA or PBM 
reports and the ways in which the plan can review such reporting to 
confirm its accuracy.
    The smaller number of aggregate data reports submitted to the 
Departments would also reduce the Departments' burden for collecting, 
storing, securing, and analyzing the data.
    For these reasons, these interim final rules require data to be 
aggregated in the section 204 data submissions for the reference year 
at the state and market segment levels. This general requirement is 
being codified at 26 CFR 54.9825-5T(a), 29 CFR 2590.725-3(a), and 45 
CFR 149.730(a). Within each state and market segment, the data of 
fully-insured plans may be aggregated according to the issuer of the 
coverage provided to these plans or the FEHB carrier, as applicable, 
that acts as a reporting entity for these plans. The data of self-
funded plans may be aggregated according to the TPA that acts as a 
reporting entity for these plans. The Departments are of the view that 
overall, aggregation at the reporting entity, state, and market segment 
level will capture statistics based on sufficiently large pools of 
underlying data while also providing a sufficient level of detail for 
the analysis and reporting required under section 9825(b) of the Code, 
section 725(b) of ERISA, and section 2799A-10(b) of the PHS Act, and is 
therefore the optimal aggregation level to enable the Departments to 
draw meaningful conclusions from the data. Aggregation at the state 
level will allow for the analysis of geographic variations in 
prescription drug trends. Aggregation at the market segment level will 
also allow for the analysis of variations in prescription drug trends 
among certain distinct populations subject to distinct plan and 
coverage design considerations, such as employees of small and large 
employers. Aggregation at the reporting entity level will allow for 
consistency in the data with respect to cost drivers such as negotiated 
rates for the provider networks used by a particular issuer or TPA, or 
the formulary design and prescription drug rebate agreements utilized 
by a particular PBM. For health insurance coverage, aggregation at the 
reporting entity, state, and market segment levels is also largely 
consistent with the aggregation rules for the MLR data collection in 45 
CFR 158.120, which will minimize the health care spending reporting 
burden for issuers.
    The Departments are of the view that, at this time, the clear 
benefits of the aggregate data approach outweigh the potential 
drawbacks. However, the Departments solicit comment on the general use 
and the specific aspects of this data aggregation approach versus a 
plan-specific data collection approach. In addition, after the 
Departments begin to receive section 204 data submissions and have the 
opportunity to evaluate the efficacy and adequacy of the aggregate data 
approach, the Departments will further review and analyze the merits of 
this approach and may modify the approach in future rulemaking if 
necessary or appropriate.
b. Aggregation by Reporting Entity
    The requirements related to aggregation by reporting entity are 
being codified at 26 CFR 54.9825-5T(b), 29 CFR 2590.725-3(b), and 45 
CFR 149.730(b). Specifically, 26 CFR 54.9825-5T(b)(1), 29 CFR 2590.725-
3(b)(1), and 45 CFR 149.730(b)(1) provide that if a reporting entity 
submits data on behalf of more than one group health plan in a state 
and market segment, the reporting entity may aggregate the data 
required in 26 CFR 54.9825-6T(b), 29 CFR 2590.725-4(b), and 45 CFR 
149.740(b) for the group health plans for each market segment in the 
state.
    As discussed in sections II.C.3.a. and II.B. of this preamble, the 
Departments intend to make available a data collection system that will 
allow multiple reporting entities to submit different subsets of the 
required information for a single plan or issuer. These interim rules 
at 26 CFR 54.9825-5T(b)(2)(i), 29 CFR 2590.725-3(b)(2)(i), and 45 CFR 
149.730(b)(2)(i) provide that if multiple reporting entities submit the 
required data related to one or more plans or issuers in a state and 
market segment, the data submitted by each of these reporting entities 
may not be aggregated at a less granular level than the aggregation 
level used by the reporting entity that submits the data on total 
annual spending on health care services in 26 CFR 54.9825-6T(b)(4), 29 
CFR 2590.725-4(b)(4), and 45 CFR 149.740(b)(4) on behalf of these plans 
or issuers. Under this approach, the data may not, for example, be 
aggregated at a less granular level than the aggregation level used by 
the issuer providing the coverage to fully-insured plans, the TPA 
acting as a reporting entity for self-funded plans, or the plan sponsor 
acting as a reporting entity for the self-funded plans it sponsors.
    For example, if a TPA is the reporting entity for the total annual 
spending on health care data for 20 self-funded plans in a state and 
market segment and aggregates the data of those plans, and a PBM is the 
reporting entity for the top 25 list for the same 20 self-funded plans, 
then the PBM must aggregate the data of only these 20 self-funded plans 
in the state and market segment to produce the top 25 list for these 20 
self-funded

[[Page 66679]]

plans. If the PBM also serves as the top 25 list reporting entity for 
30 other self-funded plans that utilize a different TPA for the section 
204 data submission, then the PBM must additionally aggregate the data 
of only these 30 other self-funded plans in the state and market 
segment and produce a separate top 25 list for these 30 self-funded 
plans. However, the PBM cannot aggregate the data for all 50 self-
funded plans to produce and submit a single top 25 list for the state 
and market segment. Conversely, a single data submission by a TPA may 
be associated with more than one corresponding data submission by 
several PBMs if the self-funded group health plans for which the TPA 
acts as a reporting entity do not all utilize the same PBM. Based on 
the Departments' estimate, discussed in section V of this preamble, 
that 473 issuers and 205 TPAs, but only 66 PBMs, will be involved in 
making section 204 data submissions, the Departments estimate that it 
is highly likely that a single PBM would submit data that complement 
data submissions of many issuers and TPAs. As a result, if a PBM 
aggregated data across multiple issuers and TPAs, this could 
significantly reduce the consistency between the prescription drug and 
rebate data submitted by the PBM and the health care spending, premium, 
and enrollment data submitted by issuers and TPAs. However, based on 
the estimated number of issuers, TPAs, and PBMs, the Departments 
anticipate that it is significantly less likely that multiple PBMs 
would submit data that complement the data submission of a single 
issuer or TPA. Therefore, the Departments are of the view that the 
disadvantage of the modest inconsistencies that may result from the 
approach adopted in these interim final rules is outweighed by the 
benefit of reduced compliance burdens. The Departments solicit comment 
on this aggregation approach.
    These interim final rules additionally provide that the Departments 
may specify in guidance alternative or additional aggregation methods 
for data submitted by multiple reporting entities. In choosing 
alternative or additional aggregation methods, the Departments will 
seek to reduce compliance burdens for the reporting entities while 
ensuring that the aggregated data facilitate the development of the 
biannual public report required under section 9825(b) of the Code, 
section 725(b) of ERISA, and section 2799A-10(b) of the PHS Act. For 
example, the Departments may choose to allow data submitted by 
affiliated issuers to be aggregated at the holding group level within a 
state and market segment. Aggregation at the holding group level may 
further reduce compliance burden, but may obscure differences between 
different business models, such as preferred provider organizations and 
health maintenance organizations. The Departments may also choose to 
allow data submitted by PBMs to be aggregated at a higher level than at 
the level of each issuer and TPA. Aggregation of prescription drug and 
rebate data at the PBM level may likewise reduce compliance burdens and 
may enable more robust trend analysis. However, as discussed previously 
in this section of this preamble, this approach could significantly 
reduce the consistency between the prescription drug and rebate data 
and the health care spending, premium, and enrollment data, potentially 
impairing some of the analyses the Departments intend to undertake for 
purposes of the section 204 public report. The Departments will issue 
any such guidance sufficiently in advance of the data submission 
deadline to enable plans, issuers, and other reporting entities to 
adjust their processes. The Departments seek comment on which 
alternative aggregation methods should be considered and their 
respective merits and drawbacks.
    As noted in section II.C.3.a. of this preamble, data submitted by 
reporting entities that are issuers, TPAs, or other plan service 
providers must be aggregated at the state and market segment level. For 
example, if an issuer is the reporting entity, the issuer must report 
the data separately for each state where it offered coverage, and 
within each state must aggregate the data separately for the individual 
market (excluding student policies), the student market, the fully-
insured small group market, the fully-insured large group market 
(excluding FEHB plans), and the FEHB line of business, as applicable. 
If the issuer also provides TPA services to self-funded group health 
plans in the same state, the issuer must additionally aggregate the 
data separately for all of the self-funded plans offered by small 
employers and all of the self-funded plans offered by large employers 
for which the issuer acts as a TPA and as the reporting entity in the 
state.
    In addition, these interim final rules at 26 CFR 54.9825-5T(b)(3), 
29 CFR 2590.725-3(b)(3), and 45 CFR 149.730(b)(3) provide that when a 
group health plan, regardless of funding type, involves health coverage 
obtained from two affiliated issuers, one, often a health maintenance 
organization, providing in-network coverage only and the second, 
usually a preferred provider or similar organization, providing out-of-
network coverage only, then for purposes of aggregating data at the 
reporting entity level, the plan's out-of-network experience may be 
treated as if it were all related to the contract provided by the in-
network issuer. This approach ensures that in this situation the 
experience of employees of a single employer can be aggregated under a 
single reporting issuer in the same section 204 data submission, which 
is a reasonable approach because the coverage is priced and marketed to 
group health plans as one single product. In addition, this provision 
enables issuers to leverage existing reporting processes that they use 
for purposes of MLR reporting under 45 CFR part 158.
    The Departments solicit comment on all aspects of the data 
aggregation by reporting entity approach.
c. Aggregation by State
    The provisions related to aggregation by state are being codified 
at 26 CFR 54.9825-5T(c), 29 CFR 2590.725-3(c), and 45 CFR 149.730(c).
    These interim final rules at 26 CFR 54.9825-5T(c)(1), 29 CFR 
2590.725-3(c)(1), and 45 CFR 149.730(c)(1) and 26 CFR 54.9825-5T(c)(2), 
29 CFR 2590.725-3(c)(2), and 45 CFR 149.730(c)(2) specify, 
respectively, that for purposes of aggregating data at the state level, 
the experience of fully-insured coverage must be attributed to the 
state where the contract was issued, while the experience of self-
funded group health plans must be attributed to the state where the 
plan sponsor has its principal place of business, with certain 
exceptions. These requirements will ensure consistent reporting across 
plans, issuers, and other reporting entities, and are similar to the 
requirements in 45 CFR 158.120 for the MLR data collection. Attribution 
of experience to a state in this manner, rather than, for example, to 
the state where the individual obtaining health care services or 
prescription drugs works or resides, will significantly reduce the 
reporting burden because the data elements required in these interim 
final rules generally are not tracked based on the situs of the 
individual. The Departments are of the view that attribution of 
experience to a state in this manner is unlikely to significantly 
affect the data trends at the state level given that the Departments 
expect most if not all reporting entities to aggregate the required 
data, which will mitigate the possibility of an outsized impact of any 
given plan's experience on the top 50 lists and trends in a state.

[[Page 66680]]

    Individuals sometimes obtain, and employers sometimes provide, 
health coverage through associations, trusts, or multiple employer 
welfare arrangements (MEWAs). Coverage issued through an association, 
but not in connection with a group health plan, is not group health 
insurance coverage for purposes of the PHS Act and is instead 
individual market coverage. These interim final rules at 26 CFR 
54.9825-5T(c)(3), 29 CFR 2590.725-3(c)(3), and 45 CFR 149.730(c)(3) 
provide that the experience of individual market business sold through 
an association must be attributed to the issue state of the certificate 
of coverage. For employment-based association coverage subject to 
ERISA, group health plans may exist at the individual employer level (a 
non-plan MEWA) or at the association level, if the association 
qualifies as an employer under ERISA section 3(5) (a plan MEWA).\30\ 
These interim final rules at 26 CFR 54.9825-5T(c)(4), 29 CFR 2590.725-
3(c)(4), and 45 CFR 149.730(c)(4) provide that the experience of health 
coverage provided through a group trust or a MEWA must be attributed to 
the state where the individual employer (if the plan is at the 
individual employer level) or the association (if the association 
qualifies as an employer under ERISA section 3(5)), respectively, has 
its principal place of business or the state where the association is 
incorporated, if the association has no principal place of business.
---------------------------------------------------------------------------

    \30\ Under ERISA section 3(5), an employer is ``any person 
acting directly as an employer, or indirectly in the interest of an 
employer, in relation to an employee benefit plan; and includes a 
group or association of employers acting for an employer in such 
capacity.'' For more information, see Multiple Employer Welfare 
Arrangements under the Employee Retirement Income Security Act 
(ERISA): A Guide to Federal and State Regulation, available at 
https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/mewa-under-erisa-a-guide-to-federal-and-state-regulation.pdf.
---------------------------------------------------------------------------

    These provisions apply in the same manner to group health plans 
covering employees in multiple states. For example, the experience of a 
fully-insured group health plan covering employees in multiple states 
must be attributed to the state in which the contract for health 
insurance coverage is issued or delivered as stated in the contract 
(except for coverage provided through an association). If the plan 
contracted for coverage with a different issuer in each state, then the 
relevant experience must be attributed to each of these states. 
Similarly, the experience of a self-funded group health plan providing 
benefits to employees in multiple states must be attributed to the 
state in which the plan sponsor has its principal place of business 
(or, in the case of an association with no principal place of business, 
the state where the association is incorporated), as applicable.
    The Departments solicit comments on all aspects of the data 
aggregation by state approach.

III. Overview of the Interim Final Rules--Office of Personnel 
Management

A. Authority for Data Collection

    OPM solicited comments on the capability of FEHB carriers to 
complete this reporting and if there should be any considerations taken 
into account specific to reporting by FEHB carriers. A few comments 
raised concerns about OPM's authority to require this reporting or 
questioned whether it was appropriate to apply section 204 to FEHB 
carriers.
    Under 5 U.S.C. 8910(a), OPM must make a continuing study of the 
operation and administration of the FEHB Program, including surveys and 
reports on FEHB plans and on the experience of these plans. Under 5 
U.S.C. 8910(b), each contract between OPM and an FEHB carrier must 
contain provisions requiring carriers to furnish such reasonable 
reports as OPM deems necessary to carry out its functions under the 
FEHB Act. Accordingly, OPM's contract with each FEHB carrier requires 
the carrier to furnish reports that OPM finds necessary to properly 
administer the FEHB Program.\31\ In addition, 5 U.S.C. 8910(c) requires 
government agencies to furnish OPM with such information and reports as 
may be necessary to enable OPM to administer the FEHB Program. On the 
basis of this statutory authority, OPM will require FEHB carriers to 
report information about pharmacy benefits and health care spending, 
consistent with section 204 of Title II of Division BB of the CAA and 
the Departments' interim final rules. In response to comments 
requesting clarification of carriers' reporting responsibilities, OPM 
has worked with the Departments to facilitate carriers' reporting by 
establishing that where an entity does not possess all of the 
information required to be reported, another reporting entity may be 
responsible for the data submission on the carriers' behalf. Reporting 
by FEHB carriers is expected to help accomplish the CAA's intended 
purposes of achieving national health data transparency and lowering 
costs both for the FEHB Program and for the health benefits industry.
---------------------------------------------------------------------------

    \31\ In addition to this statutory authority and parallel 
contract language, FEHB carrier contracts incorporate FEHB 
regulations found at 5 CFR parts 890 through 894. As part of this 
rulemaking, OPM amends FEHB regulations to direct carriers to comply 
with requirements of 45 CFR 149.710 through 149.740.
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B. Reporting and Display of Data

    Several RFI commenters also raised concerns about duplicative 
reporting or requested that OPM reconcile its current reporting 
requirements with any reporting required under section 204 of Title II 
of Division BB of the CAA. While OPM does require its FEHB carriers to 
submit certain data directly to OPM, the specific type of reporting 
diverges from section 204 of Title II of Division BB of the CAA in 
terms of the nature of the reporting as well as its purpose.
    The OPM interim final rules amend existing 5 CFR 890.114(a) to 
include references to the Department of the Treasury, DOL, and HHS 
interim final rules to clarify that, pursuant to 5 U.S.C. 8910, FEHB 
carriers are required to report prescription drug and health care 
spending as set forth in those regulations with respect to FEHB 
carriers in the same manner as those provisions apply to a group health 
plan or health insurance issuer offering group or individual health 
insurance coverage, subject to 5 U.S.C. 8902(m)(1) and the provisions 
of the carrier's contract. As provided at 5 CFR 890.114(f), the OPM 
Director will coordinate with the Departments in matters regarding FEHB 
carriers' reporting on prescription drug and health care spending, and 
with respect to oversight of reporting by FEHB carriers. Carriers must 
report FEHB plan prescription drug and health care spending data to the 
Departments as a part of the section 204 collection of information 
consistent with 45 CFR 149.720. Carriers will need to include the 
information identified in 45 CFR 149.740 and aggregate the data 
consistent with 45 CFR 149.730.
    Several corrections have been made to 5 CFR 890.114. First, 
paragraph (a) has been revised to remove inadvertently added cross-
references to 26 CFR 54.9816-7T and 29 CFR 2590.716-7, which relate to 
the Department of the Treasury's and DOL's complaints processes. 
Second, paragraph (d)(1) has been revised to change the phrase ``intent 
to initiate'' to ``initiation of'' the Federal IDR process. Third, 
paragraph (d)(2) has been revised so that cross-references to 26 CFR 
54.9816-8T(c)(4)(vi)(A)(1), 29 CFR 2590.716-8(c)(4)(vi)(A)(1), and 45 
CFR 149.510(c)(4)(vi)(A)(1) now cite paragraph (vii) instead (vi), and 
the term ``misrepresentation'' now reads ``material 
misrepresentation.''

[[Page 66681]]

IV. Waiver of Proposed Rulemaking

    Section 9833 of the Code, section 734 of ERISA, and section 2792 of 
the PHS Act authorize the Secretaries of the Departments to promulgate 
any interim final rules that they determine are appropriate to carry 
out the provisions of chapter 100 of the Code, part 7 of subtitle B of 
title I of ERISA, and title XXVII of the PHS Act. Consistent with the 
provisions at section 9833 of the Code, section 734 of ERISA, and 
section 2792 of the PHS Act, the Secretaries of the Departments and the 
OPM Director have determined that it is appropriate to issue these 
interim final rules to enable regulated entities sufficient time to 
design processes and systems necessary to comply with the data 
submission requirements of section 9825(a) of the Code, section 725(a) 
of ERISA, and section 2799A-10(a) of the PHS Act, and to enable the 
Departments to comply with the public reporting requirements of section 
9825(b) of the Code, section 725(b) of ERISA, and section 2799A-10(b) 
of the PHS Act, as explained further in this section of this preamble. 
Although these provisions constitute the Departments' primary authority 
for issuing these interim final rules, the Departments also note that 
section 553(b) of the Administrative Procedure Act (5 U.S.C. 551, et 
seq.) (APA), provides that a general notice of proposed rulemaking is 
not required when an agency for good cause finds that notice and 
comment procedures are impracticable, unnecessary, or contrary to the 
public interest and incorporates a statement of the finding and its 
reasons in the rule issued. In addition, subtitle E of the Small 
Business Regulatory Enforcement Fairness Act of 1996 (also known as the 
Congressional Review Act or CRA) requires a 60-day delay in the 
effective date for major rules unless an agency finds good cause that 
notice and public procedure are impracticable, unnecessary, or contrary 
to the public interest, in which case the rule shall take effect at 
such time as the agency determines. 5 U.S.C. 801(a)(3), 808(2). The 
Secretaries of the Departments and the OPM Director have determined 
that these interim final rules meet the exception to the default 
requirement of notice and comment rulemaking under section 553(b) of 
the APA. Specifically, the Secretaries of the Departments and the OPM 
Director have determined that it would be impracticable and contrary to 
the public interest to delay putting the provisions in these interim 
final rules in place until a full public notice and comment process has 
been completed, as explained further in this section of this preamble. 
The Secretaries of the Departments and the OPM Director also find that 
there is good cause to waive the delay in effective date for these 
interim final rules.
    The time period between enactment of the CAA and the date by which 
plans and issuers must comply with the provisions of section 9825(a) of 
the Code, section 725(a) of ERISA, and section 2799A-10(a) of the PHS 
Act, as added by the CAA, is insufficient to permit the Departments and 
OPM to pursue notice and comment rulemaking. The CAA was enacted on 
December 27, 2020. Section 204 of Title II of Division BB of the CAA 
requires plans and issuers to begin submitting the required 
prescription drug and health care spending information to the 
Departments by December 27, 2021, and to submit this information by 
June 1 of each year thereafter. Due to the novelty and complexity of 
the requirements in section 9825 of the Code, section 725 of ERISA, and 
section 2799A-10 of the PHS Act, the Departments and OPM determined it 
necessary to issue an RFI to inform the Departments' and OPM's 
implementation of the statutory requirements through rulemaking. 
Following an analysis of the statutory provisions, the technical and 
regulatory issues surrounding the concepts, definitions, and reporting 
related to prescription drugs, and industry practices related to 
prescription drug costs and data reporting processes and capabilities, 
among other things, the Departments and OPM published the RFI on June 
23, 2021 with a 30-day comment period.\32\
---------------------------------------------------------------------------

    \32\ 86 FR 32813.
---------------------------------------------------------------------------

    In their responses to the RFI, regulated entities and other 
interested parties indicated that they would need significant time to 
come into compliance after final rules implementing the requirements in 
section 9825 of the Code, section 725 of ERISA, and section 2799A-10 of 
the PHS Act are issued. In implementing these requirements, these 
interim final rules require plans, issuers, and FEHB carriers to 
establish complex internal data compilation and reporting processes, 
and may require plans, issuers, FEHB carriers, TPAs, PBMs, and drug 
manufacturers to modify various contracts and arrangements and to 
coordinate data compilation and sharing among themselves in order to 
enable submission of complete and accurate data to the Departments in 
accordance with the requirements in these interim final rules. All of 
these entities will require time to implement the changes necessary to 
comply with these new requirements. In response to the RFI, although 
several commenters stated that they would be able to submit the 
required data 6 months after the Departments and OPM published the 
final rules, the instructions for the information collection 
instrument, and the technical specifications for the data collection 
system, the overwhelming majority of commenters advised that they would 
need 12 months to comply. Commenters advised that they could not begin 
renegotiating contracts and investing in the necessary IT systems 
modifications prior to the final rules, the instructions for the 
information collection instrument, and the technical specifications for 
the data collection system being issued.
    In recognition of stakeholders' concerns about the feasibility of 
meeting the first two statutory reporting deadlines of December 27, 
2021 and June 1, 2022, as discussed in section II.C.1.b. of this 
preamble, the Departments are exercising discretion to not initiate 
enforcement actions against plans or issuers that submit the section 
204 data submissions for the 2020 and 2021 reference years by December 
27, 2022. Although this deferred enforcement may have allowed for the 
promulgation of regulations with notice and comment before the 
Departments would consider taking enforcement action, doing so 
nonetheless would not have provided sufficient time for the regulated 
entities to come into compliance with the requirements by December 27, 
2022. Issuing these rules as proposed rules would have resulted in the 
final rules and final technical specifications becoming available to 
the regulated entities no earlier than June 2022, leaving them only 6 
months--well short of the 12 months that most commenters advised is 
necessary--to complete the complex tasks required to come into 
compliance. In addition, deferred enforcement does not alter the 
statutory deadlines, and therefore the Departments must promulgate 
final rules that become effective no later than December 27, 2021, and 
must promulgate final rules timely to enable plans and issuers to rely 
on these rules and adhere to the law by the December 27, 2021 and June 
1, 2022 statutory deadlines. The Departments strongly encourage plans 
and issuers that are able to submit the required information by either 
the December 27, 2021 or June 1, 2022 statutory deadlines to do so.
    Further, although deferring enforcement for an additional period of 
time beyond December 27, 2022 could have provided sufficient time to 
issue these rules as proposed rules, the Departments are of the view 
that any additional delays in collecting the

[[Page 66682]]

information required under section 9825(a) of the Code, section 725(a) 
of ERISA, and section 2799A-10(a) of the PHS Act would be inappropriate 
and contrary to the public interest. First, section 9825(b) of the 
Code, section 725(b) of ERISA, and section 2799A-10(b) of the PHS Act 
require the Departments to publish biannual section 204 public reports, 
with the first such report due no later than 18 months after the date 
on which the first section 204 data submission is required. 
Consequently, deferring enforcement further than December 27, 2022 
would foreclose the Departments' ability to prepare and timely publish 
the first section 204 public report. Thus, the Departments are of the 
view that additional delays related to the section 204 data submissions 
would risk causing undue and cascading delays in the publication of the 
section 204 public reports, potentially delaying important legislative 
and policymaking initiatives that may be spurred by the section 204 
public reports and depriving the public of the benefit of any such 
initiatives. Second, any additional delays related to the section 204 
data submissions could require plans and issuers to submit 3, rather 
than 2, years of data at once (for example, if the Departments were to 
defer enforcement until June 1, 2023--the statutory deadline for 
submission of the 2022 data--then plans and issuers would have to 
submit the data for 2020, 2021, and 2022 by that date). This would 
place a significant burden on plans and issuers and would lead to 
lower-quality 2022 data because plans, issuers, and other reporting 
entities would lose the opportunity to incorporate lessons learned from 
preparation and submission of the 2020 and 2021 data, and the 
Departments would lose the ability to provide feedback or guidance to 
the regulated entities based on challenges or inconsistencies 
identified in the 2020 and 2021 data submissions.
    In addition, the Departments will require time to design, build, 
and test a fully operational data collection system, which cannot be 
done prior to the definitions and requirements in these interim final 
rules being finalized. The reporting entities will in turn require time 
to familiarize themselves with the data collection system and to adapt 
their processes to the technical specifications prescribed for the data 
collection system. Therefore, issuing these rules as interim final 
rules, rather than as proposed rules, will allow the Departments to 
develop and operationalize the data collection system and will allow 
the reporting entities to provide feedback on the design of this system 
to the Departments and to incorporate the specifications of the data 
collection system into their processes.
    It is therefore necessary, appropriate, and in the public interest 
that plans, issuers, FEHB carriers, TPAs, PBMs, and the Departments 
have certainty regarding the standards of these requirements in order 
to begin implementation. Accordingly, to allow plans, issuers, FEHB 
carriers, TPAs, PBMs, and the Departments sufficient time to implement 
these new requirements and any changes necessary to comply with these 
new requirements, these interim final rules must be published and 
available to the public well in advance of the December 27, 2022 
enforcement date for the initial data collection. Allowing time for a 
full notice and comment process prior to the requirements taking effect 
would not provide sufficient time for the reporting entities to comply 
with the requirements, and would risk collection of inaccurate and low-
quality data, thwarting the statute's objective of producing an 
actionable section 204 public report on prescription drug pricing and 
its impact on premiums.
    Finally, although these interim final rules reflect public comments 
submitted in response to the RFI, the Departments and OPM intend to 
expeditiously and thoroughly review and analyze the public comments 
that will be submitted on the specific provisions of these interim 
final rules, as well as any additional feedback that may be provided by 
reporting entities and other stakeholders following publication of 
these interim final rules and the information collection requirements. 
The Departments and OPM intend to promptly issue final rules based on 
these public comments.
    For the foregoing reasons, the Departments and OPM have determined 
that it is necessary, appropriate, and in the public interest to issue 
these interim final rules to allow regulated entities to timely comply 
with the statutory data submission requirements. The Departments and 
OPM have further determined that it would be impracticable and contrary 
to the public interest to engage in full notice and comment rulemaking 
before putting these interim final rules into effect.

V. Regulatory Impact Analysis

A. Summary

    These interim final rules implement the provisions of section 9825 
of the Code, section 725 of ERISA, and section 2799A-10 of the PHS Act 
as enacted by section 204 of Title II of Division BB of the CAA. These 
provisions are applicable to group health plans and health insurance 
issuers offering group or individual health insurance coverage. These 
interim final rules implement section 9825 of the Code, section 725 of 
ERISA, and section 2799A-10 of the PHS Act, which increase transparency 
by requiring plans and issuers to annually submit to the Departments 
information about prescription drugs and health care spending.
    Section 9825(a) of the Code, section 725(a) of ERISA, and section 
2799A-10(a) of the PHS Act require plans and issuers to submit certain 
information to the Departments on prescription drug and health care 
spending, including, but not limited to, average monthly premium 
amounts (paid by participants, beneficiaries, and enrollees and paid by 
employers on behalf of participants, beneficiaries, and enrollees, as 
applicable), and the number of participants, beneficiaries, and 
enrollees, as applicable, with respect to the plan or coverage in the 
previous plan year. Additionally, plans and issuers must report 
prescription drug rebates, fees, and any other remuneration paid by 
drug manufacturers and any impact on premiums and out-of-pocket costs 
associated with these rebates, fees, or other remuneration. Pursuant to 
5 U.S.C. 8910, OPM is joining the Departments to require the submission 
of prescription drug and health care spending data from FEHB plans in 
the same manner as plans and issuers must provide such data under 
section 9825 of the Code, section 725 of ERISA, and section 2799A-10 of 
the PHS Act. The Departments and OPM highlight that nothing prevents a 
TPA or a PBM from reporting the required information on behalf of 
plans, issuers, and FEHB carriers, or the subset of the required 
information that is available to them.
    Section 9825(b) of the Code, section 725(b) of ERISA, and section 
2799A-10(b) of the PHS Act require the Departments to publish on the 
internet biannual reports on prescription drug reimbursements under 
group health plans and group and individual health insurance coverage, 
prescription drug pricing trends, and the role of prescription drug 
costs in contributing to premium increases or decreases under these 
plans or coverage, aggregated in such a way that no drug or plan 
specific information is made public.
    The Departments and OPM have examined the effects of these interim 
final rules as required by Executive Order 13563 (76 FR 3821, January 
21,

[[Page 66683]]

2011, Improving Regulation and Regulatory Review); Executive Order 
12866 (58 FR 51735, October 4, 1993, Regulatory Planning and Review); 
the Regulatory Flexibility Act (September 19, 1980, Pub. L. 96-354); 
section 1102(b) of the Social Security Act (42 U.S.C. 1102(b)); section 
202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995, Pub. 
L. 104-4); Executive Order 13132 (64 FR 43255, August 10, 1999, 
Federalism); and the Congressional Review Act (5 U.S.C. 804(2)).

B. Executive Order 12866 and 13563

    Executive Order 12866 directs agencies to assess costs and benefits 
of available regulatory alternatives and, if regulation is necessary, 
to select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety effects, 
distributive impacts, and equity). Executive Order 13563 emphasizes the 
importance of quantifying both costs and benefits, of reducing costs, 
of harmonizing rules, and of promoting flexibility. A regulatory impact 
analysis (RIA) must be prepared for rules with economically significant 
effects ($100 million or more in any 1 year).
    Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a rule: 
(1) Having an annual effect on the economy of $100 million or more in 
any one year, or adversely and materially affecting a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or state, local or tribal governments or communities 
(also referred to as ``economically significant''); (2) creating a 
serious inconsistency or otherwise interfering with an action taken or 
planned by another agency; (3) materially altering the budgetary 
impacts of entitlement grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) raising novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.
    An RIA must be prepared for major rules with economically 
significant effects (for example, $100 million or more in any one 
year), and a ``significant'' regulatory action is subject to review by 
the Office of Management and Budget (OMB). The Departments anticipate 
that this regulatory action is likely to have economic impacts of $100 
million or more in at least 1 year, and thus meets the definition of a 
``significant rule'' under Executive Order 12866. Therefore, the 
Departments and OPM have provided an assessment of the potential costs, 
benefits, and transfers associated with these interim final rules. In 
accordance with the provisions of Executive Order 12866, these interim 
final rules were reviewed by OMB.
1. Need for Regulatory Action
    There is currently limited information available about how 
prescription drug costs influence premiums and out-of-pocket costs. 
There is also limited information available on the prescription drug 
rebates, fees, and other remuneration paid by drug manufacturers to 
plans and issuers (or to their administrators or service providers) and 
the impact of these reimbursements on premiums and out-of-pocket costs. 
The data submission requirements in these interim final rules will 
provide the Departments and OPM with a better understanding of 
prescription drug and health care spending in the United States. 
Further, these interim final rules are necessary to meet the statutory 
requirements of section 9825 of the Code, section 725 of ERISA, and 
section 2799A-10 of the PHS Act.
    Plans, issuers, FEHB carriers, and other reporting entities will 
incur costs related to the data submission requirements set forth in 
these interim final rules. However, in accordance with Executive Order 
12866, the Departments determined that the benefits of these interim 
final rules justify the costs.
2. Summary of Impacts
    In accordance with OMB Circular A-4, Table 1 depicts an accounting 
statement summarizing the Departments' and OPM's assessment of the 
benefits, costs, and transfers associated with these interim final 
rules. The Departments and OPM are unable to quantify all benefits, 
costs, and transfers associated with these interim final rules but have 
sought, where possible, to describe these non-quantified impacts below. 
The effects in Table 1 reflect non-quantified impacts and estimated 
direct monetary costs resulting from the data submission requirements 
in these interim final rules.

                      Table 1--Accounting Statement
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Benefits:
------------------------------------------------------------------------
Qualitative:
     Production of a dataset that satisfies the requirements in
     section 9825 of the Code, section 725 of ERISA, and section 2799A-
     10 of the PHS Act and informs the development of the section 204
     public reports, which will increase transparency about prescription
     drugs and health care spending and potentially promote more
     competitive health care markets.
     The ability of the Departments and OPM to identify the
     factors contributing to changes in plan expenditures, including
     prescription drug costs, hospital costs, health care provider and
     clinical service costs, and other medical costs, which may inform
     future policymaking that addresses health care costs.
     The ability of the Departments and OPM to identify the most
     frequently dispensed brand prescription drugs and the most costly
     prescription drugs covered by plans and issuers and the
     corresponding expenditures, which may inform future policymaking
     that addresses prescription drug costs.
     Improved understanding of prescription drug pricing trends
     by the Departments and OPM.
     Improved understanding by the public and the Departments
     and OPM of the impact of prescription drug rebates, fees, and other
     remuneration paid by drug manufacturers to plans, issuers, or FEHB
     carriers (or to their administrators or service providers) on
     premiums and out-of-pocket costs.
     Potential to inform Congress and shape future policymaking
     that could benefit consumers and employers.
------------------------------------------------------------------------


 
                                                     Estimate                      Discount rate
                      Costs                          (million)      Year dollar      (percent)    Period covered
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($/year)...................         $363.63            2021               7       2021-2025
                                                          361.09            2021               3       2021-2025
----------------------------------------------------------------------------------------------------------------
Quantitative:

[[Page 66684]]

 
     One-time costs to issuers, FEHB carriers, TPAs, and PBMs to design, develop, and implement needed
     IT systems changes and submit required information, in 2022, estimated to be approximately $1,034 million..
     One-time costs to issuers, FEHB carriers, TPAs, and PBMs to update and maintain their IT systems
     and submit required information in 2023, estimated to be approximately $290 million........................
     Annual recurring costs to issuers, FEHB carriers, TPAs, and PBMs to maintain their IT systems and
     report data in 2024, and yearly thereafter, estimated to be approximately $211 million.....................
     One-time costs to issuers, FEHB carriers, TPAs, and PBMs to prepare standard operating procedures
     and provide training to staff, in 2022, estimated to be approximately $4.7 million.........................
     One-time costs to issuers, FEHB carriers, TPAs, and PBMs to modify existing contracts, in 2022,
     estimated to be approximately $8 million...................................................................
     Costs to the federal government to build and maintain a system to receive, store, and analyze data
     submitted by issuers, FEHB carriers, TPAs, and PBMs, and to prepare section 204 reports, of approximately
     $4.4 million in 2021, $8.5 million in 2022, $7.3 million in 2023, $7.4 million in 2024, and $7.9 million in
     2025.......................................................................................................
----------------------------------------------------------------------------------------------------------------
Transfers:
----------------------------------------------------------------------------------------------------------------
Non-Quantified:
     Potential transfers from providers, facilities, pharmaceutical manufacturers, and PBMs to plans,
     issuers, and FEHB carriers if plans, issuers, and FEHB carriers are able to achieve greater negotiating
     power due to improved understanding of prescription drug costs.............................................
----------------------------------------------------------------------------------------------------------------

a. Benefits
    The reporting requirements in these interim final rules will lead 
to the development of a dataset that satisfies the requirements in 
section 9825 of the Code, section 725 of ERISA, and section 2799A-10 of 
the PHS Act. This dataset will inform the development of the biannual 
section 204 public reports by the Departments regarding prescription 
drug and health care spending.
    The prescription drug and health care spending data collection and 
the resultant section 204 public reports will benefit plans, issuers, 
FEHB carriers, employers, and policymakers by advancing their 
understanding of prescription drug costs and the impact of prescription 
drug rebates, fees, and other remuneration on premiums and out-of-
pocket costs. Consumers could potentially benefit from the section 204 
public reports if plans, issuers, and FEHB carriers are able to 
negotiate lower prescription drug prices and those reductions are 
passed on to the consumer in the form of reduced out-of-pocket costs 
and lower premiums. The section 204 data submissions will allow the 
Departments and OPM to identify the most frequently dispensed brand 
prescription drugs and the costliest prescription drugs covered by 
plans, issuers, and FEHB carriers along with the prescription drugs 
that have contributed to the greatest annual increases in plan 
expenditures, and the prescription drugs that have generated the 
highest prescription drug rebates, fees, and other remuneration. These 
reports will provide the Departments and OPM with an improved 
understanding of prescription drug costs. The dataset will also allow 
the Departments and OPM to identify other major drivers of increases in 
health care spending, including hospital costs, primary and specialty 
health care provider and clinical service costs, and other medical 
costs. The data may also allow the Departments and OPM to examine 
variation in health care costs across the country.
    Policymakers will be able to use the information provided in the 
section 204 public reports to set policies that may result in lower 
premiums, reduced out-of-pocket costs, and decreased labor costs. 
Policymakers will also be able to use this information to set policies 
that may promote transparency and more competition in health care and 
prescription drug markets, consistent with the goals of Executive Order 
14036.
b. Costs
    The Departments and OPM estimate the burden to report the 
information will be the time and effort necessary for plans, issuers, 
FEHB carriers, and other reporting entities to submit the required 
information in the required format to the Departments. The Departments 
and OPM assume that issuers, TPAs, and PBMs will submit the required 
information on behalf of group health plans or FEHB carriers. The 
Departments and OPM acknowledge that TPAs and PBMs are likely to pass 
on any related costs to plans, issuers, and FEHB carriers. The 
Departments and OPM estimate there are 473 health insurance issuers 
offering individual and group health insurance,\33\ 205 TPAs \34\ 
(generally submitting on behalf of self-funded group health plans), 46 
FEHB carriers, and 66 PBMs \35\ (submitting on behalf of plans, 
issuers, and FEHB carriers) that will submit the required information 
annually. The Departments and OPM assume that all costs will be 
incurred in 2022 and beyond, since reporting entities are unlikely to 
begin implementation in the last month of 2021. The costs related to 
these information collection requirements are estimated to be 
$1,033,758,440 in 2022, $289,786,640 in 2023, and $211,128, 360 in 2024 
and onward, as discussed in detail later in section V.D. (Paperwork 
Reduction Act) of this preamble. These total costs have a tendency 
toward overestimation because the estimate does not reflect process 
efficiencies for FEHB carriers that are also issuers.
---------------------------------------------------------------------------

    \33\ Based on data from MLR annual reports for the 2019 MLR 
reporting year, available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.
    \34\ Estimates for Non-issuer TPAs are based on data derived 
from the 2016 Benefit Year reinsurance program contributions.
    \35\ Source: National Association of Insurance Commissioners, 
last updated on March 16, 2021. Available at https://content.naic.org/cipr_topics/topic_pharmacy_benefit_managers.htm.
---------------------------------------------------------------------------

    Issuers, FEHB carriers, TPAs, and PBMs will incur additional costs 
related to the data submission. To estimate these costs, the 
Departments and OPM used data from the Bureau of Labor Statistics (BLS) 
to derive average labor costs (including a 100 percent increase for 
fringe benefits and overhead).\36\ As explained in section V.D.1. 
(Paperwork Reduction Act) of this preamble, the Departments and OPM 
used a different data set to estimate costs related to the information 
collection requirements.
---------------------------------------------------------------------------

    \36\ May 2020 Bureau of Labor Statistics, Occupational 
Employment Statistics, National Occupational Employment and Wage 
Estimates, available at https://www.bls.gov/oes/current/oes_nat.htm.

[[Page 66685]]



                                       Table 2--Adjusted Hourly Wage Rates
----------------------------------------------------------------------------------------------------------------
                                                                                      Fringe
                                                   Occupational     Mean hourly    benefits and      Adjusted
                Occupation title                       code        wage ($/hour)   overhead ($/   hourly wage ($/
                                                                                       hour)           hour)
----------------------------------------------------------------------------------------------------------------
Chief Executives................................         11-1011          $95.12          $95.12         $190.24
General and Operations Managers.................         11-1021           60.45           60.45          120.90
Computer and Information Systems Managers.......         11-3021           77.76           77.76          155.52
Lawyers.........................................         23-1011           71.59           71.59          143.18
Paralegals and Legal Assistants.................         23-2011           27.22           27.22           54.44
Executive Secretaries and Executive                      43-6011           31.36           31.36           62.72
 Administrative Assistants......................
Legal Secretaries and Administrative Assistants.         43-6012           25.36           25.36           50.72
Business Operations Specialists.................         13-1198           40.53           40.53           81.06
Computer Programmers............................         15-1251           45.98           45.98           91.96
Secretaries and Administrative Assistants.......         43-6014           19.43           19.43           38.86
----------------------------------------------------------------------------------------------------------------

    Issuers, FEHB carriers, TPAs, and PBMs will incur costs associated 
with contract modifications regarding these reporting requirements. The 
Departments and OPM assume that each of the 473 issuers, 46 FEHB 
carriers, and 205 TPAs will need to modify or enter into contracts with 
PBMs for the PBMs to provide information on prescription drug rebates, 
or other required information, that is generally maintained primarily 
by PBMs. The Departments and OPM estimate that a total of 724 contracts 
will be modified. The Departments assume that the contract 
modifications will involve the time of chief executives, general and 
operations managers, lawyers, paralegals and legal assistants, 
executive secretaries and executive administrative assistants, and 
legal secretaries and administrative assistants from both entities. The 
adjusted hourly wages (which incorporate a 100 percent markup for 
fringe benefits and overhead costs) for those involved in contract 
modifications are presented in Table 2.
    The Departments and OPM estimate that in order to negotiate 
contract revisions between issuers, FEHB carriers, TPAs, and their 
PBMs, for each issuer, FEHB carrier, TPA, and PBM, a chief executive 
will need 1 hour, general and operations managers will need 2 hours, 
lawyers will need 20 hours, paralegals will need 20 hours, 
administrative assistants will need 2 hours, and legal secretaries will 
need 20 hours for a total of 65 hours, at a cost of approximately 
$5,524 for each entity negotiating a contract revision. The total 
burden related to each contract negotiation between issuers, FEHB 
carriers, TPAs, and their PBMs is estimated to be 130 hours, with an 
associated cost of approximately $11,049. The total burden for all 724 
contract modifications is estimated to be approximately 94,120 hours, 
with an associated cost of approximately $7,999,157.\37\ The 
Departments and OPM assume that this cost will be incurred in 2022. The 
calculations and the total burden and cost associated with these 
contract modifications are presented in Table 3. The Departments and 
OPM seek comment on these estimates.
---------------------------------------------------------------------------

    \37\ The total hour burden and equivalent cost of burden were 
calculated as follows: Burden Hours per Contract Modification x 
Number of Contract Modifications = Total Burden Hours (130 x 724 = 
94,120); Total Cost per Contract Modification x Number of Contract 
Modifications = Equivalent Total Cost ($11,049 x 724 = $7,999,157).

   Table 3--Burden and Costs to Issuers, FEHB Carriers, TPAs, and PBMs Associated With Contract Modifications
----------------------------------------------------------------------------------------------------------------
                                                                                       2022
                                                                 -----------------------------------------------
                           Occupation                                Adjusted
                                                                  hourly wage ($/  Time (hours)      Estimated
                                                                       hour)                        labor cost
----------------------------------------------------------------------------------------------------------------
Chief Executives................................................         $190.24               1         $190.24
General and Operations Managers.................................          120.90               2          241.80
Lawyers.........................................................          143.18              20        2,863.60
Paralegals and Legal Assistants.................................           54.44              20        1,088.80
Executive Secretaries and Executive Administrative Assistants...           62.72               2          125.44
Legal Secretaries and Administrative Assistants.................           50.72              20        1,014.40
----------------------------------------------------------------------------------------------------------------
    Burden and Cost for Each Issuer, FEHB Carrier, TPA, and PBM.................              65        5,524.28
                                                                 -----------------------------------------------
    Total Burden and Cost for Each Contract Negotiation Between an Issuer, FEHB              130       11,048.56
     Carrier, or TPA and Their PBM..............................................
                                                                 -----------------------------------------------
    Total Burden and Cost for All Contract Negotiations.........................          94,120    7,999,157.44
----------------------------------------------------------------------------------------------------------------


[[Page 66686]]

    All reporting entities will incur costs associated with developing 
standard operating procedures and training staff responsible for 
submitting the required data. The Departments and OPM assume that each 
of the 473 issuers, 46 FEHB carriers, 205 TPAs, and 66 PBMs will 
require the time of general and operations managers, computer and 
information systems managers, business operation specialists, computer 
programmers, and secretaries and administrative assistants to develop 
new standard operating procedures and deliver or receive training. The 
adjusted hourly wages for those involved in these changes in standard 
operating procedures and training requirements are presented in Table 
2.
    The Departments and OPM estimate that for each issuer, FEHB 
carrier, TPA, and PBM, it will take 8 hours for general managers, 8 
hours for information system managers, 40 hours for business operation 
specialists, 4 hours for computer programmers, and 4 hours for 
administrative assistants to prepare new standard operating procedures 
and train staff regarding the data submission requirements. The total 
burden for each issuer, FEHB carrier, TPA, and PBM will be 64 hours 
with an associated cost of approximately $5,977. The total estimated 
burden of changing standard operating procedures and training staff for 
all 790 issuers, FEHB carriers, TPAs, and PBMs is 50,560 hours, with an 
associated equivalent cost of $4,721,862.\38\ The Departments and OPM 
assume that this cost will be incurred in 2022. The calculations and 
the total burden and cost associated with developing standard operating 
procedures and training staff are presented in Table 4. The Departments 
and OPM seek comment on these estimates.
---------------------------------------------------------------------------

    \38\ The total hour burden and equivalent cost of burden were 
calculated as follows: Burden Hours per Entity x Number of Entities 
= Total Burden Hours (64 x 790 = 50,560); Total Cost per Entity x 
Number of Entities = Equivalent Total Cost ($5,977 x 790 = 
$4,721,862).

     Table 4--Burden and Costs to Issuers, FEHB Carriers, TPAs, and PBMs Associated With Developing Standard
                                     Operating Procedures and Training Staff
----------------------------------------------------------------------------------------------------------------
                                                                                       2022
                                                                 -----------------------------------------------
                           Occupation                                Adjusted
                                                                  hourly wage ($/  Time (hours)      Estimated
                                                                       hour)                        labor cost
----------------------------------------------------------------------------------------------------------------
General and Operations Managers.................................         $120.90               8         $967.20
Computer and Information Systems Managers.......................          155.52               8        1,244.16
Project Management Specialists and Business Operations                     81.06              40        3,242.40
 Specialists, All Other.........................................
Computer Programmers............................................           91.96               4          367.84
Secretaries and Administrative Assistants, Except Legal,                   38.86               4          155.44
 Medical, and Executive.........................................
----------------------------------------------------------------------------------------------------------------
    Burden and Cost for Each Issuer, FEHB Carrier, TPA, and PBM.................              64        5,977.04
                                                                 -----------------------------------------------
    Total Burden and Cost Associated with Developing Standard Operating                   50,560    4,721,861.60
     Procedures and Training Staff..............................................
----------------------------------------------------------------------------------------------------------------

    The federal government will incur costs of approximately $4.4 
million in 2021, $8.5 million in 2022, $7.3 million in 2023, $7.4 
million in 2024, and $7.9 million in 2025 to build and maintain a 
system to receive and store the information submitted by issuers, FEHB 
carriers, TPAs, and PBMs, to analyze the data, and to prepare section 
204 public reports.
c. Transfers
    These interim final rules could potentially lead to transfers from 
providers, facilities, pharmaceutical manufacturers, and/or PBMs to 
plans, issuers, and FEHB carriers if plans, issuers, and FEHB carriers 
are able to achieve greater negotiating power because of improved 
understanding of prescription drug costs. If consumers are able to make 
informed plan selections or prescription drug purchases in response to 
improved understanding of prescription drug costs (including trends in 
prescription drug prices and the impact of pharmaceutical manufacturer 
rebates, fees, and other remuneration on premiums and out-of-pocket 
costs), these interim final rules could also potentially lead to 
transfers from pharmaceutical manufacturers, PBMs, and/or plans, 
issuers, and FEHB carriers to consumers in the form of lower 
prescription drug prices. The Departments and OPM seek comment on any 
potential transfers that may occur as a result of the data submission 
requirements in these interim final rules.

C. Regulatory Alternatives

    In developing these interim final rules, the Departments considered 
various alternative approaches.
    Aggregation. The Departments and OPM considered requiring plans, 
issuers, and FEHB carriers to submit all of the required information on 
a plan-by-plan basis, rather than allowing reporting entities to submit 
aggregated data. However, as explained in section II.C.3. of this 
preamble, this approach would impose a large administrative burden on 
regulated entities and would also result in less accurate and 
meaningful top 50 and top 25 lists, which would inhibit the 
Departments' ability to produce accurate and meaningful section 204 
public reports as required by the statute. Collecting the top 50 lists 
separately for each group health plan could produce a distorted view of 
the market due to the small sample sizes that would underlie these top 
50 lists, and due to the Departments' inability to combine data from 
such plan-specific top 50 lists to determine aggregate prescription 
drug and rebate trends nationwide and within market segments. 
Collecting the top 25 rebate list for each group health plan would 
produce an inaccurate view of rebates, fees, and other remuneration as 
these rebates are not provided at the individual prescription level, 
and often not even at the plan level; thus, TPAs and issuers would have 
to speculate as to actual amounts of rebates and any price concessions 
for each plan. In addition, this approach would be inconsistent with 
the approach taken in other HHS data collections. Further, collecting 
plan-level, drug-specific data would increase the likelihood of 
collecting and transmitting patient health data and personally 
identifiable information, and the attendant risk of inadvertent or 
inappropriate disclosure of this information.

[[Page 66687]]

    However, as noted in section II.C.3. of this preamble, the 
Departments and OPM will continue to review the merits of this 
alternative approach and may modify the approach to aggregation in 
future rulemaking.
    Plan Year. The Departments and OPM considered requiring plans, 
issuers, and FEHB carriers to submit the required data by plan or 
coverage year determined according to the effective dates of each plan 
or policy. However, this approach is inconsistent with other HHS data 
collections and would limit the Departments' ability to compare trends 
among group and individual market segments, public- and private-
sponsored health coverage, and multiple data sources. Evaluation of 
market trends is important both for policy development and for the 
required section 204 public report.
    Definition of Drug. The Departments and OPM considered several 
different classification systems to define a drug for the purposes of 
section 204 data submissions. The NDC is very granular, containing 
information on the labeler, active ingredient, form, strength, and 
packaging of drugs, and would provide robust information if the 
Departments could collect data for every code. However, section 9825 of 
the Code, section 725 of ERISA, and section 2799A-10 of the PHS Act 
give the Departments authority to collect only the information on the 
top 50 or top 25 drugs, as applicable, by plan or coverage. Given this 
limited scope of the data collection, a lower level of granularity is 
preferable for obtaining the most representative information possible, 
since multiple variations of essentially the same drug \39\ are unique 
NDCs. With access to only the top 50 NDCs, the Departments therefore 
would not have the data for all NDCs associated with a given 
prescription drug, and thus would not be able to consolidate the NDC 
information to identify meaningful trends in the prescription drug 
markets. The Departments and OPM also considered using the RxNorm 
Concept Unique Identifier (RxCUI), which is slightly less granular than 
the NDC, but RxCUI-level data collection suffers from many of the same 
limitations as NDC-level data collection, and commenters responding to 
the RFI overwhelmingly advised against collecting the data based on 
RxCUI because it is not widely used by reporting entities. Instead, 
many public reports, such as the 2020 Report to Congress on 
Prescription Drug Pricing prepared by the HHS Office of the Assistant 
Secretary for Planning and Evaluation (ASPE),\40\ use a name and 
ingredient system that identifies drugs at a higher level, rather than 
granular systems such as NDC or RxCUI, to compare drug information 
across markets and across time. Most commenters responding to the RFI 
also recommended the use of a classification that would ensure that the 
same drug in various formulations or dosages would not appear on the 
top 50 lists multiple times, such as a classification based on name and 
ingredient. Ultimately, the Departments and OPM determined that the 
most useful data would be collected if prescription drug information is 
grouped by name and ingredient.
---------------------------------------------------------------------------

    \39\ This characterization is used only for purposes of these 
interim final rules and is not intended to reflect or suggest any 
such characterization by FDA.
    \40\ https://aspe.hhs.gov/system/files/aspe-files/263451/2020-drug-pricing-report-congress-final.pdf.
---------------------------------------------------------------------------

    Most Costly Drugs. The Departments and OPM considered requiring 
plans, issuers, and FEHB carriers to rank the 50 most costly drugs 
based on spending per dosage unit rather than based on total annual 
spending. Per-unit spending would reflect drug prices and capture in 
the top 50 list the cost of the drug without the influence of the 
number of times a drug was prescribed. In contrast, total spending may 
capture the top 50 list inexpensive generic drugs that are frequently 
prescribed and purchased. However, the statutory language suggests that 
in the section 204 data submission requirements, Congress sought to 
identify the drugs that drive the overall prescription drug expenditure 
in the United States, rather than the drugs with the highest unit 
prices. Ranking the top 50 most costly drugs by total annual spending 
will provide a more informative comparison to the top 25 drugs that 
yielded the highest amount of prescription drug rebates because both 
lists would be based on total, rather than per-unit, dollar amounts.
    Leveraging Similar Data Collections under the PHS Act. The 
Departments analyzed the reporting requirements under several existing 
PHS Act provisions related to prescription drug and health care 
spending to determine whether any of the data required under section 
9825(a) of the Code, section 725(a) of ERISA, and section 2799A-10(a) 
of the PHS Act are already available to the Departments pursuant to 
other reporting requirements. The data collection requirements under 
section 9825(a) of the Code, section 725(a) of ERISA, and section 
2799A-10(a) of the PHS Act have some similarities to the requirements 
under section 2718(a) of the PHS Act implemented in the MLR rules,\41\ 
as well as section 1150A of the Social Security Act, which is 
implemented in the Exchange Establishment rule and the PBM Transparency 
rule. However, there are several important distinctions.
---------------------------------------------------------------------------

    \41\ 75 FR 74863 (Dec. 1, 2010); see also 76 FR 76573 (Dec. 7, 
2011), 77 FR 28790 (May 16, 2012), 78 FR 15409 (Mar. 11, 2013), 79 
FR 30339 (May 27, 2014), 80 FR 10749 (Feb. 27, 2015), 85 FR 29164 
(May 14, 2020), 86 FR 24140 (May 5, 2021).
---------------------------------------------------------------------------

    Section 2718(a) of the PHS Act addresses clear accounting for the 
costs of health insurance coverage, including health care spending, and 
generally requires issuers to submit annual MLR reports to HHS. HHS 
implemented these reporting requirements in the MLR rules, codified at 
45 CFR part 158. Similar to section 9825(a) of the Code, section 725(a) 
of ERISA, and section 2799A-10(a) of the PHS Act, the MLR rules require 
issuers to report data on premiums \42\ and claims, including 
prescription drug claims and rebates.\43\ However, unlike the 
requirements in section 9825(a) of the Code, section 725(a) of ERISA, 
and section 2799A-10(a) of the PHS Act, the MLR rules do not require 
that premiums be broken down by amounts paid by employers versus 
employees; do not break down health care spending costs, other than 
prescription drug costs, by type; do not break down prescription drug 
costs by amounts paid by the plan or issuer versus participants, 
beneficiaries, and enrollees; and do not require reporting of drug-
level prescription drug and rebate data. Therefore, while the total 
amounts for certain items reported under section 9825(a) of the Code, 
section 725(a) of ERISA, and section 2799A-10(a) of the PHS Act and the 
MLR rules may match, the amounts currently reported by issuers under 
the MLR rules cannot be used to satisfy all of the relevant 
requirements of section 9825(a) of the Code, section 725(a) of ERISA, 
and section 2799A-10(a) of the PHS Act. Additionally, the MLR rules do 
not apply to self-funded group health plans (although issuers report 
certain aggregate information with respect to the experience of self-
funded group health plans for which issuers provide administrative 
services), and data attributable to FEHB plans is not separated out 
under the MLR rules.
---------------------------------------------------------------------------

    \42\ 45 CFR 158.130.
    \43\ 45 CFR 158.140.
---------------------------------------------------------------------------

    Section 1150A of the Social Security Act requires a health benefit 
plan or a PBM that manages prescription drug coverage under a contract 
with a QHP issuer to provide certain prescription drug information to 
the Secretary of

[[Page 66688]]

HHS.\44\ This information includes: (a) The percentage of prescriptions 
dispensed through retail versus mail order pharmacies; (b) the 
percentage of prescriptions for generic drugs; (c) the amount and type 
of rebates, discounts, or price concessions (excluding bona fide 
service fees) that the PBM negotiates that are attributable to 
utilization under the plan; (d) the amount of rebates, discounts, or 
price concessions passed through to the plan sponsor; (e) the total 
number of prescriptions that were dispensed; and (f) the difference 
between the amount that the plan pays the PBM and the amount that the 
PBM pays pharmacies. HHS implemented these reporting requirements as 
they apply to QHP issuers in the Exchange Establishment rule,\45\ and 
implemented these reporting requirements as they apply to PBMs in the 
PBM Transparency rule.\46\
---------------------------------------------------------------------------

    \44\ QHPs are offered in the individual and small group markets. 
Section 1150A(a) of the Social Security Act also applies to Medicare 
Part D plans and Medicare Advantage plans offering a prescription 
drug plan, and PBMs that manage prescription drug coverage under 
contract with a prescription drug plan sponsor of a prescription 
drug plan or a Medicare Advantage organization offering a Medicare 
Advantage prescription drug plan.
    \45\ 77 FR 18308 (Mar. 27, 2012).
    \46\ 86 FR 24140 (May 5, 2021).
---------------------------------------------------------------------------

    Section 9825(a) of the Code, section 725(a) of ERISA, and section 
2799A-10(a) of the PHS Act, the Exchange Establishment rule, and the 
PBM Transparency rule require issuers to report some of the same 
information regarding prescription drug rebates. However, section 
9825(a) of the Code, section 725(a) of ERISA, and section 2799A-10(a) 
of the PHS Act apply to all plans and issuers, whereas the Exchange 
Establishment rule and the PBM Transparency rule only apply to 
individual and small group market QHPs and their PBMs. Therefore, 
reporting under the Exchange Establishment rule and PBM Transparency 
rule will not fully satisfy the relevant requirements of section 
9825(a) of the Code, section 725(a) of ERISA, and section 2799A-10(a) 
of the PHS Act. However, as discussed in section II.C.2.e. of the 
preamble, to reduce reporting burden, these interim final rules align 
collection of certain data elements in the section 204 data submissions 
with the data elements collected under the Exchange Establishment rule 
and the PBM Transparency rule.

D. Paperwork Reduction Act--Department of Health and Human Services

    Under the Paperwork Reduction Act of 1995 (PRA), the Departments 
and OPM are required to provide 60-day notice in the Federal Register 
and solicit public comment before a collection of information 
requirement is submitted to the Office of Management and Budget (OMB) 
for review and approval. These interim final rules contain information 
collection requirements (ICRs) that are subject to review by OMB. A 
description of these provisions is given in the following paragraphs 
with an estimate of the annual burden, summarized in Table 18. To 
fairly evaluate whether an information collection should be approved by 
OMB, section 3506(c)(2)(A) of the PRA requires that the Departments and 
OPM solicit comment on:
     The need for the information collection and its usefulness 
in carrying out the proper functions of the agency;
     The accuracy of the Departments' estimate of the 
information collection burden;
     The quality, utility, and clarity of the information to be 
collected; and
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    The Departments and OPM are soliciting public comment on each of 
the required issues under section 3506(c)(2)(A) of the PRA for the 
following ICRs.
    Contemporaneously with the publication of these interim final 
rules, HHS has submitted a request for a new ICR containing the 
information collection requirements for the prescription drug and 
health care spending requirements created by section 204 of Title II of 
Division BB of the CAA. HHS has requested emergency review and approval 
in accordance with 5 CFR 1320.13(a)(2)(i) and (iii) of the PRA. The 
Secretaries of the Departments and the OPM Director have determined 
that public harm is likely to result and the collection of information 
is likely to be delayed if normal clearance procedures are followed. 
The ICR will be available at https://www.RegInfo.gov.
    The Departments and OPM will be requesting approval of the 
emergency review requests by the effective date of these interim final 
rules. The Departments and OPM will be seeking approval for the ICRs 
for 180 days, the maximum allowed for an ICR approved using an 
emergency review. These interim final rules also serve as the notice 
providing the public with a 60-day period to submit written comments on 
the ICRs as part of the normal clearance process under the PRA.
1. Wage Estimates
    The Departments and OPM have chosen to use the Contract Awarded 
Labor Category (CALC) \47\ database tool to derive the hourly rates for 
the burden and cost estimates in these interim final rules to derive 
estimates of costs related to the ICR. The Departments and OPM chose to 
use wages derived from the CALC database because, even though the BLS 
data set is valuable to economists, researchers, and others that would 
be interested in larger, more macro-trends in parts of the economy, the 
CALC data set is meant to help market research based on existing 
government contracts in determining how much a project/product will 
cost based on the required skill sets needed and it includes some 
occupation types that are not available in the BLS data set.
---------------------------------------------------------------------------

    \47\ The CALC tool (https://calc.gsa.gov/) was built to assist 
acquisition professionals with market research and price analysis 
for labor categories on multiple U.S. General Services 
Administration (GSA) & Veterans Administration (VA) contracts. Wages 
obtained from the CALC database are fully burdened to account for 
fringe benefits and overhead costs.

[[Page 66689]]



           Table 5--CALC Hourly Wages Used in Burden Estimates
------------------------------------------------------------------------
                                                            Hourly wage
                       Occupation:                             rate
------------------------------------------------------------------------
Project Manager/Team Lead...............................            $110
Scrum Master............................................             110
Senior Business Analysis................................             134
Technical Architect/Sr. Developer.......................             207
DevOps Engineer/Security Engineer.......................             143
Application Developer...................................             111
------------------------------------------------------------------------

2. ICRs Regarding Reporting of Prescription Drug and Health Care 
Spending (45 CFR 149.720, 149.730, and 149.740)
    As discussed in section II.C. of this preamble, section 9825(a) of 
the Code, section 725(a) of ERISA, and section 2799A-10(a) of the PHS 
Act require plans and issuers to annually submit to the Departments 
certain information about prescription drugs and health care spending, 
including, but not limited to, average monthly premium amounts, and the 
number of participants, beneficiaries, and enrollees, as applicable, 
with respect to the plan or coverage in the previous plan year. In 
these interim final rules, OPM also directs FEHB carriers to comply 
with these requirements with respect to an FEHB plan in the same manner 
as such provisions apply to a group health plan or health insurance 
issuer offering group or individual health insurance coverage. The 
burden estimates are based on the expected time and effort for 
reporting entities to prepare and submit the required data. The 
Departments assume that for self-funded group health plans, the costs 
will be incurred by TPAs and that prescription drug information will be 
submitted by PBMs on behalf of plans and issuers. Costs incurred by 
TPAs and PBMs are likely to be passed on to plans, issuers, and FEHB 
carriers. The Departments acknowledge that some large self-funded plans 
may seek to make needed IT changes and report the required information 
to HHS without the use or assistance of a TPA or other third-party 
entity. In those instances, the self-funded plan will directly incur 
the burden and cost to meet the requirements of these interim final 
rules. The Departments are unable to determine how many self-funded 
plans may choose to develop their IT systems and report the required 
information to HHS and seek comment as to the number of plans that may 
choose to do so. The Departments assume that all costs will be incurred 
in 2022 and beyond.
    The Departments and OPM estimate there are 473 issuers and 46 FEHB 
carriers offering group and individual and health insurance coverage, 
205 TPAs (generally on behalf of self-funded group health plans), and 
66 PBMs (on behalf of plans, issuers, and FEHB carriers) that will 
submit the required data annually.
    In 2022, reporting entities will incur a one-time cost to make 
changes to their IT systems to include the development of programs, 
processes, and systems for reporting the data. In 2023 and beyond, each 
entity will incur annual costs to update and maintain reporting 
capabilities and to report the required data to the Departments.
---------------------------------------------------------------------------

    \48\ Calculation of totals was done as follows: Burden Hours per 
Respondent x Number of Respondent = Total Burden Hours (9,360 x 519 
= 4,857,840). Total Cost per Respondent x Number of Respondents = 
Total Cost ($1,275,560 x 519 = $662,015,640).
---------------------------------------------------------------------------

    For issuers and FEHB carriers, the Departments and OPM estimate 
that in 2022, each issuer and FEHB carrier will incur a one-time first-
year cost and hour burden to design, develop, and implement needed IT 
systems changes to collect and submit the required data to the 
Departments as set forth in these interim final rules, including 
obtaining employer and employee premium contributions from employers 
providing group health coverage. The Departments and OPM estimate that 
for each issuer and FEHB carrier, on average, it will take Project 
Managers/Team Leads 2,080 hours (at $110 per hour), Scrum Masters 1,560 
hours (at $110 per hour), Senior Business Analysts 1,040 hours (at $134 
per hour), Technical Architects/Sr. Developers 2,080 hours (at $207 per 
hour), Application Developers 2,080 hours (at $111 per hour), and 
DevOps Engineers/Security Engineers 520 hours (at $143 per hour) to 
complete this task. The Departments and OPM estimate the total burden 
per issuer will be approximately 9,360 hours, with an equivalent cost 
of approximately $1,275,560. For all 519 issuers and FEHB carriers, the 
total first-year burden is estimated to be 4,857,840 hours with an 
equivalent total cost of approximately $662,015,640.\48\

[[Page 66690]]



  Table 6--Estimated Total First-Year Cost and Hour Burden for Issuers and FEHB Carriers to Design, Develop and
                           Implement Needed IT System Changes and Submit Required Data
----------------------------------------------------------------------------------------------------------------
                                                 Number of       Burden hours     Total burden
            Number of respondents                responses     per  respondent       hours          Total cost
----------------------------------------------------------------------------------------------------------------
519.........................................             519            9,360        4,857,840     $662,015,640
----------------------------------------------------------------------------------------------------------------

    In addition to the one-time first-year cost and burden estimated in 
the previous section of this preamble, issuers and FEHB carriers will 
incur an additional one-time cost and burden in the second year of 
implementation to maintain and update their IT systems and to submit 
the required data to the Departments. The Departments and OPM estimate 
that for each issuer and FEHB carrier it will take Project Managers/
Team Leads 520 hours (at $110 per hour), Scrum Masters 260 hours (at 
$110 per hour), Senior Business Analysts 260 hours (at $134 per hour), 
Technical Architects/Sr. Developers 520 hours (at $207 per hour), 
Application Developers 520 hours (at $111 per hour), and DevOps 
Engineers/Security Engineers 260 hours (at $143 per hour) to perform 
these tasks. The Departments and OPM estimate the total second-year 
burden for each issuer will be 2,340 hours, with an equivalent cost of 
approximately $323,180. For all 519 issuers and FEHB carriers, the 
total one-time second-year implementation and reporting burden is 
estimated to be 1,214,460 hours with an equivalent total cost of 
approximately $167,730,420. The cost and burden associated with the 
second year will be incurred in 2023.\49\
---------------------------------------------------------------------------

    \49\ Calculation of totals was done as follows: Burden Hours per 
Respondent x Number of Respondent = Total Burden Hours (2,340 x 519 
= 1,214,460). Total Cost per Respondent x Number of Respondents = 
Total Cost ($323,180 x 519 = $167,730,420).

    Table 7--Estimated One-Time Second-Year Cost and Hour Burden for Issuers and FEHB Carriers To Update and
                                  Maintain IT Systems and Submit Required Data
----------------------------------------------------------------------------------------------------------------
                                                 Number of       Burden hours     Total burden
            Number of respondents                responses     per  respondent       hours          Total cost
----------------------------------------------------------------------------------------------------------------
519.........................................             519            2,340        1,214,460     $167,730,420
----------------------------------------------------------------------------------------------------------------

    In addition to the one-time first-year and second-year costs and 
burdens estimated earlier in this section of this preamble, issuers and 
FEHB carriers will incur ongoing annual costs, to be incurred from 2024 
onward, related to ensuring submission accuracy, providing quality 
assurance, conducting maintenance and making updates, enhancing or 
updating any needed security measures, and submitting the required data 
to the Departments. The Departments and OPM estimate that for each 
issuer and FEHB carrier it will take Project Managers/Team Leads 520 
hours (at $110 per hour), Scrum Masters 260 hours (at $110 per hour), 
Senior Business Analyst 40 hours (at $134 per hour), Technical 
Architects/Sr. Developers 520 hours (at $207 per hour), Application 
Developers 260 hours (at $111 per hour), and DevOps Engineers/Security 
Engineers 260 hours (at $143 per hour) to perform these tasks. The 
total annual burden for each issuer and FEHB carrier will be 1,860 
hours, with an equivalent cost of approximately $264,840. For all 519 
issuers and FEHB carriers, the total annual maintenance and reporting 
burden is estimated to be 965,340 hours with an equivalent total cost 
of approximately $137,451,960.\50\ The Departments and OPM consider 
this to be an upper-bound estimate and expect maintenance costs to 
decline in succeeding years as issuers gain efficiencies and experience 
in updating, managing, and submitting the required data.
---------------------------------------------------------------------------

    \50\ Calculation of totals was done as follows: Burden Hours per 
Respondent x Number of Respondent = Total Burden Hours (1,860 x 519 
= 965,340). Total Cost per Respondent x Number of Respondents = 
Total Cost ($264,840 x 519 = $137,451,960).

          Table 8--Estimated Annual Cost and Hour Burden for Maintenance and Reporting for All Issuers
----------------------------------------------------------------------------------------------------------------
                                                 Number of       Burden hours     Total burden
            Number of respondents                responses     per  respondent       hours          Total cost
----------------------------------------------------------------------------------------------------------------
519.........................................             519            1,860          965,340     $137,451,960
----------------------------------------------------------------------------------------------------------------

    The Departments and OPM estimate the three-year average annual 
total burden for all 519 issuers and FEHB carriers to develop, build, 
and maintain needed IT systems changes to collect and aggregate the 
required data, and submit that data to the Departments, will be 
2,345,880 hours with an average annual total cost of $322,399,340. The 
total annual burden for all respondents is likely overestimated because 
the estimate does not reflect process efficiencies for FEHB carriers 
that are also issuers. As HHS, DOL, the Department of the Treasury, and 
OPM share jurisdiction, HHS will account for 45 percent of the burden, 
or approximately 1,055,646 burden hours with an equivalent cost of 
approximately $145,079,703. The Departments and OPM seek comment on 
these estimates.

[[Page 66691]]



            Table 9--Annual Burden for Issuers and FEHB Carriers in the Individual and Group Markets
----------------------------------------------------------------------------------------------------------------
                                                                                       Total
                                     Estimated       Estimated      Burden  per      estimated         Total
                                     number of       number of       response      annual burden     estimated
                                    respondents      responses        (hours)         (hours)     labor cost ($)
----------------------------------------------------------------------------------------------------------------
2022............................             234             234           9,360       2,186,028    $297,907,038
2023............................             234             234           2,340         546,507      75,478,689
2024............................             234             234           1,860         434,403      61,853,382
                                 -------------------------------------------------------------------------------
    Three-year average..........             234             234           4,520       1,055,646     145,079,703
----------------------------------------------------------------------------------------------------------------

    For TPAs, the Departments and OPM estimate that in 2022, each TPA 
will incur a one-time first-year cost and burden to design, develop, 
and implement needed IT systems changes to collect and submit, 
generally on behalf of self-funded group health plans, the data 
required under these interim final rules, including obtaining employer 
and employee premium contributions from employers providing group 
health coverage. The Departments and OPM estimate that for each TPA, on 
average, it will take Project Managers/Team Leads 2,080 hours (at $110 
per hour), Scrum Masters 1,560 hours (at $110 per hour), Senior 
Business Analysts 1,040 hours (at $134 per hour), Technical Architects/
Sr. Developers 2,080 hours (at $207 per hour), Application Developers 
2,080 hours (at $111 per hour), and DevOps Engineers/Security Engineers 
520 hours (at $143 per hour) to complete this task. The Departments and 
OPM estimate the total burden per TPA will be approximately 9,360 
hours, with an equivalent cost of approximately $1,275,560. For all 205 
TPAs, the total one-time first-year implementation and reporting burden 
is estimated to be 1,918,800 hours with an equivalent total cost of 
approximately $261,489,800.\51\
---------------------------------------------------------------------------

    \51\ Calculation of totals was done as follows: Burden Hours per 
Respondent x Number of Respondent = Total Burden Hours (9,360 x 205 
= 1,918,800). Total Cost per Respondent x Number of Respondents = 
Total Cost ($1,275,560 x 205 = $261,489,800).

  Table 10--Estimated Total One-Time First-Year Cost and Hour Burden for TPAs To Design, Develop, and Implement
                               Needed IT Systems Changes and Submit Required Data
----------------------------------------------------------------------------------------------------------------
                                                 Number of       Burden hours     Total burden
            Number of respondents                responses     per  respondent       hours          Total cost
----------------------------------------------------------------------------------------------------------------
205.........................................             205            9,360        1,918,800     $261,489,800
----------------------------------------------------------------------------------------------------------------

    In addition to the one-time first-year cost and burden estimated in 
the previous section of this preamble, TPAs will incur an additional 
one-time cost and burden in the second year of implementation to 
maintain and update their IT systems and to submit the data to the 
Departments. The Departments and OPM estimate that for each TPA it will 
take Project Managers/Team Leads 520 hours (at $110 per hour), Scrum 
Masters 260 hours (at $110 per hour), Senior Business Analysts 260 
hours (at $134 per hour), Technical Architects/Sr. Developers 520 hours 
(at $207 per hour), Application Developers 520 hours (at $111 per 
hour), and DevOps Engineers/Security Engineers 260 hours (at $143 per 
hour) to perform these tasks. The total second-year burden for each TPA 
will be 2,340 hours, with an equivalent cost of approximately $323,180. 
For all 205 TPAs, the total one-time second-year implementation and 
reporting burden is estimated to be 479,700 hours with an equivalent 
total cost of approximately $66,251,900.\52\ The cost and burden 
associated with the second year will be incurred in 2023.
---------------------------------------------------------------------------

    \52\ Calculation of totals was done as follows: Burden Hours per 
Respondent x Number of Respondent = Total Burden Hours (2,340 x 205 
= 479,700). Total Cost per Respondent x Number of Respondents = 
Total Cost ($323,180 x 205 = $66,251,900).

  Table 11--Estimated One-Time Second-Year Cost and Hour Burden for TPAs To Update and Maintain IT Systems and
                                              Submit Required Data
----------------------------------------------------------------------------------------------------------------
                                                 Number of       Burden hours     Total burden
            Number of respondents                responses     per  respondent       hours          Total cost
----------------------------------------------------------------------------------------------------------------
205.........................................             205            2,340          479,700      $66,251,900
----------------------------------------------------------------------------------------------------------------

    In addition to one-time first-year and second-year costs and 
burdens estimated in the previous sections of this preamble, TPAs will 
incur ongoing annual costs, in 2024 and subsequent years, related to 
ensuring submission accuracy, providing quality assurance, conducting 
maintenance and making updates, enhancing or updating any needed 
security measures, and submitting the required data to the Departments. 
The Departments and OPM estimate that for each TPA it will take Project 
Managers/Team Leads 520 hours (at $110 per hour), Scrum Masters 260 
hours (at $110 per hour), Senior Business Analysts 40 hours (at $134 
per hour), Technical Architects/Sr. Developers 520 hours (at $207 per 
hour), Application Developers 260 hours (at $111 per hour), and DevOps 
Engineers/Security Engineers 260 hours (at $143 per hour) to perform 
these tasks. The total annual burden for each TPA will be 1,860 hours, 
with an equivalent cost of approximately $264,480. For all 205 TPAs, 
the total

[[Page 66692]]

annual ongoing maintenance and reporting burden is estimated to be 
381,300 hours with an equivalent total cost of approximately 
$54,292,200.\53\ The Departments and OPM consider this to be an upper-
bound estimate and expect maintenance costs to decline in succeeding 
years as issuers gain efficiencies and experience in updating, 
managing, and submitting the required data.
---------------------------------------------------------------------------

    \53\ Calculation of totals was done as follows: Burden Hours per 
Respondent x Number of Respondent = Total Burden Hours (1,860 x 205 
= 381,300). Total Cost per Respondent x Number of Respondents = 
Total Cost ($264,480 x 205 = $54,292,200).

           Table 12--Estimated Annual Cost and Hour Burden for Maintenance and Reporting for All TPAs
----------------------------------------------------------------------------------------------------------------
                                                 Number of       Burden hours     Total burden
            Number of respondents                responses     per  respondent       hours          Total cost
----------------------------------------------------------------------------------------------------------------
205.........................................             205            1,860          381,300      $54,292,200
----------------------------------------------------------------------------------------------------------------

    The Departments and OPM estimate the 3-year average annual total 
burden for all 205 TPAs to develop, build, and maintain needed IT 
systems changes to collect and aggregate the required data, and submit 
that data to the Departments, will be 926,600 hours with an average 
annual total cost of $127,344,633. As HHS, DOL, the Department of the 
Treasury, and OPM share jurisdiction, HHS will account for 45 percent 
of the burden, or approximately 416,970 burden hours with an equivalent 
cost of approximately $57,305,085. The Departments and OPM seek comment 
on these burden estimates.

   Table 13--Annual Burden for TPAs To Develop and Maintain Needed IT Systems Changes and Submit Required Data
----------------------------------------------------------------------------------------------------------------
                                                                                       Total           Total
                                     Estimated       Estimated      Burden per       estimated       estimated
                                     number of       number of       response      annual burden    labor cost
                                    respondents      responses        (hours)         (hours)           ($)
----------------------------------------------------------------------------------------------------------------
2022............................              92              92           9,360         863,460    $117,670,410
2023............................              92              92           2,340         215,865      19,813,355
2024............................              92              92           1,860         171,585      24,431,490
                                 -------------------------------------------------------------------------------
    Three-year Average..........              92              92           4,520         416,970      57,305,085
----------------------------------------------------------------------------------------------------------------

    For PBMs, the Departments and OPM estimate that in 2022, each PBM 
will incur a one-time first-year cost and burden to design, develop, 
and implement needed IT systems changes to collect and submit, on 
behalf of plans and issuers, the data required under these interim 
final rules. The Departments and OPM estimate that for each PBM, on 
average, it will take Project Managers/Team Leads 2,080 hours (at $110 
per hour), Scrum Masters 2,080 hours (at $110 per hour), Senior 
Business Analysts 1,560 hours (at $134 per hour), Technical Architects/
Sr. Developers 2,080 hours (at $207 per hour), Application Developers 
4,160 hours (at $111 per hour), and DevOps Engineers/Security Engineers 
780 hours (at $143 per hour) to complete this task. The Departments and 
OPM estimate the total burden per PBM will be approximately 12,740 
hours, with an equivalent cost of approximately $1,670,500. For all 66 
PBMs, the total one-time first-year implementation and reporting burden 
is estimated to be 840,840 hours with an equivalent total cost of 
approximately $110,253,000.\54\
---------------------------------------------------------------------------

    \54\ Calculation of totals was done as follows: Burden Hours per 
Respondent x Number of Respondents = Total Burden Hours (12,740 x 66 
= 840,840). Total Cost per Respondent x Number of Respondents = 
Total Cost ($1,670,500 x 66 = $110,253,000).

  TABLE 14--Estimated Total One-Time First-Year Cost and Hour Burden for PBMs To Design, Develop, and Implement
                               Needed IT Systems Changes and Submit Required Data
----------------------------------------------------------------------------------------------------------------
                                                 Number of       Burden hours     Total burden
            Number of respondents                responses     per  respondent       hours          Total cost
----------------------------------------------------------------------------------------------------------------
66..........................................              66           12,740          840,840     $110,253,000
----------------------------------------------------------------------------------------------------------------

    In addition to the one-time first-year cost and burden estimated in 
the previous section of this preamble, PBMs will incur additional one-
time cost and burden in the second year of implementation to maintain 
and update their IT systems and to submit the required data to the 
Departments. The Departments and OPM estimate that for each PBM it will 
take Project Managers/Team Leads 1,040 hours (at $110 per hour), Scrum 
Master 1,040 hours (at $110 per hour), Senior Business Analysts 780 
hours (at $134 per hour), Technical Architects/Sr. Developers 1,040 
hours (at $207 per hour), Application Developers 2,340 hours (at $111 
per hour), and DevOps Engineers/Security Engineers 260 hours (at $143 
per hour) to perform these tasks. The total second-year burden for each 
PBM will be 6,500 hours, with an equivalent cost of approximately 
$845,520. For all 66 PBMs, the total one-time second-year 
implementation and reporting burden is estimated to be 429,000 hours 
with an

[[Page 66693]]

equivalent total cost of approximately $55,804,320.\55\
---------------------------------------------------------------------------

    \55\ Calculation of totals was done as follows: Burden Hours per 
Respondent x Number of Respondents = Total Burden Hours (6,500 x 66 
= 429,000). Total Cost per Respondent x Number of Respondents = 
Total Cost ($845,520 x 66 = $55,804,320).

  Table 15--Estimated One-Time Second-Year Cost and Hour Burden for PBMs To Update and Maintain IT Systems and
                                              Submit Required Data
----------------------------------------------------------------------------------------------------------------
                                                 Number of       Burden hours     Total burden
           Number of  respondents                responses     per  respondent       hours          Total cost
----------------------------------------------------------------------------------------------------------------
66..........................................              66            6,500          429,000      $55,804,320
----------------------------------------------------------------------------------------------------------------

    In addition to the one-time first-year and second-year costs and 
burdens estimated in the previous sections of this preamble, PBMs will 
incur ongoing annual costs related to ensuring submission accuracy, 
providing quality assurance, conducting maintenance and making updates, 
enhancing or updating any needed security measures, and submitting the 
required data to the Departments. The Departments and OPM estimate that 
for each PBM it will take Project Managers/Team Leads 520 hours (at 
$110 per hour), Scrum Masters 260 hours (at $110 per hour), Senior 
Business Analysts 40 hours (at $134 per hour), Technical Architects/Sr. 
Developers 520 hours (at $207 per hour), Application Developers 520 
hours (at $111 per hour), and DevOps Engineers/Security Engineers 260 
hours (at $143 per hour) to perform these tasks. The Departments and 
OPM estimate the total annual burden for each PBM will be 2,120 hours, 
with an equivalent cost of approximately $293,700. For all 66 PBMs, the 
total annual maintenance and submission burden is estimated to be 
139,920 hours with an equivalent total cost of approximately 
$19,384,200.\56\ The Departments and OPM consider this to be an upper-
bound estimate and expect maintenance costs to decline in succeeding 
years as PBMs gain efficiencies and experience in updating, managing, 
and submitting the required data.
---------------------------------------------------------------------------

    \56\ Calculation of totals was done as follows: Burden Hours per 
Respondent x Number of Respondent = Total Burden Hours (2,120 x 66 = 
139,920). Total Cost per Respondent x Number of Respondents = Total 
Cost ($293,700 x 66 = $19,384,200).

           Table 16--Estimated Annual Cost and Hour Burden for Maintenance and Reporting for All PBMs
----------------------------------------------------------------------------------------------------------------
                                                 Number of       Burden hours     Total burden
            Number of respondents                responses     per  respondent       hours          Total cost
----------------------------------------------------------------------------------------------------------------
66..........................................              66            2,120          139,920      $19,384,200
----------------------------------------------------------------------------------------------------------------

    The Departments and OPM estimate the three-year average annual 
total burden for all 66 PBMs to develop, build, and maintain needed IT 
systems changes to collect and aggregate the required data, and submit 
that data to the Departments, will be 469,920 hours with an average 
annual total cost of $61,813,840. As HHS, DOL, the Department of the 
Treasury, and OPM share jurisdiction, HHS will account for 45 percent 
of the burden, or approximately 211,464 hours, with an equivalent cost 
of approximately $27,816,228. The Departments and OPM seek comment on 
these burden estimates.

   Table 17--Annual Burden for PBMs To Develop and Maintain Needed IT Systems Changes and Submit Required Data
----------------------------------------------------------------------------------------------------------------
                                                                                       Total           Total
                                     Estimated       Estimated      Burden per       estimated       estimated
                                     number of       number of       response      annual burden    labor cost
                                    respondents      responses        (hours)         (hours)           ($)
----------------------------------------------------------------------------------------------------------------
2022............................              30              30          12,740         378,378     $49,613,850
2023............................              30              30           6,500         193,050      25,111,944
2024............................              30              30           2,120          62,964       8,722,890
                                 -------------------------------------------------------------------------------
    Three-year Average..........              30              30           7,120         211,464      27,816,228
----------------------------------------------------------------------------------------------------------------

    Plans will need to provide information on the average monthly 
premiums paid by participants, beneficiaries, and enrollees, as 
applicable, and paid by employers on behalf of participants, 
beneficiaries, and enrollees, as applicable, to issuers and TPAs, so 
that issuers and TPAs can report this information to the Departments on 
behalf of plans. This information is compiled by plans for other 
reporting purposes and should be readily available. The Departments and 
OPM assume that plans will be able to provide the information to 
issuers, FEHB carriers, and TPAs at minimal cost.
    In developing the cost and burden estimates in this ICR, the 
Departments and OPM recognize that while there may be various reporting 
entities that submit the required information, IT development will 
require varying

[[Page 66694]]

degrees of effort across the reporting entities. The Departments and 
OPM also recognize that some reporting entities will have mature in-
house engineering teams and systems that can quickly respond to the 
requirements in these interim final rules, while others may have 
contracts with external firms and may require contract negotiation to 
develop and build the IT systems needed to meet the requirements. There 
may also be process efficiencies for issuers that are also FEHB 
carriers. Additionally, software and system maintenance will depend on 
various factors such as: The maturity of software in use; the ability 
to access data; software development resources or ability; any 
dependency upon third-party developers; the size of the reporting 
entity; and the number of plans. Due to these unknown factors, the 
estimates in these ICRs are the average cost and burden each entity 
will assume to develop and build an IT system from scratch. The 
Departments and OPM seek comment on these assumptions and what barriers 
reporting entities may face in developing their IT systems to meet the 
requirements in these interim final rules. HHS is seeking an OMB 
control number and approval for the proposed information collection 
(OMB control number: 0938-NEW (Prescription Drug and Health Care 
Spending (CMS-10788))).
3. Summary of Annual Burden Estimates for Information Collection 
Requirements

                                                Table 18--Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Burden per     Total annual    Hourly labor
           Regulation                 OMB control No.       Respondents      Responses       response         burden          cost of     Total cost ($)
                                                                                              (hours)         (hours)        reporting
--------------------------------------------------------------------------------------------------------------------------------------------------------
45 CFR 149.720, 730, 740--issuer  0938-NEW..............             234             234           4,520       1,055,646            $137    $145,079,703
45 CFR 149.720, 730, 740--TPA...  0938-NEW..............              92              92           4,520         416,970             137      57,305,085
45 CFR 149.720, 730, 740--PBM...  0938-NEW..............              30              30           7,120         211,464             132      27,816,228
                                                         -----------------------------------------------------------------------------------------------
    Total.......................  ......................             356             356  ..............       1,684,080  ..............     230,201,016
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. Submission of PRA-Related Comments
    The Departments and OPM submitted a copy of these interim final 
rules to OMB for review of the rules' information collection and 
recordkeeping requirements. These requirements are not effective until 
they have been approved by OMB.
    To obtain copies of the supporting statement and any related forms 
for the proposed collections discussed above, please visit 
www.cms.hhs.gov/PaperworkReductionActof1995 or call the Reports 
Clearance Office at 410-786-1326.
    The Departments and OPM invite public comments on these potential 
information collection requirements. If you wish to comment, please 
submit your comments electronically as specified in the ``Addresses'' 
section of these rules and identify the rule (CMS-9905-IFC) and the 
ICR's CFR citation.
    ICR-related comments are due January 24, 2022.

E. Paperwork Reduction Act--Department of Labor, Department of the 
Treasury, and the Office of Personnel Management

    As part of the continuing effort to reduce paperwork and respondent 
burden, the Departments and OPM conduct a preclearance consultation 
program to provide the general public and federal agencies with an 
opportunity to comment on proposed and continuing collections of 
information in accordance with the PRA. This process helps to ensure 
that the public understands the Departments' and OPM's collection 
instructions, respondents can provide the requested data in the desired 
format, reporting burden (time and financial resources) is minimized, 
collection instruments are clearly understood, and the Departments and 
OPM can properly assess the impact of collection requirements on 
respondents.
    Contemporaneously with the publication of these interim final 
rules, HHS as the host agency has submitted a request for a new common 
form ICR containing the information collection requirements for the 
prescription drug and health care spending requirements created by 
section 204 of Title II of Division BB of the CAA. Once HHS has 
obtained OMB approval for the information collection, DOL, the 
Department of the Treasury, and OPM will seek OMB approval to use the 
common form ICR by providing its agency-specific information to OMB.
    Under the PRA, an agency may not conduct or sponsor, and an 
individual is not required to respond to, a collection of information 
unless it displays a valid OMB control number.
    The information collections are summarized as follows:
1. ICRs Regarding Reporting of Prescription Drug and Health Care 
Spending (26 CFR 54.9825-1T--6T, 29 CFR 2590.725-1--4)
    As discussed earlier in the HHS Paperwork Reduction Act section 
(V.D.2) of this preamble, issuers, FEHB carriers, TPAs, and PBMs will 
incur costs to submit the required information to the Departments. The 
Departments and OPM estimate the three-year average annual total 
burden, for all 519 issuers and FEHB carriers to develop, build, and 
maintain needed IT systems changes to collect and aggregate the 
required information, and submit that information to the Departments, 
will be 2,345,880 hours with an average annual total cost of 
$322,399,340. The three-year average annual total burden, for all 205 
TPAs to develop, build, and maintain needed IT systems changes to 
collect and aggregate the required information, and submit that 
information to the Departments, is estimated to be 926,600 hours with 
an average annual total cost of $127,344,633. In addition, the three-
year average annual total burden, for all 66 PBMs to develop, build, 
and maintain needed IT systems changes to collect and aggregate the 
required information, and submit that information to the Departments, 
will be 469,920 hours with an average annual total cost of $61,813,840. 
As DOL, the Department of the Treasury, OPM, and HHS share 
jurisdiction, HHS will account for 45 percent of the burden, DOL will 
account for 25 percent, the Department of the Treasury will account for 
25 percent, and OPM will account for 5 percent. The burden accounted 
for by DOL and the Department of the Treasury each is presented in 
Table 19 and the burden accounted for by OPM is presented in Table 20.

[[Page 66695]]



      Table 19--Annual Recordkeeping and Reporting Requirements for DOL and the Department of the Treasury
----------------------------------------------------------------------------------------------------------------
                                                                                   Total annual     Total labor
                   Respondent                        Number of       Number of        burden          cost of
                                                    respondents      responses        (hours)        reporting
----------------------------------------------------------------------------------------------------------------
FEHB carrier....................................             130             130         586,470     $80,599,835
TPA.............................................              51              51         231,650      31,836,158
PBM.............................................              17              17         117,480      15,453,460
                                                 ---------------------------------------------------------------
    Total.......................................             198             198         935,600     127,889,453
----------------------------------------------------------------------------------------------------------------

    Agency: DOL-EBSA, Treasury-IRS, OPM-FEHB.
    Type of Review: New information collection.
    Title: Reporting of Prescription Drug and Health Care Spending.
    OMB Control Number: NEW.
    Affected Public: Businesses or other for-profits; not-for-profit 
institutions.
    Forms:
    Estimated Total Respondents: 198.
    Estimated Total Responses: 198.
    Frequency of Response: Annual.
    Estimated Total Burden Hours: 935,600 (DOL--425,273, Treasury--
425,273, OPM--85,055).
    Estimated Total Cost Burden: $127,889,453 (DOL--$58,131,570, 
Treasury--$58,131,570, OPM--$11,626,314).

                        Table 20--Annual Recordkeeping and Reporting Requirements for OPM
----------------------------------------------------------------------------------------------------------------
                                                                                   Total annual     Total labor
                   Respondent                        Number of       Number of        burden          cost of
                                                    respondents      responses        (hours)        reporting
----------------------------------------------------------------------------------------------------------------
FEHB Carrier....................................              26              26         117,294     $16,119,967
TPA.............................................              10              10          46,330       6,367,232
PBM.............................................               3               3          23,496       3,090,692
                                                 ---------------------------------------------------------------
    Total.......................................              39              39         187,120      25,577,891
----------------------------------------------------------------------------------------------------------------

F. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
requires agencies to analyze options for regulatory relief of small 
entities to prepare an initial regulatory flexibility analysis to 
describe the impact of the proposed rule on small entities, unless the 
head of the agency can certify that the rule will not have a 
significant economic impact on a substantial number of small entities. 
The RFA generally defines a ``small entity'' as (1) a proprietary firm 
meeting the size standards of the Small Business Administration (SBA), 
(2) a not-for-profit organization that is not dominant in its field, or 
(3) a small government jurisdiction with a population of less than 
50,000. States and individuals are not included in the definition of 
``small entity.'' HHS uses a change in revenues of more than 3 to 5 
percent as its measure of significant economic impact on a substantial 
number of small entities. Individuals and states are not included in 
the definition of a small entity. These interim final rules are not 
preceded by a general proposed rule, and thus the requirements of the 
RFA do not apply.

G. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing a proposed rule or any final rule 
for which a general proposed rule was published that includes any 
federal mandate that may result in expenditures in any 1 year by state, 
local, or Tribal governments, in the aggregate, or by the private 
sector, of $100 million in 1995 dollars, updated annually for 
inflation. In 2021, that threshold is approximately $158 million. These 
interim final rules were not preceded by a general proposed rule, and 
thus the requirements of UMRA do not apply.

H. Federalism

    Executive Order 13132 outlines fundamental principles of 
federalism. It requires adherence to specific criteria by federal 
agencies in formulating and implementing policies that have 
``substantial direct effects'' on the states, the relationship between 
the national government and states, or on the distribution of power and 
responsibilities among the various levels of government, including 
policies that impose direct costs on states or preempt state laws. 
Federal agencies promulgating regulations that have these federalism 
implications must consult with state and local officials, and describe 
the extent of their consultation and the nature of the concerns of 
state and local officials in the preamble to the interim final rules.
    These interim final rules require plans, issuers, and FEHB carriers 
to submit prescription drug and health care spending data to the 
Departments, which will be used to inform a biannual public report that 
will be issued by the Departments regarding prescription drug 
reimbursements, trends, and impact on premiums. A number of states 
currently have laws, regulations, or guidance related to the reporting 
of prescription drug and health care spending data, although there is 
no consistency among these states in the data elements collected or the 
definitions used for those data elements. It is the Departments' and 
OPM's view that these interim final rules will not have substantial 
direct effects on states' ability to collect such prescription drug and 
health care spending data as the states may deem necessary. The rules 
do not impose direct costs on states or preempt state laws.
    While developing these interim final rules, the Departments 
consulted with the states and attempted to balance the states' 
interests in regulating health insurance issuers with the need to 
ensure transparency in the prescription drug and health care market and 
collect data on a consistent basis in order to inform nationwide 
analyses. By doing

[[Page 66696]]

so, the Departments complied with the requirements of Executive Order 
13132.

I. Congressional Review Act

    These interim final rules are subject to the Congressional Review 
Act provisions of the Small Business Regulatory Enforcement Fairness 
Act of 1996 (5 U.S.C. 801 et seq.) and will be transmitted to the 
Congress and to the Comptroller General for review in accordance with 
such provisions. Under the Congressional Review Act, the Office of 
Information and Regulatory Affairs designated these interim final rules 
as a ``major rule'' as that term is defined in 5 U.S.C. 804(2), because 
it is likely to result in an annual impact on the economy of $100 
million or more.

Statutory Authority

    The Office of Personnel Management regulations are adopted pursuant 
to the authority contained in 5 U.S.C. 8910 and 5 U.S.C. 8913.
    The Department of the Treasury regulations are adopted pursuant to 
the authority contained in sections 7805 and 9833 of the Code.
    The Department of Labor regulations are adopted pursuant to the 
authority contained in 29 U.S.C. 1002, 1135, 1182, 1185d, 1191a, 1191b, 
and 1191c; Secretary of Labor's Order 1-2011, 77 FR 1088 (Jan. 9, 
2012).
    The Department of Health and Human Services regulations are adopted 
pursuant to the authority contained in sections 2792 and 2799A-10 of 
the Public Health Service Act (42 U.S.C. 300gg-92 and 300gg-120).

Edward DeHarde,
Acting Associate Director, Healthcare and Insurance, Office of 
Personnel Management.
Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement, Internal Revenue 
Service.
Lily L. Batchelder,
Assistant Secretary of the Treasury (Tax Policy).
    Signed at Washington, DC, this 12th day of November, 2021.
Ali Khawar,
Acting Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
    Dated: November 12, 2021.
Xavier Becerra,
Secretary, Department of Health and Human Services.

List of Subjects

5 CFR Part 890

    Administrative practice and procedure, Government employees, Health 
facilities, Health insurance, Health professions, Hostages, Iraq, 
Kuwait, Lebanon, Military personnel, Reporting and recordkeeping 
requirements, Retirement.

26 CFR Part 54

    Excise taxes, Health care, Health insurance, Pensions, Reporting 
and recordkeeping requirements.

29 CFR Part 2510

    Employee benefit plans, Pensions.

29 CFR Part 2590

    Continuation coverage, Disclosure, Employee benefit plans, Group 
health plans, Health care, Health insurance, Medical child support, 
Reporting and recordkeeping requirements.

45 CFR Part 149

    Balance billing, Health care, Health insurance, Reporting and 
recordkeeping requirements, Surprise billing, State regulation of 
health insurance, Transparency in coverage.

OFFICE OF PERSONNEL MANAGEMENT

    For the reasons stated in the preamble, the Office of Personnel 
Management amends 5 CFR part 890 as follows:

PART 890--FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

0
1. The authority citation for part 890 continues to read as follows:

    Authority:  5 U.S.C. 8913; Sec. 890.102 also issued under 
sections 11202(f), 11232(e), and 11246 (b) of Pub. L. 105-33, 111 
Stat. 251; Sec. 890.111 also issued under section 1622(b) of Pub. L. 
104-106, 110 Stat. 521 (36 U.S.C. 5522); Sec. 890.112 also issued 
under section 1 of Pub. L. 110-279, 122 Stat. 2604 (2 U.S.C. 2051); 
Sec. 890.113 also issued under section 1110 of Pub. L. 116-92, 133 
Stat. 1198 (5 U.S.C. 8702 note); Sec. 890.301 also issued under 
section 311 of Pub. L. 111-3, 123 Stat. 64 (26 U.S.C. 9801); Sec. 
890.302(b) also issued under section 1001 of Pub. L. 111-148, 124 
Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 1029 (42 U.S.C. 
300gg-14); Sec. 890.803 also issued under 50 U.S.C. 3516 (formerly 
50 U.S.C. 403p) and 22 U.S.C. 4069c and 4069c-1; subpart L also 
issued under section 599C of Pub. L. 101-513, 104 Stat. 2064 (5 
U.S.C. 5561 note), as amended; and subpart M also issued under 
section 721 of Pub. L. 105-261 (10 U.S.C. 1108), 112 Stat. 2061.


0
2. Amend Sec.  890.114 by revising the section heading and paragraphs 
(a) and (d) and adding reserved paragraph (e) and paragraph (f) to read 
as follows:


Sec.  890.114   Surprise billing and transparency.

    (a) A carrier must comply with requirements described in 26 CFR 
54.9816-3T through 54.9816-6T, 54.9816-8T, 54.9817-1T, 54.9817-2T, 
54.9822-1T, and 54.9825-3T through 6T; 29 CFR 2590.716-3 through 
2590.716-6, 2590.716-8, 2590.717-1, 2590.717-2, 2590.722, 2590.725-1 
through 2590.725-4; and 45 CFR 149.30, 149.110 through 149.140, 
149.310, 149.510 and 520, and 149.710 through 149.740 in the same 
manner as such provisions apply to a group health plan or health 
insurance issuer offering group or individual health insurance 
coverage, subject to 5 U.S.C. 8902(m)(1), and the provisions of the 
carrier's contract. For purposes of application of such sections, all 
carriers are deemed to offer health benefits in the large group market.
* * * * *
    (d)(1) In addition to notification to the Department per 26 CFR 
54.9816-8T(b)(2)(iii), 29 CFR 2590.716-8(b)(2)(iii), and 45 CFR 
149.510(b)(2)(iii), a carrier must notify the Director of its 
initiation of the Federal IDR process, or its receipt of written notice 
that a provider, facility, or provider of air ambulance services has 
initiated the Federal IDR process, upon sending or receiving such 
notice.
    (2) The Director will coordinate with the Departments in resolving 
matters under 26 CFR 54.9816-8T(c)(4)(vii)(A)(1), 29 CFR 2590.716-
8(c)(4)(vii)(A)(1), or 45 CFR 149.510(c)(4)(vii)(A)(1) where fraud or 
material misrepresentation are presented, and matters involving 26 CFR 
54.9816-8T(c)(4)(vii)(A)(2), 29 CFR 2590.716-8(c)(4)(vii)(A)(2), and 45 
CFR 149.510(c)(4)(vii)(A)(2). The Director will coordinate with the 
Departments in oversight of reports submitted by certified IDR entities 
with respect to carriers pursuant to 26 CFR 54.9816-8T(f), 29 CFR 
2590.716-8(f), or 45 CFR 149.510(f).
    (e) [Reserved]
    (f) The Director will coordinate with the Departments in oversight 
of prescription drug and health care spending with respect to FEHB 
carriers pursuant to 45 CFR 149.710 through 149.740.

INTERNAL REVENUE SERVICE

Amendments to the Regulations

    Accordingly, 26 CFR part 54 is amended as follows:

PART 54--PENSION EXCISE TAXES

0
Paragraph 3. The authority citation for part 54 continues to read, in 
part, as follows:

    Authority:  26 U.S.C. 7805.


0
Par. 4. Sections 54.9825-1T through 54.9825-6T are added to read as 
follows:


[[Page 66697]]


Sec.
* * * * *
54.9825-1T Basis and scope (temporary).
54.9825-2T Applicability (temporary).
54.9825-3T Definitions (temporary).
54.9825-4T Reporting requirements related to prescription drug and 
health care spending (temporary).
54.9825-5T Aggregate reporting (temporary).
54.9825-6T Required information (temporary).
* * * * *


Sec.  54.9825-1T   Basis and scope (temporary).

    (a) Basis. This section and Sec. Sec.  54.9825-2T through 54.9825-
6T implement subchapter B of chapter 100 of the Internal Revenue Code 
of 1986.
    (b) Scope. This part establishes standards for group health plans 
with respect to surprise medical bills, transparency in health care 
coverage, and additional patient protections.


Sec.  54.9825-2T   Applicability (temporary).

    (a) In general. The requirements in Sec. Sec.  54.9825-4T through 
54.9825-6T apply to group health plans (including grandfathered health 
plans as defined in Sec.  54.9815-1251), except as specified in 
paragraph (b) of this section.
    (b) Exceptions. The requirements in Sec. Sec.  54.9825-4T through 
54.9825-6T do not apply to the following:
    (1) Excepted benefits as described in Sec.  54.9831-1(c).
    (2) Short-term, limited-duration insurance as defined in Sec.  
54.9801-2.
    (3) Health reimbursement arrangements or other account-based group 
health plans as described in Sec.  54.9815-2711(d).


Sec.  54.9825-3T   Definitions (temporary).

    The definitions in Sec.  54.9816-3T apply to Sec. Sec.  54.9825-4T 
through 54.9825-6T unless otherwise specified. In addition, for 
purposes of Sec. Sec.  54.9825-4T through 54.9825-6T, the following 
definitions apply:
    Brand prescription drug means a drug for which an application is 
approved under section 505(c) of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 355(c)), or under section 351 of the PHS Act (42 U.S.C. 
262), and that is generally marketed under a proprietary, trademark-
protected name. The term ``brand prescription drug'' includes a drug 
with Emergency Use Authorization issued pursuant to section 564 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb-3), and that is 
generally marketed under a proprietary, trademark-protected name. The 
term ``brand prescription drug'' includes drugs that the U.S. Food and 
Drug Administration determines to be interchangeable biosimilar 
products under sections 351(i)(3) and 351(k)(4) of the PHS Act (42 
U.S.C. 262).
    Dosage unit means the smallest form in which a pharmaceutical 
product is administered or dispensed, such as a pill, tablet, capsule, 
ampule, or measurement of grams or milliliters.
    Federal Employees Health Benefits (FEHB) line of business refers to 
all health benefit plans that are offered to eligible enrollees 
pursuant to a contract between the Office of Personnel Management and 
Federal Employees Health Benefits (FEHB) Program carriers. Such plans 
are Federal governmental plans offered pursuant to 5 U.S.C. chapter 89.
    Life-years means the total number of months of coverage for 
participants and beneficiaries, as applicable, divided by 12.
    Market segment means one of the following: The individual market 
(excluding the student market), the student market, the fully-insured 
small group market, the fully-insured large group market (excluding the 
FEHB line of business), self-funded plans offered by small employers, 
self-funded plans offered by large employers, and the FEHB line of 
business.
    Premium amount means, with respect to individual health insurance 
coverage and fully-insured group health plans, earned premium as that 
term is defined in 45 CFR 158.130, excluding the adjustments specified 
in 45 CFR 158.130(b)(5). Premium amount means, with respect to self-
funded group health plans and other arrangements that do not rely 
exclusively or primarily on payments of premiums as defined in 45 CFR 
158.130, the premium equivalent amount representing the total cost of 
providing and maintaining coverage, including claims costs, 
administrative costs, and stop-loss premiums, as applicable.
    Prescription drug (drug) means a set of pharmaceutical products 
that have been assigned a National Drug Code (NDC) by the Food and Drug 
Administration and are grouped by name and ingredient in the manner 
specified by the Secretary, jointly with the Secretary of Labor and the 
Secretary of Health and Human Services.
    Prescription drug rebates, fees, and other remuneration means all 
remuneration received by or on behalf of a plan or issuer, its 
administrator or service provider, including remuneration received by 
and on behalf of entities providing pharmacy benefit management 
services to the plan or issuer, with respect to prescription drugs 
prescribed to participants and beneficiaries in the plan or coverage, 
as applicable, regardless of the source of the remuneration (for 
example, pharmaceutical manufacturer, wholesaler, retail pharmacy, or 
vendor). Prescription drug rebates, fees, and other remuneration also 
include, for example, discounts, chargebacks or rebates, cash 
discounts, free goods contingent on a purchase agreement, up-front 
payments, coupons, goods in kind, free or reduced-price services, 
grants, or other price concessions or similar benefits. Prescription 
drug rebates, fees, and other remuneration include bona fide service 
fees. Bona fide service fees mean fees paid by a drug manufacturer to 
an entity providing pharmacy benefit management services to the plan or 
issuer that represent fair market value for a bona fide, itemized 
service actually performed on behalf of the manufacturer that the 
manufacturer would otherwise perform (or contract for) in the absence 
of the service arrangement, and that are not passed on in whole or in 
part to a client or customer of the entity, whether or not the entity 
takes title to the drug.
    Reference year means the calendar year immediately preceding the 
calendar year in which data submissions under this section are 
required.
    Reporting entity means an entity that submits some or all of the 
information required under Sec. Sec.  54.9825-4T through 54.9825-6T 
with respect to a plan or issuer, and that may be different from the 
plan or issuer that is subject to the requirements of Sec. Sec.  
54.9825-4T through 54.9825-6T.
    Student market has the meaning given in 45 CFR 158.103.
    Therapeutic class means a group of pharmaceutical products that 
have similar mechanisms of action or treat the same types of 
conditions, grouped in the manner specified by the Secretary, jointly 
with the Secretary of Labor and the Secretary of Health and Human 
Services, in guidance. The Secretary may require plans and issuers to 
classify drugs according to a commonly available public or commercial 
therapeutic classification system, a therapeutic classification system 
provided by the Secretary of Health and Human Services, or a 
combination thereof.
    Total annual spending means incurred claims, as that term is 
defined in 45 CFR 158.140, excluding the adjustments specified in 45 
CFR 158.140(b)(1)(i), (b)(2)(iv), and (b)(4), and including cost 
sharing. With respect to prescription drugs, total annual spending is 
net of prescription drug rebates, fees, and other remuneration.

[[Page 66698]]

Sec.  54.9825-4T   Reporting requirements related to prescription drug 
and health care spending (temporary).

    (a) General requirement. A group health plan or a health insurance 
issuer offering group health insurance coverage must submit an annual 
report to the Secretary, the Secretary of Health and Human Services, 
and the Secretary of Labor, on prescription drug and health care 
spending, premiums, and enrollment under the plan or coverage.
    (b) Timing and form of report. The report for the 2020 reference 
year must be submitted to the Secretary by December 27, 2021. Beginning 
with the 2021 reference year, the report for each reference year is due 
by June 1 of the year following the reference year. The report must be 
submitted in the form and manner prescribed by the Secretary, jointly 
with the Secretary of Health and Human Services and the Secretary of 
Labor.
    (c) Transfer of business. Issuers that acquire a line or block of 
business from another issuer during a reference year are responsible 
for submitting the information and report required by this section for 
the acquired business for that reference year, including for the part 
of the reference year that was prior to the acquisition.
    (d) Reporting entities and special rules to prevent unnecessary 
duplication--(1) Special rule for insured group health plans. To the 
extent coverage under a group health plan consists of group health 
insurance coverage, the plan may satisfy the requirements of paragraph 
(a) of this section if the plan requires the health insurance issuer 
offering the coverage to report the information required by this 
section in compliance with this subpart pursuant to a written 
agreement. Accordingly, if a health insurance issuer and a group health 
plan sponsor enter into a written agreement under which the issuer 
agrees to provide the information required under paragraph (a) of this 
section in compliance with this section, and the issuer fails to do so, 
then the issuer, but not the plan, violates the reporting requirements 
of paragraph (a) of this section with respect to the relevant 
information.
    (2) Other contractual arrangements. A group health plan or health 
insurance issuer offering group health insurance coverage may satisfy 
the requirements under paragraph (a) of this section by entering into a 
written agreement under which one or more other parties (such as health 
insurance issuers, pharmacy benefit managers, third-party 
administrators, or other third parties) report some or all of the 
information required under paragraph (a) of this section in compliance 
with this section. Notwithstanding the preceding sentence, if a group 
health plan or health insurance issuer chooses to enter into such an 
agreement and the party with which it contracts fails to provide the 
information in accordance with paragraph (a) of this section, the plan 
or issuer violates the reporting requirements of paragraph (a) of this 
section.
    (e) Applicability date. The provisions of this section are 
applicable beginning December 27, 2021.


Sec.  54.9825-5T   Aggregate reporting (temporary).

    (a) General requirement. A group health plan or a health insurance 
issuer offering group health insurance coverage must submit, or arrange 
to be submitted, the information required in Sec.  54.9825-6T(b) 
separately for each State in which group health coverage or group 
health insurance coverage was provided in connection with the group 
health plan or by the health insurance issuer. The report must include 
the experience of all plans and policies in the State during the 
reference year covered by the report, and must include the experience 
separately for each market segment as defined in Sec.  54.9825-3T.
    (b) Aggregation by reporting entity--(1) In general. If a reporting 
entity submits data on behalf of more than one group health plan in a 
State and market segment, the reporting entity may aggregate the data 
required in Sec.  54.9825-6T(b) for the group health plans for each 
market segment in the State.
    (2) Multiple reporting entities. (i) If multiple reporting entities 
submit the required data related to one or more plans or issuers in a 
State and market segment, the data submitted by each of these reporting 
entities must not be aggregated at a less granular level than the 
aggregation level used by the reporting entity that submits the data on 
total annual spending on health care services, as required by Sec.  
54.9825-6T(b)(4), on behalf of these plans or issuers.
    (ii) The Secretary, jointly with the Secretary of Health and Human 
Services and the Secretary of Labor, may specify in guidance 
alternative or additional aggregation methods for data submitted by 
multiple reporting entities, to ensure a balance between compliance 
burdens and a data aggregation level that facilitates the development 
of the biannual public report required under section 9825(b) of the 
Code.
    (3) Group health insurance coverage with dual contracts. If a group 
health plan involves health insurance coverage obtained from two 
affiliated issuers, one providing in-network coverage only and the 
second providing out-of-network coverage only, the plan's out-of-
network experience may be treated as if it were all related to the 
contract provided by the in-network issuer.
    (c) Aggregation by State. (1) Experience with respect to each 
fully-insured policy must be included on the report for the State where 
the contract was issued, except as specified in paragraphs (c)(3) and 
(4) of this section.
    (2) Experience with respect to each self-funded group health plan 
must be included on the report for the State where the plan sponsor has 
its principal place of business.
    (3) For individual market business sold through an association, 
experience must be attributed to the issue State of the certificate of 
coverage.
    (4) For health coverage provided to plans through a group trust or 
multiple employer welfare arrangement, the experience must be included 
in the report for the State where the employer (if the plan is 
sponsored at the individual employer level) or the association (if the 
association qualifies as an employer under ERISA section 3(5)) has its 
principal place of business or the state where the association is 
incorporated, in the case of an association with no principal place of 
business.
    (d) Applicability date. The provisions of this section are 
applicable beginning December 27, 2021.


Sec.  54.9825-6T   Required information (temporary).

    (a) Information for each plan or coverage. The report required 
under Sec.  54.9825-4T must include the following information for each 
plan or coverage, at the plan or coverage level:
    (1) The identifying information for plans, issuers, plan sponsors, 
and any other reporting entities.
    (2) The beginning and end dates of the plan year that ended on or 
before the last day of the reference year.
    (3) The number of participants and beneficiaries, as applicable, 
covered on the last day of the reference year.
    (4) Each State in which the plan or coverage is offered.
    (b) Information for each state and market segment. The report 
required under Sec.  54.9825-4T must include the following information 
with respect to plans or coverage for each State and market segment for 
the reference year, unless otherwise specified:
    (1) The 50 brand prescription drugs most frequently dispensed by 
pharmacies, and for each such drug, the

[[Page 66699]]

data elements listed in paragraph (b)(5) of this section. The most 
frequently dispensed drugs must be determined according to total number 
of paid claims for prescriptions filled during the reference year for 
each drug.
    (2) The 50 most costly prescription drugs and for each such drug, 
the data elements listed in paragraph (b)(5) of this section. The most 
costly drugs must be determined according to total annual spending on 
each drug.
    (3) The 50 prescription drugs with the greatest increase in 
expenditures between the year immediately preceding the reference year 
and the reference year, and for each such drug: The data elements 
listed in paragraph (b)(5) of this section for the year immediately 
preceding the reference year, and the data elements listed in paragraph 
(b)(5) of this section for the reference year. The drugs with the 
greatest increase in expenditures must be determined based on the 
increase in total annual spending from the year immediately preceding 
the reference year to the reference year. A drug must be approved for 
marketing or issued an Emergency Use Authorization by the Food and Drug 
Administration for the entirety of the year immediately preceding the 
reference year and for the entirety of the reference year to be 
included in the data submission as one of the drugs with the greatest 
increase in expenditures.
    (4) Total annual spending on health care services by the plan or 
coverage and by participants and beneficiaries, as applicable, broken 
down by the type of costs, including--
    (i) Hospital costs;
    (ii) Health care provider and clinical service costs, for primary 
care and specialty care separately;
    (iii) Costs for prescription drugs, separately for drugs covered by 
the plan's or issuer's pharmacy benefit and drugs covered by the plan's 
or issuer's hospital or medical benefit; and
    (iv) Other medical costs, including wellness services.
    (5) Prescription drug spending and utilization, including--
    (i) Total annual spending by the plan or coverage;
    (ii) Total annual spending by the participants and beneficiaries, 
as applicable, enrolled in the plan or coverage, as applicable;
    (iii) The number of participants and beneficiaries, as applicable, 
with a paid prescription drug claim;
    (iv) Total dosage units dispensed; and
    (v) The number of paid claims.
    (6) Premium amounts, including--
    (i) Average monthly premium amount paid by employers and other plan 
sponsors on behalf of participants and beneficiaries, as applicable;
    (ii) Average monthly premium amount paid by participants and 
beneficiaries, as applicable; and
    (iii) Total annual premium amount and the total number of life-
years.
    (7) Prescription drug rebates, fees, and other remuneration, 
including--
    (i) Total prescription drug rebates, fees, and other remuneration, 
and the difference between total amounts that the plan or issuer pays 
the entity providing pharmacy benefit management services to the plan 
or issuer and total amounts that such entity pays to pharmacies.
    (ii) Prescription drug rebates, fees, and other remuneration, 
excluding bona fide service fees, broken down by the amounts passed 
through to the plan or issuer, the amounts passed through to 
participants and beneficiaries, as applicable, and the amounts retained 
by the entity providing pharmacy benefit management services to the 
plan or issuer; and the data elements listed in paragraph (b)(5) of 
this section--
    (A) For each therapeutic class; and
    (B) For each of the 25 prescription drugs with the greatest amount 
of total prescription drug rebates and other price concessions for the 
reference year.
    (8) The method used to allocate prescription drug rebates, fees, 
and other remuneration, if applicable.
    (9) The impact of prescription drug rebates, fees, and other 
remuneration on premium and cost sharing amounts.
    (c) Applicability date. The provisions of this section are 
applicable beginning December 27, 2021.

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Chapter XXV

    For the reasons set forth in the preamble, the Department of Labor 
amends 29 CFR part 2590 as set forth below:

PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS

0
5. The authority citation for part 2590 continues to read as follows:

    Authority:  29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a-n, 1191, 1191a, 1191b, and 1191c; sec. 
101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), Pub. L. 105-
200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 110-
343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111-148, 
124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 1029; 
Division M, Pub. L. 113-235, 128 Stat. 2130; Pub. L. 116-260 134 
Stat. 1182; Secretary of Labor's Order 1-2011, 77 FR 1088 (Jan. 9, 
2012).

Subpart D--Surprise Billing and Transparency Requirements

0
6. Section 2590.716-1 is amended by revising paragraph (a) to read as 
follows:


Sec.  2590.716-1   Basis and scope.

    (a) Basis. Sections 2590.716-1 through 2590.725-4 implement 
sections 716-725 of ERISA.
* * * * *

0
7. Section 2590.716-2 is amended by revising paragraph (a) and 
paragraph (b) introductory text to read as follows:


Sec.  2590.716-2   Applicability.

    (a) In general. (1) The requirements in Sec. Sec.  2590.716-4 
through 2590.716-7, 2590.717-1, 2590.722, and 2590.725-1 through 
2590.725-4 apply to group health plans and health insurance issuers 
offering group health insurance coverage (including grandfathered 
health plans as defined in Sec.  2590.715-1251), except as specified in 
paragraph (b) of this section.
    (2) The requirements in Sec. Sec.  2590.716-8 and 2590.717-2 apply 
to certified IDR entities and group health plans and health insurance 
issuers offering group health insurance coverage (including 
grandfathered health plans as defined in Sec.  2590.715-1251) except as 
specified in paragraph (b) of this section.
    (b) Exceptions. The requirements in Sec. Sec.  2590.716-4 through 
2590.716-8, 2590.717-1, 2590.717-2, 2590.722, and 2590.725-1 through 
2590.725-4 do not apply to the following:
* * * * *

0
8. Add Sec. Sec.  2590.725-1, 2590.725-2, 2590.725-3, and 2590.725-4 to 
read as follows:
Sec.
* * * * *
2590.725-1 Definitions.
2590.725-2 Reporting requirements related to prescription drug and 
health care spending.
2590.725-3 Aggregate reporting.
2590.725-4 Required information.
* * * * *


Sec.  2590.725-1   Definitions.

    For purposes of this section, the following definitions apply in 
addition to the definitions in Sec.  2590.716-3:
    Brand prescription drug means a drug for which an application is 
approved under section 505(c) of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 355(c)) or under section 351 of the Public Health 
Service Act (42 U.S.C. 262), and that is generally marketed under a 
proprietary, trademark-protected name. The term ``brand

[[Page 66700]]

prescription drug'' includes a drug with Emergency Use Authorization 
issued pursuant to section 564 of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 360bbb-3), and that is generally marketed under a 
proprietary, trademark-protected name. The term ``brand prescription 
drug'' includes drugs that the U.S. Food and Drug Administration 
determines to be interchangeable biosimilar products under sections 
351(i)(3) and 351(k)(4) of the PHS Act (42 U.S.C. 262).
    Dosage unit means the smallest form in which a pharmaceutical 
product is administered or dispensed, such as a pill, tablet, capsule, 
ampule, or measurement of grams or milliliters.
    Federal Employees Health Benefits (FEHB) line of business refers to 
all health benefit plans that are offered to eligible enrollees 
pursuant to a contract between the Office of Personnel Management and 
Federal Employees Health Benefits (FEHB) Program carriers. Such plans 
are Federal governmental plans offered pursuant to 5 U.S.C. chapter 89.
    Life-years means the total number of months of coverage for 
participants and beneficiaries, as applicable, divided by 12.
    Market segment means one of the following: The individual market 
(excluding the student market), the student market, the fully-insured 
small group market, the fully-insured large group market (excluding the 
FEHB line of business), self-funded plans offered by small employers, 
self-funded plans offered by large employers, and the FEHB line of 
business.
    Premium amount means, with respect to fully-insured group health 
plans, earned premium as that term is defined in 45 CFR 158.130, 
excluding the adjustments specified in 45 CFR 158.130(b)(5). Premium 
amount means, with respect to self-funded group health plans and other 
arrangements that do not rely exclusively or primarily on payments of 
premiums as defined in 45 CFR 158.130, the premium equivalent amount 
representing the total cost of providing and maintaining coverage, 
including claims costs, administrative costs, and stop-loss premiums, 
as applicable.
    Prescription drug (drug) means a set of pharmaceutical products 
that have been assigned a National Drug Code (NDC) by the Food and Drug 
Administration and are grouped by name and ingredient in the manner 
specified by the Secretary, jointly with the Secretary of the Treasury 
and the Secretary of Health and Human Services.
    Prescription drug rebates, fees, and other remuneration means all 
remuneration received by or on behalf of a plan or issuer, its 
administrator or service provider, including remuneration received by 
and on behalf of entities providing pharmacy benefit management 
services to the plan or issuer, with respect to prescription drugs 
prescribed to participants or beneficiaries in the plan or coverage, as 
applicable, regardless of the source of the remuneration (for example, 
pharmaceutical manufacturer, wholesaler, retail pharmacy, or vendor). 
Prescription drug rebates, fees, and other remuneration also include, 
for example, discounts, chargebacks or rebates, cash discounts, free 
goods contingent on a purchase agreement, up-front payments, coupons, 
goods in kind, free or reduced-price services, grants, or other price 
concessions or similar benefits. Prescription drug rebates, fees, and 
other remuneration include bona fide service fees. Bona fide service 
fees mean fees paid by a drug manufacturer to an entity providing 
pharmacy benefit management services to the plan or issuer that 
represent fair market value for a bona fide, itemized service actually 
performed on behalf of the manufacturer that the manufacturer would 
otherwise perform (or contract for) in the absence of the service 
arrangement, and that are not passed on in whole or in part to a client 
or customer of the entity, whether or not the entity takes title to the 
drug.
    Reference year means the calendar year immediately preceding the 
calendar year in which data submissions under this section are 
required.
    Reporting entity means an entity that submits some or all of the 
information required under this section with respect to a plan or 
issuer, and that may be different from the plan or issuer that is 
subject to the requirements of this section.
    Student market has the meaning given in 45 CFR 158.103.
    Therapeutic class means a group of pharmaceutical products that 
have similar mechanisms of action or treat the same types of 
conditions, grouped in the manner specified by the Secretary, jointly 
with the Secretary of the Treasury and the Secretary of Health and 
Human Services, in guidance. The Secretary may require plans and 
issuers to classify drugs according to a commonly available public or 
commercial therapeutic classification system, a therapeutic 
classification system provided by the Secretary of Health and Human 
Services, or a combination thereof.
    Total annual spending means incurred claims, as that term is 
defined in 45 CFR 158.140, excluding the adjustments specified in 45 
CFR 158.140(b)(1)(i), (b)(2)(iv), and (b)(4), and including cost 
sharing. With respect to prescription drugs, total annual spending is 
net of prescription drug rebates, fees, and other remuneration.


Sec.  2590.725-2   Reporting requirements related to prescription drug 
and health care spending.

    (a) General requirement. A group health plan or a health insurance 
issuer offering group health insurance coverage must submit an annual 
report to the Secretary, the Secretary of the Treasury, and the 
Secretary of Health and Human Services, on prescription drug and health 
care spending, premiums, and enrollment under the plan or coverage.
    (b) Timing and form of report. The report for the 2020 reference 
year must be submitted to the Secretary by December 27, 2021. Beginning 
with the 2021 reference year, the report for each reference year is due 
by June 1 of the year following the reference year. The report must be 
submitted in the form and manner prescribed by the Secretary, jointly 
with the Secretary of the Treasury and the Secretary of Health and 
Human Services.
    (c) Transfer of business. Issuers that acquire a line or block of 
business from another issuer during a reference year are responsible 
for submitting the information and report required by this section for 
the acquired business for that reference year, including for the part 
of the reference year that was prior to the acquisition.
    (d) Reporting entities and special rules to prevent unnecessary 
duplication--(1) Special rule for insured group health plans. To the 
extent coverage under a group health plan consists of group health 
insurance coverage, the plan may satisfy the requirements of paragraph 
(a) of this section if the plan requires the health insurance issuer 
offering the coverage to report the information required by this 
section in compliance with this subpart pursuant to a written 
agreement. Accordingly, if a health insurance issuer and a group health 
plan sponsor enter into a written agreement under which the issuer 
agrees to provide the information required under paragraph (a) of this 
section in compliance with this section, and the issuer fails to do so, 
then the issuer, but not the plan, violates the reporting requirements 
of paragraph (a) of this section with respect to the relevant 
information.

[[Page 66701]]

    (2) Other contractual arrangements. A group health plan or health 
insurance issuer offering group health insurance coverage may satisfy 
the requirements under paragraph (a) of this section by entering into a 
written agreement under which one or more other parties (such as health 
insurance issuers, pharmacy benefit managers, third-party 
administrators, or other third parties) report some or all of the 
information required under paragraph (a) of this section in compliance 
with this section. Notwithstanding the preceding sentence, if a group 
health plan or health insurance issuer chooses to enter into such an 
agreement and the party with which it contracts fails to provide the 
information in accordance with paragraph (a) of this section, the plan 
or issuer violates the reporting requirements of paragraph (a) of this 
section.
    (e) Applicability date. The provisions of this section are 
applicable beginning December 27, 2021.


Sec.  2590.725-3   Aggregate reporting.

    (a) General requirement. A group health plan or a health insurance 
issuer offering group health insurance coverage must submit, or arrange 
to be submitted, the information required in Sec.  2590.725-4(b) of 
this section separately for each State in which group health coverage 
or group health insurance coverage was provided in connection with the 
group health plan or by the health insurance issuer. The report must 
include the experience of all plans and policies in the State during 
the reference year covered by the report, and must include the 
experience separately for each market segment as defined in Sec.  
2590.725-1 of this section.
    (b) Aggregation by reporting entity--(1) In general. If a reporting 
entity submits data on behalf of more than one group health plan in a 
State and market segment, the reporting entity may aggregate the data 
required in Sec.  2590.725-4(b) of this section for the group health 
plans for each market segment in the State.
    (2) Multiple reporting entities. (i) If multiple reporting entities 
submit the required data related to one or more plans or issuers in a 
State and market segment, the data submitted by each of these reporting 
entities must not be aggregated at a less granular level than the 
aggregation level used by the reporting entity that submits the data on 
total annual spending on health care services, as required by Sec.  
2590.725-4(b)(4), on behalf of these plans or issuers.
    (ii) The Secretary, jointly with the Secretary of the Treasury and 
the Secretary of Health and Human Services, may specify in guidance 
alternative or additional aggregation methods for data submitted by 
multiple reporting entities, to ensure a balance between compliance 
burdens and a data aggregation level that facilitates the development 
of the biannual public report required under section 725(b) of ERISA.
    (3) Group health insurance coverage with dual contracts. If a group 
health plan involves health insurance coverage obtained from two 
affiliated issuers, one providing in-network coverage only and the 
second providing out-of-network coverage only, the plan's out-of-
network experience may be treated as if it were all related to the 
contract provided by the in-network issuer.
    (c) Aggregation by State. (1) Experience with respect to each 
fully-insured policy must be included on the report for the State where 
the contract was issued, except as specified in paragraphs (c)(3) and 
(4) of this section.
    (2) Experience with respect to each self-funded group health plan 
must be included on the report for the State where the plan sponsor has 
its principal place of business.
    (3) For individual market business sold through an association, 
experience must be attributed to the issue State of the certificate of 
coverage.
    (4) For health coverage provided to plans through a group trust or 
multiple employer welfare arrangement, the experience must be included 
in the report for the State where the employer (if the plan is 
sponsored at the individual employer level) or the association (if the 
association qualifies as an employer under ERISA section 3(5)) has its 
principal place of business or the state where the association is 
incorporated, in the case of an association with no principal place of 
business.
    (d) Applicability date. The provisions of this section are 
applicable beginning December 27, 2021.


Sec.  2590.725-4   Required information.

    (a) Information for each plan or coverage. The report required 
under Sec.  2590.725-2 must include the following information for each 
plan or coverage, at the plan or coverage level:
    (1) The identifying information for plans, issuers, plan sponsors, 
and any other reporting entities.
    (2) The beginning and end dates of the plan year that ended on or 
before the last day of the reference year.
    (3) The number of participants and beneficiaries, as applicable, 
covered on the last day of the reference year.
    (4) Each State in which the plan or coverage is offered.
    (b) Information for each state and market segment. The report 
required under Sec.  2590.725-2 must include the following information 
with respect to plans or coverage for each State and market segment for 
the reference year, unless otherwise specified:
    (1) The 50 brand prescription drugs most frequently dispensed by 
pharmacies, and for each such drug, the data elements listed in 
paragraph (b)(5) of this section. The most frequently dispensed drugs 
must be determined according to total number of paid claims for 
prescriptions filled during the reference year for each drug.
    (2) The 50 most costly prescription drugs and for each such drug, 
the data elements listed in paragraph (b)(5) of this section. The most 
costly drugs must be determined according to total annual spending on 
each drug.
    (3) The 50 prescription drugs with the greatest increase in 
expenditures between the year immediately preceding the reference year 
and the reference year, and for each such drug: The data elements 
listed in paragraph (b)(5) of this section for the year immediately 
preceding the reference year, and the data elements listed in paragraph 
(b)(5) of this section for the reference year. The drugs with the 
greatest increase in expenditures must be determined based on the 
increase in total annual spending from the year immediately preceding 
the reference year to the reference year. A drug must be approved for 
marketing or issued an Emergency Use Authorization by the Food and Drug 
Administration for the entirety of the year immediately preceding the 
reference year and for the entirety of the reference year to be 
included in the data submission as one of the drugs with the greatest 
increase in expenditures.
    (4) Total annual spending on health care services by the plan or 
coverage and by participants and beneficiaries, as applicable, broken 
down by the type of costs, including--
    (i) Hospital costs;
    (ii) Health care provider and clinical service costs, for primary 
care and specialty care separately;
    (iii) Costs for prescription drugs, separately for drugs covered by 
the plan's or issuer's pharmacy benefit and drugs covered by the plan's 
or issuer's hospital or medical benefit; and
    (iv) Other medical costs, including wellness services.
    (5) Prescription drug spending and utilization, including--
    (i) Total annual spending by the plan or coverage;

[[Page 66702]]

    (ii) Total annual spending by the participants and beneficiaries, 
as applicable, enrolled in the plan or coverage, as applicable;
    (iii) The number of participants and beneficiaries, as applicable, 
with a paid prescription drug claim;
    (iv) Total dosage units dispensed; and
    (v) The number of paid claims.
    (6) Premium amounts, including--
    (i) Average monthly premium amount paid by employers and other plan 
sponsors on behalf of participants and beneficiaries, as applicable;
    (ii) Average monthly premium amount paid by participants and 
beneficiaries, as applicable; and
    (iii) Total annual premium amount and the total number of life-
years.
    (7) Prescription drug rebates, fees, and other remuneration, 
including--
    (i) Total prescription drug rebates, fees, and other remuneration, 
and the difference between total amounts that the plan or issuer pays 
the entity providing pharmacy benefit management services to the plan 
or issuer and total amounts that such entity pays to pharmacies.
    (ii) Prescription drug rebates, fees, and other remuneration, 
excluding bona fide service fees, broken down by the amounts passed 
through to the plan or issuer, the amounts passed through to 
participants and beneficiaries, as applicable, and the amounts retained 
by the entity providing pharmacy benefit management services to the 
plan or issuer; and the data elements listed in paragraph (b)(5) of 
this section--
    (A) For each therapeutic class; and
    (B) For each of the 25 prescription drugs with the greatest amount 
of total prescription drug rebates and other price concessions for the 
reference year.
    (8) The method used to allocate prescription drug rebates, fees, 
and other remuneration, if applicable.
    (9) The impact of prescription drug rebates, fees, and other 
remuneration on premium and cost sharing amounts.
    (c) Applicability date. The provisions of this section are 
applicable beginning December 27, 2021.

DEPARTMENT OF HEALTH AND HUMAN SERVICES

    For the reasons set forth in the preamble, the Department of Health 
and Human Services amends 45 CFR part 149 as set forth below:

PART 149--SURPRISE BILLING AND TRANSPARENCY REQUIREMENTS

0
9. The authority citation for part 149 continues to read as follows:

    Authority:  42 U.S.C. 300gg-111 through 300gg-139, as amended.


0
10. Amend Sec.  149.20 by revising paragraph (a)(1) and paragraph (b) 
introductory text to read as follows:


Sec.  149.20   Applicability.

    (a) * * *
    (1) The requirements in subparts B, D, and H of this part apply to 
group health plans and health insurance issuers offering group or 
individual health insurance coverage (including grandfathered health 
plans as defined in Sec.  147.140 of this subchapter), except as 
specified in paragraph (b) of this section.
* * * * *
    (b) Exceptions. The requirements in subparts B, D, E, F, and H of 
this part do not apply to the following:
* * * * *

0
11. Add subpart H to read as follows:

Subpart H--Prescription Drug and Health Care Spending

Sec.
149.710 Definitions.
149.720 Reporting Requirements Related to Prescription Drug and 
Health Care Spending.
149.730 Aggregate Reporting.
149.740 Required Information.

Subpart H--Prescription Drug and Health Care Spending


Sec.  149.710   Definitions.

    For purposes of this subpart, the following definitions apply in 
addition to the definitions in Sec.  149.30:
    Brand prescription drug means a drug for which an application is 
approved under section 505(c) of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 355(c)), or under section 351 of the PHS Act (42 U.S.C. 
262), and that is generally marketed under a proprietary, trademark-
protected name. The term ``brand prescription drug'' includes a drug 
with Emergency Use Authorization issued pursuant to section 564 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb-3), and that is 
generally marketed under a proprietary, trademark-protected name. The 
term ``brand prescription drug'' includes drugs that the U.S. Food and 
Drug Administration determines to be interchangeable biosimilar 
products under sections 351(i)(3) and 351(k)(4) of the PHS Act (42 
U.S.C. 262).
    Dosage unit means the smallest form in which a pharmaceutical 
product is administered or dispensed, such as a pill, tablet, capsule, 
ampule, or measurement of grams or milliliters.
    Enrollee means an individual who is enrolled, within the meaning of 
Sec.  144.103 of this subchapter, in group health insurance coverage, 
or an individual who is covered by individual health insurance 
coverage, at any time during the reference year, and includes 
dependents.
    Federal Employees Health Benefits (FEHB) line of business refers to 
all health benefit plans that are offered to eligible enrollees 
pursuant to a contract between the Office of Personnel Management and 
Federal Employees Health Benefits (FEHB) Program carriers. Such plans 
are Federal governmental plans offered pursuant to 5 U.S.C. chapter 89.
    Life-years means the total number of months of coverage for 
participants and beneficiaries, or for enrollees, as applicable, 
divided by 12.
    Market segment means one of the following: The individual market 
(excluding the student market), the student market, the fully-insured 
small group market, the fully-insured large group market (excluding the 
FEHB line of business), self-funded plans offered by small employers, 
self-funded plans offered by large employers, and the FEHB line of 
business.
    Premium amount means, with respect to individual health insurance 
coverage and fully-insured group health plans, earned premium as that 
term is defined in Sec.  158.130 of this subchapter, excluding the 
adjustments specified in Sec.  158.130(b)(5). Premium amount means, 
with respect to self-funded group health plans and other arrangements 
that do not rely exclusively or primarily on payments of premiums as 
defined in Sec.  158.130 of this subchapter, the premium equivalent 
amount representing the total cost of providing and maintaining 
coverage, including claims costs, administrative costs, and stop-loss 
premiums, as applicable.
    Prescription drug (drug) means a set of pharmaceutical products 
that have been assigned a National Drug Code (NDC) by the Food and Drug 
Administration and are grouped by name and ingredient in the manner 
specified by the Secretary, jointly with the Secretary of the Treasury 
and the Secretary of Labor.
    Prescription drug rebates, fees, and other remuneration means all 
remuneration received by or on behalf of a plan or issuer, its 
administrator or service provider, including remuneration received by 
and on behalf of entities providing pharmacy benefit management 
services to the plan or issuer, with respect to prescription drugs 
prescribed to participants, beneficiaries, or enrollees in the plan or 
coverage, as applicable, regardless of the source of the remuneration 
(for example, pharmaceutical manufacturer,

[[Page 66703]]

wholesaler, retail pharmacy, or vendor). Prescription drug rebates, 
fees, and other remuneration also include, for example, discounts, 
chargebacks or rebates, cash discounts, free goods contingent on a 
purchase agreement, up-front payments, coupons, goods in kind, free or 
reduced-price services, grants, or other price concessions or similar 
benefits. Prescription drug rebates, fees, and other remuneration 
include bona fide service fees. Bona fide service fees mean fees paid 
by a drug manufacturer to an entity providing pharmacy benefit 
management services to the plan or issuer that represent fair market 
value for a bona fide, itemized service actually performed on behalf of 
the manufacturer that the manufacturer would otherwise perform (or 
contract for) in the absence of the service arrangement, and that are 
not passed on in whole or in part to a client or customer of the 
entity, whether or not the entity takes title to the drug.
    Reference year means the calendar year immediately preceding the 
calendar year in which data submissions under this section are 
required.
    Reporting entity means an entity that submits some or all of the 
information required under this subpart with respect to a plan or 
issuer, and that may be different from the plan or issuer that is 
subject to the requirements of this subpart.
    Student market has the meaning given in Sec.  158.103 of this 
subchapter.
    Therapeutic class means a group of pharmaceutical products that 
have similar mechanisms of action or treat the same types of 
conditions, grouped in the manner specified by the Secretary, jointly 
with the Secretary of the Treasury and the Secretary of Labor, in 
guidance. The Secretary may require plans and issuers to classify drugs 
according to a commonly available public or commercial therapeutic 
classification system, a therapeutic classification system provided by 
the Secretary, or a combination thereof.
    Total annual spending means incurred claims, as that term is 
defined in Sec.  158.140 of this subchapter, excluding the adjustments 
specified in Sec.  158.140(b)(1)(i), (b)(2)(iv), and (b)(4), and 
including cost sharing. With respect to prescription drugs, total 
annual spending is net of prescription drug rebates, fees, and other 
remuneration.


Sec.  149.720   Reporting requirements related to prescription drug and 
health care spending.

    (a) General requirement. A group health plan or a health insurance 
issuer offering group or individual health insurance coverage must 
submit an annual report to the Secretary, the Secretary of the 
Treasury, and the Secretary of Labor, on prescription drug and health 
care spending, premiums, and enrollment under the plan or coverage.
    (b) Timing and form of report. The report for the 2020 reference 
year must be submitted to the Secretary by December 27, 2021. Beginning 
with the 2021 reference year, the report for each reference year is due 
by June 1 of the year following the reference year. The report must be 
submitted in the form and manner prescribed by the Secretary, jointly 
with the Secretary of the Treasury and the Secretary of Labor.
    (c) Transfer of business. Issuers that acquire a line or block of 
business from another issuer during a reference year are responsible 
for submitting the information and report required by this section for 
the acquired business for that reference year, including for the part 
of the reference year that was prior to the acquisition.
    (d) Reporting entities and special rules to prevent unnecessary 
duplication--(1) Special rule for insured group health plans. To the 
extent coverage under a group health plan consists of group health 
insurance coverage, the plan may satisfy the requirements of paragraph 
(a) of this section if the plan requires the health insurance issuer 
offering the coverage to report the information required by this 
section in compliance with this subpart pursuant to a written 
agreement. Accordingly, if a health insurance issuer and a group health 
plan sponsor enter into a written agreement under which the issuer 
agrees to provide the information required under paragraph (a) of this 
section in compliance with this section, and the issuer fails to do so, 
then the issuer, but not the plan, violates the reporting requirements 
of paragraph (a) of this section with respect to the relevant 
information.
    (2) Other contractual arrangements. A group health plan or health 
insurance issuer offering group or individual health insurance coverage 
may satisfy the requirements under paragraph (a) of this section by 
entering into a written agreement under which one or more other parties 
(such as health insurance issuers, pharmacy benefit managers, third-
party administrators, or other third parties) report some or all of the 
information required under paragraph (a) of this section in compliance 
with this section. Notwithstanding the preceding sentence, if a group 
health plan or health insurance issuer chooses to enter into such an 
agreement and the party with which it contracts fails to provide the 
information in accordance with paragraph (a) of this section, the plan 
or issuer violates the reporting requirements of paragraph (a) of this 
section.
    (e) Applicability date. The provisions of this section are 
applicable beginning December 27, 2021.


Sec.  149.730   Aggregate reporting.

    (a) General requirement. A group health plan or a health insurance 
issuer offering group or individual health insurance coverage must 
submit, or arrange to be submitted, the information required in Sec.  
149.740(b) separately for each State in which group health coverage or 
group or individual health insurance coverage was provided in 
connection with the group health plan or by the health insurance 
issuer. The report must include the experience of all plans and 
policies in the State during the reference year covered by the report, 
and must include the experience separately for each market segment as 
defined in Sec.  149.710.
    (b) Aggregation by reporting entity--(1) In general. If a reporting 
entity submits data on behalf of more than one group health plan in a 
State and market segment, the reporting entity may aggregate the data 
required in Sec.  149.740(b) for the group health plans for each market 
segment in the State.
    (2) Multiple reporting entities. (i) If multiple reporting entities 
submit the required data related to one or more plans or issuers in a 
State and market segment, the data submitted by each of these reporting 
entities must not be aggregated at a less granular level than the 
aggregation level used by the reporting entity that submits the data on 
total annual spending on health care services, as required by Sec.  
149.740(b)(4), on behalf of these plans or issuers.
    (ii) The Secretary, jointly with the Secretary of the Treasury and 
the Secretary of Labor, may specify in guidance alternative or 
additional aggregation methods for data submitted by multiple reporting 
entities, to ensure a balance between compliance burdens and a data 
aggregation level that facilitates the development of the biannual 
public report required under section 2799A-10(b) of the PHS Act.
    (3) Group health insurance coverage with dual contracts. If a group 
health plan involves health insurance coverage obtained from two 
affiliated issuers, one providing in-network coverage only and the 
second providing out-of-network coverage only, the plan's out-of-
network experience may be treated as if it were all related to the 
contract provided by the in-network issuer.
    (c) Aggregation by State. (1) Experience with respect to each 
fully-

[[Page 66704]]

insured policy must be included on the report for the State where the 
contract was issued, except as specified in paragraphs (c)(3) and (4) 
of this section.
    (2) Experience with respect to each self-funded group health plan 
must be included on the report for the State where the plan sponsor has 
its principal place of business.
    (3) For individual market business sold through an association, 
experience must be attributed to the issue State of the certificate of 
coverage.
    (4) For health coverage provided to plans through a group trust or 
multiple employer welfare arrangement, the experience must be included 
in the report for the State where the employer (if the plan is 
sponsored at the individual employer level) or the association (if the 
association qualifies as an employer under ERISA section 3(5)) has its 
principal place of business or the State where the association is 
incorporated, in the case of an association with no principal place of 
business.
    (d) Applicability date. The provisions of this section are 
applicable beginning December 27, 2021.


Sec.  149.740   Required information.

    (a) Information for each plan or coverage. The report required 
under Sec.  149.720 must include the following information for each 
plan or coverage, at the plan or coverage level:
    (1) The identifying information for plans, issuers, plan sponsors, 
and any other reporting entities.
    (2) The beginning and end dates of the plan year that ended on or 
before the last day of the reference year.
    (3) The number of participants, beneficiaries, and enrollees, as 
applicable, covered on the last day of the reference year.
    (4) Each State in which the plan or coverage is offered.
    (b) Information for each state and market segment. The report 
required under Sec.  149.720 must include the following information 
with respect to plans or coverage for each State and market segment for 
the reference year, unless otherwise specified:
    (1) The 50 brand prescription drugs most frequently dispensed by 
pharmacies, and for each such drug, the data elements listed in 
paragraph (b)(5) of this section. The most frequently dispensed drugs 
must be determined according to total number of paid claims for 
prescriptions filled during the reference year for each drug.
    (2) The 50 most costly prescription drugs and for each such drug, 
the data elements listed in paragraph (b)(5) of this section. The most 
costly drugs must be determined according to total annual spending on 
each drug.
    (3) The 50 prescription drugs with the greatest increase in 
expenditures between the year immediately preceding the reference year 
and the reference year, and for each such drug: The data elements 
listed in paragraph (b)(5) of this section for the year immediately 
preceding the reference year, and the data elements listed in paragraph 
(b)(5) of this section for the reference year. The drugs with the 
greatest increase in expenditures must be determined based on the 
increase in total annual spending from the year immediately preceding 
the reference year to the reference year. A drug must be approved for 
marketing or issued an Emergency Use Authorization by the Food and Drug 
Administration for the entirety of the year immediately preceding the 
reference year and for the entirety of the reference year to be 
included in the data submission as one of the drugs with the greatest 
increase in expenditures.
    (4) Total annual spending on health care services by the plan or 
coverage and by participants, beneficiaries, and enrollees, as 
applicable, broken down by the type of costs, including--
    (i) Hospital costs;
    (ii) Health care provider and clinical service costs, for primary 
care and specialty care separately;
    (iii) Costs for prescription drugs, separately for drugs covered by 
the plan's or issuer's pharmacy benefit and drugs covered by the plan's 
or issuer's hospital or medical benefit; and
    (iv) Other medical costs, including wellness services.
    (5) Prescription drug spending and utilization, including--
    (i) Total annual spending by the plan or coverage;
    (ii) Total annual spending by the participants, beneficiaries, and 
enrollees, as applicable, enrolled in the plan or coverage, as 
applicable;
    (iii) The number of participants, beneficiaries, and enrollees, as 
applicable, with a paid prescription drug claim;
    (iv) Total dosage units dispensed; and
    (v) The number of paid claims.
    (6) Premium amounts, including--
    (i) Average monthly premium amount paid by employers and other plan 
sponsors on behalf of participants, beneficiaries, and enrollees, as 
applicable;
    (ii) Average monthly premium amount paid by participants, 
beneficiaries, and enrollees, as applicable; and
    (iii) Total annual premium amount and the total number of life-
years.
    (7) Prescription drug rebates, fees, and other remuneration, 
including--
    (i) Total prescription drug rebates, fees, and other remuneration, 
and the difference between total amounts that the plan or issuer pays 
the entity providing pharmacy benefit management services to the plan 
or issuer and total amounts that such entity pays to pharmacies.
    (ii) Prescription drug rebates, fees, and other remuneration, 
excluding bona fide service fees, broken down by the amounts passed 
through to the plan or issuer, the amounts passed through to 
participants, beneficiaries, and enrollees, as applicable, and the 
amounts retained by the entity providing pharmacy benefit management 
services to the plan or issuer; and the data elements listed in 
paragraph (b)(5) of this section--
    (A) For each therapeutic class; and
    (B) For each of the 25 prescription drugs with the greatest amount 
of total prescription drug rebates and other price concessions for the 
reference year.
    (8) The method used to allocate prescription drug rebates, fees, 
and other remuneration, if applicable.
    (9) The impact of prescription drug rebates, fees, and other 
remuneration on premium and cost sharing amounts.
    (c) Applicability date. The provisions of this section are 
applicable beginning December 27, 2021.

[FR Doc. 2021-25183 Filed 11-17-21; 4:15 pm]
BILLING CODE 6523-63-P; 4830-01-P; 4510-29-P; 4120-01-P