Bulletin No. 2021–49
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HIGHLIGHTS
OF THIS ISSUE
Bulletin No. 2021–49
December 6, 2021
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
Rev. Proc. 2021-50, page 844.
This document contains a draft Revenue Procedure allowing an eligible partnership to file an amended Form 1065,
U.S. Return of Partnership Income, and furnish a corresponding Schedule K-1 (Form 1065), Partner’s Share of
Income, Deductions, Credits, etc., to each of its partners
as an alternative option to filing an administrative adjustment request (AAR).
EMPLOYEE PLANS
Notice 2021-62, page 831.
This notice sets forth updates on the corporate bond
monthly yield curve, the corresponding spot segment
rates for November 2021 used under § 417(e)(3)(D), the
24-month average segment rates applicable for November 2021, and the 30-year Treasury rates, as reflected by
the application of § 430(h)(2)(C)(iv).
EMPLOYEE PLANS, EXCISE TAX
REG 117575-21, page 847.
This document sets forth proposed regulations implementing certain transparency requirements under section 204
of Division BB of Title II of the Consolidated Appropriations
Act, 2021. The text of the temporary regulations issued
jointly with the Department of Health and Human Services,
the Department of Labor, and the Office of Personnel Management serves as the text of these proposed regulations.
T.D. 9958, page 781.
This document sets forth temporary regulations implementing certain transparency requirements under section
204 of Division BB of Title II of the Consolidated Appro-
Finding Lists begin on page ii.
priations Act, 2021. These temporary regulations, issued
jointly with the Department of Health and Human Services,
the Department of Labor, and the Office of Personnel
Management, require group health plans and health insurance issuers in the group and individual markets to report
certain information about prescription drugs and health
care spending to the Department of Health and Human
Services, the Department of Labor, and the Department
of the Treasury.
EXEMPT ORGANIZATIONS
Announcement 2021-15, page 846.
Revocation of IRC 501(c)(3) Organizations for failure to
meet the code section requirements. Contributions made
to the organizations by individual donors are no longer
deductible under IRC 170(b)(1)(A).
INCOME TAX
Notice 2021-63, page 835.
This notice provides guidance regarding the temporary
100-percent deduction for expenses that are paid or
incurred after December 31, 2020, and before January
1, 2023, for food or beverages provided by a restaurant for purposes of § 274(n)(2)(D) of the Internal Revenue Code. In particular, the notice sets forth a special
rule that allows a taxpayer that properly applies the
rules of Rev. Proc. 2019-48 to treat the meal portion
of a per diem rate or allowance as being attributable to
food or beverages provided by a restaurant.
Rev. Proc. 2021-48, page 835.
This revenue procedure provides that taxpayers may
treat amounts that are excluded from gross income
(tax-exempt income) in connection with the forgive-
ness of Paycheck Protection Program (PPP) Loans as
received or accrued: (1) as eligible expenses are paid
or incurred, (2) when an application for PPP Loan forgiveness is filed, or (3) when PPP Loan forgiveness is
granted.
Rev. Proc. 2021-49, page 838.
This revenue procedure provides guidance for partnerships and consolidated groups regarding amounts
excluded from gross income and deductions relating
to the Paycheck Protection Program and certain other
COVID-19 relief programs. More specifically: This revenue procedure provides guidance for partners and their
partnerships regarding allocations under § 704(b) of the
Internal Revenue Code and the corresponding adjust-
ments to be made with respect to the partners’ bases
in their partnership interests under § 705 of the Code.
This revenue procedure also provides guidance under §
1502 of the Code and § 1.1502-32 of the Income Tax
Regulations regarding the corresponding basis adjustments for stock of subsidiary members of consolidated
groups as a result of tax exempt income arising from
certain forgiven PPP Loans, grant proceeds, or subsidized payment of certain principal, interest and fees.
Rev. Rul. 2021-23, page 779.
Federal rates; adjusted federal rates; adjusted federal longterm rate, and the long-term tax exempt rate. For purposes
of sections 382, 1274, 1288, 7872 and other sections of
the Code, tables set forth the rates for December 2021.
The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
December 6, 2021
Bulletin No. 2021–49
Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7872.)
Rev. Rul. 2021-23
This revenue ruling provides various prescribed rates for federal income
AFR
110% AFR
120% AFR
130% AFR
AFR
110% AFR
120% AFR
130% AFR
150% AFR
175% AFR
AFR
110% AFR
120% AFR
130% AFR
Short-term adjusted AFR
Mid-term adjusted AFR
Long-term adjusted AFR
Bulletin No. 2021–49
tax purposes for December 2021 (the
current month). Table 1 contains the
short-term, mid-term, and long-term
applicable federal rates (AFR) for the
current month for purposes of section
1274(d) of the Internal Revenue Code.
Table 2 contains the short-term, midterm, and long-term adjusted applicable federal rates (adjusted AFR) for the
current month for purposes of section
1288(b). Table 3 sets forth the adjusted
federal long-term rate and the longterm tax-exempt rate described in section 382(f). Table 4 contains the appro-
priate percentages for determining the
low-income housing credit described in
section 42(b)(1) for buildings placed in
service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service
after July 30, 2008, shall not be less
than 9%. Finally, Table 5 contains the
federal rate for determining the present
value of an annuity, an interest for life
or for a term of years, or a remainder or
a reversionary interest for purposes of
section 7520.
REV. RUL. 2021-23 TABLE 1
Applicable Federal Rates (AFR) for December 2021
Period for Compounding
Annual
Semiannual
Quarterly
Short-term
0.33%
0.33%
0.33%
0.36%
0.36%
0.36%
0.40%
0.40%
0.40%
0.43%
0.43%
0.43%
Mid-term
1.26%
1.26%
1.26%
1.39%
1.39%
1.39%
1.52%
1.51%
1.51%
1.65%
1.64%
1.64%
1.90%
1.89%
1.89%
2.22%
2.21%
2.20%
Long-term
1.90%
1.89%
1.89%
2.09%
2.08%
2.07%
2.28%
2.27%
2.26%
2.48%
2.46%
2.45%
REV. RUL. 2021-23 TABLE 2
Adjusted AFR for December 2021
Period for Compounding
Annual
Semiannual
0.25%
0.25%
0.96%
0.96%
1.45%
1.44%
779
Quarterly
0.25%
0.96%
1.44%
Monthly
0.33%
0.36%
0.40%
0.43%
1.26%
1.39%
1.51%
1.63%
1.88%
2.20%
1.88%
2.07%
2.26%
2.45%
Monthly
0.25%
0.96%
1.44%
December 6, 2021
REV. RUL. 2021-23 TABLE 3
Rates Under Section 382 for December 2021
Adjusted federal long-term rate for the current month
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal
long-term rates for the current month and the prior two months.)
1.45%
1.45%
REV. RUL. 2021-23 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for December 2021
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July
30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit
7.36%
Appropriate percentage for the 30% present value low-income housing credit
3.15%
REV. RUL. 2021-23 TABLE 5
Rate Under Section 7520 for December 2021
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a
remainder or reversionary interest
Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.
Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of December 2021. See
Rev. Rul. 2021-23, page 779.
December 6, 2021
Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of December 2021. See Rev.
Rul. 2021-23, page 779.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.
1.6%
Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of December 2021. See Rev. Rul. 2021-23, page 779.
Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of December 2021. See Rev.
Rul. 2021-23, page 779.
Section 7872.—Treatment
of Loans With BelowMarket Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.
780
Bulletin No. 2021–49
26 CFR 54.9825-1T, 26 CFR 54.9825-2T, 26
CFR 54.9825-3T, 26 CFR 54.9825-4T, 26
CFR 54.9825-5T, and 26 CFR 54.9825-6T
T.D. 9958
OFFICE OF PERSONNEL
MANAGEMENT
5 CFR Part 890
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 54
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Part 2590
DEPARTMENT OF HEALTH
AND HUMAN SERVICES
45 CFR Part 149
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.
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,
Bulletin No. 2021–49
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 CMS9905-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
781
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 202606-4056.
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 202-6938335.
Christina Whitefield, Centers for Medicare & Medicaid Services, Department of
Health and Human Services, at 301-4924172.
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,
December 6, 2021
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 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
December 6, 2021
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.
782
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
Bulletin No. 2021–49
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.
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) and 717(a)
of ERISA; sections 2799A-1(a)-(b),
2799A-2(a), 2799B-1, 2799B-2, 2799B3, 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 pro-
viders 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-ofnetwork services to in-network levels,
require such cost sharing to count toward
any in-network deductibles and out-ofpocket 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.
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)
https://www.federalregister.gov/documents/2021/07/14/2021-15069/promoting-competition-in-the-american-economy.
86 FR 36872 (July 13, 2021). Public comments on this rule were due by September 7, 2021.
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.
1
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December 6, 2021
of the Code; sections 716(c) and 717(b) of
ERISA; and sections 2799A-1(c), 2799A2(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, 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.
lower the price of and improve access to
prescription drugs and biologics.
B. Stakeholder Consultation and Input
II. Overview of the Interim Final Rules
– Departments of HHS, Labor, and the
Treasury
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 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
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 2799A10 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 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
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-andFAQs/Downloads/FAQs-Part-49.pdf.
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).
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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 2590.7152711(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 accountbased 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.
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 definitions in 26 CFR 54.98163T, 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 con-
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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December 6, 2021
sistent 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 Medi-
care 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.
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 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
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.
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-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/Chapter 570
Rx Drug Pricing_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.
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.
8
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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.
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
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-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
https://www.fda.gov/drugs/drug-approvals-and-databases/national-drug-code-directory.
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.
15
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December 6, 2021
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.
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 reducedprice 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 rule18 and the
PBM Transparency rule19 (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
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.
18
77 FR 18308 (March 27, 2012).
19
86 FR 24140 (May 5, 2021).
17
December 6, 2021
788
Bulletin No. 2021–49
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 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
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,
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.
20
Bulletin No. 2021–49
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December 6, 2021
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 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
December 6, 2021
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 sec-
790
tion 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
Bulletin No. 2021–49
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 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 runout 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 runout 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
85 FR 72158 (Nov. 12, 2020).
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/FactSheets-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.
21
22
Bulletin No. 2021–49
791
December 6, 2021
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.
December 6, 2021
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 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)
792
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 informa-
Bulletin No. 2021–49
tion. 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, beneficia-
ries, 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 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 pre-
scription 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
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.
24
Bulletin No. 2021–49
793
December 6, 2021
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
December 6, 2021
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
794
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 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
Bulletin No. 2021–49
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
Bulletin No. 2021–49
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 54.98255T, 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
795
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 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.
December 6, 2021
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.
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).
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
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.”
25
December 6, 2021
796
Bulletin No. 2021–49
rebates, fees, and other remuneration in
the section 204 data submissions with the
categories specified in the data collection
requirements under the Exchange Establishment rule27 and the PBM Transparency rule28 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 reimburse-
27
28
ments, 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.
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
77 FR 18308 (Mar. 27, 2012).
86 FR 24140 (May 5, 2021).
Bulletin No. 2021–49
797
December 6, 2021
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 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
December 6, 2021
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
798
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 ana-
Bulletin No. 2021–49
lyze 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, 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 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
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.
29
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December 6, 2021
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 54.98256T(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 2590.7253(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
December 6, 2021
plans, the TPA acting as a reporting entity
for self-funded plans, or the plan sponsor
acting as a reporting entity for the selffunded 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 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 selffunded 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
800
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
Bulletin No. 2021–49
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 selffunded 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.
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 54.98255T(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 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.
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-undererisa-a-guide-to-federal-and-state-regulation.pdf.
30
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December 6, 2021
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.
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.”
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 Fair-
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.
31
December 6, 2021
802
Bulletin No. 2021–49
ness 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
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