In mid-February, CMS released revised instructions for the highly anticipated third RxDC reports, which encompass the 2023 calendar year and are due by June 1, 2024. The new instructions may cause employers and plan sponsors to lean towards making plan-level submissions instead of relying on their vendors to make aggregate submissions on their behalf. The instructions themselves mimic the prior versions, so plan sponsors should not worry about any significant deviation. There is a “first,” however. For the first time, CMS will enforce the aggregation restriction, which is a provision that CMS had suspended for the first two reporting cycles. The cause for concern here is that plan sponsors will not be able to rely on their PBM’s aggregate submission of pharmacy data. Instead, they will have to submit plan-level Rx data. So, if this already sounds like a migraine waiting to happen, let’s pause and refresh for a moment.
The aggregation restriction prohibits plans from having their vendors submit the medical premium and life years data reported on file D1 and the pharmacy benefit data reported on files D3 through D8 “at a less granular level” than the medical benefit data reported on file D2. So, simply stated, if D2 is submitted on a plan-level basis, D1 and D3-D8 must follow suit.
From a fiduciary perspective, the implementation of this aggregation restriction can be considered a boon for employers. By submitting pharmacy files at the plan level, employers can obtain specific data about their plan, such as their PBM’s profit margin, drug level rebates for the top 25 drugs, and manufacturer cost-sharing assistance, that they didn’t have access to when PBMs submitted data files in aggregate. We should note right here that employers can still rely on their vendor’s aggregate medical benefit submissions while submitting pharmacy files at the plan level to gain access to critical financial prescription drug data. In other words, the aggregation restriction does not prohibit medical benefit data from being less granular than the medical premium, life years, and pharmacy benefit data. Considering the spotlight recently shed on fiduciary duties and the risks associated with not complying with those duties, the additional insight plan-level filings provide can help fiduciaries stay on course in fulfilling their responsibilities.
Why are we telling you all of this now? Well, we’re already at the beginning of March, and time tends to creep up on us. Preparing now to implement the new requirements will ease some of your burden when the filing is due.
There isn’t a robust amount of new information in these instructions, but changes we’ve noted in addition to the aggregation restriction enforcement include:
You might be asking yourself, “why should I start now?” Here’s why: no good faith relief is available for this third reporting submission. In addition, no deadline extension is available, even though June 1, 2024, falls on a Saturday. As we said, time flies, so plan sponsors should begin working on their reporting strategy now. We encourage plan sponsors to:
MZQ Consulting was very quick to the starting line last year in helping plan sponsors navigate this new maze of RxDC reporting. We’re still right here and ready to assist with getting you through this third reporting session. Please reach out to us.
