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The Consolidated Appropriations Act (“CAA”) requires insurance companies and group health plans to annually report and provide information about prescription drugs and their associated costs to the Centers for Medicare and Medicaid Services (“CMS”). These annual reports will allow CMS to publish its findings regarding prescription drug pricing trends, provide greater transparency in pricing and promote competition and reduced costs where warranted.
The deadline for submitting 2023’s report is June 1, 2024 and the instructions issued by CMS for 2023’s report differ from the last two cycles of Prescription Drug reports. Specifically, CMS will enforce what is referred to as the “aggregation restriction” which will require plan level data to be submitted and may help plan sponsors pinpoint specific data about their plan and the associated costs of prescription drugs.
As discussed in a previous article, the next wave of fiduciary fee litigation will likely focus on health plans and whether the fees charged by service providers are reasonable. The CAA’s requirement to for Prescription Drug reports to provide plan level data could provide plan sponsors with more targeted information about their plan and the associated costs of providing prescription drug coverage to participants and beneficiaries. Ideally, it will help plan sponsors discover whether the associated costs are reasonable and in the best interests of the plan participants and beneficiaries or if the timing is right to explore other options to reduce costs.