Author Archives: Mark Combs

A GIFT for Brokers & Plan Sponsors Hidden in Prescription Drug Reporting … Maybe

As a Plan Sponsor or Broker, how would you like to see how much your PBM is being paid back from drug manufacturers and also have all details regarding PBM spread amounts?  First off, lets make sure you understand what these things are …

1).  Bona Fide Service Fees

Bona fide service fees are fees that a manufacturer pays to a PBM that:

  • These are services that the manufacturer would otherwise perform (or contract for) in the absence of the service arrangement; and
  • Are not passed on in whole or in part to a client

2).  PBM Spread Amounts

The PBM spread is the difference between the amount the plan, issuer, or carrier paid to the PBM and the amount the PBM paid to manufacturers, wholesalers, pharmacies, or other vendors. For example, if a plan pays $250 to the PBM, and the PBM paid $200 to manufacturers, wholesalers, pharmacies, or other vendors, the PBM spread amount would be $50.

3).  Rebates Retained by the PBM

Manufacturer rebates received by PBMs and not passed through to any member or client.

 

As you can see, it would be really nice to see exactly what these amounts are.  However, depending upon the way your plan data is reported you will not be able to use the data.  The reason is that one option for reporting is that the PBM can combine all data on all plans in a given state and report in aggregate.  With this approach it is not possible for any specific plan to see their particular data.

It is for this reason we are seeing a lot of brokers in the market look to have their clients report this data on their own, which requires that they obtain only the group specific data from their PBMs.  Also, it is possible that benchmarking could be created around this data as well which would be useful to compare plan sponsors and PBMs.

Manufacturer Assistance Payments $ Needed FIRST in Drug Cost Reporting

As the marketplace is scrambling to complete Drug and Healthcare Cost Reporting for the very first time, PBMs and TPAs are discovering that BEFORE they can complete their end of the reporting they FIRST must have the amounts received by the Plan for Manufacturers Assistance Program payments. 

This is just beginning to create quite a bottle neck and here is why.  Think of this like ‘Data Dominos’ . . .

  • The TPA must have files D3-D8 complete by the PBM before they can complete their side of the reporting.  Therefore the TPA is ‘waiting’ on the PBM.
  • The PBM must have data regarding Manufacturers Assistance program payments before they can create their end of the reporting.  Therefore they are ‘waiting’ on these vendors to provide those amounts.

See the problem? 

And it gets worse because most of the organizations that offer services to help plan sponsors capture manufacturers assistance payments are unaware that they are the bottleneck.  In fact, as we have questions the marketplace we have found that most (or all) of these vendors have not even started to look into what is required from them regarding this new reporting.

Drug Cost Reporting for TPAs | It’s Not a Straightforward Process

For the TPAs in the Market Place that have had a chance to look at the Drug Cost Reporting requirements, you’ve probably also had the realization that pulling off this reporting is going to be a lot more difficult than you might have initially thought.

Its called Drug Cost Reporting so naturally the marketplace would think that the PBM (Pharmacy Benefit Manager) is going to be supplying most of this data. The thing to know is that the PBM is providing the majority of the needed data, but unfortunately what we are finding in the marketplace is that the PBMs are making logical decisions based upon their circumstances. What we mean is that, when one takes a look at the reporting requirements, they find that for the PBMs, in most cases it is in their best interest to just provide the data to the plan sponsor and allow the plan sponsor to report for themselves.

So, what does that mean? It means that the responsibility is ultimately falling back onto the TPAs. The current problem in the marketplace is that by in large people are thinking that the PBM has it taken care of on their behalf. The reality is that in most instances the PBM has but only a piece of the requirement taken care of.

As more responsibility is falling back onto the TPAs, we at DrugCostReporting.com are having conversations with them to help clarify how difficult it is to get their hands around all of the required administration.

As a holding company, we also own ACAReportingService.com. What we are seeing with the Drug Cost Reporting is very reminiscent of what we saw during the first year of ACA Reporting. Everyone in the industry was trying to figure out what this new compliance item was and how they would complete it. For this reason, we have launched consulting services as well as services provided all the way down to the plan sponsor. The goal of which is to help plan sponsors complete accurate and timely Drug Cost Reports.

You can visit drugcostreporting.com to review pricing and learn more about what we do.

Deadlines for Prescription Drug & Healthcare Reporting? Better get moving!

Compliance delays for the first years of reporting (2020 and 2021) make this first year of reporting a heavier lift and more cumbersome.  December 27th, 2022 is the FINAL due date for submissions of 2020 and 2021 data. 

These reporting years are referred to as the “reference year”, so for this first year there will be reporting for two reference years (2020 & 2021).

On an ongoing basis, for instance the reporting for 2022 data, that will be due as of June 1st. 2023 (the following year).

This structure to the reporting creates a tight time frame for reporting with the fact that in order to perform the reporting accurately you cannot begin your calculations on claims data until after March 31st of the year.  This essentially gives you 60 days to pull it all together and have it submitted.

Contradictory Guidance? Prescription Drug & Healthcare Cost Reporting Confusion

This is getting into the weeds a bit but it goes to show that the details matter when it comes to reporting.  We learned this the hard way with our first compliance company in 2015 called ACAReportingService.com.  Remember how hard that first year of ACA reporting was?  The good news is that it got easier over time.

Now … on to this contradiction that is certainly going to cause some confusion.

The instructions ask that the reporting entity submit data on behalf of plan sponsors on a 12/15 type basis.  For those of us with stop-loss experience, we know this to be claims that were incurred in 12 month period and paid within 3 months after the end of the contract.

For Prescription Drug and Healthcare Cost reporting our reference year is always a calendar year so this means we are looking for claims to be reported that were incurred in a calendar year and paid by the end of March the year following this reference year.  Simple enough, right?  As you likely guessed, there are two problems …

First, in the paragraphs following they then ask for claims liability that have been incurred but not reported as of March 31st.  What?  If anyone has some insight into what this might mean shoot us a message.

Secondly, they ask that these claims be BEFORE any stop loss reimbursements.  With stop-loss contracts that don’t match up to calendar years this is going to also cause some confusion and interpretation as to what we should include or not include based upon the time of reimbursements.  Theoretically this might end up being simple, however that is going to depend entirely upon the TPAs system and how the claims are pulled out for this reporting.

Data File #6 – Complexity in Prescription Drug & Healthcare Cost Reporting

PBMs are telling their clients “we have you taken care of” on the data submissions for this new reporting, but as you dig in you begin to understand that cannot possibly be the case.  We have covered in other blogs the issues regarding the Narrative File, Plan Files and Data Files #1 & #2.  For this post we will focus on a portion of the Data File #6.

For the Rx Totals it is required to submit prescription drugs covered by non-pharmacy benefits.  The instructions go on to say “you must make a good faith effort to obtain the information on these costs to the best of your ability”

Non-pharmacy drug benefits are drugs that a plan participant is prescribed at a location other than a pharmacy, such as in a hospital.  These type of claims are not typically paid by the PBM but rather are charged to a plan by the TPA under the medical benefits.

What are we saying here?  The PBM does not have this data … they must get the data from the TPA.  Again, this isn’t the end of the world but it does require coordination to ensure:

  • You meet your good faith effort requirements
  • Your reporting is accurate &
  • Your reporting is timely

Understanding Data and Plan File Submissions for Prescription Drug & Healthcare Reporting

In total a Plan Sponsor must submit (or have submitted on their behalf) 8 different files via the CMS portal.  It is not necessary that the same reporting entity send in all 8 files, however it is mandatory that you NOT submit any duplicate files.

Plan List Files

  • These are 3 different files but you will only submit one of them, depending upon the type of reporting entity you are.  Essentially these are files that provide identifying information that will match up to the data files.

Data Files

  • These are 8 different files that contain different data pieces required to be submitted annually

Narrative File

  • This 1 file is submitted with explanatory information to assist the departments in understanding the methodology used to create the data files.

*Note – remember for fully insured groups the carrier will handle the reporting.  For self-insured, level funded or minimum premium groups this responsibility falls on the Plan Sponsor.

There are many challenges that exist with the submission of these files, including:

  • PBMs have the data necessary for data file #’s:  3, 4, 5, 7 & 8.
  • PBMs will need the assistance of TPAs to complete data file #6
  • TPAs will be mainly the party providing data files #1 & #2, however they will require additional data from plan sponsors
  • Plan files will need coordination between the TPA and Plan Sponsor.
  • The narrative file will require data from the TPA, PBM and Plan Sponsor

BROKERS: Use this email template to send to your TPAs and PBMs

Subject:  Drug and Healthcare Cost Reporting due 12/27/2022

Hope you are doing well.  We are working with our clients to make sure they are taken care of for this new reporting that has to take place by the end of this year.

We have been learning from DrugCostReporting.com that the reporting requires each plan sponsor to submit 10 different files:

  • 1 x plan file
  • 8 x data files (#’s 1-8), &
  • 1 narrative file

This is going to require some coordination between PBMs/TPAs/Plan Sponsor and anyone else involved on the pharmacy side with manufactures assistance programs, etc.

So my questions for you guys …

  1. Can you confirm specifically what files of those listed above you will be submitting for clients?
  2. Can you confirm you are submitting this or will the client need to?
  3. How are you handling groups that were not with you guys for each full calendar year between 2020-2023

… sorry for all the questions, and thanks for your help!

What is a Reporting Entity in Prescription Drug & Healthcare Reporting? What does it do?

A reporting entity is someone who submits some or all of the required information to the departments.  Sounds straightforward, right?  Not quite … Like a lot of things the more you dig into the details the more complicated it becomes.

  • For fully insured groups this will be your carrier, so that is easy.
  • For self-insured, level funded and minimum premium funded accounts, the plan sponsor is responsible.

So you might be thinking, “well this is no big deal, my TPA and PBM will do the reporting?” 

Yes and no.  The problem is that the data files require a lot of coordination between the Plan Sponsor, TPA and PBM in order to get the right data in the right spots.  Reporting entities can be anyone who submits data and it is not necessary that one party submit all of the data.  

The challenge arrives because no one entity has all of the information necessary to report to the departments.  This is particularly challenging because (a) this is new reporting and (b) PBMs are telling their clients “we have you taken care of”.

HOWEVER, the PBM does not have all of the data necessary to do the reporting.  What they mean by this statement is that they have data files #3 – #8 taken care of, but this is only part of the reporting required.

Learn more about how we help plan sponsors stay compliant at DrugCostReporting.com

Who must submit Prescription Drug & Healthcare Cost Reporting?

Drug Cost Reporting (Section 204 of the CAA) requires health plans (plans) and carriers (issuers) offering group or individual coverage to annually submit detailed financial information about prescription drugs and health care spending to the Department of Health and Human Services (HHS), the Department of Labor, and the Department of the Treasury (the Departments).

This reporting includes self-insured plans and also grandfathered plans and all data must be submitted via the CMS portal.

Here is a list of who IS required to submit reporting:

  • Health insurance issuers offering group coverage
  • Health insurance issuers offering individual market coverage, including:
    • Student health plans
    • Plans sold through the Exchange
    • Plans sold exclusively outside of the Exchanges
    • Individual coverage issued through an association
  • Fully-insured and self-funded group health plans, including:
    • Non-federal governmental plans, such as plans sponsored by state and local government
    • Church plans that are subject to the Internal Revenue Code
    • FEHB plans

 

Here is a list of who is NOT required to submit reporting:

  • Account-based plans, such as health reimbursement arrangements
  • Excepted benefits including but not limited to:
    • Short-term limited-duration insurance
    • Hospital or other fixed indemnity insurance
    • Disease-specific insurance
    • Medicare Advantage and Part D plans
    • Medicaid plans
    • State children’s health insurance program plans
    • Basic Health Program plans