Under the Consolidated Appropriations Act, 2021 (the “CAA”), group health plans and health insurance issuers are required to submit certain information related to prescription drug and other health care spending to the Department of Labor, Department of Health and Human Services, and the Department of the Treasury (the “Departments”).1 (For additional information about requirements under the CAA and related regulations applicable to group health plan sponsors, see Foley’s Employer Checklist for New Health Plan Price Transparency Rules and CAA available here.) The Departments published interim final rules with request for comments titled “Prescription Drug and Health Care Spending” on November 23, 2021 (the “IFR”).2

Who Must Report?

Under the IFR, a group health plan (including a grandfathered plan) must submit an annual report to the Departments on specified prescription drug and health care spending information.  Reporting requirements do not apply to HRAs, other account-based group health plans, or excepted benefits.

The Departments expect that it will be rare for a group health plan to report the required information on their own, and that reporting will generally fall on insurance issuers, third-party administrators (“TPAs”), pharmacy benefit managers (“PBMs”), and other plan service providers. The IFR allows a fully-insured group health plan to enter into a written agreement with an insurance issuer under which the issuer agrees to provide the report to the Departments and accepts liability for failure to do so. However, although sponsors of self-funded group health plans may enter into similar agreements with other entities, such as TPAs and PBMs, ultimate liability for the reporting will remain with a plan sponsor of a self-funded plan regardless of the agreement. Therefore, plan sponsors should ensure that their underlying agreements with TPAs, PBMs and other non-insurer entities cover reporting failures in their indemnity provisions.

When Are Reports Due?

Reporting will run on a calendar year basis, with a reporting year referred to as a “reference year” (i.e., the prior calendar year). The Departments have deferred enforcement of the reporting deadlines for the 2020 and 2021 reference years to December 27, 2022. Thereafter, reporting will have a deadline of June 1 of the year following the end of the reference year (e.g., the 2022 reference year report is due June 1, 2023).

What Data Must Be Included in the Reports?

Data required to be included in the reports falls into two categories: (1) information that cannot be aggregated and must be provided for each plan, and (2) information that can be aggregated across plans in the same state and market segment.3 Reports will need to list out the individualized information falling under category (1) separately for each plan or coverage before providing the aggregated information falling under category (2).

Items in the first category include:

  • general plan and reporting entity identifying information,
  • the beginning and end dates of the plan’s plan year,
  • the number of participants on the last day of the reference year, and
  • a list of each state in which the plan is offered.

Items in the second category include:

  • certain top 50 prescription drug listings,
  • total annual spending on health care services by the plan broken down into smaller categories, i.e., hospital, primary provider/clinic, specialty provider/clinic, drugs covered by pharmacy benefit, drugs covered by medical benefit, and other costs (such as wellness services),
  • specific prescription drug spending and utilization information,
  • premium amount information (including total premium amount broken down into plan sponsor and participant costs), and
  • prescription drug rebate, fee, and other remuneration information (including how rebates impact premium and cost sharing amounts).

How Does Reporting Work?

A separate report must be submitted for each state and for each market segment4 in which group health coverage was provided. Reporting data may be aggregated by state and market segment. Experience with respect to each fully-insured policy must be included on the report for the state where the contract was issued. Experience with respect to each self-funded group health plan must be included on the report for the state where the plan sponsor has its principal place of business. As an example, if TPA X manages 30 self-funded large group health plans for plan sponsors located in a specific state, it may submit a single report for the self-funded large group market segment in that specific state, aggregating the data from all 30 plans.

Reporting may be performed by multiple entities. If multiple reporting entities submit the required data related to one or more plans in a state and market segment, the data must be aggregated at least as granularly as the data submitted in the report covering total annual spending on health care services on behalf of the plans.

As an example, assume there are 60 self-funded large group health plans in a specific state, which are using three different TPAs for reporting total annual spending on health care data (20 plans use TPA #1, 20 plans use TPA #2, and 20 plans use TPA #3). All 60 plans use the same PBM, which is performing other reporting related to prescription drug spending. Each of the three TPAs may submit a single aggregated report on its 20 covered plans, but the PBM must submit three separate reports, aggregating the data of plans covered by TPA #1, TPA #2, and TPA #3 separately. Additional guidance is forthcoming on data aggregation and the submission of data by multiple reporting entities.


Given the interim nature of the rule and that the Departments have requested comments on the IFR, the requirements of the IFR are subject to change. However, the reporting requirements are substantial, and employers sponsoring group health plans should start preparing now so that they are able to meet the extended deadline for filing reports for the 2020 and 2021 reference years. Employers should discuss these reporting requirements with their TPAs and PBMs and, if insured, with their insurance issuers, to confirm they will be assisting the employer in preparing and filing these required reports. Ideally, employers will enter into agreements regarding this reporting, and such agreements will include indemnification clauses addressing reporting failures.

1 See Section 204 of Division BB of the CAA; codified in the PHSA at 42 U.S.C. § 300gg-120, ERISA at 29 USC § 1185n, and the Internal Revenue Code at 26 U.S.C § 9825.

The IFR may be viewed here.

3 The Departments indicated that they 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.

4 The IFR defines “market segment” to include seven different types of coverage.  Market segments applicable to plan sponsors are: (1) self-funded plans offered by large employers, (2) self-funded plans offered by small employers, (3) the fully-insured large group market, and (4) the fully-insured small group market.