The CAA Transparency Rules Will Let Plans and Participants Know.  The Department of Labor, Health and Human Services, and the IRS (collectively the Departments) recently released the Interim Final Rules with a request for Comment (IFC), Prescription Drug and Health Care Spending.  These rules implement Section 204, Title II, another phase of the transparency provisions of the Consolidated Appropriations Act (CAA) of 2021.  The IFC is open for public comment through January 24, 2022.

This most recent IFC requires Reporting Entities — group health plans, both fully insured and self-funded, and issuers of insured group health plans or individual coverage — to report annually information about prescription drug and health care spending.  Unlike the Affordable Care Act (ACA), the CAA does not include exceptions for grandfathered plans.  Instead, the CAA rules apply broadly to grandfathered plans, church plans, non-federal government plans, and individual coverage through or outside of an exchange.  This IFC, however, does NOT apply to Health Reimbursement Accounts (HRAs), other account-based group health plans, e.g., Individual Coverage Health Reimbursement Accounts (ICHRAs), coverage consisting solely of excepted benefits, e.g., dental or vision plans, or short-term, limited-duration insurance coverage.

Reporting Content

The Departments designed these rules to solicit data that would allow an accurate comparison of apples to apples across all the Reporting Entities.  The IFC includes specific instructions concerning:

  • Calculation of covered lives,
  • What to do if a merger occurs, and
  • The timeframe (Reference Year, aka, calendar year) for the data calculations, regardless of the plan year.

The data the plans and insurance issuers must submit ranges from general plan identifying information and the states in which the plans operate to more precise information, e.g.:

  • The top 50 most often dispensed prescription drugs and the number of paid claims for each drug,
  • The top 50 most costly drugs by total annual spending and the total annual spending by the plan for each drug, and
  • The top 50 drugs with the greatest increase in plan expenditures over the previous year and each drug’s increased amount.

Other data required includes:

  • Total spending on healthcare services by the plan broken down by type;
    • Hospital
    • Healthcare
    • Specialty
    • Primary care
    • Prescription drugs
    • Wellness, etc.
  • Total Spending by Plan and Participant on;
    • Premiums
    • Prescription drugs
  • Impact on premiums of rebates, fees, and other remuneration paid by drug manufacturers to the plan or issuer or its administrators or service providers;
  • The top 25 drugs yielding the highest amounts of rebate or other remuneration during the Reference Year for each therapeutic class of drugs; and
  • Any reduction in premiums or out-of-pocket costs associated with the rebates or other remuneration.

The level of information sounds daunting, and the Departments acknowledge the magnitude of the burden for each plan to collect and report this information on an annual basis. Plans and insurers may collect and submit the data themselves, or they may rely on another party (TPA, PBM, health insurance providers, etc.), pursuant to a written agreement, to report the data on their behalf.  Regardless of who submits the data, the plan or issuer is ultimately responsible for complying with the IFC’s reporting requirements.  The Departments plan to build a portal to ease the submission burden on the Reporting Entities.  The Departments must then assemble an aggregate report from the submitted data and publish it on the internet within 18 months of the first submission deadline and biannually after that.


This brings us to the deadlines by which the Reporting Entities must submit the mass of data.  The IFC states the first deadline for plans and insurers for 2020 data is one year after the enactment of the CAA, which would be December 27, 2021.  The deadline for 2021 data is June 1, 2022, and each subsequent year’s data is due on each following June 1st.  Fortunately, the Departments have the discretion to defer the enforcement of deadlines.  They have elected to defer enforcement of the deadline for 2020 and 2021 data submission until December 27, 2022, when reporting for both years is due.  The Departments strongly encourage Reporting Entities to work on their procedures now.  Meanwhile, the Departments will build the reporting portal and provide further instructions for the actual data submission, which will provide Reporting Entities with the level of detail the Departments expect in the submissions.

The Bottom Line:

  • All group and individual health plans are subject to this IFC.
  • The required information is extensive and detailed.
  • Plans may enlist other entities to submit the required data on their behalf pursuant to a written agreement.
  • The ultimate deadline for compliance is December 27, 2022, which must include the submission for Reference Years 2020 and 2021. Reference Year 2022 will be due June 1, 2023.
  • The Departments will assemble and aggregate the information into a public report published on the internet. The report should help plan sponsors and individuals see where their healthcare dollars are used year over year.

The Departments have now deferred several deadlines into 2022, adding to other employee benefit deadlines already required in 2022. We previously published information on upcoming deadlines to assist with planning, but this means the year ahead is shaping into another busy year for plan sponsors.  We are available to help plan sponsors and administrators understand and implement the IFC requirements and other deadlines in the year(s) ahead.  Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.