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Huge Barriers Seen Barring Employers From Reporting Drug Costs (1)

July 26, 2021, 8:40 PM; Updated: July 28, 2021, 4:52 PM

Employer health plan sponsors and health insurers aren’t able to comply with a requirement that they report detailed drug pricing information to the government later this year.

Three prominent industry groups across the private health insurance sector told the Labor Department that they don’t have all the data needed to report information about prescription drug prices, rebates, and other things that affect consumer and employee premiums and out-of-pocket drug costs.

The comments, due July 23, showcase monumental barriers to complying with a requirement in the Consolidated Appropriations Act (H.R. 133) passed in December 2020 that employer health plan sponsors and insurers report on the various ways prescription drugs can be priced, affecting what a patient actually pays.

Drug rebates have come under increasing scrutiny in recent years, particularly with regard to whether health plans pass on any discounts from manufacturers to consumers.

Employer health plans sponsors “do not currently have access to specific information related to their formulary and prescription drug savings from their contracted pharmacy benefit manager (PBM) and medical third-party administrator (TPA),” the ERISA Industry Committee and consulting firm Mercer said in a comment letter.

The BlueCross BlueShield Association (BCBSA) also said health insurers don’t have the data to report all the information required “without seeking information from employers and PBMs” (pharmacy benefit managers).

Request for Information

The comments were filed in response to a request for information from four agencies about how the reporting requirement should be implemented. The drug pricing information must be reported to the federal government starting Dec. 27.

“The employers are required still to report this information to the federal government, but there’s no reason to believe that the employers will actually have any of this information,” James Gelfand, senior vice president, health policy for ERIC, said in an interview.

Gelfand predicted that the requirement will cause “a series of contractual negotiations and interactions between plan sponsors and their vendors” to get the information needed to comply with the law. The conversations will likely rope in third-party administrators and pharmacy benefit managers, the liaisons between pharmacies and drug companies. .

The more entities involved in the processing of patients’ prescription claims there are, the harder it is for employers to give the government what it asks for. “Right now, statutorily they’re not necessarily required to give that information to us,” Gelfand said.

ERIC and Mercer suggested that the federal agencies that administer the requirement “consider mass collection of data” directly from insurers and third-party administrators. ERIC represents about 120 large companies that provide health benefits to employees, and Mercer provides consulting, brokering, and actuarial services to nearly 5,000 health and benefit clients.

“It may be most efficient for the Departments to collect much of the data directly from the entities that possess it,” the letter said.

The Labor Department’s Employee Benefits Security Administration, the Centers for Medicare & Medicaid Services, the Internal Revenue Service, and the Office of Personnel Management are responsible for administering the provision. The DOL is the collecting the responses.

Everyone Lacks Something

Insurers are in a similar position, lacking some pieces of data that are needed to comply with the government’s request. The BCBSA, which represents 35 Blue Cross Blue Shield health plans that cover about one-third of Americans, recommended the federal agencies “rely on other internal agency data or external research” such as data compiled by the Kaiser Family Foundation, a spokeswoman for BCBSA said in an email.

Some information is held by employers only, such as average monthly premiums paid by employees, the BCBSA said. Health insurers and third-party administrators receive funding for group health plans from plan sponsors, but they don’t know what costs employees pay, it said.

The Pharmacy Care Management Association (PCMA), which represents PBMs, said the federal agencies would be exceeding their authority to require employers that directly pay the cost of employees’ claims to contract with third-party administrators or other service providers to submit the required data.

“The statute requires that reporting be made by plans and issuers,” the PCMA said. That allows the government to seek information from an employer with a self-funded plan, its health carrier, or its claims administrator.

Beyond that, any request for information expecting self-insured group health plans to contract with other vendors to submit the data “exceeds the Departments’ statutory authority,” the PCMA said.

Fifty-seven organizations representing millions of patients who have HIV, autoimmune diseases, cancer, diabetes, and other complex conditions said health plans should be required to report on how copayments are treated.

“Many health plans are instituting policies that do not count drug manufacturer copay assistance towards a patient’s annual deductible or out-of-pocket maximum,” the patient groups commented.

“In doing so, issuers are collecting the value of the assistance, which often exceeds the out-of-pocket maximum, and then, after it runs out, collecting additional payments by the patient until the out-of-pocket maximum is reached again,” the letter said.

Plans also designate some medicines as nonessential, “and then raise the cost-sharing to ensure that they collect all of the patient assistance offered by the manufacturer,” the patient groups said. They urged the practices by prohibited, saying, “these double and excess payments to the insurer must be reported and considered a violation of the Affordable Care Act (ACA) out-of-pocket limit.”

Many of the commenters suggested the requirement be delayed to iron out questions of where the data would come from and provide enough time to comply.

(Updates with additional details in last five paragraphs. A previous version of this story corrected the description of Mercer.)

To contact the reporter on this story: Sara Hansard in Washington at shansard@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Brent Bierman at bbierman@bloomberglaw.com

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