What do Employers Need to Know about RxDC Reporting?

As part of ongoing efforts to improve transparency in healthcare, employers sponsoring group health plans are now required to comply with Prescription Drug and Data Collection (“RxDC”) reporting requirements. This reporting mandate, introduced under the Consolidated Appropriations Act, 2021 (“CAA”), is designed to provide federal regulators with a clearer picture of healthcare and prescription drug spending.

In this blog, we’ll break down the key elements of RxDC reporting, why it matters, and what employers need to do to meet their compliance obligations.

What is RxDC reporting?

RxDC reporting requires employers to submit data to the Centers for Medicare & Medicaid Services (“CMS”), the Department of Labor (“DOL”), and the Department of the Treasury on prescription drug costs and overall healthcare spending. The goal is to increase transparency in healthcare costs and prescription drug pricing, providing regulators with the data needed to make policy decisions aimed at controlling costs.

Employers with fully insured and self-funded health plans must comply with these reporting requirements. While insurers typically handle RxDC reporting for fully insured plans, self-funded employers must ensure their Third-Party Administrator (“TPA”) or other service providers are handling the process correctly.

Why does RxDC reporting matter?

Prescription drug prices have become a significant factor in rising healthcare costs, both for employers and employees. By requiring employers and health plans to report this data, the federal government is working to:

• Improve healthcare cost transparency.
• Help policy-makers address inefficiencies in the healthcare system.
• Hold prescription drug manufacturers accountable for price increases.

For employers, complying with RxDC reporting requirements is not only a regulatory obligation but also an opportunity to play a part in the larger effort to control healthcare costs.

Key data required for RxDC reporting

Employers must provide several types of data in their RxDC report, including:

• Prescription drug costs: Data on the most frequently dispensed drugs, the number of prescriptions filled, and the impact of rebates.
• Healthcare spending: Information on total premiums, employee cost-sharing (deductibles, copays), and spending across categories like hospital services, primary care, and specialty care.
• Plan design and coverage details: Including plan type, coverage levels, and whether the plan is fully insured or self-funded.
• Rebates and remuneration: Employers must report any rebates received from drug manufacturers, which can affect the overall cost of prescription drugs.

Steps for completing RxDC reporting

Here are the steps employers should take to ensure they meet RxDC reporting requirements:

• Coordinate with your insurer or TPA: For fully insured plans, insurers will typically handle RxDC reporting. Self-funded employers must ensure their TPA or other service providers are prepared to submit the required data.
• Collect and review data: Employers must gather detailed information on prescription drug costs, healthcare spending, and plan design. Make sure the data is accurate and covers the entire plan year.
• Submit data to CMS: Use the official templates provided by CMS to format your data correctly. Submission is done electronically through the RxDC Reporting Submission Portal.
• Track submission confirmation: Once you’ve submitted the report, keep a record of the confirmation you receive from CMS. This is essential in case of audits.

Deadlines and compliance

RxDC reporting is required annually. Reports must be submitted by June 1st for the previous calendar year. Missing this deadline can result in significant financial penalties and put your organization at risk for non-compliance audits.

Common pitfalls and how to avoid them

• Incomplete data: Ensure that you collect all required data, including information on prescription drug rebates and detailed spending across healthcare categories.
• Coordination with TPAs: If you rely on a TPA to administer your plan, make sure they are aware of their role in collecting and submitting the data.
• Late submission: Set internal deadlines ahead of the official submission date to avoid last-minute scrambling and potential penalties.

Resources for employers

For more information on RxDC reporting and compliance resources, employers can visit the following:

• CMS RxDC reporting page: Provides guidance and templates for submitting your report.
• Third-Party Administrators: TPAs can assist with data collection and submission for self-funded plans.
• Legal and benefits advisors: Consulting with attorneys and healthcare benefit advisors, such as Wisterm, can ensure that you meet your obligations accurately and on time.

Conclusion

RxDC reporting is a key element of the federal government’s push for greater transparency in healthcare spending. As an employer, staying compliant with this requirement is essential to avoid penalties and help improve healthcare cost transparency for the benefit of all.

By understanding your responsibilities, gathering the necessary data, and working closely with your insurers or TPAs, you can ensure that your organization meets the RxDC reporting requirements and remains in compliance with federal regulations.