Annual RxDC Reporting Deadline Drawing Near

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The Consolidated Appropriations Act of 2021 established a new data collection requirement for employers of all sizes and funding structures, where such entities must now submit annual prescription drug data collection (RxDC) reports on their plan’s prescription drug and health care spending to the Centers for Medicare and Medicaid Services (CMS). The calendar year 2024 reports are due by June 1, 2025. The 2024 RxDC instructions are identical to the instructions provided for last year’s reporting. 

RxDC reports from employer group health plans must include a file of general plan information (P2), a data file with details about the plan’s enrollment information and allocation of premium dollars (D1), and seven data files (D2-D8) that primarily reflect statistics about prescription drug usage and medical claims data. Narrative files explaining the data contained in the D1-D8 reports are also required. Of note, RxDC reports are not required for retiree-only plans, excepted benefits, or account-based plans like HRAs, but they are required for all traditional group health plans in all U.S. states and territories. 

Because employers do not typically have access to the claims data required to prepare the data files and their accompanying narratives, employers must rely heavily on their carriers, third-party administrators (TPAs), and pharmacy benefit managers (PBMs), and are permitted to have multiple vendors submit data files on behalf of their plan. It is possible that multiple reporting entities will submit files separately on behalf of a single group health plan to provide CMS with all required data and files. Employers should coordinate with their vendors to determine how much of the reporting will be done by the vendor and what, if anything, the employer needs to do to complete the process. 

In general, the reporting works as follows: 

  • The D1 file (which includes information about plan enrollment and premium data) could be completed and submitted by the plan’s carrier, TPA, or other vendor, but there is some information that they may not have. For this reason, some vendors will require the employer to complete and submit the D1 file. In other cases, the vendor may ask the employer to provide certain data, and then if the employer timely responds, the vendor will submit the D1 file. 
  • Carriers and TPAs will generally complete and submit D2 files (which include health care spending files). 
  • PBMs will generally complete D3-D8 files (which include pharmacy data files and related data files). 
  • Each separate filing must also be accompanied by a P2 cover letter-type filing identifying the plan(s) included in that filing. 

If the carrier, TPA, PBM, or another vendor submits any files, they will generally submit aggregate data for their book of business within a particular market segment, not plan-specific data.  

The most significant challenge many employers face for RxDC reports is identifying a solution for submitting the D1 data, which needs to be filed along with its own P2. Even though the P2 plan information and D1 premium data files are comprised primarily of information employers should know about the health plan they have offered, there are complex requirements within the P2 and D1 file specifications, and it takes weeks to obtain the account with CMS’s Health Insurance Oversight System (HIOS) required for their submission. As a result, most employers will need assistance from a vendor or compliance expert to create and submit these reports through HIOS. 

Employers working with a health insurer, TPA, or PBM to submit D1 files on their behalf will likely encounter tight deadlines to provide their vendor employer-specific information for these filings. In some cases, these deadlines may have already passed; in others, a plan’s vendor may refuse to help submit D1 data. The reluctance to help and tight deadlines exist because carriers, TPAs, and PBMs must focus on the “heavy lift” that submission of D2-D8 claims files requires.  

For employers whose carrier/TPA/PBM is unwilling or unable to submit D1 on their behalf or for those who have missed their vendor’s deadline, MZQ Consulting is available to prepare and submit D1 and P2 files for your organization. Click here to get more information.  

 

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How AI Can Supercharge Your Top Talent 

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Picture this: Your competitor’s top performer has automated half their workload with AI. They’re using the extra time they have gained to find new business, solve complex problems, and generate fresh ideas. Meanwhile, your best employee is drowning in manual tasks and bogged down by work that could easily be streamlined. 

The difference? Access. 

AI is becoming necessary to keep a competitive edge. Companies that use it in their daily processes empower their teams to operate at a higher level, in turn unlocking efficiency, creativity, and innovation.  

If you want to stay ahead, the question isn’t whether to use AI. That question is easy to answer. The question is how fast you can make it a core part of your team’s workflow. 

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Guidance Released for Form 1095-C Alternative Distribution Option

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At the end of 2024, President Biden signed the Paperwork Burden Reduction Act into law, which amended the Affordable Care Act to provide that employers are no longer required by default to deliver Forms 1095-C/1095-B to recipients if a series of criteria are satisfied. Instead, employers will be in compliance with the ACA’s furnishing requirement as long as they provide a “clear, conspicuous, and accessible notice” that recipients may request a copy of their Form 1095 and, upon receipt of request for a Form 1095, provide the statement to the recipient. 

Guidance for how employers must provide such notice to their employees about their Forms 1095-B was already available, but at the time the Paperwork Reduction Act was signed into law, instructions for Forms 1095-C had not been released. 

At the end of last week, the IRS confirmed that previous guidance set forth for the distribution of Forms 1095-B can now also be relied upon for distribution of Forms 1095-C. 

The notice requirements for both types of forms are as follows: 

  • A clear and conspicuous notice must be posted on a website that is reasonably accessible to all possible Form 1095 recipients. The employer’s public-facing website is likely the most appropriate location for this notice. 
  • The employer may post a statement reading “Tax Information” on the website’s main page, which can link to a secondary page with the header IMPORTANT HEALTH COVERAGE TAX DOCUMENTS that includes the actual notice. 
  • The notice must include an email address, physical address, and telephone number that can be used to request a copy of Form 1095. 
  • For the 2024 reporting year, the notice should have been posted by March 3, 2025. The notice must remain in the same location on the website through October 15, 2025. 
  • If, after posting notice of availability, the employer receives a request for a Form 1095, the Form 1095 must be provided within 30 days. Of note, the employer would need to hand-deliver or mail the form unless they obtain specific consent from the individual to provide the Form 1095 electronically. 

Applicable Large Employers (ALEs) that wish to continue furnishing their Forms 1095-C to all recipients as part of their standard ACA reporting process (e.g., by mail) can continue to do so. The Act and the newly released instructions simply provide an alternative furnishing option for ALEs to consider. Given the March 3, 2025 posting deadline for employers to take advantage of this relief for 2024 Forms 1095-C, interested ALEs may want to begin first utilizing this alternative for the 2025 filings due in 2026. 

Notably, this relief does not imply that employers responsible for furnishing and filing Forms 1095 should hold off on creating such forms unless/until employees request them. All ALEs and those non-ALEs with self-insured or level-funded health plans are still required to file their 2024 Forms 1094/1095 with the IRS by March 31, 2025. Similarly, state-level ACA form furnishing requirements remain unaffected by this alternative to the federal distribution requirement. As a reminder, MZQ furnishes Forms 1095 to recipients at no additional cost to our ACA reporting clients. 

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Recent Developments that Impact Employer-Sponsored Group Health Plans 

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Several notable developments have already occurred within the employee benefits compliance domain. Below are two updates that we want to ensure don’t slip past employers.  

Expiration of telehealth relief for High Deductible Health Plans 

When the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law in 2020, one of its provisions was to allow qualified high deductible health plans (HDHPs) to provide telehealth services with little or no cost-sharing without requiring participants to satisfy their deductible, and without jeopardizing participant eligibility to contribute to a health savings account (HSA). The Consolidated Appropriations Act, 2023 extended this relief through December 31, 2024. 

Many anticipated that The American Relief Act, 2025 would further extend this relief for employer-sponsored group health plans, but it was ultimately absent from the final version of the law. This means that once a group’s plan renews in 2025, providing cost-sharing for telehealth services at less than fair market value before a participant’s deductible is satisfied will disqualify the participant from HSA eligibility unless the telehealth service is for preventive care. Employers with non-calendar year plan years can continue to take advantage of the telehealth relief for a bit longer until their plan’s 2025 renewal, while employers with calendar-year no longer qualify for the relief. 

For employers that want to maintain HSA eligibility for participants of their 2025 HDHP offering, we encourage those impacted by the expiration of this relief to (1) charge fair market value for telehealth (at least until the minimum HDHP deductible is met), (2) amend their plan documents to reflect any changes in cost-sharing, and (3) determine how they want to communicate those changes to employees (e.g., by distributing summaries of material modification).  

Hospital indemnity notices no longer required 

In the spring of 2024, the Departments of Health and Human Services, Labor, and the Treasury issued final rules governing employer-sponsored indemnity insurance. One requirement within these rules was a mandate that, for plan years beginning on or after January 1, 2025, any employer offering indemnity insurance include a prescribed notice spelling out the differences between fixed indemnity coverage and comprehensive coverage within any marketing, application, and enrollment materials that they provide to participants. 

Several insurance companies challenged this requirement as not being authorized by law, and a district court judge agreed with those companies and struck down the new notice requirement at the end of 2024. Though an appeals process is possible, for now, employers that offer indemnity insurance do not need to provide these notices. 

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