Executive Summary
Deferred enforcement of the prescription drug pricing machine-readable file (MRF) moves from a general deferral policy to a case-by-case enforcement approach. Employers’ plans will need to ensure compliance with the posting of this MRF.
Departments clarify that the in-network (INN) MRF requirement to report applicable rates as dollar amounts will be enforced on a case-by-case basis and their prior nonenforcement policy was not meant to be a categorical exception to enforcement of the Transparency in Coverage (TiC) Final Rules when it comes to reporting applicable rates.
What does this mean for group health plans? They must now ensure that the prescription drug MRF is posted and that the INN MRF accurately reports applicable rates.
Machine-Readable Files: Safe Harbor Lifted for Prescription Drug File Website Posting
The machine can read the files, but can you? The decision to essentially lift the deferral on posting the prescription drug MRF may give some employers frustrated flashbacks to last year’s MRF requirements.
Background
The TiC Final Rules generally require non-grandfathered group health plans to disclose on a public website information regarding: (1) INN provider rates for covered items and services, (2) out-of-network (OON) allowed amounts and billed charges for covered items and services, and (3) negotiated rates and historical net prices for covered prescription drugs. These disclosures must be made in the form of three separate machine-readable files.
Often considered unusable by the average reader, the MRF posting requirement generally went into effect last summer for the INN rates and the OON allowed amounts. However, prior to this, the Departments of Labor, Health and Human Services, and Treasury (collectively, the Departments) said they would defer enforcement of the posting of the prescription drug pricing file, due to the potential duplicative nature of the prescription drug MRF file and the information required under prescription drug data collection (RxDC) reporting set forth in the Consolidated Appropriations Act of 2021 (CAA). You may recall that the RxDC reporting requires most group health plans to submit information about prescription drugs and health care spending to the Departments by June 1, annually.
What’s new?
The pause placed on posting the prescription MRF (via previous FAQs on the Affordable Care Act (opens a new window)) was essentially lifted last week in ACA FAQ Part 61 (opens a new window). The Departments stated it is now clear that there is no “meaningful conflict” between the CAA’s RxDC reporting and the TiC Final Rules’ prescription drug MRF. As a result, the Departments find no reason for a categorical deferral of enforcement of this file. Rather, a “case-by-case enforcement approach,” as facts and circumstances warrant, replaces the general deferred enforcement approach. The Departments say they have no intention of changing this stance by engaging in rulemaking in the near future, but they do plan on providing guidance on technical requirements with an implementation timeline.
What does this mean for group health plans?
Because the Departments no longer consider duplication an issue with the RxDC reporting and MRF prescription drug posting, the next step is for plans to ensure the posting of the prescription drug MRF.
Lockton comment: The posting of the first two files, the INN and OON files, already caused considerable confusion. It would appear, however, that a plan without an existing public website does not have to create one to comply with the MRF requirement. However, to rely on the carrier’s or third-party administrator’s (TPA) posting of the MRF, the plan needs a written agreement with it. If the plan has a public website (unlikely), the website should already have the OON file posted on it regardless of the existence of a written agreement, but there would be no need to add the prescription drug or INN rate files. If you already have a carrier’s or TPA’s agreement to post the first two MRFs, make sure the language is broad enough to encompass their commitment to the prescription drug file, or update the agreement accordingly. If obtaining an agreement was difficult for the INN and OON files and is still unobtainable, be sure to retain communications addressing what carriers and TPAs are doing regarding the MRF requirements.
The INN Machine-Readable File
Background
The TiC Final Rules require plans to publish all applicable rates, which may include negotiated rates, underlying fee schedule rates, or derived amounts for all covered items and services in the INN rate file. In other words, the INN rate file requirement applies to plans regardless of the type of payment model(s) under which they provide coverage. Complicating this is the fact that the TiC Rules require that these rates be reflected in the INN rate file as dollar amounts, yet reimbursement arrangements are not always conducive to reporting in this manner because they don’t always have a current and accurate dollar amount for the items and services in the file before the item or service is provided or rendered. For example, how do you report dollar amounts for negotiated rates resulting from “percentage-of-billed charges” contract arrangements (i.e., a retrospective determination)?
As a result of these uncertainties, the Departments provided an enforcement safe harbor (opens a new window) in April 2022 for those plans with alternative reimbursement arrangements that don’t permit plans to accurately derive specific dollar amounts in advance of the provision of the item or service (unless the Departments determined that the arrangement could indeed sufficiently disclose a dollar amount).
What’s New?
Part 61 of the ACA FAQ (opens a new window) clarifies that the Departments never intended a categorical exception in last year’s FAQ to the enforcement requirements of the TiC Final Rules. Therefore, enforcement will be case-by-case. In other words, an exercise of enforcement discretion might be warranted in certain circumstances (e.g., where it was extremely difficult to determine prospectively an applicable rate for specific items or services provided under "percentage-of-billed-charges" contracts), but there is no categorical safe harbor regarding the reporting of this information in the INN rate MRF.
At the end of the day…
Employers will want to ensure compliance with the posting of the prescription drug MRF file in much the same manner as they did for the other two MRFs.
Reporting of the applicable rate in the INN MRF is largely in the hands of carriers and TPAs as to how to determine the applicable rate. Plans, therefore, should ask their carriers and TPAs if they have the ability to report applicable rates for specified items or services in dollar amounts, and, if not, if the carrier or TPA believes it would be extremely difficult or impossible for the plan (or carrier) to determine the applicable rate and for what reason.
Why is this important to employers? Because compliance with these rules still falls on the group health plans. Fully insured plans can rely on the carrier only if there is a written agreement in place where the carrier agrees to satisfy the MRF requirement; but self-funded plans retain the responsibility regardless of any agreement with their TPAs.
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