Prescription Drug and Health Care Spending rule (2021)
| What is a significant rule? Significant regulatory action is a term used to describe an agency rule that has had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. As part of its role in the regulatory review process, the Office of Information and Regulatory Affairs (OIRA) determines which rules meet this definition. |
| Administrative State |
|---|
|
| Five Pillars of the Administrative State |
| •Agency control • Executive control • Judicial control •Legislative control • Public Control |
| Click here for more coverage of the administrative state on Ballotpedia.
|
| Click here to access Ballotpedia's administrative state legislation tracker. |
The Prescription Drug and Health Care Spending rule is a significant rule issued by the U.S. Office of Personnel Management, Internal Revenue Service, Employee Benefits Security Administration, and the U.S. Department of Health and Human Services effective December 23, 2021, that implements the provisions of the Internal Revenue Code, the Employee Retirement Income Security Act (ERISA), and the Public Health Service Act (PHS Act), pursuant to the Consolidated Appropriations Act of 2021 (CAA).[1]
Timeline
The following timeline details key rulemaking activity:
- January 24, 2022: Comment period closed.[1]
- December 23, 2021: Interim final rule took effect.[1]
- November 23, 2021: Interim final rule published and comment period opened.[1]
- According to the rule, a proposed rule is not required "when an agency for good cause finds that notice and comment procedures are impracticable, unnecessary, or contrary to the public interest and incorporates a statement of the finding and its reasons in the rule issued."[1]
Background
The Consolidated Appropriations Act of 2021 introduced requirements for group health plans and health insurance issuers to annually submit prescription drug and health care spending data to the Departments. This includes reporting on general plan information, prescription drug details, health care service spending, premiums, and the impact of rebates. These regulations, along with subsequent interim final rules, aim to promote transparency, combat surprise medical billing, and address issues of market concentration and pricing trends in the pharmaceutical and health care industries, in line with Executive Order 14036.[1]
Summary of the rule
The following is a summary of the rule from the rule's entry in the Federal Register:[1]
| “ | This document sets forth interim final rules implementing provisions of the Internal Revenue Code (the Code), the Employee Retirement Income Security Act (ERISA), and the Public Health Service Act (PHS Act), as enacted by the Consolidated Appropriations Act, 2021 (CAA). These provisions are applicable to group health plans and health insurance issuers offering group or individual health insurance coverage. These interim final rules add provisions to existing rules under the Code, ERISA, and the PHS Act. These interim final rules implement provisions of the Code, ERISA, and PHS Act that increase transparency by requiring group health plans and health insurance issuers in the group and individual markets to submit certain information about prescription drugs and health care spending to the Department of Health and Human Services (HHS), the Department of Labor (DOL), and the Department of the Treasury (collectively, the Departments). The Departments are issuing these interim final rules with largely parallel provisions that apply to group health plans and health insurance issuers offering group or individual health insurance coverage. The Office of Personnel Management (OPM) is also issuing interim final rules that require Federal Employees Health Benefits (FEHB) carriers to report information about prescription drugs and health care spending in the same manner as a group health plan or health insurance issuer offering group or individual health insurance coverage.[2] | ” |
Summary of provisions
The following is a summary of the provisions from the rule's entry in the Federal Register:[1]
| “ |
A. Authority for Data Collection OPM solicited comments on the capability of FEHB carriers to complete this reporting and if there should be any considerations taken into account specific to reporting by FEHB carriers. A few comments raised concerns about OPM's authority to require this reporting or questioned whether it was appropriate to apply section 204 to FEHB carriers. Under 5 U.S.C. 8910(a), OPM must make a continuing study of the operation and administration of the FEHB Program, including surveys and reports on FEHB plans and on the experience of these plans. Under 5 U.S.C. 8910(b), each contract between OPM and an FEHB carrier must contain provisions requiring carriers to furnish such reasonable reports as OPM deems necessary to carry out its functions under the FEHB Act. Accordingly, OPM's contract with each FEHB carrier requires the carrier to furnish reports that OPM finds necessary to properly administer the FEHB Program. In addition, 5 U.S.C. 8910(c) requires government agencies to furnish OPM with such information and reports as may be necessary to enable OPM to administer the FEHB Program. On the basis of this statutory authority, OPM will require FEHB carriers to report information about pharmacy benefits and health care spending, consistent with section 204 of Title II of Division BB of the CAA and the Departments' interim final rules. In response to comments requesting clarification of carriers' reporting responsibilities, OPM has worked with the Departments to facilitate carriers' reporting by establishing that where an entity does not possess all of the information required to be reported, another reporting entity may be responsible for the data submission on the carriers' behalf. Reporting by FEHB carriers is expected to help accomplish the CAA's intended purposes of achieving national health data transparency and lowering costs both for the FEHB Program and for the health benefits industry. B. Reporting and Display of Data Several RFI commenters also raised concerns about duplicative reporting or requested that OPM reconcile its current reporting requirements with any reporting required under section 204 of Title II of Division BB of the CAA. While OPM does require its FEHB carriers to submit certain data directly to OPM, the specific type of reporting diverges from section 204 of Title II of Division BB of the CAA in terms of the nature of the reporting as well as its purpose. The OPM interim final rules amend existing 5 CFR 890.114(a) to include references to the Department of the Treasury, DOL, and HHS interim final rules to clarify that, pursuant to 5 U.S.C. 8910, FEHB carriers are required to report prescription drug and health care spending as set forth in those regulations with respect to FEHB carriers in the same manner as those provisions apply to a group health plan or health insurance issuer offering group or individual health insurance coverage, subject to 5 U.S.C. 8902(m)(1) and the provisions of the carrier's contract. As provided at 5 CFR 890.114(f), the OPM Director will coordinate with the Departments in matters regarding FEHB carriers' reporting on prescription drug and health care spending, and with respect to oversight of reporting by FEHB carriers. Carriers must report FEHB plan prescription drug and health care spending data to the Departments as a part of the section 204 collection of information consistent with 45 CFR 149.720. Carriers will need to include the information identified in 45 CFR 149.740 and aggregate the data consistent with 45 CFR 149.730. Several corrections have been made to 5 CFR 890.114. First, paragraph (a) has been revised to remove inadvertently added cross-references to 26 CFR 54.9816-7T and 29 CFR 2590.716-7, which relate to the Department of the Treasury's and DOL's complaints processes. Second, paragraph (d)(1) has been revised to change the phrase 'intent to initiate' to 'initiation of' the Federal IDR process. Third, paragraph (d)(2) has been revised so that cross-references to 26 CFR 54.9816-8T(c)(4)(vi)(A)(1), 29 CFR 2590.716-8(c)(4)(vi)(A)(1), and 45 CFR 149.510(c)(4)(vi)(A)(1) now cite paragraph (vii) instead (vi), and the term 'misrepresentation' now reads 'material misrepresentation.'[2] |
” |
Significant impact
- See also: Significant regulatory action
Executive Order 12866, issued by President Bill Clinton (D) in 1993, directed the Office of Management and Budget (OMB) to determine which agency rules qualify as significant rules and thus are subject to OMB review.
Significant rules have had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. Executive Order 12866 further defined an economically significant rule as a significant rule with an associated economic impact of $100 million or more. Executive Order 14094, issued by President Joe Biden (D) on April 6, 2023, made changes to Executive Order 12866, including referring to economically significant rules as section 3(f)(1) significant rules and raising the monetary threshold for economic significance to $200 million or more.[1]
The text of the Prescription Drug and Health Care Spending rule states that OMB deemed this rule economically significant under E.O. 12866:
| “ | The Departments anticipate that this regulatory action is likely to have economic impacts of $100 million or more in at least 1 year, and thus meets the definition of a 'significant rule' under Executive Order 12866.[2] | ” |
Text of the rule
The full text of the rule is available below:[1]
See also
- REINS Act
- Significant rule
- U.S. Office of Personnel Management
- Internal Revenue Service
- U.S. Department of Health and Human Services
External links
Footnotes
