No Surprises Act Prescription Drug Cost Reporting Includes Wellness Program Reporting Component

Employee Benefits

No Surprises Act Prescription Drug Cost Reporting Includes Wellness Program Reporting Component

The No Surprises Act (NSA), the portion of the 2021 Consolidated Appropriations Act aimed at
increasing cost transparency within the health care industry, requires health plans and issuers to report certain detailed data regarding prescription drug pricing to the Federal government (the “Rx drug reporting requirement”).

We have previously authored several articles on the NSA, including a detailed article on this reporting requirement that was published after the Interim Final Rules were issued in November 2021. This article provides more in-depth information on the regulations’ requirement to report on wellness spending, as detailed in the CMS’ Prescription Drug Data Collection (RxDC) Reporting Instructions.

The Wellness Program Component of the Rx Drug Reporting Requirement

As we mentioned in our previous article, health plans must report much more than prescription drug pricing under the Rx drug reporting requirement. Specifically, the reporting must also include data related to the health plan’s total annual spending on health care services. Spending on wellness programs is included as part of health care services. DOL Reg. §2590.725-4 provides as follows:

(b) Information for each state and market segment. The report required under § 2590.725–2 must include the following information with respect to plans or coverage for each State and market segment for the reference year unless otherwise specified:

(4) Total annual spending on health care services by the plan or coverage and by participants and beneficiaries, as applicable, broken down by the type of costs, including—

(i) Hospital costs;

(ii) Health care provider and clinical service costs for primary care and specialty care separately;

(iii) Costs for prescription drugs, separately for drugs covered by the plan’s or issuer’s pharmacy benefit and drugs covered by the plan’s or issuer’s hospital or medical benefit; and

(iv) Other medical costs, including wellness services.

Notably, the regulations do not define “wellness services,” do not detail what costs must be reported as part of the “other medical costs” category and do not discuss the details of the requirement to report wellness-related expenses.

However, the requirement is described in further detail in CMS’ Prescription Drug Data Collection (“RxDC”) Reporting Instructions. The RxDC Reporting instructions provide that necessary reporting for “wellness services” consists of “expenses for activities primarily designed to implement, promote, and increase health and wellness and not billed as a claim.” While the definition is quite vague, presumably to capture the varied nature of employer wellness programs, the instructions list the following specific examples:

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