CVS Health Issues Public Comment on Centers for Medicare & Medicaid Services Notice

WASHINGTON, April 4 -- Melissa Schulman, senior vice president for government and public affairs at CVS Health, has issued a public comment on the Centers for Medicare and Medicaid Services' notice entitled "Pharmacy Benefit Manager Transparency for Qualified Health Plans". The comment was written on March 30, 2020, and posted on April 1, 2020:

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CVS Health appreciates the opportunity to provide comments on the Paperwork Reduction Act Notice and its supporting documents (collectively, "PRA Notice") to implement the pharmacy benefit manager (PBM) reporting requirements in Section 1150A of the Social Security Act, enacted as Section 6005 of the Affordable Care Act. CVS Health is dedicated to becoming the most consumer-centric health company in the world. We are evolving based on changing consumer needs and meeting people where they are, whether that's in the community at one of our nearly 10,000 local touchpoints, in the home, or in the palm of their hand. Our newest offerings--from HealthHUB(R) locations that are redefining what a pharmacy can be, to innovative programs that help manage chronic conditions--are designed to create a higher-quality, simpler and more affordable experience.

Pursuant to the PRA Notice, PBMs would be required to report detailed information, at the qualified health plan (QHP) and National Drug Code (NDC) level, for each QHP issuer they serve to the Department of Health and Human Services (HHS). This reporting would include retained rebates, other rebates, PBM incentive payments, other price concessions, bona fide service fees, amounts paid to and from pharmacies, and "spread" for retail and mail pharmacies, among other data elements.

I. THE PRA NOTICE IMPERMISSIBLY EXCEEDS THE SCOPE OF THE AUTHORIZING STATUTE

The PRA Notice states that the legal basis for the reporting requirements is Section 1150A of the Act. However, the PRA Notice reporting requirements exceed the scope of Section 1150A in several significant respects. First, Section 1150A requires that QHPs, not PBMs, provide the reporting to HHS. Second, the Section 1150A does not require reporting of many of the data elements listed in the PRA Notice, and third, Section 1150A does not require reporting at the level of detail required by the PRA Notice. We also note that HHS finalized a regulation at 45 CFR 156.295 in 2012 that, consistent with the statutory language, implemented Section 1150A by requiring reporting by QHP issuers of only the data elements required by the statute "in the form, manner, and such times as specified by HHS." Yet the PRA Notice inexplicably makes no mention of this final rule, let alone any attempt to reconcile its requirements with those of the final rule. Finally, we note that the PRA Notice incorrectly draws a parallel with the Medicare Part D reporting requirements, failing to note the separate statutory authority, scope and purpose for the Part D reporting, which began in 2006, four years before the Affordable Care Act was even passed. We discuss each of these points in more detail below.

A. The PRA Notice Requirement for PBMs to Report Directly to HHS is Contrary to the Statute and Exceeds HHS' Authority

Section 1150A(a) states clearly and unequivocally that "in the case of a PBM," the required information must be provided "to the plan with which the PBM is under contract with," and that in the case of the plan, to HHS. Despite this unambiguous language, and without even attempting to justify the conflict, the PRA Notice reverses the requirements of the statute, having the PBM report and provide an attestation directly to HHS and requesting comments on whether the PBM will have to obtain some of the required information from issuers. It should also be noted that to the extent Section 1150A requires certain reporting with respect to Part D plans, the Centers for Medicare & Medicaid Services (CMS) correctly requires that the Part D plan do the reporting and provide the attestation to CMS.

Quite apart from the clear statutory language, this reporting approach makes logical and intuitive sense, since the information being reported ultimately relates to the plan and what it has contracted for the PBM to do, and how it has chosen to pay for those services.

Since HHS does not address why it has sought to impose the reporting obligation to HHS directly on PBMs, it is not clear whether HHS has misread the statute (since it does state incorrectly in several places that Section 1150A requires reporting to HHS by PBMs) or whether it believes that PBMs may prefer to report the required information directly to it given the level of detail required. However, whatever the reason, there is no statutory basis for mandating that PBMs report directly to HHS. By requiring direct PBM reporting to HHS, the PRA Notice impermissibly conflicts with both the authorizing statute and its implementing regulation.

B. The PRA Notice Requires Reporting of Data Elements not Authorized or Required by the Statute

Given the competitive and sensitive nature of the information required to be reported, as evidenced by the strong confidentiality protections in Section 1150A(c), the statutory language is very specific and precise as to exactly what must be reported. The financial data required to be reported is in the "aggregate" and relates only to (1) rebates, discounts or price concessions, and (2) the differential between the amount the plan pays the PBM and the amount the PBM pays retail and mail pharmacies. The statute explicitly excludes bona fide service fees from the scope of price concessions, thereby excluding bona fide service fees from the reporting requirement. Despite the explicitly limited statutory language, the PRA Notice requires that PBMs report a host of data elements not required by the statute, including bona fide service fees, PBM incentive payments, and amounts paid to and from pharmacies. While some of these data elements are included in Part D reporting, such as amounts paid to or from pharmacies, as discussed below, Medicare Part D Direct and Indirect (DIR) reporting serves a different purpose and is pursuant to different statutory authority. The proposed reporting therefore exceeds both the authorizing statutory language and HHS's own regulatory requirements in 45 CFR 156.295, which specifies the substantive reporting requirements for QHP issuers, and leaves only the form, manner and timing for HHS to determine in guidance.

C. The PRA Notice Requires Reporting at a Level of Detail Not Supported by the Statute

The PRA Notice also requires reporting at the QHP, rather than issuer, level. This exponentially expands the reporting obligations since, as HHS estimates, PBMs "taken as a whole, annually contract with approximately 275 QHP issuers, representing approximately 7,000 total plans." In addition, PBMs will be required to report "multiple prescription drug data elements for each NDC, for each QHP offered in the requested data submission timeframe," which HHS estimates will mean that "an average PBM will report information for 5,200 NDCs for each QHP." Quite apart from the burden this imposes on PBMs, this is the very opposite of "aggregate" information and, as such, is unsupported by the existing regulatory language or, more importantly, the authorizing statute.

D. The PRA Notice Incorrectly Cites Medicare Part D Reporting as a Basis for its Overreaching Reporting Requirements

HHS notes in the PRA Notice that it has sought to "mirror" Part D terminology and definitions to the "greatest extent possible." It also states, perhaps as an attempt to justify the vastly expanded reporting requirements, that "CMS collects this data from Part D sponsors as part of the Medicare Part D Direct and Indirect Remuneration (DIR) reporting requirement, and detailed drug information for each National Drug Code (NDC) from the Prescription Drug Event (PDE) data that plans are required to submit." While this is undoubtedly correct, HHS fails to note that the Part D PDE and DIR data collections are pursuant to separate, and much more expansive statutory authority for a completely different purpose. Specifically, as CMS notes in its annual DIR guidance, the Part D DIR reporting is pursuant to Section 1860D-15(f)(1)(A) of the Act, which requires Part D sponsors to provide to CMS the information it determines to be necessary for carrying out the payment provisions of Part D, including calculating reinsurance and risk corridor payments to Part D plans. The Section 1150A reporting requirements have no such purpose, and in the case of Part D, simply piggyback on the existing, much more detailed and expansive DIR reporting requirements that have been in place since the inception of the Part D program in 2006. Thus, the more expansive and granular Part D reporting provides no legal or statutory authority for HHS to seek the same type or level of information for purposes of Section 1150A reporting on QHPs.

Finally, HHS states incorrectly that the "same confidentiality protections" in Section 1150A apply to Part D DIR reporting requirements. While it is true that in each case HHS may not disclose the information in a form that discloses the identity of a specific PBM, plan, or prices charged for drugs, the entities to which HHS may disclose the data are far broader, including the Government Accountability Office (GAO), Congressional Budget Office (CBO), and the states for purposes of operating an Exchange. By contrast, the Part D DIR reporting information may be shared only with the Attorney General and Comptroller General of the United States.

II. OTHER ISSUES

A. Timing

Since QHPs and PBMs will need to adjust their contracts, data collection and reporting mechanisms to accommodate the reporting requirements once finalized, any PBM reporting requirements should apply no earlier than for the plan year following finalization of the requirements. As discussed above, should HHS seek to modify the reporting requirements as currently set forth in 45 CFR 156.295, rather than simply provide guidance as to the timing, form and manner of such required reporting, it must follow notice and comment rulemaking, which could not be effective for reporting on plan years earlier than the 2021 plan year at the earliest.

B. Duplication of Effort

HHS states in its supporting statement that the proposed reporting requirements do not duplicate any other federal effort, as no other federal entity collects this prescription drug information for QHPs. It also states that, to lessen burden and maintain consistency across CMS collection efforts, it will utilize CMS's existing collection efforts for Part D to the greatest extent possible, including collecting information for each individual drug at the NDC level. We have concerns with both statements.

First, regarding QHP data collection, we note that HHS already collects much of the required information, such as aggregate rebates and price concessions, pursuant to the medical loss ratio (MLR) reports required to be submitted by QHPs. In addition, even if the exact data elements listed in the PRA are not required to be reported for MLR purposes, they can be calculated from the information reported for MLR purposes. To lessen burden and avoid duplication of effort, we urge HHS to limit additional reporting for Section 1150A purposes to only that information required by Section 1150A, and only to the extent that it cannot already be ascertained from QHPs' MLR reporting.

Second, as discussed in greater detail above, the CMS data collection under Part D is pursuant to different and far more expansive statutory authority, and for a different purpose. Therefore, it is inappropriate and beyond HHS' authority to utilize CMS's existing data collection efforts for Part D purposes here. This does not reduce burden or avoid duplication of effort, but the opposite, by requiring QHPs and their PBMs to report vast amounts of data not authorized by the statute.

C. Reporting by Pharmacy Type

HHS requests feedback regarding the definitions for certain pharmacy subcategories, including independent pharmacies, chain pharmacies, supermarket pharmacies, or mass merchandiser pharmacies. It also asks whether PBM data systems are currently capable of breaking out drug data at this level, and the potential burden to break data out at this level if not currently possible.

CVS Health's systems currently do not identify claims data by pharmacy category, and doing so would a major and costly undertaking. In addition, the current NCPDP standard Implementation Guide for dispenser class and provider type codes/1 does not categorize pharmacies by the above pharmacy sub-categories and relies on pharmacy self-designation. Any future reporting required by pharmacy category should be consistent with the then-current NCPDP standard Implementation Guide dispensing or provider type codes. It should also make clear that any reporting of pharmacy categories is required only as and to the extent pharmacies report this information, and that plans and PBMs are not responsible for validating or verifying the information self-reported by pharmacies.

D. Operational Issues

Based on HHS' own estimates that there are approximately 7000 QHPs, each requiring reporting for some 5,200 NDCs, the PBM industry would be reporting approximately 36.4 million NDCs each year. This represents an enormous and unprecedented burden on the industry. To require this reporting at the 11-digit NDC level would vastly increase this burden, even assuming PBMs are operationally capable of reporting the required data at this level. Quite apart from the lack of statutory authority to impose this level of reporting or a clearly articulated reason for doing so, it runs counter to the Administration's goals of reducing burden. As such, we urge HHS to reconsider the PRA reporting requirements and to limit the data required to be reported to the data specified in the statute.

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CVS Health is committed to working with HHS on reporting requirements for PBMs and QHPs that provide the Department with the accurate, timely information it needs to run its programs in a fair manner and without unnecessary burden on reporting entities. We would be happy to respond to any follow-up questions you may have.

Respectfully submitted,

Melissa Schulman

Senior Vice President

Government & Public Affairs

CVS Health

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Footnote:

1/ See NCPDP dataQ(TM) Pharmacy Database File Standard Implementation Guide Version 3.0, Section 7.

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The notice can be viewed at: https://www.regulations.gov/document?D=CMS-2020-0008-0001

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