The Consolidated Appropriations Act (CAA) of 2021 introduced a series of transparency-related compliance requirements for health plans, insurance issuers, agents, and providers – all designed to improve clarity and accountability in health care pricing.
One of the CAA’s key transparency initiatives is the annual Prescription Drug Data Collection (RxDC) reporting requirement. RxDC requires health plans and insurance issuers to submit detailed information on prescription drug costs and overall health care spending to the Centers for Medicare & Medicaid Services (CMS).
CMS uses this data to produce reports for Congress and federal agencies, including the Department of Labor (DOL) and the Department of Health and Human Services (HHS), to better understand:
- Prescription drug spending trends
- Rebates and fees paid to pharmacy benefit managers (PBMs)
- The relationship between prescription drug costs and overall health care spending
Who Must Comply
RxDC reporting applies broadly to most health plans, including:
- Group health plans of all sizes
- Fully insured plans
- Self-funded and level-funded plans
- Individual and Family Plans (IFP)
- Student health plans
- Federal Employees Health Benefits (FEHB) plans
RxDC reporting does not apply to Medicare or Medicaid plans. The focus of this reference page is on employer-sponsored health plans.
Who Is Responsible for Reporting
Fully Insured Employer Plans
For fully insured health plans, the insurance carrier typically prepares and submits RxDC filings on behalf of employer groups. In most cases, employer plan sponsors have little to no direct filing responsibility because the carrier owns the premium and claims data used for reporting.
However, many carriers require employer participation by sending surveys or RFIs to verify employer and employee contribution amounts. These contribution details are used to complete required RxDC filing, specifically the D1 (Premium and Life Years) file.
If an employer does not respond to a carrier survey by the stated deadline, the carrier may:
- Report based on the information it already has on file, or
- Decline to submit certain plan-level reports and require the employer to complete those filings independently
Self-Funded and Level-Funded Plans
For self-funded and level-funded plans, the legal reporting obligation rests with the employer as the plan sponsor and payer of benefits.
In practice, RxDC reporting for these plans is typically coordinated through the employer’s Pharmacy Benefit Manager (PBM), Third Party Administrator (TPA), or Administrative Services Only (ASO) partner. Employers should confirm early how reporting responsibilities are allocated among vendors and ensure all required filings will be submitted by the deadline.
Because reporting obligations are greater for self-funded plans, employers sponsoring these arrangements should work closely with their vendors and, where appropriate, legal counsel.
Filing Deadlines
RxDC reporting is due annually by June 1 and covers the prior calendar year (referred to as the “reference year”).
Examples:
- 2025 reporting deadline (for 2024 reference year data): June 1, 2025
- 2026 reporting deadline (for 2025 reference year data): June 1, 2026
What Is Reported (RxDC Data Files – High Level)
Each year, health plans must submit a standardized set of RxDC data files to CMS. For fully insured plans, insurance carriers generally prepare and submit these files in aggregate on behalf of their employer clients.
However, some carriers require employer input – most commonly to confirm employer and employee contribution amounts – through surveys or RFIs. If an employer does not respond to a required survey by the carrier’s deadline, the employer may be required to complete and submit certain plan-level RxDC files independently.
Plans file one Plan File (P File) and six Drug/Plan Files (D Files).
Plan-Level File
P2 File – Plan Sponsor Information
The P2 file identifies the employer sponsor(s), plan name, EIN(s), state, and total covered members. This must be filed alongside every Data File (D1 – D6).
For fully insured plans, this is an aggregate-level filing prepared by the insurance carrier that includes information for all employer sponsors participating in the applicable insurance policy.
Premium and Spending Files
D1 File – Premium and Life Years
The D1 file reports total gross premiums, including employer and employee contribution amounts, as well as the number of covered lives as of December 31 of the reference year.
Because employer contribution structures are often more complex than what is reflected in an employer’s original application (e.g., tiered contributions, multiple classes, mid-year changes), insurance carriers may request employer confirmation to ensure contribution data is reported accurately. This is typically done through an employer survey or RFI.
If an employer is asked by its insurance carrier to participate in a D1-related survey (verification of contribution strategy) and does not respond by the carrier’s deadline, the carrier may be unable to finalize reporting on the employer’s behalf. In those cases, the employer may be required to complete and submit the D1 file, along with the associated P2 file, independently.
D2 File – Spending by Category
Breaks down total health care spending by category (e.g., hospital, primary care, prescription drugs, wellness). For fully insured plans, this file is aggregated and reported by the insurance carrier.
Prescription Drug Files
- D3 File – Top 50 most-dispensed brand-name drugs for the reference year
- D4 File – Top 50 most-costly drugs by total plan spending
- D5 File – Top 50 drugs with the highest year-over-year spending increase
- D6 File – Total annual prescription drug spending and utilization by state and market segment – includes total plan spending by enrolled participants, the number of participants with a paid Rx claim, the dosage of Rx units dispensed, and the total number of paid claims
- D7 File – Prescription drug rebates, fees, and related compensation by therapeutic class
- D8 File – Top 25 drugs with the highest rebate amounts for the reporting year
Narrative Response Files (Optional)
Plans may also submit narrative response files to provide additional context on pricing trends, rebate arrangements, and cost-sharing structures. These are submitted as free-text documents rather than standardized templates. They are supplemental to the Dat and Plan files, and detail any additional relevant information that is not requested by regulators on the files themselves.
Where and How to File
All RxDC reporting is submitted through CMS’s Health Insurance Oversight System (HIOS).
- Fully insured carriers submit RxDC files on behalf of their plans unless otherwise indicated
- Self-funded employers and their vendors must register and submit data directly through HIOS
New HIOS registrations can take several weeks to process, so employers sponsoring self-funded plans should confirm their filing strategy well in advance of the June 1 deadline. Self-funded plans usually work with their PBMs, TPAs/ASOs to create and file these documents.
Enforcement and Penalties
While CMS administers the RxDC data collection program, enforcement authority rests with the Department of Labor (DOL) and HHS.
Plans that fail to meet RxDC reporting requirements may be subject to penalties of $100 per affected individual per day. The IRS is also authorized to impose penalties for noncompliance.
What This Means for Health Insurance Agents
Health insurance brokers are not directly responsible for RxDC filings, but they play an important role in helping their employer clients stay informed and compliant. Brokers should be prepared to:
- Explain carrier versus employer reporting responsibilities for fully insured plans
- Help clients understand and respond to carrier RxDC surveys from their fully insured carriers to verify employer and employee contributions for accurate reporting
- Reinforce carrier deadlines and the importance of timely responses
- Direct self-funded employers to their PBM, TPA, ASO partner, or legal counsel for compliance support