Prescription Drug and Health Care Spending
| Published date | 23 November 2021 |
| Citation | 86 FR 66495 |
| Record Number | 2021-25202 |
| Section | Proposed rules |
| Court | Internal Revenue Service |
Federal Register, Volume 86 Issue 223 (Tuesday, November 23, 2021)
[Federal Register Volume 86, Number 223 (Tuesday, November 23, 2021)]
[Proposed Rules]
[Pages 66495-66496]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25202]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[REG-117575-21]
RIN 1545-BQ27
Prescription Drug and Health Care Spending
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: Elsewhere in this issue of the Federal Register, the IRS is
issuing temporary regulations that increase transparency by requiring
group health plans and health insurance issuers in the group and
individual markets to report 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 (the Departments). The IRS is issuing the temporary
regulations at the same time that the Office of Personnel Management
(OPM), the Employee Benefits Security Administration of DOL, and the
Office of Consumer Information and Insurance Oversight of HHS are
issuing substantially similar interim final rules with a request for
comments. The text of those temporary regulations also serves as the
text of these proposed regulations.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on January 24, 2022.
ADDRESSES: In commenting, please refer to file code REG-117575-21.
Comments, including mass comment submissions, must be submitted in one
of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-9905-IFC, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-9905-IFC, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
FOR FURTHER INFORMATION CONTACT: Christopher Dellana, (202) 317-5500,
Internal Revenue Service, Department of the Treasury, for issues
related to Surprise Billing.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. All comments received are
posted before the close of the comment period on the following website
as soon as possible after they have been received: http://regulations.gov. Follow the search instructions on that website to view
public comments.
Proposed Applicability Date: These regulations are generally
proposed to apply on and after December 27, 2021. As discussed in the
preamble to the temporary regulations published elsewhere in this issue
of the Federal Register, the Departments are temporarily deferring
enforcement during the first year of applicability.
Background and Regulatory Impact Analysis
The temporary regulations published elsewhere in this issue of the
Federal Register add Sec. Sec. 54.9825-1T, 54.9825-2T, 54.9825-3T,
54.9825-4T, 54.9825-5T, and 54.9825-6T to the Miscellaneous Excise Tax
Regulations. The proposed and temporary regulations are being published
as part of a joint rulemaking with the OPM, DOL, and HHS. The text of
those temporary regulations also serves as the text of these proposed
regulations. The preamble to the temporary regulations explains the
temporary regulations and provides a regulatory impact analysis.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to Federal rules that are subject to
the notice and comment requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C. 551 et seq.) and that are likely
to have a significant economic impact on a substantial number of small
entities. Unless an agency determines that a proposal is not likely to
have a significant economic impact on a substantial number of small
entities, section 603 of the RFA requires the agency to present an
initial regulatory flexibility analysis (IRFA) of the proposed rule.
The Treasury Department and the IRS have not determined whether the
proposed regulations, when finalized, will likely have a significant
economic impact on a substantial number of small entities. This
determination requires further study. However, because there is a
possibility of significant economic impact on a substantial number of
small entities, an IRFA is provided in these proposed regulations. The
Treasury Department and the IRS invite comments on both the number of
entities affected and the economic impact on small entities.
Pursuant to section 7805(f), this notice of proposed rulemaking has
been submitted to the Chief Counsel of Advocacy of the Small Business
Administration for comment on its impact on small business.
1. Need for and Objectives of the Rule
The proposed regulations will implement a reporting requirement for
prescription drug costs and other medical expenses. Specifically, group
health plans and health insurance issuers will submit key data, which
the Departments will use to report and better understand prescription
drug pricing trends and their impact on consumers' premiums and out-of-
pocket costs. The reporting requirements apply beginning with the data
for the 2020 calendar year. This will allow the Departments to better
understand national prescription drug costs and identify major drivers
of increases in health care spending, which may aid in examining
variation of health care costs across the country.
2. Affected Small Entities
The Small Business Administration estimates in its 2020 Small
Business Profile that 99.9 percent of United States
[[Page 66496]]
businesses meet its definition of a small business.\1\ The
applicability of these proposed regulations does not depend on the size
of the business, as defined by the Small Business Administration. As
described more fully in the preamble to the temporary regulations,
published elsewhere in this issue of the Federal Register, and in this
IRFA, these rules may affect a variety of different businesses.
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\1\ US Small Bus. Admin., 2020 Small Business Profile, https://cdn.advocacy.sba.gov/wp-content/uploads/2020/06/04144214/2020-Small-Business-Economic-Profile-States-Territories.pdf.
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Because small entities may comply with the requirements under the
proposed regulations in different ways, it is difficult to estimate at
this time the impact of these proposed regulations, if any, on small
businesses. Small entities might, for example, enter into contracts
with other entities in order to meet the requirements in the proposed
regulations. Due to the lack of knowledge regarding what small entities
may decide to do in order to satisfy the requirements and any costs
they might incur related to contracts, the Departments seek comment on
ways that the proposed regulations will impose additional costs and
burdens on small entities and how many would be likely engage in
contracts to meet the requirements.
The Treasury Department and the IRS expect to receive more
information on the impact on small businesses through comments on these
proposed regulations.
3. Impact of the Regulations
The proposed regulations require 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
Departments. The public reports that are required by the proposed
regulations could enhance national health transparency and lower
prescription drug and health care costs. Consumers could potentially
benefit from the required reporting if plans and issuers are able to
negotiate lower prescription drug prices and those reductions are
passed on to the consumer in the form of reduced out-of-pocket costs
and lower premiums. The public reports that are required by the
proposed regulations will create certain compliance burdens. The
recordkeeping and reporting requirements will increase for plans and
issuers subject to the regulations. This includes costs associated with
developing, building, and maintaining information technology systems
necessary to report the required data. The maintenance costs for these
information technology systems may decrease in succeeding years as
plans and issuers (or third parties on their behalf) gain efficiencies
and experience in updating, managing, and submitting the required data.
Although the Treasury Department and the IRS do not have sufficient
data to determine precisely the likely extent of the increased costs of
compliance, the estimated burden of complying with the recordkeeping
and reporting requirements are described in the Paperwork Reduction Act
section of the preamble to the temporary regulations, published
elsewhere in this issue of the Federal Register.
4. Alternatives Considered
As described in more detail in the Regulatory Impact Analysis of
the preamble to the temporary regulations, published elsewhere in this
issue of the Federal Register, the Treasury Department and the IRS
considered alternatives to the proposed regulations. For example, in
providing rules related to the aggregation of data submitted by
reporting entities, the Treasury Department and the IRS considered
whether to (i) allow reporting entities to submit aggregated data, or
(ii) require plans, issuers, and Federal Employees Health Benefits
(FEHB) carriers to submit all of the required information on a plan-by-
plan basis. As described in section II.C.3 of the preamble to the
temporary regulations, published elsewhere in this issue of the Federal
Register, the Treasury Department and the IRS, in consultation with
DOL, HHS, and OPM, determined that allowing reporting entities to
submit aggregated data would be sufficient for purposes of the
statutory requirement, without creating or imposing undue burdens on
taxpayers.
5. Duplicative, Overlapping, or Conflicting Federal Rules
As explained in the preamble to the temporary regulations,
published elsewhere in this issue of the Federal Register, the proposed
regulations would not duplicate, overlap, or conflict with any relevant
Federal rules. The Treasury Department and the IRS invite comment from
interested members of the public about identifying and avoiding
overlapping, duplicative, or conflicting requirements.
Drafting Information
The principal author of this notice of proposed rulemaking is
Christopher Dellana, Office of the Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment Taxes). The proposed regulations,
as well as the temporary regulations, have been developed in
coordination with personnel from OPM, DOL, and HHS.
List of Subjects in 26 CFR Part 54
Excise taxes, Pensions, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 54 is proposed to be amended as follows:
PART 54--PENSION EXCISE TAXES
Paragraph. 3. The authority citation for part 54 continues to read
as follows:
Authority: 26 U.S.C. 7805
Par. 4. Sections 54.9825-1 through 6 are added to read as follows:
[The text of proposed Sec. 54.9825-1 is the same as the text of
Sec. 54.9825-1T published elsewhere in this issue of the Federal
Register].
[The text of proposed Sec. 54.9825-2 is the same as the text of
Sec. 54.9825-2T published elsewhere in this issue of the Federal
Register].
[The text of proposed Sec. 54.9825-3 is the same as the text of
Sec. 54.9825-3T published elsewhere in this issue of the Federal
Register].
[The text of proposed Sec. 54.9825-4 is the same as the text of
Sec. 54.9825-4T published elsewhere in this issue of the Federal
Register].
[The text of proposed Sec. 54.9825-5 is the same as the text of
Sec. 54.9825-5T published elsewhere in this issue of the Federal
Register].
[The text of proposed Sec. 54.9825-6 is the same as the text of
Sec. 54.9825-6T published elsewhere in this issue of the Federal
Register].
Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2021-25202 Filed 11-17-21; 4:15 pm]
BILLING CODE 4630-01-P
