[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