What Is RxDC Reporting? A Complete Guide for Employers, TPAs, and Health Plans

Every year, millions of Americans wonder why their prescription drug costs keep climbing - and whether anyone in Washington is actually paying attention. The answer, at least in part, is yes. Since 2022, federal law has required group health plans, insurers, and their administrators to submit detailed prescription drug and healthcare spending data to the government. This mandate is known as RxDC reporting, and if you're an employer, third-party administrator (TPA), or health plan sponsor, it directly affects you.

This guide breaks down everything you need to know: what RxDC reporting is, who must comply, what data gets reported, who actually submits it, and what happens if you miss the deadline.

What Does RxDC Stand For?

RxDC stands for Prescription Drug Data Collection. It is a federal reporting requirement established under Section 204 of the Consolidated Appropriations Act, 2021 (CAA) - the same landmark legislation that introduced the No Surprises Act.

The goal of RxDC reporting is straightforward: give federal agencies a clear, data-backed picture of how much Americans are spending on prescription drugs and healthcare services through private health insurance. The Centers for Medicare & Medicaid Services (CMS) collects this data and uses it to publish public reports for Congress, the Department of Labor (DOL), and the Department of Health and Human Services (HHS) - so policymakers can make informed decisions about drug pricing and insurance transparency.

Who Is Required to Submit an RxDC Report?

RxDC reporting applies broadly. According to CMS guidance, the requirement covers:

• Fully insured group health plans (small and large employers)
• Self-insured and self-funded group health plans
• Level-funded health plans
• Individual and Family Plans (IFPs)
• Student health plans
• Grandfathered and non-grandfathered plans
• Non-ERISA governmental health plans

In short: if you sponsor or administer a group health plan of any size, you are subject to RxDC reporting requirements. There are no small-employer exemptions and no carve-outs for grandfathered status.

When Is the RxDC Report Due?

The RxDC report is due annually by June 1, covering data from the prior full calendar year (called the "reference year"). All plans use the calendar year as the reference year, regardless of their ERISA plan year or insurance policy renewal date.

As confirmed by the Business Group on Health and OneDigital, the full filing history is:

• 1st submission - Reference year 2020 & 2021 - Due December 27, 2022 (grace period extended to January 31, 2023)
• 2nd submission - Reference year 2022 - Due June 1, 2023
• 3rd submission - Reference year 2023 - Due June 1, 2024
• 4th submission - Reference year 2024 - Due June 1, 2025
• 5th submission - Reference year 2025 - Due June 1, 2026

There are currently no good faith compliance extensions or grace periods in place for submissions from the 2022 reference year onward. Missing the deadline has real consequences.

What Data Must Be Reported? The RxDC File Structure

A complete RxDC submission consists of one plan identification file (P2) and eight data files (D1 through D8), plus a narrative response. Per the official CMS RxDC reporting instructions, here is what each file covers:

Plan File

P2 - Plan Sponsor Information

Identifies the employer or plan sponsor, plan name, Employer Identification Number (EIN), states where coverage is offered, plan year dates, and total covered members. This file must accompany every data file submitted.

Data Files

D1 - Premium and Life-Years

Reports the average monthly premium paid by employers and employees, along with total life-years of coverage. For self-funded plans, this includes both employer and employee contribution amounts.

D2 - Spending by Category

Breaks down total healthcare spending across the following verified categories:

• Hospital care
• Primary care
• Specialty care
• Other medical costs and services
• Medical benefit drugs (both known and estimated amounts)

As confirmed by SHRM and EPIC Insurance Brokers, pharmacy benefit drug costs are reported separately in D3-D8 and are not included in D2.

D3 - Top 50 Most Frequently Dispensed Brand Drugs

Lists the 50 brand-name drugs prescribed most often during the reference year, by state and market segment.

D4 - Top 50 Most Costly Drugs

Identifies the 50 drugs generating the highest total plan spending.

D5 - Top 50 Drugs by Spending Increase

Highlights the 50 drugs whose costs rose the most compared to the prior year - a critical dataset for trend analysis.

D6 - Prescription Drug Totals

Aggregated by state and market segment, this file captures:

• Total Rx spending
• Number of members with at least one paid claim
• Drug units dispensed
• Total paid claims

D7 - Rx Rebates by Therapeutic Class

Details prescription drug rebates, fees, and other compensation received by the plan, organized by drug category.

D8 - Top 25 Drugs by Rebate Amount

Identifies the 25 drugs generating the highest rebate amounts for the plan during the reference year.

Narrative Response

Plans must also include a written narrative describing how prescription drug rebates affect premiums and member cost-sharing - giving context to the raw numbers above.

Who Actually Submits the RxDC Report?

This is where RxDC reporting gets operationally nuanced. The submission is almost never done by the employer alone. Here is how responsibility typically plays out based on plan type:

Fully Insured Plans

For employers with fully insured medical plans, the insurance carrier bears primary responsibility for submitting the RxDC report. As noted by Newfront Insurance, under interim final rules, if the carrier fails to file, the carrier - not the employer - is in violation.

However, employers should not assume everything will be handled automatically. Carriers may need plan-specific information from employers, particularly for the D1 premium data and the P2 plan identification file. Employers who ignore carrier surveys or information requests risk being required to file independently.

Employer action items for fully insured plans:

• Confirm in writing that your carrier will submit by June 1
• Respond promptly to any carrier surveys requesting contribution data
• Request documentation confirming the carrier completed the filing

Self-Insured and Self-Funded Plans

For self-insured employers, the compliance obligation rests with the plan sponsor - meaning the employer. However, most self-insured employers delegate the actual submission to their TPA, PBM, or Administrative Services Only (ASO) provider, who serve as the "reporting entity" on the plan's behalf.

As The MJ Companies and Brooks Financial Group confirm, for self-funded plans the legal responsibility remains with the employer even if a third party agrees to file on their behalf. If the TPA or PBM fails to submit, the plan sponsor is still in violation - unlike fully insured plans where the carrier absorbs that liability.

A self-insured plan's submission can be split across multiple vendors. For example, the TPA may submit the D2 spending file while the PBM handles D3 through D8 on pharmacy data. CMS considers the submission complete once all required files are received, regardless of how many parties contributed.

Employer action items for self-insured plans:

• Confirm your TPA and/or PBM will serve as reporting entities
• Request written documentation of the filing agreement
• Ensure your service contracts explicitly address RxDC responsibilities
• Provide enrollment, premium, and plan-specific data when vendors request it
• Determine whether your plan requires disaggregated (employer-level) reporting or can rely on aggregated vendor reporting

TPAs and PBMs: Your Central Role

For third-party administrators and pharmacy benefit managers, RxDC reporting is a client service obligation. As outlined by IMA Financial Group, TPAs are commonly responsible for the D2 spending file, while PBMs typically own the pharmacy-related files (D3-D8).

Both should:

• Maintain robust data pipelines capable of generating all required file formats
• Communicate proactively with plan sponsors about data needs and deadlines
• Understand the aggregation rules - specifically, that D1 and D3-D8 data cannot be reported at a less granular level than D2 data
• Document their reporting entity status in written agreements with plan sponsors

Understanding Disaggregated vs. Aggregated Reporting

One of the more complex aspects of RxDC compliance involves the level of aggregation at which data is reported.

HHS ended an earlier period during which virtually all data could be reported at an aggregate (industry-wide or vendor-wide) level. As Verrill Law explains, under current rules the granularity of File D2 sets the floor for how granular all other data files must be. If D2 is submitted at the employer EIN level, then D1 and D3-D8 must also be reported at that level - data in those files cannot be aggregated less granularly than D2.

What this means practically: employers with plans that include multiple benefit carve-outs - such as specialty pharmacy programs or other add-on benefits - may have more than one vendor reporting D2 data. The most granular D2 submission on file for a given employer dictates the aggregation standard for all associated files.

Plan sponsors should work with their benefits advisors to map out exactly which vendors are submitting which files and at what level.

Penalties for Non-Compliance

RxDC reporting is not voluntary, and the consequences of missing the deadline are serious. Per Word & Brown, plans that fail to meet their reporting obligations may face:

• $100 per affected individual per day for the period of non-compliance
• IRS-authorized penalties for non-compliant plan sponsors
• Regulatory scrutiny from the DOL and HHS

Given that even a modest self-insured plan might cover hundreds of employees, $100-per-day-per-member penalties can escalate into significant financial exposure within weeks of a missed filing.

How the RxDC Data Is Used

Once submitted, CMS aggregates and analyzes RxDC data to produce publicly available reports. As noted by Risk Strategies, the first such public report - "Prescription Drug Spending, Pricing Trends and Premiums in Private Health Insurance Plans" - was released in November 2024.

These reports are designed to give policymakers, plan sponsors, and the public a transparent view of drug pricing trends, the impact of rebates on premiums, and where healthcare dollars are actually going.

This is the broader public policy rationale behind the compliance burden: better data leads to more informed legislation, more competitive drug pricing, and ultimately, lower costs for employees.

6 Practical Steps Employers Should Take Right Now

Whether your plan year is calendar-year or non-calendar-year, The Horton Group and Higginbotham recommend the following steps to stay ahead of the next RxDC deadline:

1. Contact Your Vendors

Contact your insurance carrier, TPA, and/or PBM to confirm they are prepared to submit RxDC files on behalf of your plan by June 1.

2. Review Service Agreements

Review your service agreements to verify that RxDC reporting responsibilities are explicitly included. If they are not, get them updated now.

3. Respond Promptly to Vendor Surveys

Carriers and TPAs frequently need premium contribution and enrollment data from employers that they do not have access to independently.

4. Map Your Data Flow

Know which vendor is responsible for each data file (P2, D1-D8) and confirm there are no gaps in coverage.

5. Assess Aggregation Requirements

Work with your benefits advisor to determine whether your plan must report at the employer level or can continue using aggregated vendor data.

6. Document Everything

Request written confirmation from every reporting entity that they have completed the submission - and keep it on file.

The Bottom Line

RxDC reporting is one of the most significant ongoing compliance obligations introduced by the Consolidated Appropriations Act of 2021. For employers, the key is not doing the work yourself - it is ensuring that the right vendors have the right agreements, the right data, and a confirmed plan to file by June 1 every year.

For TPAs and PBMs, it is a service commitment that must be built into every client relationship. For health plans of all types, it is a window into your own spending patterns - and an opportunity to make more strategic decisions about pharmacy benefits and plan design.

Stay compliant, stay informed, and let the data tell the story.