Internal Revenue Bulletin 2021-49 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2021–49
December 6, 2021
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
Rev. Proc. 2021-50, page 844.
This document contains a draft Revenue Procedure allow-
ing an eligible partnership to file an amended Form 1065,
U.S. Return of Partnership Income, and furnish a corre-
sponding Schedule K-1 (Form 1065), Partner’s Share of
Income, Deductions, Credits, etc., to each of its partners
as an alternative option to filing an administrative adjust-
ment request (AAR).
EMPLOYEE PLANS
Notice 2021-62, page 831.
This notice sets forth updates on the corporate bond
monthly yield curve, the corresponding spot segment
rates for November 2021 used under § 417(e)(3)(D), the
24-month average segment rates applicable for Novem-
ber 2021, and the 30-year Treasury rates, as reflected by
the application of § 430(h)(2)(C)(iv).
EMPLOYEE PLANS, EXCISE TAX
REG 117575-21, page 847.
This document sets forth proposed regulations implement-
ing certain transparency requirements under section 204
of Division BB of Title II of the Consolidated Appropriations
Act, 2021. The text of the temporary regulations issued
jointly with the Department of Health and Human Services,
the Department of Labor, and the Office of Personnel Man-
agement serves as the text of these proposed regulations.
T.D. 9958, page 781.
This document sets forth temporary regulations imple-
menting certain transparency requirements under section
204 of Division BB of Title II of the Consolidated Appro-
priations Act, 2021. These temporary regulations, issued
jointly with the Department of Health and Human Services,
the Department of Labor, and the Office of Personnel
Management, require group health plans and health insur-
ance issuers in the group and individual markets to report
certain information about prescription drugs and health
care spending to the Department of Health and Human
Services, the Department of Labor, and the Department
of the Treasury.
EXEMPT ORGANIZATIONS
Announcement 2021-15, page 846.
Revocation of IRC 501(c)(3) Organizations for failure to
meet the code section requirements. Contributions made
to the organizations by individual donors are no longer
deductible under IRC 170(b)(1)(A).
INCOME TAX
Notice 2021-63, page 835.
This notice provides guidance regarding the temporary
100-percent deduction for expenses that are paid or
incurred after December 31, 2020, and before January
1, 2023, for food or beverages provided by a restau-
rant for purposes of § 274(n)(2)(D) of the Internal Rev-
enue Code. In particular, the notice sets forth a special
rule that allows a taxpayer that properly applies the
rules of Rev. Proc. 2019-48 to treat the meal portion
of a per diem rate or allowance as being attributable to
food or beverages provided by a restaurant.
Rev. Proc. 2021-48, page 835.
This revenue procedure provides that taxpayers may
treat amounts that are excluded from gross income
(tax-exempt income) in connection with the forgive-
Finding Lists begin on page ii.

ness of Paycheck Protection Program (PPP) Loans as
received or accrued: (1) as eligible expenses are paid
or incurred, (2) when an application for PPP Loan for-
giveness is filed, or (3) when PPP Loan forgiveness is
granted.
Rev. Proc. 2021-49, page 838.
This revenue procedure provides guidance for part-
nerships and consolidated groups regarding amounts
excluded from gross income and deductions relating
to the Paycheck Protection Program and certain other
COVID-19 relief programs. More specifically: This reve-
nue procedure provides guidance for partners and their
partnerships regarding allocations under § 704(b) of the
Internal Revenue Code and the corresponding adjust-
ments to be made with respect to the partners’ bases
in their partnership interests under § 705 of the Code.
This revenue procedure also provides guidance under §
1502 of the Code and § 1.1502-32 of the Income Tax
Regulations regarding the corresponding basis adjust-
ments for stock of subsidiary members of consolidated
groups as a result of tax exempt income arising from
certain forgiven PPP Loans, grant proceeds, or subsi-
dized payment of certain principal, interest and fees.
Rev. Rul. 2021-23, page 779.
Federal rates; adjusted federal rates; adjusted federal long-
term rate, and the long-term tax exempt rate. For purposes
of sections 382, 1274, 1288, 7872 and other sections of
the Code, tables set forth the rates for December 2021.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
December 6, 2021 Bulletin No. 2021–49

Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7872.)
Rev. Rul. 2021-23
This revenue ruling provides vari-
ous prescribed rates for federal income
tax purposes for December 2021 (the
current month). Table 1 contains the
short-term, mid-term, and long-term
applicable federal rates (AFR) for the
current month for purposes of section
1274(d) of the Internal Revenue Code.
Table 2 contains the short-term, mid-
term, and long-term adjusted applica-
ble federal rates (adjusted AFR) for the
current month for purposes of section
1288(b). Table 3 sets forth the adjusted
federal long-term rate and the long-
term tax-exempt rate described in sec-
tion 382(f). Table 4 contains the appro-
priate percentages for determining the
low-income housing credit described in
section 42(b)(1) for buildings placed in
service during the current month. How-
ever, under section 42(b)(2), the appli-
cable percentage for non-federally sub-
sidized new buildings placed in service
after July 30, 2008, shall not be less
than 9%. Finally, Table 5 contains the
federal rate for determining the present
value of an annuity, an interest for life
or for a term of years, or a remainder or
a reversionary interest for purposes of
section 7520.
REV. RUL. 2021-23 TABLE 1
Applicable Federal Rates (AFR) for December 2021
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR0.33%0.33%0.33%0.33%
110% AFR0.36%0.36%0.36%0.36%
120% AFR0.40%0.40%0.40%0.40%
130% AFR0.43%0.43%0.43%0.43%
Mid-term
AFR1.26%1.26%1.26%1.26%
110% AFR 1.39%1.39%1.39%1.39%
120% AFR1.52%1.51%1.51%1.51%
130% AFR1.65%1.64%1.64%1.63%
150% AFR1.90%1.89%1.89%1.88%
175% AFR2.22%2.21%2.20%2.20%
Long-term
AFR1.90%1.89%1.89%1.88%
110% AFR2.09%2.08%2.07%2.07%
120% AFR2.28%2.27%2.26%2.26%
130% AFR2.48%2.46%2.45%2.45%
REV. RUL. 2021-23 TABLE 2
Adjusted AFR for December 2021
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted AFR0.25%0.25%0.25%0.25%
Mid-term adjusted AFR0.96%0.96%0.96%0.96%
Long-term adjusted AFR1.45%1.44%1.44%1.44%
Bulletin No. 2021–49 779 December 6, 2021

REV. RUL. 2021-23 TABLE 3
Rates Under Section 382 for December 2021
Adjusted federal long-term rate for the current month1.45%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal
long-term rates for the current month and the prior two months.)
1.45%
REV. RUL. 2021-23 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for December 2021
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July
30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit7.36%
Appropriate percentage for the 30% present value low-income housing credit 3.15%
REV. RUL. 2021-23 TABLE 5
Rate Under Section 7520 for December 2021
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a
remainder or reversionary interest
1.6%
Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.
Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of December 2021. See
Rev. Rul. 2021-23, page 779.
Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of December 2021. See Rev.
Rul. 2021-23, page 779.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.

Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 2021. See Rev. Rul. 2021-23, page 779.
Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of December 2021. See Rev.
Rul. 2021-23, page 779.
Section 7872.—Treatment
of Loans With Below-
Market Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
December 2021. See Rev. Rul. 2021-23, page 779.

December 6, 2021 780 Bulletin No. 2021–49

Bulletin No. 2021–49 781 December 6, 2021
26 CFR 54.9825-1T, 26 CFR 54.9825-2T, 26
CFR 54.9825-3T, 26 CFR 54.9825-4T, 26
CFR 54.9825-5T, and 26 CFR 54.9825-6T
T.D. 9958
OFFICE OF PERSONNEL
MANAGEMENT
5 CFR Part 890
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 54
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Part 2590
DEPARTMENT OF HEALTH
AND HUMAN SERVICES
45 CFR Part 149
Prescription Drug and
Health Care Spending
AGENCY: Office of Personnel Manage-
ment; Internal Revenue Service, Depart-
ment of the Treasury; Employee Benefits
Security Administration, Department of
Labor; Centers for Medicare & Medic-
aid Services, Department of Health and
Human Services.
ACTION: Interim final rules with request
for comments.
SUMMARY: This document sets forth
interim final rules implementing pro-
visions of the Internal Revenue Code
(the Code), the Employee Retirement
Income Security Act (ERISA), and the
Public Health Service Act (PHS Act), as
enacted by the Consolidated Appropria-
tions Act, 2021 (CAA). These provisions
are applicable to group health plans and
health insurance issuers offering group
or individual health insurance coverage.
These interim final rules add provisions
to existing rules under the Code, ERISA,
and the PHS Act. These interim final
rules implement provisions of the Code,
ERISA, and PHS Act that increase trans-
parency by requiring 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 Department
of Health and Human Services (HHS),
the Department of Labor (DOL), and the
Department of the Treasury (collectively,
the Departments). The Departments are
issuing these interim final rules with
largely parallel provisions that apply
to group health plans and health insur-
ance issuers offering group or individual
health insurance coverage. The Office of
Personnel Management (OPM) is also
issuing interim final rules that require
Federal Employees Health Benefits
(FEHB) carriers to report information
about prescription drugs and health care
spending in the same manner as a group
health plan or health insurance issuer
offering group or individual health insur-
ance coverage.
DATES: Effective date: These regulations
are effective on December 23, 2021.
Applicability date: The regulations are
generally applicable beginning December
27, 2021. The OPM-only regulations that
apply to health benefits plans and carriers
under the FEHB Program are applicable
beginning December 27, 2021. However,
as discussed in section II.C.1.b. of this
preamble, the Departments will provide
temporary and limited deferral of enforce-
ment during the first year of applicability
and this temporary and limited deferral of
enforcement will apply, in the same man-
ner, to FEHB plans and carriers.
Comment date: To be assured consid-
eration, comments must be received at
one of the addresses provided below, by
January 24, 2022. Please see section V.E.
of this preamble for information regarding
submission of comments on the informa-
tion collection requirements.
ADDRESSES: Written comments may
be submitted to the addresses specified
below.
In commenting, refer to file code CMS-
9905-IFC.
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 at
https://www.regulations.gov by entering
the file code in the search window and
then clicking on “Comment.”
2. By regular mail. You may mail writ-
ten comments to the following address
ONLY:
Centers for Medicare & Medicaid Ser-
vices,
Department of Health and Human Ser-
vices,
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 follow-
ing address ONLY:
Centers for Medicare & Medicaid Ser-
vices,
Department of Health and Human Ser-
vices,
Attention: CMS-9905-IFC,
Mail Stop C4-26-05,
7500 Security Boulevard,
Baltimore, MD 21244-1850
For information on viewing public com-
ments, see the beginning of the “SUPPLE-
MENTARY INFORMATION” section.
FOR FURTHER INFORMATION
CONTACT: Padma Babubhai Shah,
Office of Personnel Management, at 202-
606-4056.
Christopher Dellana, Internal Revenue
Service, Department of the Treasury, at
202-317-5500.
Matthew Litton or Shannon Hysjulien,
Employee Benefits Security Administra-
tion, Department of Labor, at 202-693-
8335.
Christina Whitefield, Centers for Medi-
care & Medicaid Services, Department of
Health and Human Services, at 301-492-
4172.
Customer Service Information: Infor-
mation from OPM on health benefits
plans offered under the FEHB Program
can be found on the OPM website (www.
opm.gov/healthcare-insurance/health-
care/). Individuals interested in obtain-
ing information from DOL concerning
employment-based health coverage laws
may call the Employee Benefits Security
Administration (EBSA) Toll-Free Hotline
at 1-866-444-EBSA (3272) or visit DOL’s
website (www.dol.gov/ebsa). In addition,

December 6, 2021 782 Bulletin No. 2021–49
information from HHS on private health
insurance coverage and coverage pro-
vided by non-federal governmental group
health plans can be found on the Centers
for Medicare & Medicaid Services (CMS)
website (www.cms.gov/cciio), and infor-
mation on health care reform can be found
at www.HealthCare.gov.
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 infor-
mation that is included in a comment. The
Departments generally post all comments
received before the close of the comment
period on the following website as soon
as possible after they have been received:
http://www.regulations.gov. Follow the
search instructions on that website to view
public comments. The Departments will
not post on Regulations.gov public com-
ments that make threats to individuals or
institutions or suggest that the individual
will take actions to harm the individual.
The Departments continue to encourage
individuals not to submit duplicative com-
ments. The Departments will post accept-
able comments from multiple unique
commenters even if the content is identi-
cal or nearly identical to other comments.
I. Background
A. Prescription Drug and Health Care
Spending Transparency under the
Consolidated Appropriations Act, 2021
On December 27, 2020, the Consoli-
dated Appropriations Act, 2021 (Pub. L.
116-260) (CAA) was enacted. Section
204 of Title II of Division BB of the CAA
added parallel provisions at section 9825
of the Internal Revenue Code (the Code),
section 725 of the Employee Retirement
Income Security Act (ERISA), and sec-
tion 2799A-10 of the Public Health Ser-
vice Act (PHS Act), which require group
health plans and health insurance issuers
offering group or individual health insur-
ance coverage to annually submit to the
Departments certain information about
prescription drug and health care spend-
ing. The statute provides that data shall be
reported not later than 1 year after the date
the CAA was enacted, and not later than
June 1 of each year thereafter.
The data submission required under
section 9825(a) of the Code, section 725(a)
of ERISA, and section 2799A-10(a) of the
PHS Act (section 204 data submissions)
includes general information on the plan
or coverage, such as the beginning and
end dates of the plan year, the number of
participants, beneficiaries, or enrollees,
as applicable, and each state in which
the plan or coverage is offered. Plans
and issuers must also report the 50 most
frequently dispensed brand prescription
drugs, and the total number of paid claims
for each such drug; the 50 most costly pre-
scription drugs by total annual spending,
and the annual amount spent by the plan
or coverage for each such drug; and the
50 prescription drugs with the greatest
increase in plan or coverage expenditures
from the plan year preceding the plan year
that is the subject of the report, and, for
each such drug, the change in amounts
expended by the plan or coverage in each
such plan year (top 50 lists). Addition-
ally, plans and issuers must report total
spending on health care services by the
plan or coverage broken down by the type
of costs (including hospital costs; health
care provider and clinical service costs,
for primary care and specialty care sep-
arately; costs for prescription drugs; and
other medical costs, including wellness
services); spending on prescription drugs
by the plan or coverage as well as by par-
ticipants, beneficiaries, and enrollees, as
applicable; and the average monthly pre-
miums paid by participants, beneficiaries,
and enrollees and paid by employers on
behalf of participants, beneficiaries, and
enrollees, as applicable. Plans and issuers
must report any impact on premiums by
rebates, fees, and any other remuneration
paid by drug manufacturers to the plan or
coverage or its administrators or service
providers, including the amount paid with
respect to each therapeutic class of drugs
and for each of the 25 drugs that yielded
the highest amounts of rebates and other
remuneration under the plan or coverage
from drug manufacturers during the plan
year (top 25 list). Finally, plans and issu-
ers must report any reduction in premiums
and out-of-pocket costs associated with
these rebates, fees, or other remuneration.
The Departments intend to provide greater
technical detail regarding each data ele-
ment in the section 204 data submission
in the instructions for the information col-
lection instrument. The Departments also
intend to provide an internet portal where
reporting entities can submit the required
data.
Section 9825(b) of the Code, sec-
tion 725(b) of ERISA, and section
2799A-10(b) of the PHS Act additionally
require the Departments to publish on
the internet a report on prescription drug
reimbursements for plans and coverage,
prescription drug pricing trends, and the
role of prescription drug costs in contrib-
uting to premium increases or decreases
under these plans or coverage, with infor-
mation that is aggregated so that no drug
or plan specific information is made pub-
lic (section 204 public report). This sec-
tion 204 public report must be published
no later than 18 months after the date
on which plans and issuers are required
to first submit the information and bian-
nually thereafter. The section 204 public
report may not include any confidential or
trade secret information submitted to the
Departments, pursuant to section 9825(c)
of the Code, section 725(c) of ERISA,
and section 2799A-10(c) of the PHS Act.
These interim final rules implement sec-
tion 9825 of the Code, section 725 of
ERISA, and section 2799A-10 of the PHS
Act. The Departments seek comment on
all aspects of these interim final rules.
Under the FEHB Act, 5 U.S.C. 8901
et seq., OPM is charged with adminis-
tering the FEHB Program and maintains
oversight and enforcement authority with
respect to FEHB plans, which are federal
governmental plans. Pursuant to 5 U.S.C.
8910, OPM is joining the Departments
to require the submission of prescription
drug and health care spending data from
FEHB plans in the same manner as plans
and issuers must provide such data under
section 9825 of the Code, section 725 of
ERISA, and section 2799A-10 of the PHS
Act.
On July 9, 2021, President Biden issued
Executive Order 14036, “Promoting
Competition in the American Economy.”
1

Executive Order 14036 directed the fed-
eral government to “enforce the antitrust
laws to combat the excessive concen-
tration of industry, the abuses of market

Bulletin No. 2021–49 783 December 6, 2021
power, and the harmful effects of monop-
oly and monopsony.” The data collection
required by these interim final rules will
provide valuable information about com-
petition and market concentration in the
pharmaceutical and health care indus-
tries. Policymakers can use the prescrip-
tion drug and health care spending data to
make informed decisions in support of the
goals of Executive Order 14036, includ-
ing identifying any excessive pricing of
prescription drugs driven by industry con-
centration and monopolistic behaviors,
promoting the use of lower-cost generic
drugs, and addressing the impact of phar-
maceutical manufacturer rebates, fees, and
other remuneration on prescription drug
prices and on plan, issuer, and consumer
costs.
The Departments are issuing regula-
tions implementing provisions of Title I
(No Surprises Act) and Title II (Transpar-
ency) of Division BB of the CAA in sev-
eral phases.
On July 13, 2021, the Departments
and OPM issued interim final rules enti-
tled, “Requirements Related to Surprise
Billing; Part I”
2
which generally apply to
group health plans and health insurance
issuers offering group or individual health
insurance coverage (including grandfa-
thered health plans) with respect to plan
years (in the individual market, policy
years) beginning on or after January 1,
2022; FEHB health benefits plans with
respect to contract years beginning on or
after January 1, 2022; and health care pro-
viders and facilities, and providers of air
ambulance services beginning on January
1, 2022 (July 2021 interim final rules).
The July 2021 interim final rules imple-
ment sections 9816(a)-(b) and 9817(a) of
the Code; sections 716(a)-(b) and 717(a)
of ERISA; sections 2799A-1(a)-(b),
2799A-2(a), 2799B-1, 2799B-2, 2799B-
3, and 2799B-5 of the PHS Act; and 5
U.S.C. 8902(p), to protect consumers
from surprise medical bills for emergency
services, air ambulance services furnished
by nonparticipating providers of air ambu-
lance services, and non-emergency ser-
vices furnished by nonparticipating pro-
viders at participating facilities in certain
circumstances.
Among other requirements, the July
2021 interim final rules require emer-
gency services to be covered without
any prior authorization, without regard to
whether the health care provider or facil-
ity furnishing the emergency services is a
participating provider or a participating
emergency facility with respect to the
services, and without regard to any other
term or condition of the plan or coverage
other than the exclusion or coordination of
benefits or a permitted affiliation or wait-
ing period. With respect to emergency ser-
vices furnished by nonparticipating pro-
viders or facilities, air ambulance services
furnished by nonparticipating providers
of air ambulance services, and non-emer-
gency services furnished by nonpartici-
pating providers at certain participating
facilities, the July 2021 interim final rules
generally limit cost sharing for out-of-
network services to in-network levels,
require such cost sharing to count toward
any in-network deductibles and out-of-
pocket maximums, and prohibit balance
billing in certain circumstances. Balance
billing refers to the practice of out-of-net-
work providers billing patients for the dif-
ference between: (1) the provider’s billed
charges; and (2) the amount collected
from the plan or issuer plus the amount
collected from the patient in the form of
cost sharing (such as a copayment, coin-
surance, or amounts paid toward a deduct-
ible).
On September 16, 2021, the Depart-
ments and OPM issued proposed rules
entitled, “Requirements Related to Air
Ambulance Services, Agent and Broker
Disclosures, and Provider Enforcement.”
3

These proposed rules propose to imple-
ment section 9823 of the Code; section
723 of ERISA; and sections 2723(b),
2746, 2799A-8, and 2799B-4 of the PHS
Act; as well as sections 106(a) and 106(e)
of the No Surprises Act. These proposed
rules would implement certain provi-
sions of the No Surprises Act that would
increase transparency by requiring group
health plans and health insurance issuers
in the group and individual markets, and
FEHB carriers, to submit certain informa-
tion about air ambulance services to the
Departments and OPM, as applicable, and
by requiring providers of air ambulance
services to submit certain information to
the Secretaries of HHS and Transporta-
tion. These proposed rules also include
HHS-only provisions that would increase
transparency by requiring a health insur-
ance issuer offering individual health
insurance coverage or short-term, limit-
ed-duration insurance to disclose to poli-
cyholders and to report to HHS any direct
or indirect compensation provided by the
issuer to an agent or broker associated
with enrolling individuals in such cover-
age. The HHS-only proposed rules would
additionally provide the process by which
HHS would investigate complaints and
potential violations of PHS Act provisions
and, if warranted, take enforcement action,
including the imposition of civil money
penalties, against providers and facilities,
including providers of air ambulance ser-
vices. These proposed rules would amend
existing regulations to clarify the process
to investigate complaints and potential
violations of the PHS Act and impose civil
money penalties against plans and issuers.
These proposed rules would also establish
the process by which HHS would impose
civil money penalties if a provider of air
ambulance services fails to submit some
or all required data to HHS.
On October 7, 2021, the Departments
and OPM published interim final rules
entitled, “Requirements Related to Sur-
prise Billing; Part II,”
4
which generally
apply to certified independent dispute
resolution (IDR) entities; selected dispute
resolution (SDR) entities; group health
plans and health insurance issuers offering
group or individual health insurance cov-
erage and FEHB carriers; and providers,
facilities, and providers of air ambulance
services beginning on or after January 1,
2022, with the exception of certain provi-
sions that apply beginning on October 7,
2021 (October 2021 interim final rules).
The October 2021 interim final rules
implement sections 9816(c) and 9817(b)
1
https://www.federalregister.gov/documents/2021/07/14/2021-15069/promoting-competition-in-the-american-economy.
2
86 FR 36872 (July 13, 2021). Public comments on this rule were due by September 7, 2021.
3
86 FR 51730 (Sept. 16, 2021). Public comments on this rule were due by October 18, 2021.
4
86 FR 55980 (October 7, 2021). Public comments on this rule are due by December 6, 2021.

December 6, 2021 784 Bulletin No. 2021–49
of the Code; sections 716(c) and 717(b) of
ERISA; and sections 2799A-1(c), 2799A-
2(b), 2799B-6(1), 2799B-6(2)(B), and
2799B-7 of the PHS Act.
The October 2021 interim final rules
implement provisions of the No Surprises
Act that establish a federal IDR process
that group health plans, health insurance
issuers offering group or individual health
insurance coverage, and FEHB carriers;
and nonparticipating providers, facilities,
and providers of air ambulance services
may use following the end of an unsuc-
cessful open negotiation period to deter-
mine the out-of-network rate for items
or services that are emergency services,
nonemergency services furnished by
nonparticipating providers at participat-
ing facilities, and air ambulance services
furnished by nonparticipating providers
of air ambulance services, under certain
circumstances. In addition, HHS-only
provisions of the October 2021 interim
final rules address good faith estimates of
health care items or services for uninsured
or self-pay individuals and the associated
patient-provider dispute resolution pro-
cess. The October 2021 interim final rules
also amend final regulations issued by the
Departments in 2015 related to external
review in order to implement section 110
of the No Surprises Act.
Division BB of the CAA also includes:
provisions regarding transparency in plan
and insurance identification cards (section
107); continuity of care (section 113);
accuracy of provider network directo-
ries (section 116); and prohibition on gag
clauses (section 201) that are applicable
for plan years beginning on or after Jan-
uary 1, 2022. The Departments intend to
undertake rulemaking to fully implement
these provisions, with the exception of
section 201 of Title II of Division BB
of the CAA, prohibition on gag clauses,
which is self-implementing. On August
20, 2021, the Departments issued guid-
ance regarding implementation of each
of these sections of Division BB of the
CAA.
5
Until rulemaking fully imple-
menting these provisions is finalized and
effective, plans and issuers are expected to
implement the requirements using a good
faith, reasonable interpretation of the stat-
ute.
B. Stakeholder Consultation and Input
The Departments and OPM published
a Request for Information (RFI) in the
June 23, 2021 Federal Register (86 FR
32813). The RFI solicited comments from
the public regarding implementation con-
siderations for the data collection required
by section 9825 of the Code, section 725 of
ERISA, and section 2799A-10 of the PHS
Act and the associated impact on plans
and issuers. The Departments sought input
on specific data elements to be collected,
including the level of detail that is feasible
for entities subject to the data collection
requirements to report and the associated
burdens and potential compliance costs.
In the RFI, the Departments indicated
that public comments would inform the
Departments’ and OPM’s implementa-
tion of the statutory requirements through
rulemaking and the establishment of pro-
cesses to receive the required information.
The Departments also sought comment
from the public regarding information to
include in the Departments’ biannual sec-
tion 204 public report. OPM sought input
from the public regarding implementation
considerations for the data collection as it
pertains to FEHB carriers.
The Departments also held several
listening sessions with employers, group
health plans, issuers, and pharmacy ben-
efit managers (PBMs) to gather public
input on each aspect of the data submis-
sion requirements as well as the biannual
section 204 public reports. OPM also
held a listening session with FEHB car-
riers. The Departments consulted with
stakeholders through regular contact
with states, issuers, plans, trade groups,
employers, and other interested parties.
The Departments and OPM considered all
public input received in the development
of these interim final rules. The Depart-
ments and OPM also took into account
the objectives of Executive Order 14036
to promote competitiveness in the health
care and pharmaceutical markets and
lower the price of and improve access to
prescription drugs and biologics.
II. Overview of the Interim Final Rules
– Departments of HHS, Labor, and the
Treasury
A. Applicability
These interim final rules add 26
CFR 54.9825-2T and amend 29 CFR
2590.716-2 and 45 CFR 149.20 to include
a reference to the new regulations added
by these interim final rules.
6
These interim
final rules include the prescription drug
and health care spending data submis-
sion requirements for plans and issuers
required under section 9825 of the Code,
section 725 of ERISA, and section 2799A-
10 of the PHS Act.
These interim final rules generally
apply to group health plans and health
insurance issuers offering group or indi-
vidual health insurance coverage. The term
“group health plan” includes both insured
and self-funded group health plans, and
includes private employment-based group
health plans subject to ERISA, non-federal
governmental plans (such as plans spon-
sored by states and local governments)
subject to the PHS Act, and church plans
subject to the Code. Individual health
insurance coverage includes coverage
offered in the individual market, through
or outside of an Exchange, and includes
student health insurance coverage as
defined at 45 CFR 147.145. As discussed
further in section III. of this preamble,
OPM interim final rules require FEHB
carriers to comply with these interim final
rules, with respect to prescription drug
and health care spending data submission
requirements, subject to OPM regulation
and contract provisions.
Section 9825 of the Code, section 725
of ERISA, and section 2799A-10 of the
PHS Act (and all provisions of the No
Surprises Act that are applicable to group
health plans and health insurance issuers
offering group or individual health insur-
ance coverage) apply to grandfathered
health plans. Section 1251 of the Afford-
able Care Act provides that grandfathered
5
FAQs about Affordable Care Act and Consolidated Appropriations Act, 2021, Implementation Part 49 (Aug. 20, 2021), available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-
FAQs/Downloads/FAQs-Part-49.pdf.
6
The amendment to 29 CFR 2590.716-2 also includes a technical edit to correct a cross-reference in 29 CFR 2590.716-2(a)(2).

Bulletin No. 2021–49 785 December 6, 2021
health plans are not subject to certain pro-
visions of the Code, ERISA, or the PHS
Act, as added by the Affordable Care Act,
for as long as they maintain their status
as grandfathered health plans. For exam-
ple, grandfathered health plans are subject
neither to the requirement to cover certain
preventive services without cost sharing
under section 2713 of the PHS Act, nor to
the annual limitation on cost sharing set
forth under section 2707(b) of the PHS
Act. If a plan or coverage loses its grand-
fathered status, it is required to comply
with both provisions, in addition to certain
other requirements of the Affordable Care
Act. However, the CAA does not include
an exception for grandfathered health
plans that is comparable to the exception
contained in section 1251 of the Afford-
able Care Act. Therefore, the provisions
of these interim final rules that apply to
plans and issuers also apply to grandfa-
thered health plans (as defined in 26 CFR
54.9815-1251, 29 CFR 2590.715-1251,
and 45 CFR 147.140).
These interim final rules do not apply
to health reimbursement arrangements
(HRAs), or other account-based group
health plans, as described in 26 CFR
54.9815-2711(d)(6)(i), 29 CFR 2590.715-
2711(d)(6)(i), and 45 CFR 147.126(d)
(6)(i), that make reimbursements subject
to a maximum fixed dollar amount for
a period, because the benefit design of
these plans makes the prescription drug
and health care spending data report-
ing concepts under section 9825 of the
Code, section 725 of ERISA, and section
2799A-10 of the PHS Act inapplicable.
The Departments expect that account-
based group health plans typically will
be integrated with other coverage that
will be required to report such informa-
tion (such as in the case of individual
coverage HRAs (ICHRAs), for which the
issuer of the individual coverage will be
required to report the information) or will
be otherwise exempt from these require-
ments (such as excepted benefit HRAs).
Therefore, under these interim final rules,
the reporting requirements do not apply
to HRAs (including ICHRAs) and other
account-based group health plans. This
approach is consistent with many other
requirements that apply to group health
plans and the existing applicability pro-
visions in 26 CFR 54.9816-2T, 29 CFR
2590.716-2, and 45 CFR 149.20 with
respect to other requirements of Division
BB of the CAA.
Excepted benefits are exempt from
the requirements in chapter 100 of the
Code, part 7 of ERISA, and Part A and
Part D of title XXVII of the PHS Act.
7

Under section 2791(b)(5) of the PHS Act,
short-term, limited-duration insurance
is excluded from the definition of indi-
vidual health insurance coverage and is,
therefore, exempt from the new require-
ments established in section 2799A-10
of the PHS Act. Therefore, short-term,
limited-duration insurance (as defined in
26 CFR 54.9801-2, 29 CFR 2590.701-2,
and 45 CFR 144.103) and coverage that
consists solely of excepted benefits (as
described in section 9832(c) of the Code,
section 733(c) of ERISA, and section
2791(c) of the PHS Act) are not subject to
the data submission requirements set forth
in these interim final rules.
The Departments seek comment as to
whether there are any other plans with
unique benefit designs that should be
exempt from these interim final rules.
B. Definitions (26 CFR 54.9825-3T, 29
CFR 2590.725-1, 45 CFR 149.710)
The Departments adopt terms and defi-
nitions applicable to the data submission
requirements set forth in these interim
final rules in 26 CFR 54.9825-3T, 29 CFR
2590.725-1, and 45 CFR 149.710. In addi-
tion, the definitions in 26 CFR 54.9816-
3T, 29 CFR 2590.716-3, and 45 CFR
149.30 apply to these interim final rules.
In general, these interim final rules do not
define terms that are commonly used in the
health care and health insurance industry.
Reference Year. Section 9825(a) of the
Code, section 725(a) of ERISA, and sec-
tion 2799A-10(a) of the PHS Act require
plans and issuers to submit information
“with respect to the health plan or cov-
erage in the previous plan year.” To help
ensure uniformity of data across plans and
coverage and increase the usability of the
data for purposes of the section 204 pub-
lic report, the Departments are requiring
plans and issuers to submit information
based on the “reference year,” defined in
these interim final rules as the calendar
year immediately preceding the calendar
year in which the section 204 data submis-
sions are due.
Collecting data for the immediately
preceding calendar year, rather than the
previous plan year, better accounts for
the timing of when newly introduced
drugs – including new brand prescription
drugs, newly available generic versions
of brand prescription drugs, and biosimi-
lars – become available and the fact that
some group health plans and health insur-
ance coverage have plan years that do not
correspond to calendar years. If data are
collected based on the plan year, newly
introduced drugs would be reflected in
the data for some plans and coverage but
not others. If data are collected based on
the calendar year, newly introduced drugs
will be reflected in the data for every plan,
regardless of the start and end date of the
plan year.
Newly introduced drugs, such as bio-
logics, are often very costly and may
impact the ranking of the 50 most costly
prescription drugs. Similarly, when a
generic or biosimilar version of a drug
becomes available, the brand version will
be prescribed less frequently, which may
impact the ranking of the top 50 most
frequently dispensed brand prescription
drugs. Therefore, if the Departments were
to collect information regarding the top 50
drugs by plan or policy year as specified in
plan or coverage documents, without addi-
tional specification about the measure-
ment period, there would be inconsistency
among data submissions that would make
them difficult to compare to each other.
Collection of all data on a calendar-year
basis will enable the Departments to effec-
tively analyze the data and understand the
impact of a newly introduced drug consis-
tently across plans and coverage, market
segments, and years. In addition, using the
calendar year as the reference year will
enable the Departments to produce con-
7
See section 9831 of the Code, section 732 of ERISA, and section 2722 of the PHS Act. The CAA amended the PHS Act statutory exemption for these products to include the new require-
ments established under new Part D of the PHS Act. See section 102(a)(3)(B) of the No Surprises Act, which made conforming amendments to add the phrase “and Part D” to section 2722(b),
(c)(1), (c)(2), and (c)(3) of the PHS Act.

December 6, 2021 786 Bulletin No. 2021–49
sistent data analyses across group health
plans and group health insurance coverage
(which may be offered on a non-calendar
basis) and individual health insurance
coverage (which is generally offered on
a calendar-year basis) for purposes of the
section 204 public report.
Second, using the calendar year as the
reference year is consistent with other
HHS rules and data collections related to
prescription drug and health care spend-
ing. For example, similar to section 9825
of the Code, section 725 of ERISA, and
section 2799A-10 of the PHS Act, section
2718(a) of the PHS Act requires issuers
to report Medical Loss Ratio (MLR) data
“with respect to each plan year.” How-
ever, issuers report calendar year infor-
mation to HHS for the MLR data collec-
tion instead.
8
The National Association of
Insurance Commissioners (NAIC), which
section 2718(c) of the PHS Act directs to
make recommendations to HHS regarding
definitions for the MLR data collection,
recommended that the term “plan year” in
section 2718(a) of the PHS Act be inter-
preted to refer to the calendar year, rather
than the year specified in particular plan
or policy documents.
9
The NAIC recom-
mended this interpretation because any
other definition would have precluded
meaningful comparison of the reported
data, reduced the reliability of the data,
and increased reporting burdens. The
Departments are of the view that the same
rationales apply with respect to the section
204 data submissions.
In addition, the prescription drug data
collection with respect to qualified health
plans (QHPs), required under section
1150A of the Social Security Act related
to collection of information “for a contract
year,” also involves the submission of data
on a calendar-year basis.
10
Likewise, the
Medicare program, in which some Medi-
care Part D plans and Medicare Advantage
Plans offering a prescription drug plan
have non-calendar year contract years,
analyzes prescription drug and prescrip-
tion drug rebate data on a calendar-year
basis and generally collects data in a man-
ner that permits calendar year-based anal-
ysis.
11
Similarly, the Medicaid program,
where some managed care plans have
non-calendar year contract years, analyzes
prescription drug and prescription drug
rebate data on a calendar-year basis.
12
In
addition, state data collections related to
prescription drug spending and rebates,
including certain state All-Payer Claims
Databases, generally collect data on a
calendar-year basis.
13
Collection of calen-
dar-year data will allow the Departments
to evaluate the consistency and validity
of the data and compare trends across
multiple data sources as well as between
publicly- and privately-sponsored health
coverage.
Prior to issuing these interim final
rules, the Departments received comment
letters from several stakeholders recom-
mending that the Departments collect
data on a calendar-year basis, including
for non-calendar year plans or coverage.
The Departments also solicited comment
on using calendar year as the basis for
the section 204 data submissions in the
RFI, and the overwhelming majority of
commenters that responded to this RFI
question supported the calendar-year
approach. Commenters stated that calen-
dar-year data would be more meaningful
when comparing trends in the group mar-
kets (where plan years may not align with
the calendar year) to those in the individ-
ual market (where policy years are gener-
ally on a calendar-year basis), because all
of the data would be based on the same
period. Issuers additionally advised that
reporting calendar-year data for purposes
of the section 204 data submissions would
reduce compliance burdens because issu-
ers submit other related data to state and
federal regulators on a calendar-year
basis. The Departments share the views of
these commenters.
Student Market. In these interim final
rules, for purposes of section 204 data
submissions, the term “student market”
has the meaning given in 45 CFR 158.103.
Under 45 CFR 149.30, the definitions in
45 CFR 144.103 apply to the provisions
of 45 CFR part 149 unless otherwise spec-
ified. The definitions of many terms in 45
CFR 144.103 and 45 CFR 158.103 are
identical. However, the term “student mar-
ket” is not defined in 45 CFR 144.103, but
is defined in 45 CFR 158.103 as the mar-
ket for student health insurance coverage.
Consistency of the definition of “student
market” in these interim final rules with the
definition in 45 CFR 158.103 will enable
the Departments to validate data quality
and produce consistent analyses across
data submitted under section 2718(a) of
the PHS Act for purposes of MLR report-
ing and section 9825 of the Code, section
725 of ERISA, and section 2799A-10 of
the PHS Act for purposes of the section
204 public report.
14
Consistency with the
definition of “student market” in 45 CFR
158.103 will also reduce compliance bur-
dens for plans and issuers in the fully-in-
sured markets, because plans and issuers
subject to the requirements of 45 CFR part
158 have already created group size and
market determination processes and have
modified systems to track data using the
definitions in 45 CFR 158.103 for pur-
poses of MLR reporting. The Departments
recognize that self-funded group health
plans generally are not subject to as many
requirements that are based on employer
size as fully-insured group health plans.
Consequently, self-funded plans are likely
8
See 45 CFR § 158.103, which defines the MLR reporting year as a calendar year during which group or individual health insurance coverage is provided by an issuer.
9
https://www.naic.org/documents/committees_ex_mlr_reg_asadopted.pdf.
10
Pharmacy Benefit Manager Transparency for Qualified Health Plans information collection, available at https://www.cms.gov/regulations-and-guidancelegislationpaperworkreductionac-
tof1995pra-listing/cms-10725.
11
See, e.g., 42 CFR Part 423; see also https://www.cms.gov/newsroom/fact-sheets/medicare-part-d-direct-and-indirect-remuneration-dir.
12
See, e.g., https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Information-on-Prescription-Drugs/Medicaid.
13
See, e.g., Colorado Prescription Drug Rebate Data Submission Manual (Sept. 8, 2020), https://www.civhc.org/wp-content/uploads/2020/10/Colorado-APCD-2020-Drug-Rebate-Data-Sub-
mission-Manual_09.08.2020.pdf; Maine Uniform Reporting System for Prescription Drug Price Data Sets, 90-590 C.M.R. ch. 570, https://mhdo.maine.gov/_finalStatutesRules/Chapter 570
Rx Drug Pricing_2020Feb4.docx; Massachusetts Payer Reporting of Prescription Drug Rebates Data Specification Manual (Apr. 2020), https://www.chiamass.gov/assets/docs/p/prescrip-
tion-drug-rebate/Prescription-Drug-Rebate-Data-Specification-Manual-2020.pdf; Minnesota Commerce Department, Public Pharmacy Benefit Manager (PBM) Transparency Report (Dec.
1, 2020), https://mn.gov/commerce-stat/pdfs/pbm-transparency-report.pdf; Texas Pharmaceutical Benefits Reporting (Dec. 2020): Health benefit plan issuer and Pharmacy benefit manager
reporting forms, https://www.tdi.texas.gov/health/documents/hbpi.pdf and https://www.tdi.texas.gov/health/documents/pbm.pdf.
14
All other relevant definitions in 45 CFR 158.103 have the same meaning or functional effect as the definitions in 45 CFR 144.103.

Bulletin No. 2021–49 787 December 6, 2021
to face more challenges in determining
employer size and providing that informa-
tion to third-party administrators (TPAs)
that submit data on behalf of self-funded
plans. Therefore, reasonable approxima-
tions for employer size determinations
of self-funded group health plans will be
allowed. The instructions for the infor-
mation collection instrument will provide
examples of approximation methods that
the Departments will consider to be rea-
sonable.
FEHB Line of Business. In these
interim final rules, the term “FEHB line
of business” refers to all health benefits
plans that are offered to eligible enrollees
pursuant to a contract between an FEHB
Program carrier and OPM. Such plans are
Federal governmental plans offered pur-
suant to 5 U.S.C. chapter 89.
Market Segment. In these interim final
rules, the term “market segment” means
each of the following: the individual mar-
ket (excluding the student market), the
student market, the fully-insured small
group market, the fully-insured large
group market (excluding the FEHB line
of business), self-funded plans offered
by small employers, self-funded plans
offered by large employers, and the FEHB
line of business. Mixed-funded plans,
which generally self-fund some health
benefits and fully insure other health ben-
efits, should attribute information reported
to a market segment based on the source
of funding for the benefits included in the
report. For example, self-funded phar-
macy benefits might be attributed to the
market for self-funded group health plans
offered by large employers while the
reporting for the medical component of
the same plan is attributed to the fully-in-
sured large group market, if the medical
benefits are funded through an insurance
contract. “Minimum premium” plans and
similar hybrid arrangements that mimic
key aspects of fully-insured arrangements
or that are required to comply with state
laws regarding mandated benefits must be
included in the fully-insured small group
and large group market segments. “Min-
imum premium” plans generally feature
regular fixed-premium payments and limit
the plan sponsor’s monthly or annual lia-
bility for claims, similar to fully-insured
coverage. Finally, because student health
insurance coverage is designed, marketed,
and priced for a unique and narrower pop-
ulation than other individual health insur-
ance coverage, collecting student market
data separately for purposes of section 204
data submissions will allow the Depart-
ments to better analyze prescription drug
usage and costs in this market. In addition,
issuers of coverage subject to 45 CFR part
158 already track and report data for the
student market policies separately from
other individual market policies.
Enrollee. In these interim final rules,
in the context of provisions of section
2799A-10(a) of the PHS Act, the term
“enrollee” means an individual who is
enrolled, within the meaning of 45 CFR
144.103, in group health insurance cover-
age, or an individual who is covered by
individual health insurance coverage, at
any time during the reference year, and
includes dependents.
Life-years. In these interim final rules,
the term “life-years” means the total num-
ber of months of coverage for participants
and beneficiaries, or for enrollees, as
applicable, divided by 12.
Brand Prescription Drug. In these
interim final rules, the term “brand pre-
scription drug” means a drug for which
an application is approved under section
505(c) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 355(c)), or under
section 351 of the PHS Act (42 U.S.C.
262), and that is generally marketed
under a proprietary, trademark-protected
name. The term “brand prescription drug”
includes a drug with Emergency Use
Authorization issued pursuant to section
564 of the Federal Food, Drug, and Cos-
metic Act (21 U.S.C. 360bbb-3), and that
is generally marketed under a proprietary,
trademark-protected name. The term
“brand prescription drug” includes drugs
that the U.S. Food and Drug Administra-
tion (FDA) determines to be interchange-
able biosimilar products under sections
351(i)(3) and 351(k)(4) of the PHS Act
(42 U.S.C. 262).
Prescription Drug or Drug. In these
interim final rules, the term “prescription
drug” or “drug” means a set of pharma-
ceutical products, including biologics, that
have been assigned a National Drug Code
(NDC) by FDA and are grouped by name
and ingredient in the manner specified
by the Departments.
15
The Departments
anticipate specifying that pharmaceutical
products must be grouped by name and
active ingredient, separately for brand
products and generic products or certain
biosimilar products. Products with the
same name and active ingredient will thus
be considered, for the purpose of these
interim final rules, to be the same pre-
scription drug even if they have a different
dosage strength, package size, mode of
delivery, or, for generic products, different
manufacturers.
16

The Departments chose to group phar-
maceutical products by name and ingre-
dient because this approach will produce
more meaningful top 50 and top 25 lists
of prescription drugs. If products are not
grouped according to name and ingredient,
the same drug could occupy several spots
on the top 50 or top 25 lists. For example,
providers may prescribe a drug that comes
in the form of pills in different strengths,
such as 10 mg or 20 mg, or a drug may
sometimes be dispensed as a 30-day sup-
ply and sometimes as a 90-day supply.
In addition, several different companies
may manufacture the same generic drug.
If each variation of the drug were con-
sidered separately, the drug could occupy
several spots on a top 50 list, which would
be redundant and would not clearly indi-
cate the full scope and variety of drugs in
the top 50 list. Or, conversely, the varia-
tions could disperse the frequency across
so many different products that the drug
would not end up making the top 50 list
despite its prevalence, even if it would be
included in the list if categorized by ingre-
dient or name.
This definition is consistent with stake-
holder recommendations. Although a
number of commenters responding to the
RFI suggested that the Departments rely
on the NDC with regard to the definition
of “prescription drug,” the majority of
15
https://www.fda.gov/drugs/drug-approvals-and-databases/national-drug-code-directory.
16
This definition of the term “prescription drug” and “drug” and characterization of the term “same prescription drug” are used only for purposes of these interim final rules and are not
intended to reflect or suggest any such definition or characterization of these terms by FDA.

December 6, 2021 788 Bulletin No. 2021–49
commenters advised the Departments to
classify prescription drugs according to
characteristics such as the drug’s name
and active ingredient and not solely by
the NDC, which distinguishes products by
dosage strength, form of delivery, package
size, and manufacturer. Commenters gen-
erally recommended that the Departments
adopt a definition of “prescription drug”
consistent with this approach to ensure
that different formulations and dosages
of the same drug do not appear on the top
50 lists multiple times. Commenters also
suggested that the Departments either use
a common commercially available data-
base to group prescription drugs by name,
active ingredient, and therapeutic class, or
provide a new uniform mapping for how
prescription drugs must be grouped and
classified.
Therapeutic Class. In these interim
final rules, the term “therapeutic class”
means a group of pharmaceutical prod-
ucts that have similar mechanisms of
action or treat the same types of condi-
tions, grouped in the manner specified
by the Departments in guidance.
17
The
Departments may specify in guidance
the technical specifications for how plans
and issuers must classify drugs, and may
specify that plans and issuers must do so
according to a commonly available public
or commercial therapeutic classification
system that maps prescription drugs to
therapeutic classes, a therapeutic classi-
fication system provided by the Depart-
ments through guidance, or a combination
thereof. The Departments will require all
plans and issuers to use the same classifi-
cation system. This definition is consistent
with stakeholder recommendations. Com-
menters responding to the questions in the
RFI regarding the definition of “therapeu-
tic class” advised that regulated entities
use a variety of commercially available
therapeutic classification systems. Many
commenters urged the Departments to
provide a uniform mapping system for
therapeutic classes. Commenters gen-
erally requested that the Departments
provide clear instructions and provide
adequate implementation time, including
by allowing plans and issuers to phase in
adoption of a new uniform classification
system.
Prescription Drug Rebates, Fees, and
Other Remuneration. In these interim
final rules, the term “prescription drug
rebates, fees, and other remuneration”
means all remuneration received by or on
behalf of a plan or issuer, its administrator
or service provider, including remunera-
tion received by and on behalf of entities
providing pharmacy benefit management
services to the plan or issuer, with respect
to prescription drugs prescribed to partic-
ipants, beneficiaries, or enrollees in the
plan or coverage, as applicable, regard-
less of the source of the remuneration (for
example, pharmaceutical manufacturer,
wholesaler, retail pharmacy, or vendor).
Prescription drug rebates, fees, and other
remuneration also include, for example,
discounts, chargebacks or rebates, cash
discounts, free goods contingent on a
purchase agreement, up-front payments,
coupons, goods in kind, free or reduced-
price services, grants, or other price con-
cessions or similar benefits. Prescription
drug rebates, fees, and other remuneration
include bona fide service fees. Bona fide
service fees mean fees paid by a drug man-
ufacturer to an entity providing pharmacy
benefit management services to the plan
or issuer that represent fair market value
for a bona fide, itemized service actually
performed on behalf of the manufacturer
that the manufacturer would otherwise
perform (or contract for) in the absence of
the service arrangement, and that are not
passed on in whole or in part to a client or
customer of the entity, whether or not the
entity takes title to the drug.
Some commenters responding to the
RFI regarding the definition of prescrip-
tion drug rebates, fees, and other remu-
neration recommended definitions that
are identical or substantially similar to
the definition of prescription drug rebates
and other price concessions in the MLR
regulations at 45 CFR 158.103 (which
generally require issuers, among other
requirements, to report premiums, pre-
scription drug and medical expenses, and
administrative expenses to HHS). Some
commenters recommended that the defi-
nition include significantly more detailed
illustrative examples. Many commenters
encouraged the Departments to collect
detailed information on the various types
of prescription drug rebates, fees, and
other remuneration, including at the level
of detail consistent with the specifications
for the data collection requirements under
the Exchange Establishment rule
18
and the
PBM Transparency rule
19
(which gener-
ally require certain entities to submit to
HHS prescription drug data with respect
to QHPs). In these interim final rules, the
Departments are adopting a definition of
prescription drug rebates, fees, and other
remuneration that overlaps with the defi-
nition in the MLR regulations at 45 CFR
158.103 to the extent consistent with sec-
tion 9825(a)(9) of the Code, section 725(a)
(9) of ERISA, and section 2799A-10(a)(9)
of the PHS Act. As the types of prescrip-
tion drug rebates, fees, and other remuner-
ation continue to evolve, the Departments
intend to provide additional examples in
the instructions for the information collec-
tion instrument as may be necessary. The
Departments intend to specify the level of
detail at which prescription drug rebates,
fees, and other remuneration must be
reported in section 204 data submissions
in the instructions for the information
collection instrument. The Departments
intend to specify a level of detail that will
assist plans, issuers, and other reporting
entities in correctly determining the total
amount of prescription drug rebates, fees,
and other remuneration, and that will be
generally consistent with the categories
of rebates, fees, and other remuneration
specified in the data collection require-
ments under the Exchange Establishment
rule and the PBM Transparency rule.
A number of commenters urged the
Departments to include bona fide service
fees in the definition of “prescription drug
rebates, fees, and other remuneration,”
stating that the statute did not provide
17
This definition of the term “therapeutic class” is used only for purposes of these interim final rules and is not intended to reflect or suggest any such definition or characterization of this
term by FDA.
18
77 FR 18308 (March 27, 2012).
19
86 FR 24140 (May 5, 2021).

Bulletin No. 2021–49 789 December 6, 2021
an exception for any fees paid by manu-
facturers to PBMs and other service pro-
viders, and that disclosure of these fees
is necessary to ensure transparency and
to ensure that rebates and other fees are
not improperly mischaracterized as bona
fide service fees. In contrast, other com-
menters urged the Departments to exclude
bona fide service fees from the definition
of “prescription drug rebates, fees, and
other remuneration,” stating that these
fees do not affect drug costs or impact
premiums, and should be excluded for
consistency with the requirements under
the MLR rule, the Exchange Establish-
ment rule and the PBM Transparency
rule, as well as the definitions used by the
Medicare and Medicaid programs. The
Departments interpret section 9825(a)(9)-
(10) of the Code, section 725(a)(9)-(10) of
ERISA, and section 2799A-10(a)(9)-(10)
of the PHS Act to require plans and issu-
ers to report the total amount of rebates,
fees, and any other remuneration, and sep-
arately, the extent to which rebates, fees,
and any other remuneration impact premi-
ums and out-of-pocket costs. The Depart-
ments note that section 9825(a)(9) of the
Code, section 725(a)(9) of ERISA, and
section 2799A-10(a)(9) of the PHS Act
require plans and issuers to report rebates,
fees, and any other remuneration paid by
drug manufacturers to the plan or cover-
age or its administrators or service pro-
viders, with respect to prescription drugs
prescribed to participants, beneficiaries, or
enrollees, as applicable, in the plan or cov-
erage, and do not provide for the exclusion
of bona fide service fees or any other fees.
However, the Departments recognize that
bona fide service fees may not always be
intended to directly affect the cost or uti-
lization of specific prescription drugs, and
generally are not passed through to plans
and issuers or to participants, beneficia-
ries, and enrollees. Therefore, the Depart-
ments will require reporting of only the
total amount of bona fide service fees, but
will not require these fees to be reported
separately for each therapeutic class or for
each drug on the top 25 list. This approach
will help reduce compliance burden by
enabling plans, issuers, TPAs, and PBMs
to leverage some of the reporting capa-
bilities they have already built to meet
the requirements of section 1150A of the
Social Security Act, which requires QHP
issuers, Medicare Advantage Organiza-
tions offering plans with Medicare Part D,
and Part D plan sponsors and PBMs that
manage prescription drug coverage under
contracts with these entities to report cer-
tain prescription drug benefit and rebate
information to HHS and to exclude bona
fide service fees in such reporting.
A number of commenters urged the
Departments to exclude drug manufac-
turer cost-sharing assistance to partici-
pants, beneficiaries, and enrollees, such as
coupons and copay cards, from the defini-
tion of prescription drug rebates because
these amounts are not credited to the plan
or coverage or its administrators or service
providers. The Departments agree with
this view, and in these interim final rules,
the definition of prescription drug rebates
and other price concessions excludes drug
manufacturer cost-sharing assistance pro-
vided to participants, beneficiaries, or
enrollees, as applicable. However, to the
extent these amounts impact total annual
spending by health plans or issuers, or by
participants, beneficiaries, and enrollees,
these interim final rules include drug man-
ufacturer cost-sharing assistance in the
definition of “total annual spending,” as
discussed in more detail later in this sec-
tion of this preamble.
Dosage Unit. In these interim final
rules, the term “dosage unit” means the
smallest form in which a pharmaceuti-
cal product is administered or dispensed.
Common dosage units include a pill, tab-
let, capsule, ampule, or measurement of
grams or milliliters.
20
Premium Amount. In these interim
final rules, the term “premium amount”
with respect to individual health insurance
coverage and fully-insured group health
plans has the meaning given to the term
“earned premium” in 45 CFR 158.130,
excluding the adjustments specified in
45 CFR 158.130(b)(5), which currently
encompass payments and receipts related
to the risk adjustment program that would
not be relevant for purposes of the section
204 data submissions. Several comment-
ers responding to the RFI requested that
the Departments clarify how premiums
must be reported for self-funded plans
or recommended the use of premium
equivalents to ensure consistent report-
ing between fully-insured and self-funded
plans. To accurately capture the concept
of premiums and the full costs of main-
taining health coverage with respect to
self-funded group health plans and other
arrangements that do not rely exclusively
or primarily on premiums, in these interim
final rules, the term “premium amount”
with respect to these plans includes pre-
mium equivalent amounts that represent
the total cost of providing and maintain-
ing coverage, such as the cost of claims,
administrative costs, and stop-loss premi-
ums.
Reporting Entity. In these interim final
rules, the term “reporting entity” means
an entity that submits some or all of the
information required under these interim
final rules to the Departments with respect
to a plan or issuer. The term also includes
entities, other than plans and issuers, that
submit the information on behalf of plans
and issuers, as allowed by these interim
final rules. Many commenters responding
to the RFI regarding potential types of
reporting entities requested clarification as
to which entities are responsible for sec-
tion 204 data submissions. Commenters
generally indicated that plans and issuers
expect that issuers and TPAs will report
the information on behalf of most group
health plans, including self-funded group
health plans. Therefore, the Departments
are allowing multiple types of reporting
entities to submit the required information
to provide plans and issuers with flexibil-
ity and to reduce administrative burdens.
Some commenters requested that the
Departments require TPAs and PBMs to
report the information to or on behalf of
self-funded group health plans. Although
the Departments understand that these
entities will make the section 204 data
submissions on behalf of most self-funded
group health plans in the vast majority of
cases, the Departments note that section
9825 of the Code, section 725 of ERISA,
20
This definition of the term "dosage unit " is used only for purposes of these interim final rules and is not intended to reflect or suggest any such definition or characterization of this term
by FDA.

December 6, 2021 790 Bulletin No. 2021–49
and section 2799A-10 of the PHS Act
make plans and issuers responsible for
providing the required information to the
Departments. Therefore, the Departments
do not require TPAs and PBMs to submit
the information.
In addition, many commenters urged
the Departments to design a data collection
system that would allow multiple report-
ing entities to submit different subsets
of the required information with respect
to the same plan or issuer. Commenters
advised that a single reporting entity may
not possess all of the information required
to be reported under section 9825(a) of
the Code, section 725(a) of ERISA, and
section 2799A-10(a) of the PHS Act. For
example, plans and issuers indicated that a
significant amount of information on pre-
scription drug rebates is generally main-
tained primarily by PBMs, while other
information is only known to plan spon-
sors, issuers, and TPAs. Commenters also
advised that a segmented data collection
system would reduce compliance burden
by reducing the need for the reporting
entities to transfer the data among them-
selves before submitting it to the Depart-
ments. The Departments intend to build a
data collection system that will allow mul-
tiple reporting entities to submit different
subsets of the required information with
respect to the same plan or issuer.
Total Annual Spending. In these
interim final rules, the term “total annual
spending” means incurred claims, as
that term is defined in 45 CFR 158.140,
excluding the adjustments specified in 45
CFR 158.140(b)(1)(i), 45 CFR 158.140(b)
(2)(iv), and 45 CFR 158.140(b)(4), and
including cost sharing but net of prescrip-
tion drug rebates, fees, and other remuner-
ation. Consistent with the definition in 45
CFR 158.140, plans and issuers must cal-
culate the components of incurred claims
based on claims incurred during the refer-
ence year and paid through March 31 of
the year immediately following the refer-
ence year. The adjustments specified in 45
CFR 158.140(b)(2)(iv) currently encom-
pass claims payments recovered through
fraud reduction efforts and thus do not
constitute spending, while the adjustments
specified in 45 CFR 158.140(b)(4) cur-
rently encompass payments and receipts
related to the risk adjustment program that
would not be relevant for purposes of the
section 204 data submissions. The adjust-
ments specified in 45 CFR 158.140(b)(1)
(i) currently encompass prescription drug
rebates and other price concessions as
that term is defined in 45 CFR 158.103.
However, the definition of prescription
drug rebates, fees, and other remuneration
adopted in these interim final rules differs
in several ways from the definition of pre-
scription drug rebates and other price con-
cessions in 45 CFR 158.103. Similar to the
definition in 45 CFR 158.140, total annual
spending with respect to prescription
drugs means the spending net of prescrip-
tion drug rebates, fees, and other remu-
neration, as that term is defined in these
interim final rules, in lieu of the adjust-
ments specified in 45 CFR 158.140(b)(1)
(i) for prescription drug rebates and other
price concessions, as that term is defined
in 45 CFR 158.103. The Departments are
choosing this definition of incurred claims
to be generally consistent with the finan-
cial reporting requirements in the MLR
data collection under 45 CFR part 158,
which will reduce compliance burdens for
issuers and TPAs. Further, defining “total
annual spending” to mean spending net of
prescription drug rebates, fees, and other
remuneration will enable the Departments
to undertake more meaningful and accu-
rate comparisons of the costs of different
prescription drugs, by capturing the actual
costs for different plans and issuers, as
well as for the participants, beneficiaries,
and enrollees, as applicable, of different
plans and issuers.
In addition, as noted earlier in this
section of this preamble regarding the
definition of “prescription drug rebates,
fees, and other remuneration,” a number
of commenters that responded to the RFI
urged the Departments to exclude drug
manufacturer cost-sharing assistance to
participants, beneficiaries, and enroll-
ees, such as coupons and copay cards,
from the definition of prescription drug
rebates. Nonetheless, many comment-
ers also urged the Departments to collect
information regarding drug manufacturer
cost-sharing assistance, particularly to the
extent this assistance is excluded from the
annual limitation on cost sharing, while
a few commenters opposed collection of
such information. The Departments note
that section 9825(a)(7)(B) of the Code,
section 725(a)(7)(B) of ERISA, and sec-
tion 2799A-10(a)(7)(B) of the PHS Act
direct plans and issuers to report infor-
mation on prescription drug spending by
the plan or coverage and by participants,
beneficiaries, and enrollees, as appli-
cable. To the extent drug manufacturer
cost-sharing assistance reduces spend-
ing by the health plan or coverage or by
participants, beneficiaries, and enrollees,
and to the extent information regarding
the amount of these reductions is avail-
able to plans, issuers, their administrators,
or their service providers such as PBMs
(for example, when the drug manufacturer
cost-sharing assistance is excluded from
the annual limitation on cost sharing) and
thus can be reported to the Departments,
the Departments intend to collect data on
these reductions separately and incorpo-
rate such reductions into the analysis con-
ducted for the section 204 public report.
The Departments seek comment on
these definitions, including whether other
terms should be defined.
C. Reporting Requirements
1. Reporting Requirements Related
to Prescription Drug and Health Care
Spending (26 CFR 54.9825-4T, 29 CFR
2590.725-2, and 45 CFR 149.720)
a. General Requirement
Section 9825(a) of the Code, section
725(a) of ERISA, and section 2799A-10(a)
of the PHS Act require plans and issuers
to submit annually to the Departments
certain information on prescription drug
and health care spending, premiums, and
enrollment under the plan or coverage.
This general requirement is being codi-
fied at 26 CFR 54.9825-4T(a), 29 CFR
2590.725-2(a), and 45 CFR 149.720(a).
b. Timing and Form of Report
Section 9825(a) of the Code, section
725(a) of ERISA, and section 2799A-10(a)
of the PHS Act require plans and issu-
ers to provide the first section 204 data
submissions to the Departments not later
than 1 year after the date of enactment of
the CAA, which would be December 27,
2021, with respect to the plan or coverage
in the previous plan year, and by June 1
of each year thereafter. In these interim

Bulletin No. 2021–49 791 December 6, 2021
final rules, consistent with the discussion
in section II.A of this preamble regard-
ing the definition of “reference year,”
the Departments interpret these statutory
provisions to require plans and issuers to
submit calendar year 2020 information by
December 27, 2021, calendar year 2021
information by June 1, 2022, calendar
year 2022 information by June 1, 2023,
and so forth. Therefore, these interim final
rules provide that the report for the 2020
reference year must be submitted to the
Secretaries of the Treasury, Labor, and
HHS (Secretaries of the Departments) by
December 27, 2021, and that beginning
with the 2021 reference year, the report
for each reference year is due by June 1
of the year following the reference year.
These interim final rules also require that
the report must be submitted in the form
and manner prescribed jointly by the
Secretaries of the Departments. These
requirements are being codified at 26 CFR
54.9825-4T(b), 29 CFR 2590.725-2(b),
and 45 CFR 149.720(b).
Stakeholders expressed significant
concerns about the feasibility of comply-
ing with the data submission deadlines
specified in the statute. Specifically, stake-
holders explained that they would need
between 6 months to a year to comply with
the reporting requirements after: (1) these
interim final rules are issued; (2) technical
guidance is provided by the Departments
(such as instructions for the information
collection instrument); and (3) the speci-
fications for the data collection system are
published by the Departments. Stakehold-
ers explained that they would need this
time to modify contractual agreements
to enable disclosure and transfer of the
required data between various reporting
entities; to develop internal processes and
procedures; and to implement the identifi-
cation, compilation, preparation, and val-
idation of the required data. Stakeholders
further noted that they are concurrently
implementing measures to comply with
numerous other complex requirements
and near-term deadlines imposed by the
other provisions in the No Surprises Act
and Title II of Division BB of the CAA,
as well as the Transparency in Coverage
final rule.
21
As noted in FAQs about Affordable
Care Act and Consolidated Appropria-
tions Act, 2021 Implementation Part 49,
published by the Departments on August
20, 2021, the Departments recognize the
significant operational challenges that
regulated entities may face in meeting
the initial deadlines for the section 204
data submissions.
22
Accordingly, the
Departments are exercising discretion to
defer enforcement in connection with the
December 27, 2021 and the June 1, 2022
deadlines for the section 204 data sub-
missions for the 2020 and 2021 reference
years, respectively. More specifically, the
Departments will not initiate enforce-
ment action against a plan or issuer that
does not report the required information
by the first statutory deadline for report-
ing on December 27, 2021 or the second
statutory deadline for reporting on June
1, 2022, and that instead submits the sec-
tion 204 data submissions for the 2020
and 2021 reference years by December
27, 2022.
23
However, the Departments
strongly encourage plans and issuers to
start working to ensure that they are in a
position to be able to report the required
information with respect to the 2020 and
2021 reference years by December 27,
2022. The Departments further encour-
age plans and issuers that are able to
submit the required information by either
the December 27, 2021 or June 1, 2022
statutory deadlines to do so.
A number of commenters responding
to the RFI additionally recommended that
the Departments allow for a longer run-
out period for prescription drug claims
and rebates than allowed by the annual
June 1 statutory deadline. Some com-
menters therefore recommended that the
Departments establish regular reporting
deadlines of between 4 and 18 months
after the end of the reference year. The
Departments recognize that longer run-
out periods could lead to the submission
of more accurate data, but note that sec-
tion 9825(a) of the Code, section 725(a)
of ERISA, and section 2799A-10(a) of
the PHS Act prescribe the annual report-
ing deadline of June 1. The Departments
further note that the deadline for the sec-
tion 204 data submissions must balance
the need for accuracy with the need for
timely access to the data and the statutory
deadlines for the biannual section 204
public report. The Departments are con-
fident that regulated entities will be able
to produce reasonably accurate estimates
of the payable and receivable prescription
drug rebate, fee, and other remuneration
amounts by the June 1 statutory deadlines,
similar to how issuers and other reporting
entities currently determine such amounts
for other federal and state financial report-
ing purposes. However, to ensure that
the Departments receive complete and
accurate data and are able to evaluate the
reliability of the estimates and trends, the
Departments will also collect restated
amounts for prescription drug rebates,
fees, and other remuneration for the pre-
ceding reference year.
c. Transfer of Business
To capture meaningful and accu-
rate information required under section
9825(a) of the Code, section 725(a) of
ERISA, and section 2799A-10(a) of the
PHS Act with respect to group or indi-
vidual health insurance coverage pro-
vided by an issuer, these interim final
rules require issuers that acquire a line
or block of business from another issuer
during a reference year to submit the
required information and report for the
acquired business, including for the part
of the reference year that was prior to the
21
85 FR 72158 (Nov. 12, 2020).
22
FAQs about Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 49 (Aug. 20, 2021), Q12, available at https://www.cms.gov/CCIIO/Resources/Fact-
Sheets-and-FAQs/Downloads/FAQs-Part-49.pdf.
23
Under section 2723 of the PHS Act, states have the opportunity to be the primary enforcers of section 2799A-10 of the PHS Act with respect to health insurance issuers. However, on Sep-
tember 16, 2021, the Departments and OPM published a proposed rule entitled, Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement
(86 FR 51730), in which HHS proposed to have direct enforcement authority for newly enacted provisions of the PHS Act that require health insurance issuers to submit certain information
to HHS or the Departments, including section 2799A-10 of the PHS Act, unless the state notifies HHS of its intent to enforce. HHS solicited comment on this approach. Public comments on
this proposed rule were due by October 18, 2021. HHS is considering public comments and intends to address the issue of enforcement of section 2799A-10 of the PHS Act enforcement in
the Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement final rule.

December 6, 2021 792 Bulletin No. 2021–49
acquisition. This requirement mirrors the
existing requirements for issuers to report
the premium, claims, and other expendi-
tures with respect to purchased business
for MLR data reporting purposes in 45
CFR 158.110(c). This requirement is
being codified at 26 CFR 54.9825-4T(c),
29 CFR 2590.725-2(c), and 45 CFR
149.720(c).
The sale or transfer of blocks of pol-
icies between issuers is a common prac-
tice in the health insurance industry and
could lead to inconsistencies in the report-
ing required under section 9825(a) of
the Code, section 725(a) of ERISA, and
section 2799A-10(a) of the PHS Act. For
example, if part of the data for a given
reference year with respect to a block
of business were reported by the selling
issuer, and the other part was reported
by the acquiring issuer, the split report-
ing could result in distortions and incon-
sistencies in the list of the top 50 most
frequently dispensed brand prescrip-
tion drugs, the report on the impact of
cost-sharing amounts, the report on aver-
age monthly premium amounts, and other
required data elements. The Departments
seek comment on whether these interim
final rules should be amended through
future rulemaking to require reporting
of any data elements that would address
the impact of mergers, splits, and similar
transactions on prescription drug costs to
the extent such transactions increase mar-
ket concentration.
d. Reporting Entities and Special Rules to
Prevent Unnecessary Duplication
As discussed in section II.B of this pre-
amble regarding the definition of “report-
ing entity,” the Departments are allowing
plans and issuers to satisfy their reporting
obligations under these interim final rules
by having third parties, such as issuers,
TPAs, or PBMs, submit some or all of the
required information on their behalf, pro-
vided a plan or issuer enters into a writ-
ten agreement with the third party that is
providing the information on its behalf in
accordance with these interim final rules.
The Departments expect that it will be
rare for group health plans to report the
required information on their own, but
nothing in these interim final rules prohib-
its them from doing so.
For fully-insured group health plans,
these interim final rules at 26 CFR
54.9825-4T(d)(1), 29 CFR 2590.725-2(d)
(1), and 45 CFR 149.720(d)(1) provide
that, to the extent coverage under a group
health plan consists of group health insur-
ance coverage, the plan may satisfy the
section 204 data submission requirements
if the plan requires the health insurance
issuer offering the coverage to report the
required information in compliance with
these interim final rules, pursuant to a
written agreement. Under this provision,
if the issuer fails to report the required
information, then the issuer, not the plan,
violates the reporting requirements.
For both fully-insured and self-funded
group health plans, as well as health insur-
ance issuers offering group or individual
health coverage, these interim final rules
at 26 CFR 54.9825-4T(d)(2), 29 CFR
2590.725-2(d)(2), and 45 CFR 149.720(d)
(2) provide that the plan or issuer may also
satisfy the section 204 data submission
requirements with respect to the required
information that the plan or issuer, as
applicable, requires another party (such
as another issuer, a PBM, a TPA, or other
third party) to report in compliance with
these interim final rules, pursuant to a
written agreement. Under this provision,
if the third-party reporting entity fails to
report the required information, the plan
or issuer violates the reporting require-
ments.
The Departments solicit comment on
this approach.
2. Required Information (26 CFR
54.9825-6T, 29 CFR 2590.725-4, and 45
CFR 149.740)
a. General Information
The provisions of these interim final
rules that address the general information
that plans and issuers must submit for
each plan or coverage at the plan or cov-
erage level are being codified at 26 CFR
54.9825-6T(a), 29 CFR 2590.725-4(a),
and 45 CFR 149.740(a).
Plans and issuers must ensure that the
information they report, or the information
that is reported on their behalf, includes
identifying information at the plan or
coverage level, such as name and Federal
Employer Identification Number (FEIN)
and other relevant identification numbers,
for plans, issuers, plan sponsors, and any
other reporting entities. Plan- and cover-
age-level identifying information is neces-
sary for the Departments to verify receipt
of data from all plans and issuers subject
to the section 204 data submission require-
ments. The identifying information will
also allow the Departments to ensure that
reporting entities do not submit duplicate
information, and that different reporting
entities do not reflect the data of the same
health plan or coverage in different market
segments when a plan or issuer engages
multiple reporting entities to report infor-
mation on its behalf. For example, if a
self-funded group health plan engages a
TPA to report health care spending and a
PBM to report prescription drug spending,
the Departments will need to verify that
both reporting entities reported the data
and included the data for the plan in the
appropriate market segment. The identi-
fying information will further enable the
Departments to cross-reference the data
to other data submitted by plans and issu-
ers to the Departments, such as the MLR
data submitted by issuers to HHS and the
Form 5500 Annual Returns/Reports of
Employee Benefit Plan data submitted by
group health plans to DOL and the Depart-
ment of the Treasury.
In addition, plans and issuers must
ensure that the information they report, or
that is reported on their behalf, includes
the following data elements, which are
required by section 9825(a)(1)-(3) of the
Code, section 725(a)(1)-(3) of ERISA,
and section 2799A-10(a)(1)-(3) of the
PHS Act, at the plan level, regardless of
whether they submit the other required
information at the aggregate level, as
described in section II.C.3. of this pream-
ble: (1) the beginning and end dates of the
plan year that ended on or before the last
day of the reference year; (2) the number
of participants, beneficiaries, and enroll-
ees, as applicable, covered on the last day
of the reference year; and (3) each state
in which the plan or coverage is offered.
The number of participants, beneficiaries,
and enrollees, as applicable, can be mea-
sured in multiple ways, such as the aver-
age number over the course of a year, or
a number at a point in time, such as at the
beginning or end of the year, all of which
convey different and valuable informa-

Bulletin No. 2021–49 793 December 6, 2021
tion. To ensure data consistency, these
interim final rules require plans and issu-
ers to report at the plan level the number of
participants, beneficiaries, and enrollees,
as applicable, covered only on the last day
of the reference year. This approach will
provide the Departments with the most
recent information regarding enrollment
at the plan level. To reduce the reporting
burdens, these interim rules require plans
and issuers to report the life-years attribut-
able to the participants, beneficiaries, and
enrollees, as applicable, over the course
of the reference year only in total, at the
state and market segment aggregate level,
as described in section II.C.3. of this pre-
amble. This approach will provide enroll-
ment metrics that are most relevant to the
other data elements collected at the aggre-
gate level and will enable the Departments
to analyze trends such as average annual
spending per person. Issuers subject to
MLR reporting requirements under 45
CFR part 158 will be able to leverage the
life-years they compile at the state and
market segment level for MLR reporting
purposes.
In accordance with the require-
ments in section 9825(b) of the Code,
section 725(b) of ERISA, and section
2799A-10(b) of the PHS Act regarding the
treatment of plan-specific information in
the section 204 public report, the Depart-
ments will not publicly disclose this infor-
mation in a manner by which any plan can
be identified.
b. Health Care Spending
Section 9825(a)(7) of the Code, sec-
tion 725(a)(7) of ERISA, and section
2799A-10(a)(7) of the PHS Act require
plans and issuers to report the total annual
spending on health care services, broken
down by the types of cost, including: (1)
hospital costs; (2) health care provider
and clinical service costs, for primary care
and specialty care separately; (3) costs for
prescription drugs; and (4) other medical
costs, including wellness services. For
prescription drug spending, plans and
issuers must report separately the costs
incurred by the plan or coverage and the
costs incurred by participants, beneficia-
ries, and enrollees, as applicable. The pro-
visions related to these requirements are
being codified at 26 CFR 54.9825-6T(b)
(4) through (5), 29 CFR 2590.725-4(b)(4)
through (5), and 45 CFR 149.740(b)(4)
through (5).
Stakeholders requested that the Depart-
ments provide specific instructions for
which expenses must be reported in each
category. Several commenters responding
to the RFI made technical suggestions
regarding how the Departments should
specify these expense categories. These
interim final rules set forth general require-
ments, and the Departments intend to pro-
vide detailed technical guidance in the
instructions to the information collection
instrument regarding reporting by health
care service type that aligns with these
general requirements and provides exam-
ples of the costs that should be reported
in each category. To promote consistency
and reduce the reporting burden, the
Departments may leverage specific data
elements used in the MLR Annual Report-
ing Form and the Unified Rate Review
Template that issuers file with HHS.
24
The
Departments solicit comments on the use
of MLR and rate review definitions of
health care spending cost elements.
Many commenters responding to the
RFI urged the Departments to exclude
prescription drugs covered under the hos-
pital or medical benefit from the section
204 data submissions due to the complex-
ity of obtaining these data, longer run-out
periods associated with these drugs, and
differences in the relevant pricing mecha-
nisms and underlying cost drivers (such as
different supply chains and procurement
mechanisms). Commenters additionally
noted that these drugs may be subject to
different cost-sharing requirements than
drugs dispensed by retail or mail-order
pharmacies, and may present consum-
ers with fewer opportunities to choose
among drugs. The Departments acknowl-
edge these concerns, but note that section
9825(a) of the Code, section 725(a) of
ERISA, and section 2799A-10(a) of the
PHS Act do not create an exemption for
prescription drugs covered under a plan’s
or coverage’s hospital or medical benefit.
The Departments further note that pre-
scription drugs covered under a hospital
or medical benefit constitute a significant
proportion of the total prescription drug
spending in the U.S., and include some
of the more costly drugs. Therefore, these
interim final rules require reporting of
the total annual spending on prescription
drugs administered in a hospital, clinic,
provider’s office, or other provider setting
and covered under the hospital or medi-
cal benefit of a plan or coverage (which
may be a subset of, and already reported
with, the total spending on hospital or
other medical costs), separately from the
total annual spending on drugs covered
under the pharmacy benefit of a plan or
coverage. Separate reporting of spending
on drugs covered under the pharmacy
benefit and on drugs covered under the
hospital or medical benefit will assist the
Departments in evaluating prescription
drug trends with respect to the setting in
which the drugs are administered. How-
ever, in recognition of stakeholders’ con-
cerns regarding the compliance burdens
associated with reporting information on
drugs covered under the hospital or med-
ical benefit, these interim final rules do
not, at this time, require plans and issuers
to report data elements other than total
annual spending, as required under sec-
tion 9825(a) of the Code, section 725(a)
of ERISA, and section 2799A-10(a) of the
PHS Act, such as the top 50 and top 25
lists, for drugs covered under the hospital
or medical benefit. Instead, these data ele-
ments should reflect only the drugs cov-
ered under the pharmacy benefit. Once the
Departments begin to receive the section
204 data submissions and have the oppor-
tunity to evaluate the prescription drug
data, the Departments will further review
and analyze the merits of this approach and
may modify the provisions regarding the
information to be collected on drugs cov-
ered under the hospital or medical benefit
in future rulemaking. Finally, the Depart-
ments recognize that for drugs covered
under the hospital or medical benefit, the
cost of the prescription drugs included in
some bundled payment arrangements and
other alternative payment arrangements
may not be readily available to the plan
or issuer. In these situations, the plan or
24
See, e.g., https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/2019-MLR-Form-Instructions.pdf and https://www.cms.gov/CCIIO/Resources/Forms-
Reports-and-Other-Resources/Downloads/URR_v5.3-instructions.pdf.

December 6, 2021 794 Bulletin No. 2021–49
issuer is required to separately report the
total annual spending attributable to the
prescription drugs included in the bundle
or other alternative payment arrangement
in good faith and to the best of its abil-
ity. The Departments seek comment on
all aspects of collecting only some of the
information on drugs covered under the
hospital or medical benefit. The Depart-
ments also seek comment on whether
reporting flexibilities for drugs included
in bundled and other alternative payment
arrangements may contribute to prescrip-
tion drug spending increases or facilitate
anti-competitive practices.
These interim final rules require plans
and issuers to separately report total
annual spending on health care services
by the plan or coverage, and total annual
spending on health care services by par-
ticipants, beneficiaries, and enrollees, as
applicable. Collecting total annual spend-
ing on health care services at this level
of detail will ensure consistency with the
other data elements required by section
9825(a) of the Code, section 725(a) of
ERISA, and section 2799A-10(a) of the
PHS Act, such as total annual spending on
prescription drugs and average monthly
premium amounts, which are collected
separately with respect to a plan or cov-
erage and with respect to participants,
beneficiaries, and enrollees, as applica-
ble. Consistency across the data elements
will enhance the usability of the data and
enable the Departments to conduct mean-
ingful data analysis. These interim final
rules additionally require plans and issu-
ers to report, for each drug in the top 50
and top 25 lists, as well as for each ther-
apeutic class, prescription drug spending
and utilization, including: (1) total annual
spending by the plan or coverage; (2) total
annual spending by participants, bene-
ficiaries, and enrollees enrolled in the
plan or coverage, as applicable; (3) the
number of participants, beneficiaries, and
enrollees, as applicable, with a paid pre-
scription drug claim; (4) total dosage units
dispensed; and (5) the number of paid
claims. The Departments intend to collect
cost-sharing amounts to obtain the total
annual spending by participants, benefi-
ciaries, and enrollees, as applicable. Inclu-
sion of identical data elements in each of
the top 50 and top 25 lists and the thera-
peutic class list will streamline reporting
and reduce compliance burdens. Collect-
ing these amounts for each of the top 50
and top 25 lists, as well as for each thera-
peutic class, will enable the Departments
to include in the section 204 public report
an analysis regarding the overlap (or lack
thereof) and the causes of any such over-
lap, among the lists of the most frequently
dispensed drugs, the most costly drugs, the
drugs with the greatest cost increases, and
the drugs generating the greatest amount
of rebates. This analysis may include anal-
ysis of the differences and similarities in
these five spending and utilization data
elements across drugs in the top 50, top
25, and the therapeutic class lists. This
analysis may further include analysis of
how prescription drug spending increases
are distributed among plans and issuers
as compared to the participants, benefi-
ciaries, and enrollees. The total annual
spending on prescription drugs and total
dosage units dispensed will enable the
Departments to conduct the required anal-
ysis of prescription drug pricing trends for
purposes of the section 204 public report,
and to compare trends across multiple
data sources as well as between publicly
and privately-sponsored health coverage.
The number of paid claims and the unique
number of individuals with paid prescrip-
tion drug claims will allow the Depart-
ments to compute average per person cost
sharing, and evaluate the average impact,
if any, of prescription drug spending
increases and rebates on participants, ben-
eficiaries, and enrollees, as well as analyze
whether spending increases are driven by
increases in drug prices or utilization. The
Departments seek comment on the use of
identical prescription drug data elements
for each of the top 50 and top 25 lists and
the therapeutic class list.
c. Premium Amounts
Section 9825(a)(8) of the Code, sec-
tion 725(a)(8) of ERISA, and section
2799A-10(a)(8) of the PHS Act require
plans and issuers to report the average
monthly premium paid by employers on
behalf of participants, beneficiaries, and
enrollees, as applicable, as well as the
average monthly premium paid by par-
ticipants, beneficiaries, and enrollees, as
applicable. The provisions related to this
requirement are being codified at 26 CFR
54.9825-6T(b)(6), 29 CFR 2590.725-4(b)
(6), and 45 CFR 149.740(b)(6).
Stakeholders expressed concerns about
this requirement. Employers expressed
concern that reporting this information
would be burdensome and suggested
that the Departments utilize the informa-
tion regarding the tax-deductible portion
of premiums shown on the Forms W-2.
Issuers and TPAs expressed concern that
information regarding the employer and
participant, beneficiary, and enrollee con-
tributions to premiums is currently only
known to employers, and that it would be
time-consuming and burdensome for issu-
ers and TPAs to obtain this information
from employers. Issuers and TPAs also
anticipated that some employers may not
want to disclose this information to issuers
and TPAs. Issuers and TPAs requested that
the Departments allow them to report esti-
mated average monthly premium amounts
based on a sample of employers or based
on publicly available survey data.
The Departments acknowledge these
concerns but note that plans and issuers
are required to report this information
under section 9825(a)(8) of the Code,
section 725(a)(8) of ERISA, and section
2799A-10(a)(8) of the PHS Act. Further-
more, the Departments are of the view
that the information on the trends in the
employer versus employee contributions
to premium amounts is integral to ana-
lyzing the extent to which the impact
of prescription drug costs on premiums
affects employers versus employees.
Plans, employers, participants, beneficia-
ries, and enrollees experience premium
increases driven by increases in prescrip-
tion drug spending or, conversely, pre-
mium decreases driven by prescription
drug rebates, proportionately to their share
of total premium amounts, as well as the
changes in this proportion over time.
Existing data on premium amounts paid
by employers versus by participants, ben-
eficiaries, and enrollees are not complete
for each state and market segment defined
in these interim final rules. Furthermore,
premium information shown on the Forms
W-2 includes information related to plans
that are not subject to these interim final
rules (such as account-based group health
plans). Therefore, these interim final rules
require plans and issuers to submit the
actual average monthly premium amounts

Bulletin No. 2021–49 795 December 6, 2021
separately with respect to payments by
employers on behalf of participants, ben-
eficiaries, and enrollees, and payments by
participants, beneficiaries, and enrollees.
For purposes of these interim final
rules, to accurately capture premium
amounts with respect to all types of group
health plan sponsors, the average monthly
premium amount paid by employers on
behalf of participants, beneficiaries, and
enrollees, as applicable, includes premium
amounts paid by plan sponsors that do not
directly employ individuals (for exam-
ple, employee organizations or employer
groups and associations acting in the
interest of their members and considered
an “employer” within the meaning of sec-
tion 3(5) of ERISA) but that nonetheless
make payments of premiums or premium
equivalents on behalf of participants, ben-
eficiaries, and enrollees, as applicable.
These interim final rules also require
plans and issuers to report total annual
premium amounts and the total number
of life-years. Section 9825(a)(9)-(10)
of the Code, section 725(a)(9)-(10) of
ERISA, and section 2799A-10(a)(9)-(10)
of the PHS Act require plans and issuers to
report any impact on premiums and reduc-
tions in premiums and out-of-pocket costs
associated with rebates, fees, or other
remuneration paid by drug manufacturers
to the plan or coverage or its administra-
tors or service providers. In addition, the
section 204 public report required by sec-
tion 9825(b) of the Code, section 725(b)
of ERISA, and section 2799A-10(b) of
the PHS Act must include information
on the role of prescription drug costs in
contributing to premium increases or
decreases. Collecting total annual pre-
mium amount information will provide
the Departments with important context to
understand the impact of rebates, fees, and
other remuneration. For example, if the
impact of rebates, fees, and other remu-
neration resulted in a premium decrease
of $100,000 for the reference year, it is
important for the Departments to know
whether the reduction is based on total
annual premium amounts of $1,000,000
or $10,000,000. Similarly, collection of
the total number of life-years will enable
the Departments to estimate the combined
average premium, as well as to estimate
an average impact at the per person level
for the participants, beneficiaries, and
enrollees, as applicable, whose premiums
or out-of-pocket costs may be affected by
prescription drug costs and prescription
drug rebates, fees, and other remunera-
tion.
The Departments seek comment on all
aspects of the data submission require-
ments regarding premium amounts.
d. Top 50 Drug Lists
Section 9825(a)(4)-(6) of the Code,
section 725(a)(4)-(6) of ERISA, and sec-
tion 2799A-10(a)(4)-(6) of the PHS Act
require plans and issuers to report, respec-
tively: (1) the 50 brand prescription drugs
most frequently dispensed by pharmacies
for claims paid by the plan or coverage,
and the total number of paid claims for
each such drug; (2) the 50 most costly
prescription drugs with respect to the plan
or coverage by total annual spending, and
the annual amount spent by the plan or
coverage for each such drug; and (3) the
50 prescription drugs with the greatest
increase in plan or coverage expenditures
over the plan year preceding the plan year
that is the subject of the report, and, for
each such drug, the change in amounts
expended by the plan or coverage in each
such plan year. The provisions related to
these requirements are being codified at
26 CFR 54.9825-6T(b)(1) through (3), 29
CFR 2590.725-4(b)(1) through (3), and 45
CFR 149.740(b)(1) through (3).
In accordance with these interim final
rules, the top 50 drugs must be deter-
mined separately for each aggregation
level described in 26 CFR 54.9825-
5T, 29 CFR 2590.725-3, and 45 CFR
149.730, as described in section II.C.3 of
this preamble. For example, if an issuer
acts as the reporting entity, has health
insurance business or acts as a TPA in
multiple states and market segments, and
aggregates the data at the state and mar-
ket segment level, then the issuer must
prepare the three top 50 lists for each
market segment within each state. Each
of these lists must be based on the com-
bined experience of all plans or policies
included in the relevant aggregation. The
Departments expect that it will be rare for
self-funded plans to report these lists on
their own using their own claims experi-
ence to determine the top 50 drugs, but to
the extent a self-funded plan does so, any
TPA that administers benefits for the plan
should not include that plan’s experience
in the TPA’s aggregated report.
As noted in section II.C.2.b. of this pre-
amble, at this time, to simplify reporting
and analysis and to reduce the reporting
burden, these interim final rules require
the information on the top 50 lists to
include only the drugs covered under
the pharmacy benefit of a plan or cov-
erage, and exclude drugs administered
in a hospital, clinic, provider’s office, or
other provider setting and covered under
the hospital or medical benefit of a plan
or coverage. Stakeholders requested that
drugs covered under the hospital or med-
ical benefit be excluded from the section
204 data submissions because these drugs
may have different supply chains and pro-
curement mechanisms, be subject to dif-
ferent pricing mechanisms and cost-shar-
ing requirements than drugs dispensed by
retail or mail-order pharmacies, and may
present consumers with fewer opportuni-
ties to choose among drugs. As a result,
the dispensing frequency, total spending,
and prescription drug rebates, which are
used to rank the top 50 and top 25 lists,
are likely to be different for drugs covered
under the pharmacy benefit and for drugs
covered under the hospital or medical
benefit. Consequently, combining drugs
covered under the pharmacy benefit with
the hospital or medical benefit could lead
to distorted ranking of the top 50 lists.
Commenters responding to the RFI fur-
ther pointed to the operational challenges
of combining the data on drugs covered
under the pharmacy benefit and the hos-
pital or medical benefit to produce the top
50 lists, given that these data come from
separate sources and may be reported by
different reporting entities. The Depart-
ments will continue to review the validity
of this approach and whether it adequately
fulfills the objectives of section 9825(a) of
the Code, section 725(a) of ERISA, and
section 2799A-10(a) of the PHS Act, and
the Departments may modify the report-
ing requirements for the top 50 lists to
include drugs covered under the hospital
or medical benefit, or to require separate
top 50 lists for drugs covered under the
pharmacy benefit and under the hospital
or medical benefit, in future rulemaking.
The Departments solicit comment on this
approach.

December 6, 2021 796 Bulletin No. 2021–49
Top 50 Most Frequently Dispensed
Brand Prescription Drugs. Plans, issuers,
and other reporting entities must deter-
mine the most frequently dispensed brand
prescription drugs based on the total num-
ber of paid claims for prescriptions filled
during the reference year for each drug.
For each of the top 50 most frequently
dispensed brand prescription drugs,
the section 204 data submission must
include the data elements listed in 26 CFR
54.9825-6T(b)(5), 29 CFR 2590.725-4(b)
(5), and 45 CFR 149.740(b)(5) (required
prescription drug data elements), which
include: (1) total annual spending by the
plan or coverage; (2) total annual spending
by participants, beneficiaries, and enroll-
ees enrolled in the plan or coverage, as
applicable; (3) the number of participants,
beneficiaries, and enrollees, as applicable,
with a paid prescription drug claim; (4)
total dosage units dispensed; and (5) the
number of paid claims. The rationale for
collecting the required prescription drug
data elements for each of the top 50 most
frequently dispensed brand prescription
drugs is described in section II.C.2.b. of
this preamble.
Top 50 Most Costly Drugs. Plans,
issuers, and other reporting entities must
determine the 50 most costly drugs based
on total annual spending per drug. Total
annual spending, as defined in these
interim final rules and as described in sec-
tion II.B. of this preamble, must be net of
prescription drug rebates, fees, and other
remuneration and must include cost shar-
ing as well as, to the extent available, drug
manufacturer cost-sharing assistance.
For each of the top 50 most costly drugs,
the section 204 data submissions must
include the required prescription drug
data elements. The statute requires report-
ing of the top 50 most costly drugs by
total annual spending with respect to the
plan or coverage, which the Departments
interpret to mean all spending under the
plan or coverage, including both amounts
spent by the plan or coverage as well as
cost sharing and other amounts paid by
participants, beneficiaries, and enrollees.
The statute additionally requires report-
ing of the amounts spent only by the plan
or coverage for each such drug. Because
cost sharing generally corresponds to the
difference between total annual spending
and the amounts spent by the plan or cov-
erage, the Departments chose to capture
the amounts spent by the plan or coverage
through requiring reporting of the total
cost sharing paid under the plan or cov-
erage. Reporting of total cost sharing will
provide the Departments with information
equivalent to that specified in the stat-
ute but will be more convenient for data
analysis. The rationale for collecting the
required prescription drug data elements
for each of the top 50 drugs with the high-
est total annual spending is described in
section II.C.2.b. of this preamble.
Top 50 Drugs with the Greatest
Increase in Expenditures. Plans, issuers,
and other reporting entities must deter-
mine the top 50 drugs with the greatest
increase in expenditures based on the
dollar amount of the increase in total
annual spending over the preceding year.
The statute requires reporting of the top
50 drugs with the greatest year-over-year
increase in plan expenditures, which the
Departments interpret to mean all spend-
ing under the plan or coverage, including
both amounts spent by the plan or cov-
erage as well as cost sharing and other
amounts paid by participants, beneficia-
ries, and enrollees. This interpretation is
consistent with the interpretation of the
reporting methodology for the top 50
most costly drugs. A number of comment-
ers responding to the RFI recommended
that the Departments define the increase
in expenditures based on the absolute
amount of the increase rather than the per-
centage increase because the former value
would enable the Departments to analyze
which drugs are driving the increases in
total spending on prescription drugs and
would provide the Departments a better
sense of the magnitude of the increases
in this spending. The Departments agree
with this rationale.
For each of the top 50 drugs with the
greatest increase in expenditures, the sec-
tion 204 data submissions must include:
(1) the required prescription drug data ele-
ments for the year immediately preceding
the reference year; and (2) the required
prescription drug data elements for the
reference year. The rationale for collect-
ing the information on the year-over-year
changes in the required prescription drug
data elements for each of the top 50 drugs
with the greatest increases in expenditures
is described in section II.C.2.b. of this
preamble. Only drugs that were approved
for marketing and/or issued an Emergency
Use Authorization by FDA for the entire
year immediately preceding the refer-
ence year and for the entire reference year
should be included in this top 50 list.
25
This
approach will ensure that the cost increase
is based on year-over-year changes and is
not distorted by the inclusion of new drugs
released in the market later in a calendar
year.
The Departments seek comment on all
aspects of the data submission require-
ments regarding the top 50 drug lists.
e. Prescription drug rebates, fees, and
other remuneration
Section 9825(a)(9) of the Code, sec-
tion 725(a)(9) of ERISA, and section
2799A-10(a)(9) of the PHS Act require
plans and issuers to report prescription
drug rebates, fees, and any other remuner-
ation paid by drug manufacturers to the
plan or coverage or its administrators or
service providers, with respect to prescrip-
tion drugs prescribed to participants, ben-
eficiaries, or enrollees, as applicable, in
the plan or coverage. The statute requires
these amounts to be reported for each ther-
apeutic class of drugs, as well as for each
of the 25 drugs that yielded the highest
amount of rebates and other remuneration
under the plan or coverage from drug man-
ufacturers during the plan year.
26
The pro-
visions related to these requirements are
being codified at 26 CFR 54.9825-6T(b)
(7) through (9), 29 CFR 2590.725-4(b)(7)
through (9), and 45 CFR 149.740(b)(7)
through (9).
As discussed in section II.B. of this
preamble regarding the definition of
“prescription drug rebates, fees, and
other remuneration,” the Departments
intend to generally align the categories of
25
This includes an Emergency Use Authorization issued pursuant to section 564 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb-3) for an unapproved use of an otherwise-ap-
proved drug.
26
As discussed in section II.B. of this preamble, in this instance, the Departments are interpreting “plan year” to mean “reference year.”

Bulletin No. 2021–49 797 December 6, 2021
rebates, fees, and other remuneration in
the section 204 data submissions with the
categories specified in the data collection
requirements under the Exchange Estab-
lishment rule
27
and the PBM Transpar-
ency rule
28
to reduce compliance burdens
by allowing reporting entities to leverage
some of the reporting capabilities they
have already built to meet the require-
ments of these other HHS rules. For
consistency with the Exchange Estab-
lishment rule and the PBM Transparency
rule, these interim final rules further
require reporting of total prescription
drug rebates, fees, and other remuneration
with respect to amounts passed through
to the plan or issuer, amounts passed
through to participants, beneficiaries,
or enrollees, as applicable, and amounts
retained by the PBM. Similarly, consis-
tent with the information collected under
the Exchange Establishment rule and the
PBM Transparency rule, these interim
final rules require reporting of the differ-
ence between total amounts that the plan
or issuer pays the PBM and total amounts
that the PBM pays pharmacies. One com-
menter responding to the RFI opposed
collection of the difference between total
amounts that the plan or issuer pays the
PBM and total amounts that the PBM
pays pharmacies, as well as collection
of other details regarding prescription
drug rebates, fees, and other remunera-
tion consistent with the Exchange Estab-
lishment rule and the PBM Transparency
rule; however, the commenter also rec-
ommended using the same definition for
prescription drug rebates, fees, and other
remuneration as used in the Exchange
Establishment rule and the PBM Trans-
parency rule. In contrast, several other
commenters expressed concern with the
impact on the market participants and on
prescription drug pricing of the differ-
ence between total amounts that the plan
or issuer pays the PBM and total amounts
that the PBM pays pharmacies, and rec-
ommended that the Departments collect
this information. The Departments are of
the view that collection of this informa-
tion is integral to the Departments’ ability
to analyze prescription drug reimburse-
ments, pricing trends, and the impact of
prescription drug rebates, fees, and other
remuneration on premiums and cost shar-
ing for purposes of developing the sec-
tion 204 public report. This information
will inform the Departments’ analyses
because, similar to prescription drug
rebates, fees, and other remuneration,
the difference between total amounts that
the plan or issuer pays the PBM and total
amounts that the PBM pays pharmacies is
a factor that contributes to the differences
between the payments for prescription
drugs made by plans, issuers, enrollees,
participants, and beneficiaries, and the
portion of those payments captured by
pharmacies and drug manufacturers, and
thus impacts the cost of prescription drugs
to plans, issuers, enrollees, participants,
and beneficiaries. However, similar to
bona fide service fees, these interim final
rules provide for the submission of these
amounts only in total and not at the drug
or therapeutic class level. This approach
will help reduce compliance burden by
enabling plans, issuers, TPAs, and PBMs
to leverage some of the reporting capa-
bilities they have already built to meet
the requirements of section 1150A of the
Social Security Act, and will ensure that
the information will be collected only to
the extent that the Departments currently
view that as necessary for their analy-
sis. Last, the rationale for collecting the
required prescription drug data elements
for each therapeutic class and for each of
the top 25 drugs that yielded the highest
amount of rebates is described in section
II.C.2.b. of this preamble.
Section 9825(a)(9)-(10) of the Code,
section 725(a)(9)-(10) of ERISA, and
section 2799A-10(a)(9)-(10) of the PHS
Act additionally require plans and issuers
to report the impact of the prescription
drug rebates, fees, and other remunera-
tion from drug manufacturers on premi-
ums and out-of-pocket costs. For inter-
nal consistency, these interim final rules
capture the impact on out-of-pocket costs
by requiring reporting of the impact of
prescription drug rebates, fees, and other
remuneration on cost sharing. A number
of commenters responding to the RFI
indicated that plans and issuers may not
know or be able to quantify the impact
of prescription drug rebates on premiums
or cost sharing. These commenters rec-
ommended that the Departments allow
plans and issuers to provide qualitative
descriptions of how prescription drug
rebates, fees, and other remuneration
generally provide savings to participants,
beneficiaries, and enrollees, instead of
attempting to collect drug-level impact
amounts. The Departments intend to
design the information collection instru-
ment in a manner that would enable plans
and issuers to provide both quantitative
and qualitative information regarding the
impact of prescription drug rebates on
premiums and cost sharing.
The Departments seek comment on all
aspects of the data submission require-
ments regarding prescription drug rebates,
fees, and other remuneration.
3. Aggregate Reporting (26 CFR
54.9825-5T, 29 CFR 2590.725-3, and 45
CFR 149.730)
a. General requirement
Section 9825(a) of the Code, sec-
tion 725(a) of ERISA, and section
2799A-10(a) of the PHS Act require
plans and issuers to submit the infor-
mation in section 204 data submissions
to the Departments “with respect to the
health plan or coverage.” Some of the
information described in these statutory
provisions pertains specifically to each
group health plan, such as the beginning
and end dates of the plan year, the number
of participants, beneficiaries, and enroll-
ees, as applicable, and each state where
the plan or coverage is offered. However,
the Departments are of the view that sec-
tion 9825(a) of the Code, section 725(a)
of ERISA, and section 2799A-10(a) of
the PHS Act do not strictly prescribe that
every data element outlined in these pro-
visions must be reported separately by
each unique group health plan. After care-
ful consideration of whether aggregate or
plan-level information would be more
appropriate to facilitate development of
27
77 FR 18308 (Mar. 27, 2012).
28
86 FR 24140 (May 5, 2021).

December 6, 2021 798 Bulletin No. 2021–49
the section 204 public report as well as
feedback received from stakeholders, the
Departments have determined that plans
and issuers (or other entities reporting
on their behalf) may submit the majority
of the information required under these
interim final rules on an aggregate basis.
The only plan-level information col-
lected will be the following: (1) identify-
ing information for plans and issuers and
other reporting entities; (2) the beginning
and end dates of the plan year that ended
on or before the last day of the reference
year; (3) the number of participants, ben-
eficiaries, or enrollees, as applicable,
covered on the last day of the reference
year; and (4) each state in which a plan
or coverage is offered.
There are several reasons for collecting
the majority of the information in the sec-
tion 204 data submissions on an aggregate
basis.
First, collecting aggregate data is nec-
essary for the Departments to be able to
draw conclusions about market trends for
purposes of developing a meaningful and
accurate section 204 public report. The
Departments would not be able to accu-
rately combine plan-specific top 50 lists
to determine aggregate prescription drug
trends within market segments, within
states, and across the country. The Depart-
ments would not be able to accurately
combine plan-specific top 50 lists because
the statute only requires plans and issu-
ers to report information for the top 50
drugs and not for all drugs. As a result,
the Departments would not have access to
the utilization and spending information
for drugs that may not make the top 50
lists of every group health plan, but which
may have higher combined utilization or
spending across all group health plans
than the drugs appearing on the plan-spe-
cific top 50 lists. Consequently, collec-
tion of plan-specific data could impair
the Departments’ ability to comply with
the statutory requirement to produce the
section 204 public report on prescription
drug reimbursement and pricing trends.
As a simplified example of the problems
with collecting plan-specific data, suppose
that the statute requires reporting of only
the top 3 most frequently dispensed brand
prescription drugs, rather than the top 50
drugs. Also, suppose that there is only
one issuer offering two plans in a specific
state and market segment. For Plan One,
the four brand prescription drugs with the
highest number of paid claims are Drug A
with 100 claims, Drug B with 80 claims,
Drug C with 75 claims, and Drug Z with
70 claims. For Plan Two, the four brand
prescription drugs with the highest num-
ber of paid claims are Drug D with 110
claims, Drug E with 105 claims, Drug
F with 90 claims, and Drug Z with 85
claims. If the Departments collected the
top 3 brand prescription drugs at the plan
level, Drug Z would be missing from the
issuer’s submission because it is not in the
top 3 list for either plan. However, if the
issuer aggregated the data at the state and
market segment level before submitting it,
Drug Z would have 155 paid claims and
the Departments would correctly identify
it as the most frequently dispensed drug in
this state and market segment.
The inability to correctly identify
trends in prescription drug reimburse-
ments, pricing, and impact on premiums
from the plan-specific data would inhibit
the Departments’ ability to comply with
the requirements in section 9825(b) of
the Code, section 725(b) of ERISA, and
2799A-10(b) of the PHS Act to develop
and issue a public report on these trends.
Collecting aggregate data will signifi-
cantly reduce the possibility of such sce-
narios.
In addition, the data underlying the
top 50 lists need to be of sufficient size
for the Departments to be able to draw
conclusions about market trends for pur-
poses of developing a meaningful and
accurate section 204 public report. The
majority of group health plans have a
relatively small number of participants,
beneficiaries, or enrollees. If the Depart-
ments were to collect the top 50 lists sep-
arately for each group health plan, most
of these lists would be based on small
sample sizes and consequently could pro-
vide a distorted view of the market. This
is because plan-specific lists would tend
to be driven by the utilization of specific
participants, beneficiaries, or enrollees
of a given plan, which may not be repre-
sentative of the market and may obscure
broader trends. For example, a top 50 list
for a plan with five participants and ben-
eficiaries may contain only two steroid
drugs, both purchased by a single par-
ticipant to treat a skin condition. These
drugs would appear as the first and sec-
ond drugs on this plan-specific list. The
top 50 list for another small employer
plan may contain only three drugs – two
drugs used to treat a rare autoimmune
disease of one participant, and another
drug used to manage post-surgery pain
of another participant – which would
likewise appear as the first, second, and
third drugs on that plan-specific list.
However, neither of these plan-specific
lists is likely to be representative of the
broader market; and, as described in the
preceding paragraph, the Departments
would not be able to combine the data
from plan-specific top 50 lists in the man-
ner needed to arrive at accurate totals for
any given drug across states, market seg-
ments, or the country.
Another reason to collect aggregate
data is to protect personally identifiable
information and protected health infor-
mation. Many comments received in
response to the RFI stated that collection
of plan-level data would raise significant
privacy concerns because, as illustrated
in the example above, it would not be dif-
ficult to discern which drugs and which
claims were attributable to specific par-
ticipants, beneficiaries, or enrollees in
plan-level data. These comments argued
that aggregate reporting would reduce the
likelihood of collecting and transmitting
personally identifiable information and
protected health information, and thus the
risk of inadvertent or inappropriate disclo-
sure. The Departments share this concern
and agree that aggregate reporting will
better ensure that personally identifiable
information and protected health infor-
mation are protected from disclosure.
Specifically, allowing aggregation of data
will provide a larger population sample
of participants, beneficiaries, or enrollees
from which the data are drawn so that it
is difficult to determine if a prescription
drug or therapeutic class can be associated
with a specific individual. In addition,
HHS, which will collect the information
on behalf of the Departments and OPM,
intends to collect and maintain the infor-
mation using information technology (IT)
systems that are designed to meet all of
the security standards protocols estab-
lished under federal law or by HHS that
are relevant to such information.
29
The
Departments and OPM will further ana-

Bulletin No. 2021–49 799 December 6, 2021
lyze the collected information to evaluate
whether additional steps may be taken to
ensure consumer privacy.
An additional reason to collect aggre-
gate data is that prescription drug rebates,
fees, and other remuneration generally are
not negotiated separately for each plan;
rather, they tend to be driven by sales vol-
ume and other considerations at the PBM
level. Therefore, it is the Departments’
understanding that plan-specific prescrip-
tion drug rebate data generally is rarely
available. Consequently, plan-specific
lists of prescription drug rebates for each
therapeutic class and for the top 25 drugs
with the highest amount of rebates largely
would be based on allocation calculations,
and therefore plan-specific data would
create little value beyond that created by
aggregated reporting. Plan-specific lists
might have some value for plans, but for
purposes of the Departments’ analysis of
the data for the section 204 public report,
there is no compelling policy reason to
require plans and issuers to engage in a
complex and burdensome allocation exer-
cise, particularly because lists based on
allocation calculations would not provide
useful information about any specific plan.
Last, the overwhelming majority
of commenters on the RFI encouraged
the Departments to adopt an aggregate
approach to data collection. They noted
that an aggregate approach would be sig-
nificantly less burdensome and urged the
Departments to collect data at the high-
est possible aggregation level. They also
raised similar concerns as those described
earlier in this section of this preamble
regarding small sample sizes, usability
of plan-specific data, and disclosure of
personally identifiable information and
protected health information. In addition,
stakeholders noted that some cost ele-
ments are not tracked separately for each
group health plan. Some commenters did,
however, identify potential benefits of
plan-specific reporting of data. One com-
menter noted the increased transparency
that would result from plans receiving
plan-specific information about prescrip-
tion drugs from PBMs. The commenter
also stated that plan-specific reporting
would be more valuable for identifying
trends than overly aggregated data. Other
commenters noted that certain reporting
requirements under section 9825(a) of
the Code, section 725(a) of ERISA, and
section 2799A-10(a) of the PHS Act are
plan-specific and asserted that aggregated
reporting would present operational chal-
lenges if, for example, a TPA were the
reporting entity for all of the required
information and it serviced different types
of plans but did not have access to all of
the required information for each plan.
One commenter had concerns about plans
being held responsible for the TPA’s or
PBM’s failure to accurately report aggre-
gated data.
The Departments are of the view that
collection of aggregate data will sub-
stantially reduce the burdens for both the
reporting entities and the federal gov-
ernment. The Departments estimate that
reporting every data element separately
for each group health plan would require
plans and issuers to prepare and sub-
mit a combined total of several million
reports. In contrast, reporting aggregate
data would result in a combined total of
approximately 2,000 reports, requiring
plans and issuers to spend significantly
less effort and fewer resources on calcula-
tions, validation, submission, and storage
of the data while still providing a suffi-
ciently large data pool from which to iden-
tify trends and variations in prescription
drug use and costs. To the extent a TPA is
the reporting entity for all of the required
information for numerous plans but does
not have access to all of the required infor-
mation for each plan, it can either obtain
it from the plan or require the plan to
submit that information. As noted in this
preamble, plans may need to revise their
services agreements with TPAs to address
liability for and the accuracy of the infor-
mation that the TPA or PBM reports and
the ways in which the plan can review
such reporting to confirm its accuracy.
The smaller number of aggregate data
reports submitted to the Departments
would also reduce the Departments’ bur-
den for collecting, storing, securing, and
analyzing the data.
For these reasons, these interim final
rules require data to be aggregated in the
section 204 data submissions for the ref-
erence year at the state and market seg-
ment levels. This general requirement is
being codified at 26 CFR 54.9825-5T(a),
29 CFR 2590.725-3(a), and 45 CFR
149.730(a). Within each state and market
segment, the data of fully-insured plans
may be aggregated according to the issuer
of the coverage provided to these plans or
the FEHB carrier, as applicable, that acts
as a reporting entity for these plans. The
data of self-funded plans may be aggre-
gated according to the TPA that acts as
a reporting entity for these plans. The
Departments are of the view that overall,
aggregation at the reporting entity, state,
and market segment level will capture sta-
tistics based on sufficiently large pools of
underlying data while also providing a suf-
ficient level of detail for the analysis and
reporting required under section 9825(b)
of the Code, section 725(b) of ERISA,
and section 2799A-10(b) of the PHS Act,
and is therefore the optimal aggregation
level to enable the Departments to draw
meaningful conclusions from the data.
Aggregation at the state level will allow
for the analysis of geographic variations
in prescription drug trends. Aggregation at
the market segment level will also allow
for the analysis of variations in prescrip-
tion drug trends among certain distinct
populations subject to distinct plan and
coverage design considerations, such as
employees of small and large employers.
Aggregation at the reporting entity level
will allow for consistency in the data with
respect to cost drivers such as negotiated
rates for the provider networks used by a
particular issuer or TPA, or the formulary
design and prescription drug rebate agree-
ments utilized by a particular PBM. For
health insurance coverage, aggregation at
the reporting entity, state, and market seg-
ment levels is also largely consistent with
the aggregation rules for the MLR data
collection in 45 CFR 158.120, which will
minimize the health care spending report-
ing burden for issuers.
The Departments are of the view
that, at this time, the clear benefits of
29
HHS’ enterprise-wide information security and privacy program was launched in FY 2003, to help protect HHS against potential IT threats and vulnerabilities. The program ensures com-
pliance with federal mandates and legislation, including the Federal Information Security Management Act and the President’s Management Agenda. The HHS Cybersecurity Program plays
an important role in protecting HHS's ability to provide mission-critical operations. In addition, the HHS Cybersecurity Program is the cornerstone of the HHS IT Strategic Plan.

December 6, 2021 800 Bulletin No. 2021–49
the aggregate data approach outweigh
the potential drawbacks. However, the
Departments solicit comment on the
general use and the specific aspects of
this data aggregation approach versus a
plan-specific data collection approach.
In addition, after the Departments begin
to receive section 204 data submissions
and have the opportunity to evaluate the
efficacy and adequacy of the aggregate
data approach, the Departments will fur-
ther review and analyze the merits of this
approach and may modify the approach
in future rulemaking if necessary or
appropriate.
b. Aggregation by Reporting Entity
The requirements related to aggrega-
tion by reporting entity are being codi-
fied at 26 CFR 54.9825-5T(b), 29 CFR
2590.725-3(b), and 45 CFR 149.730(b).
Specifically, 26 CFR 54.9825-5T(b)(1),
29 CFR 2590.725-3(b)(1), and 45 CFR
149.730(b)(1) provide that if a reporting
entity submits data on behalf of more than
one group health plan in a state and market
segment, the reporting entity may aggre-
gate the data required in 26 CFR 54.9825-
6T(b), 29 CFR 2590.725-4(b), and 45
CFR 149.740(b) for the group health plans
for each market segment in the state.
As discussed in sections II.C.3.a. and
II.B. of this preamble, the Departments
intend to make available a data collection
system that will allow multiple reporting
entities to submit different subsets of the
required information for a single plan
or issuer. These interim rules at 26 CFR
54.9825-5T(b)(2)(i), 29 CFR 2590.725-
3(b)(2)(i), and 45 CFR 149.730(b)(2)(i)
provide that if multiple reporting entities
submit the required data related to one or
more plans or issuers in a state and mar-
ket segment, the data submitted by each
of these reporting entities may not be
aggregated at a less granular level than the
aggregation level used by the reporting
entity that submits the data on total annual
spending on health care services in 26 CFR
54.9825-6T(b)(4), 29 CFR 2590.725-4(b)
(4), and 45 CFR 149.740(b)(4) on behalf
of these plans or issuers. Under this
approach, the data may not, for example,
be aggregated at a less granular level than
the aggregation level used by the issuer
providing the coverage to fully-insured
plans, the TPA acting as a reporting entity
for self-funded plans, or the plan sponsor
acting as a reporting entity for the self-
funded plans it sponsors.
For example, if a TPA is the reporting
entity for the total annual spending on
health care data for 20 self-funded plans
in a state and market segment and aggre-
gates the data of those plans, and a PBM
is the reporting entity for the top 25 list
for the same 20 self-funded plans, then
the PBM must aggregate the data of only
these 20 self-funded plans in the state and
market segment to produce the top 25
list for these 20 self-funded plans. If the
PBM also serves as the top 25 list report-
ing entity for 30 other self-funded plans
that utilize a different TPA for the section
204 data submission, then the PBM must
additionally aggregate the data of only
these 30 other self-funded plans in the
state and market segment and produce
a separate top 25 list for these 30 self-
funded plans. However, the PBM cannot
aggregate the data for all 50 self-funded
plans to produce and submit a single top
25 list for the state and market segment.
Conversely, a single data submission by
a TPA may be associated with more than
one corresponding data submission by
several PBMs if the self-funded group
health plans for which the TPA acts as
a reporting entity do not all utilize the
same PBM. Based on the Departments’
estimate, discussed in section V of this
preamble, that 473 issuers and 205 TPAs,
but only 66 PBMs, will be involved in
making section 204 data submissions,
the Departments estimate that it is highly
likely that a single PBM would submit
data that complement data submissions
of many issuers and TPAs. As a result, if
a PBM aggregated data across multiple
issuers and TPAs, this could significantly
reduce the consistency between the pre-
scription drug and rebate data submitted
by the PBM and the health care spending,
premium, and enrollment data submitted
by issuers and TPAs. However, based on
the estimated number of issuers, TPAs,
and PBMs, the Departments anticipate
that it is significantly less likely that mul-
tiple PBMs would submit data that com-
plement the data submission of a single
issuer or TPA. Therefore, the Depart-
ments are of the view that the disadvan-
tage of the modest inconsistencies that
may result from the approach adopted in
these interim final rules is outweighed by
the benefit of reduced compliance bur-
dens. The Departments solicit comment
on this aggregation approach.
These interim final rules additionally
provide that the Departments may spec-
ify in guidance alternative or additional
aggregation methods for data submitted
by multiple reporting entities. In choos-
ing alternative or additional aggrega-
tion methods, the Departments will seek
to reduce compliance burdens for the
reporting entities while ensuring that
the aggregated data facilitate the devel-
opment of the biannual public report
required under section 9825(b) of the
Code, section 725(b) of ERISA, and sec-
tion 2799A-10(b) of the PHS Act. For
example, the Departments may choose
to allow data submitted by affiliated issu-
ers to be aggregated at the holding group
level within a state and market segment.
Aggregation at the holding group level
may further reduce compliance burden,
but may obscure differences between dif-
ferent business models, such as preferred
provider organizations and health main-
tenance organizations. The Departments
may also choose to allow data submitted
by PBMs to be aggregated at a higher
level than at the level of each issuer
and TPA. Aggregation of prescription
drug and rebate data at the PBM level
may likewise reduce compliance bur-
dens and may enable more robust trend
analysis. However, as discussed previ-
ously in this section of this preamble,
this approach could significantly reduce
the consistency between the prescrip-
tion drug and rebate data and the health
care spending, premium, and enroll-
ment data, potentially impairing some
of the analyses the Departments intend
to undertake for purposes of the section
204 public report. The Departments will
issue any such guidance sufficiently in
advance of the data submission deadline
to enable plans, issuers, and other report-
ing entities to adjust their processes. The
Departments seek comment on which
alternative aggregation methods should
be considered and their respective merits
and drawbacks.
As noted in section II.C.3.a. of this pre-
amble, data submitted by reporting enti-
ties that are issuers, TPAs, or other plan

Bulletin No. 2021–49 801 December 6, 2021
service providers must be aggregated at
the state and market segment level. For
example, if an issuer is the reporting entity,
the issuer must report the data separately
for each state where it offered coverage,
and within each state must aggregate the
data separately for the individual market
(excluding student policies), the student
market, the fully-insured small group
market, the fully-insured large group
market (excluding FEHB plans), and the
FEHB line of business, as applicable. If
the issuer also provides TPA services to
self-funded group health plans in the same
state, the issuer must additionally aggre-
gate the data separately for all of the self-
funded plans offered by small employers
and all of the self-funded plans offered by
large employers for which the issuer acts
as a TPA and as the reporting entity in the
state.
In addition, these interim final
rules at 26 CFR 54.9825-5T(b)(3), 29
CFR 2590.725-3(b)(3), and 45 CFR
149.730(b)(3) provide that when a group
health plan, regardless of funding type,
involves health coverage obtained from
two affiliated issuers, one, often a health
maintenance organization, providing
in-network coverage only and the sec-
ond, usually a preferred provider or sim-
ilar organization, providing out-of-net-
work coverage only, then for purposes of
aggregating data at the reporting entity
level, the plan’s out-of-network expe-
rience may be treated as if it were all
related to the contract provided by the
in-network issuer. This approach ensures
that in this situation the experience of
employees of a single employer can be
aggregated under a single reporting issuer
in the same section 204 data submission,
which is a reasonable approach because
the coverage is priced and marketed to
group health plans as one single product.
In addition, this provision enables issuers
to leverage existing reporting processes
that they use for purposes of MLR report-
ing under 45 CFR part 158.
The Departments solicit comment
on all aspects of the data aggregation by
reporting entity approach.
c. Aggregation by State
The provisions related to aggregation
by state are being codified at 26 CFR
54.9825-5T(c), 29 CFR 2590.725-3(c),
and 45 CFR 149.730(c).
These interim final rules at 26 CFR
54.9825-5T(c)(1), 29 CFR 2590.725-3(c)
(1), and 45 CFR 149.730(c)(1) and 26 CFR
54.9825-5T(c)(2), 29 CFR 2590.725-3(c)
(2), and 45 CFR 149.730(c)(2) specify,
respectively, that for purposes of aggregat-
ing data at the state level, the experience of
fully-insured coverage must be attributed
to the state where the contract was issued,
while the experience of self-funded group
health plans must be attributed to the state
where the plan sponsor has its principal
place of business, with certain exceptions.
These requirements will ensure consis-
tent reporting across plans, issuers, and
other reporting entities, and are similar to
the requirements in 45 CFR 158.120 for
the MLR data collection. Attribution of
experience to a state in this manner, rather
than, for example, to the state where the
individual obtaining health care services
or prescription drugs works or resides,
will significantly reduce the reporting bur-
den because the data elements required in
these interim final rules generally are not
tracked based on the situs of the individ-
ual. The Departments are of the view that
attribution of experience to a state in this
manner is unlikely to significantly affect
the data trends at the state level given that
the Departments expect most if not all
reporting entities to aggregate the required
data, which will mitigate the possibility of
an outsized impact of any given plan’s
experience on the top 50 lists and trends
in a state.
Individuals sometimes obtain, and
employers sometimes provide, health
coverage through associations, trusts, or
multiple employer welfare arrangements
(MEWAs). Coverage issued through
an association, but not in connection
with a group health plan, is not group
health insurance coverage for purposes
of the PHS Act and is instead individ-
ual market coverage. These interim
final rules at 26 CFR 54.9825-5T(c)(3),
29 CFR 2590.725-3(c)(3), and 45 CFR
149.730(c)(3) provide that the experi-
ence of individual market business sold
through an association must be attributed
to the issue state of the certificate of cov-
erage. For employment-based associa-
tion coverage subject to ERISA, group
health plans may exist at the individual
employer level (a non-plan MEWA) or
at the association level, if the association
qualifies as an employer under ERISA
section 3(5) (a plan MEWA).
30
These
interim final rules at 26 CFR 54.9825-
5T(c)(4), 29 CFR 2590.725-3(c)(4), and
45 CFR 149.730(c)(4) provide that the
experience of health coverage provided
through a group trust or a MEWA must be
attributed to the state where the individ-
ual employer (if the plan is at the individ-
ual employer level) or the association (if
the association qualifies as an employer
under ERISA section 3(5)), respectively,
has its principal place of business or the
state where the association is incorpo-
rated, if the association has no principal
place of business.
These provisions apply in the same
manner to group health plans covering
employees in multiple states. For exam-
ple, the experience of a fully-insured
group health plan covering employees
in multiple states must be attributed to
the state in which the contract for health
insurance coverage is issued or delivered
as stated in the contract (except for cov-
erage provided through an association).
If the plan contracted for coverage with
a different issuer in each state, then the
relevant experience must be attributed to
each of these states. Similarly, the expe-
rience of a self-funded group health plan
providing benefits to employees in mul-
tiple states must be attributed to the state
in which the plan sponsor has its princi-
pal place of business (or, in the case of
an association with no principal place of
business, the state where the association is
incorporated), as applicable.
The Departments solicit comments on
all aspects of the data aggregation by state
approach.
30
Under ERISA section 3(5), an employer is “any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a
group or association of employers acting for an employer in such capacity.” For more information, see Multiple Employer Welfare Arrangements under the Employee Retirement Income
Security Act (ERISA): A Guide to Federal and State Regulation, available at https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/mewa-under-
erisa-a-guide-to-federal-and-state-regulation.pdf.

December 6, 2021 802 Bulletin No. 2021–49
III. Overview of the Interim
Final Rules – Office of Personnel
Management
A. Authority for Data Collection
OPM solicited comments on the capa-
bility of FEHB carriers to complete this
reporting and if there should be any con-
siderations taken into account specific
to reporting by FEHB carriers. A few
comments raised concerns about OPM’s
authority to require this reporting or ques-
tioned whether it was appropriate to apply
section 204 to FEHB carriers.
Under 5 U.S.C. 8910(a), OPM must
make a continuing study of the operation
and administration of the FEHB Program,
including surveys and reports on FEHB
plans and on the experience of these
plans. Under 5 U.S.C. 8910(b), each con-
tract between OPM and an FEHB carrier
must contain provisions requiring carriers
to furnish such reasonable reports as OPM
deems necessary to carry out its functions
under the FEHB Act. Accordingly, OPM’s
contract with each FEHB carrier requires
the carrier to furnish reports that OPM
finds necessary to properly administer the
FEHB Program.
31
In addition, 5 U.S.C.
8910(c) requires government agencies to
furnish OPM with such information and
reports as may be necessary to enable
OPM to administer the FEHB Program.
On the basis of this statutory authority,
OPM will require FEHB carriers to report
information about pharmacy benefits and
health care spending, consistent with sec-
tion 204 of Title II of Division BB of the
CAA and the Departments’ interim final
rules. In response to comments requesting
clarification of carriers’ reporting respon-
sibilities, OPM has worked with the
Departments to facilitate carriers’ report-
ing by establishing that where an entity
does not possess all of the information
required to be reported, another report-
ing entity may be responsible for the data
submission on the carriers’ behalf. Report-
ing by FEHB carriers is expected to help
accomplish the CAA’s intended purposes
of achieving national health data trans-
parency and lowering costs both for the
FEHB Program and for the health benefits
industry.
B. Reporting and Display of Data
Several RFI commenters also raised
concerns about duplicative reporting or
requested that OPM reconcile its current
reporting requirements with any report-
ing required under section 204 of Title II
of Division BB of the CAA. While OPM
does require its FEHB carriers to submit
certain data directly to OPM, the specific
type of reporting diverges from section
204 of Title II of Division BB of the CAA
in terms of the nature of the reporting as
well as its purpose.
The OPM interim final rules amend
existing 5 CFR 890.114(a) to include
references to the Department of the Trea-
sury, DOL, and HHS interim final rules
to clarify that, pursuant to 5 U.S.C. 8910,
FEHB carriers are required to report pre-
scription drug and health care spending as
set forth in those regulations with respect
to FEHB carriers in the same manner as
those provisions apply to a group health
plan or health insurance issuer offering
group or individual health insurance cov-
erage, subject to 5 U.S.C. 8902(m)(1) and
the provisions of the carrier’s contract. As
provided at 5 CFR 890.114(f), the OPM
Director will coordinate with the Depart-
ments in matters regarding FEHB carriers’
reporting on prescription drug and health
care spending, and with respect to over-
sight of reporting by FEHB carriers. Car-
riers must report FEHB plan prescription
drug and health care spending data to the
Departments as a part of the section 204
collection of information consistent with
45 CFR 149.720. Carriers will need to
include the information identified in 45
CFR 149.740 and aggregate the data con-
sistent with 45 CFR 149.730.
Several corrections have been made
to 5 CFR 890.114. First, paragraph (a)
has been revised to remove inadver-
tently added cross-references to 26 CFR
54.9816-7T and 29 CFR 2590.716-7,
which relate to the Department of the
Treasury’s and DOL’s complaints pro-
cesses. Second, paragraph (d)(1) has
been revised to change the phrase “intent
to initiate” to “initiation of” the Federal
IDR process. Third, paragraph (d)(2) has
been revised so that cross-references to
26 CFR 54.9816-8T(c)(4)(vi)(A)(1), 29
CFR 2590.716-8(c)(4)(vi)(A)(1), and 45
CFR 149.510(c)(4)(vi)(A)(1) now cite
paragraph (vii) instead (vi), and the term
“misrepresentation” now reads “material
misrepresentation.”
IV. Waiver of Proposed Rulemaking
Section 9833 of the Code, section
734 of ERISA, and section 2792 of the
PHS Act authorize the Secretaries of the
Departments to promulgate any interim
final rules that they determine are appro-
priate to carry out the provisions of chap-
ter 100 of the Code, part 7 of subtitle B of
title I of ERISA, and title XXVII of the
PHS Act. Consistent with the provisions
at section 9833 of the Code, section 734 of
ERISA, and section 2792 of the PHS Act,
the Secretaries of the Departments and
the OPM Director have determined that it
is appropriate to issue these interim final
rules to enable regulated entities sufficient
time to design processes and systems nec-
essary to comply with the data submis-
sion requirements of section 9825(a) of
the Code, section 725(a) of ERISA, and
section 2799A-10(a) of the PHS Act, and
to enable the Departments to comply with
the public reporting requirements of sec-
tion 9825(b) of the Code, section 725(b)
of ERISA, and section 2799A-10(b) of
the PHS Act, as explained further in this
section of this preamble. Although these
provisions constitute the Departments’
primary authority for issuing these interim
final rules, the Departments also note
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. 551, et seq.)
(APA), provides that a general notice of
proposed rulemaking is not required when
an agency for good cause finds that notice
and comment procedures are impractica-
ble, unnecessary, or contrary to the pub-
lic interest and incorporates a statement
of the finding and its reasons in the rule
issued. In addition, subtitle E of the Small
Business Regulatory Enforcement Fair-
31
In addition to this statutory authority and parallel contract language, FEHB carrier contracts incorporate FEHB regulations found at 5 CFR parts 890 through 894. As part of this rulemaking,
OPM amends FEHB regulations to direct carriers to comply with requirements of 45 CFR 149.710 through 149.740.

Bulletin No. 2021–49 803 December 6, 2021
ness Act of 1996 (also known as the Con-
gressional Review Act or CRA) requires
a 60-day delay in the effective date for
major rules unless an agency finds good
cause that notice and public procedure are
impracticable, unnecessary, or contrary to
the public interest, in which case the rule
shall take effect at such time as the agency
determines. 5 U.S.C. 801(a)(3), 808(2).
The Secretaries of the Departments and
the OPM Director have determined that
these interim final rules meet the excep-
tion to the default requirement of notice
and comment rulemaking under section
553(b) of the APA. Specifically, the Sec-
retaries of the Departments and the OPM
Director have determined that it would be
impracticable and contrary to the public
interest to delay putting the provisions
in these interim final rules in place until
a full public notice and comment process
has been completed, as explained further
in this section of this preamble. The Sec-
retaries of the Departments and the OPM
Director also find that there is good cause
to waive the delay in effective date for
these interim final rules.
The time period between enactment of
the CAA and the date by which plans and
issuers must comply with the provisions of
section 9825(a) of the Code, section 725(a)
of ERISA, and section 2799A-10(a) of the
PHS Act, as added by the CAA, is insuffi-
cient to permit the Departments and OPM
to pursue notice and comment rulemaking.
The CAA was enacted on December 27,
2020. Section 204 of Title II of Division
BB of the CAA requires plans and issuers
to begin submitting the required prescrip-
tion drug and health care spending infor-
mation to the Departments by December
27, 2021, and to submit this information
by June 1 of each year thereafter. Due to
the novelty and complexity of the require-
ments in section 9825 of the Code, section
725 of ERISA, and section 2799A-10 of
the PHS Act, the Departments and OPM
determined it necessary to issue an RFI
to inform the Departments’ and OPM’s
implementation of the statutory require-
ments through rulemaking. Following an
analysis of the statutory provisions, the
technical and regulatory issues surround-
ing the concepts, definitions, and reporting
related to prescription drugs, and industry
practices related to prescription drug costs
and data reporting processes and capabili-
ties, among other things, the Departments
and OPM published the RFI on June 23,
2021 with a 30-day comment period.
32
In their responses to the RFI, regu-
lated entities and other interested parties
indicated that they would need significant
time to come into compliance after final
rules implementing the requirements in
section 9825 of the Code, section 725 of
ERISA, and section 2799A-10 of the PHS
Act are issued. In implementing these
requirements, these interim final rules
require plans, issuers, and FEHB carriers
to establish complex internal data compi-
lation and reporting processes, and may
require plans, issuers, FEHB carriers,
TPAs, PBMs, and drug manufacturers to
modify various contracts and arrange-
ments and to coordinate data compilation
and sharing among themselves in order to
enable submission of complete and accu-
rate data to the Departments in accordance
with the requirements in these interim
final rules. All of these entities will require
time to implement the changes necessary
to comply with these new requirements.
In response to the RFI, although several
commenters stated that they would be able
to submit the required data 6 months after
the Departments and OPM published the
final rules, the instructions for the infor-
mation collection instrument, and the
technical specifications for the data col-
lection system, the overwhelming major-
ity of commenters advised that they would
need 12 months to comply. Commenters
advised that they could not begin rene-
gotiating contracts and investing in the
necessary IT systems modifications prior
to the final rules, the instructions for the
information collection instrument, and the
technical specifications for the data col-
lection system being issued.
In recognition of stakeholders’ con-
cerns about the feasibility of meeting the
first two statutory reporting deadlines of
December 27, 2021 and June 1, 2022, as
discussed in section II.C.1.b. of this pre-
amble, the Departments are exercising dis-
cretion to not initiate enforcement actions
against plans or issuers that submit the
section 204 data submissions for the 2020
and 2021 reference years by December 27,
2022. Although this deferred enforcement
may have allowed for the promulgation
of regulations with notice and comment
before the Departments would consider
taking enforcement action, doing so none-
theless would not have provided sufficient
time for the regulated entities to come
into compliance with the requirements by
December 27, 2022. Issuing these rules as
proposed rules would have resulted in the
final rules and final technical specifica-
tions becoming available to the regulated
entities no earlier than June 2022, leaving
them only 6 months – well short of the
12 months that most commenters advised
is necessary – to complete the complex
tasks required to come into compliance. In
addition, deferred enforcement does not
alter the statutory deadlines, and therefore
the Departments must promulgate final
rules that become effective no later than
December 27, 2021, and must promulgate
final rules timely to enable plans and issu-
ers to rely on these rules and adhere to the
law by the December 27, 2021 and June
1, 2022 statutory deadlines. The Depart-
ments strongly encourage plans and issu-
ers that are able to submit the required
information by either the December 27,
2021 or June 1, 2022 statutory deadlines
to do so.
Further, although deferring enforcement
for an additional period of time beyond
December 27, 2022 could have provided
sufficient time to issue these rules as pro-
posed rules, the Departments are of the view
that any additional delays in collecting the
information required under section 9825(a)
of the Code, section 725(a) of ERISA, and
section 2799A-10(a) of the PHS Act would
be inappropriate and contrary to the pub-
lic interest. First, section 9825(b) of the
Code, section 725(b) of ERISA, and sec-
tion 2799A-10(b) of the PHS Act require
the Departments to publish biannual
section 204 public reports, with the first
such report due no later than 18 months
after the date on which the first section
204 data submission is required. Conse-
quently, deferring enforcement further than
December 27, 2022 would foreclose the
Departments’ ability to prepare and timely
32
86 FR 32813.

December 6, 2021 804 Bulletin No. 2021–49
publish the first section 204 public report.
Thus, the Departments are of the view that
additional delays related to the section 204
data submissions would risk causing undue
and cascading delays in the publication of
the section 204 public reports, potentially
delaying important legislative and policy-
making initiatives that may be spurred by
the section 204 public reports and depriv-
ing the public of the benefit of any such
initiatives. Second, any additional delays
related to the section 204 data submissions
could require plans and issuers to submit
3, rather than 2, years of data at once (for
example, if the Departments were to defer
enforcement until June 1, 2023 – the stat-
utory deadline for submission of the 2022
data – then plans and issuers would have to
submit the data for 2020, 2021, and 2022
by that date). This would place a significant
burden on plans and issuers and would lead
to lower-quality 2022 data because plans,
issuers, and other reporting entities would
lose the opportunity to incorporate lessons
learned from preparation and submission
of the 2020 and 2021 data, and the Depart-
ments would lose the ability to provide
feedback or guidance to the regulated enti-
ties based on challenges or inconsistencies
identified in the 2020 and 2021 data sub-
missions.
In addition, the Departments will require
time to design, build, and test a fully opera-
tional data collection system, which cannot
be done prior to the definitions and require-
ments in these interim final rules being
finalized. The reporting entities will in turn
require time to familiarize themselves with
the data collection system and to adapt their
processes to the technical specifications
prescribed for the data collection system.
Therefore, issuing these rules as interim
final rules, rather than as proposed rules,
will allow the Departments to develop and
operationalize the data collection system
and will allow the reporting entities to pro-
vide feedback on the design of this system
to the Departments and to incorporate the
specifications of the data collection system
into their processes.
It is therefore necessary, appropriate,
and in the public interest that plans, issu-
ers, FEHB carriers, TPAs, PBMs, and the
Departments have certainty regarding the
standards of these requirements in order
to begin implementation. Accordingly, to
allow plans, issuers, FEHB carriers, TPAs,
PBMs, and the Departments sufficient
time to implement these new requirements
and any changes necessary to comply with
these new requirements, these interim final
rules must be published and available to
the public well in advance of the Decem-
ber 27, 2022 enforcement date for the ini-
tial data collection. Allowing time for a
full notice and comment process prior to
the requirements taking effect would not
provide sufficient time for the reporting
entities to comply with the requirements,
and would risk collection of inaccurate
and low-quality data, thwarting the stat-
ute’s objective of producing an actionable
section 204 public report on prescription
drug pricing and its impact on premiums.
Finally, although these interim final
rules reflect public comments submitted
in response to the RFI, the Departments
and OPM intend to expeditiously and thor-
oughly review and analyze the public com-
ments that will be submitted on the specific
provisions of these interim final rules, as
well as any additional feedback that may
be provided by reporting entities and other
stakeholders following publication of these
interim final rules and the information col-
lection requirements. The Departments and
OPM intend to promptly issue final rules
based on these public comments.
For the foregoing reasons, the Depart-
ments and OPM have determined that it is
necessary, appropriate, and in the public
interest to issue these interim final rules
to allow regulated entities to timely com-
ply with the statutory data submission
requirements. The Departments and OPM
have further determined that it would be
impracticable and contrary to the public
interest to engage in full notice and com-
ment rulemaking before putting these
interim final rules into effect.
V. Regulatory Impact Analysis
A. Summary
These interim final rules implement
the provisions of section 9825 of the
Code, section 725 of ERISA, and section
2799A-10 of the PHS Act as enacted by
section 204 of Title II of Division BB of
the CAA. These provisions are applicable
to group health plans and health insur-
ance issuers offering group or individual
health insurance coverage. These interim
final rules implement section 9825 of the
Code, section 725 of ERISA, and section
2799A-10 of the PHS Act, which increase
transparency by requiring plans and issu-
ers to annually submit to the Departments
information about prescription drugs and
health care spending.
Section 9825(a) of the Code, section
725(a) of ERISA, and section 2799A-10(a)
of the PHS Act require plans and issuers to
submit certain information to the Depart-
ments on prescription drug and health
care spending, including, but not limited
to, average monthly premium amounts
(paid by participants, beneficiaries, and
enrollees and paid by employers on behalf
of participants, beneficiaries, and enroll-
ees, as applicable), and the number of
participants, beneficiaries, and enrollees,
as applicable, with respect to the plan or
coverage in the previous plan year. Addi-
tionally, plans and issuers must report pre-
scription drug rebates, fees, and any other
remuneration paid by drug manufacturers
and any impact on premiums and out-of-
pocket costs associated with these rebates,
fees, or other remuneration. Pursuant to 5
U.S.C. 8910, OPM is joining the Depart-
ments to require the submission of pre-
scription drug and health care spending
data from FEHB plans in the same man-
ner as plans and issuers must provide such
data under section 9825 of the Code, sec-
tion 725 of ERISA, and section 2799A-
10 of the PHS Act. The Departments and
OPM highlight that nothing prevents a
TPA or a PBM from reporting the required
information on behalf of plans, issuers,
and FEHB carriers, or the subset of the
required information that is available to
them.
Section 9825(b) of the Code, sec-
tion 725(b) of ERISA, and section
2799A-10(b) of the PHS Act require the
Departments to publish on the internet
biannual reports on prescription drug
reimbursements under group health plans
and group and individual health insurance
coverage, prescription drug pricing trends,
and the role of prescription drug costs in
contributing to premium increases or
decreases under these plans or coverage,
aggregated in such a way that no drug or
plan specific information is made public.
The Departments and OPM have exam-
ined the effects of these interim final rules
as required by Executive Order 13563
(76 FR 3821, January 21, 2011, Improv-
ing Regulation and Regulatory Review);
Executive Order 12866 (58 FR 51735,

Bulletin No. 2021–49 805 December 6, 2021
October 4, 1993, Regulatory Planning and
Review); the Regulatory Flexibility Act
(September 19, 1980, Pub. L. 96–354);
section 1102(b) of the Social Security Act
(42 U.S.C. 1102(b)); section 202 of the
Unfunded Mandates Reform Act of 1995
(March 22, 1995, Pub. L. 104–4); Execu-
tive Order 13132 (64 FR 43255, August
10, 1999, Federalism); and the Congres-
sional Review Act (5 U.S.C. 804(2)).
B. Executive Order 12866 and 13563
Executive Order 12866 directs agencies
to assess costs and benefits of available
regulatory alternatives and, if regulation is
necessary, to select regulatory approaches
that maximize net benefits (including
potential economic, environmental, pub-
lic health and safety effects, distributive
impacts, and equity). Executive Order
13563 emphasizes the importance of quan-
tifying both costs and benefits, of reducing
costs, of harmonizing rules, and of promot-
ing flexibility. A regulatory impact analysis
(RIA) must be prepared for rules with eco-
nomically significant effects ($100 million
or more in any 1 year).
Section 3(f) of Executive Order 12866
defines a “significant regulatory action” as
an action that is likely to result in a rule:
(1) having an annual effect on the econ-
omy of $100 million or more in any one
year, or adversely and materially affect-
ing a sector of the economy, productiv-
ity, competition, jobs, the environment,
public health or safety, or state, local or
tribal governments or communities (also
referred to as “economically significant”);
(2) creating a serious inconsistency or oth-
erwise interfering with an action taken or
planned by another agency; (3) materially
altering the budgetary impacts of entitle-
ment grants, user fees, or loan programs
or the rights and obligations of recipients
thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the
President’s priorities, or the principles set
forth in the Executive Order.
An RIA must be prepared for major
rules with economically significant effects
(for example, $100 million or more in any
one year), and a “significant” regulatory
action is subject to review by the Office
of Management and Budget (OMB). The
Departments anticipate that this regula-
tory action is likely to have economic
impacts of $100 million or more in at least
1 year, and thus meets the definition of a
“significant rule” under Executive Order
12866. Therefore, the Departments and
OPM have provided an assessment of
the potential costs, benefits, and transfers
associated with these interim final rules. In
accordance with the provisions of Execu-
tive Order 12866, these interim final rules
were reviewed by OMB.
1. Need for Regulatory Action
There is currently limited information
available about how prescription drug costs
influence premiums and out-of-pocket
costs. There is also limited information
available on the prescription drug rebates,
fees, and other remuneration paid by drug
manufacturers to plans and issuers (or to
their administrators or service providers)
and the impact of these reimbursements on
premiums and out-of-pocket costs. The data
submission requirements in these interim
final rules will provide the Departments
and OPM with a better understanding of
prescription drug and health care spending
in the United States. Further, these interim
final rules are necessary to meet the stat-
utory requirements of section 9825 of the
Code, section 725 of ERISA, and section
2799A-10 of the PHS Act.
Plans, issuers, FEHB carriers, and
other reporting entities will incur costs
related to the data submission require-
ments set forth in these interim final rules.
However, in accordance with Executive
Order 12866, the Departments determined
that the benefits of these interim final rules
justify the costs.
2. Summary of Impacts
In accordance with OMB Circular A-4,
Table 1 depicts an accounting statement
summarizing the Departments’ and OPM’s
assessment of the benefits, costs, and trans-
fers associated with these interim final rules.
The Departments and OPM are unable to
quantify all benefits, costs, and transfers
associated with these interim final rules but
have sought, where possible, to describe
these non-quantified impacts below. The
effects in Table 1 reflect non-quantified
impacts and estimated direct monetary
costs resulting from the data submission
requirements in these interim final rules.
TABLE 1: Accounting Statement
Benefits:
Qualitative:
• Production of a dataset that satisfies the requirements in section 9825 of the Code, section 725 of ERISA, and section 2799A-
10 of the PHS Act and informs the development of the section 204 public reports, which will increase transparency about
prescription drugs and health care spending and potentially promote more competitive health care markets.
• The ability of the Departments and OPM to identify the factors contributing to changes in plan expenditures, including
prescription drug costs, hospital costs, health care provider and clinical service costs, and other medical costs, which may
inform future policymaking that addresses health care costs.
• The ability of the Departments and OPM to identify the most frequently dispensed brand prescription drugs and the most costly
prescription drugs covered by plans and issuers and the corresponding expenditures, which may inform future policymaking
that addresses prescription drug costs.
• Improved understanding of prescription drug pricing trends by the Departments and OPM.
• Improved understanding by the public and the Departments and OPM of the impact of prescription drug rebates, fees, and
other remuneration paid by drug manufacturers to plans, issuers, or FEHB carriers (or to their administrators or service
providers) on premiums and out-of-pocket costs.
• Potential to inform Congress and shape future policymaking that could benefit consumers and employers.

December 6, 2021 806 Bulletin No. 2021–49
Costs: EstimateYear DollarDiscount RatePeriod Covered
Annualized Monetized ($/year)$ 363.63 million20217 percent2021 – 2025
$ 361.09 million20213 percent2021 – 2025
Quantitative:
• One-time costs to issuers, FEHB carriers, TPAs, and PBMs to design, develop, and implement needed IT systems changes and
submit required information, in 2022, estimated to be approximately $1,034 million.
• One-time costs to issuers, FEHB carriers, TPAs, and PBMs to update and maintain their IT systems and submit required
information in 2023, estimated to be approximately $290 million.
• Annual recurring costs to issuers, FEHB carriers, TPAs, and PBMs to maintain their IT systems and report data in 2024, and
yearly thereafter, estimated to be approximately $211 million.
• One-time costs to issuers, FEHB carriers, TPAs, and PBMs to prepare standard operating procedures and provide training to
staff, in 2022, estimated to be approximately $4.7 million.
• One-time costs to issuers, FEHB carriers, TPAs, and PBMs to modify existing contracts, in 2022, estimated to be
approximately $8 million.
• Costs to the federal government to build and maintain a system to receive, store, and analyze data submitted by issuers, FEHB
carriers, TPAs, and PBMs, and to prepare section 204 reports, of approximately $4.4 million in 2021, $8.5 million in 2022,
$7.3 million in 2023, $7.4 million in 2024, and $7.9 million in 2025.
Transfers:
Non-Quantified:
• Potential transfers from providers, facilities, pharmaceutical manufacturers, and PBMs to plans, issuers, and FEHB carriers if
plans, issuers, and FEHB carriers are able to achieve greater negotiating power due to improved understanding of prescription
drug costs.
a. Benefits
The reporting requirements in these
interim final rules will lead to the develop-
ment of a dataset that satisfies the require-
ments in section 9825 of the Code, section
725 of ERISA, and section 2799A-10 of the
PHS Act. This dataset will inform the devel-
opment of the biannual section 204 public
reports by the Departments regarding pre-
scription drug and health care spending.
The prescription drug and health care
spending data collection and the resultant
section 204 public reports will benefit
plans, issuers, FEHB carriers, employ-
ers, and policymakers by advancing
their understanding of prescription drug
costs and the impact of prescription drug
rebates, fees, and other remuneration on
premiums and out-of-pocket costs. Con-
sumers could potentially benefit from the
section 204 public reports if plans, issuers,
and FEHB carriers 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 section 204 data
submissions will allow the Departments
and OPM to identify the most frequently
dispensed brand prescription drugs and
the costliest prescription drugs covered by
plans, issuers, and FEHB carriers along
with the prescription drugs that have con-
tributed to the greatest annual increases
in plan expenditures, and the prescrip-
tion drugs that have generated the highest
prescription drug rebates, fees, and other
remuneration. These reports will pro-
vide the Departments and OPM with an
improved understanding of prescription
drug costs. The dataset will also allow the
Departments and OPM to identify other
major drivers of increases in health care
spending, including hospital costs, pri-
mary and specialty health care provider
and clinical service costs, and other med-
ical costs. The data may also allow the
Departments and OPM to examine varia-
tion in health care costs across the country.
Policymakers will be able to use the
information provided in the section 204
public reports to set policies that may result
in lower premiums, reduced out-of-pocket
costs, and decreased labor costs. Policymak-
ers will also be able to use this information
to set policies that may promote transpar-
ency and more competition in health care
and prescription drug markets, consistent
with the goals of Executive Order 14036.
b. Costs
The Departments and OPM estimate
the burden to report the information will
be the time and effort necessary for plans,
issuers, FEHB carriers, and other reporting
entities to submit the required information
in the required format to the Departments.
The Departments and OPM assume that
issuers, TPAs, and PBMs will submit the
required information on behalf of group
health plans or FEHB carriers. The Depart-
ments and OPM acknowledge that TPAs
and PBMs are likely to pass on any related
costs to plans, issuers, and FEHB carriers.
The Departments and OPM estimate there
are 473 health insurance issuers offering
individual and group health insurance,
33

205 TPAs
34
(generally submitting on behalf
of self-funded group health plans), 46
FEHB carriers, and 66 PBMs
35
(submitting
on behalf of plans, issuers, and FEHB car-
riers) that will submit the required informa-
tion annually. The Departments and OPM
33
Based on data from MLR annual reports for the 2019 MLR reporting year, available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.
34
Estimates for Non-issuer TPAs are based on data derived from the 2016 Benefit Year reinsurance program contributions.
35
Source: National Association of Insurance Commissioners, last updated on March 16, 2021. Available at https://content.naic.org/cipr_topics/topic_pharmacy_benefit_managers.htm.

Bulletin No. 2021–49 807 December 6, 2021
assume that all costs will be incurred in
2022 and beyond, since reporting entities
are unlikely to begin implementation in the
last month of 2021. The costs related to
these information collection requirements
are estimated to be $1,033,758,440 in 2022,
$289,786,640 in 2023, and $211,128, 360
in 2024 and onward, as discussed in detail
later in section V.D. (Paperwork Reduction
Act) of this preamble. These total costs
have a tendency toward overestimation
because the estimate does not reflect pro-
cess efficiencies for FEHB carriers that are
also issuers.
Issuers, FEHB carriers, TPAs, and
PBMs will incur additional costs related
to the data submission. To estimate these
costs, the Departments and OPM used data
from the Bureau of Labor Statistics (BLS)
to derive average labor costs (including
a 100 percent increase for fringe bene-
fits and overhead).
36
As explained in sec-
tion V.D.1. (Paperwork Reduction Act)
of this preamble, the Departments and
OPM used a different data set to estimate
costs related to the information collection
requirements.
TABLE 2: Adjusted Hourly Wage Rates
Occupation Title
Occupational
Code
Mean Hourly Wage
($/hour)
Fringe Benefits and
Overhead ($/hour)
Adjusted Hourly
Wage ($/hour)
Chief Executives11-1011$95.12 $95.12 $190.24
General and Operations
Managers
11-1021$60.45 $60.45 $120.90
Computer and Information
Systems Managers
11-3021$77.76 $77.76 $155.52
Lawyers23-1011$71.59 $71.59 $143.18
Paralegals and Legal Assistants23-2011$27.22 $27.22 $54.44
Executive Secretaries and
Executive Administrative
Assistants
43-6011$31.36 $31.36 $62.72
Legal Secretaries and
Administrative Assistants
43-6012$25.36 $25.36 $50.72
Business Operations Specialists, 13-1198$40.53 $40.53 $81.06
Computer Programmers15-1251$45.98 $45.98 $91.96
Secretaries and Administrative
Assistants
43-6014$19.43 $19.43 $38.86
36
May 2020 Bureau of Labor Statistics, Occupational Employment Statistics, National Occupational Employment and Wage Estimates, available at https://www.bls.gov/oes/current/oes_nat.
htm.
Issuers, FEHB carriers, TPAs, and
PBMs will incur costs associated with
contract modifications regarding these
reporting requirements. The Depart-
ments and OPM assume that each of the
473 issuers, 46 FEHB carriers, and 205
TPAs will need to modify or enter into
contracts with PBMs for the PBMs to
provide information on prescription drug
rebates, or other required information,
that is generally maintained primarily by
PBMs. The Departments and OPM esti-
mate that a total of 724 contracts will be
modified. The Departments assume that
the contract modifications will involve
the time of chief executives, general and
operations managers, lawyers, paralegals
and legal assistants, executive secretaries
and executive administrative assistants,
and legal secretaries and administrative
assistants from both entities. The adjusted
hourly wages (which incorporate a 100
percent markup for fringe benefits and
overhead costs) for those involved in
contract modifications are presented in
Table 2.
The Departments and OPM estimate
that in order to negotiate contract revisions
between issuers, FEHB carriers, TPAs,
and their PBMs, for each issuer, FEHB
carrier, TPA, and PBM, a chief executive
will need 1 hour, general and operations
managers will need 2 hours, lawyers
will need 20 hours, paralegals will need
20 hours, administrative assistants will
need 2 hours, and legal secretaries will
need 20 hours for a total of 65 hours, at
a cost of approximately $5,524 for each
entity negotiating a contract revision.
The total burden related to each contract
negotiation between issuers, FEHB carri-
ers, TPAs, and their PBMs is estimated to
be 130 hours, with an associated cost of
approximately $11,049. The total burden
for all 724 contract modifications is esti-
mated to be approximately 94,120 hours,
with an associated cost of approximately
$7,999,157.
37
The Departments and OPM
assume that this cost will be incurred in
2022. The calculations and the total bur-
den and cost associated with these con-
tract modifications are presented in Table
3. The Departments and OPM seek com-
ment on these estimates.

December 6, 2021 808 Bulletin No. 2021–49
TABLE 3: Burden and Costs to Issuers, FEHB Carriers, TPAs, and PBMs Associated with Contract Modifications
2022
Occupation
Adjusted Hourly
Wage ($/hour)
Time (hours)
Estimated Labor
Cost
Chief Executives$190.241$190.24
General and Operations Managers$120.902$241.80
Lawyers$143.1820$2,863.60
Paralegals and Legal Assistants$54.4420$1,088.80
Executive Secretaries and Executive Administrative Assistants$62.722$125.44
Legal Secretaries and Administrative Assistants$50.7220$1,014.40
Burden and Cost for Each Issuer, FEHB Carrier, TPA, and PBM65$5,524.28
Total Burden and Cost for Each Contract Negotiation Between an Issuer, FEHB Carrier,
or TPA and Their PBM
130$11,048.56
Total Burden and Cost for All Contract Negotiations94,120$7,999,157.44
All reporting entities will incur costs
associated with developing standard oper-
ating procedures and training staff respon-
sible for submitting the required data. The
Departments and OPM assume that each
of the 473 issuers, 46 FEHB carriers, 205
TPAs, and 66 PBMs will require the time
of general and operations managers, com-
puter and information systems managers,
business operation specialists, computer
programmers, and secretaries and adminis-
trative assistants to develop new standard
operating procedures and deliver or receive
training. The adjusted hourly wages for
those involved in these changes in standard
operating procedures and training require-
ments are presented in Table 2.
The Departments and OPM estimate
that for each issuer, FEHB carrier, TPA,
and PBM, it will take 8 hours for general
managers, 8 hours for information system
managers, 40 hours for business operation
specialists, 4 hours for computer program-
mers, and 4 hours for administrative assis-
tants to prepare new standard operating
procedures and train staff regarding the
data submission requirements. The total
burden for each issuer, FEHB carrier, TPA,
and PBM will be 64 hours with an asso-
ciated cost of approximately $5,977. The
total estimated burden of changing stan-
dard operating procedures and training staff
for all 790 issuers, FEHB carriers, TPAs,
and PBMs is 50,560 hours, with an asso-
ciated equivalent cost of $4,721,862.
38
The
Departments and OPM assume that this
cost will be incurred in 2022. The calcu-
lations and the total burden and cost asso-
ciated with developing standard operating
procedures and training staff are presented
in Table 4. The Departments and OPM seek
comment on these estimates.
TABLE 4: Burden and Costs to Issuers, FEHB Carriers, TPAs, and PBMs Associated with Developing Standard Operating
Procedures and Training Staff
2022
Occupation
Adjusted Hourly
Wage ($/hour)
Time (hours)
Estimated Labor
Cost
General and Operations Managers$120.90 8 $967.20
Computer and Information Systems Managers$155.52 8 $1,244.16
Project Management Specialists and Business Operations
Specialists, All Other
$81.06 40 $3,242.40
Computer Programmers$91.96 4 $367.84
Secretaries and Administrative Assistants, Except Legal, Medical,
and Executive
$38.86 4 $155.44
Burden and Cost for Each Issuer, FEHB Carrier, TPA, and PBM64$5,977.04
Total Burden and Cost Associated with Developing Standard Operating Procedures and
Training Staff
50,560$4,721,861.60
37
The total hour burden and equivalent cost of burden were calculated as follows: Burden Hours per Contract Modification x Number of Contract Modifications = Total Burden Hours (130 x
724 = 94,120); Total Cost per Contract Modification x Number of Contract Modifications = Equivalent Total Cost ($11,049 x 724 = $7,999,157).
38
The total hour burden and equivalent cost of burden were calculated as follows: Burden Hours per Entity x Number of Entities = Total Burden Hours (64 x 790 = 50,560); Total Cost per
Entity x Number of Entities = Equivalent Total Cost ($5,977 x 790 = $4,721,862).

Bulletin No. 2021–49 809 December 6, 2021
The federal government will incur
costs of approximately $4.4 million in
2021, $8.5 million in 2022, $7.3 million
in 2023, $7.4 million in 2024, and $7.9
million in 2025 to build and maintain a
system to receive and store the informa-
tion submitted by issuers, FEHB carriers,
TPAs, and PBMs, to analyze the data, and
to prepare section 204 public reports.
c. Transfers
These interim final rules could poten-
tially lead to transfers from providers,
facilities, pharmaceutical manufacturers,
and/or PBMs to plans, issuers, and FEHB
carriers if plans, issuers, and FEHB carri-
ers are able to achieve greater negotiating
power because of improved understanding
of prescription drug costs. If consumers
are able to make informed plan selections
or prescription drug purchases in response
to improved understanding of prescription
drug costs (including trends in prescrip-
tion drug prices and the impact of phar-
maceutical manufacturer rebates, fees,
and other remuneration on premiums and
out-of-pocket costs), these interim final
rules could also potentially lead to trans-
fers from pharmaceutical manufacturers,
PBMs, and/or plans, issuers, and FEHB
carriers to consumers in the form of lower
prescription drug prices. The Departments
and OPM seek comment on any potential
transfers that may occur as a result of the
data submission requirements in these
interim final rules.
C. Regulatory Alternatives
In developing these interim final rules,
the Departments considered various alter-
native approaches.
Aggregation. The Departments and
OPM considered requiring plans, issu-
ers, and FEHB carriers to submit all of
the required information on a plan-by-
plan basis, rather than allowing reporting
entities to submit aggregated data. How-
ever, as explained in section II.C.3. of this
preamble, this approach would impose
a large administrative burden on regu-
lated entities and would also result in less
accurate and meaningful top 50 and top
25 lists, which would inhibit the Depart-
ments’ ability to produce accurate and
meaningful section 204 public reports as
required by the statute. Collecting the top
50 lists separately for each group health
plan could produce a distorted view of the
market due to the small sample sizes that
would underlie these top 50 lists, and due
to the Departments’ inability to combine
data from such plan-specific top 50 lists to
determine aggregate prescription drug and
rebate trends nationwide and within mar-
ket segments. Collecting the top 25 rebate
list for each group health plan would pro-
duce an inaccurate view of rebates, fees,
and other remuneration as these rebates
are not provided at the individual pre-
scription level, and often not even at the
plan level; thus, TPAs and issuers would
have to speculate as to actual amounts of
rebates and any price concessions for each
plan. In addition, this approach would
be inconsistent with the approach taken
in other HHS data collections. Further,
collecting plan-level, drug-specific data
would increase the likelihood of collect-
ing and transmitting patient health data
and personally identifiable information,
and the attendant risk of inadvertent or
inappropriate disclosure of this informa-
tion.
However, as noted in section II.C.3.
of this preamble, the Departments and
OPM will continue to review the merits
of this alternative approach and may mod-
ify the approach to aggregation in future
rulemaking.
Plan Year. The Departments and OPM
considered requiring plans, issuers, and
FEHB carriers to submit the required
data by plan or coverage year determined
according to the effective dates of each
plan or policy. However, this approach is
inconsistent with other HHS data collec-
tions and would limit the Departments’
ability to compare trends among group
and individual market segments, public-
and private-sponsored health coverage,
and multiple data sources. Evaluation of
market trends is important both for policy
development and for the required section
204 public report.
Definition of Drug. The Departments
and OPM considered several different clas-
sification systems to define a drug for the
purposes of section 204 data submissions.
The NDC is very granular, containing
information on the labeler, active ingredi-
ent, form, strength, and packaging of drugs,
and would provide robust information if
the Departments could collect data for
every code. However, section 9825 of the
Code, section 725 of ERISA, and section
2799A-10 of the PHS Act give the Depart-
ments authority to collect only the infor-
mation on the top 50 or top 25 drugs, as
applicable, by plan or coverage. Given this
limited scope of the data collection, a lower
level of granularity is preferable for obtain-
ing the most representative information
possible, since multiple variations of essen-
tially the same drug
39
are unique NDCs.
With access to only the top 50 NDCs, the
Departments therefore would not have the
data for all NDCs associated with a given
prescription drug, and thus would not be
able to consolidate the NDC information to
identify meaningful trends in the prescrip-
tion drug markets. The Departments and
OPM also considered using the RxNorm
Concept Unique Identifier (RxCUI), which
is slightly less granular than the NDC, but
RxCUI-level data collection suffers from
many of the same limitations as NDC-level
data collection, and commenters respond-
ing to the RFI overwhelmingly advised
against collecting the data based on RxCUI
because it is not widely used by report-
ing entities. Instead, many public reports,
such as the 2020 Report to Congress on
Prescription Drug Pricing prepared by the
HHS Office of the Assistant Secretary for
Planning and Evaluation (ASPE),
40
use a
name and ingredient system that identifies
drugs at a higher level, rather than granular
systems such as NDC or RxCUI, to com-
pare drug information across markets and
across time. Most commenters responding
to the RFI also recommended the use of
a classification that would ensure that the
same drug in various formulations or dos-
ages would not appear on the top 50 lists
multiple times, such as a classification
based on name and ingredient. Ultimately,
the Departments and OPM determined that
the most useful data would be collected if
prescription drug information is grouped
by name and ingredient.
39
This characterization is used only for purposes of these interim final rules and is not intended to reflect or suggest any such characterization by FDA.
40
https://aspe.hhs.gov/system/files/aspe-files/263451/2020-drug-pricing-report-congress-final.pdf.

December 6, 2021 810 Bulletin No. 2021–49
Most Costly Drugs. The Departments
and OPM considered requiring plans, issu-
ers, and FEHB carriers to rank the 50 most
costly drugs based on spending per dos-
age unit rather than based on total annual
spending. Per-unit spending would reflect
drug prices and capture in the top 50 list
the cost of the drug without the influence
of the number of times a drug was pre-
scribed. In contrast, total spending may
capture the top 50 list inexpensive generic
drugs that are frequently prescribed and
purchased. However, the statutory lan-
guage suggests that in the section 204
data submission requirements, Congress
sought to identify the drugs that drive the
overall prescription drug expenditure in
the United States, rather than the drugs
with the highest unit prices. Ranking the
top 50 most costly drugs by total annual
spending will provide a more informa-
tive comparison to the top 25 drugs that
yielded the highest amount of prescription
drug rebates because both lists would be
based on total, rather than per-unit, dollar
amounts.
Leveraging Similar Data Collections
under the PHS Act. The Departments ana-
lyzed the reporting requirements under
several existing PHS Act provisions
related to prescription drug and health
care spending to determine whether any
of the data required under section 9825(a)
of the Code, section 725(a) of ERISA, and
section 2799A-10(a) of the PHS Act are
already available to the Departments pur-
suant to other reporting requirements. The
data collection requirements under sec-
tion 9825(a) of the Code, section 725(a)
of ERISA, and section 2799A-10(a) of
the PHS Act have some similarities to the
requirements under section 2718(a) of the
PHS Act implemented in the MLR rules,
41

as well as section 1150A of the Social
Security Act, which is implemented in
the Exchange Establishment rule and the
PBM Transparency rule. However, there
are several important distinctions.
Section 2718(a) of the PHS Act
addresses clear accounting for the costs
of health insurance coverage, includ-
ing health care spending, and generally
requires issuers to submit annual MLR
reports to HHS. HHS implemented these
reporting requirements in the MLR
rules, codified at 45 CFR part 158. Sim-
ilar to section 9825(a) of the Code,
section 725(a) of ERISA, and section
2799A-10(a) of the PHS Act, the MLR
rules require issuers to report data on pre-
miums
42
and claims, including prescrip-
tion drug claims and rebates.
43
However,
unlike the requirements in section 9825(a)
of the Code, section 725(a) of ERISA,
and section 2799A-10(a) of the PHS Act,
the MLR rules do not require that premi-
ums be broken down by amounts paid by
employers versus employees; do not break
down health care spending costs, other
than prescription drug costs, by type; do
not break down prescription drug costs by
amounts paid by the plan or issuer versus
participants, beneficiaries, and enrollees;
and do not require reporting of drug-level
prescription drug and rebate data. There-
fore, while the total amounts for certain
items reported under section 9825(a) of
the Code, section 725(a) of ERISA, and
section 2799A-10(a) of the PHS Act and
the MLR rules may match, the amounts
currently reported by issuers under the
MLR rules cannot be used to satisfy all
of the relevant requirements of section
9825(a) of the Code, section 725(a) of
ERISA, and section 2799A-10(a) of the
PHS Act. Additionally, the MLR rules
do not apply to self-funded group health
plans (although issuers report certain
aggregate information with respect to the
experience of self-funded group health
plans for which issuers provide adminis-
trative services), and data attributable to
FEHB plans is not separated out under the
MLR rules.
Section 1150A of the Social Secu-
rity Act requires a health benefit plan
or a PBM that manages prescription
drug coverage under a contract with a
QHP issuer to provide certain prescrip-
tion drug information to the Secretary
of HHS.
44
This information includes: (a)
the percentage of prescriptions dispensed
through retail versus mail order pharma-
cies; (b) the percentage of prescriptions
for generic drugs; (c) the amount and
type of rebates, discounts, or price con-
cessions (excluding bona fide service
fees) that the PBM negotiates that are
attributable to utilization under the plan;
(d) the amount of rebates, discounts, or
price concessions passed through to the
plan sponsor; (e) the total number of pre-
scriptions that were dispensed; and (f)
the difference between the amount that
the plan pays the PBM and the amount
that the PBM pays pharmacies. HHS
implemented these reporting require-
ments as they apply to QHP issuers in
the Exchange Establishment rule,
45
and
implemented these reporting require-
ments as they apply to PBMs in the PBM
Transparency rule.
46
Section 9825(a) of the Code, section
725(a) of ERISA, and section 2799A-10(a)
of the PHS Act, the Exchange Establish-
ment rule, and the PBM Transparency
rule require issuers to report some of the
same information regarding prescription
drug rebates. However, section 9825(a)
of the Code, section 725(a) of ERISA,
and section 2799A-10(a) of the PHS Act
apply to all plans and issuers, whereas
the Exchange Establishment rule and the
PBM Transparency rule only apply to
individual and small group market QHPs
and their PBMs. Therefore, reporting
under the Exchange Establishment rule
and PBM Transparency rule will not fully
satisfy the relevant requirements of sec-
tion 9825(a) of the Code, section 725(a)
of ERISA, and section 2799A-10(a) of the
PHS Act. However, as discussed in section
II.C.2.e. of the preamble, to reduce report-
ing burden, these interim final rules align
41
75 FR 74863 (Dec. 1, 2010); see also 76 FR 76573 (Dec. 7, 2011), 77 FR 28790 (May 16, 2012), 78 FR 15409 (Mar. 11, 2013), 79 FR 30339 (May 27, 2014), 80 FR 10749 (Feb. 27, 2015),
85 FR 29164 (May 14, 2020), 86 FR 24140 (May 5, 2021).
42
45 CFR 158.130.
43
45 CFR 158.140.
44
QHPs are offered in the individual and small group markets. Section 1150A(a) of the Social Security Act also applies to Medicare Part D plans and Medicare Advantage plans offering a
prescription drug plan, and PBMs that manage prescription drug coverage under contract with a prescription drug plan sponsor of a prescription drug plan or a Medicare Advantage organi-
zation offering a Medicare Advantage prescription drug plan.
45
77 FR 18308 (Mar. 27, 2012).
46
86 FR 24140 (May 5, 2021).

Bulletin No. 2021–49 811 December 6, 2021
collection of certain data elements in the
section 204 data submissions with the data
elements collected under the Exchange
Establishment rule and the PBM Trans-
parency rule.
D. Paperwork Reduction Act—
Department of Health and Human
Services
Under the Paperwork Reduction Act of
1995 (PRA), the Departments and OPM
are required to provide 60-day notice in
the Federal Register and solicit public
comment before a collection of infor-
mation requirement is submitted to
the Office of Management and Budget
(OMB) for review and approval. These
interim final rules contain information
collection requirements (ICRs) that are
subject to review by OMB. A description
of these provisions is given in the follow-
ing paragraphs with an estimate of the
annual burden, summarized in Table 18.
To fairly evaluate whether an information
collection should be approved by OMB,
section 3506(c)(2)(A) of the PRA requires
that the Departments and OPM solicit
comment on:
● The need for the information collec-
tion and its usefulness in carrying out
the proper functions of the agency;
● The accuracy of the Departments’
estimate of the information collection
burden;
● The quality, utility, and clarity of the
information to be collected; and
● Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
The Departments and OPM are solic-
iting public comment on each of the
required issues under section 3506(c)(2)
(A) of the PRA for the following ICRs.
Contemporaneously with the publica-
tion of these interim final rules, HHS has
submitted a request for a new ICR con-
taining the information collection require-
ments for the prescription drug and health
care spending requirements created by
section 204 of Title II of Division BB of
the CAA. HHS has requested emergency
review and approval in accordance with 5
CFR 1320.13(a)(2)(i) and (iii) of the PRA.
The Secretaries of the Departments and
the OPM Director have determined that
public harm is likely to result and the
collection of information is likely to be
delayed if normal clearance procedures
are followed. The ICR will be available at
https://www.RegInfo.gov.
The Departments and OPM will be
requesting approval of the emergency
review requests by the effective date of
these interim final rules. The Departments
and OPM will be seeking approval for the
ICRs for 180 days, the maximum allowed
for an ICR approved using an emergency
review. These interim final rules also serve
as the notice providing the public with a
60-day period to submit written comments
on the ICRs as part of the normal clear-
ance process under the PRA.
1. Wage Estimates
The Departments and OPM have cho-
sen to use the Contract Awarded Labor
Category (CALC)
47
database tool to
derive the hourly rates for the burden and
cost estimates in these interim final rules
to derive estimates of costs related to the
ICR. The Departments and OPM chose to
use wages derived from the CALC data-
base because, even though the BLS data
set is valuable to economists, research-
ers, and others that would be interested in
larger, more macro-trends in parts of the
economy, the CALC data set is meant to
help market research based on existing
government contracts in determining how
much a project/product will cost based
on the required skill sets needed and it
includes some occupation types that are
not available in the BLS data set.
TABLE 5: CALC Hourly Wages Used in Burden Estimates
Occupation:Hourly Wage Rate
Project Manager/Team Lead$110
Scrum Master$110
Senior Business Analysis$134
Technical Architect/Sr. Developer$207
DevOps Engineer/Security Engineer$143
Application Developer$111
2. ICRs Regarding Reporting of
Prescription Drug and Health Care
Spending (45 CFR 149.720, 149.730, and
149.740)
As discussed in section II.C. of this
preamble, section 9825(a) of the Code,
section 725(a) of ERISA, and section
2799A-10(a) of the PHS Act require
plans and issuers to annually submit to
the Departments certain information
about prescription drugs and health care
spending, including, but not limited to,
average monthly premium amounts, and
the number of participants, beneficiaries,
and enrollees, as applicable, with respect
to the plan or coverage in the previous
plan year. In these interim final rules,
OPM also directs FEHB carriers to com-
ply with these requirements with respect
to an FEHB plan in the same manner as
such provisions apply to a group health
plan or health insurance issuer offering
group or individual health insurance cov-
47
The CALC tool (https://calc.gsa.gov/) was built to assist acquisition professionals with market research and price analysis for labor categories on multiple U.S. General Services Adminis-
tration (GSA) & Veterans Administration (VA) contracts. Wages obtained from the CALC database are fully burdened to account for fringe benefits and overhead costs.

December 6, 2021 812 Bulletin No. 2021–49
erage. The burden estimates are based on
the expected time and effort for report-
ing entities to prepare and submit the
required data. The Departments assume
that for self-funded group health plans,
the costs will be incurred by TPAs and
that prescription drug information will
be submitted by PBMs on behalf of plans
and issuers. Costs incurred by TPAs and
PBMs are likely to be passed on to plans,
issuers, and FEHB carriers. The Depart-
ments acknowledge that some large self-
funded plans may seek to make needed
IT changes and report the required infor-
mation to HHS without the use or assis-
tance of a TPA or other third- party entity.
In those instances, the self-funded plan
will directly incur the burden and cost to
meet the requirements of these interim
final rules. The Departments are unable
to determine how many self-funded plans
may choose to develop their IT systems
and report the required information to
HHS and seek comment as to the number
of plans that may choose to do so. The
Departments assume that all costs will be
incurred in 2022 and beyond.
The Departments and OPM estimate
there are 473 issuers and 46 FEHB car-
riers offering group and individual and
health insurance coverage, 205 TPAs
(generally on behalf of self-funded group
health plans), and 66 PBMs (on behalf of
plans, issuers, and FEHB carriers) that
will submit the required data annually.
In 2022, reporting entities will incur
a one-time cost to make changes to their
IT systems to include the development
of programs, processes, and systems for
reporting the data. In 2023 and beyond,
each entity will incur annual costs to
update and maintain reporting capabili-
ties and to report the required data to the
Departments.
For issuers and FEHB carriers, the
Departments and OPM estimate that in
2022, each issuer and FEHB carrier will
incur a one-time first-year cost and hour
burden to design, develop, and implement
needed IT systems changes to collect and
submit the required data to the Depart-
ments as set forth in these interim final
rules, including obtaining employer and
employee premium contributions from
employers providing group health cover-
age. The Departments and OPM estimate
that for each issuer and FEHB carrier,
on average, it will take Project Manag-
ers/Team Leads 2,080 hours (at $110 per
hour), Scrum Masters 1,560 hours (at
$110 per hour), Senior Business Analysts
1,040 hours (at $134 per hour), Technical
Architects/Sr. Developers 2,080 hours
(at $207 per hour), Application Develop-
ers 2,080 hours (at $111 per hour), and
DevOps Engineers/Security Engineers
520 hours (at $143 per hour) to complete
this task. The Departments and OPM esti-
mate the total burden per issuer will be
approximately 9,360 hours, with an equiv-
alent cost of approximately $1,275,560.
For all 519 issuers and FEHB carriers, the
total first-year burden is estimated to be
4,857,840 hours with an equivalent total
cost of approximately $662,015,640.
48

TABLE 6: Estimated Total First-Year Cost and Hour Burden for Issuers and FEHB Carriers to Design, Develop and Imple-
ment Needed IT System Changes and Submit Required Data
Number of
Respondents
Number of ResponsesBurden Hours Per
Respondent
Total Burden HoursTotal Cost
5195199,3604,857,840$662,015,640
In addition to the one-time first-year
cost and burden estimated in the previous
section of this preamble, issuers and FEHB
carriers will incur an additional one-time
cost and burden in the second year of
implementation to maintain and update
their IT systems and to submit the required
data to the Departments. The Departments
and OPM estimate that for each issuer and
FEHB carrier it will take Project Man-
agers/Team Leads 520 hours (at $110
per hour), Scrum Masters 260 hours (at
$110 per hour), Senior Business Analysts
260 hours (at $134 per hour), Technical
Architects/Sr. Developers 520 hours (at
$207 per hour), Application Developers
520 hours (at $111 per hour), and DevOps
Engineers/Security Engineers 260 hours
(at $143 per hour) to perform these tasks.
The Departments and OPM estimate the
total second-year burden for each issuer
will be 2,340 hours, with an equivalent
cost of approximately $323,180. For all
519 issuers and FEHB carriers, the total
one-time second-year implementation
and reporting burden is estimated to be
1,214,460 hours with an equivalent total
cost of approximately $167,730,420. The
cost and burden associated with the sec-
ond year will be incurred in 2023.
49

TABLE 7: Estimated One-Time Second-Year Cost and Hour Burden for Issuers and FEHB Carriers to Update and Maintain
IT Systems and Submit Required Data
Number of
Respondents
Number of ResponsesBurden Hours Per
Respondent
Total Burden HoursTotal Cost
5195192,3401,214,460$167,730,420
48
Calculation of totals was done as follows: Burden Hours per Respondent x Number of Respondent = Total Burden Hours (9,360 x 519 = 4,857,840). Total Cost per Respondent x Number
of Respondents = Total Cost ($1,275,560 x 519 = $662,015,640).
49
Calculation of totals was done as follows: Burden Hours per Respondent x Number of Respondent = Total Burden Hours (2,340 x 519 = 1,214,460). Total Cost per Respondent x Number
of Respondents = Total Cost ($323,180 x 519 = $167,730,420).

Bulletin No. 2021–49 813 December 6, 2021
In addition to the one-time first-year
and second-year costs and burdens esti-
mated earlier in this section of this pream-
ble, issuers and FEHB carriers will incur
ongoing annual costs, to be incurred from
2024 onward, related to ensuring submis-
sion accuracy, providing quality assur-
ance, conducting maintenance and mak-
ing updates, enhancing or updating any
needed security measures, and submitting
the required data to the Departments. The
Departments and OPM estimate that for
each issuer and FEHB carrier it will take
Project Managers/Team Leads 520 hours
(at $110 per hour), Scrum Masters 260
hours (at $110 per hour), Senior Business
Analyst 40 hours (at $134 per hour), Tech-
nical Architects/Sr. Developers 520 hours
(at $207 per hour), Application Devel-
opers 260 hours (at $111 per hour), and
DevOps Engineers/Security Engineers
260 hours (at $143 per hour) to perform
these tasks. The total annual burden for
each issuer and FEHB carrier will be 1,860
hours, with an equivalent cost of approx-
imately $264,840. For all 519 issuers and
FEHB carriers, the total annual mainte-
nance and reporting burden is estimated to
be 965,340 hours with an equivalent total
cost of approximately $137,451,960.
50

The Departments and OPM consider this
to be an upper-bound estimate and expect
maintenance costs to decline in succeed-
ing years as issuers gain efficiencies and
experience in updating, managing, and
submitting the required data.
TABLE 8: Estimated Annual Cost and Hour Burden for Maintenance and Reporting for All Issuers
Number of
Respondents
Number of ResponsesBurden Hours Per
Respondent
Total Burden HoursTotal Cost
5195191,860965,340$137,451,960
The Departments and OPM estimate
the three-year average annual total burden
for all 519 issuers and FEHB carriers to
develop, build, and maintain needed IT
systems changes to collect and aggregate
the required data, and submit that data
to the Departments, will be 2,345,880
hours with an average annual total cost
of $322,399,340. The total annual burden
for all respondents is likely overestimated
because the estimate does not reflect
process efficiencies for FEHB carriers
that are also issuers. As HHS, DOL, the
Department of the Treasury, and OPM
share jurisdiction, HHS will account for
45 percent of the burden, or approximately
1,055,646 burden hours with an equiva-
lent cost of approximately $145,079,703.
The Departments and OPM seek comment
on these estimates.
TABLE 9: Annual Burden for Issuers and FEHB carriers in the Individual and Group Markets
Estimated Number
of Respondents
Estimated Number
of Responses
Burden Per
Response (hours)
Total Estimated Annual
Burden (Hours)
Total Estimated
Labor Cost ($)
20222342349,3602,186,028$297,907,038
20232342342,340546,507$75,478,689
20242342341,860434,403$61,853,382
Three-year
average
2342344,5201,055,646$145,079,703
For TPAs, the Departments and OPM
estimate that in 2022, each TPA will incur
a one-time first-year cost and burden to
design, develop, and implement needed IT
systems changes to collect and submit, gen-
erally on behalf of self-funded group health
plans, the data required under these interim
final rules, including obtaining employer
and employee premium contributions from
employers providing group health cover-
age. The Departments and OPM estimate
that for each TPA, on average, it will take
Project Managers/Team Leads 2,080 hours
(at $110 per hour), Scrum Masters 1,560
hours (at $110 per hour), Senior Business
Analysts 1,040 hours (at $134 per hour),
Technical Architects/Sr. Developers 2,080
hours (at $207 per hour), Application
Developers 2,080 hours (at $111 per hour),
and DevOps Engineers/Security Engineers
520 hours (at $143 per hour) to complete
this task. The Departments and OPM
estimate the total burden per TPA will be
approximately 9,360 hours, with an equiv-
alent cost of approximately $1,275,560.
For all 205 TPAs, the total one-time first-
year implementation and reporting burden
is estimated to be 1,918,800 hours with
an equivalent total cost of approximately
$261,489,800.
51

50
Calculation of totals was done as follows: Burden Hours per Respondent x Number of Respondent = Total Burden Hours (1,860 x 519 = 965,340). Total Cost per Respondent x Number of
Respondents = Total Cost ($264,840 x 519 = $137,451,960).
51
Calculation of totals was done as follows: Burden Hours per Respondent x Number of Respondent = Total Burden Hours (9,360 x 205 = 1,918,800). Total Cost per Respondent x Number
of Respondents = Total Cost ($1,275,560 x 205 = $261,489,800).

December 6, 2021 814 Bulletin No. 2021–49
TABLE 10: Estimated Total One-Time First-Year Cost and Hour Burden for TPAs to Design, Develop, and Implement Needed
IT Systems Changes and Submit Required Data
Number of
Respondents
Number of ResponsesBurden Hours Per
Respondent
Total Burden HoursTotal Cost
2052059,3601,918,800$261,489,800
In addition to the one-time first-year
cost and burden estimated in the previous
section of this preamble, TPAs will incur an
additional one-time cost and burden in the
second year of implementation to maintain
and update their IT systems and to submit
the data to the Departments. The Depart-
ments and OPM estimate that for each TPA
it will take Project Managers/Team Leads
520 hours (at $110 per hour), Scrum Mas-
ters 260 hours (at $110 per hour), Senior
Business Analysts 260 hours (at $134 per
hour), Technical Architects/Sr. Developers
520 hours (at $207 per hour), Application
Developers 520 hours (at $111 per hour),
and DevOps Engineers/Security Engineers
260 hours (at $143 per hour) to perform
these tasks. The total second-year burden
for each TPA will be 2,340 hours, with an
equivalent cost of approximately $323,180.
For all 205 TPAs, the total one-time sec-
ond-year implementation and reporting
burden is estimated to be 479,700 hours
with an equivalent total cost of approxi-
mately $66,251,900.
52
The cost and burden
associated with the second year will be
incurred in 2023.
TABLE 11: Estimated One-Time Second-Year Cost and Hour Burden for TPAs to Update and Maintain IT Systems and
Submit Required Data
Number of
Respondents
Number of
Responses
Burden Hours Per
Respondent
Total Burden
Hours
Total Cost
2052052,340479,700$66,251,900
In addition to one-time first-year and
second-year costs and burdens estimated
in the previous sections of this preamble,
TPAs will incur ongoing annual costs,
in 2024 and subsequent years, related to
ensuring submission accuracy, providing
quality assurance, conducting maintenance
and making updates, enhancing or updating
any needed security measures, and submit-
ting the required data to the Departments.
The Departments and OPM estimate that
for each TPA it will take Project Managers/
Team Leads 520 hours (at $110 per hour),
Scrum Masters 260 hours (at $110 per
hour), Senior Business Analysts 40 hours
(at $134 per hour), Technical Architects/Sr.
Developers 520 hours (at $207 per hour),
Application Developers 260 hours (at $111
per hour), and DevOps Engineers/Security
Engineers 260 hours (at $143 per hour)
to perform these tasks. The total annual
burden for each TPA will be 1,860 hours,
with an equivalent cost of approximately
$264,480. For all 205 TPAs, the total annual
ongoing maintenance and reporting bur-
den is estimated to be 381,300 hours with
an equivalent total cost of approximately
$54,292,200.
53
The Departments and OPM
consider this to be an upper-bound estimate
and expect maintenance costs to decline in
succeeding years as issuers gain efficien-
cies and experience in updating, managing,
and submitting the required data.
TABLE 12: Estimated Annual Cost and Hour Burden for Maintenance and Reporting for All TPAs
Number of
Respondents
Number of ResponsesBurden Hours Per
Respondent
Total Burden HoursTotal Cost
2052051,860381,300$54,292,200
The Departments and OPM estimate
the 3-year average annual total burden for
all 205 TPAs to develop, build, and main-
tain needed IT systems changes to col-
lect and aggregate the required data, and
submit that data to the Departments, will
be 926,600 hours with an average annual
total cost of $127,344,633. As HHS, DOL,
the Department of the Treasury, and OPM
share jurisdiction, HHS will account for
45 percent of the burden, or approximately
416,970 burden hours with an equivalent
cost of approximately $57,305,085. The
Departments and OPM seek comment on
these burden estimates.
52
Calculation of totals was done as follows: Burden Hours per Respondent x Number of Respondent = Total Burden Hours (2,340 x 205 = 479,700). Total Cost per Respondent x Number of
Respondents = Total Cost ($323,180 x 205 = $66,251,900).
53
Calculation of totals was done as follows: Burden Hours per Respondent x Number of Respondent = Total Burden Hours (1,860 x 205 = 381,300). Total Cost per Respondent x Number of
Respondents = Total Cost ($264,480 x 205 = $54,292,200).

Bulletin No. 2021–49 815 December 6, 2021
TABLE 13: Annual Burden for TPAs to Develop and Maintain Needed IT Systems Changes and Submit Required Data
Estimated Number
of Respondents
Estimated Number
of Responses
Burden Per
Response (hours)
Total Estimated Annual
Burden (Hours)
Total Estimated
Labor Cost ($)
202292929,360863,460$117,670,410
202392922,340215,865$19,813,355
202492921,860171,585$24,431,490
Three-year
Average
92924,520416,970$57,305,085
For PBMs, the Departments and OPM
estimate that in 2022, each PBM will
incur a one-time first-year cost and burden
to design, develop, and implement needed
IT systems changes to collect and submit,
on behalf of plans and issuers, the data
required under these interim final rules.
The Departments and OPM estimate that
for each PBM, on average, it will take
Project Managers/Team Leads 2,080
hours (at $110 per hour), Scrum Masters
2,080 hours (at $110 per hour), Senior
Business Analysts 1,560 hours (at $134
per hour), Technical Architects/Sr. Devel-
opers 2,080 hours (at $207 per hour),
Application Developers 4,160 hours (at
$111 per hour), and DevOps Engineers/
Security Engineers 780 hours (at $143 per
hour) to complete this task. The Depart-
ments and OPM estimate the total burden
per PBM will be approximately 12,740
hours, with an equivalent cost of approx-
imately $1,670,500. For all 66 PBMs, the
total one-time first-year implementation
and reporting burden is estimated to be
840,840 hours with an equivalent total
cost of approximately $110,253,000.
54

TABLE 14: Estimated Total One-time First-Year Cost and Hour Burden for PBMs to Design, Develop, and Implement Needed
IT Systems Changes and Submit Required Data
Number of
Respondents
Number of ResponsesBurden Hours Per
Respondent
Total Burden HoursTotal Cost
666612,740840,840$110,253,000
In addition to the one-time first-year
cost and burden estimated in the previ-
ous section of this preamble, PBMs will
incur additional one-time cost and bur-
den in the second year of implementa-
tion to maintain and update their IT sys-
tems and to submit the required data to
the Departments. The Departments and
OPM estimate that for each PBM it will
take Project Managers/Team Leads 1,040
hours (at $110 per hour), Scrum Master
1,040 hours (at $110 per hour), Senior
Business Analysts 780 hours (at $134 per
hour), Technical Architects/Sr. Devel-
opers 1,040 hours (at $207 per hour),
Application Developers 2,340 hours (at
$111 per hour), and DevOps Engineers/
Security Engineers 260 hours (at $143
per hour) to perform these tasks. The
total second-year burden for each PBM
will be 6,500 hours, with an equivalent
cost of approximately $845,520. For all
66 PBMs, the total one-time second-year
implementation and reporting burden is
estimated to be 429,000 hours with an
equivalent total cost of approximately
$55,804,320.
55

TABLE 15: Estimated One-Time Second-Year Cost and Hour Burden for PBMs to Update and Maintain IT Systems and
Submit Required Data
Number of
Respondents
Number of ResponsesBurden Hours Per
Respondent
Total Burden HoursTotal Cost
66666,500429,000$55,804,320
In addition to the one-time first-year
and second-year costs and burdens esti-
mated in the previous sections of this pre-
amble, PBMs will incur ongoing annual
costs related to ensuring submission accu-
racy, providing quality assurance, con-
ducting maintenance and making updates,
enhancing or updating any needed secu-
rity measures, and submitting the required
data to the Departments. The Departments
and OPM estimate that for each PBM it
will take Project Managers/Team Leads
520 hours (at $110 per hour), Scrum Mas-
ters 260 hours (at $110 per hour), Senior
Business Analysts 40 hours (at $134 per
54
Calculation of totals was done as follows: Burden Hours per Respondent x Number of Respondent = Total Burden Hours (12,740 x 66 = 840,840). Total Cost per Respondent x Number of
Respondents = Total Cost ($1,670,500 x 66 = $110,253,000).
55
Calculation of totals was done as follows: Burden Hours per Respondent x Number of Respondent = Total Burden Hours (6,500 x 66 = 429,000). Total Cost per Respondent x Number of
Respondents = Total Cost ($845,520 x 66 = $55,804,320).

December 6, 2021 816 Bulletin No. 2021–49
hour), Technical Architects/Sr. Develop-
ers 520 hours (at $207 per hour), Appli-
cation Developers 520 hours (at $111 per
hour), and DevOps Engineers/Security
Engineers 260 hours (at $143 per hour)
to perform these tasks. The Departments
and OPM estimate the total annual bur-
den for each PBM will be 2,120 hours,
with an equivalent cost of approximately
$293,700. For all 66 PBMs, the total
annual maintenance and submission bur-
den is estimated to be 139,920 hours with
an equivalent total cost of approximately
$19,384,200.
56
The Departments and
OPM consider this to be an upper-bound
estimate and expect maintenance costs to
decline in succeeding years as PBMs gain
efficiencies and experience in updating,
managing, and submitting the required
data.
TABLE 16: Estimated Annual Cost and Hour Burden for Maintenance and Reporting for All PBMs
Number of
Respondents
Number of ResponsesBurden Hours Per
Respondent
Total Burden HoursTotal Cost
66662,120139,920$19,384,200
The Departments and OPM estimate
the three-year average annual total bur-
den for all 66 PBMs to develop, build,
and maintain needed IT systems changes
to collect and aggregate the required data,
and submit that data to the Departments,
will be 469,920 hours with an average
annual total cost of $61,813,840. As HHS,
DOL, the Department of the Treasury, and
OPM share jurisdiction, HHS will account
for 45 percent of the burden, or approxi-
mately 211,464 hours, with an equivalent
cost of approximately $27,816,228. The
Departments and OPM seek comment on
these burden estimates.
TABLE 17: Annual Burden for PBMs to Develop and Maintain Needed IT Systems Changes and Submit Required Data
Estimated
Number of
Respondents
Estimated
Number of
Responses
Burden Per
Response (hours)
Total Estimated
Annual Burden
(Hours)
Total Estimated
Labor Cost ($)
2022303012,740378,378$49,613,850
202330306,500193,050$25,111,944
202430302,12062,964$8,722,890
Three-year
Average
30307,120211,464$27,816,228
Plans will need to provide information
on the average monthly premiums paid by
participants, beneficiaries, and enrollees,
as applicable, and paid by employers on
behalf of participants, beneficiaries, and
enrollees, as applicable, to issuers and
TPAs, so that issuers and TPAs can report
this information to the Departments on
behalf of plans. This information is com-
piled by plans for other reporting pur-
poses and should be readily available. The
Departments and OPM assume that plans
will be able to provide the information to
issuers, FEHB carriers, and TPAs at min-
imal cost.
In developing the cost and burden esti-
mates in this ICR, the Departments and
OPM recognize that while there may be
various reporting entities that submit the
required information, IT development will
require varying degrees of effort across
the reporting entities. The Departments
and OPM also recognize that some report-
ing entities will have mature in-house
engineering teams and systems that can
quickly respond to the requirements in
these interim final rules, while others
may have contracts with external firms
and may require contract negotiation to
develop and build the IT systems needed
to meet the requirements. There may also
be process efficiencies for issuers that are
also FEHB carriers. Additionally, soft-
ware and system maintenance will depend
on various factors such as: the maturity of
software in use; the ability to access data;
software development resources or ability;
any dependency upon third-party develop-
ers; the size of the reporting entity; and the
number of plans. Due to these unknown
factors, the estimates in these ICRs are the
average cost and burden each entity will
assume to develop and build an IT system
from scratch. The Departments and OPM
seek comment on these assumptions and
what barriers reporting entities may face
in developing their IT systems to meet the
requirements in these interim final rules.
HHS is seeking an OMB control number
and approval for the proposed information
collection (OMB control number: 0938-
NEW (Prescription Drug and Health Care
Spending (CMS-10788))).
56
Calculation of totals was done as follows: Burden Hours per Respondent x Number of Respondent = Total Burden Hours (2,120 x 66 = 139,920). Total Cost per Respondent x Number of
Respondents = Total Cost ($293,700 x 66 = $19,384,200).

Bulletin No. 2021–49 817 December 6, 2021
3. Summary of Annual Burden Estimates for Information Collection Requirements
TABLE 18: Annual Recordkeeping and Reporting Requirements
Regulation
OMB
control
number
Respon-
dents
Respon-
ses
Burden per
Response
(hours)
Total
Annual
Burden
(hours)
Hourly
Labor
Cost of
Reporting
Total Cost
($)
45 CFR 149.720, 730, 740 – issuer0938-NEW2342344,5201,055,646$137$145,079,703
45 CFR 149.720, 730, 740 – TPA0938-NEW92924,520416,970$137$57,305,085
45 CFR 149.720, 730, 740 – PBM0938-NEW30307,120211,464$132$27,816,228
Total
3563561,684,080$230,201,016
4. Submission of PRA-Related
Comments
The Departments and OPM submitted
a copy of these interim final rules to OMB
for review of the rules’ information col-
lection and recordkeeping requirements.
These requirements are not effective until
they have been approved by OMB.
To obtain copies of the supporting state-
ment and any related forms for the pro-
posed collections discussed above, please
visit www.cms.hhs.gov/PaperworkReduc-
tionActof1995 or call the Reports Clear-
ance Office at 410-786-1326.
The Departments and OPM invite pub-
lic comments on these potential informa-
tion collection requirements. If you wish
to comment, please submit your com-
ments electronically as specified in the
“Addresses” section of these rules and
identify the rule (CMS–9905–IFC) and
the ICR’s CFR citation.
ICR-related comments are due
[INSERT DATE 60 DAYS AFTER THE
DATE OF PUBLICATION IN THE FED-
ERAL REGISTER].
E. Paperwork Reduction Act—
Department of Labor, Department of the
Treasury, and the Office of Personnel
Management
As part of the continuing effort to
reduce paperwork and respondent burden,
the Departments and OPM conduct a pre-
clearance consultation program to provide
the general public and federal agencies
with an opportunity to comment on pro-
posed and continuing collections of infor-
mation in accordance with the PRA. This
process helps to ensure that the public
understands the Departments’ and OPM’s
collection instructions, respondents can
provide the requested data in the desired
format, reporting burden (time and finan-
cial resources) is minimized, collection
instruments are clearly understood, and
the Departments and OPM can properly
assess the impact of collection require-
ments on respondents.
Contemporaneously with the publica-
tion of these interim final rules, HHS as
the host agency has submitted a request
for a new common form ICR containing
the information collection requirements
for the prescription drug and health care
spending requirements created by section
204 of Title II of Division BB of the CAA.
Once HHS has obtained OMB approval
for the information collection, DOL, the
Department of the Treasury, and OPM will
seek OMB approval to use the common
form ICR by providing its agency-specific
information to OMB.
Under the PRA, an agency may not
conduct or sponsor, and an individual is
not required to respond to, a collection
of information unless it displays a valid
OMB control number.
The information collections are sum-
marized as follows:
1. ICRs Regarding Reporting of
Prescription Drug and Health Care
Spending (26 CFR 54.9825-1T-6T, 29
CFR 2590.725-1-4)
As discussed earlier in the HHS Paper-
work Reduction Act section (V.D.2) of this
preamble, issuers, FEHB carriers, TPAs,
and PBMs will incur costs to submit the
required information to the Departments.
The Departments and OPM estimate the
three-year average annual total burden,
for all 519 issuers and FEHB carriers to
develop, build, and maintain needed IT
systems changes to collect and aggre-
gate the required information, and sub-
mit that information to the Departments,
will be 2,345,880 hours with an average
annual total cost of $322,399,340. The
three-year average annual total burden,
for all 205 TPAs to develop, build, and
maintain needed IT systems changes to
collect and aggregate the required infor-
mation, and submit that information to the
Departments, is estimated to be 926,600
hours with an average annual total cost
of $127,344,633. In addition, the three-
year average annual total burden, for all
66 PBMs to develop, build, and maintain
needed IT systems changes to collect and
aggregate the required information, and
submit that information to the Depart-
ments, will be 469,920 hours with an
average annual total cost of $61,813,840.
As DOL, the Department of the Treasury,
OPM, and HHS share jurisdiction, HHS
will account for 45 percent of the bur-
den, DOL will account for 25 percent, the
Department of the Treasury will account
for 25 percent, and OPM will account for
5 percent. The burden accounted for by
DOL and the Department of the Treasury
each is presented in Table 19 and the bur-
den accounted for by OPM is presented in
Table 20.

December 6, 2021 818 Bulletin No. 2021–49
TABLE 19: Annual Recordkeeping and Reporting Requirements for DOL and the Department of the Treasury
Respondent
Number of
Respondents
Number of Responses
Total Annual Burden
(hours)
Total Labor Cost of
Reporting
FEHB carrier130130586,470$80,599,835
T PA 5151231,650$31,836,158
PBM 1717117,480$15,453,460
Total
198198935,600$127,889,453
Agency: DOL–EBSA, Treasury–IRS, OPM–FEHB
Type of Review: New information collection.
Title: Reporting of Prescription Drug and Health Care Spending
OMB Control Number: NEW
Affected Public: Businesses or other for-profits; not-for-profit institutions.
Forms:
Estimated Total Respondents: 198
Estimated Total Responses: 198
Frequency of Response: Annual
Estimated Total Burden Hours: 935,600 (DOL–425,273, Treasury–425,273, OPM–85,055)
Estimated Total Cost Burden: $127,889,453 (DOL–$58,131,570, Treasury–$58,131,570, OPM–$11,626,314)
TABLE 20: Annual Recordkeeping and Reporting Requirements for OPM
Respondent
Number of
Respondents
Number of Responses
Total Annual Burden
(hours)
Total Labor Cost of
Reporting
FEHB Carrier 2626117,294$16,119,967
T PA 101046,330$6,367,232
PBM 3323,496$3,090,692
Total
3939187,120$25,577,891
F. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
(5 U.S.C. 601 et seq.) requires agencies
to analyze options for regulatory relief
of small entities to prepare an initial reg-
ulatory flexibility analysis to describe
the impact of the proposed rule on small
entities, unless the head of the agency can
certify that the rule will not have a signif-
icant economic impact on a substantial
number of small entities. The RFA gener-
ally defines a “small entity” as (1) a pro-
prietary firm meeting the size standards of
the Small Business Administration (SBA),
(2) a not-for-profit organization that is not
dominant in its field, or (3) a small gov-
ernment jurisdiction with a population of
less than 50,000. States and individuals
are not included in the definition of “small
entity.” HHS uses a change in revenues of
more than 3 to 5 percent as its measure of
significant economic impact on a substan-
tial number of small entities. Individuals
and states are not included in the defini-
tion of a small entity. These interim final
rules are not preceded by a general pro-
posed rule, and thus the requirements of
the RFA do not apply.
G. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires that
agencies assess anticipated costs and ben-
efits and take certain other actions before
issuing a proposed rule or any final rule for
which a general proposed rule was pub-
lished that includes any federal mandate
that may result in expenditures in any 1
year by state, local, or Tribal governments,
in the aggregate, or by the private sector,
of $100 million in 1995 dollars, updated
annually for inflation. In 2021, that thresh-
old is approximately $158 million. These
interim final rules were not preceded by a
general proposed rule, and thus the require-
ments of UMRA do not apply.
H. Federalism
Executive Order 13132 outlines funda-
mental principles of federalism. It requires
adherence to specific criteria by federal
agencies in formulating and implement-
ing policies that have “substantial direct
effects” on the states, the relationship
between the national government and
states, or on the distribution of power and
responsibilities among the various levels
of government, including policies that
impose direct costs on states or preempt
state laws. Federal agencies promulgat-
ing regulations that have these federalism
implications must consult with state and
local officials, and describe the extent of
their consultation and the nature of the
concerns of state and local officials in the
preamble to the interim final rules.

Bulletin No. 2021–49 819 December 6, 2021
These interim final rules require plans,
issuers, and FEHB carriers to submit pre-
scription drug and health care spending
data to the Departments, which will be
used to inform a biannual public report
that will be issued by the Departments
regarding prescription drug reimburse-
ments, trends, and impact on premiums.
A number of states currently have laws,
regulations, or guidance related to the
reporting of prescription drug and health
care spending data, although there is no
consistency among these states in the data
elements collected or the definitions used
for those data elements. It is the Depart-
ments’ and OPM’s view that these interim
final rules will not have substantial direct
effects on states’ ability to collect such
prescription drug and health care spend-
ing data as the states may deem necessary.
The rules do not impose direct costs on
states or preempt state laws.
While developing these interim final
rules, the Departments consulted with the
states and attempted to balance the states’
interests in regulating health insurance
issuers with the need to ensure transpar-
ency in the prescription drug and health
care market and collect data on a consis-
tent basis in order to inform nationwide
analyses. By doing so, the Departments
complied with the requirements of Exec-
utive Order 13132.
I. Congressional Review Act
These interim final rules are subject to
the Congressional Review Act provisions
of the Small Business Regulatory Enforce-
ment Fairness Act of 1996 (5 U.S.C. 801
et seq.) and will be transmitted to the
Congress and to the Comptroller General
for review in accordance with such pro-
visions. Under the Congressional Review
Act, the Office of Information and Reg-
ulatory Affairs designated these interim
final rules as a “major rule” as that term
is defined in 5 U.S.C. 804(2), because it is
likely to result in an annual impact on the
economy of $100 million or more.
Statutory Authority
The Office of Personnel Management
regulations are adopted pursuant to the
authority contained in 5 U.S.C. 8910 and
5 U.S.C. 8913.
The Department of the Treasury regu-
lations are adopted pursuant to the author-
ity contained in sections 7805 and 9833 of
the Code.
The Department of Labor regulations
are adopted pursuant to the authority con-
tained in 29 U.S.C. 1002, 1135, 1182,
1185d, 1191a, 1191b, and 1191c; Secre-
tary of Labor’s Order 1-2011, 77 FR 1088
(Jan. 9, 2012).
The Department of Health and Human
Services regulations are adopted pursuant
to the authority contained in sections 2792
and 2799A-10 of the Public Health Ser-
vice Act (42 U.S.C. 300gg-92 and 300gg-
120).
_____________________________
Edward DeHarde,
Acting Associate Director
Healthcare and Insurance
Office of Personnel Management
_____________________________
Douglas W. O’Donnell
Deputy Commissioner for Services and
Enforcement
Internal Revenue Service.
_____________________________
Lily L. Batchelder
Assistant Secretary of the Treasury
(Tax Policy).
Signed at Washington DC, this 12th
day of November, 2021
_____________________________
Ali Khawar,
Acting Assistant Secretary,
Employee Benefits Security Adminis-
tration,
Department of Labor
Dated: November 12, 2021.
_____________________________
Xavier Becerra
Secretary,
Department of Health and Human Ser-
vices.

December 6, 2021 820 Bulletin No. 2021–49
List of Subjects
5 CFR Part 890
Administrative practice and procedure,
Government employees, Health facilities,
Health insurance, Health professions,
Hostages, Iraq, Kuwait, Lebanon, Military
personnel,
Reporting and recordkeeping require-
ments, Retirement.
26 CFR Part 54
Excise taxes, Health care, Health insur-
ance, Pensions, Reporting and record-
keeping requirements.
29 CFR Part 2510
Employee benefit plans, Pensions.
29 CFR Part 2590
Continuation coverage, Disclosure,
Employee benefit plans, Group health
plans, Health care, Health insurance,
Medical child support, Reporting and
recordkeeping requirements.
45 CFR Part 149
Balance billing, Health care, Health
insurance, Reporting and recordkeeping
requirements, Surprise billing, State reg-
ulation of health insurance, Transparency
in coverage.
OFFICE OF PERSONNEL
MANAGEMENT
For the reasons stated in the pream-
ble, the Office of Personnel Management
amends 5 CFR part 890 as follows:
PART 890—FEDERAL EMPLOYEES
HEALTH BENEFITS PROGRAM
1. The authority citation for part 890
continues to read as follows:
Authority: 5 U.S.C. 8913; Sec.
890.102 also issued under sections
11202(f), 11232(e), and 11246 (b) of Pub.
L. 105-33, 111 Stat. 251; Sec. 890.111
also issued under section 1622(b) of Pub.
L. 104-106, 110 Stat. 521 (36 U.S.C.
5522); Sec. 890.112 also issued under sec-
tion 1 of Pub. L. 110-279, 122 Stat. 2604
(2 U.S.C. 2051); Sec. 890.113 also issued
under section 1110 of Pub. L. 116-92,
133 Stat. 1198 (5 U.S.C. 8702 note); Sec.
890.301 also issued under section 311 of
Pub. L. 111-3, 123 Stat. 64 (26 U.S.C.
9801); Sec. 890.302(b) also issued under
section 1001 of Pub. L. 111-148, 124 Stat.
119, as amended by Pub. L. 111-152, 124
Stat. 1029 (42 U.S.C. 300gg-14); Sec.
890.803 also issued under 50 U.S.C. 3516
(formerly 50 U.S.C. 403p) and 22 U.S.C.
4069c and 4069c-1; subpart L also issued
under section 599C of Pub. L. 101-513,
104 Stat. 2064 (5 U.S.C. 5561 note), as
amended; and subpart M also issued under
section 721 of Pub. L. 105-261 (10 U.S.C.
1108), 112 Stat. 2061.
2. Amend § 890.114 by revising the
section heading and paragraphs (a) and
(d) and adding reserved paragraph (e) and
paragraph (f) to read as follows:
§ 890.114 Surprise billing and
transparency.
(a) A carrier must comply with require-
ments described in 26 CFR 54.9816-
3T through 54.9816-6T, 54.9816-8T,
54.9817-1T, 54.9817-2T, 54.9822-
1T, and 54.9825-3T through 6T; 29
CFR 2590.716-3 through 2590.716-6,
2590.716-8, 2590.717-1, 2590.717-2,
2590.722, 2590.725-1 through 2590.725-
4; and 45 CFR 149.30, 149.110 through
149.140, 149.310, 149.510 and 520, and
149.710 through 149.740 in the same
manner as such provisions apply to a
group health plan or health insurance
issuer offering group or individual health
insurance coverage, subject to 5 U.S.C.
8902(m)(1), and the provisions of the car-
rier’s contract. For purposes of application
of such sections, all carriers are deemed
to offer health benefits in the large group
market.
* * * * *
(d)(1) In addition to notification to the
Department per 26 CFR 54.9816-8T(b)
(2)(iii), 29 CFR 2590.716-8(b)(2)(iii),
and 45 CFR 149.510(b)(2)(iii), a carrier
must notify the Director of its initiation
of the Federal IDR process, or its receipt
of written notice that a provider, facility,
or provider of air ambulance services has
initiated the Federal IDR process, upon
sending or receiving such notice.
(2) The Director will coordinate with
the Departments in resolving matters
under 26 CFR 54.9816-8T(c)(4)(vii)(A)
(1), 29 CFR 2590.716-8(c)(4)(vii)(A)(1),
or 45 CFR 149.510(c)(4)(vii)(A)(1) where
fraud or material misrepresentation are
presented, and matters involving 26 CFR
54.9816-8T(c)(4)(vii)(A)(2), 29 CFR
2590.716-8(c)(4)(vii)(A)(2), and 45 CFR
149.510(c)(4)(vii)(A)(2). The Director
will coordinate with the Departments in
oversight of reports submitted by certified
IDR entities with respect to carriers pur-
suant to 26 CFR 54.9816-8T(f), 29 CFR
2590.716-8(f), or 45 CFR 149.510(f).
(e) [Reserved]
(f) The Director will coordinate with
the Departments in oversight of prescrip-
tion drug and health care spending with
respect to FEHB carriers pursuant to 45
CFR 149.710 through 149.740.
Internal Revenue Service
Amendments to the Regulations
Accordingly, 26 CFR part 54 is
amended as follows:
PART 54—PENSION EXCISE TAXES
Paragraph 3. The authority citation
for part 54 continues to read, in part, as
follows:
Authority: 26 U.S.C. 7805
Par. 4. Sections 54.9825-1T through
54.9825-6T are added to read as follows:
Sec.
* * * * *
54.9825–1T Basis and scope (tempo-
rary).
54.9825–2T Applicability (temporary).
54.9825–3T Definitions (temporary).
54.9825–4T Reporting requirements
related to prescription drug and health
care spending (temporary).
54.9825–5T Aggregate reporting (tem-
porary).
54.9825–6T Required information
(temporary).
* * * * *
§ 54.9825–1T Basis and scope
(temporary).
(a) Basis. This section and §§ 54.9825–
2T through 54.9825–6T implement sub-

Bulletin No. 2021–49 821 December 6, 2021
chapter B of chapter 100 of the Internal
Revenue Code of 1986.
(b) Scope. This part establishes stan-
dards for group health plans with respect
to surprise medical bills, transparency
in health care coverage, and additional
patient protections.
§ 54.9825–2T Applicability
(temporary).
(a) In general. The requirements in
§§ 54.9825–4T through 54.9825–6T
apply to group health plans (including
grandfathered health plans as defined in
§ 54.9815–1251), except as specified in
paragraph (b) of this section.
(b) Exceptions. The requirements in
§§ 54.9825–4T through 54.9825–6T do
not apply to the following:
(1) Excepted benefits as described in
§ 54.9831–1(c).
(2) Short-term, limited-duration insur-
ance as defined in § 54.9801–2.
(3) Health reimbursement arrange-
ments or other account-based group health
plans as described in § 54.9815–2711(d).
§ 54.9825–3T Definitions (temporary).
The definitions in § 54.9816-3T apply
to §§ 54.9825–4T through 54.9825–6T
unless otherwise specified. In addition,
for purposes of §§ 54.9825–4T through
54.9825–6T, the following definitions
apply:
Brand prescription drug means a drug
for which an application is approved under
section 505(c) of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 355(c)),
or under section 351 of the PHS Act (42
U.S.C. 262), and that is generally mar-
keted under a proprietary, trademark-pro-
tected name. The term “brand prescription
drug” includes a drug with Emergency
Use Authorization issued pursuant to sec-
tion 564 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360bbb-3), and
that is generally marketed under a propri-
etary, trademark-protected name. The term
“brand prescription drug” includes drugs
that the U.S. Food and Drug Administration
determines to be interchangeable biosim-
ilar products under sections 351(i)(3) and
351(k)(4) of the PHS Act (42 U.S.C. 262).
Dosage unit means the smallest form in
which a pharmaceutical product is admin-
istered or dispensed, such as a pill, tab-
let, capsule, ampule, or measurement of
grams or milliliters.
Federal Employees Health Benefits
(FEHB) line of business refers to all health
benefit plans that are offered to eligible
enrollees pursuant to a contract between
the Office of Personnel Management
and Federal Employees Health Benefits
(FEHB) Program carriers. Such plans are
Federal governmental plans offered pur-
suant to 5 U.S.C. chapter 89.
Life-years means the total number of
months of coverage for participants and
beneficiaries, as applicable, divided by 12.
Market segment means one of the fol-
lowing: the individual market (excluding
the student market), the student market,
the fully-insured small group market, the
fully-insured large group market (exclud-
ing the FEHB line of business), self-
funded plans offered by small employers,
self-funded plans offered by large employ-
ers, and the FEHB line of business.
Premium amount means, with respect
to individual health insurance coverage
and fully-insured group health plans,
earned premium as that term is defined
in 45 CFR 158.130, excluding the adjust-
ments specified in 45 CFR 158.130(b)(5).
Premium amount means, with respect to
self-funded group health plans and other
arrangements that do not rely exclusively
or primarily on payments of premiums as
defined in 45 CFR 158.130, the premium
equivalent amount representing the total
cost of providing and maintaining cover-
age, including claims costs, administrative
costs, and stop-loss premiums, as applica-
ble.
Prescription drug (drug) means a set
of pharmaceutical products that have been
assigned a National Drug Code (NDC) by
the Food and Drug Administration and are
grouped by name and ingredient in the
manner specified by the Secretary, jointly
with the Secretary of Labor and the Secre-
tary of Health and Human Services.
Prescription drug rebates, fees, and
other remuneration means all remuner-
ation received by or on behalf of a plan
or issuer, its administrator or service pro-
vider, including remuneration received
by and on behalf of entities providing
pharmacy benefit management services
to the plan or issuer, with respect to pre-
scription drugs prescribed to participants
and beneficiaries in the plan or coverage,
as applicable, regardless of the source of
the remuneration (for example, pharma-
ceutical manufacturer, wholesaler, retail
pharmacy, or vendor). Prescription drug
rebates, fees, and other remuneration also
include, for example, discounts, charge-
backs or rebates, cash discounts, free
goods contingent on a purchase agree-
ment, up-front payments, coupons, goods
in kind, free or reduced-price services,
grants, or other price concessions or sim-
ilar benefits. Prescription drug rebates,
fees, and other remuneration include bona
fide service fees. Bona fide service fees
mean fees paid by a drug manufacturer to
an entity providing pharmacy benefit man-
agement services to the plan or issuer that
represent fair market value for a bona fide,
itemized service actually performed on
behalf of the manufacturer that the man-
ufacturer would otherwise perform (or
contract for) in the absence of the service
arrangement, and that are not passed on in
whole or in part to a client or customer of
the entity, whether or not the entity takes
title to the drug.
Reference year means the calendar
year immediately preceding the calendar
year in which data submissions under this
section are required.
Reporting entity means an entity that
submits some or all of the information
required under §§ 54.9825–4T through
54.9825–6T with respect to a plan or
issuer, and that may be different from
the plan or issuer that is subject to the
requirements of §§ 54.9825–4T through
54.9825–6T.
Student market has the meaning given
in 45 CFR 158.103.
Therapeutic class means a group of
pharmaceutical products that have similar
mechanisms of action or treat the same
types of conditions, grouped in the man-
ner specified by the Secretary, jointly with
the Secretary of Labor and the Secretary
of Health and Human Services, in guid-
ance. The Secretary may require plans and
issuers to classify drugs according to a
commonly available public or commercial
therapeutic classification system, a thera-
peutic classification system provided by
the Secretary of Health and Human Ser-
vices, or a combination thereof.
Total annual spending means incurred
claims, as that term is defined in 45 CFR

December 6, 2021 822 Bulletin No. 2021–49
158.140, excluding the adjustments spec-
ified in 45 CFR 158.140(b)(1)(i), (b)(2)
(iv), and (b)(4), and including cost shar-
ing. With respect to prescription drugs,
total annual spending is net of prescrip-
tion drug rebates, fees, and other remu-
neration.
§ 54.9825–4T Reporting requirements
related to prescription drug and health
care spending (temporary).
(a) General requirement. A group
health plan or a health insurance issuer
offering group health insurance coverage
must submit an annual report to the Sec-
retary, the Secretary of Health and Human
Services, and the Secretary of Labor, on
prescription drug and health care spend-
ing, premiums, and enrollment under the
plan or coverage.
(b) Timing and form of report. The
report for the 2020 reference year must be
submitted to the Secretary by December
27, 2021. Beginning with the 2021 ref-
erence year, the report for each reference
year is due by June 1 of the year following
the reference year. The report must be sub-
mitted in the form and manner prescribed
by the Secretary, jointly with the Secretary
of Health and Human Services and the
Secretary of Labor.
(c) Transfer of business. Issuers that
acquire a line or block of business from
another issuer during a reference year are
responsible for submitting the information
and report required by this section for the
acquired business for that reference year,
including for the part of the reference year
that was prior to the acquisition.
(d) Reporting entities and special rules
to prevent unnecessary duplication—(1)
Special rule for insured group health
plans. To the extent coverage under a
group health plan consists of group health
insurance coverage, the plan may satisfy
the requirements of paragraph (a) of this
section if the plan requires the health insur-
ance issuer offering the coverage to report
the information required by this section in
compliance with this subpart pursuant to a
written agreement. Accordingly, if a health
insurance issuer and a group health plan
sponsor enter into a written agreement
under which the issuer agrees to provide
the information required under paragraph
(a) of this section in compliance with this
section, and the issuer fails to do so, then
the issuer, but not the plan, violates the
reporting requirements of paragraph (a)
of this section with respect to the relevant
information.
(2) Other contractual arrangements.
A group health plan or health insurance
issuer offering group health insurance
coverage may satisfy the requirements
under paragraph (a) of this section by
entering into a written agreement under
which one or more other parties (such as
health insurance issuers, pharmacy benefit
managers, third-party administrators, or
other third parties) report some or all of
the information required under paragraph
(a) of this section in compliance with this
section. Notwithstanding the preceding
sentence, if a group health plan or health
insurance issuer chooses to enter into such
an agreement and the party with which
it contracts fails to provide the informa-
tion in accordance with paragraph (a) of
this section, the plan or issuer violates the
reporting requirements of paragraph (a) of
this section.
(e) Applicability date. The provisions
of this section are applicable beginning
December 27, 2021.
§ 54.9825–5T Aggregate reporting
(temporary).
(a) General requirement. A group
health plan or a health insurance issuer
offering group health insurance coverage
must submit, or arrange to be submitted,
the information required in § 54.9825-
6T(b) separately for each State in which
group health coverage or group health
insurance coverage was provided in con-
nection with the group health plan or by
the health insurance issuer. The report
must include the experience of all plans
and policies in the State during the refer-
ence year covered by the report, and must
include the experience separately for each
market segment as defined in § 54.9825-
3T.
(b) Aggregation by reporting entity—
(1) In general. If a reporting entity sub-
mits data on behalf of more than one
group health plan in a State and market
segment, the reporting entity may aggre-
gate the data required in § 54.9825-6T(b)
for the group health plans for each market
segment in the State.
(2) Multiple reporting entities. (i) If
multiple reporting entities submit the
required data related to one or more plans
or issuers in a State and market segment,
the data submitted by each of these report-
ing entities must not be aggregated at a
less granular level than the aggregation
level used by the reporting entity that
submits the data on total annual spend-
ing on health care services, as required
by § 54.9825-6T(b)(4), on behalf of these
plans or issuers.
(ii) The Secretary, jointly with the
Secretary of Health and Human Services
and the Secretary of Labor, may spec-
ify in guidance alternative or additional
aggregation methods for data submitted
by multiple reporting entities, to ensure a
balance between compliance burdens and
a data aggregation level that facilitates
the development of the biannual public
report required under section 9825(b) of
the Code.
(3) Group health insurance coverage
with dual contracts. If a group health
plan involves health insurance cover-
age obtained from two affiliated issuers,
one providing in-network coverage only
and the second providing out-of-network
coverage only, the plan’s out-of-network
experience may be treated as if it were
all related to the contract provided by the
in-network issuer.
(c) Aggregation by State. (1) Experi-
ence with respect to each fully-insured
policy must be included on the report for
the State where the contract was issued,
except as specified in paragraphs (c)(3)
and (4) of this section.
(2) Experience with respect to each
self-funded group health plan must be
included on the report for the State where
the plan sponsor has its principal place of
business.
(3) For individual market business sold
through an association, experience must
be attributed to the issue State of the cer-
tificate of coverage.
(4) For health coverage provided to
plans through a group trust or multiple
employer welfare arrangement, the expe-
rience must be included in the report for
the State where the employer (if the plan
is sponsored at the individual employer
level) or the association (if the association
qualifies as an employer under ERISA
section 3(5)) has its principal place of

Bulletin No. 2021–49 823 December 6, 2021
business or the state where the association
is incorporated, in the case of an associa-
tion with no principal place of business.
(d) Applicability date. The provisions
of this section are applicable beginning
December 27, 2021.
§ 54.9825–6T Required information
(temporary).
(a) Information for each plan or cover-
age. The report required under § 54.9825-
4T must include the following information
for each plan or coverage, at the plan or
coverage level:
(1) The identifying information for
plans, issuers, plan sponsors, and any
other reporting entities.
(2) The beginning and end dates of the
plan year that ended on or before the last
day of the reference year.
(3) The number of participants and
beneficiaries, as applicable, covered on
the last day of the reference year.
(4) Each State in which the plan or cov-
erage is offered.
(b) Information for each state and mar-
ket segment. The report required under
§ 54.9825-4T must include the following
information with respect to plans or cov-
erage for each State and market segment
for the reference year, unless otherwise
specified:
(1) The 50 brand prescription drugs
most frequently dispensed by pharmacies,
and for each such drug, the data elements
listed in paragraph (b)(5) of this section.
The most frequently dispensed drugs must
be determined according to total num-
ber of paid claims for prescriptions filled
during the reference year for each drug.
(2) The 50 most costly prescription
drugs and for each such drug, the data
elements listed in paragraph (b)(5) of
this section. The most costly drugs must
be determined according to total annual
spending on each drug.
(3) The 50 prescription drugs with the
greatest increase in expenditures between
the year immediately preceding the refer-
ence year and the reference year, and for
each such drug: the data elements listed
in paragraph (b)(5) of this section for
the year immediately preceding the ref-
erence year, and the data elements listed
in paragraph (b)(5) of this section for
the reference year. The drugs with the
greatest increase in expenditures must be
determined based on the increase in total
annual spending from the year immedi-
ately preceding the reference year to the
reference year. A drug must be approved
for marketing or issued an Emergency
Use Authorization by the Food and Drug
Administration for the entirety of the year
immediately preceding the reference year
and for the entirety of the reference year to
be included in the data submission as one
of the drugs with the greatest increase in
expenditures.
(4) Total annual spending on health
care services by the plan or coverage and
by participants and beneficiaries, as appli-
cable, broken down by the type of costs,
including—
(i) Hospital costs;
(ii) Health care provider and clinical
service costs, for primary care and spe-
cialty care separately;
(iii) Costs for prescription drugs, sep-
arately for drugs covered by the plan’s or
issuer’s pharmacy benefit and drugs cov-
ered by the plan’s or issuer’s hospital or
medical benefit; and
(iv) Other medical costs, including
wellness services.
(5) Prescription drug spending and uti-
lization, including —
(i) Total annual spending by the plan or
coverage;
(ii) Total annual spending by the par-
ticipants and beneficiaries, as applicable,
enrolled in the plan or coverage, as appli-
cable;
(iii) The number of participants and
beneficiaries, as applicable, with a paid
prescription drug claim;
(iv) Total dosage units dispensed; and
(v) The number of paid claims.
(6) Premium amounts, including—
(i) Average monthly premium amount
paid by employers and other plan spon-
sors on behalf of participants and benefi-
ciaries, as applicable;
(ii) Average monthly premium amount
paid by participants and beneficiaries, as
applicable; and
(iii) Total annual premium amount and
the total number of life-years.
(7) Prescription drug rebates, fees, and
other remuneration, including—
(i) Total prescription drug rebates, fees,
and other remuneration, and the differ-
ence between total amounts that the plan
or issuer pays the entity providing phar-
macy benefit management services to the
plan or issuer and total amounts that such
entity pays to pharmacies.
(ii) Prescription drug rebates, fees, and
other remuneration, excluding bona fide
service fees, broken down by the amounts
passed through to the plan or issuer, the
amounts passed through to participants
and beneficiaries, as applicable, and the
amounts retained by the entity providing
pharmacy benefit management services to
the plan or issuer; and the data elements
listed in paragraph (b)(5) of this section—
(A) For each therapeutic class; and
(B) For each of the 25 prescription
drugs with the greatest amount of total
prescription drug rebates and other price
concessions for the reference year.
(8) The method used to allocate pre-
scription drug rebates, fees, and other
remuneration, if applicable.
(9) The impact of prescription drug
rebates, fees, and other remuneration on
premium and cost sharing amounts.
(c) Applicability date. The provisions
of this section are applicable beginning
December 27, 2021.

December 6, 2021 824 Bulletin No. 2021–49
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Chapter XXV
For the reasons set forth in the pream-
ble, the Department of Labor amends 29
CFR part 2590 as set forth below:
PART 2590—RULES AND
REGULATIONS FOR GROUP
HEALTH PLANS
5. The authority citation for part 2590
continues to read as follows:
Authority: 29 U.S.C. 1027, 1059,
1135, 1161-1168, 1169, 1181-1183, 1181
note, 1185, 1185a-n, 1191, 1191a, 1191b,
and 1191c; sec. 101(g), Pub. L.104-191,
110 Stat. 1936; sec. 401(b), Pub. L. 105-
200, 112 Stat. 645 (42 U.S.C. 651 note);
sec. 512(d), Pub. L. 110-343, 122 Stat.
3881; sec. 1001, 1201, and 1562(e), Pub.
L. 111-148, 124 Stat. 119, as amended by
Pub. L. 111-152, 124 Stat. 1029; Division
M, Pub. L. 113-235, 128 Stat. 2130; Pub.
L. 116-260 134 Stat. 1182; Secretary of
Labor’s Order 1-2011, 77 FR 1088 (Jan.
9, 2012).
Subpart D—Surprise Billing and
Transparency Requirements
6. Section 2590.716-1 is amended by
revising paragraph (a) to read as follows:
§ 2590.716-1 Basis and scope.
(a) Basis. Sections 2590.716-1 through
2590.725-4 implement sections 716-725
of ERISA.
* * * * *
7. Section 2590.716-2 is amended by
revising paragraph (a) and paragraph (b)
introductory text to read as follows:
§ 2590.716-2 Applicability.
(a) In general. (1) The requirements
in §§ 2590.716-4 through 2590.716-7,
2590.717-1, 2590.722, and 2590.725-1
through 2590.725-4 apply to group health
plans and health insurance issuers offering
group health insurance coverage (includ-
ing grandfathered health plans as defined
in § 2590.715-1251), except as specified
in paragraph (b) of this section.
(2) The requirements in §§ 2590.716-8
and 2590.717-2 apply to certified IDR
entities and group health plans and
health insurance issuers offering group
health insurance coverage (including
grandfathered health plans as defined in
§ 2590.715-1251) except as specified in
paragraph (b) of this section.
(b) Exceptions. The requirements
in §§ 2590.716-4 through 2590.716-8,
2590.717-1, 2590.717-2, 2590.722, and
2590.725-1 through 2590.725-4 do not
apply to the following:
* * * * *
8. Add §§ 2590.725-1, 2590.725-2,
2590.725-3, and 2590.725-4 to read as
follows:
Sec.
* * * * *
2590.725-1 Definitions.
2590.725-2 Reporting requirements
related to prescription drug and health
care spending.
2590.725-3 Aggregate reporting.
2590.725-4 Required information.
* * * * *
§ 2590.725-1 Definitions.
For purposes of this section, the fol-
lowing definitions apply in addition to the
definitions in § 2590.716-3:
Brand prescription drug means a drug
for which an application is approved under
section 505(c) of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 355(c)) or
under section 351 of the Public Health
Service Act (42 U.S.C. 262), and that is
generally marketed under a proprietary,
trademark-protected name. The term
“brand prescription drug” includes a drug
with Emergency Use Authorization issued
pursuant to section 564 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C.
360bbb-3), and that is generally marketed
under a proprietary, trademark-protected
name. The term “brand prescription drug”
includes drugs that the U.S. Food and
Drug Administration determines to be
interchangeable biosimilar products under
sections 351(i)(3) and 351(k)(4) of the
PHS Act (42 U.S.C. 262).
Dosage unit means the smallest form in
which a pharmaceutical product is admin-
istered or dispensed, such as a pill, tab-
let, capsule, ampule, or measurement of
grams or milliliters.
Federal Employees Health Benefits
(FEHB) line of business refers to all health
benefit plans that are offered to eligible
enrollees pursuant to a contract between
the Office of Personnel Management
and Federal Employees Health Benefits
(FEHB) Program carriers. Such plans are
Federal governmental plans offered pur-
suant to 5 U.S.C. chapter 89.
Life-years means the total number of
months of coverage for participants and
beneficiaries, as applicable, divided by 12.
Market segment means one of the fol-
lowing: the individual market (excluding
the student market), the student market,
the fully-insured small group market, the
fully-insured large group market (exclud-
ing the FEHB line of business), self-
funded plans offered by small employers,
self-funded plans offered by large employ-
ers, and the FEHB line of business.
Premium amount means, with respect
to fully-insured group health plans, earned
premium as that term is defined in 45 CFR
158.130, excluding the adjustments spec-
ified in 45 CFR 158.130(b)(5). Premium
amount means, with respect to self-funded
group health plans and other arrangements
that do not rely exclusively or primarily
on payments of premiums as defined in
45 CFR 158.130, the premium equivalent
amount representing the total cost of pro-
viding and maintaining coverage, includ-
ing claims costs, administrative costs, and
stop-loss premiums, as applicable.
Prescription drug (drug) means a set
of pharmaceutical products that have been
assigned a National Drug Code (NDC) by
the Food and Drug Administration and are
grouped by name and ingredient in the
manner specified by the Secretary, jointly
with the Secretary of the Treasury and the
Secretary of Health and Human Services.
Prescription drug rebates, fees, and
other remuneration means all remuner-
ation received by or on behalf of a plan
or issuer, its administrator or service pro-
vider, including remuneration received
by and on behalf of entities providing
pharmacy benefit management services
to the plan or issuer, with respect to pre-
scription drugs prescribed to participants
or beneficiaries in the plan or coverage,
as applicable, regardless of the source of

Bulletin No. 2021–49 825 December 6, 2021
the remuneration (for example, pharma-
ceutical manufacturer, wholesaler, retail
pharmacy, or vendor). Prescription drug
rebates, fees, and other remuneration also
include, for example, discounts, charge-
backs or rebates, cash discounts, free
goods contingent on a purchase agree-
ment, up-front payments, coupons, goods
in kind, free or reduced-price services,
grants, or other price concessions or sim-
ilar benefits. Prescription drug rebates,
fees, and other remuneration include bona
fide service fees. Bona fide service fees
mean fees paid by a drug manufacturer to
an entity providing pharmacy benefit man-
agement services to the plan or issuer that
represent fair market value for a bona fide,
itemized service actually performed on
behalf of the manufacturer that the man-
ufacturer would otherwise perform (or
contract for) in the absence of the service
arrangement, and that are not passed on in
whole or in part to a client or customer of
the entity, whether or not the entity takes
title to the drug.
Reference year means the calendar
year immediately preceding the calendar
year in which data submissions under this
section are required.
Reporting entity means an entity that
submits some or all of the information
required under this section with respect to
a plan or issuer, and that may be different
from the plan or issuer that is subject to
the requirements of this section.
Student market has the meaning given
in 45 CFR 158.103.
Therapeutic class means a group of
pharmaceutical products that have similar
mechanisms of action or treat the same
types of conditions, grouped in the man-
ner specified by the Secretary, jointly with
the Secretary of the Treasury and the Sec-
retary of Health and Human Services, in
guidance. The Secretary may require plans
and issuers to classify drugs according to a
commonly available public or commercial
therapeutic classification system, a thera-
peutic classification system provided by
the Secretary of Health and Human Ser-
vices, or a combination thereof.
Total annual spending means incurred
claims, as that term is defined in 45 CFR
158.140, excluding the adjustments spec-
ified in 45 CFR 158.140(b)(1)(i), (b)(2)
(iv), and (b)(4), and including cost shar-
ing. With respect to prescription drugs,
total annual spending is net of prescription
drug rebates, fees, and other remuneration.
§ 2590.725-2 Reporting requirements
related to prescription drug and health
care spending.
(a) General requirement. A group
health plan or a health insurance issuer
offering group health insurance cover-
age must submit an annual report to the
Secretary, the Secretary of the Treasury,
and the Secretary of Health and Human
Services, on prescription drug and health
care spending, premiums, and enrollment
under the plan or coverage.
(b) Timing and form of report. The
report for the 2020 reference year must be
submitted to the Secretary by December
27, 2021. Beginning with the 2021 ref-
erence year, the report for each reference
year is due by June 1 of the year following
the reference year. The report must be sub-
mitted in the form and manner prescribed
by the Secretary, jointly with the Secre-
tary of the Treasury and the Secretary of
Health and Human Services.
(c) Transfer of business. Issuers that
acquire a line or block of business from
another issuer during a reference year are
responsible for submitting the information
and report required by this section for the
acquired business for that reference year,
including for the part of the reference year
that was prior to the acquisition.
(d) Reporting entities and special rules
to prevent unnecessary duplication—(1)
Special rule for insured group health
plans. To the extent coverage under a
group health plan consists of group health
insurance coverage, the plan may satisfy
the requirements of paragraph (a) of this
section if the plan requires the health insur-
ance issuer offering the coverage to report
the information required by this section in
compliance with this subpart pursuant to a
written agreement. Accordingly, if a health
insurance issuer and a group health plan
sponsor enter into a written agreement
under which the issuer agrees to provide
the information required under paragraph
(a) of this section in compliance with this
section, and the issuer fails to do so, then
the issuer, but not the plan, violates the
reporting requirements of paragraph (a)
of this section with respect to the relevant
information.
(2) Other contractual arrangements.
A group health plan or health insurance
issuer offering group health insurance
coverage may satisfy the requirements
under paragraph (a) of this section by
entering into a written agreement under
which one or more other parties (such as
health insurance issuers, pharmacy benefit
managers, third-party administrators, or
other third parties) report some or all of
the information required under paragraph
(a) of this section in compliance with this
section. Notwithstanding the preceding
sentence, if a group health plan or health
insurance issuer chooses to enter into such
an agreement and the party with which
it contracts fails to provide the informa-
tion in accordance with paragraph (a) of
this section, the plan or issuer violates the
reporting requirements of paragraph (a) of
this section.
(e) Applicability date. The provisions
of this section are applicable beginning
December 27, 2021.
§ 2590.725-3 Aggregate reporting.
(a) General requirement. A group
health plan or a health insurance issuer
offering group health insurance coverage
must submit, or arrange to be submitted,
the information required in § 2590.725-
4(b) of this section separately for each
State in which group health coverage or
group health insurance coverage was pro-
vided in connection with the group health
plan or by the health insurance issuer. The
report must include the experience of all
plans and policies in the State during the
reference year covered by the report, and
must include the experience separately
for each market segment as defined in
§ 2590.725-1 of this section.
(b) Aggregation by reporting entity—
(1) In general. If a reporting entity sub-
mits data on behalf of more than one
group health plan in a State and market
segment, the reporting entity may aggre-
gate the data required in § 2590.725-4(b)
of this section for the group health plans
for each market segment in the State.
(2) Multiple reporting entities. (i) If
multiple reporting entities submit the
required data related to one or more plans
or issuers in a State and market segment,
the data submitted by each of these report-
ing entities must not be aggregated at a less

December 6, 2021 826 Bulletin No. 2021–49
granular level than the aggregation level
used by the reporting entity that submits
the data on total annual spending on health
care services, as required by § 2590.725-
4(b)(4), on behalf of these plans or issuers.
(ii) The Secretary, jointly with the Sec-
retary of the Treasury and the Secretary of
Health and Human Services, may spec-
ify in guidance alternative or additional
aggregation methods for data submitted
by multiple reporting entities, to ensure a
balance between compliance burdens and
a data aggregation level that facilitates the
development of the biannual public report
required under section 725(b) of ERISA.
(3) Group health insurance coverage
with dual contracts. If a group health
plan involves health insurance cover-
age obtained from two affiliated issuers,
one providing in-network coverage only
and the second providing out-of-network
coverage only, the plan’s out-of-network
experience may be treated as if it were
all related to the contract provided by the
in-network issuer.
(c) Aggregation by State. (1) Experi-
ence with respect to each fully-insured
policy must be included on the report for
the State where the contract was issued,
except as specified in paragraphs (c)(3)
and (4) of this section.
(2) Experience with respect to each
self-funded group health plan must be
included on the report for the State where
the plan sponsor has its principal place of
business.
(3) For individual market business sold
through an association, experience must
be attributed to the issue State of the cer-
tificate of coverage.
(4) For health coverage provided to
plans through a group trust or multiple
employer welfare arrangement, the expe-
rience must be included in the report for
the State where the employer (if the plan
is sponsored at the individual employer
level) or the association (if the association
qualifies as an employer under ERISA
section 3(5)) has its principal place of
business or the state where the association
is incorporated, in the case of an associa-
tion with no principal place of business.
(d) Applicability date. The provisions
of this section are applicable beginning
December 27, 2021.
§ 2590.725-4 Required information.
(a) Information for each plan or
coverage. The report required under
§ 2590.725-2 must include the following
information for each plan or coverage, at
the plan or coverage level:
(1) The identifying information for
plans, issuers, plan sponsors, and any
other reporting entities.
(2) The beginning and end dates of the
plan year that ended on or before the last
day of the reference year.
(3) The number of participants and
beneficiaries, as applicable, covered on
the last day of the reference year.
(4) Each State in which the plan or cov-
erage is offered.
(b) Information for each state and mar-
ket segment. The report required under
§ 2590.725-2 must include the following
information with respect to plans or cov-
erage for each State and market segment
for the reference year, unless otherwise
specified:
(1) The 50 brand prescription drugs
most frequently dispensed by pharmacies,
and for each such drug, the data elements
listed in paragraph (b)(5) of this section.
The most frequently dispensed drugs must
be determined according to total num-
ber of paid claims for prescriptions filled
during the reference year for each drug.
(2) The 50 most costly prescription
drugs and for each such drug, the data
elements listed in paragraph (b)(5) of
this section. The most costly drugs must
be determined according to total annual
spending on each drug.
(3) The 50 prescription drugs with the
greatest increase in expenditures between
the year immediately preceding the refer-
ence year and the reference year, and for
each such drug: the data elements listed
in paragraph (b)(5) of this section for
the year immediately preceding the ref-
erence year, and the data elements listed
in paragraph (b)(5) of this section for
the reference year. The drugs with the
greatest increase in expenditures must be
determined based on the increase in total
annual spending from the year immedi-
ately preceding the reference year to the
reference year. A drug must be approved
for marketing or issued an Emergency
Use Authorization by the Food and Drug
Administration for the entirety of the year
immediately preceding the reference year
and for the entirety of the reference year to
be included in the data submission as one
of the drugs with the greatest increase in
expenditures.
(4) Total annual spending on health
care services by the plan or coverage and
by participants and beneficiaries, as appli-
cable, broken down by the type of costs,
including—
(i) Hospital costs;
(ii) Health care provider and clinical
service costs, for primary care and spe-
cialty care separately;
(iii) Costs for prescription drugs, sep-
arately for drugs covered by the plan’s or
issuer’s pharmacy benefit and drugs cov-
ered by the plan’s or issuer’s hospital or
medical benefit; and
(iv) Other medical costs, including
wellness services.
(5) Prescription drug spending and uti-
lization, including —
(i) Total annual spending by the plan or
coverage;
(ii) Total annual spending by the par-
ticipants and beneficiaries, as applicable,
enrolled in the plan or coverage, as appli-
cable;
(iii) The number of participants and
beneficiaries, as applicable, with a paid
prescription drug claim;
(iv) Total dosage units dispensed; and
(v) The number of paid claims.
(6) Premium amounts, including—
(i) Average monthly premium amount
paid by employers and other plan spon-
sors on behalf of participants and benefi-
ciaries, as applicable;
(ii) Average monthly premium amount
paid by participants and beneficiaries, as
applicable; and
(iii) Total annual premium amount and
the total number of life-years.
(7) Prescription drug rebates, fees, and
other remuneration, including—
(i) Total prescription drug rebates, fees,
and other remuneration, and the differ-
ence between total amounts that the plan
or issuer pays the entity providing phar-
macy benefit management services to the
plan or issuer and total amounts that such
entity pays to pharmacies.

Bulletin No. 2021–49 827 December 6, 2021
(ii) Prescription drug rebates, fees,
and other remuneration, excluding bona
fide service fees, broken down by the
amounts passed through to the plan or
issuer, the amounts passed through to
participants and beneficiaries, as appli-
cable, and the amounts retained by the
entity providing pharmacy benefit man-
agement services to the plan or issuer;
and the data elements listed in paragraph
(b)(5) of this section—
(A) For each therapeutic class; and
(B) For each of the 25 prescription
drugs with the greatest amount of total
prescription drug rebates and other price
concessions for the reference year.
(8) The method used to allocate pre-
scription drug rebates, fees, and other
remuneration, if applicable.
(9) The impact of prescription drug
rebates, fees, and other remuneration on
premium and cost sharing amounts.
(c) Applicability date. The provisions
of this section are applicable beginning
December 27, 2021.

December 6, 2021 828 Bulletin No. 2021–49
DEPARTMENT OF HEALTH
AND HUMAN SERVICES
For the reasons set forth in the pream-
ble, the Department of Health and Human
Services amends 45 CFR part 149 as set
forth below:
PART 149— SURPRISE BILLING
AND TRANSPARENCY
REQUIREMENTS
9. The authority citation for part 149
continues to read as follows:
Authority: 42 U.S.C. 300gg-111
through 300gg-139, as amended.
10. Amend § 149.20 by revising para-
graph (a)(1) and paragraph (b) introduc-
tory text to read as follows:
§ 149.20 Applicability.
(a) * * *
(1) The requirements in subparts B, D,
and H of this part apply to group health
plans and health insurance issuers offer-
ing group or individual health insurance
coverage (including grandfathered health
plans as defined in § 147.140 of this sub-
chapter), except as specified in paragraph
(b) of this section.
* * * * *
(b) Exceptions. The requirements in
subparts B, D, E, F, and H of this part do
not apply to the following:
* * * * *
11. Add subpart H to read as follows:
Subpart H—Prescription Drug and
Health Care Spending
Sec.
149.710 Definitions.
149.720 Reporting Requirements
Related to Prescription Drug
and Health Care Spending.
149.730 Aggregate Reporting.
149.740 Required Information.
Subpart H—Prescription Drug and
Health Care Spending
§ 149.710 Definitions.
For purposes of this subpart, the fol-
lowing definitions apply in addition to the
definitions in §149.30:
Brand prescription drug means a drug
for which an application is approved under
section 505(c) of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 355(c)),
or under section 351 of the PHS Act (42
U.S.C. 262), and that is generally mar-
keted under a proprietary, trademark-pro-
tected name. The term “brand prescription
drug” includes a drug with Emergency
Use Authorization issued pursuant to sec-
tion 564 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360bbb-3), and
that is generally marketed under a pro-
prietary, trademark-protected name. The
term “brand prescription drug” includes
drugs that the U.S. Food and Drug Admin-
istration determines to be interchangeable
biosimilar products under sections 351(i)
(3) and 351(k)(4) of the PHS Act (42
U.S.C. 262).
Dosage unit means the smallest form in
which a pharmaceutical product is admin-
istered or dispensed, such as a pill, tab-
let, capsule, ampule, or measurement of
grams or milliliters.
Enrollee means an individual who is
enrolled, within the meaning of § 144.103
of this subchapter, in group health insur-
ance coverage, or an individual who is
covered by individual health insurance
coverage, at any time during the reference
year, and includes dependents.
Federal Employees Health Benefits
(FEHB) line of business refers to all health
benefit plans that are offered to eligible
enrollees pursuant to a contract between
the Office of Personnel Management
and Federal Employees Health Benefits
(FEHB) Program carriers. Such plans are
Federal governmental plans offered pur-
suant to 5 U.S.C. chapter 89.
Life-years means the total number of
months of coverage for participants and
beneficiaries, or for enrollees, as applica-
ble, divided by 12.
Market segment means one of the fol-
lowing: the individual market (excluding
the student market), the student market,
the fully-insured small group market, the
fully-insured large group market (exclud-
ing the FEHB line of business), self-
funded plans offered by small employers,
self-funded plans offered by large employ-
ers, and the FEHB line of business.
Premium amount means, with respect
to individual health insurance coverage
and fully-insured group health plans,
earned premium as that term is defined in
§ 158.130 of this subchapter, excluding
the adjustments specified in § 158.130(b)
(5). Premium amount means, with respect
to self-funded group health plans and other
arrangements that do not rely exclusively
or primarily on payments of premiums
as defined in § 158.130 of this subchap-
ter, the premium equivalent amount rep-
resenting the total cost of providing and
maintaining coverage, including claims
costs, administrative costs, and stop-loss
premiums, as applicable.
Prescription drug (drug) means a set
of pharmaceutical products that have been
assigned a National Drug Code (NDC) by
the Food and Drug Administration and are
grouped by name and ingredient in the
manner specified by the Secretary, jointly
with the Secretary of the Treasury and the
Secretary of Labor.
Prescription drug rebates, fees, and
other remuneration means all remuner-
ation received by or on behalf of a plan
or issuer, its administrator or service pro-
vider, including remuneration received
by and on behalf of entities providing
pharmacy benefit management services
to the plan or issuer, with respect to pre-
scription drugs prescribed to participants,
beneficiaries, or enrollees in the plan or
coverage, as applicable, regardless of the
source of the remuneration (for example,
pharmaceutical manufacturer, wholesaler,
retail pharmacy, or vendor). Prescription
drug rebates, fees, and other remunera-
tion also include, for example, discounts,
chargebacks or rebates, cash discounts,
free goods contingent on a purchase
agreement, up-front payments, coupons,
goods in kind, free or reduced-price ser-
vices, grants, or other price concessions or
similar benefits. Prescription drug rebates,
fees, and other remuneration include bona
fide service fees. Bona fide service fees
mean fees paid by a drug manufacturer to
an entity providing pharmacy benefit man-
agement services to the plan or issuer that
represent fair market value for a bona fide,
itemized service actually performed on
behalf of the manufacturer that the man-
ufacturer would otherwise perform (or
contract for) in the absence of the service
arrangement, and that are not passed on in
whole or in part to a client or customer of
the entity, whether or not the entity takes
title to the drug.

Bulletin No. 2021–49 829 December 6, 2021
Reference year means the calendar
year immediately preceding the calendar
year in which data submissions under this
section are required.
Reporting entity means an entity that
submits some or all of the information
required under this subpart with respect to
a plan or issuer, and that may be different
from the plan or issuer that is subject to
the requirements of this subpart.
Student market has the meaning given
in § 158.103 of this subchapter.
Therapeutic class means a group of
pharmaceutical products that have similar
mechanisms of action or treat the same
types of conditions, grouped in the manner
specified by the Secretary, jointly with the
Secretary of the Treasury and the Secre-
tary of Labor, in guidance. The Secretary
may require plans and issuers to classify
drugs according to a commonly available
public or commercial therapeutic classifi-
cation system, a therapeutic classification
system provided by the Secretary, or a
combination thereof.
Total annual spending means incurred
claims, as that term is defined in § 158.140
of this subchapter, excluding the adjust-
ments specified in § 158.140(b)(1)(i), (b)
(2)(iv), and (b)(4), and including cost shar-
ing. With respect to prescription drugs,
total annual spending is net of prescription
drug rebates, fees, and other remuneration.
§ 149.720 Reporting requirements
related to prescription drug and health
care spending.
(a) General requirement. A group
health plan or a health insurance issuer
offering group or individual health insur-
ance coverage must submit an annual
report to the Secretary, the Secretary of the
Treasury, and the Secretary of Labor, on
prescription drug and health care spend-
ing, premiums, and enrollment under the
plan or coverage.
(b) Timing and form of report. The
report for the 2020 reference year must be
submitted to the Secretary by December
27, 2021. Beginning with the 2021 ref-
erence year, the report for each reference
year is due by June 1 of the year following
the reference year. The report must be sub-
mitted in the form and manner prescribed
by the Secretary, jointly with the Secretary
of the Treasury and the Secretary of Labor.
(c) Transfer of business. Issuers that
acquire a line or block of business from
another issuer during a reference year are
responsible for submitting the information
and report required by this section for the
acquired business for that reference year,
including for the part of the reference year
that was prior to the acquisition.
(d) Reporting entities and special rules
to prevent unnecessary duplication—(1)
Special rule for insured group health plans.
To the extent coverage under a group health
plan consists of group health insurance
coverage, the plan may satisfy the require-
ments of paragraph (a) of this section if the
plan requires the health insurance issuer
offering the coverage to report the infor-
mation required by this section in compli-
ance with this subpart pursuant to a written
agreement. Accordingly, if a health insur-
ance issuer and a group health plan sponsor
enter into a written agreement under which
the issuer agrees to provide the information
required under paragraph (a) of this sec-
tion in compliance with this section, and
the issuer fails to do so, then the issuer, but
not the plan, violates the reporting require-
ments of paragraph (a) of this section with
respect to the relevant information.
(2) Other contractual arrangements.
A group health plan or health insurance
issuer offering group or individual health
insurance coverage may satisfy the require-
ments under paragraph (a) of this section
by entering into a written agreement under
which one or more other parties (such as
health insurance issuers, pharmacy bene-
fit managers, third-party administrators, or
other third parties) report some or all of the
information required under paragraph (a) of
this section in compliance with this section.
Notwithstanding the preceding sentence,
if a group health plan or health insurance
issuer chooses to enter into such an agree-
ment and the party with which it contracts
fails to provide the information in accor-
dance with paragraph (a) of this section, the
plan or issuer violates the reporting require-
ments of paragraph (a) of this section.
(e) Applicability date. The provisions
of this section are applicable beginning
December 27, 2021.
§ 149.730 Aggregate reporting.
(a) General requirement. A group
health plan or a health insurance issuer
offering group or individual health insur-
ance coverage must submit, or arrange to
be submitted, the information required in
§ 149.740(b) separately for each State in
which group health coverage or group or
individual health insurance coverage was
provided in connection with the group
health plan or by the health insurance
issuer. The report must include the expe-
rience of all plans and policies in the State
during the reference year covered by the
report, and must include the experience
separately for each market segment as
defined in § 149.710.
(b) Aggregation by reporting entity—
(1) In general. If a reporting entity sub-
mits data on behalf of more than one
group health plan in a State and market
segment, the reporting entity may aggre-
gate the data required in § 149.740(b) for
the group health plans for each market
segment in the State.
(2) Multiple reporting entities. (i) If
multiple reporting entities submit the
required data related to one or more plans
or issuers in a State and market segment,
the data submitted by each of these report-
ing entities must not be aggregated at a less
granular level than the aggregation level
used by the reporting entity that submits
the data on total annual spending on health
care services, as required by § 149.740(b)
(4), on behalf of these plans or issuers.
(ii) The Secretary, jointly with the Sec-
retary of the Treasury and the Secretary
of Labor, may specify in guidance alter-
native or additional aggregation methods
for data submitted by multiple reporting
entities, to ensure a balance between com-
pliance burdens and a data aggregation
level that facilitates the development of
the biannual public report required under
section 2799A-10(b) of the PHS Act.
(3) Group health insurance coverage
with dual contracts. If a group health
plan involves health insurance cover-
age obtained from two affiliated issuers,
one providing in-network coverage only
and the second providing out-of-network
coverage only, the plan’s out-of-network
experience may be treated as if it were
all related to the contract provided by the
in-network issuer.
(c) Aggregation by State. (1) Experi-
ence with respect to each fully-insured
policy must be included on the report for
the State where the contract was issued,

December 6, 2021 830 Bulletin No. 2021–49
except as specified in paragraphs (c)(3)
and (4) of this section.
(2) Experience with respect to each
self-funded group health plan must be
included on the report for the State where
the plan sponsor has its principal place of
business.
(3) For individual market business sold
through an association, experience must
be attributed to the issue State of the cer-
tificate of coverage.
(4) For health coverage provided to
plans through a group trust or multiple
employer welfare arrangement, the expe-
rience must be included in the report for
the State where the employer (if the plan
is sponsored at the individual employer
level) or the association (if the association
qualifies as an employer under ERISA
section 3(5)) has its principal place of
business or the State where the association
is incorporated, in the case of an associa-
tion with no principal place of business.
(d) Applicability date. The provisions
of this section are applicable beginning
December 27, 2021.
§ 149.740 Required information.
(a) Information for each plan or cover-
age. The report required under § 149.720
must include the following information
for each plan or coverage, at the plan or
coverage level:
(1) The identifying information for
plans, issuers, plan sponsors, and any
other reporting entities.
(2) The beginning and end dates of the
plan year that ended on or before the last
day of the reference year.
(3) The number of participants, benefi-
ciaries, and enrollees, as applicable, cov-
ered on the last day of the reference year.
(4) Each State in which the plan or cov-
erage is offered.
(b) Information for each state and mar-
ket segment. The report required under
§ 149.720 must include the following
information with respect to plans or cov-
erage for each State and market segment
for the reference year, unless otherwise
specified:
(1) The 50 brand prescription drugs
most frequently dispensed by pharmacies,
and for each such drug, the data elements
listed in paragraph (b)(5) of this section.
The most frequently dispensed drugs must
be determined according to total num-
ber of paid claims for prescriptions filled
during the reference year for each drug.
(2) The 50 most costly prescription
drugs and for each such drug, the data
elements listed in paragraph (b)(5) of
this section. The most costly drugs must
be determined according to total annual
spending on each drug.
(3) The 50 prescription drugs with the
greatest increase in expenditures between
the year immediately preceding the refer-
ence year and the reference year, and for
each such drug: the data elements listed
in paragraph (b)(5) of this section for
the year immediately preceding the ref-
erence year, and the data elements listed
in paragraph (b)(5) of this section for
the reference year. The drugs with the
greatest increase in expenditures must be
determined based on the increase in total
annual spending from the year immedi-
ately preceding the reference year to the
reference year. A drug must be approved
for marketing or issued an Emergency
Use Authorization by the Food and Drug
Administration for the entirety of the year
immediately preceding the reference year
and for the entirety of the reference year to
be included in the data submission as one
of the drugs with the greatest increase in
expenditures.
(4) Total annual spending on health
care services by the plan or coverage and
by participants, beneficiaries, and enroll-
ees, as applicable, broken down by the
type of costs, including—
(i) Hospital costs;
(ii) Health care provider and clinical
service costs, for primary care and spe-
cialty care separately;
(iii) Costs for prescription drugs, sep-
arately for drugs covered by the plan’s or
issuer’s pharmacy benefit and drugs cov-
ered by the plan’s or issuer’s hospital or
medical benefit; and
(iv) Other medical costs, including
wellness services.
(5) Prescription drug spending and uti-
lization, including —
(i) Total annual spending by the plan or
coverage;
(ii) Total annual spending by the par-
ticipants, beneficiaries, and enrollees, as
applicable, enrolled in the plan or cover-
age, as applicable;
(iii) The number of participants, bene-
ficiaries, and enrollees, as applicable, with
a paid prescription drug claim;
(iv) Total dosage units dispensed; and
(v) The number of paid claims.
(6) Premium amounts, including—
(i) Average monthly premium amount
paid by employers and other plan spon-
sors on behalf of participants, beneficia-
ries, and enrollees, as applicable;
(ii) Average monthly premium amount
paid by participants, beneficiaries, and
enrollees, as applicable; and
(iii) Total annual premium amount and
the total number of life-years.
(7) Prescription drug rebates, fees, and
other remuneration, including—
(i) Total prescription drug rebates, fees,
and other remuneration, and the differ-
ence between total amounts that the plan
or issuer pays the entity providing phar-
macy benefit management services to the
plan or issuer and total amounts that such
entity pays to pharmacies.
(ii) Prescription drug rebates, fees, and
other remuneration, excluding bona fide
service fees, broken down by the amounts
passed through to the plan or issuer, the
amounts passed through to participants,
beneficiaries, and enrollees, as applica-
ble, and the amounts retained by the entity
providing pharmacy benefit management
services to the plan or issuer; and the data
elements listed in paragraph (b)(5) of this
section—
(A) For each therapeutic class; and
(B) For each of the 25 prescription
drugs with the greatest amount of total
prescription drug rebates and other price
concessions for the reference year.
(8) The method used to allocate pre-
scription drug rebates, fees, and other
remuneration, if applicable.
(9) The impact of prescription drug
rebates, fees, and other remuneration on
premium and cost sharing amounts.
(c) Applicability date. The provisions
of this section are applicable beginning
December 27, 2021.
(Filed by the Office of the Federal Register on
November 17, 2021, 4:15p.m., and published in the
issue of the Federal Register for November 23, 2021,
86 F.R. 66662)

Bulletin No. 2021–49 831 December 6, 2021
Part III
Update for Weighted
Average Interest Rates,
Yield Curves, and Segment
Rates
Notice 2021-62
This notice provides guidance on the
corporate bond monthly yield curve, the
corresponding spot segment rates used
under § 417(e)(3), and the 24-month
average segment rates under § 430(h)
(2) of the Internal Revenue Code. In
addition, this notice provides guid-
ance as to the interest rate on 30-year
Treasury securities under § 417(e)(3)
(A)(ii)(II) as in effect for plan years
beginning before 2008 and the 30-year
Treasury weighted average rate under
§ 431(c)(6)(E)(ii)(I).
YIELD CURVE AND SEGMENT
RATES
Section 430 specifies the minimum
funding requirements that apply to sin-
gle-employer plans (except for CSEC plans
under § 414(y)) pursuant to § 412. Section
430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under
this provision, present value is generally
determined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during speci-
fied periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates
are adjusted by the applicable percentage
of the 25-year average segment rates for
the period ending September 30 of the
year preceding the calendar year in which
the plan year begins.
1
However, an elec-
tion may be made under § 430(h)(2)(D)
(ii) to use the monthly yield curve in place
of the segment rates.
Notice 2007-81, 2007-44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond
segment rates used to compute the target
normal cost and the funding target. Con-
sistent with the methodology specified in
Notice 2007-81, the monthly corporate
bond yield curve derived from October
2021 data is in Table 2021-10 at the end
of this notice. The spot first, second, and
third segment rates for the month of Octo-
ber 2021 are, respectively, 0.87, 2.74, and
3.16
The 24-month average segment rates
determined under § 430(h)(2)(C)(i)
through (iii) must be adjusted pursuant to
§ 430(h)(2)(C)(iv) to be within the appli-
cable minimum and maximum percent-
ages of the corresponding 25-year average
segment rates.
The 25-year average segment rates
for plan years beginning in 2020, 2021
and 2022 were published in Notice 2019-
51, 2019-41 I.R.B. 866, Notice 2020-72,
2020-40 I.R.B. 789, and Notice 2021-54,
2021-41 I.R.B. 457, respectively.
24-MONTH AVERAGE CORPORATE
BOND SEGMENT RATES
The three 24-month average corpo-
rate bond segment rates applicable for
November 2021 without adjustment for
the 25-year average segment rate limits
are as follows:
24-Month Average Segment Rates Without 25-Year Average Adjustment
Applicable Month First Segment Second Segment Third Segment
November 2021 0.96 2.64 3.32
25-YEAR AVERAGE SEGMENT
RATES
Section 9706(a) of the American Res-
cue Plan Act of 2021, Pub. L. No. 117-2
(ARP), which was enacted on March 11,
2021, changes the 25-year average seg-
ment rates and the applicable minimum
and maximum percentages used under
§ 430(h)(3)(C)(iv) of the Code to adjust
the 24-month average segment rates. Prior
to this change, the applicable minimum
and maximum percentages were 90%
and 110% for a plan year beginning in
2020, and 85% and 115% for a plan year
beginning in 2021, respectively. After this
change, the applicable minimum and max-
imum percentages are 95% and 105% for
a plan year beginning in 2020, 2021, or
2022. In addition, pursuant to this change,
any 25-year average segment rate that is
less than 5% is deemed to be 5%.
2
Pursuant to § 9706(c)(1) of ARP, these
changes apply with respect to plan years
beginning on or after January 1, 2020.
However, § 9706(c)(2) of ARP provides
that a plan sponsor may elect not to have
these changes apply to any plan year
beginning before January 1, 2022.
3
The adjusted 24-month average seg-
ment rates set forth in the chart below
reflect § 430(h)(2)(C)(iv) of the Code
as amended by § 9706(a) of ARP.
These adjusted 24-month average seg-
ment rates apply only for plan years for
which an election under § 9706(c)(2) of
ARP is not in effect. For a plan year for
which such an election does not apply,
the 24-month averages applicable for
1
Pursuant to § 433(h)(3)(A), the 3
rd
segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).
2
Pursuant to this change, the 25-year averages of the first segment rate for 2020, 2021, and 2022 are increased to 5.00% because those 25-year averages as originally published are below
5.00%.
3
This election may be made either for all purposes for which the amendments under § 9706 of ARP apply or solely for purposes of determining the adjusted funding target attainment per-
centage under § 436 of the Code for the plan year.

December 6, 2021 832 Bulletin No. 2021–49
November 2021, adjusted to be within
the applicable minimum and maxi-
mum percentages of the corresponding
25-year average segment rates in accor-
dance with § 430(h)(2)(C)(iv) of the
Code, are as follows:
Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning In
Applicable
Month
First
Segment
Second
Segment
Third
Segment
2020November 20214.755.506.27
2021November 20214.755.366.11
2022November 20214.755.185.92
The adjusted 24-month average seg-
ment rates set forth in the chart below do
not reflect the changes to § 430(h)(2)(C)
(iv) of the Code made by § 9706(a) of
ARP. These adjusted 24-month average
segment rates apply only for plan years for
which an election under § 9706(c)(2) of
ARP is in effect. For a plan year for which
such an election applies, the 24-month
averages applicable for November 2021,
adjusted to be within the applicable min-
imum and maximum percentages of the
corresponding 25-year average segment
rates in accordance with § 430(h)(2)(C)
(iv) of the Code, are as follows:
Pre-ARP Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning In
Applicable
Month
First
Segment
Second
Segment
Third
Segment
2020November 20213.645.215.94
2021November 20213.324.795.47
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 431 specifies the minimum
funding requirements that apply to mul-
tiemployer plans pursuant to § 412. Sec-
tion 431(c)(6)(B) specifies a minimum
amount for the full-funding limitation
described in § 431(c)(6)(A), based on the
plan’s current liability. Section 431(c)(6)
(E)(ii)(I) provides that the interest rate
used to calculate current liability for this
purpose must be no more than 5 percent
above and no more than 10 percent below
the weighted average of the rates of inter-
est on 30-year Treasury securities during
the four-year period ending on the last
day before the beginning of the plan year.
Notice 88-73, 1988-2 C.B. 383, provides
guidelines for determining the weighted
average interest rate. The rate of interest
on 30-year Treasury securities for October
2021 is 2.06 percent. The Service deter-
mined this rate as the average of the daily
determinations of yield on the 30-year
Treasury bond maturing in August 2051.
For plan years beginning in November
2021, the weighted average of the rates
of interest on 30-year Treasury securities
and the permissible range of rates used to
calculate current liability are as follows:
Treasury Weighted Average Rates
For Plan Years
Beginning In
30-Year Treasury
Weighted Average
Permissible Range
90% to 105%
October 20212.171.95 to 2.28
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Notice 2007-81 provides guide-
lines for determining the minimum pres-
ent value segment rates. Pursuant to that
notice, the minimum present value seg-
ment rates determined for October 2021
are as follows:
Minimum Present Value Segment Rates
Month First Segment Second Segment Third Segment
October 2021 0.87 2.74 3.16

Bulletin No. 2021–49 833 December 6, 2021
DRAFTING INFORMATION
The principal author of this notice is
Tom Morgan of the Office of the Asso-
ciate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development
of this guidance. For further information
regarding this notice, contact Mr. Morgan
at 202-317-6700 or Osmundo Bernabe at
626-927-1344 (not toll-free numbers).

December 6, 2021 834 Bulletin No. 2021–49
Table 2021-10
Monthly Yield Curve for October 2021
Derived from October 2021 Data
MaturityYieldMaturityYieldMaturityYieldMaturityYieldMaturityYield
0.50.1820.53.1440.53.1660.53.1880.53.19
1.00.3521.03.1441.03.1661.03.1881.03.19
1.50.5221.53.1441.53.1761.53.1881.53.19
2.00.6822.03.1442.03.1762.03.1882.03.19
2.50.8222.53.1442.53.1762.53.1882.53.19
3.00.9623.03.1443.03.1763.03.1883.03.19
3.51.0923.53.1443.53.1763.53.1883.53.19
4.01.2324.03.1444.03.1764.03.1884.03.19
4.51.3624.53.1444.53.1764.53.1884.53.19
5.01.5025.03.1445.03.1765.03.1885.03.19
5.51.6325.53.1445.53.1765.53.1985.53.19
6.01.7626.03.1446.03.1766.03.1986.03.19
6.51.8926.53.1446.53.1766.53.1986.53.19
7.02.0227.03.1447.03.1767.03.1987.03.19
7.52.1427.53.1447.53.1767.53.1987.53.19
8.02.2628.03.1448.03.1768.03.1988.03.19
8.52.3628.53.1448.53.1768.53.1988.53.19
9.02.4629.03.1449.03.1769.03.1989.03.19
9.52.5529.53.1449.53.1769.53.1989.53.19
10.02.6330.03.1550.03.1770.03.1990.03.19
10.52.7130.53.1550.53.1870.53.1990.53.19
11.02.7731.03.1551.03.1871.03.1991.03.19
11.52.8331.53.1551.53.1871.53.1991.53.19
12.02.8832.03.1552.03.1872.03.1992.03.19
12.52.9332.53.1552.53.1872.53.1992.53.20
13.02.9733.03.1553.03.1873.03.1993.03.20
13.53.0033.53.1553.53.1873.53.1993.53.20
14.03.0334.03.1554.03.1874.03.1994.03.20
14.53.0534.53.1554.53.1874.53.1994.53.20
15.03.0735.03.1655.03.1875.03.1995.03.20
15.53.0935.53.1655.53.1875.53.1995.53.20
16.03.1036.03.1656.03.1876.03.1996.03.20
16.53.1136.53.1656.53.1876.53.1996.53.20
17.03.1237.03.1657.03.1877.03.1997.03.20
17.53.1237.53.1657.53.1877.53.1997.53.20
18.03.1338.03.1658.03.1878.03.1998.03.20
18.53.1338.53.1658.53.1878.53.1998.53.20
19.03.1339.03.1659.03.1879.03.1999.03.20
19.53.1339.53.1659.53.1879.53.1999.53.20
20.03.1440.03.1660.03.1880.03.19100.03.20

Bulletin No. 2021–49 835 December 6, 2021
Temporary 100-Percent
Deduction Applies to
Meal Portion of 2021 and
2022 Per Diem Rate or
Allowance
Notice 2021-63
SECTION 1. PURPOSE
This notice provides guidance regard-
ing the temporary 100-percent deduction
for expenses that are paid or incurred after
December 31, 2020, and before January 1,
2023, for food or beverages provided by a
restaurant for purposes of § 274(n)(2)(D)
of the Internal Revenue Code (Code). In
particular, the notice sets forth a special
rule for applying the temporary 100-per-
cent deduction to the meal portion of a per
diem rate or allowance.
SECTION 2. BACKGROUND
Section 274 generally limits or dis-
allows deductions for certain meal and
entertainment expenses that otherwise
would be allowable under chapter 1 of
the Code (chapter 1). Section 274(n)(1)
provides that a deduction for any expense
for food or beverages generally is limited
to 50 percent of the amount otherwise
deductible under chapter 1. However,
§ 274(n)(2)(D) provides a temporary
exception to the 50-percent limitation for
expenses that are paid or incurred after
December 31, 2020, and before January
1, 2023, for food or beverages provided
by a restaurant. Notice 2021-25, 2021-17
I.R.B. 1118, explains when the temporary
100-percent deduction applies and when
the 50-percent deduction continues to
apply for purposes of § 274.
Section 274(d) generally provides
that no deduction is allowed for any trav-
eling expense (including meals while
away from home) unless the taxpayer
substantiates such expense by adequate
records or by sufficient corroborating
evidence. However, § 274(d) autho-
rizes the Secretary of the Treasury or
her delegate to prescribe by regulation
that some or all of the substantiation
requirements do not apply in the case of
an expense which does not exceed a par-
ticular amount. Section 1.274-5(j)(1) of
the Income Tax Regulations authorizes
the Commissioner of Internal Revenue
(Commissioner) to establish a method
allowing a taxpayer to treat a specific
amount as paid or incurred for meals
while traveling away from home instead
of substantiating the actual cost. See also
§ 1.274-5(g).
In Rev. Proc. 2019-48, 2019-51 I.R.B.
1392, the Commissioner provides rules
for taxpayers that choose to use a per diem
rate to substantiate, under § 274(d) and
§ 1.274-5, the amount of ordinary and nec-
essary business expenses paid or incurred
while traveling away from home for:
lodging, meal, and incidental expenses;
meals and incidental expenses only; or
incidental expenses only. Taxpayers that
follow the rules in Rev. Proc. 2019-48 are
deemed to meet the substantiation require-
ments in § 274(d) for the applicable travel
expenses. See, for example, section 4.01
of Rev. Proc. 2019-48. Except for inci-
dental expenses only deductions, all or
part of the amount of an expense deemed
substantiated under Rev. Proc. 2019-48 is
subject to the appropriate limitation under
§ 274(n) on the deductibility of food or
beverage expenses. See section 6.05 of
Rev. Proc. 2019-48.
SECTION 3. SPECIAL RULE
Solely for purposes of § 274(n)(2)(D),
a taxpayer that properly applies the rules
of Rev. Proc. 2019-48 may treat the meal
portion of a per diem rate or allowance
paid or incurred after December 31, 2020,
and before January 1, 2023, as being
attributable to food or beverages provided
by a restaurant.
SECTION 4. EFFECTIVE DATE
This notice is effective for the meal
portion of per diem allowances for lodg-
ing, meal and incidental expenses, or for
meal and incidental expenses only that
are paid or incurred by an employer after
December 31, 2020, and before Janu-
ary 1, 2023. For purposes of computing
the amount allowable as a deduction to
a self-employed individual or employee
described in § 62(a)(2)(B)-(E) for travel
away from home, this notice is effective
for the meal portion of per diem rates
for meal and incidental expenses paid or
incurred after December 31, 2020, and
before January 1, 2023.
DRAFTING INFORMATION
The principal author of this notice is
James Liechty of the Office of Associate
Chief Counsel (Income Tax & Account-
ing). For further information regarding
this notice contact James Liechty at (202)
317-4657 (not a toll-free number).
26 CFR 601.105: Examination of returns and
claims for refund, credit or abatement; determina-
tion of correct tax liability.
(Also Part I, § 61.)
Rev. Proc. 2021-48
SECTION 1. PURPOSE
This revenue procedure provides that
taxpayers may treat amounts that are
excluded from gross income (tax-exempt
income) in connection with the forgive-
ness of Paycheck Protection Program
(PPP) Loans as received or accrued: (1) as
eligible expenses are paid or incurred,
(2) when an application for PPP Loan
forgiveness is filed, or (3) when PPP
Loan forgiveness is granted. To the extent
tax-exempt income resulting from the
forgiveness of a PPP Loan is treated as
gross receipts under a particular Federal
tax provision, including but not limited to
§§ 448(c) and 6033 of the Internal Reve-
nue Code (Code), this revenue procedure
applies for purposes of determining the
timing and, to the extent relevant, report-
ing of such gross receipts.
SECTION 2. BACKGROUND
.01 Overview.
(1) The PPP is a loan program adminis-
tered by the U.S. Small Business Admin-
istration (SBA) and the Administrator of
the SBA (Administrator) as part of the
SBA’s “7(a) Loan Program” under § 7(a)

December 6, 2021 836 Bulletin No. 2021–49
of the Small Business Act (15 U.S.C.
§ 636(a)).
1
Congress established the PPP
to assist small businesses nationwide
adversely impacted by the COVID–19
pandemic in paying payroll costs and
other eligible expenses.
2
Under the PPP,
the Administrator may guarantee the full
principal amount of a “covered loan,” as
defined in § 7(a)(36)(A)(ii) of the Small
Business Act, which for purposes of the
PPP is a loan made under the PPP to an
“eligible recipient,” as defined in § 7(a)
(36)(A)(iv) of the Small Business Act,
during the period beginning on February
15, 2020, and ending on May 31, 2021
(PPP First Draw Loan).
3
Under § 7(a)(37)
of the Small Business Act, the Administra-
tor may guarantee under the same terms,
conditions, and processes as a PPP First
Draw Loan the full principal amount of a
subsequent loan made under the PPP to an
“eligible entity,” as defined in § 7(a)(37)
(A)(iv) of the Small Business Act, that has
used or will use the full amount of a PPP
First Draw Loan on or before the expected
date on which the subsequent loan is dis-
bursed to the eligible entity (PPP Sec-
ond Draw Loan).
4
Section 1109(b) of the
CARES Act allows the Department of
the Treasury (Treasury Department), the
Farm Credit Administration, and other
Federal financial regulatory agencies
to authorize bank and nonbank lenders,
including insured credit unions, to par-
ticipate in loans made under the PPP and
provide PPP loans under § 1109 (Section
1109 Loans).
5
Under § 1109(d)(2)(D) of
the CARES Act, regulations establish-
ing the terms and conditions of Section
1109 Loans must provide for forgiveness
of Section 1109 Loans under terms and
conditions that, to the maximum extent
practicable, are consistent with the terms
and conditions for loan forgiveness of
PPP First Draw Loans under § 1106 of the
CARES Act.
(2) A taxpayer that receives a PPP First
Draw Loan, a PPP Second Draw Loan,
and/or a Section 1109 Loan, each a “PPP
Loan” and collectively “PPP Loans,” may
be eligible to receive forgiveness of the
principal amount of the PPP Loan up to an
amount (loan forgiveness amount) equal
to the costs incurred and payments made
during the “covered period,” as defined
in § 7A(a)(4) of the Small Business Act,
for the following “eligible expenses”:
(1) payroll costs, (2) interest on a covered
mortgage obligation, (3) any covered rent
obligation payment, (4) any covered utility
payment, (5) covered operations expendi-
tures, (6) covered property damage costs,
(7) covered supplier costs, and (8) cov-
ered worker protection expenditures.
6

However, a taxpayer’s loan forgiveness
amount may be reduced under “PPP loan
forgiveness reduction rules” if the tax-
payer experiences reductions in full-time
equivalent employees or employee salary
and wages during the covered period and
the taxpayer does not qualify for any of
the statutory or regulatory exemptions
from the PPP loan forgiveness reduction
rules.
7
.02 Forgiveness of PPP Loans.
(1) Section 276(a)(1) of the COVID Tax
Relief Act amended § 7A(i) of the Small
Business Act to provide guidance on the
Federal income tax consequences of the
forgiveness of PPP First Draw Loans. Sec-
tion 276(b) of the COVID Tax Relief Act
provides substantially similar guidance
with regard to PPP Second Draw Loans,
as do §§ 278(a)(1) and (2) with regard to
Section 1109 Loans. Specifically, § 7A(i)
of the Small Business Act and §§ 276(b)
and 278(a) of the COVID Tax Relief Act
provide that, for purposes of the Code, no
amount is included in the gross income of
an eligible recipient or an eligible entity,
as appropriate, by reason of the forgive-
ness of a PPP Loan, and no deduction is
denied, no tax attribute is reduced, and no
basis increase is denied, by reason of such
exclusion from gross income.
(2) Revenue Procedure 2021-20, 2021-
19 I.R.B. 1150 (May 10, 2021), provides
a safe harbor that allows certain taxpay-
ers that, under prior guidance issued by
the Treasury Department and the Inter-
nal Revenue Service, did not deduct cer-
tain otherwise deductible PPP-related
expenses on a tax return that was filed
prior to the enactment of the COVID Tax
Relief Act to deduct such expenses in the
next taxable year (that is, the taxable year
following the taxable year in which such
expenses were paid or incurred).
(3) For eligible recipients and eligible
entities, as appropriate, that are partner-
ships or S corporations, § 7A(i) of the
Small Business Act and §§ 276(b) and
278(a)(3) of the COVID Tax Relief Act
provide that any amount excluded from
gross income under § 7A(i) of the Small
Business Act or § 276(b) or § 278(a) of
the COVID Tax Relief Act, as applicable,
is treated as tax-exempt income for pur-
poses of §§ 705 and 1366 of the Code.
Section 7A(i) of the Small Business Act
and §§ 276(b) and 278(a) of the COVID
Tax Relief Act further provide that, except
as provided by the Secretary of the Trea-
sury or her delegate, any increase in the
adjusted basis of a partner’s interest in a
partnership under § 705 of the Code with
respect to amounts treated as tax-exempt
income under § 7A(i) of the Small Busi-
ness Act, § 276(b) of the COVID Tax
Relief Act, or § 278(a) of the COVID
Tax Relief Act, as applicable, equals the
partner’s distributive share of deductions
resulting from costs giving rise to the
forgiveness of the PPP Loans. Revenue
Procedure 2021-49, 2021-49 I.R.B. 838
(Dec. 6, 2021), released November 18,
2021, provides guidance for partners and
their partnerships regarding allocations
1
See §§ 1102 and 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public Law 116-136, 134 Stat. 281, 286-94, 297-301 (Mar. 27, 2020), as amended by
§§ 2 and 3 of the Paycheck Protection Program Flexibility Act of 2020, Public Law 116-142, 134 Stat. 641 (June 5, 2020); the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and
Venues Act (Economic Aid Act) enacted as Title III of Division N of the Consolidated Appropriations Act, 2021 (CAA), Public Law 116-220, 134 Stat. 1182 (Dec. 27, 2020); § 276 of the
COVID-related Tax Relief Act of 2020 (COVID Tax Relief Act), enacted as Subtitle B of Title II of Division N of the CAA; and § 2 of the PPP Extension Act of 2021, Public Law 117-6, 135
Stat. 250 (Mar. 30, 2021). Section 304(b)(1)(A) of the Economic Aid Act redesignated § 1106 of the CARES Act (15 U.S.C. § 9005) as § 7A and transferred redesignated § 7A to be inserted
to appear after § 7 of the Small Business Act (15 U.S.C. § 636).
2
See Business Loan Program Temporary Changes; Paycheck Protection Program, 85 FR 20811 (Apr. 15, 2020).
3
See § 7(a)(2) of the Small Business Act and § 2 of the PPP Extension Act of 2021.
4
See § 7(a)(37) of the Small Business Act (as added by § 311(a) of the Economic Aid Act).
5
134 Stat. at 304-06.
6
See § 7A(a) of the Small Business Act (as amended by § 304(b)(2) of the Economic Aid Act).
7
See § 7A(d) of the Small Business Act (as amended by § 304(b)(2) of the Economic Aid Act) and Business Loan Program Temporary Changes; Paycheck Protection Program – Loan For-
giveness Requirements and Loan Review Procedures as Amended by Economic Aid Act, 86 F.R. 8290 (Feb. 5, 2021).

Bulletin No. 2021–49 837 December 6, 2021
under § 704(b) of the Code of amounts
excluded from gross income under § 7A(i)
of the Small Business Act and § 276(b) or
§ 278(a) of the COVID Tax Relief Act,
as applicable, allocations under § 704(b)
of the Code of deductions resulting from
expenditures attributable to the use of cer-
tain PPP Loan proceeds, and correspond-
ing adjustments to partners’ bases in their
partnership interests under § 705 of the
Code. Revenue Procedure 2021-49 also
provides guidance under § 1502 of the
Code and § 1.1502-32 of the Income Tax
Regulations regarding the corresponding
basis adjustments for stock of subsidi-
ary members of consolidated groups as
a result of tax-exempt income resulting
from forgiveness of PPP Loans. To allow
their partners or shareholders to make
proper basis adjustments under §§ 705,
1367, and 1502 of the Code, as applica-
ble, entities that are partnerships, S cor-
porations, or subsidiary members of con-
solidated groups, must determine when
tax-exempt income from the forgiveness
of a PPP Loan is received or accrued.
(4) Certain eligible recipients and enti-
ties may need to determine when tax-ex-
empt income resulting from the forgive-
ness of a PPP Loan is received or accrued
to apply Federal tax provisions for which
the amount of gross receipts is relevant.
For example, certain eligible recipients
and entities may need to determine when
such tax-exempt income is included in
gross receipts under § 448(c) or § 6033 of
the Code. However, Revenue Procedure
2021-33, 2021-34 I.R.B. 327 (Aug. 23,
2021) provides a safe harbor that permits
eligible recipients and entities to exclude
the amount of forgiveness of a PPP Loan
from gross receipts solely for purposes
of determining eligibility to claim the
employee retention credit under § 2301
of the CARES Act, as amended by §§ 206
and 207 of the Taxpayer Certainty and
Disaster Tax Relief Act of 2020, enacted
as Division EE of the CAA, and extended
by § 9651 of the American Rescue Plan
Act of 2021, Public Law 117-2, 135 Stat.
4 (Mar. 11, 2021). That safe harbor is not
mandatory, and it does not allow eligi-
ble recipients and entities to exclude the
amount of forgiveness of a PPP Loan from
gross receipts under § 448(c) or § 6033 of
the Code for any other Federal tax pur-
pose.
(5) The Administrator has provided
guidance regarding the process for tax-
payers to receive forgiveness of PPP First
Draw Loans and PPP Second Draw Loans.
See Business Loan Program Temporary
Changes; Paycheck Protection Program
– Loan Forgiveness Requirements and
Loan Review Procedures as Amended by
Economic Aid Act, 86 F.R. 8283 (Feb. 5,
2021) (Loan Forgiveness Requirements);
Business Loan Program Temporary
Changes; Paycheck Protection Program
as Amended by Economic Aid Act, 86
F.R. 3692 (Jan. 14, 2021); Business Loan
Program Temporary Changes; Paycheck
Protection Program – COVID Revenue
Reduction Score, Direct Borrower For-
giveness Process, and Appeals Deferment,
86 F.R. 40921 (July 28, 2021). To receive
forgiveness of PPP First Draw Loans and
PPP Second Draw Loans, the taxpayer
must, among other things, complete and
submit a “PPP Loan Forgiveness Appli-
cation.” The amount of information and
documentation, if any, that the taxpayer
must provide to seek forgiveness and
whether the taxpayer’s loan forgiveness
amount is subject to a reduction depends
on the facts and circumstances. The for-
giveness approval process undertaken
by lenders also depends on the facts and
circumstances and the type of PPP Loan
Forgiveness Application submitted by the
taxpayer. Loan Forgiveness Requirements
at 8295-96.
SECTION 3. TIMING OF TAX-
EXEMPT INCOME
.01 Overview. Subject to section 3.03
of this revenue procedure, a taxpayer that
received a PPP Loan may treat tax-ex-
empt income resulting from the partial or
complete forgiveness of such PPP Loan as
received or accrued:
(1) As, and to the extent that, the tax-
payer pays or incurs eligible expenses as
described in section 2.01(2). Under this
section 3.01(1), a taxpayer that has elected
to use the safe harbor provided under Rev-
enue Procedure 2021-20 will be treated as
paying or incurring the eligible expenses
during the taxpayer’s immediately sub-
sequent taxable year following the tax-
payer’s 2020 taxable year in which the
expenses were actually paid or incurred,
as described in Revenue Procedure 2021-
20;
(2) When the taxpayer files an applica-
tion for forgiveness of the PPP Loan; or
(3) When the PPP Loan forgiveness is
granted.
.02 Amended returns. Taxpayers may
report tax-exempt income pursuant to
section 3.01 on a timely filed original or
amended Federal income tax return, infor-
mation return or administrative adjustment
request (AAR) under § 6227 of the Code.
See also Revenue Procedure 2021-50,
2021-49 I.R.B. 844 (Dec. 6, 2021), released
November 18, 2021, allowing an eligible
partnership to file an amended Form 1065,
U.S. Return of Partnership Income, as an
alternative to filing an AAR, and furnish
a corresponding amended Schedule K-1
(Form 1065), Partner’s Share of Income,
Deductions, Credits, etc., to each of its
partners. Partners and shareholders that
receive amended Forms K-1 as provided in
this section 3.02 must file amended Federal
income tax returns, information returns or
AARs, as applicable, consistent with the
Forms K-1 received.
.03 When PPP Loan is not fully for-
given. Unless otherwise provided in
the 2021 filing year form instructions,
if the taxpayer receives forgiveness for
an amount of the PPP Loan that is less
than the amount that the taxpayer previ-
ously treated as tax-exempt income, the
taxpayer must make appropriate adjust-
ments on an amended Federal income
tax return, information return or AAR,
as applicable, for the taxable year(s) in
which the taxpayer treated tax-exempt
income from the forgiveness of such PPP
Loan as received or accrued. Partners
and shareholders that receive amended
Forms K-1 as provided in this section
3.03 must file amended Federal income
tax returns, information returns or AARs,
as applicable, consistent with the Forms
K-1 received.
.04 Reporting consistent with this reve-
nue procedure. The IRS will publish form
instructions for the 2021 filing season
that will detail how taxpayers can report
consistently with sections 3.01 through
3.03 of this revenue procedure. However,
taxpayers do not need to wait until the
instructions are published to apply this
revenue procedure.

December 6, 2021 838 Bulletin No. 2021–49
.05 Gross receipts application. To
the extent tax-exempt income resulting
from the partial or complete forgiveness
of a PPP Loan is treated as gross receipts
under a particular Federal tax provision,
including but not limited to §§ 448(c)
and 6033 of the Code, section 3 of this
revenue procedure applies for purposes
of determining the timing and, to the
extent relevant, reporting of such gross
receipts.
SECTION 4. EFFECTIVE DATE
This revenue procedure is effective
for any taxable year in which a taxpayer
paid or incurred eligible expenses, as
described in section 2.01(2) of this reve-
nue procedure, any taxable year in which
the taxpayer applied for forgiveness of a
PPP Loan, or any taxable year in which
the taxpayer’s PPP Loan forgiveness is
granted.
SECTION 5. PAPERWORK
REDUCTION ACT
Any collection of information associ-
ated with this notice has been submitted
to the Office of Management and Budget
for review under OMB control numbers
1545-0123 (for business filers), 1545-
074 (for individual filers) and 1545-0047
(for exempt organizations) in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. § 3507(d)). An agency
may not conduct or sponsor and a person
is not required to respond to a collection
of information unless it displays a valid
OMB control number.
SECTION 6. DRAFTING
INFORMATION
The principal authors of this revenue
procedure are Morgan Lawrence and
Charles Gorham of the Office of Associate
Chief Counsel (Income Tax & Account-
ing). For further information regarding
this revenue procedure, please contact
Morgan Lawrence at (202) 317-7011 (not
a toll-free number).
26 CFR 601.105: Examination of returns and
claims for refund, credit or abatement; determina-
tion of correct tax liability.
(Also Part I, §§ 704, 705, 1502; 1.1502-
32.)
Rev. Proc. 2021-49
SECTION 1. PURPOSE
.01 This revenue procedure provides
guidance for partnerships and consoli-
dated groups regarding amounts excluded
from gross income (tax exempt income)
and deductions relating to the Paycheck
Protection Program (PPP) and certain
other COVID-19 relief programs. More
specifically:
(1) This revenue procedure provides
guidance for partners and their partner-
ships regarding:
(a) allocations under § 704(b) of the
Internal Revenue Code (Code) of tax
exempt income arising from the forgive-
ness of PPP Loans, the receipt of certain
grant proceeds, or the subsidized payment
of certain principal, interest and fees;
(b) allocations under § 704(b) of the
Code of deductions resulting from expen-
ditures attributable to the use of forgiven
PPP Loans or certain grant proceeds, or
subsidized payments of certain interest
and fees; and
(c) the corresponding adjustments to be
made with respect to the partners’ bases in
their partnership interests under § 705 of
the Code.
(2) This revenue procedure also pro-
vides guidance under § 1502 of the Code
and § 1.1502-32 of the Income Tax Regu-
lations regarding the corresponding basis
adjustments for stock of subsidiary mem-
bers of consolidated groups as a result of
tax exempt income arising from certain
forgiven PPP Loans, grant proceeds, or
subsidized payment of certain principal,
interest and fees.
.02 For guidance on the timing of tax
exempt income arising from forgiven PPP
Loans, see Rev. Proc. 2021-48, 2021-49
I.R.B. ___, released on November 18,
2021.
SECTION 2. BACKGROUND
.01 CARES Act.
(1) Overview. The PPP is a loan pro-
gram administered by the U.S. Small
Business Administration (SBA) and the
Administrator of the SBA (Administrator)
as part of the SBA’s “7(a) Loan Program”
under § 7(a) of the Small Business Act (15
U.S.C. § 636(a)).
1
Congress established
the PPP to assist small businesses nation-
wide adversely affected by the COVID-19
emergency in paying payroll costs and
other eligible expenses.
2
Under the PPP,
the Administrator may guarantee the full
principal amount of a “covered loan,” as
defined in § 7(a)(36)(A)(ii) of the Small
Business Act, which for purposes of the
PPP is a loan made under the PPP to an
“eligible recipient,” as defined in § 7(a)
(36)(A)(iv) of the Small Business Act,
during the period beginning on February
15, 2020, and ending on May 31, 2021
(PPP First Draw Loan).
3
A PPP First Draw
Loan may be forgiven under § 7A of the
Small Business Act.
(2) Authorization of lenders to par-
ticipate in PPP. Section 1109(b) of the
CARES Act allows the Department of
the Treasury (Treasury Department), the
Farm Credit Administration, and other
Federal financial regulatory agencies
to authorize bank and nonbank lenders,
including insured credit unions, to par-
ticipate in loans made under the PPP and
provide PPP loans under § 1109 (Section
1109 Loans).
4
Under § 1109(d)(2)(D) of
the CARES Act, regulations establish-
ing the terms and conditions of Section
1109 Loans must provide for forgiveness
1
See §§ 1102 and 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public Law 116-136, 134 Stat. 281, 286-94, 297-301 (Mar. 27, 2020), as amended by §§
2 and 3 of the Paycheck Protection Program Flexibility Act of 2020, Public Law 116-142, 134 Stat. 641 (June 5, 2020); the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and
Venues Act (Economic Aid Act) enacted as Title III of Division N of the Consolidated Appropriations Act, 2021 (CAA), Public Law 116-220, 134 Stat. 1182 (Dec. 27, 2020); § 276 of the
COVID-related Tax Relief Act of 2020 (COVID Tax Relief Act), enacted as Subtitle B of Title II of Division N of the CAA; and the PPP Extension Act of 2021, Public Law 117-6, 135 Stat.
250 (Mar. 30, 2021). Section 304(b)(1)(A) of the Economic Aid Act redesignated § 1106 of the CARES Act (15 U.S.C. § 9005) as § 7A and transferred redesignated § 7A to be inserted to
appear after § 7 of the Small Business Act (15 U.S.C. § 636).
2
See Business Loan Program Temporary Changes; Paycheck Protection Program, 85 FR 20811 (Apr. 15, 2020).
3
See § 7(a)(2) of the Small Business Act and § 2 of the PPP Extension Act of 2021.
4
134 Stat., at 304-306.

Bulletin No. 2021–49 839 December 6, 2021
of Section 1109 Loans under terms and
conditions that, to the maximum extent
practicable, are consistent with the terms
and conditions for loan forgiveness of
PPP First Draw Loans under § 1106 of the
CARES Act.
(3) Emergency EIDL Grants. Section
1110(e) of the CARES Act allows an eli-
gible entity that applied for an Economic
Injury Disaster Loan (EIDL) under § 7(b)
(2) of the Small Business Act (15 U.S.C.
§ 636(b)(2)) in response to COVID-19
to request that the Administrator provide
an advance that is not more than $10,000
(an Emergency EIDL Grant). An appli-
cant is not required to repay any amount
of an Emergency EIDL Grant, even if the
applicant is subsequently denied an EIDL
under § 7(b)(2) of the Small Business Act
or a PPP loan under § 7(a) of the Small
Business Act. See § 1110(e)(5) of the
CARES Act.
(4) Principal and interest payments
of covered loans. Section 1112(c) of the
CARES Act requires the Administrator to
pay the principal, interest, and any asso-
ciated fees with respect to covered loans
in regular servicing status made before
the date of enactment of the CARES Act,
whether or not on deferment, and covered
loans made within six months after the
enactment of the CARES Act. Covered
loans under this provision include loans:
(a) guaranteed by the SBA under the
7(a) Loan Program (including Commu-
nity Advantage Loans but excluding PPP
First Draw Loans) or under the 504 Loan
Program established under title V of the
Small Business Investment Act of 1958
(15 U.S.C. § 695 et seq.), and
(b) SBA microloan products made by
an intermediary to certain small busi-
nesses using loans or grants received
under § 7(m) of the Small Business Act
(15 U.S.C. § 636(m)).
.02 Economic Aid to Hard-Hit Small
Businesses, Nonprofits, and Venues Act
(1) PPP Second Draw Loans. Section
311 of the Economic Aid Act amended
§ 7(a) of the Small Business Act to autho-
rize Paycheck Protection Program Second
Draw Loans (PPP Second Draw Loans) as
covered loans under the same terms, con-
ditions, and processes as PPP First Draw
Loans. See § 7(a)(37)(B) of the Small
Business Act (as added by § 311(a) of the
Economic Aid Act). Congress authorized
the PPP Second Draw Loans to further
assist those small businesses nationwide
that continue to be adversely affected by
the COVID-19 emergency. Similar to a
PPP First Draw Loan, the Administrator
is permitted to guarantee the full principal
amount of a PPP Second Draw Loan made
under the PPP to an “eligible entity,” as
defined in § 7(a)(37)(A)(iv) of the Small
Business Act, that has used or will use the
full amount of a PPP First Draw Loan on
or before the expected date on which the
subsequent loan is disbursed to the eligi-
ble entity, and a PPP Second Draw Loan
may be forgiven under § 7(a)(37)(J) of the
Small Business Act (as added by § 311(a)
of the Economic Aid Act). An individual
or entity that receives a PPP First Draw
Loan, a PPP Second Draw Loan, and/or
a Section 1109 Loan, each a “PPP Loan”
and collectively “PPP Loans,” may be
eligible to receive forgiveness of the prin-
cipal amount of the PPP Loan up to an
amount (loan forgiveness amount) equal
to the costs incurred and payments made
during the “covered period,” as defined
in § 7A(a)(4) of the Small Business Act,
for the following “eligible expenses”:
(1) payroll costs, (2) interest on a cov-
ered mortgage obligation, (3) any covered
rent obligation payment, (4) any covered
utility payment, (5) covered operations
expenditures, (6) covered property dam-
age costs, (7) covered supplier costs, and
(8) covered worker protection expendi-
tures.
5
However, an individual or entity’s
loan forgiveness amount may be reduced
under “PPP loan forgiveness reduction
rules” if the individual or entity experi-
ences reductions in full-time equivalent
employees or employee salary and wages
during the covered period and the individ-
ual or entity does not qualify for any of the
statutory or regulatory exemptions from
the PPP loan forgiveness reduction rules.
6
(2) Shuttered Venue Operator Grants.
Section 324(b) of the Economic Aid Act
authorizes the SBA to make initial and sup-
plemental grants to certain “eligible per-
sons or entities,” which include live venue
operators and promoters, theatrical produc-
ers, live performing arts organization oper-
ators, museum operators, motion picture
theater operators, and talent representatives
(Shuttered Venue Operator Grants). See
§ 324(a) of the Economic Aid Act (defining
the term “eligible person or entity”).
(3) Extension of Emergency EIDL
Grants program and Targeted EIDL
Advances. Section 331 of the Economic
Aid Act extends the Emergency EIDL
Grant program to allow covered entities,
as defined under paragraph (a)(2) of that
section, to request to receive a total of
$10,000 under § 1110(e) of the CARES
Act, without regard to whether the cov-
ered entity’s EIDL under § 7(b)(2) of the
Small Business Act is, or was, approved
or accepted and without regard to whether
the covered entity received a PPP Loan
(Targeted EIDL Advances). The covered
entity is not required to repay any amount
of the Emergency EIDL Grant, including
the portion (if any) that comprises a Tar-
geted EIDL Advance. See § 1110(e) of the
CARES Act; § 331(b)(2)(A) of the Eco-
nomic Aid Act.
.03 COVID Tax Relief Act.
(1) Forgiveness of PPP Loans.
(a) Overview. Section 276(a) of the
COVID Tax Relief Act amended § 7A(i)
of the Small Business Act (as redes-
ignated, transferred, and inserted by
§ 304(b)(1)(A) of the Economic Aid Act)
to provide guidance regarding the Federal
income tax treatment of the forgiveness of
PPP First Draw Loans. Section 276(b) of
the COVID Tax Relief Act provides sub-
stantially similar guidance with regard to
PPP Second Draw Loans, as do § 278(a)
(1) and (2) of the COVID Tax Relief Act
with regard to Section 1109 Loans.
(b) Federal income tax treatment. Spe-
cifically, § 7A(i) of the Small Business
Act and §§ 276(b) and 278(a)(1) and (2)
of the COVID Tax Relief Act, as applica-
ble, provide that, generally for purposes
of the Code, no amount is included in the
gross income of an eligible recipient or
an eligible entity, as appropriate, by rea-
son of the forgiveness of a PPP Loan and
no deduction is denied, no tax attribute is
5
See § 7A(a) of the Small Business Act (as amended by § 304(b)(2) of the Economic Aid Act).
6
See § 7A(d) of the Small Business Act (as amended by § 304(b)(2) of the Economic Aid Act) and Business Loan Program Temporary Changes; Paycheck Protection Program – Loan For-
giveness Requirements and Loan Review Procedures as Amended by Economic Aid Act, 86 F.R. 8290 (Feb. 5, 2021).

December 6, 2021 840 Bulletin No. 2021–49
reduced, and no basis increase is denied,
by reason of such exclusion from gross
income. Those sections also provide that,
for eligible recipients and eligible enti-
ties, as appropriate, that are partnerships
or S corporations, any amount excluded
from gross income under § 7A(i) of
the Small Business Act or § 276(b) or
§ 278(a)(3) of the COVID Tax Relief Act,
as applicable, is treated as tax exempt
income for purposes of §§ 705 and 1366
of the Code. Section 7A(i) of the Small
Business Act and §§ 276(b) and 278(a)
(3) of the COVID Tax Relief Act further
provide that, except as provided by the
Secretary of the Treasury or her delegate
(Secretary), any increase in the adjusted
basis of a partner’s interest in a partner-
ship under § 705 of the Code with respect
to amounts treated as tax exempt income
under § 7A(i) of the Small Business Act,
§ 276(b) of the COVID Tax Relief Act, or
§ 278(a) of the COVID Tax Relief Act, as
applicable, equals the partner’s distrib-
utive share of deductions resulting from
costs giving rise to the forgiveness of the
PPP Loans.
(2) Emergency EIDL Grants and Tar-
geted EIDL Advances. Section 278(b)(1)
and (2) of the COVID Tax Relief Act pro-
vide that any Emergency EIDL Grant or
Targeted EIDL Advance is not included
in the gross income of the person that
receives such advance or funding, and
no deduction is denied, no tax attribute is
reduced, and no basis increase is denied,
by reason of such exclusion from gross
income. Section 278(b)(3) of the COVID
Tax Relief Act provides that, in the case
of a partnership or an S corporation that
receives such advance or funding, any
amount excluded from gross income under
§ 278(b)(1) of the COVID Tax Relief Act
is treated as tax exempt income for pur-
poses of §§ 705 and 1366 of the Code and
that the Secretary is to prescribe rules for
determining a partner’s distributive share
of any such advance or funding for pur-
poses of § 705 of the Code.
(3) Subsidy for certain loan payments.
Section 278(c)(1) and (2) of the COVID
Tax Relief Act provide that any payment
described in § 1112(c) of the CARES Act
is not included in the gross income of the
person on whose behalf such payment is
made, and no deduction is denied, no tax
attribute is reduced, and no basis increase
is denied, by reason of such exclusion
from gross income. Section 278(c)(3)
(A) of the COVID Tax Relief Act pro-
vides that, in the case of a partnership or
S corporation on whose behalf a payment
described in § 1112(c) of the CARES Act
is made, any amount excluded from gross
income under § 278(c)(1) of the COVID
Tax Relief Act is treated as tax exempt
income for purposes of §§ 705 and 1366
of the Code. Section 278(c)(3)(B) of the
COVID Tax Relief Act provides that,
except as provided by the Secretary, any
increase in the adjusted basis of a partner’s
interest in a partnership under § 705 of the
Code with respect to any such payment
equals the sum of the partner’s distribu-
tive share of deductions resulting from
interest and fees described in § 1112(c) of
the CARES Act and the partner’s share,
as determined under § 752 of the Code,
of principal described in § 1112(c) of the
CARES Act.
(4) Shuttered Venue Operator Grants.
Section 278(d)(1) and (2) of the COVID
Tax Relief Act provide that any Shuttered
Venue Operator Grant is not included
in the gross income of the person that
receives such grant, and no deduction is
denied, no tax attribute is reduced, and no
basis increase is denied, by reason of such
exclusion from gross income. Section
278(d)(3) of the COVID Tax Relief Act
provides that, in the case of a partnership
or an S corporation that receives a Shut-
tered Venue Operator Grant, any amount
excluded from gross income under
§ 278(d)(1) of the COVID Tax Relief Act
is treated as tax exempt income for pur-
poses of §§ 705 and 1366 of the Code,
and the Secretary is to prescribe rules for
determining a partner’s distributive share
of any such grant for purposes of § 705 of
the Code.
.04 American Rescue Plan.
(1) Supplemental Targeted EIDL
Advances.
(a) Overview. Section 5002(b)(2)(B)
of the ARP requires the Administrator to
make additional Targeted EIDL Advances
to covered entities that (1) have suffered
an economic loss of greater than 50 per-
cent and (2) employ not more than 10
employees (Supplemental Targeted EIDL
Advances). The terms “covered entity”
and “economic loss” have the meanings
given the terms in § 331(a) of the Eco-
nomic Aid to Hard-Hit Small Businesses,
Nonprofits, and Venues Act. See § 5002(a)
(2) of the ARP. The amount of a Supple-
mental Targeted EIDL Advance equals
$5,000, and is provided to a covered entity
in addition to any Emergency EIDL Grant
or Targeted EIDL Advance that the cov-
ered entity may have received.
(b) Federal income tax treatment. Sec-
tion 9672(1) and (2) of the ARP provide
that any Supplemental Targeted EIDL
Advance is not included in the gross
income of the person that receives such
advance, and no deduction is denied, no tax
attribute is reduced, and no basis increase
is denied, by reason of such exclusion
from gross income. Section 9672(3) of the
ARP provides that, in the case of a part-
nership or an S corporation that receives
a Supplemental Targeted EIDL Advance,
any amount excluded from gross income
under § 9672(1) of the ARP is treated as tax
exempt income for purposes of §§ 705 and
1366 of the Code, and the Secretary is to
prescribe rules for determining a partner’s
distributive share of any such amount for
purposes of § 705 of the Code.
(2) Restaurant Revitalization Grants.
(a) Overview. Section 5003(c) of the
ARP requires the Administrator to make
grants (Restaurant Revitalization Grants)
of up to $10 million in the aggregate
($5 million in the aggregate per loca-
tion) to eligible entities (including restau-
rants, food stands and food trucks, bars,
and other similar establishments, but not
including, among other prohibited recipi-
ents, publicly traded companies or chains
of 20 or more locations) and affiliated
businesses to cover pandemic-related rev-
enue losses. See § 5003(a)(2), (4), and (7)
of the ARP (defining “affiliated business,”
“eligible entity,” and “pandemic-related
revenue loss,” respectively). The amount
of any Restaurant Revitalization Grant is
limited to the eligible entity’s pandem-
ic-related revenue loss, as determined
pursuant to § 5003(a)(7) of the ARP and
any guidance issued by the SBA, which is
reduced by any amounts received through
a PPP First Draw Loan or a PPP Second
Draw Loan in 2020 or 2021. See § 5003(c)
(4)(B)(i) and (a)(7) of the ARP. In addi-
tion, any amount of a Restaurant Revital-
ization Grant made to an eligible entity
based on estimated receipts that is greater
than the actual gross receipts of the eligi-

Bulletin No. 2021–49 841 December 6, 2021
ble entity in 2020 must be returned to the
Treasury Department. See § 5003(c)(4)(B)
(ii) of the ARP.
(b) Return of Funds to the Treasury
Department. If an eligible entity that
receives a Restaurant Revitalization Grant
fails to use all grant funds or permanently
ceases operations on or before the last day
of the covered period, the eligible entity
must return to the Treasury Department
any funds that the eligible entity did not
use for allowable expenses. See § 5003(c)
(6) of the ARP. Section 5003(c)(5) of the
ARP describes “allowable expenses” as
including, among other expenses, payroll
costs, payments of principal or interest on
any mortgage obligation, rent payments,
utilities, maintenance expenses, supplies,
operational expenses, paid sick leave, and
any other expenses that the Administrator
determines to be essential to maintaining
the eligible entity. See § 5003(c)(5) of
the ARP (enumerating permitted uses of
funds made available through a Restau-
rant Revitalization Grant). The covered
period began on February 15, 2020, and
ends on December 31, 2021, or a date to
be determined by the Administrator that
is not later than two years after the date
of enactment of § 5003 of the ARP. See
§ 5003(a)(3) of the ARP.
(c) Federal income tax treatment. Sec-
tion 9673(1) and (2) of the ARP provide
that any Restaurant Revitalization Grant
received from the Administrator is not
included in the gross income of the person
that receives such grant, and no deduction
is denied, no tax attribute is reduced, and
no basis increase is denied, by reason of
such exclusion from gross income. Section
9673(3) of the ARP provides that, in the
case of a partnership or an S corporation
that receives a Restaurant Revitalization
Grant, except as otherwise provided by
the Secretary, any amount excluded from
gross income under § 9673(1) of the ARP is
treated as tax exempt income for purposes
of §§ 705 and 1366 of the Code, and the
Secretary is to prescribe rules for determin-
ing a partner’s distributive share of any such
amount for purposes of § 705 of the Code.
.05 Relevant Provisions under Sub-
chapter K of the Code
(1) Partner’s distributive share. Sec-
tion 704(b) of the Code provides that a
partner’s distributive share of income,
gain, loss, deduction, or credit (or item
thereof) is determined in accordance with
the partner’s interest in the partnership
(determined by taking into account all facts
and circumstances), if (1) the partnership
agreement does not provide as to the part-
ner’s distributive share of income, gain,
loss, deduction, or credit (or item thereof),
or (2) the allocation to a partner under the
agreement of income, gain, loss, deduc-
tion, or credit (or item thereof) does not
have substantial economic effect. In order
for an allocation to have economic effect,
it must be consistent with the underlying
economic arrangement of the partners.
This means in the event that there is an
economic benefit or economic burden that
corresponds to an allocation, the partner to
whom the allocation is made must receive
such economic benefit or bear such eco-
nomic burden. See § 1.704-1(b)(2)(ii)(a)
of the Income Tax Regulations.
(2) Determination of basis of partner’s
interest. Section 705(a)(1) of the Code pro-
vides that the adjusted basis of a partner’s
interest in a partnership is increased by the
sum of the partner’s distributive share for
the taxable year and prior taxable years of
(A) taxable income of the partnership as
determined under § 703(a) of the Code,
(B) income of the partnership exempt from
tax under Title 26, and (C) the excess of
the deductions for depletion over the basis
of the property subject to depletion. Under
§ 705(a)(2) and (3) of the Code, a partner’s
adjusted basis in a partnership interest is
decreased (but not below zero) by distri-
butions by the partnership as provided in
§ 733 of the Code and by the sum of the
partner’s distributive share for the taxable
year and prior taxable years of (A) losses of
the partnership and (B) expenditures of the
partnership not deductible in computing its
taxable income and not properly charge-
able to capital account; and decreased (but
not below zero) by the amount of the part-
ner’s deduction for depletion for any part-
nership oil and gas property to the extent
such deduction does not exceed the propor-
tionate share of the adjusted basis of such
property allocated to such partner under
§ 613A(c)(7)(D) of the Code.
.06 Relevant Provisions under Sub-
chapter S of the Code
(1) Determination of S corporation
shareholder’s Federal income tax liabil-
ity. Section 1366(a)(1) of the Code pro-
vides, in part, that, in determining the
Federal income tax of an S corporation
shareholder under chapter 1 of the Code
for the shareholder’s taxable year in which
the taxable year of the S corporation ends
(or for the final taxable year of a share-
holder who dies, or of a trust or estate
which terminates, before the end of the S
corporation’s taxable year), there is taken
into account the shareholder’s pro rata
share of the corporation’s--
(a) items of income (including tax
exempt income), loss, deduction (includ-
ing expenses related to tax exempt
income, whether deductible or non-de-
ductible), or credit the separate treatment
of which could affect the liability for tax
of any shareholder; and
(b) nonseparately computed income or
loss.
(2) Positive basis adjustments to stock
of S corporation shareholders. Section
1367(a)(1) of the Code provides, in part,
that the basis of each shareholder’s stock
in an S corporation is increased for any
period by the sum of the items of income
described in § 1366(a)(1)(A) of the Code
determined with respect to that share-
holder for such period. Consequently,
amounts excluded from gross income
under § 7A(i) of the Small Business Act,
§ 276(b) of the COVID Tax Relief Act,
and § 278(a) through (d) of the COVID
Tax Relief Act are taken into account in
accordance with each S corporation share-
holder’s pro rata share under § 1366(a)(1)
(A), and accordingly increase the basis of
the shareholder’s stock in the S corpora-
tion under § 1367(a)(1).
.07 Relevant Provisions in the Consoli-
dated Return Regulations
(1) Tax exempt income. Section 1.1502-
32(b)(2) provides for adjustments to the
basis in the stock of a member of a consol-
idated group (as defined in § 1.1502-1(h))
that is a subsidiary of one or more mem-
bers (S), including positive adjustments
for tax exempt income. See § 1.1502-32(b)
(2)(ii). S’s tax exempt income is defined
as its income and gain which is taken into
account but permanently excluded from
its gross income under applicable law and
which increases, directly or indirectly,
the basis of its assets (or an equivalent
amount). Section 1.1502-32(b)(3)(ii)(A).
(2) COD income. Section 1.1502-32(b)
(3)(ii)(C)(1) provides that excluded dis-
charge-of-indebtedness income (that is,

December 6, 2021 842 Bulletin No. 2021–49
excluded COD income) is treated as tax
exempt income only to the extent the dis-
charge is applied to reduce tax attributes
attributable to any member of the group
under § 108 or § 1017 of the Code, or
§ 1.1502-28 (implementing § 108 in a con-
solidated group). As described in section
2.03 of this revenue procedure, § 7A(i)
of the Small Business Act, and §§ 276(b)
and 278(a)(1) and (2) of the COVID Tax
Relief Act, as applicable, provide that no
amount is included in the gross income
of a borrower by reason of forgiveness
of a PPP Loan, and that no deduction is
denied, no tax attribute is reduced, and no
basis increase is denied, by reason of such
exclusion from gross income.
SECTION 3. SCOPE
This revenue procedure applies to a
taxpayer that is described in section 3.01,
3.02, 3.03, 3.04, or 3.05 of this revenue
procedure (Covered Taxpayer).
.01 A partnership or a member of a con-
solidated group that--
(1) Received a PPP Loan; and
(2) Received partial or complete for-
giveness of the PPP Loan such that, in
accordance with § 7A(i) of the Small
Business Act, or §§ 276(b) or 278(a)(1) of
the COVID Tax Relief Act, as applicable,
the forgiveness amount is not included in
the gross income of the eligible recipient,
entity, or borrower.
.02 A partnership for which the SBA
made payments with respect to a covered
loan under § 1112(c) of the CARES Act.
.03 A partnership that received an
Emergency EIDL Grant, a Targeted EIDL
Advance, or a Shuttered Venue Operator
Grant.
.04 A partnership that received a Sup-
plemental Targeted EIDL Advance.
.05 A partnership that received a
Restaurant Revitalization Grant.
SECTION 4. ALLOCATION OF
CERTAIN PARTNERSHIP ITEMS
AND PARTNERSHIP INTEREST
BASIS ADJUSTMENTS
.01 Treatment for Covered Taxpayers
that are partnerships. If a Covered Tax-
payer that is a partnership satisfies all of
the applicable requirements provided in
section 4.02 of this revenue procedure,
and complies with all information report-
ing requirements described in section 6 of
this revenue procedure, the Internal Rev-
enue Service (IRS) will treat the Covered
Taxpayer’s allocation of amounts treated
as tax exempt income and allocation of
deductions described in section 4.02(1),
(2), (3), or (4) of this revenue procedure
(as the case may be) as determined in
accordance with § 704(b) of the Code.
Under § 705(a) of the Code, a partner’s
basis in its interest is increased by the
partner’s distributive share of tax exempt
income and is decreased by the partner’s
distributive share of deductions described
in section 4.02(1), (2), (3), or (4) of this
revenue procedure.
.02 Requirements for Covered Taxpay-
ers that are partnerships.
(1) Requirements for the allocation of
deductions and amounts treated as tax
exempt income arising in connection with
the forgiveness of a PPP Loan. A Covered
Taxpayer that is a partnership satisfies the
requirements of this section 4.02(1) if all
of the following conditions are met:
(a) The allocation of deductions result-
ing from expenditures giving rise to the
forgiveness of a PPP Loan is determined
under § 1.704-1(b)(3), according to the
partners’ overall economic interests in the
partnership.
(b) The allocation of amounts treated
as tax exempt income under § 7A(i) of
the Small Business Act, § 276(b) of the
COVID Tax Relief Act, or § 278(a) of the
COVID Tax Relief Act, as applicable, is
made in accordance with the allocation
of the deductions described in section
4.02(1)(a) of this revenue procedure.
(c) If any expenditure giving rise to
the forgiveness of a PPP Loan is required
to be capitalized under the Code (cap-
italized expenditure), the allocation of
amounts treated as tax exempt income
under § 7A(i) of the Small Business Act,
§ 276(b) of the COVID Tax Relief Act, or
§ 278(a) of the COVID Tax Relief Act, as
applicable, is made in accordance with the
allocation of the deemed loss, as provided
in this section 4.02(1)(c), with respect to
the capitalized expenditure’s basis. Solely
for purposes of this revenue procedure,
the deemed loss with respect to the cap-
italized expenditure’s basis is treated as a
loss allowable as a deduction and is equal
to the amount of loss that would be rec-
ognized if the property to which the capi-
talized expenditure relates were treated as
disposed of in a fully taxable transaction
for no consideration (hypothetical transac-
tion) and, with respect to each partner, the
allocation of the deemed loss associated
with the capitalized expenditure’s basis is
determined under § 1.704-1(b)(3), accord-
ing to the partners’ overall economic
interests in the partnership. The hypothet-
ical transaction and resulting deemed loss
are solely for purposes of determining
the manner in which tax exempt income
described in this section 4.02(1)(c) is allo-
cated to the partnership’s partners.
(2) Requirements for the allocation of
deductions and amounts treated as tax
exempt income arising in connection with
payments made by the SBA on behalf of
the taxpayer with respect to a covered
loan under § 1112(c) of the CARES Act.
A Covered Taxpayer that is a partnership
satisfies the requirements of this section
4.02(2) if all of the following conditions
are met:
(a) The allocation of deductions result-
ing from payments of interest and fees
described in § 1112(c) of the CARES
Act is determined under § 1.704-1(b)(3),
according to the partners’ overall eco-
nomic interests in the partnership.
(b) The allocation of amounts treated
as tax exempt income under § 278(c) of
the COVID Tax Relief Act attributable to
interest and fees described in § 1112(c)
of the CARES Act is made in accordance
with the allocation of the deductions
described in section 4.02(2)(a) of this rev-
enue procedure.
(c) The allocation of amounts treated as
tax exempt income under § 278(c) of the
COVID Tax Relief Act attributable to pay-
ments of principal described in § 1112(c)
of the CARES Act is made in accordance
with each partner’s share of the liability
under § 752 of the Code and the regula-
tions thereunder.
(d) If any expenditure related to the
payment of interest and fees described in
§ 1112(c) of the CARES Act is required
to be treated as a capitalized expendi-
ture, the allocation of amounts treated as
tax exempt income under § 278(c) of the
COVID Tax Relief Act is made in accor-
dance with the allocation of the deemed
loss, as described in section 4.02(1)(c) of
this revenue procedure, with respect to the

Bulletin No. 2021–49 843 December 6, 2021
capitalized expenditure’s basis. Upon the
hypothetical transaction, the allocation
of the deemed loss is determined under §
1.704-(1)(b)(3), according to the partners’
overall economic interests in the partner-
ship. The hypothetical transaction and
resulting deemed loss are solely for pur-
poses of determining the manner in which
tax exempt income described in this sec-
tion 4.02(2)(d) is allocated to the partner-
ship’s partners.
(3) Requirements for the allocation
of deductions and amounts treated as
tax exempt income arising in connection
with the taxpayer receiving an Emergency
EIDL Grant, Targeted EIDL Advance,
or a Shuttered Venue Operator Grant. A
Covered Taxpayer that is a partnership
satisfies the requirements of this section
4.02(3) if all of the following conditions
are met:
(a) The allocation of deductions result-
ing from the expenditure of proceeds of an
Emergency EIDL Grant, a Targeted EIDL
Advance, or a Shuttered Venue Operator
Grant is determined under § 1.704-1(b)
(3), according to the partners’ overall eco-
nomic interests in the partnership.
(b) The allocation of amounts treated
as tax exempt income under § 278(b) and
(d) of the COVID Tax Relief Act is made
in accordance with the allocation of the
deductions described in section 4.02(3)(a)
of this revenue procedure.
(c) If any expenditure paid with the
proceeds from an Emergency EIDL Grant,
a Targeted EIDL Advance, or a Shut-
tered Venue Operator Grant is required
to be treated as a capitalized expendi-
ture, the allocation of amounts treated
as tax exempt income under § 278(b)
and (d) of the COVID Tax Relief Act is
made in accordance with the allocation of
the deemed loss, as described in section
4.02(1)(c) of this revenue procedure, with
respect to the capitalized expenditure’s
basis. Upon the hypothetical transaction,
the allocation of the deemed loss is deter-
mined under § 1.704-(1)(b)(3), according
to the partners’ overall economic interests
in the partnership. The hypothetical trans-
action and resulting deemed loss are solely
for purposes of determining the manner
in which tax exempt income described in
this section 4.02(3)(c) is allocated to the
partnership’s partners.
(4) Requirements for the allocation of
deductions and amounts treated as tax
exempt income arising in connection with
the taxpayer receiving a Supplemental
Targeted EIDL Advance or a Restaurant
Revitalization Grant. A Covered Taxpayer
that is a partnership satisfies the require-
ments of this section 4.02(4) if all of the
following conditions are met:
(a) The allocation of deductions result-
ing from the expenditure of proceeds of a
Supplemental Targeted EIDL Advance or
a Restaurant Revitalization Grant is deter-
mined under § 1.704-1(b)(3), according to
the partners’ overall economic interests in
the partnership.
(b) The allocation of amounts treated
as tax exempt income under §§ 9672 and
9673 of the ARP is made in accordance
with the allocation of the deductions
described in section 4.02(4)(a) of this rev-
enue procedure.
(c) If any expenditure paid with the
proceeds from a Supplemental Targeted
EIDL Advance or a Restaurant Revital-
ization Grant is required to be treated as
a capitalized expenditure, the allocation
of amounts treated as tax exempt income
under §§ 9672 and 9673 of the ARP is
made in accordance with the allocation of
the deemed loss, as described in section
4.02(1)(c) of this revenue procedure, with
respect to the capitalized expenditure’s
basis. Upon the hypothetical transaction,
the allocation of the deemed loss is deter-
mined under § 1.704-(1)(b)(3), according
to the partners’ overall economic interests
in the partnership. The hypothetical trans-
action and resulting deemed loss are solely
for purposes of determining the manner
in which tax exempt income described in
this section 4.02(4)(c) is allocated to the
partnership’s partners.
.03 Amended Returns. If a taxpayer
has filed an original or amended Fed-
eral income tax return or information
return, as applicable, for a taxable year
ending after March 27, 2020, the tax-
payer may file an amended return or an
administrative adjustment request under
§ 6227 of the Code, as applicable, that
reflects application of this revenue pro-
cedure. See Rev. Proc. 2021-50, 2021-49
I.R.B.___, released November 18, 2021,
allowing eligible partnerships to file
amended partnership returns under this
revenue procedure if the requirements of
section 3 of Rev. Proc. 2021-50 are met.
SECTION 5. STOCK BASIS
ADJUSTMENTS REGARDING
COVERED TAXPAYERS THAT ARE
MEMBERS OF CONSOLIDATED
GROUPS
With regard to a Covered Taxpayer that
is a member of a consolidated group, the
IRS will treat any amount excluded from
gross income under § 7A(i) of the Small
Business Act, § 276(b) of the COVID Tax
Relief Act, or § 278(a)(1) of the COVID
Tax Relief Act, as applicable, as tax exempt
income for purposes of § 1.1502-32(b)(2)
(ii). A Covered Taxpayer that is a member
of a consolidated group may rely on the
IRS treatment provided by this section 5
only if the consolidated group attaches
a signed statement to its consolidated tax
return indicating that all Covered Taxpay-
ers in the consolidated group are relying on
this section 5 and reporting consistently.
SECTION 6. INFORMATION
REPORTING BY PARTNERSHIPS
THAT ARE COVERED TAXPAYERS
A Covered Taxpayer that is a partner-
ship must report to the IRS all partnership
items described in section 4 of this reve-
nue procedure that the Commissioner of
Internal Revenue or the Commissioner’s
delegate may require in forms, instruc-
tions, or other guidance.
SECTION 7. EFFECTIVE DATE
A taxpayer may apply this revenue pro-
cedure for any taxable year ending after
March 27, 2020.
SECTION 8. DRAFTING
INFORMATION
The principal authors of this revenue
procedure are Katherine A. Waibler and
Michael R. Gould of the Office of Associ-
ate Chief Counsel (Passthroughs and Spe-
cial Industries). For further information
regarding this revenue procedure, contact
Katherine A. Waibler at (202) 317-5056,
and, regarding § 1.1502-32, Robert H.
Liquerman at (202) 317-3181.

December 6, 2021 844 Bulletin No. 2021–49
26 CFR 601.601. Rules and regulations.
(Also Part I, §§ 6031, 6222, 6227.)
Rev. Proc. 2021-50
SECTION 1. PURPOSE
This revenue procedure allows eli-
gible partnerships to file amended part-
nership returns for taxable years ending
after March 27, 2020 using a Form 1065,
U.S. Return of Partnership Income (Form
1065), with the “Amended Return” box
checked, and issue an amended Schedule
K-1, Partner’s Share of Income, Deduc-
tions, Credits, etc. (Schedule K-1), to each
of its partners. An eligible partnership may
file an amended return under Rev. Proc.
2021-48, 2021-49 I.R.B. 835, or Rev.
Proc. 2021-49, 2021-49 I.R.B. 838, if the
requirements of section 3 of this revenue
procedure are met. In order to take advan-
tage of the option to amend provided in
this revenue procedure, amended partner-
ship returns must be filed, and correspond-
ing Schedules K-1 must be furnished, on
or before December 31, 2021.
SECTION 2. BACKGROUND
.01 Bipartisan Budget Act of 2015.
(1) Section 1101(a) of the Bipartisan
Budget Act of 2015 (BBA), P.L. 114-74,
Title XI (November 2, 2015), replaced
subchapter C of chapter 63 of subtitle F of
the Internal Revenue Code (Code) effec-
tive for partnership taxable years begin-
ning after December 31, 2017. Prior to
the enactment of the BBA, subchapter C
of chapter 63 contained the unified part-
nership audit and litigation rules enacted
by the Tax Equity and Fiscal Responsi-
bility Act of 1982 (TEFRA), P.L. 97–248
(September 3, 1982), that were com-
monly referred to as the TEFRA partner-
ship procedures. Section 1101(c) of the
BBA replaced the TEFRA partnership
procedures with a centralized partner-
ship audit regime that, in general, deter-
mines, assesses, and collects tax at the
partnership level. The centralized part-
nership audit procedures enacted by the
BBA are found at §§ 6221 through 6241
of the Code. The centralized partnership
audit procedures apply to all partnerships,
unless the partnership makes a valid elec-
tion under § 6221(b) not to have those
procedures apply. Partnerships subject to
the centralized partnership audit regime
are referred to as BBA partnerships.
(2) Section 6031(a) of the Code
requires every partnership to file a return
for each taxable year stating the items
of its gross income and the deductions
allowable by subtitle A of the Code and
such other information as required by
forms and regulations, including informa-
tion about the partners in the partnership.
For a partnership, the return required by
§ 6031(a) is Form 1065, which includes
Schedules K-1. Each Schedule K-1
reports a partner’s name, taxpayer identi-
fication number, and distributive share of
partnership-related items and other infor-
mation related to the partner’s interest in
the partnership. Section 6031(b) requires
that a partnership required to file a return
under § 6031(a) furnish a copy of the
Schedule K-1 to each partner that includes
such information as may be required to
be shown by regulations. In general, §
6031(b) also prohibits BBA partnerships
from amending the information required
to be furnished to their partners after the
due date of the return, unless specifically
provided by the Secretary of the Treasury
or her delegate. This revenue procedure
exercises that authority to allow a BBA
partnership to file an amended partnership
return and furnish amended Schedules
K-1 under the circumstances described in
this revenue procedure.
(3) Section 6222(a) of the Code
requires partners in a BBA partnership to
treat partnership-related items, as defined
in § 6241 and the corresponding regula-
tions, consistently on the partner’s return
with how the BBA partnership treated
the items on its return. This consistency
requirement generally applies to all part-
ners. Treatment with the partnership
return generally requires that a partner in
a BBA partnership file a return consistent
with the information reported to the part-
ner on the partner’s Schedule K-1.
.02 PPP Loan Forgiveness Treatment.
(1) Rev. Proc. 2021-49, released on
November 18, 2021, provides guidance
for partners and partnerships regarding:
(a) allocations under § 704(b) of the Code
of amounts excluded from gross income
(tax-exempt income), as described in sections
2.03 and 2.04 of Rev. Proc. 2021-49, arising
from the forgiveness of Paycheck Protection
Program (PPP) Loans, as described in sec-
tion 2.02 of Rev. Proc. 2021-49, certain grant
proceeds, or the subsidized payment of cer-
tain principal, interest, and fees;
(b) allocations under § 704(b) of the
Code of deductions resulting from expen-
ditures attributable to the use of forgiven
PPP Loans, certain grant proceeds, or the
subsidized payments of certain interest
and fees described in sections 2.03 and
2.04 of Rev. Proc. 2021-49; and
(c) the corresponding adjustments to be
made with respect to the partners’ bases in
their partnership interests under § 705 of
the Code.
(2) Rev. Proc. 2021-48, released on
November 18, 2021, provides that taxpay-
ers may treat tax-exempt income result-
ing from the forgiveness of PPP Loans,
as described in section 2.01 of Rev. Proc.
2021-48, as received or accrued: (1) as,
and to the extent that, the taxpayer pays
or incurs eligible expenses described in
section 2.01(2) of Rev. Proc. 2021-48, (2)
when the taxpayer files an application for
forgiveness of the PPP Loan, or (3) when
the PPP Loan forgiveness is granted.
.03 Amended Returns.
(1) This revenue procedure explains
how a BBA partnership that wishes to
take advantage of Rev. Proc. 2021-48 or
Rev. Proc. 2021-49 may do so without fil-
ing an administrative adjustment request
(AAR) under § 6227 of the Code, which
is the process prescribed for a partnership
to make partnership adjustments to a part-
nership return after it is filed.
(2) This revenue procedure allows BBA
partnerships the option to file an amended
return instead of an AAR, though it does not
prevent a partnership from filing an AAR to
obtain the benefits of Rev. Proc. 2021-48,
Rev. Proc. 2021-49, or any other tax benefits
to which the partnership is entitled. A BBA
partnership that files an amended return
pursuant to this revenue procedure is still
subject to the centralized partnership audit
procedures enacted by the BBA.
SECTION 3. AMENDED RETURN
OPTION PROVIDED TO ELIGIBLE
BBA PARTNERSHIPS FOR
TAXABLE YEARS ENDING AFTER
MARCH 27, 2020
.01 Scope. The filing and furnishing
option provided by section 3.02 of this

Bulletin No. 2021–49 845 December 6, 2021
revenue procedure applies to BBA part-
nerships described in section 3.03 of this
revenue procedure for the taxable years
described in section 3.04 of this revenue
procedure.
.02 Option to file amended return.
BBA partnerships that filed a Form 1065
and furnished all required Schedules K-1
for taxable years ending after March 27,
2020 and did so prior to the issuance of
this revenue procedure may file amended
partnership returns and furnish corre-
sponding amended Schedules K-1 on or
before December 31, 2021. The amended
returns must take into account tax changes
under Rev. Proc. 2021-48 or Rev. Proc.
2021-49, but eligible BBA partnerships
under section 3.03 of this revenue proce-
dure may make any additional changes on
their amended returns.
.03 Eligible BBA partnerships.
(1) The filing and furnishing option
provided in section 3.02 of this revenue
procedure is available only to BBA part-
nerships that filed Forms 1065 and fur-
nished Schedules K-1 for the partnership
for taxable years ending after March 27,
2020 and prior to the issuance of Rev.
Proc. 2021-48 or Rev. Proc. 2021-49.
Additionally, to be eligible for the filing
and furnishing option in section 3.02 of
this revenue procedure, BBA partnerships
must:
(a) Be within the scope of section 3 of
Rev. Proc. 2021-49 and meet the require-
ments of section 4.02(1), 4.02(2), 4.02(3),
or 4.02(4) of Rev. Proc. 2021-49 by filing
an amended Form 1065 in accordance
with procedures in section 6 of Rev. Proc.
2021-49, or
(b) Treat tax-exempt income result-
ing from the forgiveness of a PPP Loan,
at a time described in section 3.01(1), (2)
or (3) of Rev. Proc. 2021-48 by filing an
amended Form 1065 in accordance with
procedures in section 3.02 of Rev. Proc.
2021-48, as applicable.
(2) For purposes of § 6222, the
amended return replaces any prior return
(including any AAR filed by the partner-
ship) for the taxable year for purposes of
determining the partnership’s treatment
of partnership-related items. See section
4.03 of this revenue procedure for a spe-
cial rule regarding partnerships who have
previously filed AARs for an affected tax-
able year.
.04 Eligible taxable years. The filing
and furnishing option provided in this rev-
enue procedure applies to any partnership
taxable year ending after March 27, 2020
and prior to the issuance of Rev. Proc.
2021-48 and Rev. Proc. 2021-49.
SECTION 4. PROCEDURE
.01 Filing requirements. To take
advantage of the option to file an
amended return provided by section 3
of this revenue procedure, a BBA part-
nership must file a Form 1065 (with the
“Amended Return” box checked) and
furnish corresponding amended Sched-
ules K-1 to its partners. The BBA part-
nership must clearly indicate the appli-
cation of this revenue procedure on the
amended return and write “FILED PUR-
SUANT TO REV PROC 2021-50” at the
top of the amended return and attach a
statement with each amended Schedule
K-1 furnished to its partners with the
same notation. The BBA partnership may
file electronically or by mail but filing
electronically may allow for faster pro-
cessing of the amended return. The BBA
partnership filing an amended return pur-
suant to this revenue procedure should
not include any forms that are normally
only filed with an AAR, such as Form
8985, Pass-Through Statement-Trans-
mittal/Partnership Adjustment Tracking
Report (Required Under Sections 6226
and 6227) or Form 8986, Partner’s Share
of Adjustment(s) to Partnership-Related
Item(s) (Required Under Sections 6226
and 6227).
.02 Special rule for BBA partnerships
whose returns are under examination.
If a BBA partnership is currently under
examination for a taxable year ending
after March 27, 2020, and wishes to take
advantage of the option to file an amended
return provided by section 3 of this reve-
nue procedure, the partnership may only
do so if the partnership sends notice in
writing to the revenue agent coordinating
the partnership’s examination that the part-
nership seeks to use the amended return
option described in this revenue procedure
prior to or contemporaneously with filing
the amended return as described in sec-
tion 4.01 of this revenue procedure. The
partnership must also provide the revenue
agent with a copy of the amended return
and amended Schedules K-1 upon filing.
.03 Special rule for BBA partnerships
who have previously filed an AAR. If a
BBA partnership has previously filed an
AAR and wishes to file an amended return
pursuant to this revenue procedure for the
same taxable year, the partnership should
use the items as adjusted in the AAR,
where applicable, in lieu of any report-
ing from the originally filed partnership
return.
.04 Special rule for a pass-through
partner that is a BBA partnership. If a
pass-through partner (as defined in §
301.6241-1(a)(5) of the Procedure and
Administration Regulations) that is also
a BBA partnership receives an amended
Schedule K-1 issued pursuant to this rev-
enue procedure, the pass-through partner
may file an amended return in lieu of filing
an AAR, but only with respect to the items
included on the K-1 it received, using the
procedures described in section 4.01 of
this revenue procedure.
(1) The time limit to file an amended
return, as discussed in sections 3.02 and
5 of this revenue procedure, is not appli-
cable to pass-through partners within the
scope of this section 4.04 of this revenue
procedure.
(2) This section 4.04 also applies
to BBA partnerships that received an
amended Schedule K-1 under any other
previously issued revenue procedure
allowing BBA partnerships to issue
amended Schedules K-1.
SECTION 5. EFFECTIVE DATE
An eligible BBA partnership may apply
this revenue procedure for eligible taxable
years by filing amended Forms 1065,
and furnishing corresponding amended
Schedules K-1, on or before December
31, 2021.
SECTION 6. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Nikki Bossert of the Office
of the Associate Chief Counsel (Procedure
and Administration). For further informa-
tion, please contact 202-317-5185 (not a
toll-free number).

December 6, 2021 846 Bulletin No. 2021–49
Part IV
Announcement 2021-15
Deletions From Cumulative
List of Organizations,
Contributions to Which are
Deductible Under Section
170 of the Code
Table of Contents
The Internal Revenue Service has
revoked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the IRS will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the IRS is not pre-
cluded from disallowing a deduction for
any contributions made after an organiza-
tion ceases to qualify under section 170(c)
(2) if the organization has not timely filed
a suit for declaratory judgment under sec-
tion 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declar-
atory judgment has been timely filed,
contributions from individuals and orga-
nizations described in section 170(c)(2)
that are otherwise allowable will continue
to be deductible. Protection under sec-
tion 7428(c) would begin on December
6, 2021 and would end on the date the
court first determines the organization is
not described in section 170(c)(2) as more
particularly set for in section 7428(c)(1).
For individual contributors, the maximum
deduction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were
the basis for revocation.
NAME OF ORGANIZATIONEffective Date of RevocationLOCATION
726 Members Family Fund5/1/2017Staten Island, NY
Association for Community Enhancement1/1/2017Selma, CA
Blankie Depot1/1/2016Hazlet, NJ
Brainsker Young Mens Benevolent Association1/1/2017Chicago, IL
Communities Doing Good Inc1/1/2017Charlotte, NC
FCPOA DET Key West First Class Petty9/12/2014Key West, FL
Hearts Rescue Sanctuary1/1/2016Franklin, OH
Hopeful Hooves1/1/2017Buckeye, AZ
Hopi Mission School7/1/2013Kykotsmovi, AZ
Motorcycle and Model Railroad Museum1/1/2016Green Bay, WI
Oneculture1/1/2017Indio, CA
PA Charities1/1/2017Fort Pierce, FL
Real Nation Hockey7/1/2015Westminster, CA
Rocking L Equestrians12/7/2015Morris, IL
Teddy Bear Artist Invitational1/1/2016Plattsburgh, NY

Bulletin No. 2021–49 847 December 6, 2021
Notice of Proposed
Rulemaking
Prescription Drug and
Health Care Spending
REG-117575-21
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing.
SUMMARY: Elsewhere in this issue of
the Federal Register, the IRS is issuing
temporary regulations that increase trans-
parency by requiring group health plans
and health insurance issuers in the group
and individual markets to report informa-
tion about prescription drugs and health
care spending to the Department of Health
and Human Services (HHS), the Depart-
ment 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 Person-
nel Management (OPM), the Employee
Benefits Security Administration of DOL,
and the Office of Consumer Information
and Insurance Oversight of HHS are issu-
ing 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. Com-
ments, including mass comment submis-
sions, 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 writ-
ten comments to the following address
ONLY:
Centers for Medicare & Medicaid Ser-
vices,
Department of Health and Human Ser-
vices,
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 follow-
ing address ONLY:
Centers for Medicare & Medicaid Ser-
vices,
Department of Health and Human Ser-
vices,
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 infor-
mation that is included in a comment. All
comments received are posted before the
close of the comment period on the fol-
lowing website as soon as possible after
they have been received: http://regula-
tions.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 tem-
porary regulations published elsewhere
in this issue of the Federal Register, the
Departments are temporarily deferring
enforcement during the first year of appli-
cability.
Background and Regulatory Impact
Analysis
The temporary regulations published
elsewhere in this issue of the Federal
Register add §§ 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 pub-
lished 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 regula-
tions 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 sub-
stantial 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 pro-
posed 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 substan-
tial 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 submit-
ted 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 imple-
ment a reporting requirement for pre-
scription 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 prescrip-
tion 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

December 6, 2021 848 Bulletin No. 2021–49
calendar year. This will allow the Depart-
ments to better understand national pre-
scription drug costs and identify major
drivers of increases in health care spend-
ing, 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 Pro-
file that 99.9 percent of United States busi-
nesses meet its definition of a small busi-
ness.
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 tempo-
rary regulations, published elsewhere in
this issue of the Federal Register, and in
this IRFA, these rules may affect a variety
of different businesses.
Because small entities may comply
with the requirements under the proposed
regulations in different ways, it is dif-
ficult 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 com-
ments 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 prescrip-
tion 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 bene-
fit from the required reporting if plans and
issuers are able to negotiate lower pre-
scription 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 sys-
tems necessary to report the required data.
The maintenance costs for these informa-
tion technology systems may decrease
in succeeding years as plans and issu-
ers (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 tempo-
rary regulations, published elsewhere in
this issue of the Federal Register.
4. Alternatives Considered
As described in more detail in the Reg-
ulatory Impact Analysis of the preamble
to the temporary regulations, published
elsewhere in this issue of the Federal Reg-
ister, 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 Trea-
sury 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 bur-
dens on taxpayers.
5. Duplicative, Overlapping, or
Conflicting Federal Rules
As explained in the preamble to the
temporary regulations, published else-
where in this issue of the Federal Register,
the proposed regulations would not dupli-
cate, overlap, or conflict with any relevant
Federal rules. The Treasury Department
and the IRS invite comment from inter-
ested members of the public about iden-
tifying and avoiding overlapping, duplica-
tive, 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 Organiza-
tions, and Employment Taxes). The pro-
posed regulations, as well as the tempo-
rary 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 pro-
posed to be amended as follows:
PART 54—PENSION EXCISE TAXES
Paragraph 1. The authority citation
for part 54 continues to read as follows:
Authority: 26 U.S.C. 7805
Par. 2. Sections 54.9825–1 through 6
are added to read as follows:
[The text of proposed § 54.9825–1 is
the same as the text of § 54.9825–1T pub-
lished elsewhere in this issue of the Fed-
eral Register].
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.

Bulletin No. 2021–49 849 December 6, 2021
[The text of proposed § 54.9825–2 is
the same as the text of § 54.9825–2T pub-
lished elsewhere in this issue of the Fed-
eral Register].
[The text of proposed § 54.9825–3 is
the same as the text of § 54.9825–3T pub-
lished elsewhere in this issue of the Fed-
eral Register].
[The text of proposed § 54.9825–4 is
the same as the text of § 54.9825–4T pub-
lished elsewhere in this issue of the Fed-
eral Register].
[The text of proposed § 54.9825–5 is
the same as the text of § 54.9825–5T pub-
lished elsewhere in this issue of the Fed-
eral Register].
[The text of proposed § 54.9825–6 is
the same as the text of § 54.9825–6T pub-
lished elsewhere in this issue of the Fed-
eral Register].
Douglas W. O’Donnell
Deputy Commissioner for Services
and Enforcement
(Filed by the Office of the Federal Register on
November 17, 2021, 4:15 p.m., and published in the
issue of the Federal Register for November 23, 2021,
86 F.R. 66495)

Bulletin No. 2021–49 i December 6, 2021
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use
and formerly used will appear in material
published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.
—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

December 6, 2021 ii Bulletin No. 2021–49
Numerical Finding List
1
Bulletin 2021–49
Announcements:
2021-12, 2021-31 I.R.B. 267
2021-13, 2021-33 I.R.B. 314
2021-14, 2021-33 I.R.B. 315
2021-15, 2021-49 I.R.B. 846
AOD:
2021-4, 2021-47 I.R.B. 725
Notices:
2021-39, 2021-27 I.R.B. 3
2021-40, 2021-28 I.R.B. 15
2021-41, 2021-29 I.R.B. 17
2021-42, 2021-29 I.R.B. 19
2021-38, 2021-30 I.R.B. 155
2021-44, 2021-31 I.R.B. 166
2021-45, 2021-31 I.R.B. 170
2021-47, 2021-32 I.R.B. 269
2021-46, 2021-33 I.R.B. 303
2021-48, 2021-33 I.R.B. 305
2021-49, 2021-34 I.R.B. 316
2021-43, 2021-35 I.R.B. 332
2021-50, 2021-35 I.R.B. 333
2021-51, 2021-36 I.R.B. 361
2021-52, 2021-38 I.R.B. 381
2021-53, 2021-39 I.R.B. 438
2021-54, 2021-41 I.R.B. 457
2021-55, 2021-41 I.R.B. 461
2021-58, 2021-43 I.R.B. 660
2021-59, 2021-43 I.R.B. 664
2021-57, 2021-44 I.R.B. 706
2021-56, 2021-45 I.R.B. 716
2021-60, 2021-45 I.R.B. 719
2021-35, 2021-46 I.R.B. 723
2021-61, 2021-47 I.R.B. 738
2021-62, 2021-49 I.R.B. 831
2021-63, 2021-49 I.R.B. 835
Proposed Regulations:
REG-107705-21, 2021-30 I.R.B. 162
REG-102951-16, 2021-32 I.R.B. 272
REG-109077-21, 2021-39 I.R.B. 445
REG-100718-21, 2021-42 I.R.B. 653
REG-107707-21, 2021-42 I.R.B. 657
REG 117575-21, 2021-49 I.R.B. 847
Revenue Procedures:
2021-28, 2021-27 I.R.B. 5
2021-29, 2021-27 I.R.B. 12
2021-24, 2021-29 I.R.B. 19
2021-14, 2021-30 I.R.B. 158
Revenue Procedures:—Continued
2021-30, 2021-31 I.R.B. 172
2021-31, 2021-33 I.R.B. 324
2021-33, 2021-34 I.R.B. 327
2021-34, 2021-35 I.R.B. 337
2021-35, 2021-35 I.R.B. 355
2021-36, 2021-35 I.R.B. 357
2021-37, 2021-38 I.R.B. 385
2021-38, 2021-38 I.R.B. 425
2021-39, 2021-38 I.R.B. 426
2021-40, 2021-38 I.R.B. 426
2021-41, 2021-39 I.R.B. 443
2021-32, 2021-42 I.R.B. 465
2021-44, 2021-42 I.R.B. 469
2021-42, 2021-43 I.R.B. 666
2021-46, 2021-47 I.R.B. 740
2021-45, 2021-48 I.R.B. 764
2021-47, 2021-48 I.R.B. 775
2021-48, 2021-49 I.R.B. 835
2021-49, 2021-49 I.R.B. 838
2021-50, 2021-49 I.R.B. 844
Revenue Rulings:
2021-12, 2021-27 I.R.B. 1
2021-13, 2021-30 I.R.B. 152
2021-14, 2021-31 I.R.B. 164
2021-19, 2021-42 I.R.B. 470
2021-15, 2021-35 I.R.B. 331
2021-16, 2021-36 I.R.B. 359
2021-17, 2021-37 I.R.B. 362
2021-18, 2021-40 I.R.B. 447
2021-21, 2021-44 I.R.B. 704
2021-22, 2021-47 I.R.B. 726
2021-23, 2021-49 I.R.B. 779
Treasury Decisions:
9951, 2021-30 I.R.B. 25
9952, 2021-39 I.R.B. 428
9953, 2021-39 I.R.B. 430
9956, 2021-41 I.R.B. 449
9957, 2021-41 I.R.B. 452
9955, 2021-42 I.R.B. 471
9958, 2021-49 I.R.B. 781
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin
2021–52, dated December 27, 2021.

Bulletin No. 2021–49 iii December 6, 2021
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2021–49
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin
2021–52, dated December 27, 2021.

Internal Revenue Service
Washington, DC 20224
Official Business
Penalty for Private Use, $300
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