CMS is proposing reforms to address longstanding problems with Medicare Advantage and pharmacy benefit managers
The Consolidated Appropriations Act of 2026 included several provisions that could meaningfully improve transparency and accountability in Medicare Advantage (MA) and Medicare Part D. The Centers for Medicare and Medicaid Services (CMS) has now proposed regulations to implement them. I support these changes. They address problems that have persisted for far too long, and they reinforce a principle I have argued repeatedly: healthcare organizations should be accountable for the value they deliver to members.
MA must get Its networks right
I have long supported MA. It offers millions of seniors coordinated care, additional benefits, and quality alternatives to traditional Medicare. But supporting MA does not mean ignoring its shortcomings.
Provider directories and network accuracy have been problems for decades. Members choose plans based on whether their physicians, hospitals, and other providers participate. When that information is wrong, the consequences are not merely administrative. Patients can lose access to trusted physicians, face unexpected costs, or discover that an appointment they scheduled with an in-network provider is no longer covered at the expected cost-sharing level.
CMS is proposing more frequent provider directory verification, annual accuracy analyses, public reporting of directory accuracy scores, and financial protections for members who rely on inaccurate information. Beginning with the applicable 2028 and 2029 contract-year requirements, plans would face more meaningful accountability for the information they provide.
This is not an unreasonable burden. If an MA organization markets a network and asks beneficiaries to choose its product, it has a responsibility to make sure that network is real and accurately represented. Plans should not be able to advertise broad access while leaving members to discover the limitations after enrollment.
The proposed protections for members who schedule care with a listed in-network provider are particularly important. Patients should not bear the financial consequences of inaccurate information supplied by their health plan.
Of course, maintaining accurate directories requires cooperation from providers, too. Physicians move, practices close, and contracts change. Plans cannot independently prevent every discrepancy. But they can establish better verification processes, act quickly when changes occur, and take responsibility for the information under their control.
The objective should not be to punish MA plans for every mistake. It should be to make accuracy a basic operating requirement. Better networks and more reliable information benefit beneficiaries, responsible plans and the long-term credibility of the MA program.
PBM reform is long overdue
I have also argued that pharmacy benefit manager (PBM) reform is long overdue. The new Part D requirements represent a meaningful start, particularly the move toward compensation based on fair-market-value service fees rather than drug prices or rebates.
The fundamental problem is that PBM compensation arrangements can create incentives that do not necessarily align with the interests of patients or the organizations paying the bills. When compensation is linked to drug prices or rebate arrangements, the system can reward higher-cost products rather than the most clinically appropriate, cost-effective alternatives.
That does not mean every PBM arrangement produces this result or that brand-name drugs are never the right choice. Some branded medications provide important clinical benefits. The issue is whether the financial incentives encourage decisions based on clinical value and total cost—or on the economics of the transaction.
A flat-dollar, itemized fee for legitimate PBM services is a reasonable approach. PBMs perform important functions, including claims administration, pharmacy network management and formulary support. They should be paid fairly for those services. But compensation should be transparent and should not depend on incentives that may encourage higher drug spending.
The Part D provisions also establish reporting and disclosure requirements, provide plan sponsors with audit rights and address the treatment of rebates and other compensation. These are important steps toward giving Part D sponsors better visibility into the arrangements they are paying for.
Still, I believe more needs to be done. Transparency is valuable, but disclosure alone does not guarantee better pricing or better decisions. Plan sponsors need the ability to understand what they are paying, evaluate PBM performance and determine whether the arrangement actually reduces total pharmacy costs.
PBMs have had too much influence over drug purchasing and benefit design without sufficient visibility into how their financial arrangements affect employers, health plans and patients. Additional reforms should focus on aligning incentives, strengthening independent oversight, and ensuring that savings are passed through rather than obscured by complicated contractual arrangements.
We cannot ignore vertically integrated insurers
The financial relationships inside vertically integrated healthcare companies should also be a topic of reform. Today, some large insurers operate businesses spanning health insurance, PBMs, specialty pharmacies, physician groups, care delivery organizations, data services, and other healthcare functions. Integration can have legitimate advantages. Coordinating care, sharing information and reducing administrative duplication can improve outcomes and efficiency.
But integration also creates potential conflicts of interest that cannot simply be ignored. When a health plan pays an affiliated PBM, which directs business to an affiliated pharmacy, or when an insurer contracts with an affiliated provider organization, how do we know the transactions reflect fair market value? How can an employer or plan sponsor determine whether it is receiving the best available price? Are clinical and formulary decisions being made in the patient’s best interest, or could the financial interests of another subsidiary influence the decision?
The concern is that profits and costs can move between related entities in ways that make it difficult to understand the true economics of the healthcare system. A health plan might appear to have lower margins while an affiliated service business generates substantial profits. A PBM might report one set of economics while its specialty pharmacy or other related businesses benefit from the broader arrangement. Without adequate transparency, employers, regulators and consumers may struggle to determine where the money is going and whether the arrangement delivers genuine savings.
We need stronger disclosure of material related-party transactions, meaningful oversight of conflicts of interest, and independent assessments of whether affiliated arrangements offer fair value. Regulators should also examine whether vertical integration creates incentives that undermine competition or steer patients toward affiliated businesses without a clear clinical or economic justification.
Vertical integration should not be prohibited but we need to ensure that integration produces demonstrable benefits rather than merely creating additional opportunities to shift revenue within a corporate family.
Thus, the proposed rule should be viewed as a beginning, not an endpoint. We need healthcare organizations to compete on quality, access, affordability and value—not on their ability to exploit information gaps or complicated financial arrangements.
Transparency, fair compensation and accountability should be standard expectations throughout healthcare. That is not anti-business. It is what a well-functioning healthcare market should require.
#healthcare #manda #healthplans #pbms #providers
— Marc S. Ryan
