CMS Moves to Tighten Medicare Advantage Directory Accuracy and PBM Oversight
CMS has proposed a far-reaching rule aimed at two persistent pain points in Medicare: unreliable Medicare Advantage provider directories and opaque pharmacy benefit manager compensation. The proposal would translate provisions from February’s government funding package into federal policy, with new requirements for plan directory maintenance, beneficiary cost protection, and PBM reporting. The practical effect is straightforward. Seniors should have a better chance of finding a covered clinician, and the drug middlemen that shape Part D pricing would face sharper scrutiny over how they make money.
For Medicare Advantage members, inaccurate directories are more than an administrative nuisance. A beneficiary may spend time choosing a plan based on a listed specialist or hospital, only to discover at the point of care that the provider is out of network or not accepting new patients. CMS is trying to close that gap by requiring MA plans to verify directory accuracy at least every 90 days and update entries when they are wrong. Plans would also have to keep a rolling eye on changes rather than relying on a once-a-year certification that can age quickly in a market where physician affiliations and site locations change often.
The rule takes aim at a problem that has long been visible in the data. One 2023 study found inconsistencies in more than 80% of provider listings, and a CMS review of Medicare Advantage directories in 2018 found error rates ranging from 5% to 93% depending on the plan examined. Those numbers help explain why directory cleanup has become a policy priority. A provider directory is supposed to function as a live map of the network, but when the map is wrong, the beneficiary pays the cost in delayed care, confusion, and avoidable administrative appeals.
CMS is also adding a consumer safeguard for situations where directory errors lead people to seek care outside their network. Under the proposal, seniors who land with an out-of-network provider because the plan directory was inaccurate would not be charged more than their in-network cost sharing amount. That protection matters because directory errors do not always announce themselves before care is delivered. When a beneficiary relies on plan information that turns out to be false, the financial penalty can be immediate and substantial. The agency is signaling that the burden should not fall on older adults who did what the system told them to do.
The proposed rule goes further by requiring plans to develop and report an accuracy score to CMS and to post that score publicly in their directories. This adds a new layer of accountability. A numerical score can turn directory maintenance from an internal compliance task into a visible performance metric that plans, regulators, and beneficiaries can compare. CMS said those heightened verification standards, annual accuracy analysis requirements, and cost-sharing protections would take effect in 2028, while public display of accuracy scores would not be required until 2029.
A second pillar of the proposal targets pharmacy benefit managers, a sector long criticized for compensation structures that can reward higher drug prices rather than lower ones. The rule would limit PBMs to flat service fees that cannot be tied to drug price, rebate volume, or formulary placement. It also would require drug rebates to be passed through to the Part D plan sponsor. In functional terms, the rule is trying to separate administrative payment from drug economics so the middleman is not paid more when the drug system itself becomes more expensive.
PBMs would face a new annual reporting obligation as well. They would have to provide plan sponsors and CMS with information about compensation and cost performance, including what drugs were dispensed, where they were dispensed, and how much revenue the PBM retained from a transaction. The transparency element is central. PBM contracts often sit deep in the supply chain, far from the patient’s view, yet their pricing and formulary decisions can affect out-of-pocket costs, pharmacy access, and the final net price paid by plans. Requiring annual disclosure makes those decisions less hidden and creates a paper trail for oversight.
The proposal also implements another part of the funding package: lower copays for generic drugs for low-income seniors who are dually eligible for Medicare and Medicaid. Their copay would fall from $1 to $0. It is a small dollar change on paper, but in a population with high medication burden, even modest cost sharing can influence whether prescriptions are filled on time and continued consistently. For patients managing multiple chronic conditions, eliminating a copay can remove one more point of friction between a prescription and the pharmacy counter.
CMS framed the proposal as part of a broader push toward more connected and accurate provider data. The agency has been working on a national provider directory, a centralized repository intended to hold provider directory information across insurers in the U.S. The data gathered from Medicare Advantage plans under this rule could eventually feed into that system. In that sense, the proposal is not only about cleaning up plan directories; it is also about building the infrastructure for a more standardized national dataset.
CMS Administrator Dr. Mehmet Oz said the agency has been working to improve data connectivity and accuracy in provider directories across the healthcare system, and that the changes are designed to give seniors more reliable information, stronger financial protections, and greater confidence in Medicare. The next step is another proposed rule on policy and technical changes for Medicare Advantage and Part D later this fall. The details in that follow-on package will matter, but this first proposal already sketches a sharp regulatory line: directories must be current, and PBM compensation must be easier to see.
The unanswered issue is execution. Directory rules can be written tightly and still fail if plans do not maintain data with enough discipline or if enforcement lags behind enrollment season. PBM transparency can expose incentives, but the effect on drug prices and plan behavior will depend on how firmly CMS polices flat-fee requirements, rebate treatment, and reporting quality. The proposed rule gives the agency a clearer framework, but its real test will be whether older adults experience fewer network surprises and whether Part D pricing becomes easier to audit rather than merely easier to describe.