CMS moves to tighten Medicare Advantage directories and PBM payment rules
The Centers for Medicare & Medicaid Services is pressing ahead with a rule designed to correct two long-running failures in the Medicare marketplace: unreliable Medicare Advantage provider directories and opaque PBM payment arrangements. The proposal would force MA plans to verify directory accuracy at least every 90 days, update listings when errors surface, and shield beneficiaries from higher costs when an inaccurate directory sends them to an out-of-network clinician. It also would reshape how pharmacy benefit managers are paid in Medicare Part D, tying compensation to fair market value rather than drug price, rebates, or formulary placement.
The timing matters because the rule translates provisions from the Consolidation Appropriations Act of 2026, which became law in February after ending a short government shutdown. CMS is using the proposal to convert legislative language into operational requirements for insurers and pharmacy middlemen. The result is a more aggressive federal attempt to make managed Medicare more legible to older adults while reducing financial incentives that can distort drug spending.
Directory errors are becoming a coverage problem, not a clerical nuisance
Directory inaccuracy has become a practical obstacle for the roughly 36 million seniors enrolled in Medicare Advantage. When a beneficiary looks for a cardiologist, oncologist, or other specialist and the listed clinician is no longer in network, the error can shift the patient into a higher-cost setting or delay care altogether. CMS is responding to that risk by requiring plans to confirm provider-directory accuracy every 90 days and revise records when discrepancies are found.
A single sentence captures the stakes: inaccurate directories can change what a senior pays at the point of care. Under the proposal, beneficiaries who rely on a faulty directory and end up with an out-of-network provider would not be charged more than their in-network cost-sharing amount. That protection turns directory maintenance into a direct consumer safeguard rather than an administrative benchmark.
The agency is also asking plans to analyze accuracy on an annual basis, report an accuracy score to CMS, and post that score publicly in their directories. Public reporting changes the incentives. Once accuracy becomes visible, a plan’s network management can no longer hide behind vague assurances that its files are current. The proposal would also require plans to maintain a rolling review process, a step that moves directory stewardship closer to continuous quality control than annual compliance review.
The backdrop is ugly. A 2023 study found inconsistencies in upwards of 80% of provider listings, and CMS’s own 2018 review of Medicare Advantage directories found inaccuracies ranging from 5% to 93% of all listings depending on the plan examined. Those numbers explain why the federal government is pushing for a national provider directory, a centralized repository intended to aggregate provider-directory data across insurers. Data collected from MA plans under this rule could feed that larger infrastructure, giving CMS a foundation for a systemwide directory that is easier to search and harder to manipulate.
PBM compensation would be tied to service value instead of drug economics
CMS is also targeting pharmacy benefit managers, whose role in the drug supply chain has drawn repeated criticism because their business practices are difficult for patients, employers, and even plan sponsors to follow. The proposal would limit PBM compensation in Medicare Part D to flat service fees that cannot vary based on the price of a drug, the rebate it generates, or where it sits on a formulary. In plain terms, the agency is trying to separate payment for administrative work from the financial upside that can come from steering use toward more lucrative products.
The proposal goes further by requiring PBMs to pass through any rebates on drugs to the Part D plan sponsor. That provision is designed to reduce the incentive to retain savings inside the middle layer of the pharmacy supply chain instead of letting them flow to the plan or the beneficiary. CMS is also requiring annual reporting on spending and formulary decisions, including what drugs were dispensed, where they were dispensed, and how much revenue the PBM retained from the transaction.
A second sentence can stand alone here: opacity is being treated as a reimbursement problem.
That framing is important because Medicare Part D pricing depends on a chain of negotiations that can obscure the real source of savings or markups. By demanding fair market value for PBM services and detailed annual disclosures to both plan sponsors and CMS, the rule tries to make compensation legible enough for oversight. The intent is not to abolish PBMs, but to narrow the gap between administrative function and economic self-dealing.
Low-income seniors would see a zero-dollar generic copay, but the rollout is delayed
The proposal also implements a provision from the February funding package that lowers generic-drug copays for low-income seniors dually eligible for Medicare and Medicaid from $1 to $0. For beneficiaries who live on fixed incomes and often manage multiple chronic conditions, even a nominal copay can be enough to disrupt adherence. Removing that charge may not solve every access problem, but it eliminates one small but persistent barrier at the pharmacy counter.
Most of the directory and PBM provisions would not take effect immediately. CMS says the heightened provider-directory verification standards, annual accuracy analysis, and cost-sharing protections would begin in 2028. MA carriers would have until 2029 to publicly display accuracy scores in their directories. The lag between proposal and implementation gives plans time to rework internal data feeds, but it also means patients will keep navigating the current system for several more years.
CMS says it expects to issue another proposed rule later this fall covering additional Medicare Advantage and Part D policy and technical changes. For now, the proposal signals a broader federal effort to make managed Medicare less opaque, more auditable, and more accountable when directory failures or payment structures put seniors at risk.