CMS Moves to Tackle Medicare Advantage Directory Errors and PBM Pricing Practices
The Centers for Medicare & Medicaid Services has begun putting congressional directives into regulatory form, with a proposed rule aimed at two long-standing pressure points in Medicare coverage: inaccurate Medicare Advantage provider directories and opaque pharmacy benefit manager compensation practices. The package also codifies a small but clinically meaningful reduction in generic drug copayments for certain low-income dual eligibles.
The policy logic is straightforward. When a plan directory lists a clinician as in-network but the patient later learns otherwise, the consequences are immediate: delayed care, surprise bills, cancelled appointments, and avoidable churn across already fragmented specialties. For older adults and people with multiple chronic illnesses, even one broken referral can slow diagnosis or interrupt treatment continuity. CMS is trying to reduce those failures before they reach the bedside.
Directory Accuracy Checks Would Become a Recurring Plan Obligation
Under the proposed framework, Medicare Advantage plans would have to verify and update provider directories at least once every 90 days. CMS would then require plan directories to display directory accuracy scores prominently, while also publishing those results in a machine-readable format so beneficiaries can compare plan reliability when choosing coverage.
The agency is also proposing a direct financial safeguard. If a directory incorrectly lists a provider as in-network, Medicare Advantage enrollees would be limited to in-network cost sharing when they seek care from that provider. In practical terms, the patient would not be penalized for trusting the plan’s own directory. This is a direct response to the kind of “ghost network” problem that can leave enrollees believing they have access to care that does not really exist.
The policy arrives with a delayed implementation timeline. The directory review requirements and cost-sharing protections would take effect in the 2028 contract year, while the publication of accuracy scores is scheduled for contract year 2029. That lag gives plans time to clean up their data infrastructure, but it also means beneficiaries will not see the full consumer-facing transparency layer immediately.
Mehmet Oz, M.D., CMS administrator, framed the proposal as part of a broader effort to improve data connectivity and accuracy across the healthcare system. The clinical relevance extends well beyond paperwork. Directory errors can force patients to restart searches for specialists, complicate follow-up after hospital discharge, and disrupt access to high-demand services such as behavioral health, cardiology, oncology, and physical therapy. In markets where access is already tight, the error rate itself becomes a determinant of care.
A single misclassified listing can become a financial event.
PBM Compensation Rules Target List-Price Ties in Part D
CMS paired the provider directory proposal with a separate effort to rein in how Part D pharmacy benefit managers are paid. The proposed rule would restrict PBMs from tying compensation to the list price of drugs, shifting the payment framework toward fair market value for services rather than drug costs. CMS also outlined broader transparency, reporting, and disclosure requirements for PBMs.
That change reflects a familiar conflict in drug benefit design. When compensation rises with list price, the incentive structure can drift away from cost containment and toward higher spending on more expensive products, even when lower-cost alternatives are available. By decoupling pay from the price of the drug, CMS is trying to narrow the gap between administrative compensation and therapeutic value. The policy does not by itself solve drug affordability, but it does target one of the financial channels that can inflate Part D spending.
CMS said it does not yet have enough data on PBM contract structures and fee structures to estimate the financial effects of the proposal. That uncertainty is itself revealing. The internal mechanics of PBM contracting remain opaque enough that even the regulator cannot confidently project the budgetary impact of changing compensation rules.
Generic Copay Relief for Dual Eligibles Extends the Affordability Agenda
The proposed rule also codifies a reduction in generic drug copayments for dual eligibles at or below the Federal Poverty Level, lowering the maximum from $1 to $0 beginning Jan. 1. The financial difference is small on paper, but the behavioral consequences can still be meaningful. Even a nominal copayment can become a barrier when patients are choosing between prescriptions and basic household needs, especially for people managing diabetes, hypertension, heart failure, or psychiatric illness on multiple medications.
CMS said the Medicare program would absorb the cost of the copayment change. The agency has previously linked the removal of small price barriers with better medication adherence, and this provision follows that same logic. A zero-dollar copay does not guarantee adherence, but it removes one more reason for a patient to skip a refill at the pharmacy counter.
Administrative Burden Will Rise as Oversight Tightens
CMS acknowledged that the directory requirements will increase administrative and compliance costs for Medicare Advantage organizations. Plans will need more frequent verification cycles, better data reconciliation, and stronger internal controls to keep directories current enough to avoid cost-sharing disputes. On the PBM side, new reporting and disclosure obligations will likely force contractual revisions and more granular documentation of fee arrangements.
The proposal is anchored in the Consolidated Appropriations Act of 2026, signed into law in February after congressional negotiations that also preserved several telehealth and hospital-at-home extenders and extended support for rural hospitals and facilities serving high proportions of government-insured patients. The CMS rule is the regulatory expression of that statute, with the agency now translating congressional language into operational obligations for plans and pharmacy intermediaries.
For beneficiaries, the practical stakes are concrete. A more accurate directory should reduce the chance of surprise out-of-network charges. Stronger PBM transparency could expose fee structures that have long been hidden from patients and employers. And a zero-dollar generic copay may help dual eligibles stay on chronic therapy when every dollar matters.
What remains unresolved is how aggressively plans and PBMs will adapt once the rule is finalized, and whether the reporting framework will be detailed enough to measure real-world access improvements rather than simply shifting administrative burden. The proposal creates a clearer standard for accountability, but the quality of the final data will determine whether patients actually see fewer billing shocks and fewer gaps in care.