In February, the Centers for Medicare and Medicaid Services (CMS) introduced a proposed rule aimed at enacting critical healthcare measures from the recent government funding package. These measures focus on enhancing the precision of provider directories for Medicare Advantage plans and overhauling the payment structure for pharmacy benefit managers.
The proposed rule would require Medicare Advantage plans to check their provider directories for accuracy and update them at least every 90 days. Seniors who receive care from an out-of-network provider due to an inaccurate directory would not have to pay more than their in-network cost-sharing amount.
The rule also limits pharmacy benefit managers (PBMs) to flat service fees that cannot be based on factors like the price of a drug or its placement on a formulary. PBMs would be required to report information about their compensation and cost performance to plan sponsors and the CMS on an annual basis.
Medicare Advantage Directory Changes
The Medicare Advantage directory changes aim to provide the 36 million seniors in the privatized Medicare program with more reliable information about covered doctors and hospitals. A study from 2023 found that upwards of 80% of provider listings contained inconsistencies.
A CMS review of directories from 2018 found inaccuracies ranging from 5% to 93% of all listings, depending on the plan examined. The CMS finalized a rule last fall requiring Medicare Advantage plans to update their provider directories within 30 days of learning about changes and attest at least once a year that directories are accurate.
The new rule would heighten those standards, requiring rolling reviews and more frequent attestation. Medicare Advantage plans would also have to report an accuracy score to the CMS and publicly post it on their directories.
Pharmacy Benefit Manager Reforms
The rule would establish transparency and compensation requirements for PBMs, which have been criticized for opaque business arrangements with drugmakers and pharmacies. The reforms would require PBMs to pass through any rebates on drugs to the Part D plan sponsor and share an annual report on spending and formulary decisions with their clients and the government.
PBMs would have to disclose details on what drugs were dispensed, where, and what revenue the PBM retained from a transaction. The CMS said it anticipates releasing another proposed rule of policy and technical changes for Medicare Advantage and Part D later this fall.
The proposed rule would also implement a section of the funding package lowering co-pays on generic drugs for low-income seniors dually eligible for Medicare and Medicaid from $1 to $0. The heightened provider directory verification and maintenance standards, annual accuracy analysis, and cost-sharing protections for seniors would go into effect in 2028.
Medicare Advantage carriers would have until 2029 to publicly display accuracy scores in their provider lists. The data collected from Medicare Advantage organizations under the proposed rule could ultimately feed into the CMS’ larger effort to develop a national provider directory, a centralized repository that will include all provider directory information for all insurers in the U.S.
CMS Administrator Dr. Mehmet Oz stated that the CMS has been working to improve data connectivity and accuracy in provider directories across the healthcare system. Dr. Oz added that the proposals will give seniors more reliable information, stronger financial protections, and greater confidence in Medicare.
