A PBM Report Is Not a PBM Review
A pharmacy-benefit report can be thick, polished, and full of percentages. It can still leave a plan sponsor unable to answer the basic business question: what did our plan pay, who was paid from that money, and what changed for the people using the benefit?
The source idea: plan sponsors need clearer PBM economics
On October 16, CMS proposed new transparency and reporting requirements for pharmacy benefit managers in Medicare Advantage and Part D. The proposal would require annual reporting on compensation and cost performance, and it would tie certain PBM payments to fair-market-value services rather than drug cost. This is a proposed rule for a different market; it does not rewrite a self-funded employer’s ERISA plan or pharmacy contract.
Still, the business idea travels. A plan sponsor cannot judge pharmacy performance from a rebate total or a trend line alone. Those may be useful data points, but neither identifies every payment stream, every affiliated party, or the service result the plan actually purchased.
Start with money, then connect it to service
For a self-funded plan, a useful PBM review separates the dollars. It should show what the plan paid pharmacies, what it paid the PBM for administration and clinical programs, what manufacturers paid into the arrangement, and where any retained fees or affiliate revenue sit. The contract and reporting definitions matter as much as the totals. A number called a “rebate” does not by itself tell a CFO whether it was fully passed through, when it was received, or whether an offsetting fee was charged elsewhere.
Then connect the money to the operating result. Did member access improve? Were specialty prescriptions handled safely and promptly? Did the formulary or utilization-management rules create avoidable disruption? A lower line item that simply moves cost, delays care, or creates a manual workload for HR is not automatically better purchasing.
Ask for a report that can support a decision
Paul H. Flowers Jr. at Superior Insurance Advisors and Paul.Health helps employers turn vendor reports into questions leadership can actually use. The goal is not to accuse a PBM or to treat every revenue stream as improper. It is to make the economics and responsibilities clear enough that the plan committee can decide whether the current arrangement is working.
That means comparing the report to the contract, not just last year’s report to this year’s. It also means naming an owner who can obtain explanations, test the definitions, and carry unresolved questions into the next negotiation.
Source: Centers for Medicare & Medicaid Services, “CMS Proposes Reforms to Strengthen Transparency and Affordability in Medicare Advantage and Part D”, October 16, 2026. The proposal discussed applies to Medicare Advantage and Part D, not directly to self-funded employer plans. This article is original educational commentary, not legal, tax, investment, or fiduciary advice. Plan documents, contracts, and applicable law govern.
Five questions for the next pharmacy review
- Can we reconcile every material payment connected to our pharmacy benefit?
- Which amounts are passed through, retained, paid later, or paid to an affiliate?
- Do our contract definitions match the categories used in the report?
- What service, access, and clinical outcomes sit behind the financial numbers?
- Who owns the follow-up before our next renewal or amendment?
Before accepting the next PBM report, could your leadership team use it to explain both the money and the member experience in one clear meeting?