CMS Proposes Sweeping Medicare Reforms to Improve Provider Directory Accuracy, PBM Transparency and Prescription Drug Affordability

Why CMS Is Proposing These Changes

Medicare beneficiaries often rely on online insurance directories to identify Physicians / MD-DO, medical specialists, hospitals, pharmacies and other healthcare professionals who participate in their health plans. These directories can influence decisions about where patients seek treatment, whether they schedule specialist appointments and how much they expect to pay for covered services.

When directory information is inaccurate, patients may encounter several problems. A physician or Nurse Practitioners (NP) listed as in-network may have left the plan, a practice may no longer accept a particular insurance product, or a provider's contact information may be outdated. In some circumstances, patients discover these discrepancies only after scheduling an appointment or receiving care.

Such errors can create administrative burdens for healthcare practices, disrupt continuity of care and expose beneficiaries to unexpected out-of-network expenses.

Prescription drug benefit management presents a different but related transparency challenge. PBMs negotiate and administer prescription drug benefits on behalf of health plans and other clients. Their contractual arrangements can influence pharmacy reimbursement, formulary decisions and the financial relationships between drug manufacturers, insurers and pharmacies.

CMS's proposal seeks to address these issues through stronger verification procedures, additional reporting obligations and compensation standards intended to make financial arrangements easier to evaluate.

Together, the proposed measures reflect an effort to improve the information available to beneficiaries and plan sponsors while encouraging more consistent oversight of healthcare costs.

Medicare Advantage Plans Could Face Stricter Provider Directory Requirements

One of the proposal's central provisions would require Medicare Advantage organizations to verify and update provider directory information at least once every 90 days.

This would establish a recurring verification cycle intended to reduce the time inaccurate information remains available to beneficiaries. Plans would need processes for identifying outdated listings, confirming provider participation and updating relevant records.

More frequent verification and maintenance

Provider directories contain information that can change frequently, including practice locations, telephone numbers, specialty designations, accepting-patient status and participation in hybrid clinic care or Telehealth / Remote / Virtual Jobs across specific insurance networks.

A directory may become inaccurate when a physician changes employers, a medical practice relocates, a hospital updates its contracting arrangements or an insurer modifies its provider network. Without effective communication between providers and health plans, these changes may not be reflected promptly in public-facing directories.

The proposed 90-day verification requirement would encourage Medicare Advantage organizations to establish more systematic procedures for reviewing this information.

Depending on how plans implement the requirements, operational changes could include more frequent outreach to provider offices, improved data reconciliation, automated verification processes and clearer internal responsibility for directory maintenance.

For healthcare providers, these developments could increase the importance of responding promptly to insurer requests and ensuring that network participation details remain consistent across contracting, credentialing and administrative systems.

Public reporting of directory accuracy scores

CMS also proposes requiring Medicare Advantage organizations to report provider directory accuracy scores and make those scores publicly available.

Public reporting could give beneficiaries another source of information when comparing health plans. Instead of relying exclusively on a plan's network size or premium, consumers could potentially consider how accurately the plan represents its participating providers.

For healthcare organizations, accuracy scores could become an additional indicator of the effectiveness of a plan's network administration.

Plans with inaccurate directories could face greater scrutiny from beneficiaries, providers, regulators and other stakeholders. Conversely, reliable directory information could help strengthen consumer confidence and reduce unnecessary administrative friction.

The precise methodology used to calculate, compare and display these scores will be important. Meaningful comparisons depend on consistent measurement standards, clear definitions and appropriate treatment of differences among provider networks.

Financial protection when directory information is wrong

Another important element of the proposal would protect beneficiaries in qualifying circumstances when they receive out-of-network services because they relied on inaccurate provider directory information.

Under the proposed protection, affected beneficiaries would pay no more than the applicable in-network cost-sharing amount.

This distinction matters because patients generally have limited ability to independently verify every detail of an insurance network. They may reasonably rely on information published by their health plan when choosing a physician or scheduling treatment.

If the proposal is finalized as described, qualifying directory errors could have financial consequences for health plans rather than leaving patients responsible for unexpected out-of-network cost-sharing amounts.

The practical application of this protection will depend on the final eligibility criteria, documentation requirements and procedures for determining whether a beneficiary reasonably relied on incorrect information.

Patients and providers should not assume that every out-of-network claim would automatically qualify. The proposed protection is directed at qualifying circumstances associated with inaccurate directories.

Implications for physicians, hospitals and medical practices

The proposed requirements could affect provider organizations even though the principal verification and reporting obligations would fall on Medicare Advantage organizations.

Medical practices may need to review how they communicate changes in provider status, practice locations, specialty information and insurance participation. Hospitals and larger health systems may also need to coordinate information across multiple facilities and affiliated physician groups.

Administrative teams responsible for payer enrollment, credentialing, contracting and revenue cycle management could play an important role in maintaining accurate information.

For practices operating across multiple locations or participating in numerous insurance networks, the challenge may be ensuring that every relevant plan receives consistent updates.

More reliable directories could ultimately benefit providers by reducing avoidable scheduling problems, insurance disputes and patient complaints. However, these benefits would depend on effective coordination between plans and healthcare organizations.

CMS Proposes Greater Transparency in Pharmacy Benefit Manager Compensation

The proposal also addresses prescription drug benefit management under Medicare Part D, focusing on how pharmacy benefit managers are compensated and how their financial arrangements are reported.

PBMs operate between health plans, pharmaceutical manufacturers and pharmacies. Their responsibilities can include negotiating drug-related financial arrangements, managing formularies, administering prescription benefits and determining certain conditions under which medications are covered.

Because PBMs occupy an intermediary position, the details of their compensation arrangements can be difficult for outside parties to evaluate. Plan sponsors may need additional information to understand how PBM contracts affect total drug spending, pharmacy payments and the financial performance of prescription drug benefits.

Compensation tied to fair market value

Under the proposed changes, PBM payments would need to reflect the fair market value of the services provided rather than being tied to factors such as drug prices, rebates or formulary placement.

The stated direction of the proposal is to make compensation more closely connected to identifiable services and less dependent on financial incentives that could complicate the evaluation of prescription drug costs.

The implications would depend on how the final rule defines covered services, permissible payment structures and the documentation required to demonstrate fair market value.

PBMs and their clients could need to review contractual provisions to determine whether existing compensation arrangements would satisfy the new standards.

This could involve examining administrative fees, service agreements, performance-based payments and other contractual terms, subject to the final rule's scope and definitions.

Annual reporting to plan sponsors and CMS

The proposed rule would also require PBMs to provide annual reports to plan sponsors and CMS detailing compensation and cost performance.

These reports could give plan sponsors a more structured basis for assessing the financial results of their prescription drug benefit arrangements.

Depending on the final reporting specifications, organizations may need to improve their ability to collect, reconcile and explain information from multiple contractual and financial systems.

For insurers and other plan sponsors, better reporting could support more informed contract negotiations and help identify differences between expected and actual performance.

For PBMs, the requirements could increase the need for consistent documentation, auditable financial records and clearly defined reporting procedures.

The final details will determine which information must be disclosed, how calculations should be performed and what protections may apply to commercially sensitive information.

Potential effects on pharmacies

Pharmacies could also be affected by changes in the way PBMs structure and document their business relationships.

Pharmacy reimbursement, contract terms and administrative requirements are important considerations for independent pharmacies, regional pharmacy groups and larger pharmacy operators.

Greater transparency could provide stakeholders with additional information about the economics of prescription drug benefit administration. However, the proposal alone does not establish that every pharmacy will receive higher reimbursement or that prescription drug prices will automatically decline.

Actual outcomes would depend on the final requirements, the terms of individual contracts and how PBMs, insurers and pharmacies respond.

Pharmacy operators should therefore distinguish between the proposal's transparency objectives and any specific financial outcome that has not yet been established.

Additional Prescription Drug Cost Relief for Certain Low-Income Beneficiaries

The proposal also includes a reduction in copayments for certain generic prescription drugs.

For eligible low-income beneficiaries who qualify for both Medicare and Medicaid, the proposed policy would reduce copayments for covered generic drugs from $1 to $0.

Although the individual savings may appear modest, eliminating a copayment can matter to patients who take multiple medications or manage chronic health conditions requiring ongoing prescription treatment.

Why generic drug affordability matters

Generic medicines play an important role in the treatment of many common and chronic conditions. They can provide clinically appropriate alternatives to brand-name medications when prescribed and used according to applicable clinical guidance.

For patients managing several prescriptions, even relatively small out-of-pocket expenses can accumulate over time. Cost concerns may also influence whether patients fill prescriptions consistently or delay obtaining medications.

Reducing eligible generic drug copayments could remove one financial barrier for the beneficiaries covered by the proposal.

However, the benefit would apply to the specified eligible population and covered medications. It should not be interpreted as a general elimination of prescription copayments for every Medicare beneficiary or every drug.

Implications for pharmacies and care teams

If finalized, the proposed change could require updates to claims processing, beneficiary eligibility checks, pharmacy systems and communications about patient cost-sharing.

Pharmacists and pharmacy staff would need accurate information about the applicable benefit rules to ensure that eligible beneficiaries are charged correctly.

Healthcare professionals involved in medication management may also need to understand the change when discussing prescription affordability with patients.

For care teams working with older adults and people with complex medical needs — including staff clinicians, case managers, and Registered Nurses (RN) / Travel Nursing — clear communication about covered benefits can help patients understand their expected expenses and available assistance.

What the Proposed Rule Could Mean for Healthcare Organizations

The potential impact extends beyond insurance companies. Different organizations may face different operational priorities depending on their role in Medicare administration and patient care.

• Health insurers and Medicare Advantage organizations: Plans would need to evaluate their provider directory verification processes, data quality controls, accuracy reporting capabilities and procedures for addressing qualifying beneficiary complaints. Organizations may also need to review how they communicate network changes to members and contracted providers.
• Hospitals and physician practices: Provider organizations may need to strengthen internal procedures for updating payer records, maintaining consistent provider information and responding to verification requests. Administrative teams responsible for credentialing, contracting and payer enrollment could be particularly involved.
• Pharmacies and pharmacy operators: Pharmacies should monitor potential changes to PBM contracts, reimbursement arrangements and reporting practices. They may also need to review how prescription claims and beneficiary copayments are processed if the proposed requirements are finalized.
• Pharmacy benefit managers: PBMs could face additional work involving contract reviews, fair-market-value documentation, compensation analysis and annual reporting. Compliance teams may need to coordinate with finance, legal, analytics and client-management departments.
• Healthcare compliance and regulatory affairs teams: Compliance professionals should track the proposal's development, identify potentially affected business processes and distinguish existing legal obligations from requirements that would arise only after a final rule becomes effective.
• Healthcare information technology and data management teams: Accurate provider directories depend on reliable data exchange among health plans, healthcare providers and administrative systems. Organizations may need to evaluate data ownership, update frequency, validation controls and processes for resolving conflicting records.
• Medicare beneficiaries and patient advocates: Beneficiaries could benefit from more reliable network information, additional protections in qualifying directory-error situations and reduced copayments for certain generic drugs if the relevant provisions are adopted.

Potential Operational and Compliance Challenges

Implementing the proposed requirements could involve more than updating policies or publishing new reports. Healthcare organizations may need to coordinate changes across departments, systems and external business partners.

Data quality and accountability

Provider directory accuracy depends on information from multiple sources. A plan may rely on provider-submitted data, credentialing records, contracting systems and other administrative databases.

If these sources contain conflicting information, a verification process may identify a problem without immediately resolving it. Organizations would benefit from clearly assigning responsibility for investigating discrepancies and documenting corrections.

Contract review and financial documentation

PBMs and plan sponsors may need to assess whether existing contracts adequately identify the services being provided and the associated compensation.

Organizations could also need processes to ensure that financial reports use consistent definitions and can be reconciled with underlying records.

Staff training and internal communication

New reporting or verification procedures may require training for personnel involved in network management, claims administration, pharmacy operations and compliance.

Employees should understand which processes are changing, what information must be retained and how potential errors should be escalated.

Technology and administrative costs

Organizations with fragmented data systems may face additional technology or staffing needs. Automation could help manage recurring verification tasks, but automated processes still require reliable source data, appropriate controls and human review where discrepancies cannot be resolved automatically.

The ultimate cost of compliance will depend on the final rule's requirements and the readiness of each organization.

When Could the Proposed Medicare Reforms Take Effect?

CMS issued the proposal for the 2028 contract year. According to the announcement described in the proposal, the public comment period would run for 60 days following publication in the Federal Register.

The proposed Medicare Advantage provider directory verification and qualifying beneficiary cost-sharing protections are expected to take effect in 2028 if finalized as described. Plans would have until 2029 to publicly display provider directory accuracy scores.

These dates should be treated as proposed implementation timelines rather than confirmation that the requirements have already become final.

The rulemaking process allows stakeholders to submit comments, identify implementation concerns and recommend changes. CMS may revise individual provisions before publishing a final rule.

Healthcare organizations should monitor the official rulemaking record for the publication date, applicable deadlines, final compliance dates and any changes to the proposed requirements.

Until a final rule is issued, organizations should continue to distinguish existing regulatory obligations from proposed changes.

What Healthcare Leaders Should Do Now

Although the proposal is not itself a final rule, organizations may find it useful to begin assessing their exposure to the proposed changes.

These preliminary steps can help organizations understand potential implementation challenges without treating the proposed provisions as current requirements.

The Broader Significance for the U.S. Healthcare System

The proposal reflects two connected policy objectives: improving the reliability of information used to access healthcare and increasing visibility into the financial arrangements that influence prescription drug benefits.

Provider directories are an important part of the patient experience because they shape decisions about where to seek care and what patients expect to pay. More reliable information could reduce avoidable confusion, help patients make better-informed choices and support continuity of care.

PBM transparency addresses a different part of the healthcare system: the financial and contractual relationships that influence prescription drug benefit administration. More detailed reporting and compensation standards could give plan sponsors additional tools to evaluate these arrangements.

The proposed reduction in certain generic drug copayments adds a direct affordability component for an eligible group of low-income beneficiaries.

Nevertheless, the eventual effects will depend on the final provisions, how they are implemented and whether the changes produce measurable improvements in directory accuracy, financial accountability and patient costs.

The proposal should therefore be viewed as a potential regulatory development with meaningful implications for healthcare administration, rather than as evidence that all intended outcomes have already been achieved.

The Bottom Line

CMS's October 2026 proposal could introduce significant changes to Medicare Advantage provider directory management, pharmacy benefit manager compensation and prescription drug affordability for certain low-income beneficiaries.

If finalized, the requirements could encourage more frequent verification of provider information, greater transparency in PBM financial arrangements and additional protections for beneficiaries who experience qualifying problems because of inaccurate directories.

Healthcare organizations should follow the rulemaking process closely, assess the potential effects on their operations and prepare to adjust compliance procedures if the proposed changes become final.

For healthcare professionals, administrators, pharmacists and regulatory specialists, the proposal is an important development to monitor as federal policymakers continue to focus on patient access, affordability and accountability across the Medicare system.