Medicare Wants PBMs Paid a Flat Fee. That Tells You How They Get Paid Now.
Medicare just admitted PBMs get paid more when your drugs cost more.
On Oct. 16, CMS proposed a rule that would require pharmacy benefit managers, the middlemen that run drug coverage for insurers and employers, to work for flat, itemized fees in Medicare drug plans starting in 2028. Pay tied to a drug's price or its rebate would be off the table.
That's a big deal for PBMs. It should also make you wonder how they've been paid up to now.
A Rule That Shouldn't Need to Exist
The proposal implements part of the Consolidated Appropriations Act of 2026, the spending package Congress passed in February. Section 6224 of that law targets how PBMs and their affiliates get paid in Medicare Part D, and CMS is now writing the details.
According to Becker's Hospital Review, starting Jan. 1, 2028, PBMs would only be able to accept flat-dollar, itemized service fees for Part D drugs, and those fees could not depend on drug prices or rebates. Fierce Healthcare reported that CMS wants PBM pay to "reflect fair market value for services provided, rather than drug costs."
That's a confession. Nobody writes a rule saying your pay can't depend on the price unless your pay has been depending on the price.
What CMS Is Proposing
What the proposed rule says | What it means in plain words |
Flat, itemized service fees only, starting Jan. 1, 2028 | The PBM's pay can't grow just because your drug got more expensive |
No pay based on drug price, rebates or formulary placement | Less reason to favor the pricier drug |
Fair market value means the cost of the service plus a reasonable markup | A fee someone could actually explain |
Rebates allowed only if fully passed through to the plan | The discount is supposed to reach the plan, not stick to the middleman |
Money the law doesn't allow gets disgorged to the plan, then passed to CMS | Keep what you shouldn't, give it back |
Plans can audit their PBM at least once a year | Someone finally gets to check the math |
Annual PBM reports on pricing and pay to plans and CMS | Data that has mostly stayed private |
The same proposal also drops generic copays from $1 to $0 for full-benefit dual eligible enrollees at or below the federal poverty level starting in 2028, according to CMS. Becker's notes that copay is $1.60 in 2026 after inflation indexing.
Why a Middleman's Pay Should Never Follow the Price
Here's the problem the law is trying to fix.
Drugmakers pay rebates to PBMs, and rebates are tied to list prices. When PBM compensation moves with list prices or rebates, a higher list price can mean a bigger payday for the company that's supposed to be holding prices down.
That's backwards. If you hired someone to negotiate your car price and paid them a percentage of the sticker, you'd never expect them to fight very hard for a lower sticker.
A flat fee breaks that link. The PBM gets paid for the work it does, whether your drug costs $10 or $1,000.
CMS Can't Even Put a Number on It
One line in the coverage stood out to me. Fierce Healthcare reported that CMS said it doesn't yet have enough data on PBM contract structures and fee structures to estimate the financial impact of the PBM changes.
Think about that. Medicare is one of the biggest buyers of prescription drugs on the planet, and it can't see enough of how its middlemen get paid to put a number on it. That's why the reporting and audit pieces matter as much as the flat fee.
The rule also carries a separate fix for Medicare Advantage "ghost networks," the provider directories full of doctors who aren't really available. Plans would have to verify directory data at least every 90 days, and accuracy scores would be published starting in 2029.
2028 Is a Long Way Off
This is a proposed rule. Public comments are due Dec. 15, and the PBM provisions wouldn't take effect until Jan. 1, 2028. That's more than a year of lobbying, and nothing is final until CMS says so.
The flat-fee rule is a Medicare rule. According to a summary by the law firm Sidley Austin, it covers stand-alone Part D plans and Medicare Advantage drug plans. The same law has separate PBM rules for employer plans, including passing 100% of rebates through to the plan, but those generally don't start until 2029, and they don't impose the same flat-fee requirement.
Sidley also notes that the detailed PBM reports to Medicare will be confidential, and the government is barred from publicly disclosing identifying information. So even after 2028, you won't get to read them.
If you run a health plan for your company, ask your PBM a simple question: does any part of what you earn go up when list prices go up?
We Already Work on a Flat Fee
Here's what I find funny about all this. The big reform is cost plus a reasonable markup. That's our whole business model.
Forest Park Pharmacy has no PBM contracts and doesn't take insurance. Every drug is priced at actual acquisition cost plus a transparent fee. When generic prices fall, our prices fall. We don't earn more when your drug costs more, so we have no reason to pretend the price is higher than it is. We compete on price.
Head to forestparkpharmacy.com to look at our price checker and transfer today to save. See ya.
