The Centers for Medicare & Medicaid Services is signaling its intent to overhaul how Medicare Advantage organizations maintain provider directories and operate pharmacy benefit management divisions, according to proposed regulations tied to provisions buried in a February government funding package. The move represents CMS's most aggressive attempt to date at solving two persistent problems that have plagued health system leaders and patients alike: outdated provider networks and opaque PBM operations.
For health system executives, the timing matters considerably. Most reforms wouldn't take effect until 2028, providing roughly 18 months to audit current practices and retool business processes. However, that timeline may prove tighter than many organizations realize, especially given the complexity of the issues CMS is targeting.
Directory Problems Demand Systemic Solutions
Provider directories have become a chronic headache for both MA plans and the health systems that contract with them. Patients routinely discover that doctors listed as in-network have retired, changed practices, or never agreed to participate. Health systems complain that MA plans fail to promptly update directory information, leading to denied claims and frustrated patients. The problem has become so widespread that state attorneys general have launched investigations and patient advocacy groups have made it a focal point of complaints.
CMS's proposed approach would likely establish clearer standards for directory accuracy and more frequent verification requirements. For MA plans, this means investing in better data management infrastructure and potentially dedicating more staff to network validation. For health systems, it could mean more administrative burden upfront, though potentially fewer downstream payment disputes tied to network status questions.
Technology vendors specializing in provider credentialing and network management could see increased demand if the regulations require plans to upgrade their systems. Conversely, MA plans currently relying on outdated manual processes may face unexpected capital expenditure requirements as 2028 approaches.
What remains unclear is how aggressively CMS will enforce compliance and what penalties non-compliant plans might face. History suggests enforcement could be uneven, potentially creating competitive disparities between well-resourced national MA insurers and regional plans with leaner IT budgets.
PBM Regulation Enters Uncharted Territory
The proposed transparency measures targeting PBMs represent CMS wading into territory that has long been controlled by the plans themselves. Pharmacy benefit managers operate as semi-autonomous divisions within many MA organizations, and they guard their formulary decisions, rebate arrangements, and cost-sharing logic fiercely. Increased transparency could fundamentally alter how these entities negotiate with manufacturers and set patient out-of-pocket costs.
For health systems managing specialty pharmacy programs and negotiating drug coverage for employees, greater visibility into PBM decision-making could prove valuable. However, PBMs may resist requirements they view as proprietary information disclosure, potentially leading to legal challenges that could delay implementation beyond 2028.
Health plan executives must also consider how transparency requirements might affect their competitive positioning. If all plans must disclose similar information about formulary construction and rebate retention, some plans currently leveraging proprietary PBM advantages could lose differentiation.
The proposed regulations reflect growing congressional and regulatory frustration with both directory accuracy and PBM opacity. For health system leaders and vendors, the message is clear: the status quo is no longer acceptable to regulators. Organizations that begin positioning themselves now for 2028 compliance—auditing directories, modernizing credentialing systems, and preparing for potential PBM transparency requirements—will likely navigate the transition more smoothly than those waiting until the rules are finalized to act.
Reporting basis: healthcaredive.com. Analysis by the HTC editorial desk.