| A new mandate
Historically, PBM platforms were designed primarily for transaction processing. The transparency was often layered on through downstream reporting tools, spreadsheets or periodic audits. The system functioned with built-in gaps that didn’t allow for reconstructed pricing logic, traceable rebate flows and alignment across financial outputs. The legacy structure satisfied past requirements, however, does not meet the emerging standard. The new mandates require recurring machine-readable reporting, claim-level financial visibility and reconciliation across pricing, rebates and payments. The crux of the issue in the legacy system is that the results produced cannot be reliably explained. Reporting based on the new mandates, requires gross and net drug costs, rebates, fees and discounts along with claim-level utilization and pricing data. Why it matters
Regulatory reform is moving the industry from trust to verification. As fiduciaries, employers and regulators expect traceability of rebate eligibility and pass-through, validation of pricing methodologies and defensible financial outcomes. Addressing the financial impact on patients and plans, PBMs must disclose total participant out-of-pocket spending and total net spending per drug. The expectation of transparency has exceeded quarterly reports and must now exist within the workflow. This creates a new requirement that goes beyond reporting operations but proving operations as they happen. Reinforcing audit scrutiny and accountability pressure, additional reporting is required for drugs where gross spending exceeds $10,000 within a six-month period, including identification of the highest cost drugs. What must change
Moving away from retrospective reporting, manual reconciliation and disconnected systems, transparency must now be baked into the infrastructure to meet regulatory requirements.This embedded transparency needs to span the claim lifecycle, connecting pricing logic, rebate governance and financial reconciliation so each can be traced and validated. Supporting claim-level traceability, PBMs need to track and report wholesale acquisition cost for brand name drugs and average wholesale price for generics. The traceability should be continuous across operational workflows, allowing organizations to demonstrate within their systems exactly how claims are priced, how rebates flow and how financial outcomes are produced. The structure design must be inherently audit ready with visibility inside the transaction itself, not in an assembled report after the fact. — By MedCity Influencer Lori Daugherty |
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