Medicare Rule Targets Drug Copays and PBM Payments

Why It Matters

The Department of Health and Human Services (HHS) proposed eliminating generic-drug copays for about 6 million low-income Medicare enrollees and barring pharmacy benefit managers (PBMs) from receiving most compensation beyond flat-dollar service fees with Medicare Part D drugs. ​

The proposed rule, which implements three provisions of the Consolidated Appropriations Act, 2026 (CAA), would also require 708 Medicare Advantage (MA) organizations to verify provider directory information. The Centers for Medicare & Medicaid Services (CMS) says the regulations are necessary to implement the statute. Comments are due Dec. 15.

What the rule would do

• Eliminate generic drug copays for the lowest-income enrollees. For plan years beginning on or after Jan. 1, 2028, the copayment for generic drugs for full-benefit dual-eligible individuals with incomes at or below 100% of the federal poverty level would drop from the current inflation-adjusted amount, which stands at $1.60 for plan year 2026, to $0. The annual inflation adjustment for this population's generic copay would also end for plan years beginning on or after Jan. 1, 2028.
• Add requirements for the accuracy of provider directories. Specified MA plans, including network-based plans and network-based private fee-for-service plans but excluding Programs of All-Inclusive Care for the Elderly (PACE) plans and certain non-network regional preferred provider organizations, would have to verify each listed provider's directory information at least every 90 days, remove noncontracted providers within five business days, conduct an annual accuracy analysis, calculate a weighted accuracy score, and submit an annual accuracy report to CMS by the first Monday in April of the following year. Beginning in contract year 2029, CMS would post accuracy scores in a machine-readable file, and MA organizations would have to display those scores prominently in their directories.
• Limit PBM remuneration. PBMs and their affiliates generally could not receive remuneration for services connected to the utilization of Part D drugs beyond flat-dollar bona fide service fees at fair market value. Three exceptions apply: incentive payments from a plan sponsor that meet statutory requirements; manufacturer rebates fully passed through to the plan sponsor; and flat dispensing fees and reimbursement of ingredient costs.
• Require disgorgement of prohibited remuneration. Violations would require PBMs or their affiliates to disgorge prohibited remuneration to the plan sponsor, which would then be required to remit those amounts to CMS.

Who is hit and how much

• Approximately 6 million enrollees would be affected by the generic copay elimination, based on CMS enrollment data for full-benefit dual-eligible individuals at or below 100% of the federal poverty level.
• CMS estimates the net federal cost of eliminating generic copays at approximately $1.337 billion from 2028 through 2037, reflecting a $1.461 billion benefit impact offset by $124 million in increased Part D plan premiums.
• The 708 MA organizations subject to the provider directory accuracy requirements would face an estimated $6,025,071 in combined additional costs in contract year 2028 and $1,608,453 annually in subsequent years, although CMS notes that these estimates may change based on public comments.
• The Congressional Budget Office (CBO) estimates that the PBM remuneration restriction would reduce federal direct spending by approximately $444 million from 2026 through 2035. CMS says it lacks sufficient data to reasonably estimate the overall impact on the Part D program.

The law now and after

The generic copay for the lowest-income dual-eligible enrollees was originally set at $1 under Medicare prescription drug regulations finalized in 2005 and has since been adjusted for inflation. The CAA requires that copay fall to $0 for plan years beginning on or after Jan. 1, 2028, and ends the annual inflation adjustment for generic drugs for this population beginning that year.