Last Week the DOL, [Yesterday] Congress: PBM Transparency and Compensation Disclosure Requirements

By SIIA – As we told you on Friday, the DOL released proposed regulations requiring PBMs to disclose up to 8 “types” of compensation streams to a self-insured group health plan in accordance with ERISA’s section 408(b)(2)(B) Compensation Disclosure requirements (which you can read here, along with a 2-page summary of these proposed regs here). And today, in a “1-2 punch” for PBM transparency, Congress enacted legislative language that would require a PBM to disclose to a group health plan, among other things, PBM payment practices including the receipt of rebates, price concessions, and “spread pricing,” along with the gross and net costs of prescription drugs in the PBM’s drug formulary, and other information like whether the PBM is dispensing covered drugs through PBM-owned pharmacies, mail-order, or specialty programs. Read Full Article...

HVBA Article Summary

1. Expanded Compensation Disclosure Requirements under ERISA: Legislative amendments to ERISA section 408(b)(2)(B) removed references to “Brokerage Services” and “Consulting” and clarified that any service provider performing “types of services” listed in the statute—including PBMs and TPAs—must now disclose both direct and indirect compensation to plan fiduciaries. This clarification ensures that pharmacy benefit management services and third-party administrative services fall squarely within the scope of mandatory disclosure, significantly broadening compliance requirements for service providers handling employer-sponsored group health plans.

2. Mandatory 100% Rebate Pass-Through from PBMs to Plans: The legislation also establishes a new standard requiring pharmacy benefit managers to pass through 100% of manufacturer rebates received for covered prescription drugs to the health plan itself. This provision is designed to improve transparency and cost accountability by preventing PBMs from retaining any share of rebates, potentially redirecting millions of dollars back to plan sponsors and, ultimately, to plan participants through lower premiums or reduced drug costs.

3. Extensive Semi-Annual Reporting Obligations to Increase PBM Transparency: Beginning 30 months after enactment, PBMs must submit detailed reports every 6 months (or quarterly if requested) to group health plans. These reports must be provided in a machine-readable format and include data such as:

   • National Drug Codes and names of all drugs for which claims were filed

   • Compensation amounts paid by the plan to the PBM and from the PBM to pharmacies

   • The net difference in drug pricing, including rebates, discounts, and fees

   • Out-of-pocket costs for participants and total net spending on each drug

   • Utilization details like dosage units, dispensing channels (retail, mail, specialty), and days supply

   • A breakdown of spending by therapeutic class, including the 50 drugs with highest gross spending

   • Disclosure of PBM-owned pharmacy operations, including refill policies and pricing comparisons with non-PBM-owned pharmacies

   
   These granular reporting requirements mark a major shift toward transparency and accountability in drug benefit management, with the potential to reshape how health plans evaluate and contract with PBMs.

The 2008 Housing Crash Was a Warning. Health Insurance May Be Next.

By Ron Howrigon – In 2008 the housing market crashed and the U.S. experienced a severe economic recession - and dragged most of the world down with us. The crash resulted from building a large part of our economy on an irrational and unsustainable business model. Looking back, it’s easy to see how subprime mortgages, mortgage-backed securities and collateralized debt obligations were destined to fail. When the crash happened, over 2.6 million jobs were lost and over 1 trillion dollars of wealth disappeared almost overnight. Several notable companies, including Lehman Brothers, went under. This was the largest market correction since the Great Depression. Read Full Article...

HVBA Article Summary

1. Health Insurance Market Size and Risk: The health care sector in the U.S. is more than three times the size of the housing market and employs over ten times as many people. This scale means that a crash or major correction in health insurance could have far more severe economic consequences than the 2008 housing crash. The recent $80 billion sell-off in major health insurance companies signals potential instability in this sector.

2. Flawed Business Model of Health Insurance: The health insurance industry suffers from a fundamental economic problem due to the disconnect between the purchaser (government or employer) and the consumer (patient). Purchasers aim to minimize spending, while consumers are insulated from costs and may overutilize services. Additionally, insurers profit by denying or delaying care, which conflicts with typical supplier incentives and creates a race to the bottom among insurers, negatively impacting patients with chronic diseases.

3. Concentration of Costs and Impact on Patients: A small percentage of consumers (5%) account for half of all health care costs, while the bottom 50% account for less than 3%. This concentration allows insurers to focus cost-cutting measures on a relatively small group of expensive patients, often those with chronic illnesses. Such practices increase profits for insurers but can leave vulnerable patients without necessary care, exacerbating health disparities.

Why Skyrocketing Premiums Were Inevitable Under Obamacare’s Design

By Lawrence Wilson – A fully implemented Affordable Care Act would “bend the cost curve” in health care, “moving the health care system toward higher quality and more efficient care,” according to a White House statement in 2013. Many people now agree that didn’t happen. “We pay more than any other country in the world for worse health care,” Sen. Elissa Slotkin (D-Mich.) said while campaigning for office in 2024. “Families pay more, get less, and we’re left with few choices,” Rep. Mike Lawler (R-N.Y.) testified in a December 2025 committee hearing. Read Full Article...

HVBA Article Summary

1. Structural Provisions Increased Costs: The Affordable Care Act introduced several foundational policies, such as guaranteed issue, community rating, and mandated essential health benefits, which expanded access but also raised costs and risk for insurers. These provisions made it more difficult for insurers to manage risk and set premiums based on individual health status. As a result, while some consumers benefited from lower premiums, others faced higher costs, and the overall insurance market experienced upward pressure on prices.

2. Risk Mitigation Efforts Fell Short: To address the increased risk for insurers, the ACA included temporary programs like risk adjustment, reinsurance, and risk corridors. However, these mechanisms were not sufficient to fully offset the higher-than-expected costs and adverse selection that occurred, especially as enrollment of young, healthy individuals lagged behind projections. The financial shortfalls in these programs contributed to insurer losses and further premium increases.

3. Enrollment Patterns and Market Instability: Early years of the ACA saw lower-than-anticipated enrollment, particularly among young adults, which led to a less healthy insurance pool and higher costs for insurers. Even as enhanced subsidies during the COVID-19 pandemic boosted enrollment to record highs, the age profile of enrollees did not significantly improve, and many insurers continued to report losses in the marketplace. This combination of enrollment challenges and persistent insurer losses has contributed to the ongoing rise in health insurance premiums.

Latest CMS Data Reveal Six Trends Reshaping U.S. Drug Spending

By Adam J. Fein, Ph.D. – The boffins at the Centers for Medicare & Medicaid Services (CMS) recently dropped the latest National Health Expenditure (NHE) data, which track all U.S. spending on healthcare. We spent an astounding $5,278,588,000,000 on healthcare in 2024. Yes, that’s $5.3 trillion! Retail outpatient prescription drugs accounted for less than 9% of that total. More than half of net outpatient drug spending was paid by federal, state, and local government programs. Read Full Article...

HVBA Article Summary

1. Utilization, Not Prices, Drives Drug Spending Growth: The latest CMS data indicate that the increase in outpatient prescription drug spending in 2024 was primarily due to higher utilization, such as more people being treated and more prescriptions dispensed, rather than significant increases in net drug prices. This challenges the common narrative that rising drug prices are the main driver of spending growth. The data suggest that shifts in the types of drugs used and greater demand for certain therapies are more influential factors.

2. Government Programs Now Fund the Majority of Drug Spending: Public funds, including Medicare and Medicaid, accounted for over half of net outpatient prescription drug spending in 2024. This marks a significant shift in the payer landscape, with taxpayers increasingly bearing the cost of prescription drugs. The growing role of government funding is expected to lead to more regulatory intervention in drug pricing and access.

3. Trends Vary by Insurance Type and Benefit Design: The report highlights that spending growth rates and out-of-pocket costs differ notably across payer types. For example, Medicare drug spending grew rapidly, partly due to policy changes and increased demand for specific drug classes, while Medicaid spending growth slowed as pandemic-era enrollment unwound. Consumers continue to pay a higher share out-of-pocket for prescription drugs compared to hospital care, which may influence public perceptions and policy debates around drug affordability.

PBM rebate pass-through mandate slashes group health price increases

By Allison Bell – West Virginia officials say a state pharmacy benefit manager mandate is helping to hold down employers' group health insurance premiums. The state began to license PBMs in 2020. In 2022, the state began to require insurers to pass all prescription drug rebates and other prescription drug discounts on to health insurance purchasers in 2022. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Rebate Pass-Through Mandate Curbed Rate Increases: For 2026 group health insurance plans, the rebate pass-through mandate significantly reduced the size of premium increases. The average rate hike dropped to 12.6%, down from a projected 19.5%, representing a 7.8 percentage point cut. This translated into a 40% smaller average increase than what insurers would have otherwise implemented. The mandate's effect, as calculated by insurers and reported by the West Virginia Offices of the Insurance Commissioner, illustrates its role in tempering rising healthcare costs. 

2. Insurer Responses Varied Widely: The impact of the rebate pass-through mandate was not uniform across insurers. In one notable case, an insurer reduced its large-group premium rates by 2.91% instead of following through with a planned 5.09% increase. Other insurers reported that the mandate trimmed their planned rate hikes by anywhere from 13% to nearly 58%, showcasing a diverse range of cost-saving outcomes. This suggests that the mandate’s influence was shaped by each insurer's specific pricing structure and reliance on PBM-negotiated rebates.

3. Policy Direction Reflects Increased PBM Oversight: The rebate pass-through initiative aligns with a broader regulatory trend aimed at increasing transparency and oversight of Pharmacy Benefit Managers (PBMs). Critics—including pharmacists, drug manufacturers, and employers—have accused PBMs of inflating retail drug prices and withholding negotiated rebates. In response, the federal government included a PBM rebate pass-through provision in a $1.2 trillion spending package, signaling a shift toward policies that return more savings to employers and plan sponsors. This move highlights growing bipartisan efforts to reshape how prescription drug savings are distributed across the healthcare system.

Prices rise at surgery centers acquired by Optum: study

By Rebecca Pifer Parduhn – There’s a harsh spotlight on market concentration in healthcare, as lawmakers — including traditionally pro-business Republicans — become more critical of massive conglomerates in the space amid skyrocketing healthcare prices. UnitedHealth, Optum’s parent company, has been catching a lot of the flak. UnitedHealth operates both Optum, the largest employer of physicians in the U.S. with nearly 90,000 owned or affiliated physicians, and UnitedHealthcare, the largest private insurer in the nation. Read Full Article...

HVBA Article Summary

1. Optum's ASC Acquisitions Drove an 11% Price Hike: Cornell researchers found that prices at 24 ambulatory surgery centers (ASCs) rose by $239.24 on average (an 11% increase) after they were acquired by Optum between 2015 and 2018. Price increases emerged two quarters post-acquisition and remained stable, with professional fees driving most of the growth. These effects were stronger in markets where Optum had greater presence, suggesting that vertical integration boosted Optum’s negotiating leverage.

2. Vertical Integration Linked to Higher Prices and Market Capture: The study supports concerns that UnitedHealth’s vertical structure may raise costs. A separate November study found UnitedHealthcare pays more to Optum doctors than unaffiliated ones. While referral patterns didn’t change much overall, some increase in referrals to Optum-owned ASCs occurred in concentrated markets. Optum also tends to acquire practices that already favor ASCs, helping it retain more revenue while lowering costs for its own insurer by avoiding higher-cost hospital outpatient settings.

3. Policymakers Increasingly Focused on Vertical Integration Risks: With $450 billion in revenue, UnitedHealth faces growing scrutiny over how its structure may inflate prices. Though others like CVS, Elevance, and Humana are vertically integrated, UnitedHealth’s scale makes it a key concern. The Biden administration’s 2023 antitrust guidelines strengthened federal oversight of vertical mergers. Researchers urge regulators to look beyond horizontal metrics, warning that vertical consolidation can harm competition and consumers. Congress appears more open to intervention, but significant barriers remain.

ChatGPT Health is a wellness win but with a blind spot

By Guy Benjamin – Let me start by saying this: OpenAI's launch of ChatGPT Health is genuinely exciting. Having 230 million people weekly turn to AI for health guidance shows just how desperately Americans need accessible health information. The ability to connect fitness apps, understand lab results and get personalized wellness advice represents real innovation in making health information more accessible. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. AI Alone Doesn’t Solve Healthcare Accessibility Through Benefits: While AI tools like ChatGPT Health can explain symptoms, track workouts, and define medical terminology, they do not address the core issue employees face: understanding and accessing care through their employer-sponsored benefits. This is especially concerning when employer healthcare costs are rising by 6% to 8% annually (Mercer and PwC), and families already spend an average of $6,850 on premiums alone (KFF). Without knowing what providers are in-network or what care is actually covered, employees may delay necessary treatments despite having insurance.

2. Benefits Navigation and Price Transparency Are Essential for Impact: A key challenge AI must tackle is helping employees find affordable, in-network providers—something that wellness coaching alone cannot fix. The article highlights massive price discrepancies for the same procedures (up to tenfold differences) within the same insurance network and city. For example, an MRI could cost $150 at one location and $1,800 at another. This lack of price transparency can be a barrier to care and financial stability. AI should prioritize directing users to high-value providers aligned with their benefits, rather than just supplying generalized health advice.

3. Combining AI with Strategic Benefits Guidance Drives Real Value: For benefits leaders and advisers, the competitive edge lies in integrating AI with tools that reduce HR workloads and improve healthcare ROI. HR teams reportedly spend about nine hours per week answering benefits-related inquiries, while CFOs continue to monitor escalating healthcare costs—often the second-largest budget item after salaries. By using AI to handle routine benefits questions, guide employees to cost-effective care, and ensure price transparency, companies can enhance employee experience, reduce claims costs, and better justify their investment in health benefits.