The New “Covered Service Provider” Status
The 2026 CAA formally reclassified Pharmacy Benefit Managers (PBMs) as “covered service providers” under ERISA.
- The Impact: This forces PBMs to disclose all direct and indirect compensation to plan sponsors. If your PBM receives a “consulting fee” or “broker commission” from a drug manufacturer, they must now report it to you in writing.
- Fiduciary Duty: In 2026, the burden of proof has shifted. As an employer, you are now a “fiduciary” for your PBM’s fees. If you don’t audit them for “reasonableness,” you could be held liable for overspending plan assets.
Auditing the “Spread Pricing” Trap
“Spread pricing”—where a PBM bills you $100 for a drug but only pays the pharmacy $70—is under heavy fire in 2026.
- The 2026 Audit Step: Use your new Annual Audit Rights to request a “Net Cost Verification.” Your PBM is now legally required to provide data showing the difference between what you paid and what the pharmacy received.
- The “Pass-Through” Mandate: Many 2026 contracts are now required to use a 100% Pass-Through Model, where the PBM is only allowed to charge a transparent, flat administrative fee (e.g., $5 per script) instead of keeping the “spread.”
Hunting for “Hidden” Rebate Aggregators
PBMs often use subsidiary companies (aggregators) to collect drug rebates, previously claiming these weren’t part of the “PBM agreement.”
- The 2026 Rule: The CAA 2026 mandates that 100% of all rebates, alternative discounts, and price concessions—including those flowing through third-party aggregators—must be remitted back to the plan.
- Red Flag Audit: Look for “Bona Fide Service Fees” in your 2026 contract. PBMs are increasingly using this label to hide what are actually drug volume rebates. Your auditor should verify that these fees are truly for services rendered and not tied to the number of pills dispensed.
The 2026 Audit Checklist
When conducting your 2026 vendor review, demand the following three documents:
- Direct/Indirect Compensation Disclosure: A full list of every dollar the PBM earns from your plan and from manufacturers.
- Drug-Level Net Pricing Report: A detailed report (mandatory for plans with 100+ participants) showing the price of every drug after all rebates are applied.
- Affiliated Pharmacy Disclosure: Data on whether your PBM is steering employees toward mail-order pharmacies they own, often at higher costs to your plan.
Sources & References (May 2026)
- Source: Jenner & Block – What the 2026 CAA Forces PBMs to Reveal
- Source: JD Supra – PBM Reforms May Open a New Era for Group Health Plan Sponsors
- Source: The Fedeli Group – CAA 2026 Introduces New PBM Transparency and Reporting Requirements
- Source: MDRX Law – 2026 PBM Transparency Reform: What Employers and Providers Should Know