PBM Reform's Paradox: Why New Laws Demand Stricter Oversight

COLUMBUS, OH – March 19, 2026 – A wave of federal and state legislation aimed at reining in Pharmacy Benefit Managers (PBMs) is creating a new paradox for health plans and employers: greater transparency on paper may not translate to accuracy or savings in practice without a fundamental shift in oversight. This is the central argument of a new issue brief from Rivera, an independent pharmacy payment integrity company, which warns that reform does not enforce itself.

As lawmakers mandate changes to PBM compensation, disclosure, and network rules, the complexity of verifying compliance at the individual claim level is increasing exponentially. The brief, titled “Reform does not enforce itself: Why PBM legislation demands continuous oversight,” posits that these reforms necessitate a new discipline of continuous, real-time monitoring to close a critical "verification gap" that traditional audits are ill-equipped to handle.

The New Regulatory Gauntlet

The landscape governing PBMs is undergoing its most significant transformation in decades. At the federal level, landmark legislation like the Consolidated Appropriations Act of 2026 (CAA 2026) is set to overhaul the system. Beginning as early as 2028 for Medicare Part D, the act will delink PBM compensation from drug prices, moving them to flat, bona fide service fees. By 2029 for many employer-sponsored plans, the CAA will mandate a 100% pass-through of all drugmaker rebates and fees to the plan, along with strengthened, non-waivable audit rights.

These federal efforts are complemented by proposed rules from the Department of Labor (DOL) that aim to bring unprecedented transparency to self-insured health plans under ERISA. The rules would require PBMs to disclose all direct and indirect compensation, including profits from "spread pricing"—the difference between what a plan is charged for a drug and what the PBM pays the pharmacy.

This federal momentum builds on a foundation of aggressive state-level action. All 50 states have now passed some form of PBM regulation. Florida’s Prescription Drug Reform Act, which took effect in 2024, banned spread pricing and mandated full rebate remittance. Similarly, Massachusetts and Pennsylvania are implementing new licensing and reporting requirements with stiff financial penalties for non-compliance. This patchwork of stacking regulations creates a dizzying compliance environment where a single national health plan must navigate dozens of different rule sets.

The 'Verification Gap': Reform Without Enforcement

While these reforms are celebrated as victories for transparency, experts caution that legislation is not a self-executing solution. The new laws create intricate contractual and operational requirements that must be correctly configured and applied to millions of individual pharmacy claims—a process ripe for error.

This is the "verification gap" that Rivera's brief highlights. Traditional oversight methods, which typically rely on retrospective audits of a small sample of claims months after a plan year has ended, are proving inadequate. Such audits were designed for a simpler era and are fundamentally reactive. They might catch a past error, but they cannot prevent systemic issues from costing a health plan millions of dollars in real time.

“The conversation has shifted from whether PBMs should be more transparent to whether that transparency is actually being verified,” said Ron Hamm, CEO of Rivera, in a statement. “Health plans that treat reform as a reason to ease up on oversight will still be accountable for every dollar that runs through their pharmacy benefit.”

The new rules around rebate pass-throughs, delinked fees, and state-specific pricing models create thousands of new data points to track. An error in claims adjudication logic or a misinterpretation of a contractual clause can lead to widespread, cascading overpayments that a sample-based audit might miss entirely. The reforms, while well-intentioned, have inadvertently made the system more complex to administer correctly, placing a greater burden of verification on the health plans and employers paying the bills.

From Reactive Audits to Continuous Monitoring

In response to this challenge, a new generation of technology-driven oversight is emerging. Companies in the payment integrity space are moving beyond the old audit model and championing "continuous monitoring"—an approach that uses sophisticated software to analyze 100% of pharmacy claims as they are processed.

This method contrasts sharply with periodic audits. Instead of looking backward at a small slice of data, continuous monitoring platforms ingest a complete claims feed from the PBM, running each transaction against hundreds or even thousands of proprietary algorithms. These algorithms check for adherence to everything from complex contract terms and benefit design to the intricate web of state and federal regulations.

Rivera, for instance, states its platform uses over 750 algorithms to evaluate every claim against contract terms, benefit configuration, and regulatory mandates. When a discrepancy is found—whether it's an incorrect copay, a misapplied discount, or a failure to pass through a rebate correctly—the system flags it immediately. This allows the health plan to not only recover the specific dollar amount but also to work with the PBM to fix the root cause, preventing thousands of similar errors from occurring in the future. This proactive stance is what distinguishes the new model from its predecessor.

Turning Compliance into Financial Value

For CFOs and benefits leaders, the appeal of this new approach extends far beyond a simple compliance checkbox. With pharmacy costs now approaching 30% of total medical spend for many employers, effective management is a critical financial priority. Continuous monitoring transforms oversight from a cost center into a mechanism for tangible value creation.

The financial impact of PBM errors, whether intentional or accidental, can be substantial. Studies and government reports have long pointed to billions lost annually through opaque practices and incorrect claims processing. By identifying overpayments in real time, continuous monitoring enables immediate cost recovery. Industry service providers often report that the savings generated far exceed the cost of the service, with some clients seeing a return on investment of eight to ten times their initial spend.

Furthermore, the data generated by these platforms provides health plans with unprecedented leverage in PBM negotiations. Armed with detailed, continuous performance data, plan sponsors can move from relying on the PBM's own reporting to having an independent, verified record of contract adherence, pricing accuracy, and rebate fulfillment. This data-driven approach strengthens their position when renewing contracts or holding PBMs accountable for performance guarantees. As CEO Ron Hamm noted, “Continuous monitoring is how plans turn reform into measurable value, not just compliance.”

This shift signifies that for health plans and employers, the era of passive trust in PBM administration is over. Navigating the complex, post-reform landscape requires a new level of active, data-driven vigilance to ensure that the promise of transparency results in real, measurable financial integrity.