Congress Passes Landmark PBM Reform: What CAA 2026 Means for Employer Health Plans

As part of the bill to end the most recent federal government shutdown, Congress passed the Consolidated Appropriations Act, 2026 (CAA 2026). Included in CAA 2026 are new laws designed to change the pricing and compensation structures of pharmacy benefit managers (PBMs). 

CAA 2026 

Effective 2029, CAA 2026 requires that any contract with a PBM and either an employer-sponsored group health plan or health insurance carrier may not limit or delay disclosure of specific information to the plan. What information must be disclosed depends on various factors, including whether the plan is self- or fully insured and the size of the employer. Generally, each report must include information on compensation received by the PBM and the prescription drug claims and costs of the plan. 

The most detailed reporting is given to larger plans. CAA 2026 defines a large employer as one that averaged at least 100 employees on business days during the previous calendar or plan year. Fully insured plans must complete an annual opt-in to receive these reports, while self-insured plans need no opt-in. 

In addition to the report provided to the plan, the PBM must also provide a summary report for employees and dependents that includes aggregate information. Participants also have some rights to access specific claim level data. 

The PBM must provide this information to the plan at least every six months, while some plans will receive quarterly reports. The report must be written in plain language and provided in a machine-readable format. 

Notice Requirements 

CAA 2026 also includes new notice requirements for group health plans that inform participants and dependents of the PBM reporting requirements. The notice applies to all plans regardless of funding or size. It is anticipated that federal agencies will provide a template notice before 2029. The notice can be provided along with other plan notices or be included as an update to the SPD or certificate of coverage. 

Additional Pharmacy Implications Under CAA 2026 and Related PBM Reforms 

In addition to the provisions outlined above, recently passed PBM reform legislation and related policy actions further clarify how pharmacy benefit manager practices will change in the coming years. Based on the legislative text approved by Congress, these PBM-related reforms fall into several key areas that are especially relevant for employer-sponsored health plans. 

PBM Compensation Limits and Prohibitions 

Beginning in 2028 for Medicare Part D, PBMs and affiliated entities will be restricted from receiving remuneration tied to drug pricing outcomes. Compensation will be limited to flat fees for actual services provided, and all rebates and discounts, excluding bona fide service fees, must be fully passed through to the plan or insurer. 

Effective 2029, PBM contracts must use pass-through pricing and have increased fee transparency provisions. In pass-through pricing, the amount paid to the pharmacy equals the amount billed to the client. Instead of making money on the difference between the amount charged to the plan and the pharmacy, PBMs will make its money through administrative fees. 

CAA 2026 also requires the PBM to direct 100% of all prescription drug discounts and rebates to the plan or carrier each quarter. 

These changes are intended to reduce conflicts of interest and align PBM incentives more closely with plan sponsors and participants. 

Continued State-Level PBM Regulation 

Federal reforms do not replace existing state-level PBM oversight. Many states already require PBM registration or licensure, mandate pricing and rebate reporting, and restrict spread pricing, particularly in Medicaid programs. Some states also use competitive bidding and reverse auction models to encourage PBM competition and lower costs. Employers operating across multiple states will need to remain mindful of overlapping federal and state requirements. 

Potential Impact on Employers and the Healthcare Market 

Greater transparency and rebate pass-through requirements are expected to reduce hidden costs and provide employers with better insight into pharmacy spend. While some stakeholders caution that savings may not be immediate, the reforms may improve long-term pricing accountability. 

Employers and health plans are likely to gain stronger leverage in PBM contracting and vendor selection. Independent and community pharmacies may benefit from improved network access and reimbursement fairness. At the same time, PBMs will face increased compliance and reporting obligations, potentially leading to operational changes and evolving business models. 

Turn PBM Reform into a Strategic Advantage 

CAA 2026 and related PBM reforms give employers unprecedented access to pricing, utilization, and compensation data. Organizations that use this information effectively can strengthen oversight, improve plan design, and gain leverage in vendor negotiations. 

The pharmacy benefits management landscape is dynamic, in 2026 this is driven by a demand for transparency, affordability, and clinical value from businesses, providers, consumers, and regulatory agencies. Connect with your OneDigital team to discuss this topic and more regarding the latest developments in employee benefits.