Prescription drug costs remain a growing concern for employers, employees, and the benefits industry. Pharmacy Benefit Managers (PBMs) play an important role in negotiating drug prices and managing pharmacy benefits, but questions about pricing transparency and the true cost of medications continue to receive attention.

Recent updates to the federal Transparency in Coverage (TiC) regulations introduce new reporting and disclosure requirements for group health plans, insurers, third-party administrators (TPAs), and PBMs. With changes taking effect throughout 2027 and 2028, employers should begin preparing now.

What's Changing Under the New Rules?

The updated regulations aim to make health care pricing information more accurate, consistent, and accessible while reducing certain administrative burdens. However, they also introduce additional reporting and oversight requirements.

Key changes include:

• Reduced Reporting Frequency: Machine-readable files (MRFs) containing in-network negotiated rates and out-of-network allowed amounts will generally move from monthly to quarterly publication.
• Changes to In-Network Reporting: Negotiated rates will be reported by provider network rather than by individual health plan, changing how pricing information is organized and disclosed.
• Expanded Out-of-Network Reporting: The minimum claims threshold will decrease from 20 to 11 claims, and the historical reporting period will be extended.

Additional requirements include provider taxonomy, utilization, and website access information, along with formal accuracy attestations and oversight by a designated senior official.

For self-funded employers, these requirements deserve particular attention. Although TPAs and other vendors may prepare and publish the required information, plan sponsors remain ultimately responsible for compliance. Because employers may not have direct access to the underlying pricing data, reviewing vendor responsibilities and contractual agreements will be especially important.

Prescription Drug Pricing Takes Center Stage

One of the biggest changes involves prescription drug pricing disclosures. Beginning in December 2027, plans and insurers are expected to publicly report negotiated prescription drug rates and historical net prices, with monthly updates thereafter.

PBMs often maintain or manage much of the information needed for these disclosures. Employers should not assume their medical carrier or TPA will automatically handle every reporting requirement. Self-funded employers should begin discussions with their PBMs to determine whether the necessary data will be available, how it will be reported, and who will be responsible for its accuracy.

It’s important to note that these disclosures are separate from existing Prescription Drug Data Collection (RxDC) reporting. Completing RxDC reporting does not automatically satisfy the prescription drug MRF requirements.

More Information for Plan Participants

The updated rules also make it easier for employees and other plan participants to understand their potential health care costs. In addition to existing online and paper options, plans must provide personalized cost-sharing information by telephone upon request.

Required disclosures must also address applicable federal balance billing protections under the No Surprises Act.

These changes are intended to help participants compare providers, evaluate treatment options, and better estimate their out-of-pocket expenses.

When the New Rules Take Effect

Implementation will occur in phases throughout 2027 and 2028:

• January 1, 2027: Updated telephone disclosure and participant notice requirements generally apply to plan years beginning on or after this date.
• March 6, 2027: Applicability date for updated pricing file requirements, with initial updated files expected by April 1, 2027.
• September 6, 2027: Applicability date for additional contextual disclosure requirements, with initial provider taxonomy and website access files expected by October 1, 2027.
• December 2027: Prescription drug MRF disclosures are expected to begin, with monthly updates thereafter.
• July 1, 2028: Initial annual utilization file scheduled for publication.

Who's Responsible for What?

Although carriers, TPAs, and PBMs will generally play significant roles in preparing and publishing required disclosures, employers should not assume existing vendor agreements automatically cover these responsibilities. Reviewing contracts and clarifying responsibilities will be especially important as the new rules take effect.

For self-funded plans, employers remain ultimately responsible for compliance, even when reporting tasks are delegated to vendors. Key considerations include:

• Reporting Responsibilities: Confirm who will prepare and publish required disclosures and complete accuracy attestations.
• Data Access and Accuracy: Determine who will provide pricing information and ensure it is complete and accurate.
• Contractual Protections: Review vendor agreements to address reporting obligations and potential liability for incomplete or inaccurate information.

Written agreements may allow vendors to complete accuracy attestations on the plan's behalf, but employers should consider discussing additional contractual protections with legal counsel.

For fully insured plans, written agreements may generally assign disclosure responsibilities to the insurer. Employers should still confirm these obligations are covered and that required participant disclosures will be available.

Preparing for Greater Transparency

The updated TiC requirements bring prescription drug pricing further into the transparency conversation and place increased attention on PBMs.

While some changes may ease administrative burdens, the expanded disclosure requirements make coordination between employers and their vendors more important than ever.

Employers can get ahead of these changes by reviewing existing contracts, identifying reporting responsibilities, and communicating now with carriers, TPAs, and PBMs. Knowing who has the information, who is responsible for reporting it, and who is accountable for its accuracy will be just as important as the information itself.