CAA 2026 Part 5: The Employer Action Plan — What Employers Should Be Doing Now

For most employers, there is time to prepare. Many of the major commercial PBM requirements under CAA 2026 will not hit calendar-year health plans until 2029. I would not look at that as a reason to put this on the shelf for two years. I would look at it as an opportunity to get ahead of it.

Most of what CAA 2026 is asking employers and PBMs to address should already be part of good health plan management. Employers should know how their PBM makes money. They should understand where rebates and other manufacturer payments go. They should have access to their claims data. They should have meaningful audit rights. They should understand how their broker and other vendors are compensated. And they should have some record of why major health plan decisions were made.

You do not need to wait until 2029 to start doing any of that.

I would not start by assuming you need a new PBM. Start by figuring out exactly what you have today.

Pull out the current PBM contract. Not the proposal. Not the renewal spreadsheet. Not the presentation from the last RFP.

The actual contract.

Look at how rebates are defined. Find out whether the contract addresses other manufacturer payments. Determine whether spread pricing is allowed anywhere in the arrangement. Review the audit provisions. Find the language dealing with claims data. Look at specialty pharmacy requirements and affiliated companies. Read the termination provisions.

There should be a reasonably clear answer.

The PBM may charge an administrative fee. It may also generate revenue through manufacturer payments, pharmacy spread, specialty pharmacy, mail order, network arrangements or affiliated companies. None of those things automatically means the employer has a bad arrangement.

You just need to understand the arrangement.

If nobody on the employer side can explain how the PBM gets paid after reviewing the contract and talking with the PBM, I would keep digging.

If there is one thing I hope employers take away from this series, it is that a large rebate does not necessarily mean you have a good pharmacy deal.

For years, PBM proposals have made it very easy to focus on rebate guarantees because the numbers fit nicely into a spreadsheet. One PBM guarantees $X. Another guarantees $Y. The bigger number looks better.

Healthcare does not work that neatly.

The real question is what the prescription cost after everything is accounted for.

What did the plan pay? What did the employee pay? What did the pharmacy receive? What rebates, discounts or other manufacturer payments were generated? What did the PBM retain? Did an affiliated specialty pharmacy earn additional margin?

That is the number I would want to understand.

CAA 2026 should make more of the information necessary to answer that question available to employers. Once it is available, employers and their advisors need to actually use it.

If you are looking for a place to start analyzing pharmacy costs, specialty pharmacy would be high on my list.

A very small percentage of prescriptions can drive a huge percentage of total pharmacy spending. One specialty drug can cost tens or hundreds of thousands of dollars a year. Gene and cell therapies can reach into the millions.

At those prices, relatively small differences in acquisition cost or margin become meaningful very quickly.

Find out where your specialty prescriptions are being filled. Determine whether that pharmacy is owned by or affiliated with the PBM. Understand how the specialty pharmacy gets paid and whether alternative channels are available.

Look at biosimilars. Look at formulary decisions. Look at site-of-care opportunities where applicable. Look at whether the medication producing the biggest rebate is actually producing the lowest net cost.

The PBM's affiliated specialty pharmacy may be the best option.

If it is, the numbers should be able to show it.

PBM transparency gets most of the attention under CAA 2026, but I think employers should use this as an opportunity to look at compensation across the entire health plan.

Start with your broker or consultant.

How are they paid?

Is all compensation coming directly from the employer or carrier commission, or are there other payments connected to the account? Is there compensation from the PBM, TPA or other vendors? Would the advisor's compensation change if the employer selected a different vendor? Are there bonuses, overrides, referral fees or other arrangements tied to the business?

That does not mean the compensation is inappropriate. Advisors should be paid for the work they perform.

The employer should simply understand who is paying them.

I think the same standard should apply to everyone involved in managing the health plan. Transparency should not stop at the PBM.

Self-funded employers should take the same approach with their TPA.

Understand the administrative fees, network arrangements, data rights and outside vendor relationships. Ask whether the TPA requires or strongly prefers a particular PBM and why. Understand whether the TPA earns revenue from other vendors connected to the plan.

Look at network access fees, subrogation, dialysis arrangements, navigation programs, cost-containment services and other areas where additional fees or revenue-sharing arrangements may exist.

Fully insured employers have less control over many of these relationships, but that does not mean they should ignore them.

Ask the carrier what information is available. Ask about pharmacy reporting. Understand broker compensation. Find out what data you can access and what you cannot.

If the answer is that the carrier will not provide certain information, at least you know.

That lack of visibility is part of what the employer is buying when it chooses a fully insured arrangement and should be considered when evaluating whether that funding model still makes sense.

I continue to believe data access is one of the most important issues in employer healthcare.

If you are self-funded and paying the claims, you should have meaningful access to the data generated by those claims.

Medical and pharmacy claims data can tell an employer a lot about what is driving costs. High-cost claimants, specialty medications, chronic conditions, site of care, network utilization and other trends become much easier to understand when the employer has access to usable information.

The contract should clearly explain what data the employer receives and how often.

Can the employer receive claims-level information?

Can it be shared with the employer's consultant, actuary, pharmacy expert or analytics firm subject to appropriate privacy requirements?

Can the employer use the information to evaluate another PBM or TPA?

What happens to the historical data when the contract ends?

If an employer is funding millions of dollars in claims but cannot get enough information to understand those claims, I think that is a problem worth fixing.

A PBM contract may say the employer has the right to conduct an audit.

That sounds good until you read the next three pages explaining all the restrictions.

Who can perform the audit? What records can they review? How far back can they look? Can they verify pharmacy reimbursement? Can they review rebates and other manufacturer payments? Can they look at specialty pharmacy transactions? Can the auditor tell the employer what was found?

And what happens if the audit finds that money is owed to the plan?

An audit provision should allow the employer to independently verify that the PBM performed according to the contract.

If it does not accomplish that, I am not sure how useful the audit provision really is.

This is something I would address during the contract negotiation, not after a problem comes up.

This may be one of the biggest long-term changes I think will come from the continued push toward healthcare transparency.

Employers have spent years developing formal governance processes around retirement plans. Many organizations have a 401(k) committee that meets regularly, reviews fees, evaluates investments, monitors service providers and documents major decisions.

Then we look at the health plan.

That same employer may spend considerably more money on healthcare and manage most of it through a handful of meetings leading up to renewal.

I think that needs to change.

For larger employers, I would seriously consider creating a health plan fiduciary or benefits committee. It does not need to be complicated. HR, finance, leadership and the appropriate outside advisors can meet periodically to review the plan.

Look at claims performance. Review pharmacy trends. Evaluate vendor performance and compensation. Review important contract changes. Discuss upcoming renewals and longer-term strategy.

Then document what was discussed and what decisions were made.

This is not about creating more meetings.

It is about creating a process.

Most employers already have some type of process for making major benefits decisions. The problem is that very little of it gets documented.

The broker presents the renewal. HR and finance discuss the options. Leadership makes a decision. Open enrollment happens.

A few years later, nobody remembers exactly why a particular vendor or plan design was selected.

That is easy to improve.

Keep a short decision memo or meeting minutes. Document the vendors or options considered, the important financial differences, compensation disclosures, service considerations and why the final decision made sense for the plan.

Save the supporting analysis.

This does not need to turn into a legal brief.

You simply want a record showing that the decision was made thoughtfully based on the information available at the time.

I think the annual renewal process is one of the biggest limitations in employer health plan strategy.

Too many employers spend ten months of the year doing very little with the health plan and then try to solve everything during the 60 or 90 days before renewal.

By then, a lot of options are already off the table.

Changing a PBM takes time. Evaluating TPAs takes time. Stop-loss strategy takes time. Contract negotiations take time. Cost-containment programs take time to evaluate and implement. Employee communication takes time.

I would rather see employers operate from a multi-year strategy and review the plan throughout the year.

When the PBM reports arrive, review them.

When claims data identifies a problem, address it.

When a contract is approaching renewal, start the conversation early enough to negotiate it properly.

When a new cost-management opportunity becomes available, evaluate it instead of automatically waiting until next renewal.

The renewal should be one part of the strategy.

It should not be the strategy.

You do not need to overhaul everything tomorrow.

The next renewal meeting is a good place to begin.

Put CAA 2026 on the agenda.

Ask your PBM how it is preparing for the new requirements. Ask what additional reporting will become available. Ask how rebate and remuneration language may change. Ask whether the current contract will need to be amended.

Review data rights and audit provisions.

Ask about specialty pharmacy and affiliated companies.

Review broker and consultant compensation.

If the current PBM agreement is renewing or being extended over the next couple of years, pay particular attention to how the contract addresses future regulatory requirements.

I would be hesitant to lock an employer into a long-term PBM arrangement today without understanding how that agreement is going to work in the CAA 2026 environment.

One simple thing employers can do is create a central location for the documents related to health plan oversight.

Keep the PBM agreement and amendments.

Keep TPA and carrier contracts.

Keep broker and consultant compensation disclosures.

Save PBM reports, vendor analyses and audit results.

Maintain relevant gag clause documentation and attestations.

Keep RFP results and major vendor comparisons.

Save committee minutes and decision memos.

You do not need a complicated system. You need an organized record.

If somebody asks three years from now why the employer retained a PBM or how compensation was evaluated, you should be able to pull up the information without recreating the entire process from memory.

Before the major PBM requirements become applicable, I would want an employer to be able to answer some basic questions about its health plan.

**How does our PBM make money?** Understand known direct and indirect compensation associated with the arrangement.

**Where do our rebates and other manufacturer payments go?** Review the contractual definitions and understand what is passed through.

**Do we have spread pricing?** Know whether it exists anywhere in the arrangement.

**What is happening with specialty pharmacy?** Understand affiliated pharmacies, pricing, rebates, biosimilars and alternative sourcing opportunities.

**Can we get our claims data?** Confirm the employer can receive, analyze and retain appropriate medical and pharmacy information.

**Can we actually audit the PBM?** Make sure the audit provision provides a meaningful ability to verify performance.

**How is our advisor paid?** Understand broker and consultant compensation and potential conflicts.

**How are our other vendors paid?** Look beyond the PBM at the TPA, carrier and other health plan vendors.

**Who is responsible for oversight?** Someone inside the organization needs ownership of the process.

**Are we documenting major decisions?** Keep a record of what was considered and why decisions were made.

**Are we managing the plan throughout the year?** Do not wait until renewal to start asking questions.

Those are not just CAA 2026 questions.

They are good health plan management questions.

This is probably the biggest point I want to make as I wrap up this series.

It would be very easy for CAA 2026 to become another compliance project.

The PBM sends a report. Someone saves it. A box gets checked. Everybody moves on.

If that is all employers do with this information, we will have missed most of the opportunity.

CAA 2026 should give employers a better view into some of the areas of healthcare that have historically been difficult to see. How PBMs are compensated. Where rebate dollars go. What pharmacies are paid. How affiliated companies participate in the transaction. What advisors receive. What the actual net cost of prescription drugs looks like.

That information can help employers negotiate better PBM contracts, identify unnecessary costs, evaluate specialty pharmacy strategies, compare vendors and make better decisions for their employees.

That is where the value is.

CAA 2026 is part of a much larger change taking place in employer healthcare.

For a long time, employers have paid enormous healthcare bills while having surprisingly little visibility into what was happening behind them. We are slowly moving away from that model.

Employers are getting more data.

They are getting more information about compensation.

They are getting stronger transparency rights.

They are getting a better view of how healthcare dollars move through the system.

I think that is good for employers and ultimately good for employees.

But having access to information and actually using it are two very different things.

Someone still has to read the report.

Someone still has to understand the contract.

Someone still has to ask why the PBM is making money in a particular way.

Someone still has to question a specialty pharmacy arrangement that does not make sense.

Someone still has to compare the alternatives and make the decision.

That is where the opportunity sits.

The employers that treat this as another compliance requirement will probably end up with another folder full of reports.

The employers that use the information to ask better questions, negotiate better contracts and manage their plans throughout the year have an opportunity to build something much more valuable: