Choosing a fiduciary PBM could revolutionize your healthcare benefits. Importantly, ERISA now codifies key elements that must exist for a PBM-Plan arrangement to be judged reasonable, expanding on the reasonableness standard. For instance, a PBM-Plan contract cannot be deemed reasonable unless the PBM makes the following written disclosures:

• A description of the services that will be rendered to the Plan in accordance with the agreement;
• A declaration that the PBM, an affiliate, or a subcontractor will, or reasonably anticipates providing, services in accordance with the agreement directly to the Plan in its capacity as fiduciary;
• A breakdown of each direct payment that the PBM, an affiliate, or subcontractor anticipates receiving in relation to the services rendered, whether in total or by service;
• A description of all indirect payments that the payer expects to make to the PBM, an affiliate, or a subcontractor in connection with the services mentioned; this description should also include information about the contract between the payer and the relevant PBM, affiliate, or subcontractor that governs the payment of indirect payments;
• If compensation is determined based on transactions (such as commissions, finder fees, or other similar incentive compensation based on business placed or retained), a description of any compensation that will be paid among the PBM, an affiliate, or a subcontractor in connection with the services, including identification of the services for which such compensation will be paid and identification of the payers and recipients of such compensation (including the status of the pay)
• An explanation of any remuneration that the PBM, an affiliate, or a subcontractor could be expecting to get in connection with the contract or arrangement’s termination, as well as how any pre-paid money will be computed and reimbursed after that [1].

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Additionally, PBMs are obligated by ERISA to provide any additional information on compensation received by the PBM in connection with the contract that is necessary for the Plan to meet its reporting obligations under the CAA. This information must be provided upon written request from the Plan [2]. Click here to learn more about TransparentRx, America’s first fiduciary model PBM.

[1] See 29 U.S.C. § 1108(b)(2)(B)(i) and (iii).

[2] See 29 U.S.C. § 1108(b)(2)(B)(vi).