What Happened?

If you are one of about six million full-benefit dual-eligible Medicare enrollees with incomes at or below 100% of the federal poverty level, a proposed rule would cut your generic-drug copay from $1.60 to $0 starting in plan years beginning January 2028. ​

The Department of Health and Human Services (HHS) proposed the change as part of a broader rule that would also bar pharmacy benefit managers (PBMs) from receiving most compensation beyond flat-dollar service fees for Medicare Part D drugs, according to a Legis1 review of the proposed rule.

The proposed rule implements three provisions of the Consolidated Appropriations Act, 2026 (CAA). The proposal covers three changes:

  • Generic drug copays eliminated: Enrollees with incomes at or below 100 percent of the federal poverty level would pay nothing for generic drugs under Medicare Part D beginning Jan. 1, 2028.
  • Provider directory accuracy: 708 Medicare Advantage (MA) organizations would have to verify each listed provider's directory information at least every 90 days for specified network-based plans, and remove noncontracted providers within five business days. CMS would post accuracy scores in a machine-readable file starting in contract year 2029, and MA organizations would have to display those scores prominently in their directories.
  • PBM pay limits: under the proposed rule, PBMs generally could not receive compensation tied to Part D drug use beyond flat-dollar service fees at fair market value, with three exceptions: incentive payments from a plan sponsor that meet statutory requirements, manufacturer rebates fully passed through to the plan sponsor, and flat dispensing fees plus reimbursement of ingredient costs.

Why Does it Matter to Me?

The generic copay being eliminated was first set at $1 in 2005 and has climbed with inflation to $1.60 for plan year 2026. The Consolidated Appropriations Act, 2026 requires it to drop to $0 for plan years beginning Jan. 1, 2028, and ends the annual inflation adjustment for this group.

The Centers for Medicare and Medicaid Services (CMS) estimates the net federal cost of eliminating the copay at approximately $1.34 billion from 2028 through 2037, the result of a $1.46 billion benefit impact offset by $124 million in higher Part D plan premiums.

The Congressional Budget Office (CBO) estimates that restricting PBM pay would reduce federal direct spending by approximately $444 million from 2026 through 2035, though CMS says it lacks enough data to estimate the full impact on the Part D program.

Both Sides, Now

CMS says the regulations are necessary to implement the Consolidated Appropriations Act, 2026. Supporters of limiting PBM compensation argue that steering more money away from middlemen lowers net drug costs for enrollees.

Critics contend the approach raises premiums and increases government spending. The Congressional Budget Office (CBO) estimated that a proposed HHS rule changing how PBM rebates are treated would increase federal spending by roughly $177 billion over 2020 to 2029 and raise Part D premiums, and critics have used that estimate to argue that restricting PBM compensation would not lower net drug spending.

What Happens Next?

Comments on the proposed rule are due Dec. 15. The 708 MA organizations subject to directory accuracy requirements would face combined first-year costs of about $6 million in contract year 2028, roughly 3.7 times the roughly $1.6 million they would face in each later year.

If finalized, all three changes would take effect with plan year 2028, and PBMs would have to submit their first annual reports under the new pay rules by July 1, 2028.

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