The National Association of Insurance Commissioners (NAIC) is developing a PBM-specific framework to make market conduct examinations more consistent across jurisdictions. The framework is still moving through the NAIC process, but the current draft gives PBMs a clearer view of what regulators may examine.
The draft reaches into 10 areas spanning everything from pricing, claims and rebates to contracts, network adequacy, utilization review and pharmacy audits. In many cases, the focus goes beyond written policies and procedures and into the underlying contracts, data, records and individual transactions needed to verify compliance.
For PBMs operating across multiple states, examination readiness depends on connecting each jurisdiction’s requirements to clear evidence that they were followed.
1. PBM Operations and Management
NAIC’s draft directs examiners to review the controls supporting a PBM’s broader operations, including audit programs, information system controls, antifraud measures, privacy, regulatory reporting and oversight of functions performed by outside entities. For PBMs, readiness goes beyond maintaining written policies to having records that support those controls and delegated-function oversight.
What PBMs should have ready: Audit and monitoring records, key control documentation, regulatory reporting records, evidence of vendor oversight and a centralized repository that keeps examination materials organized and accessible.
2. PBM Pricing and Methodologies
The draft standards look at the relationship between what health plans are charged and what pharmacies are reimbursed under applicable state requirements. Review can include spread pricing, pharmacy reimbursement methodologies, pricing sources, dispensing fees and effective-rate reconciliations, with examiners comparing contracts and policies against billing and claim-level data.
What PBMs should have ready: Health plan and pharmacy contracts, pricing and reimbursement policies, relevant claims and billing data, reconciliation records and documentation organized by segment, client type and line of business, including fully insured, self-funded and ERISA plan arrangements where applicable.
3. Contracts
The draft’s contract standards address pharmacy contracting and negotiations, vendors performing PBM functions that interact with pharmacies and pharmacy dispute processes. One standard even specifically examines whether PBMs exercise “good faith and fair dealing” in pharmacy contracting and negotiations. Review can extend to provider manuals, amendments, emails, redlines and other communications about how terms were negotiated, updated and implemented.
What PBMs should have ready: Executed agreements, provider manuals, amendment histories, relevant contracting correspondence, vendor agreements, pharmacy dispute records and documentation for leased-group, parent-company or compliance-partner arrangements that may affect how agreements and manuals are drafted, received, updated or commented on.
4. Pharmacy Claims
The draft calls for timely and transparent claims submission and adjudication processes that give pharmacies visibility into payment rates before submitting claims. Examiners can review reimbursement, pricing sources, fees, payment timing, rejected claims, reversals and appeals—and the draft even suggests considering live demonstrations of claims adjudication.
What PBMs should have ready: Claims policies, defined claim-level data, applicable pharmacy contracts and supporting records for sampled, rejected or appealed claims.
5. Pharmaceutical Manufacturer Rebates
The draft rebate standards include whether manufacturer rebates and other applicable rebate-related items are handled according to governing legal and contractual requirements. Depending on the requirement involved, that can include amounts received through aggregators, pass-through to health plans or other covered entities, point-of-sale credits and regulatory reporting.
What PBMs should have ready: Manufacturer, aggregator and health plan agreements; records of rebate receipts, remittances and credits; and supporting reconciliation and reporting documentation.
6. Pharmacy Network Adequacy
The draft addresses how pharmacies are credentialed, how networks are built and changed and whether members have appropriate pharmacy access. One standard asks PBMs to demonstrate a sufficient number and types of pharmacies to provide access without unreasonable delay based on applicable requirements. Examiners can also review pharmacy location, network participation, pharmacy type and affiliate status, which can be especially important when a PBM operates virtually or relies on contracted, mail-order, specialty, affiliate or brick-and-mortar pharmacy access.
What PBMs should have ready: Credentialing records, pharmacy-level network data, network contracts, change communications and evidence supporting applicable access requirements, including documentation that distinguishes company licensure from the physical pharmacy locations used to satisfy network adequacy standards.
7. Utilization Review
For PBMs that perform utilization review, the draft examines the clinical criteria, governance, staffing, timeliness and communications behind utilization-management decisions. Examiners can also review individual approvals, denials, reconsiderations and how PBMs oversee utilization review performed by outside organizations. Because many utilization review requirements depend on state law and clinical oversight standards, PBMs need to be able to show who is authorized to make or sign off on determinations, including physician, RN/APRN, pharmacist, clinical peer or other credentialed-reviewer involvement where required.
What PBMs should have ready: Current and historical clinical criteria, utilization-review policies and governance records, credentialing documentation for clinical reviewers, sampled decision files, sign-off records where required and documentation of delegated-function oversight.
8. Drug Formulary, Placement and Specialty Drug
Within this examination area, the draft focuses on three main questions: whether the PBM maintains a compliant formulary program, follows applicable requirements governing access to medications and applies a state’s specialty drug definition appropriately when one exists. For compliance teams, the practical challenge is being able to reconstruct the basis for a drug’s tier, specialty designation or access restriction under the requirements in effect at the time.
What PBMs should have ready: Historical formularies and specialty drug lists, P&T committee records, prior authorization and step therapy criteria, and documentation supporting drug placement and access decisions.
9. Complaints, Grievances and Appeals
The draft standards address complaint, grievance and appeal registers, written procedures, response timeframes and compliant outcomes. Examiners may reconcile PBM records against complaints received by the state and sample individual cases, including issues arising in auditing, credentialing and network enrollment. That means PBMs need a consistent tracking process for routine grievances as well as escalated matters that reach an appeal, ombudsman or state consumer-assistance process.
What PBMs should have ready: Complaint, grievance and appeal registers, written procedures, supporting records for sampled cases, documentation of resolutions and required remedies and escalation records for matters involving state agencies, ombudsman offices or other consumer-assistance channels.
10. Pharmacy Audits
The proposed pharmacy audit standard examines whether PBMs maintain reasonable and uniform audit criteria and procedures and follow those procedures when conducting audits. Review can span initiation, methodology, notices, supporting documentation, pharmacy responses, findings, financial adjustments and appeals. The draft also calls for information on any artificial intelligence used in pharmacy auditing and related AI policies.
What PBMs should have ready: Pharmacy audit policies, an inventory of audits during the examination period, complete supporting files for sampled audits and third-party auditor or AI-related documentation where applicable.
What the Draft Means for PBM Examination Readiness
Across the 10 examination areas, the draft repeatedly connects applicable requirements to the records used to test compliance. Contracts, policies and procedures can be tested against claims, reimbursement data, communications, clinical decisions and individual case files.
The framework may bring more consistency to how PBM examinations are conducted across jurisdictions, but the underlying requirements can still vary from state to state. Knowing which rules apply, where the supporting evidence lives and how to produce it for the appropriate jurisdiction can make examination readiness much more manageable.
ClearFile gives PBM compliance teams real-time visibility across jurisdictions, with state-specific regulatory guidance, centralized documentation and the tools to keep compliance work organized and audit ready. See how ClearFile can help your team stay ahead of evolving requirements and prepare for regulatory examinations.
