Why “Transparency” Must Go Beyond Drug Prices

In our last SimsRx blog, we broke down the major medication pricing benchmarks—NADAC, WAC, AWP, MAC, U&C, PAC—and explained how they shape what hospices pay.

But pricing transparency alone is not enough. A hospice’s true medication costs are also affected by:

• How PBMs negotiate with pharmacies

• Whether rebates or incentives are being applied (or retained)

• How claims data is shared or withheld

• Whether the hospice can see what pharmacies are reimbursed

• How network or per-diem arrangements are structured

• Whether hospices are allowed to speak directly with pharmacies about pricing

When these factors are hidden, hospices lose visibility into the full financial ecosystem of their medication spend.

At SimsRx, we view transparency as end-to-end visibility, not just price tags.

1. Rebate Transparency: Where Do the Dollars Go?

Rebates are one of the most misunderstood elements of pharmacy benefits. While rebates are more common in Medicare Part D and commercial plans, some PBMs use rebate-like incentives even in hospice.

Key questions to ask:

• Are rebates or manufacturer incentives being collected on hospice prescriptions?

• If so, are those savings passed back to the hospice—or kept by the PBM?

• Are rebates influencing the formulary recommendations you receive?

A lack of rebate transparency can lead to:

• Higher drug costs for the hospice

• Incentives to dispense certain drugs regardless of clinical need

• Formularies designed to maximize PBM revenue, not quality

Hospices should insist on clear disclosure of any manufacturer or third-party incentives tied to medication decisions.

2. Claims Data Transparency: The Foundation of Oversight

If a PBM does not share claims data, a hospice cannot:

• Verify what the pharmacy was reimbursed

• Compare costs against NADAC or AWP benchmarks

• Detect spread pricing

• Track formulary trends

• Audit medication utilization

• Identify outlier costs

Lack of claims data is one of the biggest red flags in hospice pharmacy benefits.

A transparent PBM should provide:

• Complete claims files (NCPDP format or equivalent)

• What the pharmacy was paid

• What the hospice was charged

• Benchmark comparisons

• Utilization reports

Hospices that cannot see claims data cannot accurately evaluate their medication spend—which is precisely why some PBMs refuse to share it.

3. Pricing Transparency: Eliminating Hidden Margins

For hospice, pricing transparency means understanding:

• What the PBM pays the pharmacy

• What the PBM charges the hospice

• Whether spread pricing exists

• What benchmarks drive pricing

• Whether any margin is added on top of the pharmacy reimbursement

• How dispensing fees or per-diem fees are calculated

Red flags include:

• Per diem pricing with no claims-level detail

• MAC lists that are not disclosed

• No visibility into pharmacy reimbursement rates

• Different benchmarks used for pharmacy vs. hospice billing

• PBMs refusing to reconcile pricing with NADAC or acquisition cost

Transparent pricing = no hidden margin, period.

4. Pharmacy Negotiation Transparency: Can the Hospice See What’s Really Happening?

Some PBMs restrict hospices from contacting pharmacies about:

• What the pharmacy is being paid

• How dispensing fees are set

• Contract terms between the PBM and pharmacy

• Whether pharmacies are being underpaid

These restrictions are a major warning sign.

Hospices should be able to:

• Speak openly with their network pharmacies

• Understand how pharmacies are reimbursed

• Ensure fair and sustainable payment models

• Confirm that cost savings aren’t coming from pharmacy underpayment

When PBMs prohibit direct conversations between hospice and pharmacy partners, it’s often to hide unfavorable arrangements—such as paying pharmacies significantly less than what the hospice pays the PBM.

Hospice deserves transparency on both sides of the contract.

5. Red Flags Hospice Leaders Should Watch For

🚩 1. Per-Diem Pricing Without Claims Detail

You cannot evaluate cost, utilization, or pharmacy reimbursement if you don’t see claims.

🚩 2. PBMs That Will Not Share Claims Data

This is the clearest sign that spread pricing or margin manipulation may be occurring.

🚩 3. Ban on Talking to Pharmacies About Pricing or Payments

No hospice should be prevented from understanding how its pharmacy partners are paid.

🚩 4. Two-Tiered Pricing Models

One benchmark for the hospice, another benchmark for the pharmacy.

🚩 5. Lack of Disclosure on Rebates or Incentives

Even if rebates are rare in hospice, any incentive that drives medication selection should be disclosed.

🚩 6. No Visibility Into How MAC Lists Are Created

Opaque MAC pricing hides margin and complicates oversight.

Transparency is the antidote to all of these issues.

Building a Transparent Pharmacy Benefit Model for Hospice

A transparent pharmacy benefit model includes:

• Full claims-level transparency

• Clear pricing benchmarks

• Disclosure of pharmacy reimbursement

• Open communication between hospice and pharmacy

• No spread pricing

• No hidden margins

• Clear cost and utilization reporting

• Honest alignment between clinical care and financial integrity

At SimsRx, we believe hospices deserve a PBM partner who operates openly, honestly, and collaboratively—never behind closed doors.

Final Thoughts

Medication transparency in hospice pharmacy benefits must go beyond the drug price itself. Hospices deserve clarity on rebates, claims data, pharmacy reimbursement, and contract structures. Without transparency, costs rise, quality suffers, and hospices lose the ability to manage their medication spend responsibly.

Empowered hospice leaders—armed with the right data, clear reporting, and transparent partners—can transform medication management from a black box into a predictable, accountable, and clinically aligned system.

References

• U.S. Government Accountability Office (GAO).
  Prescription Drugs: Actions Needed to Address Pharmacy Benefit Managers’ Use of Pharmacy Rebates and Other Fees.
  GAO-21-635. Published 2021.
  This report details how PBM rebates, pricing decisions, and spread practices impact drug costs across healthcare settings, including hospice.

• Office of Inspector General (OIG), U.S. Department of Health & Human Services.
  Medicaid Pharmacy Pricing and Reimbursement: MAC Prices and Pharmacy Reimbursement.
  OIG-14-06687, published 2014.
  Provides clear analysis of MAC list variability, lack of transparency, and reimbursement inconsistencies.

• National Council for Prescription Drug Programs (NCPDP).
  Pharmacy Claims Standard (Telecommunication Standard Implementation Guide).
  Describes the requirements for claims data, reporting, and transaction transparency—relevant to hospice claims-sharing expectations.

• Health Affairs / Milliman Research.
  PBM Practices and Transparency: Impacts of Spread Pricing, Two-Sided Pricing Models, and Claims Visibility.
  Often cited for documented impacts of PBM spread pricing and the necessity of claims-level transparency.

• Centers for Medicare & Medicaid Services (CMS).
  Drug Pricing and Negotiation Transparency Requirements under CMS Programs.
  CMS Policy Guidance (multiple years).
  Provides regulatory expectations for price transparency, benchmark reporting, NADAC utilization, and pharmacy reimbursement visibility.