By Celynda G Tadlock, PharmD, MBA
President and Chief Payer Relations and Market Strategy Officer
A recent Pharmastar legislative win for PACE in Florida could reduce emerging costs associated with state regulatory audits across the PACE model. On March 24, 2026, after extensive Pharmastar investments in both state and federal lobby efforts, Florida enacted CS/HB 697, revising the definition of a “pharmacy benefits plan or program” to exclude those serving PACE organizations. As a result, effective July 1, 2026, PACE programs in Florida are exempt from state Office of Insurance Regulation (OIR) Market Conduct Examinations (MCE).
Although the PACE exemption applies only to Florida, Pharmastar is engaged in active efforts to extend this win beyond state borders.
The exemption highlights how aligning oversight with the unique structure of PACE, which is already regulated by CMS and Medicaid, can reduce unnecessary and duplicative costs while preserving program integrity.
Florida’s Prescription Drug Reform Act (SB 1550, 2023) subjected PBMs to MCEs, generating substantial audit costs even when PBMs exclusively serve PACE organizations already subject to CMS oversight.
A Pharmastar MCE of 2024 claims resulted in several hundred thousand dollars in state-billed audit costs paid by Pharmastar in 2025. Pharmastar collaborated with the impacted PACE organizations in Florida to appropriately include these expenses into their 2026 CMS bids, ultimately increasing costs to Medicare. The increased costs to CMS for a duplicative and burdensome state audit were key factors that supported the need for change in Florida.
Pharmastar recognized that this audit requirement posed a major cost to Pharmastar and CMS with no added value. As a result, Pharmastar decided to hire government relations firms based in Florida and Washington D.C. to lobby state lawmakers to get PACE exempted from the 2023 PBM reform bill. Pharmastar incurred 100% of the costs of hiring consultants in Florida and Washington, D.C., to fight the audit requirement. These costs were not passed on to CMS. In addition, Pharmastar invested significant staff time to these lobby efforts and to the MCE.
By exempting PBMs that serve PACE, the new law removes a regulatory burden that duplicates existing federal oversight. The result is reduced administrative costs, less financial pressure on PACE plans, and potential savings reflected in Medicare spending. Even for organizations outside Florida, this demonstrates how policy alignment can help control costs.
PACE is already subject to CMS One-Third Financial Audits, which review claims, rebates, and other financial elements. Additionally, PACE organizations select pharmacies, negotiate contracts, and rely on interdisciplinary teams to guide medication decisions. Duplicative state audits add cost without meaningful additional oversight.
High audit costs disproportionately affect smaller, transparent PBMs like Pharmastar that specialize in supporting PACE. Without relief, these requirements risk limiting competition and leaving fewer options for plans. Maintaining a diverse marketplace helps PACE organizations preserve flexibility, transparency, and alignment with the interdisciplinary care model.
Florida’s approach demonstrates that states can regulate PBMs aggressively while still carving out narrow exemptions for programs like PACE that are already subject to comprehensive federal oversight.
Perhaps most importantly, the Florida legislation sets a precedent. As other states consider PBM regulation, this approach demonstrates that policies can reflect the distinct structure of PACE. For organizations nationwide, it strengthens advocacy efforts to avoid duplicative requirements and protect program affordability.
As PBM regulation continues to evolve nationally, Florida’s experience offers a model for balancing accountability, cost control, and the unique regulatory structure of integrated care programs like PACE.
So, while Florida plans benefit first, all PACE organizations gain from the precedent. Aligning oversight, reducing unnecessary costs, and preserving competition helps support the long-term sustainability of PACE nationwide.
For more information on Pharmastar services, contact Gwen Southard at gsouthard@anewhealthrx.com.