How Contract X-Ray scores a PBM contract.
A transparent framework grounded in explicit contract language, aligned with ERISA fiduciary standards and CAA 2026.
01 · What we score
Scores reflect explicit contract language, not business practices or marketing claims.
Every Contract X-Ray score answers one question: does this provision support the employer’s fiduciary obligations? The employer plan sponsor is the fiduciary. The PBM is not. The contract is the artifact that defines whether the plan sponsor has the language it needs to meet that obligation.
When language is absent, we say so. “The contract is silent on this provision” is its own finding. Silence costs points, because a contract that does not address a fiduciary requirement does not support the plan sponsor when the requirement matters.
Verbal commitments, RFP responses, marketing claims, and operational practice are out of scope. We score the document the parties signed.
We score what the contract says, not what the PBM says.
02 · The framework
Ten provisions, three domains.
Every analysis evaluates the same ten provisions, grouped into three fiduciary domains. Each provision carries equal weight (10 percent of the total score), and the ten provisions roll up into the Fiduciary Alignment Score on a 0 to 100 scale.
Domain 1
Fiduciary Conduct
Fiduciary Loyalty Commitment
Whether the PBM contractually supports the plan sponsor’s fiduciary obligations or disclaims them.
Conflict of Interest & Neutrality
Disclosure of ownership, affiliate transactions, and revenue from third parties.
Lowest Net Cost & Clinical Integrity
Whether formulary design prioritizes lowest net cost and clinical evidence over rebate maximization.
Domain 2
Financial Integrity
Pass-Through Pricing Integrity
Whether the plan sponsor pays the actual cost of the drug, with no spread retained by the PBM.
Rebate & Manufacturer Revenue
Whether 100 percent of manufacturer rebates and other manufacturer-derived revenue flow to the plan.
Administrative Fee Transparency
Whether all PBM revenue sources are disclosed and consistent with an arms-length administrative relationship.
Domain 3
Oversight and Control
Data Ownership & Rights
Whether the plan sponsor owns and can access its claims, eligibility, and rebate data without restriction.
Audit Rights & Verification
Whether the plan sponsor can audit the contract’s financial terms with meaningful scope, frequency, and independence.
Carve-Out & Vendor Rights
Whether the plan sponsor can engage alternative vendors (specialty, mail, biosimilar) without financial penalty.
Termination & Clean Exit
Whether the plan sponsor can exit the contract on reasonable terms and transition without operational hostage-taking.
03 · How we score
A five-tier scale, calibrated against a reference set of contracts.
Each provision receives a score from 0 to 100, placed in one of five tiers. The tiers describe the strength of contract language against the fiduciary standard for that provision.
The ten provisions are equally weighted at 10 percent each. They roll up to a single 0 to 100 Fiduciary Alignment Score, which itself maps to the same five-tier scale and serves as the headline number on every report. Each contract is scored against a reference set drawn from 20+ distinct PBMs, so a score is both an absolute measurement and a market-relative one.
04 · How the framework was built
Expert-developed rules, applied the same way every time.
The Contract X-Ray framework was developed with input from 30+ experts in ERISA fiduciary law, PBM contracting, employer health plan governance, and benefits consulting. Their judgment is codified into the scoring rubric: specific rules, specific evidence requirements, specific thresholds. The expert panel decides what counts as a Red Flag. The framework records that decision.
Once the framework exists, the scoring itself is automated. Every contract runs through the same rubric the same way. No analyst freelances a score, and no contract is scored against a different bar than the one before it. Automated application is what makes results consistent across contracts and reproducible over time.
05 · Regulatory alignment
Aligned with the standards plan sponsors are already accountable to.
ERISA sets the fiduciary obligation for private-sector employer plans. The ten provisions track directly to fiduciary duties of loyalty, prudence, and reasonable cost. Government plan sponsors operate under applicable state and federal law rather than ERISA, but the same provisions apply because the underlying questions about contract language do not change.
CAA 2026 codifies disclosure and oversight requirements that intersect directly with several provisions, particularly audit rights (P5), data ownership (P4), rebate transparency (P3), and administrative fee transparency (P10). A contract that scores well on these provisions is a contract that supports CAA 2026 compliance work.
The framework is developed and maintained by Nautilus Health Institute, an independent 501(c)(3) nonprofit, in collaboration with partners who share the goal of advancing fiduciary-aligned PBM contract standards.
06 · Out of scope
What Contract X-Ray does not evaluate.
A contract score is not a verdict on the PBM. The framework answers one question well. It does not answer others.
- Service quality and operational performance. Customer support, claims processing speed, member experience, clinical program outcomes, and network breadth are real and important. They live outside this framework.
- Marketing claims and verbal commitments. RFP responses, sales presentations, account-team assurances, and the value proposition in a PBM’s pitch deck are not part of the analysis. Only the executed contract is.
- Whether the PBM is the right partner. A high score means the contract supports the plan sponsor’s fiduciary obligations. A low score means it does not. Whether to remain with the PBM, renegotiate, or transition is a decision for the plan sponsor, advised by counsel.
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