Which level of transparency involves the PBM disclosing all cash flows in the sponsor's contract?

The correct choice reflects the fundamental aspect of transparency in pharmacy benefit management. Level 1 transparency requires that the Pharmacy Benefit Manager (PBM) provides full disclosure of all cash flows associated with the sponsor's contract. This means that the PBM must clearly outline the financial transactions, including all fees, rebates, and any other financial movements that occur throughout the management of the pharmacy benefits. This level of openness is critical for sponsors, such as employers or insurance companies, to understand how funds are being allocated and to ensure that they are receiving the expected value from their PBM agreements.

This foundation of transparency enables sponsors to make more informed decisions about their pharmacy benefit plans, as it provides insight into the actual costs and savings associated with the plan. Understanding every cash flow allows sponsors to assess the effectiveness of their benefit management and to evaluate whether the PBM is acting in their best interests.