Navigating the Maze: DIR Fees
- Tom Modeen
The Centers for Medicare and Medicaid Services (CMS) created Direct and Indirect Remuneration or DIR Fees as a way to track the annual amount of drug manufacturer rebates and other price adjustments applied to prescription drug plans. The fees are impacting the total cost of Medicare Part D medications. Here is a great source on DIR Fees:
The original intention of these fees was to pass rebate savings from a PBM to Medicare. They quickly became fees a pharmacy pays a PBM for network participation or for filling a prescription.
DIR Fees have levied an enormous amount of financial stress on the pharmacy community due to a lack of transparency on just how these fees are accessed and if they are aiding CMS in staying on budget. In a recent op-ed, the CEO of NCPA revealed that 67% of pharmacies stated that PBMs provided no information on the amount or timing of these “clawbacks.”
Facts on DIR Fees
DIR Fees are deducted from the pharmacy reimbursements based on contractual obligations with PMBs and plan sponsors.
DIR Fees are not deducted at point-of-sale.
DIR Fee Reconciliation is generally executed by the PBM either quarterly or yearly. This makes payment reconciliation for the pharmacy virtually impossible. The only exception to this rule would be when the DIR Fee is a known entity based upon the agreed rate a pharmacy is charged to participate in a preferred network.
DIR Fees can be fixed or percentage-based fees
Often, percentage fee schedules may be represented as a percentage of the total cost of each drug.
DIR Fees may be based on your pharmacy’s performance
Your Medicare Star Ratings could weigh heavily in your DIR Fee accessment. It could also be based upon your generic dispensing rates, preferred product dispensing rates as well as error rates and audit performance. The lack of transparency and plan unique measurements further heighten the confusion.\
Looking Forward; Being Pro-Active
It is obvious that continual support of state and national pharmacy associations in pursuit of an equitable solution to the DIR Fees dilemma is critical. One should not discount the pressing need for pharmacies to get on board with elevating their Medicare Star Ratings. Initiatives such as implementing a medication adherence program, MTM case management and perhaps, medication synchronization which will provide better health outcomes for patients and perhaps, better financial outcomes for the pharmacy. The future survival of pharmacy is anchored to the core principals of the profession.