Why DIR Fees are causing problems and what is being done

Oct 10, 2016DIR Fees, Independent Pharmacy Insights

Direct and Indirect Remuneration (also known as DIR Fees) (1) are complicated. They are even more complicated when they are imposed on independent pharmacies by prescription drug plan sponsors, their intermediaries and pharmacy benet managers (PBMs). Even though no one likes to pay a fee, the issues don’t stem from the fee assessment itself, rather the manner in which they’re assessed and charged (2).

What’s the real issue?

DIR Fees are creating a negative impact specifically due to the timing in which reconciliations take place and fees are assessed. Instead of the fees being calculated and deducted from each claim— at the time reimbursement is made, plans and PBMs instead perform reconciliations —sometimes months after the reimbursement is received by the pharmacy—and charge back the fees at a later date. This makes it nearly impossible for a member pharmacy to properly calculate their reimbursement rate over the life of a contract (2).

Who’s aware of the situation?

The Centers for Medicare and Medicaid Services (CMS) is aware of the situation and has even voiced concern over the potential for inaccuracies in measuring preferred pharmacy pricing (3). To address issues from DIR Fees, CMS published a Proposed Guidance on Direct and Indirect Remuneration (DIR) and Pharmacy Price Concessions in 2014. This publication put in place parameters that require each plan sponsor or PBM’s contractual price with a pharmacy to be a net of all price concessions, with the exception of those that cannot be reasonably determined at the point of sale. This publication is a denite step in the right direction, leading toward transparency. Further, it would enable pharmacies to accurately determine reimbursement rates and manage cash flow— effectively keeping prices down for customers (2).

What steps are being taken now?

Organizations such as the National Community Pharmacists’ Association continue to put pressure on CMS. In addition, on June 15th of this year, 16 U.S. Senators petitioned CMS for movement in finalizing the proposed guidelines (4).

Once finalized, the guidelines will likely contribute to the necessary transparency pharmacies are looking for with regard to their reimbursement rates, and CMS and plan beneficiaries require regarding the true cost of prescription drugs at each pharmacy (2). alliantRX will continue to update you with the status of DIR Fees and proposed guidelines. Stay tuned for more information.

1. Link to: “What Are DIR Fees and Why Do They Matter Blog
2. http://www.ncpa.co/pdf/dir-one-pager-2016.pdf
3. http://www.ncpa.co/pdf/faq-direct-indirect-remuneration-fees.pdf
4. http://www.ncpa.co/pdf/senate-dir-letter-061516.pdf