Although it’s a new year, independent community pharmacies are still fighting the same battles—especially when it comes to PBM transparency, inadequate reimbursements and DIR fees.
DIR fees, or direct and indirect remuneration fees, are retroactive fees that pharmacy benefit managers (PBMs) extract from pharmacies months after a claim has been submitted, rather than deducting them on a real-time basis.
It’s nearly impossible for independent pharmacies to assess their actual reimbursement rates with DIR fees, which makes it difficult for them to operate their businesses.
DIR fees leave pharmacies with a much smaller margin that initially expected, often even at a loss.
But independent community pharmacies and organizations like the National Community Pharmacists Association (NCPA) continue to fight back against DIR fees and hope to see change in 2017.
Here’s a look at what’s new with DIR fees this year—and how the struggle is improving.
CMS is assessing DIR fees
The Centers for Medicare & Medicaid Services (CMS) released a fact sheet in January 2017 that included an analysis of DIR fees.
According to CMS, total DIR reported by Medicare Part D sponsors has grown significantly in recent years.
“Part D sponsors and PBMs are engaging to a greater extent in arrangements that feature compensation after the point-of-sale, and the value of such compensation is also generally increasing,” CMS stated in the fact sheet. “As a result, CMS has observed a growing disparity between gross Part D drug costs, calculated based on costs of drugs at the point-of-sale, and net Part D drug costs, which account for all DIR.”
The analysis noted significant implications of DIR fees for Medicare Part D including:
- Beneficiary cost-sharing: DIR fees don’t reduce the cost of drugs for beneficiaries at the point-of-sale
- Medicare subsidy payments: More burden placed on beneficiary cost-sharing causes Medicare’s costs for these beneficiaries to grow
- Plan liability: More of the drug spend is being shifted into the catastrophic phase, and high-price-high-DIR arrangements have a disproportionate impact on plan liability
New legislation on DIR fees is introduced
If new bills proposed in the House and the Senate are passed in 2017, the DIR fee practices that negatively affect independent pharmacies could take a hit.
In February, the “Improving Transparency and Accuracy in Medicare Part D Drug Spending Act” (S. 413/H.R. 1038) was introduced in the House and the Senate.
The legislation would prohibit pharmacy DIR fees from being applied after the point-of-sale for prescription drugs dispensed to Medicare beneficiaries.
NCPA strongly supports a ban on retroactive DIR fees, and recently published a fact sheet on the benefits of the proposed bill.
Benefits of enacting the legislation include:
- Lower Medicare costs for taxpayers
- Greater transparency in drug pricing
- Reduced cost-sharing and greater budget predictability for seniors
- Preserved access to independent pharmacies
NCPA also noted that the bill will not lead to unaffordable Medicare Part D premiums or ban “pay-for-performance” programs, as CMS and the opposition have suggested.
Pharmacists can take action to fight DIR fees
Independent pharmacists can encourage legislators to take action by emailing their state senators and representatives and urging them to co-sponsor the bill.
They can also write a letter to the editor to voice their support for S. 413/H.R. 1038. NCPA has provided a sample support letter for pharmacists to use.
Additionally, pharmacists can submit a complaint to Medicare that can be used to provide examples of PBM abuse and unfair practices, such as DIR fees.
It’s important for pharmacists to voice their opinions and advocate for legislation that will ban DIR fees and allow for greater PBM transparency so they can continue to operate their businesses and serve their communities.
DIR fees are likely negatively affecting your pharmacy business. Here are five things every pharmacist needs to know about DIR fees.
