Lapis Lazuli – DIR Reform for Pharmacy’s Future

by Marketouch BACK TO BLOG.

The first half of 2021 has seen another valiant attempt by over 250 retail pharmacies, consumer advocacy groups, healthcare organizations, and a bi-partisan group of legislators to ensure that any pharmacy price concessions assessed by Pharmacy Benefit Managers (PBMs) are clearly conveyed at the pharmacy point of sale and that the PBMs are held accountable for retroactively back charging fees on pharmacies. These fees, also known as DIR fees, are the result of a current Medicare program loophole. It allows PBMs to recoup money for prescriptions which were previously paid to pharmacies, in some cases over six months after the medication was dispensed. PBMs are claiming they are entitled to do so due to that pharmacy’s performance on “quality measures”. However, the quality measures can be unknown, unpredictable, inconsistent, and outside of a pharmacy’s control.

DIR fees are leading to higher costs for patients at the pharmacy counter. The Centers for Medicare and Medicaid Services (CMS) has stated that eliminating these retroactive pharmacy DIR fees will save beneficiaries an estimated $7.1-$9.2 billion in reduced cost sharing. CMS has stated that from 2010 to 2019, DIR fees paid by pharmacies increased an incredible 91,500% percent. Imagine a loaf of bread in 2010 cost $1 but, in 2019, that same loaf of bread costs $916.

DIR fees oftentimes cause pharmacies to actually lose money when dispensing a prescription. Needless to say, retroactive DIR fees are making it more difficult for pharmacies to stay in business, thus reducing patient access to essential healthcare services. Many pharmacies have gone out of business. According to the Drug Channels Institute, after five years of declines, results from 2020 revealed that the number of urban and rural independent pharmacies dipped below 20,000 for the first time. There are over 1,500 “pharmacy deserts” now in America (towns located ten or more miles driving distance from the nearest retail pharmacy).

Enter The Pharmacy DIR Reform to Reduce Senior Drug Costs Act (H.R. 3554/S.1909). The goals of this bi-partisan legislation are:

  • Redefine “negotiated price” under statute to include all pharmacy price concessions at the point-of-sale, so that a senior’s cost-sharing will reflect all possible discounts
  • Eliminate the retroactive nature of DIR fees
  • Improve transparency in price concessions and fees by requiring Medicare prescription drug plans and Medicare Advantage drug plans to report (at least annually) any pharmacy price concession or incentive payment they apply after the point-of-sale
  • Establish a new pharmacy performance evaluation system to ensure that the measures a prescription drug plan or Medicare Advantage drug plan uses to assess pharmacy performance are fair, reliable, consistent, and transparent

The MarkeTouch team supports the efforts of these individuals and organizations to improve; prescription pricing transparency, access to high quality pharmacies, and improved patient clinical outcomes, which are all derived through fair, accurate, and timely pharmacy reimbursement. If you would like to see reform in the current DIR program, please contact your Congressional representatives and Senators to ask them to support The Pharmacy DIR Reform to Reduce Senior Drug Costs Act (H.R. 3554/S.1909).

If you would like to learn more about how to reduce your risk to DIR fees, please give us a call. MarkeTouch offers pharmacies and healthcare organizations patient engagement campaigns specifically designed to acquire new patients, retain your valuable customer base, grow your business, improve clinical outcomes and improve operational productivity. Our suite of clinical services center on improving your pharmacies’ contractual performance measures and positively impacting STAR ratings.

Until next time, take care.


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