Direct and indirect remuneration (DIR) fees are the bane of many pharmacists’ lives. Now, changes may be coming. At last.
“DIR fees have been disastrous for community pharmacy in part because of how much money they are clawing back, but just the uncertainty, the unpredictability of it is also a problem,” says Bradley J. Arthur, RPh, co-owner of two independent pharmacies in Buffalo, NY, and past president of NCPA. DIR fees originated when Medicare Part D was created in 2006, Arthur says, but the fees charged by plans or pharmacy benefit managers (PBMs) have become more prominent—and more detrimental to pharmacies—in recent years.
On April 3, CMS issued a final 2019 Medicare Part D rule that asserted its authority to require a portion of DIR fees to be assessed at the point of sale. The rule doesn’t actually make the change, but opens the door for further discussion about how the fees are assessed. According to the rule, any formal changes to DIR fees “would be proposed through notice and comment rule-making in the future.”
Pharmacy officials see this move as a step in the right direction.
“In this rule, CMS hints strongly that it is concerned about retroactive pharmacy DIR, that it has the statutory authority to address the issue, and that there may be further rule-making to deal with it in the months ahead,” said NCPA CEO B. Douglas Hoey, RPh, MBA, in a release. “That’s very promising. This rule simply telegraphs the next step in the process.”
This change comes months after CMS solicited comments on a suggestion within the proposed 2019 rule that the DIR fees be assessed at the point of sale rather than retroactively.
“We are gaining traction,” says Ronna Hauser, vice president of regulatory affairs for the NCPA.
CMS’ rule change also comes after bills were introduced into the House and Senate in February 2017. These identical bills would bar retroactive DIR fees and improve transparency by requiring that DIR fee assessments be made at the point of sale. Both bills remain active at press time and have earned support from legislators.
Some in the pharmacy industry are optimistic that these efforts could eliminate retroactive Medicare Part D pharmacy fees that cause reimbursements to shrink well after a sale has been made.
“I think a lot of folks didn’t fully appreciate the impact of DIR fees until they were up to an amount where it was starting to affect their cash flow,” says Arthur. “If you quietly take a couple hundred bucks from me in a month, it’s probably not going to rise to the level where I am going to react to it, but when it started getting into the thousands and tens of thousands—and I hear of single stores now where it’s $60,000 a year in DIR fees—now you are talking about amounts of money that are deal breakers for some small, single store pharmacies.”