Justin Wilson, co-owner of Valu-Med Pharmacy in Midwest City, OK, is very concerned about the survival of his business. Like many other independent community pharmacies across the country, the impact of direct and indirect remuneration (DIR) fees—in addition to other financial pressures—may push Valu-Med over the edge.
So far in 2017, pharmacy benefit managers (PBMs) collected $24,000 in retroactive DIR fees from Valu-Med several months after patients had filled scripts. “We’ve hit the bottom on medication reimbursement. We are buying medication as low as we possibly can, and now we have these retrospective DIR fees to deal with,” Wilson said. “I’m not sure how we can keep the doors open unless something changes soon.”
Plus, DIR policies vary widely and the fees are unknown, so Valu-Med is unable to plan for its financial future, Wilson said. “Each PBM calculates these fees differently and collects them at different times of the year. We really have no idea how we will be reimbursed on prescriptions. We are in a kind of ‘wait and see when the dust settles’ type of business model.”
As a result, the pharmacy is unable to offer raises to employees and is “being forced to look at decreasing staff levels/hours to make our business model work,” Wilson said. “This ultimately decreases the quality of care we can provide for our patients.”
Valu-Med is not alone in the DIR fee battle. “Independent community pharmacists cited this as their number one priority for 2017 by far,” said B. Douglas Hoey, RPh, CEO of NCPA. “We’ve seen some former owners cite this specifically as a factor in their decision to close their community pharmacy practice.”
Pharmacy DIR fees are higher than in 2016, and pharmacists have lost some customers because of their insurance plans.
“We have had to reject several preferred network contracts due to how aggressive their terms/fees were. We would have been upside down on every prescription filled if we took those rates,” Wilson said, without listing which plans were rejected. “Other than that, we are still accepting most plans as we do not want to turn our backs on the patients who have been coming to my family’s pharmacy since 1977.”
For example, Aetna’s new policy essentially eliminated independent pharmacies from its preferred network because of pushback from pharmacies on DIR fees, according to NCPA. “Our members have potentially lost customers, since independents that were preferred are not in Aetna’s preferred network any longer,” Hoey said.
Up next: What's coming next for DIR fees
However, Humana said that its new program will benefit community pharmacies. The insurer aims to provide a “true value-based preferred network opportunity that is based solely on widely-accepted standards of quality performance,” William Fleming, President of Humana Pharmacy Solutions, told Drug Topics last fall.
“We believe that inclusion in our preferred networks will allow community pharmacies to better compete for Humana members, potentially increasing patient volume, while pushing forward a movement in community pharmacy in improving quality of care,” Fleming said.
The program utilizes common pharmacy quality measures, including the rate of medication adherence for members taking diabetes, blood pressure, and cholesterol-lowering medications.
The highest performing pharmacies in Humana’s Quality Network, regardless of chain or independent affiliation, are then rewarded at a higher level to recognize their superior performance. The highest performing pharmacies—those above the 80th percentile—receive up to $6 per eligible claim. Pharmacies in the 50th to 80th percentiles receive up to $2 per eligible claim.
Is DIR relief on the way?
Despite the current financial pressure of DIR fees, NCPA is optimistic that bipartisan legislation to prohibit them will be passed this year.
In mid-February, Senators Shelley Moore Capito (R-WVA) and Jon Tester (D-MT) introduced Senate Bill 413, which would prohibit pharmacy DIR fees from being applied after the point-of-sale for prescription drugs dispensed to Medicare beneficiaries. In the House, Representatives Morgan Griffith (R-VA) and Peter Welch (D-VA) introduced a companion bill: H.R. 1038, the “Improving Transparency and Accuracy in Medicare Part D Drug Spending Act.”
However, the Pharmaceutical Care Management Association (PCMA) opposes the legislation. While the “House bill might increase drugstore profits, it would raise premiums for beneficiaries and increase costs for taxpayers,” the organization said in a statement.
Meanwhile, NCPA is “encouraged by the bipartisan, bicameral support we are seeing so far,” Hoey said.
The importance of legislation to ban retroactive pharmacy DIR fees was essentially confirmed by the Centers for Medicare and Medicaid Services (CMS), according to NCPA. CMS recently released an analysis that illustrated how DIR fees can cost Medicare beneficiaries and taxpayers more money and push seniors into the Medicare Part D donut hole more quickly, according to NCPA.
“That is a game changer. It helps bring more focus on the issue as one that directly impacts seniors and taxpayers, in addition to community pharmacists. The attention to high prescription drug prices has also helped to shine a spotlight on the role PBMs play in adding costs to the system,” Hoey said.
However, PCMA said that the CMS report actually highlights how DIR reduces premiums for beneficiaries, which also leads to lower costs for the federal government. “Stable and affordable premiums contribute to a 90% satisfaction rate among Part D enrollees for their drug plan,” the organization said in a statement.