Managing Profit & Loss: The Importance of Data in Reducing DIR Fees

For independent pharmacy owners, managing Direct and Indirect Remuneration (DIR) fees on Medicare Part D claims can feel like a guessing game with potentially serious implications. DIR fees are assessed and “clawed back” weeks or even months after adjudication at the point of sale. The fee amounts can vary significantly – given that they are tied to performance-based contracting – and in some cases, they result in a net loss for the pharmacy. The fees are often lumped together, which makes it more difficult and time-consuming for pharmacies to analyze which claims are subject to DIR clawbacks.

The National Community Pharmacists Association (NCPA) reported that two-thirds of the pharmacies surveyed said PBMs “provided no information on the amount or timing of DIR fees.” Furthermore, nearly nine in 10 said DIR fees were “significantly affecting their pharmacy’s ability to provide care and stay in business.” This lack of transparency, coupled with the delayed (post-adjudication) nature of DIR fees, creates obstacles that can be challenging for pharmacies to overcome on their own.

For these reasons, it has become essential that pharmacies have a support system in place to decrease the chance of losses from DIR fees. A high-performing Pharmacy Services Administrative Organization (PSAO) will offer the right tools for enhanced performance as well as visibility. But those tools – and the PSAOs that offer them – are not all the same.

When choosing a PSAO partner, look for one that provides multilayered visibility into fees, performance goals and measurements on a user-friendly platform. Armed with the right data-driven insights, independent pharmacies should have the ability to:

  • Access an individual member portal that shows their payers and associated fees
  • Actively monitor performance across multiple payers and check overall scores
  • Narrow down the focus to gauge performance for one specific payer
  • Identify patients who are bringing scores down (“outliers”), so pharmacies can reach out to them and help address issues such as low adherence rates
  • Keep operational efficiency and profitability at a higher level

A great PSAO will provide personalized guidance to ensure you understand how to access – and act on – the data to drive greater profits and fewer losses. Such hands-on, pharmacy-centric guidance should include:

  • A thorough explanation of how to take full advantage of the data
  • Education about what the pharmacies are being measured on regarding DIR fees
  • Visibility into how the entire network is performing to help each member pharmacy benefit from higher scores and lower fees

Additionally, a true PSAO partner will provide a Medication Therapy Management (MTM) platform, which can be used for comprehensive medication reviews (CMRs) with patients. Because CMRs are included in the metrics that determine DIR fees with some major payers, pharmacies that use MTM platforms can check adherence rates and engage lagging patients, even on plans where CMRs are not required – all of which can help lower DIR fees across the board. Adherence check-ins on MTM platforms can have financial incentives for pharmacies as well.

For independent pharmacies, the successful management of DIR fees is a key component of staying profitable and competitive. With the help of a PSAO that is focused on supporting you and your unique financial challenges, you can improve your awareness, understanding and response to DIR fees, for better management and better results.

To learn more about how Pharmacy First can help, contact us.

About the Author

Todd Wormington is the Director, Pharmacy Programs for Pharmacy First and has over 25 years of pharmacy industry experience. His work as a practicing pharmacist helped frame a passion for direct patient care and led to a career focused on the clinical and operational resources required to deliver enhanced pharmacy services in a community-based setting.