Blog

Blog

Jun 30 2021

CMS Reveals Astonishing 91,500 Percent Increase in DIR Fees. PrimeRx™ Can Help Pharmacies Plan for Impact

You have to go all the way to page 242 of the Centers for Medicare & Medicaid Services' (CMS) fiscal year 2022 budget to find information about direct and indirect renumeration fees (DIR fees), but once there, the information is truly shocking. The document reads, "The data show that pharmacy price concessions, net of all pharmacy incentive payments, grew more than 91,500 percent between 2010 and 2019."

And there you have it. Pharmacies have long known that DIR fees were increasing at an alarming rate, and dramatically affecting their bottom lines, but who knew it was by 91,500 percent?

Not surprisingly, the CMS admission was met with shock by many in the pharmacy profession. "This is absolutely unsustainable," B. Douglas Hoey, chief executive officer of the National Community Pharmacists Association (NCPA), said in a press release. "It's completely out of control," he added, noting that "for context, a $4 gallon of milk increased by that much would cost $3,660." 

Hoey also noted that the typical community pharmacy pays roughly $81,000 each year in DIR fees, and that DIR fees have been cited as a reason why hundreds of pharmacies have closed their doors in recent years.

DIR fees are imposed on pharmacies by pharmacy benefit managers (PBMs), ostensibly as a way to reconcile rebates and price concessions that affect the price of a drug. However, these fees are usually collected after the point-of-sale and concern transactions long-settled in the pharmacy's books. Pharmacies have long complained about the seemingly arbitrary way in which fees are "clawed back" and the alarming rate at which they have increased. As a matter of fact, last year as pharmacists were at the front lines of the pandemic, NCPA reported 66 percent of pharmacies were experiencing negative cash flow issues due to DIR fees and decreasing reimbursement rates.

Not surprisingly, pharmacy groups including NCPA, the American Pharmacists Association (APhA), National Alliance of State Pharmacy Associations (NASPA), National Association of Chain Drug Stores (NACDS), National Association of Specialty Pharmacy (NASP), and the American Society of Consultant Pharmacists (ASCP), have put DIR fee reform at the top of their priority lists. In January 2021, NCPA filed a federal lawsuit against the Department of Health and Human Services to address the way DIR fees are assessed. That lawsuit currently awaits action.

In the meantime, pharmacies are left to hope for relief, either from a judicial win or enactment of favorable federal legislation. That doesn't mean though, that pharmacists can't find ways to avoid the "sticker shock" that often accompanies a DIR fee assessment.

PrimeRx™ users in particular have a valuable asset at their disposal, with several capabilities that allow pharmacies to proactively anticipate DIR fee amounts and maximize performance in critical areas upon which fees are assessed. A comprehensive discussion of these capabilities is included in Micro Merchant Systems' white paper, "PBM Fees and the Pharmacy: Using Technology to Document and Analyze Bottom-line Impact." A complimentary copy of the white paper can be accessed by clicking here. An overview of these capabilities includes:

PrimeRx­ Planning Tool. The system's unique "planning tool" allows pharmacies to anticipate future DIR fees based on historical averages for a particular plan. This information is quite valuable since DIR fees are generally not clawed back until after a transaction has settled and been reconciled in a pharmacy's accounting system. With the planning tool, pharmacies have a basis on which to predict fees, which can help with budgeting and forecasting. Pharmacies also gain visibility into the tremendous impact of these fees on their bottom lines.

Performance Metrics. PBMs assess DIR fees based on a pharmacy's performance in key areas including CMS "Star Ratings" criteria. PrimeRx™ system can help pharmacies improve performance in "Star" categories with capabilities that include:

  • Medication Adherence. PrimeRx™ allows the pharmacy to maintain detailed patient prescription histories, which means a pharmacist has immediate access to patient records when filling a prescription or speaking with a patient about a particular medication. Ready access to this information can help a pharmacist explain how a particular drug works and discuss any potential side effects, which can allay patient concerns. In addition, a pharmacy can automatically generate outbound text messages, emails, and phone calls as a way to remind patients about renewals and pickups. these simple messages can have a tremendous impact in reminding patients that a prescription is about to run out, thereby helping to avoid a missed dosage, or even worse, a patient simply deciding to forego renewing a prescription.
  • Comprehensive Medication Review. According to the American Journal of Health-System Pharmacy, CMS directs that medication therapy management programs target patients who have two or more chronic diseases, take Medicare Part D-covered drugs, and have estimated drug spending that exceeds a CMS-established threshold. PrimeRx™ can assist pharmacists in addressing these requirements in several ways that include:
    • Identification of eligible patients
    • Determination of ideal medication dosage and usage schedule
    • Synching all medication so that pick-ups occur on a single day.
    • Availability of information describing purpose of each medication, along with information about potential side effects
    • Tracking of all pharmacist-patient interactions
    • Outbound texts and phone calls to remind patients about scheduled refills
  • Ease of Obtaining Medications. PrimeRx™ allows pharmacies to help patients easily receive their medications by facilitating the prescribing workflow process and the patient pharmacy experience. PrimeRx™ seamlessly allows electronic prescriptions to enter the dispensing workflow and converts hard copy prescriptions into the system. With most prescriptions arriving electronically, patients no longer need to physically travel to the pharmacy to drop pff a paper copy and wait for it to be filled. Instead, PrimeRx™ alerts patients when prescriptions are filled and ready for pickup. When the time comes for the medication to be refilled, the system automatically generates a text or email asking the patient if a refill is desired.
  • Use of Statins. With CMS now assessing information about diabetic patients who are prescribed statins, PrimeRx™ can easily identify eligible patients, notify them about the role of statins in diabetes management, and initiate the process for obtaining a prescription. 


Although there is no "silver bullet" that will eliminate the impact of DIR fees on a typical pharmacy, capabilities offered within PrimeRx™ can add visibility and help document a pharmacy's performance on the metrics upon which DIR fees are assessed.

News that DIR fees have increased by more than 91,000 percent over the past ten years is simply unconscionable. Perhaps this shocking number will be the jolt lawmakers and regulators need to finally recognize the impact these fees are having on the pharmacy industry. Until then, PrimeRx™ will continue to support pharmacies by helping them to better anticipate, and plan for, fee assessments