What are DIR fees?
DIR fees are the result of a loophole in Medicare regulations. Often more than half a year after a pharmacy fills a Medicare prescription, payers are taking back money paid to pharmacies. Payers are claiming they are taking back money due to a pharmacy’s performance on so-called quality measures. However, these quality measures can be unknown, unpredictable, inconsistent, and outside of a pharmacy’s control. The federal Centers for Medicare & Medicaid Services says that the use of DIR fees has exploded by 107,400 percent between 2010 and 2020 – a dramatic increase from the 45,000 percent growth that CMS reported between 2010 and 2017. Inmar produced a white paper that describes DIR fees.
DIR fees 2023?
DIR fee relief must be part of the effort by Congress and the Biden Administration to reduce drug prices and to bring transparency to the system. In Medicare, DIR fees are inflating the amount that seniors pay for prescription drugs at the pharmacy counter. DIR fees also are further pushing pharmacies out of business. IQVIA estimates that between December 2017 and December 2020 almost 2,200 pharmacies closed nationwide. Temporary policies and dynamics related to the COVID-19 pandemic slowed pharmacy closures, but the extreme pressures on pharmacies now have returned. This is because payers are hitting pharmacies with extremely high surprise bills that can force pharmacies to provide drugs below cost. Addressing DIR fees also would help to reduce overall healthcare costs.
How Do DIR Fees Increase Patients’ Costs?
The amount that Medicare patients pay for a prescription drug is supposed to be based on the cost of the drug. However, payers often calculate drug prices without subtracting the dollars that are taken back from pharmacies. This inflates patients’ drug costs, because the calculation is based on a figure that is higher than what the plans really pay.
What is being Done to Provide DIR Fee Relief?
The Biden Administration’s Centers for Medicare & Medicaid Services (CMS) announced a proposed rule on January 6, 2022 that included crucial aspects of DIR fee reform. NACDS welcomed the announcement and issued March 2022 recommendations. Two March 2022 congressional sign-on letters by members the U.S. House and U.S. Senate also called for DIR reforms. More than 200 patient advocates, healthcare entities, and companies also sent a March 2022 letter calling for the finalization of the rule. The new rule – Medicare Program; Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs – was finalized by CMS on April 29, 2022. The rule’s provisions affecting DIR fees will take effect January 2024. NACDS expressed appreciation for the new federal rule that will help improve transparency of exorbitant DIR fees and set the stage for further reform that is crucial to improve predictability, fairness, and viability for pharmacies.
Bipartisan legislation has been introduced in the current 118th Congress to bring about the far-reaching DIR fee reform that patients and pharmacies need. U.S. Senators Jon Tester (D-MT), Shelley Moore-Capito (R-WV), Sherrod Brown (D-OH), and James Lankford (R-OK) in June 2023 introduced the Protect Patient Access to Pharmacies Act (S. 2052). Similar legislation is expected soon in the U.S. House of Representatives.
NACDS President and CEO Steven C. Anderson said of the new legislation: “Ending DIR fee abuses is essential for patients’ pharmacy access, for lower drug prices, and to prevent the baffling expectation that pharmacies fill prescriptions at a loss while pharmacy benefit managers (PBMs) manipulate the Part D program to boost their profits at the expense of seniors. NACDS represents regional pharmacies with as few as four stores as well as national pharmacies – and we emphasize that DIR fee reform is essential for comprehensive PBM reform that matters to all patients and to the diverse pharmacies that serve them.”
A 30-second ad by NACDS makes the case for immediate DIR fee relief.
DIR Fee Relief Can Benefit from Pharmacists’ Insights
People trust pharmacies and their solutions for saving money. In a December 2022 survey conducted by Morning Consult and commissioned by NACDS, 79% of American adults said they find pharmacists “very credible” or “somewhat credible” sources of information about how to save money on prescription drugs. This ranks pharmacists the highest among those tested (others tested include doctors, hospitals, health insurance companies, and pharmaceutical companies).
