The first time I heard about DIR fees was in 2016. I had no idea what it meant and had to look it up.
“DIR” means “Direct and Indirect Remuneration.” The term was originally advanced by the Centers for Medicare and Medicaid Services (“CMS”) in the drug price reporting context to ensure that Medicare Part D sponsors and Pharmacy Benefit Managers (“PBMs”) accurately report rebates and other “price concessions” from manufacturers or other third parties which could not be reasonably determined at the point of sale.
Many owners at the time had not heard of DIR fees either and wondered why their profits were lagging behind the prior year. Unfortunately, DIRs have worsened each year since then, and now independent pharmacy owners are facing the unknown with the “Double DIR Fees” starting in January of 2024. This uncertainty has many owners concerned and looking for answers.
NCPA has put together some great resources/tips to help an owner prepare and navigate through these challenges:
Tips for What You Can Do as an Owner
(by Tadrus Advisory Group, LLC)
Find original article here: https://ncpa.org/sites/default/files/2023-06/Tips%20for%20Owners%20DIR%20Hangover.pdf
MODIFY YOUR WORKFLOW TO ACCOMMODATE LOWEST NET PAYMENT
Your “worst case scenario” payment is what will be paid at the point of sale.
This DIR transparency will allow you to make real-time business decisions on a script-byscript basis.
Purchase evaluation, therapeutic substitution opportunity, split combination products, etc.
Real-time data should enable you to determine if a win-win situation is available for the patient and provider.
BEST PRACTICES
Scale medication synchronization
Centralize operations and inventory
Optimize your buy plan
Optimize work schedules/wages
Reprice vials, labels, and other office supplies
Measure billable services plus prescriptions
Scale current and seek out new non-dispensing revenue
Assess automation and technology
Partner with colleagues to “share” experiences
LINE OF BUSINESS ACCOUNTING
Break out income and expenses
– Retail
– DME
– LTC
– 340B
– Clinical
– CPESN® Health Equity
Accountants and bookkeepers are key
Report key metrics to store level
HEALTH EQUITY INITIATIVES
Employ community health workers and licensed practical nurses
Hire a population health pharmacist.
CPESN Health Equity
MAXIMIZATION OF PATIENT REVENUE
Identify per-patient, per-book of business and per-payer/group.
Quantify the potential value vs. current value.
Target engagements to capture dollars through scripted interactions.
Raise the percentage of business under med sync target.
Identify your highest payers and highest-risk individuals.
DATA MINING
Inspect claims data for clues about potential DIRs.
– Message fields returned on paid claims
– Codified fields in the paid claim response file
Export data/pull additional sources/analyze
– Across locations
– Contracting scenarios
– Patient risk types
CPESN BI (Business Intelligence) can help you access analytics to inform your decision-making and future plans.
SCALE CLINICAL INITIATIVES
Utilize CPESN Big Tree as a special-purpose network; Big Tree Medical provides pharmacyintegrated direct primary care within the pharmacy footprint.
– Co-located direct primary care clinics
Screen all patients for immunizations.
Look at your prescriptive authorities and standing protocols in your state.
Opioid safety
– DisposeRx Products/Narcan nasal spray
– RIOSORD evaluations/CPESN Service Sets
MTM programs/DME programs
IM and SC injections
Additional Resources:
Financial Tips for Treating the DIR Hangover (by Sykes & Company, PA) https://ncpa.org/sites/default/files/2023-02/dir-hangover-financial-tips.pdf
Practical Tips for Preventing the DIR Hangover (by Scott Pace, PharmD, JD, ad Tripp Loga, Pharm D) https://ncpa.org/sites/default/files/2023-03/DIR%20Hangover%20Practical%20Tips_0.pdf