Preparing for the DIR Hangover

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