Due to a loophole in Medicare regulations, direct and indirect remuneration (DIR) fees have been affecting profitability for pharmacies since 2010. Originally, DIR fees were only applied as a penalty for underperforming payers and pharmacies on claims processed through Medicare Part D. Now, DIR fees can be assessed for any plans/payers, so pharmacies feel their impact even more. Plus, performance metrics for pharmacies are often inconsistent and outside of their control. DIR fees are also hard to manage because they’re assessed by Pharmacy Benefit Managers (PBMs) after the claims have been processed. This not only alters the reimbursement amount, but it makes pharmacy revenue unpredictable and claims reconciliation more difficult as well. While legislative efforts are underway, there are things you can do to protect your pharmacy. Here are four ways to mitigate the impact of DIR fees:

1. Focus on medication adherence.

In 2008, the Center for Medicare & Medicaid Services (CMS) implemented a Five-Star Rating system to evaluate health plans for service quality, patient care, and adherence. While pharmacies aren’t rated directly, their performance affects the star rating for payors they work with. This is why PBMs use the star ratings to help determine how much pharmacies should pay back, and ultimately how much they profit.

While some of the factors tied to star ratings are not within your control, there are ways you can boost your pharmacy’s performance. One of the best ways is to focus on patient adherence. Pharmacies with a high adherence rate are more likely to be added to health plan networks and earn discounted DIR fees. Read more >