4 Ways to Mitigate the Impact of DIR Fees
Posted on Mar 22, 2023
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.
You can increase your adherence rate by:
- Implementing a medication synchronization (MedSync) program. These programs are especially helpful for patients on multiple, recurring medications.
- Utilizing unit/multi-dose packaging, so it’s easier for patients to remember when to take their medications.
- Reminding patients about medications that are due to be refilled. This doesn’t have to be a time-consuming task, either. In fact, BestRx pharmacies can send automated reminders to patients via email or text messages through our Messing Interface.
- Offering online access to your pharmacy. Enabling patients to submit their refill requests and questions online, it eliminates unnecessary calls or trips to your store. Instead, they can submit a request from their computer or mobile device, whenever and wherever they are.
- Ensuring it’s easy for patients to communicate with your pharmacy. Using our Messaging Interface’s two-way chat functionality, you can quickly communicate with patients in real-time. This way, you can respond to patient questions and ensure they understand how to take their medications in just a few clicks. Plus, our integration with Doxy enables you to provide secure virtual care services as well.
- Providing delivery options. Not only are they convenient, but medication and OTC deliveries provide access for patients who are unable to physically make it into your store, too.
- Adding Medication Therapy Management (MTM) services. MTM enables you to regularly meet with patients and conduct an in-depth review of all their medications, treatment progress and overall health. You can also address any questions, side effects, or treatment barriers. This way, patients are more likely to stay compliant.
2. Plan for DIR fees.
Rather than trying to determine your DIR fees manually, or waiting to see what fees may be assessed, put your pharmacy software to work for you. Your pharmacy software can be used to obtain an accurate estimate of potential clawbacks in advance. This way you’ll avoid being surprised and be better prepare for the potential fees.
BestRx includes a built-in DIR fee estimator, so the calculations are quick and easy. All you need to do is enter a payer’s DIR percentage or dollar amount in the system, and it will be automatically applied to any claims being sent to that payer.
3. Stay on top of third-party reconciliations.
Tracking and reconciling claims is an essential part of managing your DIR fees. However, if you’re trying to do it manually, it can be time-consuming. Instead, you can streamline your entire claims presses using electronic remittance files that are sent directly to your pharmacy software. That way, you can easily monitor claims from submission all the way through payment reconciliation. Not only will you save time, but you can check for errors and determine the anticipated reimbursement rate before the claim is submitted. You can also run reports of your paid claims, to identify shifts in reimbursement by payer, or for a particular medication.
4. Look for ways to add other sources of revenue.
While prescriptions account for most of your business, DIR fees only apply to dispensing, not other services you offer. That’s why offering additional services and products can help mitigate the effects of DIR fees on your pharmacy’s bottom line. Plus, it helps you build stronger relationships with your customers as well.
Here are some ways you can generate additional, DIR fee-free revenue:
- School or travel-related immunizations, as well as flu, and COVID-19 vaccines.
- Point-of-care testing, such as flu and strep throat swabs or A1C blood tests.
- Health screenings, from annual wellness exams to condition-specific screenings.
- Participating in 340B programs. These programs help pharmacies offset uncompensated care and low reimbursements by allowing them to purchase discounted drugs.
- Supporting nursing home and long-term care facility residents; many of whom are on multiple, recurring medications.
- Offering OTC products. This can help to increase sales with your existing patients and attract new customers to your store, too.
While DIR fees have been around for years, upcoming changes with Medicare will bring new challenges for pharmacies in the future. It’s important to be prepared for these changes and proactively work on ways to mitigate the damage caused by DIR fees.
To learn how BestRx can help your pharmacy navigate the legislative changes ahead, request a free demo today. Together, we can help to ensure your pharmacy is operating as efficiently and profitability as possible.