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What are DIR Fees, Why do They Exist, and What Can We do About Them?

What are DIR Fees, Why do They Exist, and What Can We do About Them?

There are lots of hidden costs in the pharmacy industry and if you’ve ever worked at a pharmacy, you’re probably familiar with the term Direct and Indirect Remuneration or “DIR Fees”. But what are DIR Fees anyway? The idea of having to pay fees of any kind is unnerving, so we’ve set out to give you a better understanding of what DIR fees are and the reason for their existence – because no one likes to pay fees if they don’t fully understand them.

To being with, calling a spade a spade, they are simply another bogus way for PBM’s to screw over independent pharmacy. Technically, Direct and Indirect Remuneration or “DIR” fees are the fees that pharmacies are paying back to Medicare part D plans/PBM’s (Pharmacy Benefit Managers), originally as a way to offset member costs. According to NCPA, plans/PBM’s have used the term “DIR Fee” to describe a “true-up” between a target reimbursement rate in a participating pharmacy agreement and the aggregated effective rate actually realized by a pharmacy. It comes as no surprise that many pharmacy owners are confused by this, seeing as there is a total lack of transparency among the PBM’s collecting these astronomical fees. Fees are assessed by a myriad of performance-based metrics that make little to no sense to pharmacy owners making it difficult to predict your bottom line claw back amount.

Datascan Pharmacy Software recognizes the struggles you’re facing as an independent pharmacy and has built in many features that help clients manage, assess, and fight back against DIR fees. Our DIR estimator tool allows you to configure each plan in your system with specific low and high end percentage fees for brands and generics across 30 and 90 day supply, and even lets you enter specific fee amounts. The estimated fee appears on the claim at adjudication to better analyze each prescription and determine if you will expect a net loss on the prescription. In fact, we have a post edit hard stop you can turn on for any RX that expects a loss after the DIR. It color codes the script, and stops the label from automatically printing, giving you the opportunity to assess the situation and make decisions. There are also reports pharmacies can run to collect DIR fee data and better plan for the claw backs from the PBM’s. To help combat the star ratings metric, which supposedly causes harm to your reimbursements and affects DIR fees, building medication adherence is a must. We have multiple automated functions, utilities, warnings on maintenance medications with no refills, and an adherence dashboard. All of this coupled with multiple automatic ways to communicate with your patients and Datascan’s mobile application, getting your patients their medications on time is greatly simplified. All you need to do is harness and implement the technology that is already within the Datascan Pharmacy Software platform, and you’re already paying for! This, together with fighting PBM’s through tough legislation and rallying together with your fellow independent pharmacies will help guarantee the future of our industry.

Although singlehandedly, no independent pharmacy can do anything to stop or reduce DIR Fees, we can prepare for them, measure them, report on them, and avoid losing money on them, thanks to Datascan’s intelligent technology designed specifically to mitigate the risk of DIR Fees. If you’re considering a new pharmacy software for your independent pharmacy, demand that managing, predicting, and accounting for DIR Fees is a part of the program and come at no additional cost to you.