Direct and Indirect Remuneration Information Center
Direct and Indirect Remuneration ("DIR") Fees: DIR is a cover-all term that covers the monies that that a Medicare Part D plan/PBM may collect to offset member costs. However, recently PBMs have begun expanding DIR fees for commerical plans as well. DIR fees can be in numerous forms, often unknown to the dispensing pharmacy who is forced to pay PBMs any assessed and arbitraty DIR fee. These fees can be in the form of service fees, network access fees, adminsitative fees, reconsiliation, etc.
CMS originally created DIR as way to account for all costs associated with prescription medications, which included price concessions that would ultimately impact the gross prescription drug costs of Medicare Part D plans that were not captured at the point of sale. For example, according to the National Community Pharmacists Association, plans/PBMs 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. Sound confusing? That’s because it is and these fees are surrounded by a lack of transparency.
Why have DIR fees become more prominent in the past couple years? Several states established MAC transparency laws, meaning PBMs are required to provide transparency around generic drug pricing. In the wake of such transparency laws, plan sponsors and PBMs began using DIR as a way to maintain profits and work around transparency laws
The problem with DIR fees: PBMs use arbitrary and opaque DIR fees to derive record profits at the expense of independent pharmacies, plan sponsors and most importantly consumers. The lack of transparency surrounding DIR fees allows PBMs to clawback money from the pharmacies, without any indication to the pharmacy of related measures that would allow a pharmacy to plan accordingly. Additionally, DIR fees are not adjudicated at the point of sale, meaning the pharmacy lacks knowledge of if, when and how much a DIR fee on a prescription may be. DIR fees can be as high as $12 per script, which the pharmacy would be required to pay back to the PBM. This lack of understanding of what DIR fees are inhibits pharmacists' ability to implement new patient care services as they do not know whether they will be reimbursement and therefore are able to afford to provide new services.
Pending Federal Legislation Addressing DIR Fees
S. 3308/H.R. 5951, the Improving Transparency and Accuracy in Medicare Part D Spending Act.
Act prohibits retroactive "DIR fees" on pharmacies in Medicare Part D. Medicare officials can also enact guidance to require transparency into these fees.