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Elimination of Retroactive DIR- What does this mean for you and your patients?

Retroactive DIR fees have increased by 107,400% over the past 10 years (2010-2020) according to the Centers for Medicare and Medicaid Services (CMS). In April 2022, CMS finalized elimination of retroactive direct and indirect remuneration (DIR) fees utilized by PBMs, effective January 1st, 2024. But what does this mean for your pharmacy and your patients? This blog post will breakdown the key take-aways from CMS' Final Rule.

  1. This rule does not fully eliminate the use of DIR fees by PBMs- it only eliminates the retroactive fee mechanism, often referred to as "clawbacks". The National Community Pharmacists Association (NCPA) has a great diagram explaining the "clawback" mechanism for DIR fees that PBMs will no longer use starting in 2024. PBMs will not have the ability to take back money previously paid for drug after dispensing- but they will be able to still apply "proactive" fees at the point-of-sale price. Some other names for these proactive fees include "administrative fees" and "service fees". This should lead to increased transparency and predictability for drug reimbursement for pharmacy teams.

2. Patients will see out-of-pocket costs decrease

Moving all fees from PBMs to point-of-sale should result in in lower cost sharing for patients. This should also create more transparency in plan pricing for patients.

3. Part D plans are encouraged, but not required, to address the impact on cash flow this new rule will have from (CY) 2023 to (CY) 2024.

CMS acknowledges, but does not address, that while pharmacies will receive the new "lowest possible reimbursement" starting in 2024, they will still be subject to paying DIR fees from 2023 plans. This may impact cash flow in vulnerable pharmacies. CMS encourages PBMs to create alternative payment mechanisms, such as payment plans, but does not require they do so.

All information in the post was obtained from the American Pharmacists Association (APhA) or NCPA and can be accessed at the following links:

What are your thoughts on CMS Final Rule?

Katie Hettinger, PharmD

Community Practice Research Fellow | Purdue University

FtP Indiana Team Lead and Assistant Network Facilitator | CPESN IN

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