By: Wendy Morrow, Team
Lead, Net-Rx
What are DIR fees?
Direct and indirect
remuneration (DIR) fees assessed on Medicare Part D scripts are now
being extended to commercial networks. DIR is
a “catch-all” term that covers a variety of “fees” including “pay to play” fees
for network participation. It is also used to refer to pharmacy fulfillment of
various quality measures or alternately a fee assessed to pharmacies for
non-compliance with quality measures. These fees lower the
profit received on each script because they are taken out after the point of
sale and are not visible within the transaction.
The steady increase in DIR fees is an ongoing issue for pharmacies. They have increased by nearly 225 percent per year on average
between 2012 and 2017. Amid
the COVID-19 pandemic, several members of Congress have proposed DIR fees reform. But
until reform comes, and perhaps even after, pharmacies struggle with
quantifying these fees. The fees are generally collected on your
remittances as a check adjustment and can be assessed months after the date of
fill. In 2019, pharmacies paid over $9
billion in DIR fees. Do
you need help identifying DIR fees on remittances from the PBM?
What is pharmacy reconciliation?
Why
is the transparency of DIR fees important?
DIR fees can have a significant
impact on pharmacy claims reimbursements. To accurately calculate your profit margins,
you need to include any fees charged by payers. This includes DIR fees. Once
you have identified your fees, you can deduct the charges from the payments on
the expense line to calculate your true net income. If you do not account for
DIR fees as part of your gross profit, your gross margin will not be accurate
and could affect your profit and loss statement.
At Net-Rx™, we recognized the need
for reporting and transparency. Net-Rx is a provider of pharmacy reimbursement
solutions exclusively for pharmacies. One
of our many solutions, RecRx, includes a Fee/Adjustment report. This report provides a detailed list of third-party
claim and check-level adjustments listed on your remittances. This includes any
claim level and check level DIR coding the remittances have.
Net-Rx has been an advocate of
pharmacies for over 15 years. We participated in the NCPDP WG45 task group to
help create and enact a standardized way of reporting DIR fees on payment
remittance advices to provide transparency and visibility to the pharmacies. With the evolving
landscape of pharmacy operations, we continue to develop new, innovative
software while remaining steadfast in our core values of commitment and
dependability.
© 2021 Managed Health Care Associates, Inc.
Read more articles that cover topics such as submission clarification codes and how formulary status affects claim responses and reimbursement.
http://www.ncpa.co/pdf/dir-faq.pdf
http://www.ncpa.co/pdf/dir-faq.pdf
https://www.govinfo.gov/content/pkg/FR-2018-11-30/pdf/2018-25945.pdf
https://ncpa.org/sites/default/files/2020-04/dir-letter-phase-IV-covid-pandemic.pdf
http://www.nacds.org/pdfs/government/2020/AdvocateLeaveBehinds.pdf
https://www.sykes-cpa.com/dir-fees-accounting-tax-treatment/