What are DIR Fees?

DIR stands for “direct and indirect remuneration.” Plans/PBM's use the term to define certain pharmacy network participation fees and the reconciliation of certain contractual terms with actual reimbursement. 

PBM's categorize them as fees for a variety of different ‘perks’ provided to pharmacies. Some ‘perks’ include: fees for participating in preferred pharmacy networks, network access fees, administrative fees, technical fees, service fees, credentialing fees, refill rates, generic dispensing rates, audit performance rates, error rates, and more. 

Why do they exist?

CMS initially created DIR fees as a way to collect rebates that PBMs were receiving from pharmaceutical manufacturers. The rebates PBMs collect from drug manufacturers are rewards for allowing their products to be included on different plan formularies, and essentially helping a drug company reach a particular share of the market for a given therapeutic class. The DIR fees were not meant to be kept by the PBM, rather passed back as savings to the payer, Medicare. Instead, PBMs created a new equation to solve their rebate issue, one which involved pharmacies...

How do they work? 

 DIR fees are structured in one of two ways for each prescription claim: 

  • a flat dollar amount, or
  • a percentage of the full cost

DIR fees are paid in one of two ways:

  • taken out right at the point-of-sale, or
  • retroactively, after adjudication

DIR fees for each pharmacy are calculated using certain store pharmacy measurements, determined by each PBM:

  • Hypertension, cholesterol, diabetes, and speciality medication adherence
  • Statin gap therapy
  • MTM completions
  • Formulary compliance
  • High risk medications
  • GDR (generic dispensing rate)

If you're a current Amplicare customer, we'll break down performance measures by PBM with an accessible document in your Resources.

Some PBM's calculate DIR fees by aggregating the PSAO's performance instead of solely weighing an individual pharmacy's performance.

What's Next?

There are many ways in which you can better understand and manage these fees using Amplicare:

  • Click here to learn how to account for DIR fees while doing a Medicare plan comparison.
  • Click here to learn how to prioritize performance measurement opportunities that directly impact your DIR fees.
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