DIR Fees – That isn’t a ransom note… it probably feels like it though, and you better pay it! 2

Written and published by Ross Snyder – Foundation Systems, Inc – 801-785-7720 – help.fsi.us.com

What is DIR?

DIR – Direct and Indirect Remuneration.

DIR fees are better described as ransom charged to community/independent pharmacies by PBMs (really all pharmacies), or face termination of their adjudication contract. Your contract is held hostage by these fees, better known as “Pay to Play”.

All the years I have been with FSI, I have seen the independent/community pharmacy reimbursement rates drop while the pharmacy is tapped harder and harder for steeper claim fees and more. Most contracts between a pharmacy and an insurance company for claim processing require a certain formula for generating a request for payment in the online claim adjudication process. The formula is normally AWP x Disp Qty + Disp Fee = Gross Amount Due. The gross amount due is how much you are asking the insurance to reimburse you.

My opinion, most, if not all insurance companies have a grossly deflated AWP and they reimburse based on their own formulary, not yours. They are keeping their end of the contract but paying on their own formulary, not following the national AWP you are required to submit as the script cost. Bump your AWP up and get a higher reimbursement rate, but watch out when they bring the audit!

First, avoid the audit!

Here are some ways to not get caught in the audit trap, then let’s talk DIRs. Submitting claims as an independent pharmacy to a HUGE PBM is a crazy game of cat and mouse if you are trying to make tweaks for bigger reimbursement rates. Unless you just want a reason to freely give your patients to some Big-Box on or around the corner, it’s best to play it safe! Unless you can afford to pay their audit fines.

• AWP is what it is, submit it, don’t jack it up higher. If you are keeping up on your FSI updates, you have nothing to worry about.
• Don’t edit co-pays!!! If I have to come back and add more exclamation marks to emphasize this, I will!!!
• Don’t double-dip! Bill to one insurance as a primary, they tweak your claim and bill to another insurance as a primary.
• If the insurance company wants data sent, send it. NCPDP D0 standards(suggestions) are much different than ever before. Prior to D0, you could send everything, the insurance company would take what they need to pay the claim and send your adjudicated claim back. With D0, you send what they want, nothing more, nothing less; Unless the insurance decides to make their own perversion of the D0 format and add their own field. If they want it, you don’t send it, and it’s not rejected, you can be fined later for not sending it. If they don’t want it, you send it, and it’s not rejected, you can be fined later for sending data not pertaining to the requirements of their claim format.
• Don’t edit the co-pays!!!!! Most people get caught doing this at the point of sale. FSI’s claim adjudication response and point of sale have a configuration to completely turn this ability off. I suggest you look into it right away. !!!!! – More emphasis
• A rule to follow, it doesn’t matter how small you think you are, if you are an independent/community pharmacy, you aren’t getting a break! If you get caught, you are probably getting a bigger fine than some Big-Box chain store freely and knowingly breaking the rules.

Now for the DIR part, in simple terms

The cutbacks you have learned to adjust for and the audits you pay on aren’t creating a big enough bonus for the PBM executives. And, the insurance company has already violated their own contract with you to a maximum extent, so they implemented direct and indirect remuneration. The travel industry has done this for years, and most of us still travel, pending COVID-19 restrictions. But if the islands or beaches are calling, we at least try to answer. Every time we travel we are paying DIR fees for our travels.

Here’s how it works. You book your very low airfare, rental car, hotel, or resort. You usually find a great low rate and feel good about it. We brag about the cheap travel accommodations taking us to our version of a tropical paradise to our coworkers and all over social media. Remember the contract or fine print you skipped? There is always a contract or agreement you have to sign before you can obtain the service you want to pay for. When you get your final receipt, the sunburn is already starting to peel, and now you can’t pay. There are excise fees, departure taxes, accommodation fees, sales tax, airport surcharges, varying seasonal surcharges, insurance, facility charges, concession fees, resort fees, blah blah blah the list goes on! Your low rate isn’t so low anymore, but the trip is over and now everything must be paid for, as you agreed. The insurance companies have adopted the same techniques and nobody complained, not loud enough anyway, like the little guys have a voice in this matter anyway. Try complaining and see where it gets you! PBMs found if they took the word fee, phrased it with other subtle terms, then built it into the contract you sign or agree to, they can keep on charging you more and more long after the claim was meagerly adjudicated a long time ago.

More DIR stuff

“DIR fees are the result of a loophole in Medicare regulations. Often more than half a year after a pharmacy fills a Medicare prescription, payers are taking back money paid to pharmacies. Payers are claiming they are taking back money due to a pharmacy’s performance on so-called quality measures. However, these quality measures can be unknown, unpredictable, inconsistent, and outside of a pharmacy’s control. The federal Centers for Medicare & Medicaid Services says that the use of DIR fees has exploded by 45,000 percent between 2010 and 2017.” – NACDS

There is more than one DIR fee method you could deal with to figure our how much your pharmacy will be paying. If your ‘star ratings aren’t to the PBM’s liking, you will see higher DIR fees regardless of how it’s assessed. The fees you are being charged shouldn’t be taken lightly. DIRs are in a sense, a pay-to-play fee. If you can’t process to the insurance companies, you can’t make money. Some pharmacies make so little on reimbursements and pay such high DIR fees, they end up having to sell their pharmacy to a brave new buyer, or selling their data to a big-box bully.

Your take and legislation you know of

I have heard and read a lot about DIR legislation, but I would like to hear what you have to say. What is the latest legislation on this? Scroll down to comment and post articles you know about.

JJ, Frank P, Kevin M, I know you guys have something to say!