Pharmacy Direct and Indirect Remuneration (DIR)
Value-based Pharmacy Reimbursement Reduces Drug Costs for Medicare Beneficiaries, Lowers Spending.
Pharmacy direct and indirect remuneration, or Pharmacy DIR, is a form of value-based contracting in Medicare Part D. Pharmacy DIR increases the quality of the prescription drug benefit while helping to keep cost-sharing and premiums affordable for beneficiaries.
What is Pharmacy DIR?
How Medicare Part D Pharmacy Direct and Indirect Remuneration (DIR) Works
- Pharmacist dispenses medication to beneficiary. PBM pays pharmacy at point of service the contractual amount for the ingredient costs and dispensing fee.
of independent pharmacies use third-party negotiators, called PSAOs, to negotiate contracts with PBMs on behalf of thousands of pharmacies.
2. Pharmacist dispenses medication to beneficiary. PBM pays pharmacy at point of service the contractual amount for the ingredient costs and dispensing fee.
3. Per the PBM-pharmacy contract, post-point of service pharmacy price concessions are retrospectively reconciled based on agreed-upon value-based benchmarks.
Payment can be increased or decreased per an individual pharmacy’s performance.
In addition to payment terms, these pharmacy contracts typically include performance standards with payment adjustments based on:
Generic
dispensing rate
Patient
adherence rate
Prescription
refill rate
Counseling
services / MTM
Opioid dispensing
oversight
Increase efficiency and value
Other value-based patient outcomes measures
Dispensing Volume
4. All payments that meet CMS’s specific definition of pharmacy DIR must be reported to the agency by June of the following year. CMS uses the pharmacy DIR reporting process to assure funds are used to lower beneficiary costs in subsequent years. Pharmacy DIR is also used by CMS to calculate final Medicare payments to Part D plans – helping to reduce beneficiary premiums and some government costs.
What Pharmacy DIR is NOT:
Pharmacy DIR is NOT exclusive to pharmacy concessions. Manufacturer price concessions constitute a large majority of total DIR.
Pharmacy DIR is NOT a clawback of payments to pharmacies.
Pharmacy DIR is NOT a retrospective "fee" associated to pharmacies.
PBMs use pharmacy DIR to reduce the total cost of the benefit for enrollees and taxpayers.
PCMA PRESS RELEASES
More Pharmacy DIR Resources
