Is Your Health System Ready for the Upcoming Changes to DIR Fees?

Strategies to address changes affecting DIR pricing to allow your pharmacy to achieve more.

Read time: 3 minutes

By: Ram Arumugam

As more health systems operate outpatient retail pharmacies as a means of improving revenue and patient retention, the upcoming changes to DIR fees may have a significant impact on those health systems that are unprepared for the challenges. However, working with a trusted partner like McKesson can help your outpatient retail pharmacy mitigate the impact.

Understanding the Changing DIR Fee Structure

Direct and indirect remuneration (DIR) are designed to account for the difference between the pharmacy's prescription drug reimbursement at the point of sale and the final reimbursement as determined by the payer retroactively.

Traditionally, DIR fees were assessed after the point of sale based on various factors such as performance metrics, drug utilization, and other contractual arrangements. This retrospective nature made it challenging for pharmacies to accurately predict their reimbursement rates, leading to difficulties in managing their finances.

The 2023 Center for Medicare and Medicaid Services (CMS) final rule is expected to be implemented in January, essentially eliminating retroactive application of post-adjudication DIR fees. This will also require DIR fees be included in the price patients pay at the point of sale. While this change will potentially add much-requested transparency to reimbursement management, this decision also has the potential to result in a significant and possibly negative impact on pharmacies’ cash flow. Payers will continue their assessment of retroactive 2023 DIR fees during the first part of 2024, coinciding with lowered reimbursements and fees that will now be assessed at the point of sale.

How Your Outpatient Retail Pharmacy Can Prepare

To properly prepare for the upcoming changes to DIR fees, your pharmacy will need a strategic plan. This means you will first need to review your claims data and analyze how the changes in their operational strategies will affect your bottom line. Start with accessing your pharmacy claims portal. If you are a customer of McKesson’s HMA, you have access to the or portal that outlines managed care reporting like Financial Insights, DIR Fee Reports, Effective Rate Reports, MAC Success Manager, and many others to set you on the right track for success.

In addition to accessing the portal, your health systems pharmacy should:

  • Stay informed: Keep up to date on the latest developments, proposed rules, and regulatory changes regarding DIR fees by visiting announcements page. In addition, MHS Enterprise Account Executives (EAE) will be a reliable source to connect to the SMEs within McKesson’s Payer Solutions for Health Systems to advice you on changes affecting your practice. Also, watch for updates on our content hub, Prescribed Perspectives.
  • Analyze financial implications: Evaluate the revenue and reimbursement patterns, factoring in DIR fees, to identify potential areas of improvement and optimization.
  • Leverage clinical expertise to optimize pharmacy performance: Explore strategies to improve medication adherence, streamline medication management processes, and enhance patient outcomes.
  • Optimize pharmacy operations: Increase efficiency in operations and workflow management to effectively dispense and allow enough time for counselling and patient care. A review of your operational excellence strategy would be optimal for any health system regardless of their operating scale.
  • Maintain an accurate and efficient inventory control: Measuring, analyzing, improving, and monitoring of inventory turns and waste reduction exercises will improve profit margins.
  • Increase prescription capture strategies: Reduce patient leakage by adapting prescription capture strategies in a structured approach.
  • Invest in technology and data analytics: Leverage technology solutions and data analytics to gain insights into prescription drug utilization patterns, reimbursement trends, and performance metrics.
  • Increase service offerings: Outpatient pharmacy is well-positioned to offer an expanded line of services beyond medication dispensing, which includes Meds to Beds (bedside delivery), home delivery services, immunization (routine and travel), MTM services, specialty pharmacy services, hospice services, and even home health and clinical trial facilitation. All these services will help expand your footprint and drive prescription volume to the pharmacy. If this path is not within your goal and mitigation strategy, the time is right to consult our EAEs and SMEs.
  • Commit to increasing patient satisfaction: Taking a holistic multi-team approach to tackle this will improve patients’ confidence and reliance on the pharmacy and ultimately improve patient adherence.

Introducing McKesson’s Health Mart Atlas DIR Assist

To help health system pharmacies manage the financial pressures from the changes in the way DIR fees are collected, Health Mart Atlas has developed Health Mart Atlas DIR Assist, a completely voluntary, opt-in program designed to help pharmacies with cash flow challenges associated with the change in DIR fees.

DIR Assist will allow pharmacies the opportunity to set Central Pay funds aside for later disbursement. The amount and timing of these set-asides are at the discretion of the pharmacy. Health Mart Atlas is ready to help you protect your pharmacy from the cash flow challenges associated with the change in how DIR fees are collected during those first few months of 2024.

Those who are already a member of Health Mart Atlas can log in to their portal for more information.

Not yet a customer? Contact Payer Solutions for Health Systems and learn how we can help your pharmacy achieve more.

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