DIR fees are now an inevitable part of running a pharmacy. In the past few years, DIR fees have been the subject of much debate, partially due to their retroactive nature and the growing impact they have on a pharmacy’s bottom line. Last year, for instance, the National Community Pharmacists Association and a coalition of other pharmacy organizations backed legislation that promised DIR reform. While the proposal didn’t make it into a final CMS rule, the groups are still championing increased transparency around DIRs.
In the meantime, pharmacies still have to face the reality of DIR fees. These fees are often collected retroactively, not at the point of sale, which means it may be challenging to know exactly how much you will have to pay. This makes it all the more important that you are prepared ahead of time and able to mitigate the impact that DIR fees can have on your bottom line.
Many plans have contracts that are structured to claw back DIRs in the summer. When the time comes, many pharmacies can expect to see higher DIRs than last year due to contract changes. If you are one of the pharmacies that has received higher brand reimbursements so far this year, note that you should not automatically assume it means higher profitability. Being prudent about spending and having money set aside is a good strategy to help you face the upcoming spike in DIR fees. Aside from that, here are a few other things you can do:
1. Use Your PSAO DIR Calculator
Your PSAO is an important resource for your business, particularly when it comes to DIR fees. DIR rates are usually part of your pharmacy contracts, which PSAOs help negotiate. If you have questions about your contracts, including DIR rates or performance metrics, your PSAO is the best source of information. Most PSAOs also offer a DIR calculator which will provide you with an estimate of what DIR fees to expect this year so you can plan ahead.
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2. Maximize Your Pharmacy Performance
Each year, plans set out specific metrics they measure pharmacies against and whether or not they will apply at the PSAO or store level (here’s a look at the differences between them). Improving your store’s performance in these metrics is a great way to reduce your DIR fees. While high performance doesn’t eliminate DIR fees entirely, plans often reward pharmacies that rate highly on the various metrics. Consider what steps you can take to increase your performance, from focusing on outliers to improving adherence through Med Sync, compliance packaging, or other methods.
3. Increase Non-Prescription Revenue
DIR fees are tied to prescription reimbursements, so increasing cash flow through non-prescription sources of revenue is a good plan for profitability. Many pharmacies offer OTC products, including supplements, CBD, or naloxone, to help boost income. Additional services such as counseling are also popular options. Amplicare Restore provides an easy way to boost these services by identifying patients who may need vitamin or mineral supplements because of their medications or who may benefit from CBD, among other things. If you already offer these services, consider increasing your marketing efforts around them so your patients are aware.
As we get closer to summer, being aware of what’s coming and planning ahead can help you maintain profitability — no matter what DIRs come your way.