New DIR Fee Estimator Can Help Pharmacies Manage Cash Flow

Good Neighbor pharmacy owners no longer have to wonder how much the next round of direct and indirect remuneration (DIR) fees is going to hurt. Good Neighbor’s pharmacy services administrative organization, Elevate Provider Network, now includes a DIR Fee Estimator tool to manage the impact of DIR fees.

 “Our goal is to help Good Neighbor owners manage the life cycle of pharmacy claims,” said Chuck Reed, Group

Chuck ReedVice President for Pharmacy Innovation and Solutions at AmerisourceBergen. “DIR fees have emerged as Good Neighbor owners’ most complex and most vexing problem. The DIR Estimator helps them manage that problem.”

Good Neighbor launched the DIR Fee Estimator on Monday. The official launch will come during the General Session at ThoughtSpot 2017 on Friday, but Good Neighbor owners can start using the tool now.

DIR fees have been a growing problem for independent pharmacy owners since they were introduced in 2014. Not only do the fees claw back a portion of pharmacy claims that have already been paid, the timing and amount of the amounts clawed back is difficult for store owners to predict and manage. PBMs are adding new DIR fees at every turn, DIR fees are growing on a per-claim basis, and a growing number of patients are on Medicare, which puts more and more claims at risk for DIR clawbacks for ever-longer periods of time.

Claims that were once processed and closed in 14 to 35 days now remain open for months. Elevate began processing DIR fees the first week in July for pharmacy claims that were submitted and processed the first week of January, Reed said. DIR fees have stretched the life cycle of a typical pharmacy claim from the standard 35 days to 190 days and sometimes longer.

“The real impact of DIR fees is on cash flow,” Reed said. “The number of rules that can come into play on how much will be clawed back and when are variable and opaque. You might be able to guess that you have a claim that may have a DIR fee assessed, but the size of the fee is almost impossible to know. That’s where the estimator tool can help.”

DIR fees are based on a variety of factors, including the number of days supply in a script, brand versus generic, specialty drug status, whether the agent is preferred or nonpreferred, whether the store is in a preferred network, the pharmacy star rating at a particular point in time, and others.

All of those factors, and the rules by which they are applied, are contained in payer contracts, Reed noted. But the rules, and the ways they interact to claw back claims payments, are difficult for the pharmacy to track. And every payer has its own rules. The latest wrinkle is the addition to clawback calculations of customer satisfaction scores.

Elevate Provider Network experts extracted all of those rules from payer contracts and automated their application. The rules are then applied to each claim handled by the pharmacy services administration organization.

The DIR Fee Estimator gives Good Neighbor owners a high, a low, and a likely estimate of DIR fees on an aggregate basis by payer.

The estimates are not likely to precisely match PBM calculations, Mr. Reed cautioned. But they will give owners information to help them create a DIR reserve fund to pay fees as they are assessed by PBMs. 

“Creating a reserve to pay DIR fees is very much like creating a reserve to pay your accrued employment taxes every quarter,” Reed said. “DIR fees are a reality and this is the most effective tool yet to help owners manage their cash flow and pay those fees. As painful as DIR fees are, and in many ways unfair, we are focusing on ways we can help Good Neighbor pharmacies manage what has become a reality.”