NACDS Demonstrates Need for DIR Fee Reform in Comments to CMS

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Supports agency proposal to reduce patients’ out-of-pocket drug costs, reduce overall healthcare costs, improve patient health, and address drastically unfair reimbursement to pharmacies

"The proposed changes are consistent with several of the Administration’s priorities, including the goal to reduce prescription drug costs for patients; improve the Medicare program; and use ‘[Department of Health and Human Services] programs to build a value-driven healthcare system.’"

Based on insights from member pharmacies that serve as the front lines of healthcare delivery, the National Association of Chain Drug Stores (NACDS) has submitted extensive and thoroughly documented comments to the Centers for Medicare & Medicaid Services in support of the agency’s proposal to reform direct and indirect remuneration (DIR) fees – which relates directly to reducing patients’ out-of-pocket drug costs.

NACDS issued its comments in response to CMS’ proposed rule titled “Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses,” which was released in November 2018.

“The proposed changes are consistent with several of the Administration’s priorities, including the goal to reduce prescription drug costs for patients; improve the Medicare program; and use ‘[Department of Health and Human Services] programs to build a value-driven healthcare system.’ We therefore strongly urge CMS to use its current authority to further update the Part D Program by implementing these much-needed reforms in the final rule,” NACDS wrote in its comments.

“NACDS members’ experiences confirm that the abuses and harms of pharmacy DIR fees are genuine. And the situation is rapidly growing worse, as abusive pharmacy DIR fees continue to grow exponentially. Pharmacies are calling on CMS to eliminate these and other harms now, by implementing reforms to eliminate pharmacy DIR fees.”

NACDS’ comments explain that pharmacy DIR fees are based on “a regulatory loophole that plans have exploited to increase beneficiary drug costs,” and that “CMS should close that loophole completely.” DIR fees increasingly are being misused by payers to retroactively and severely claw back reimbursement to pharmacies for the prescription drugs that they provide to Medicare beneficiaries. For example, payers impose penalties for pharmacies’ alleged failure to achieve certain benchmarks – many of which are vague, undefined, inconsistent, unachievable or outside of the control of pharmacies.

Interpretations of specific terms that are used in the Medicare program related to pharmacy reimbursement and drug pricing have led to these claw-backs, and ultimately to higher out-of-pocket drug costs for patients and increased costs for the government.

NACDS also noted the importance of establishing appropriate quality measures, saying, “Vital to the success of these reforms will be the development and establishment of a Medicare Part D: Pharmacy Quality Incentive Program that is built on a standard set of pharmacy performance metrics that drive better health outcomes and reduce the total cost of care.”

In summary, NACDS’ comments address crucial factors, including:

  • The harmful effects of current DIR practices on Medicare beneficiaries, pharmacies, and competition;
  • Savings to taxpayers and improved health that would flow from increasing the likelihood that patients take their medications as prescribed, as a result of DIR fee reform and of a pharmacy quality incentive program;
  • Specific input on the calculation of “negotiated price” and “price concessions” that would mitigate the problems associated with the current misuse of DIR;
  • Emphasis on the importance of a properly-aligned pharmacy quality incentive program; and
  • The fact that CMS has the clear authority to take the actions that it has proposed and that NACDS recommends.

NACDS has established DIR fee reform and related reimbursement issues as its top priorities, given the essential role of these issues in pharmacy’s viability, and in pharmacy’s value to patients and to the healthcare delivery system.

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Chris Krese
NACDS
703-837-4650
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