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NACDS to CMS: Finish the Job of DIR Fee Reform

NACDS stands up for seniors and pharmacies in comments on Medicare proposed rule


The National Association of Chain Drug Stores (NACDS) is reminding the Centers for Medicare & Medicaid Services (CMS) that the 107,400% growth in “DIR fees” over one decade’s time continues to jeopardize seniors and the pharmacies that serve them.

In formal comments on CMS’ proposed Medicare rule for 2024, NACDS noted that a rule finalized in May 2022 and slated to take effect in January 2024 will improve “transparency” of these damaging “direct and indirect remuneration fees,” but will not fully address their harmful effects.

NACDS commented to CMS this week that the rule finalized last year will “better align marketplace competition with the interests of Medicare patients, and lead to lower total healthcare costs, including lower out-of-pocket cost for beneficiaries,” and will “promote better medication adherence, mitigation of health disparities, and in turn, better health outcomes.”

However, NACDS said: “Although we appreciate CMS taking this first step toward comprehensive DIR fee reform, much work remains to be done. Unfortunately, the 2022 rule did not eliminate pharmacy DIR clawbacks that plan sponsors and PBMs impose on pharmacies, nor did the rule eliminate sponsors’ and PBMs’ incentives to continue to do so. Pharmacy DIR was intended as a payment or fee adjustment after the point-of-sale, with the amount calculated according to pharmacy performance metrics, but instead, PBMs have exploited DIR to create a loophole in the Medicare regulation allowing them now to dictate pharmacies’ reimbursement based on factors unknown or opaque to pharmacies. In the Part D bidding process, sponsors and PBMs may continue to underestimate DIR fees and then over-collect from pharmacies, with the potential for great financial benefit to the plan sponsors and PBMs. We are disappointed that CMS has not addressed pharmacies’ ability to receive a reasonable rate of reimbursement in this proposed rule [for 2024].”

NACDS’ comments include specific recommendations for bringing about comprehensive DIR fee reform.

In addition, NACDS’ comments provide specific recommendations on issues beyond DIR fee reform that affect patients and pharmacies, including: electronic prescribing to foster patient safety; the Limited Income NET (LINET) program to meet low-income individuals; meeting patients’ needs during medication shortages; the advancement of health equity; expansion of Medication Therapy Management to help patients take medications as prescribed; and pharmacy reimbursement and operations issues.


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NACDS represents traditional drug stores, supermarkets and mass merchants with pharmacies. Chains operate over 40,000 pharmacies, and NACDS’ member companies include regional chains, with a minimum of four stores, and national companies. Chains employ nearly 3 million individuals, including 155,000 pharmacists. They fill over 3 billion prescriptions yearly, and help patients use medicines correctly and safely, while offering innovative services that improve patient health and healthcare affordability. NACDS members also include more than 900 supplier partners and over 70 international members representing 21 countries. Please visit NACDS.org.

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