Inmar Intelligence | April 15, 2019

Inmar White Paper Backs CMS' DIR Fee Reform Proposal, Standardized Pharmacy Quality Program, to Reduce Patients' Out-of-Pocket Drug Costs

Inmar, a data-driven technology-enabled services company, released a new white paper that explores the impact of direct and indirect remuneration (DIR) fees on patients' out-of-pocket drug costs and on pharmacies. Commissioned by the National Association of Chain Drug Stores (NACDS), the white paper supports the Centers for Medicare & Medicaid Services' (CMS) pharmacy DIR fee reform proposal. Inmar submits that CMS also should establish a standardized pharmacy quality program and eliminate post point-of-sale price concessions to create a more reasonable operating environment for pharmacies.

Inmar's white paper provides practical examples of the ways in which DIR fees dramatically reduce reimbursement to pharmacies from plans and pharmacy benefit managers (PBM) for the Medicare prescriptions that they fill. This occurs when funds are "clawed back" — even six-to-nine months after the transaction — based on performance ratings that are not even appropriate for use in the pharmacy environment. This proves highly significant for patients because Medicare beneficiaries' cost-sharing is supposed to be based on the drug's cost, but that cost — and thus the cost-sharing — is inflated when it does not take into account the "claw-backs."

At the heart of Inmar's white paper is its evaluation of current DIR trends through its pharmacy customers, which include national and regional chains, health system pharmacies, long-term care, specialty and independent retail pharmacies that, collectively, comprise of approximately 25 percent of the entire pharmacy industry.

"Current [pharmacy benefit manager] PBM and plan DIR approaches are complex, uneven and challenging. This results in substantial financial penalties being paid by pharmacies to plans and PBMs. This impact is compounded by the fact that pharmacy reimbursement rates have also declined since DIR was first implemented, and pharmacy DIR fees now amount to more than 1.5 percent of total pharmacy sales and more than 6 percent of Medicare Part D prescription sales," the Inmar white paper states. By comparison, pharmacy DIR fees totaled less than 1 percent of Medicare Part D pharmacy sales in the first quarter of 2015.

"Additionally, significant variations in DIR approaches exist across plans and PBMs. Varying approaches often include incongruent and opaque DIR metrics, definitions, methodologies and processes by plans and PBMs, all of which needlessly penalize pharmacies." Only 25 percent of PBMs and plans provide the claim-level detail needed by pharmacies to effectively reconcile DIR fees against receivables.

Based on its analysis, the Inmar white paper states, "CMS should implement its proposals to include all pharmacy price concessions in negotiated prices at the point of dispensing; develop a standard set of pharmacy quality and cost measures in the Part D Program; and align Medicare program incentives for improving pharmacy access and quality and reducing costs."

Download a copy of the white paper and read more about Inmar's position on CMS' DIR Fee Reform Proposal here.

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Holly Pavlika
SVP, Corporate Marketing
(336) 770-3596