How Community Pharmacy Can Plan for DIR Fees

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With the first round of DIR fee collection coming to a close, you’re probably reflecting on the giant check you just had to make out to your favorite PBM. We know you’re feeling frustrated, confused, and maybe even downright angry. Well the good news is, you are not alone. That’s the common consensus among many community pharmacies.  

During Open Enrollment, we like to encourage plan reviews as a proactive approach to minimizing the DIR fee impact. As we are clearly outside of Open Enrollment period, we are in a reactive phase – the cards have been dealt and we cannot change the plans that contribute the most to DIR fees. What we CAN do is focus on strategies that help you best prepare for the next collection period.

Now, let’s see what we can do to help arm you with the necessary tools to help combat DIR Fees and brace for what’s ahead.

First things first. If you haven’t already seen it, make sure to check out Healthcare Analyst Audrey Einhellig’s latest webinar, Understanding DIR Fees for New Patient Plans.

If you can’t watch the full video, not to worry! We’ve put together some tricks on how to understand and plan for DIR Fees in the next round.

Know the plans that have the highest DIR fees and keep track
Understand which plans are impacting your pharmacy business the most by talking to your PSAO about contracted PBM rates. Use the Patient Engagement Center to identify how many Medicare patients belong to each plan. Pay attention to which plans cover the most patients and determine the DIR criteria for that plan. Focus on the plans costing your pharmacy the most.  

Understanding your gross and net profit
DIR Fees typically account for 1% of your sales which is equivalent to 5% of your pharmacy’s gross profit; assuming you are working with a 20% margin. The more you know about fees coming down the pipeline, the better you can manage your cash flow. In other words, make sure you accrue the appropriate funds so you’re not blindsided at the end of the term!

Stay up to date on tools and practices
As we know, we are outside of Open Enrollment, which means the best way to be proactive now is to focus on profit and performance. In the end, it all comes down to the revenue you are bringing in and, let’s be honest, who doesn’t want to increase profits?! And what better way to do this than by expanding your offering of clinical services. Utilizing solutions like VaccineComplete, MTM Assist, and PrescribeCare make it easier than ever before to improve healthcare while also increasing pharmacy performance and driving more revenue into your pharmacy.

Accurately calculate your performance payment
We would like to emphasize a simple concept – focus on what you CAN impact or in this case, the plans that you can change. Don’t bother wasting your time on plans that have DIR Fees associated with a generic dispensing rate. Instead, focus on DIR Fees associated with Star Ratings – finally something you can impact! Do this by engaging in pharma and plan funded programs that are designed to improve performance and provide additional revenue. Make sure you know how to anticipate your fees, and don’t get surprised by the next take-back surge!

Let’s review what we’ve learned today. It really comes down to understanding your pharmacy’s revenue and accruing the necessary funds to best prepare for the future.

Not a fan of DIR Fees? Remember, you can be part of the change! Speak out against DIR Fees to your local legislation.


We want to hear from you!
Contact us 
with any questions or suggestions on how we can help better prepare you for DIR Fees.



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