CMS’ proposed DIR fee reform garners industry support

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CMS’ proposed DIR fee reform garners industry support

By David Salazar - 11/28/2018
The latest effort from the Centers for Medicare and Medicaid Services is garnering industry attention. CMS on Tuesday unveiled a proposed rule, titled “Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses,” which includes provisions focused on direct and indirect remuneration, or DIR, fee reform.

The proposed rule is interested, among other things, in transparently pricing drugs, and seeks to redefine what constitutes “negotiated prices” under Medicare Part D to mean “the lowest amount a pharmacy could receive as reimbursement” for Part D drugs through its contract with the plan sponsor or intermediary. This would require PBMs and plan sponsors to include the lowest possible reimbursement in their claims processing systems.

It also would add a definition for “price concession” in Part D to include “all forms of discounts and direct or indirect subsidies or rebates that serve to reduce the costs incurred under Part D plans by Part D sponsors.”

The National Association of Chain Drug Stores, the National Community Pharmacists Association and the National Association of Specialty Pharmacy jointly praised the proposed rule, noting that it includes many changes related to direct and indirect remuneration, or DIR, fee reform that they have advocated for in the past.

“The proposed rule raises the need for policies related to DIR fee reform that will lower patients’ out-of-pocket costs at the pharmacy counter and lead to a more competitive and efficient Medicare Part D program,” the organizations said. “We believe pharmacy DIR fee reform will greatly advance the goal of the Trump administration’s Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs — addressing the high and rising out-of-pocket costs for patients.”

CMS noted in the proposed rule that it also is considering developing a standard set of metrics upon which pharmacies and plans could base their contracts, and is seeking feedback on whether they could be designed to offer pharmacies more predictability regarding reimbursements while still letting plans negotiate terms.

“A standardized pharmacy performance program should incentivize pharmacies for performing on measures based on pharmacy-specific, proven and achievable criteria, based on the drug dispensed and the disease state being managed,” NACDS, NCPA and NASPA said. “This would drive quality improvements and system efficiencies while also reducing unnecessary administrative burdens placed on pharmacies as a result of disparate measures and assessment methodologies by plans.”

CMS said that the changes in the proposed rule could happen as soon as 2020 — a timeline industry organizations said they would welcome.

“We remain committed to continuing to work with CMS as it advances these important pharmacy DIR fee reform concepts,” they said. “CMS has indicated that the related policies could be in place for Contract Year 2020, and it is imperative for the benefit of patients and for the competitiveness and efficiency of the Medicare Part D program that pharmacy DIR fee reform take effect as soon as possible.”