2024 DIR Changes May Bring Financial Challenges to Independent Pharmacies

Crystal Lennartz, VP, GM, Health Mart Atlas & Atlas Specialty, joined Pharmacy Times at McKesson ideaShare 2023 in Las Vegas, Nevada, to discuss how upcoming changes to Medicare Part D with direct and indirect remuneration (DIR). Lennartz provides clarity on how it will impact pharmacists, what they can do to prepare, and the importance of maintaining performance.

PT Staff: What are the direct and indirect remuneration (DIR) changes coming in 2024 and why do independent pharmacies need to prepare for it?

Crystal Lennartz: Yes, so there are changes coming in 2024 to Medicare Part D, that will really impact all pharmacies. The Centers for Medicare and Medicaid Services (CMS) updated the definition of negotiated price, and essentially that means that all pharmacy price concessions are going to be built into the point-of-sale. That's positive for patients because they'll experience lower co-pays at the pharmacy counter. And it's also great from a transparency perspective because pharmacies will understand what they're getting paid. But unfortunately, there's going to be a period in early 2024 where they're still experiencing those direct and indirect renumeration, or DIR, fee Trust Preferred Securities (TruPS) from 2023, while also having that lower point-of-sale reimbursement. So it's important that they understand that dynamic and prepare for it.

PT Staff: Can you explain how resources like Health Mart Atlas DIR Assist can help pharmacies during DIR changes?

Crystal Lennartz: So Health Mart Atlas has created the DIR Assist program to really help pharmacies to navigate those financial challenges that are coming in early 2024. It's a completely voluntary program that pharmacies can opt in to better understand what they may need to set aside. And then also have us reserve those funds via central pay so that they're prepared coming into 2024.

PT Staff: How long have DIR changes been on the radar?

Crystal Lennartz: So it's been about a year since CMS updated the rules, but it's effective on January 1, 2024. So that good news is it gives some time in the back half of this year for pharmacies to prepare for the changes.

PT Staff: Besides accruing money to pay DIR fees, how can pharmacies prepare?

Crystal Lennartz: Pharmacies can prepare for some of these cash flow challenges, not only by setting money aside, but also by looking at their pharmacy operations and things that they can do to potentially free up cash flow or look at other additional revenue generating services to bring in more revenue.

PT Staff: Is there anything that pharmacies can do to explain how DIR changes will impact patients? What patients in particular?

Crystal Lennartz: So, these changes will impact Medicare patients, which are our seniors, and pharmacies play an important role every year, but especially this year, and helping their seniors to navigate open enrollment and plan choices that they might make, and what that might mean in terms of out-of-pocket costs. A lot of times, they're visiting their pharmacy more than any other health care providers. So, they are a great resource in terms of education for plan changes.

PT Staff: Are there any other preparation strategies pharmacies should consider?

Crystal Lennartz: There's also some additional opportunities when we think about freeing up cash flow or looking at what they might need to do. One consideration is Rx ownership. So being able to have a financial review and look at their revenue and cash flows their patient, patient and payer mix, see if there's anything that they can be doing there.

The second is around making sure that they get paid every dollar they earn. And one option that we have is a program called Provider Pay, it really helps with accounts receivable, just making sure all those claims get matched. And finally, I would say, ensuring they have the right amount of inventory, we do have a solution for that as well called Pinpoint Community Solutions. That helps them to free up excess inventory and cash and preparation for 2024.

PT Staff: With retroactive DIR fees going away, how does performance remain important?

Crystal Lennartz: With the DIR fee is going away performance is going to continue to be important to payers and pharmacies within Medicare and beyond. 2024 will really be probably a reset year in terms of some of these performance programs. So, we may see less than 2024. But there's at least a couple of large programs in Medicare that pharmacies can earn upside incentive programs and really, it's the right thing to do from a patient perspective for adherence to their medications, as well as for the pharmacy. I see an opportunity to potentially earn revenue.

PT Staff: Now that we’ve seen DIR fee reform, what’s next?

Crystal Lennartz: I think just all the momentum coming off of the impact that pharmacies had during COVID-19, we're continuing to see additional services opportunities and Health Mart and Health Mart Atlas want to ensure that pharmacies can really get paid fairly for the services that they provide and will continue to advocate for the advancement of for pharmacies to be able to practice really at the top of their license.

PT Staff: How else can pharmacists advocate for themselves during this period of change?

Crystal Lennartz: You have the Health Mart and Health Mart Atlas pharmacies are already very active in their communities in it. It's important that they can advocate at the state and federal level as small business owners, and really [advocate for] the services and reach that they can have in their community.