CMS Proposes DIR Fee Reporting Requirements for Medicare

The Centers for Medicare & Medicaid Services (CMS) recently released a proposed guidance for Medicare Part D reporting on direct and indirect remuneration (DIR) data for 2016. The revised document makes changes to current reporting requirements.

Pharmacy benefit managers (PBMs) have been scrutinized over DIR fees, which are retroactively charged to pharmacies. Many pharmacies have noted a lack of transparency over these fees and have claimed that this practice threatens their businesses and the patients they serve. However, PBMs counter that it helps keep costs low for patients.

In the revised document, the CMS provides clarity for the reporting requirements regarding DIR fees for Part D plan sponsors.

The CMS amended multiple rebate fields of the DIR reports to no longer allow for negative input. A negative DIR indicates payment by the sponsor that increases a drug’s cost. Since manufacturer rebates reduce drug costs, a report submission will fail if a negative value is entered in rebate fields, according to the document.

Additionally, the revisions will change how pharmacy DIR is reported. Plan sponsors are now required to report price concessions from pharmacies and incentive payments to pharmacies separately.

“We believe that requiring sponsors to report pharmacy DIR in this manner will better allow CMS to verify the accuracy of the data reported, as it is more reflective of how pharmacy payment arrangements are actually structured,” the CMS wrote.

Specifically, this change has received support from the National Community Pharmacist Association (NCPA), which is the voice of more than 22,000 independent community pharmacies in the country.

“We strongly support this modification in how pharmacy DIR information is collected; specifically making a distinction between price concessions received from pharmacies and incentive payments paid to pharmacies by Medicare Part D plan sponsors,” NCPA wrote in a letter to the CMS. “This delineation will also shed much needed light on plan sponsor/PBM pharmacy quality measures in the Part D program.”

The document also updates the definition of negotiated price, which must be included in all price concessions from payments to pharmacies. Due to this change, only payments that cannot be determined at point-of-sale can be reported as DIR, according to the CMS.

While NCPA generally supports the overall DIR reporting changes proposed, the organization stated that the CMS should require plan sponsors to divulge why certain fees cannot be estimated at the point-of-sale. The NCPA said that plan sponsors should be able to use historical or data trends to estimate negotiated price.

“NCPA has long held that virtually all pharmacy price concessions could be reasonably estimated by plans/PBMs,” the organization wrote. “It is an industry reality that the PBM business model is one in which most fees are already either charged or estimated on a ‘per click’ or ‘per claim’ basis.”

Summary DIR Reports will also now report both “Rebate Administration Fees Reported as Bona Fide Service Fees” and “All Other Bona Fide Service Fees” under “Bona Fide Service Fees.” Previously, these sections were reported separately, the CMS wrote.

The CMS also proposed layouts for the Summary DIR and Detailed DIR reports, with changes in categories that will only affect the Summary DIR submission, according to the document.

Since DIR reporting is typically required by the end of June, the CMS has chosen to extend the deadline to ensure that the new reporting requirements are established and to allow sponsors sufficient time to prepare the report.