NASP Supports CMS DIR Fee Proposal

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. While pharmacies claim this practice threatens their businesses and the patients they serve, PBMs counter that DIR fees help keep costs low for patients.

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

The National Society of Specialty Pharmacy (NASP), which represents thousands of specialty pharmacy stakeholders, supports this change, as it would increase transparency, according to a letter NASP sent to the CMS.

NASP also encourages the CMS to require plan sponsors to detail the pharmacy type, as retail and specialty pharmacies are quite different. This could lead to a better understanding of the specialty pharmacy industry.

“By doing this, CMS will learn that very rarely, if ever, does a specialty pharmacy receive any incentive payments; rather, only price concessions,” NASP wrote. “With this greater understanding, NASP believes that CMS can then take the necessary steps to correct this imbalance and require PBMs to create meaningful quality measures that focus on the care provided by specialty pharmacies as the only foundation for the collection of DIR fees.”

The revisions proposed by CMS will also alter how pharmacy DIR is reported—plan sponsors would be required to report price concessions from pharmacies and incentive payments to pharmacies separately. The agency believes that this 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.

The proposed document 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.

NASP also believes that the modification should provide additional clarity about reasonable determination of DIR fees at point-of-sale. They note that the examples of adjustments to be reported as DIR do not apply to all pharmacies, especially specialty pharmacies.

NASP surveyed their members and found that at least 95% of DIR fees paid could have been determined at point-of-sale, which could reach billions of dollars collected in 2017.

“NASP therefore urges the agency to reign in the accounting abuses of the PBMs and require them to count the recoupments from specialty pharmacies as negotiated price and not DIR fees when the PBM knows that the specialty pharmacy cannot attain a certain metric, quality measure, and/or generic dispensing rate,” NASP wrote in the letter.

Summary DIR Reports will 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, according to the CMS.

NASP stated that PBMs should collect DIR fees based on pharmacy type. Since many of the performance metrics do not align with specialty pharmacy services, NASP is concerned that the proposed guidance does not break out DIR fees collected at retail and specialty pharmacies, according to the letter. Changing this aspect of the proposal would allow the CMS to have a better understanding of the structure of arrangements with PBMs and different types of pharmacies.

The change also received support from the National Community Pharmacist Association (NCPA), which is the voice of thousands of independent community pharmacies.

“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.”

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