The DIR hangover is a serious concern for community pharmacies. A recent survey by the National Community Pharmacists Association (NCPA) showed that 98% of community pharmacy owners and pharmacists are worried about the DIR hangover and the impact it could have on their pharmacies. And it’s easy to understand why.
Rising to the Challenge
“The DIR Fee Hangover is just another example of how in business (especially pharmacy) we are constantly hit with adversity,” said Mat Slakoper, president of Mat’s Pharmacy & Medical Supply in Croydon, PA. “I feel there is always a silver lining when hit with these adversities. Planning for the future, investing financially in your business, looking for diversity, or just being hungrier will make our pharmacies stronger and resilient to the adversities thrown at us.”
The DIR hangover is a challenge, but it is not insurmountable. By taking steps to prepare, pharmacies can minimize the impact of the DIR hangover on their businesses and continue helping patients in their communities for years to come. No matter how you choose to prepare, it’s important to start now.
What is the DIR Hangover?
In May 2022, the Center for Medicare and Medicaid Services (CMS) eliminated retroactive DIR fees; instead, all DIR fees would be assessed at the point of sale beginning in 2024. While the elimination of retroactive (and unpredictable) fees was celebrated by pharmacists, there was also a catch.
Starting January 1, 2024, DIR fees for the end of 2023 will come due to pharmacy benefit managers like always. However, these fees will be coming due just as 2024’s DIR fees are moved to the point of sale. What does that mean? For the first few months of the year, your pharmacy will be paying double: the last of 2023’s retroactive fees AND 2024’s point-of-sale fees.
As you can imagine, this could present a challenge for many pharmacies.
Cashflow and Other Issues
Because DIR fees are moving to the point of sale, that means reimbursements for prescriptions are going to be lower than they were in 2023. While this does add a bit more transparency and predictability to a practice many pharmacists have disagreed with since its inception, it is still going to cause a serious headache — and possibly worse — for the industry in the first half of 2024.
In the best-case scenario, a pharmacy has enough cash reserves or revenue from other parts of the business (like a clinical practice) to cover the DIR hangover period. Once the hangover period is over, adjusting to the new lower reimbursement rates will be difficult, but manageable without the threat of clawbacks looming over a pharmacy.
In the worst-case scenario, however, the financial struggle could be enough that a pharmacy is forced to close its doors. And since communities need more access to healthcare — not less — we can’t let that happen. So what can pharmacies do?
Is There a DIR Hangover Remedy?
While the DIR hangover is a serious concern for pharmacies, there are several things you can do to mitigate its impact.
- Look over your payer contracts. Find out which payers are set to hurt you and which ones are trying to help you. Look at fees and reimbursement rates so you have a better idea of what is coming and how you should prepare.
- Set aside cash for estimated DIR fees. Calculate what your DIR fees were for the end of 2022, then set that as your savings benchmark for 2023. Find ways to boost front-of-store sales or expand your clinical practice to generate extra revenue to offset the DIR fees.
- Find ways to improve patient adherence. Because adherence rates affect DIR fees, you can make an impact on your 2024 fees and reduce how much is taken out of your reimbursements by helping your patients get back on their medication plans.
For further ideas on how your pharmacy should mitigate the DIR hangover, check out EnlivenHealth’s new e-book, “The 2024 DIR Fee Hangover Playbook: How to Keep Your Pharmacy in the Game.” Download it for free today!