The community pharmacy landscape is changing. Starting in January 2024, Direct & Indirect Remuneration (DIR) fees will be moving to the point-of-sale, ending the PBM practice of clawbacks supposedly for good. But the retroactive DIR fees that have been challenging pharmacists for years have one last trick up their sleeve: The last of those fees will come due after point-of-sale DIR fees take effect. Industry experts are calling this the “DIR hangover.”
This DIR double-dip could create a serious financial struggle for many pharmacies, particularly independent stores. However, as a pharmacist, you still have time to prepare. And in this case, preparation could be the difference between closing up for the night and closing up for good.
(For a more comprehensive look at the DIR hangover and how you can build an action plan for your pharmacy, check out our popular e-book, “The 2024 DIR Fee Hangover Playbook: How to Keep Your Pharmacy in the Game.”)
Here are five tips to help you formulate an effective strategy for tackling this challenge:
#1: Know Your Contract Terms
Look over your payer contracts to get a better understanding of how DIR fees from different payers are affecting your bottom line. Reviewing your contracts will help you identify which plans are going to have the highest DIR fees. Once you have a better idea of what is coming, you’ll be better prepared to handle it. Furthermore, examining this data and understanding how different payers contribute to your total DIR fees can offer valuable insights into which payers are worth continuing partnerships with and which ones may require reassessment.
#2: Learn from the Past
Maximize your savings by reviewing your reconciled claims from late 2022 and early 2023. This will give you valuable insight into your upcoming DIR fees. Calculate the total DIR fees you paid in the first quarter of 2023 and use that total as your savings goal. Whether you take out a business loan to cover that number or use one of the methods in the next few sections to generate extra revenue, you’ll know how much you need to make to fill that gap.
#3: Boost Your Profits to Cushion the DIR Double-Hit
You can substantially improve both your profits and your patients’ medication adherence using data analytics. Use an analytics program to go through your pharmacy data and find any prescriptions that are due to be filled but haven’t been filled yet. To focus on improving your profitability, target the patients with the most profitable medications first. To improve your PDC scores, focus on medications related to hypertension, diabetes, and cholesterol maintenance. Either way, you will be helping your patients be more adherent to their medication plans and generating revenue for your pharmacy that you would have missed otherwise. Reach out to those patients and get them back on their plans.
For even more on this topic, watch our on-demand webinar, “The DIR Hangover Remedy: Proven Strategies for Overcoming 2024’s Greatest Challenge,” featuring a panel of clinical, financial, and analytics experts!
#4: Diversify Your Revenue Streams
One way to counteract the DIR hangover (and DIR fees in general) is to generate income that generally isn’t subject to them. When you bill for clinical services like immunization and point-of-care testing through the medical benefit and get paid as a provider, your pharmacy doesn’t owe any part of that revenue to PBMs. Consider expanding your vaccination program past flu shots and COVID shots if you haven’t already, and look at implementing other clinical services like test-and-treat programs, diabetes care and self-management training, and social determinants of health (SDOH) screenings.
#5: Find Ways to Streamline Day-to-Day Tasks
Streamline your pharmacy workflows and free up valuable staff time (for some of the extra work described above) by implementing a medication synchronization program and using an interactive voice response (IVR) system. Med sync improves operational efficiency and medication adherence (which can have an impact on DIR fees, by the way) by allowing patients with multiple prescriptions to pick them up at the same time. Meanwhile, an IVR system enhances patient access to your pharmacy while reducing distractions for your staff and giving them more time to focus on filling prescriptions or providing clinical services.
Preparation Is Key
With the DIR hangover looming closer, the time to act is now. This challenge isn’t insurmountable; with clear planning and careful preparation, you can overcome it. For further resources and an expanded look at how your pharmacy can prepare for the 2024 DIR hangover, read our comprehensive e-book, “The 2024 DIR Fee Hangover Playbook: How to Keep Your Pharmacy in the Game.” It will help you evaluate your options, build your action plan, and have some peace of mind going into the new year.