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Richard Logan, Jr., PharmD
 Inexorably, healthcare in the United States is marching towards a value payment system.  It’s a slow, ugly, and sometimes bloody process.  While the concept of healthcare paying for performance (good performance and high quality) to reduce overall healthcare spend is revolutionary, the process to get there is evolutionary.  Darwin would be proud.  The rest of us should be working on the evolutionary process to ride with it and not be buried by it.

Since this revolution began, the only thing that remains certain is not only does no one have all the answers, collectively we don’t even know the questions.  We are trying to effect global health, or population health, by treating one patient at a time.  It’s an unwieldly process and one that needs to have the rough edges sanded off.

One way we’ve tried to effect population health is by attempting to establish standards for treatment, goals and metrics.  All of which are designed to help the individual patient get healthier, utilize less healthcare and thereby save money. 

Look at the previous paragraph and think Stars Programs.  Ostensibly, the Stars program was designed to improve patient care.  I even wrote an article early on proclaiming Pharmacy’s future was in the stars.  So, how are we doing?

Pharmacy’s performance numbers have been pulled from paid claims, digitalized, analyzed, spiritualized, bastardized, and utilized in multiple ways, some of them unintended.  While a pharmacy is not officially assigned a “Star” rating, most payers are proceeding to reduce pharmacy reimbursements based on “Star Performance.”  This results in the movement of mountains of cash from providers to middlemen, but does it positively affect the patient?  Are these performance metrics doing what they were designed to do?

The example of the High Risk Medication metric is a good example of the evolutionary process underway.  The High Risk Medication list was intended to act as a guideline in reducing risk associated with certain medications used in the elderly.  Reduce the exposure, reduce the risk, reduce the spend was the theory.  Payers would be incentivized to reduce the use of these medications within their plans member population.  Payers responded by changing formularies, dropping previously covered medications, instituting prior authorizations for “high risk meds”, penalizing their providers for prescribing or dispensing them to members, etc., etc., etc.  And it worked!  The paid claims for these medications went down significantly and plans reaped rewards as a result.  But was this the plan “gaming the metrics” or was it a true, beneficial, patient care improvement?  There was no marked national decline in drug related adverse events or hospital admissions during that time, and from behind the counter we saw patients switching to cash instead of risking a claim denial.  Nearly no affect at all, other than the plans reaped large monetary rewards.

I propose the system of “Stars” as it stands now perpetuates that scenario to a large degree.  Take 90 day supply of medication as an example.  When there is a possible gap in fill on paid prescription claims, the first notice sent out is “switch this person to a 90 day supply.”  In my experience, a patient non-adherent to a 30 day supply will not magically become adherent if they are given a 90 day supply of medication.  It is, however, much easier to make the metrics look favorable with a 90 day paid claim than a 30 day paid claim, considering plans only look at data for a 12 month period based on coverage cycles.  Once more the system is gamed to the benefit of a plan, but the patient is not helped nor outcomes improved.

What is needed are true pharmacy based performance metrics that reflect the positive contribution the pharmacist makes to the health of a patient.  Metrics and measures must be designed that help the patient, not the payer, or even the provider.  Both payer and provider need to be compensated for improving the health of a patient and thereby saving money, not by meeting a metric that can easily be manipulated for the purpose of reaping unearned rewards.

Designing these clinically based metrics is a daunting task.  It is, however, a task that pharmacy can accomplish.  Pharmacists are positioned to provide the necessary resources and input to payer and government as the evolutionary reimbursement decisions are made.  All parties understand that without pharmacist input and participation the costs of future healthcare are unsustainable.  We are at the table.  Our voices and actions must speak loudly.

The Stars, as we know them now will change in the sky, some will fade and blink out, some new ones will emerge and some will be passed by the evolutionary process. What we cannot allow is the for-profit gaming of the system.  All metrics must focus on positive patient outcomes, not corporate profits.  Pharmacists are the voice of the patient at this table.  When we speak for the patient, it benefits us all.

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Political Action

For as long as I can remember (and that’s a long time), the battle cry in pharmacy has been “Get into politics or get out of Pharmacy.”  That cry is no less important now than it was forty years ago.  While legislative challenges abound, there are friends of pharmacy and patient champions in Congress.  If you don’t believe it, take a look at the You Tube video of Georgia U.S. Representative Doug Collins defending pharmacy in a House committee meeting.  Whether you agree or disagree with his political views, Representative Collins “gets it” where pharmacy is concerned.  He understands what it means to patients and to healthcare to have healthy and financially secure community pharmacies available to patients…….and he’s willing to stand up for us. 

Rep. Collins, and others know as our healthcare system moves from fee for service to a patient centric, value based payment model that the professional role of the pharmacist will be taking on a more meaningful position in providing patient care.

The value of pharmacy services is undeniable.  Multiple studies over many years have shown pharmacist involvement to improve care and reduce the cost of care.  Improving medication adherence in a diabetic yields a seven dollar healthcare savings for each dollar spent on pharmacy.  Pharmacy involvement in hospital discharge transitions of care has been shown to reduce costly early readmissions.  The case could be made (and I have made it at multiple forums) that the success of value based healthcare, in many instances, pivots on pharmacy involvement.  Simply put, if pharmacists are not involved in patient care, it will create a void into which one could not pour enough money to fill.

Many stakeholders are realizing the value of pharmacy services and moving to include them in comprehensive payment plans.  While this is a good sign and a positive direction, we must not lose sight of the fact that these stakeholders actions are often being promulgated by individuals working outside the C-suites.  While executives within organizations might have the data to see the value of pharmacy to their organization, many times the people actually doing the work are not privy to the whole picture.  In order for healthcare to become affordable, those making the rules need to have panoramic views of the entire field and not look at healthcare spending through a microscope.

MedHere Today is working diligently with other national organizations to bring pharmacy’s message to the forefront.  We have presented our case to Congress, CMS, commercial payers and the like.  We will continue to do so.  Those of us bringing this message to the rule-makers and rule-enforcers need help.  Every pharmacist needs to be an advocate of the profession.  We each need to let the public know what we do goes beyond putting pills in a vial and how our actions reduce healthcare spend.  Without a concerted effort, our clinical services will not be included in the value based purchasing conversation.  That will create a black hole that will need to have money poured into it for generations.

Political action is vital.  Beyond that, a concerted, sustained information agenda directed toward those who carry out legislative directives is no less imperative.

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I like baseball.  I follow team standings across multiple divisions and enjoy catching a game now and again.  My wife, on the other hand, is a baseball FAN.  More specifically she is a St. Louis Cardinal fan.  Every game night she and a group of her rabid Cardinal fan girlfriends open up their social media hotlines and sit in front of the TV watching every Cardinal play and texting/Facebooking madly back and forth about every move every player makes.  They enjoy talking baseball, watching baseball, obsessing over baseball, and are familiar with the statistics of their favorite players.  It’s easy for them to become involved in the ratings and statistics of their favorite players because baseball is a game of numbers.  From the time a player becomes a prospect and throughout their career someone is tracking every professional move they make.  From the number of at-bats, to strikeouts and hits versus right handed and left handed pitchers to the number of catches, baseball tracks and records every conceivable move a player makes and uses those numbers to benefit the team when analyzing player performance.  A player with high percentages in the appropriate categories can command a higher salary when negotiation times come around.  Lower rated players, not so much.  Every player strives to do their best and put up good numbers.  It’s a baseball thing.

The ladies’ baseball ritual occupies them for several hours most summer nights. Those are precious hours for me.  I am allowed free range of the house.  If I wish to turn in early, who’s to know?  If I wish to have a root beer float and eat pork rinds, no one will be the wiser and I won’t face that look every husband fears.  I probably have too much time if truth be told.  During my baseball “vacation time” the other day I took the opportunity to read some online news.  I came across an article talking about a site called “Roast Me.”  Evidently, this site invites people to post snapshots of themselves and invites anyone on the internet to post rude comments about the picture.  Unfortunately, there was a link to the website.  My recommendation to you is to NOT click the link.  I offer that recommendation from experience.  The website is full of perfectly ordinary looking people, mostly young, who have taken “selfies” and posted them to the site with a hand-written note that says “roast me.”  The comments are mostly awful.  They’re insulting.  They’re based on a single snapshot of a person who willingly subjects themselves to ridicule.  I cannot imagine anyone doing that to themselves!

Oh wait………..pharmacies do that to themselves daily.  We allow a third party to base an opinion on our practices using only a snapshot.  This snapshot is in the form of claims data.  Third parties use submitted and scrubbed claims data not only to evaluate your pharmacy but also base payments on this snapshot.  Many times this evaluation of a pharmacy is based on a minimal number of claims.  Which means an entire practice, for the purposes of payment, is evaluated on claims for perhaps no more than 1 or 2 percent of patients served.  It’s much like throwing our pharmacy selfie on the net and saying roast my pharmacy.  Base it on a single snapshot.  Base it on a few claims for even fewer patients and then lower my pay rate based on this snapshot.

It is impossible to holistically evaluate the value of a pharmacy’s service based on a few paid claims.  I’ve heard pharmacists say, “I’m a 4 Star Pharmacy.”  Nope.  Not 5 Star. Not 4, 3, 2, or 1 Star. Your pharmacy does not have a rating.  Your pharmacy may have a few patients who appear as 4 Star to a particular payer, but that’s a few patients and one plan.  Each plan looks only at that plans patients and can have a totally different view of your pharmacy.

Rating a pharmacy, and there are discussions going on now about rating pharmacies, must be done more like rating a baseball player than rating a Roast Me snapshot.  We need to look at the pharmacy practice and its impact on the health of patients served.  Look at the patients a pharmacy serves.  Is the population a difficult, unhealthy population?  Is the population health literate? What are the pharmacy demographics and how has the pharmacy responded to those demographics to improve patient care? No one in pharmacy opposes rating a practice if payment is higher for pharmacies that are doing more for their patients and lowering healthcare costs.  It can be a showcase of pharmacy practice.  But Rate a pharmacy, don’t Roast it!


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The late, great, comedian Jerry Clower from the metropolis of Liberty, Mississippi told the story of going Coon Huntin’ (that’s raccoon hunting for those of you unindoctrinated in Southern ways).  It seems Mr. Clower was hunting one evening with a group of friends, including one John Eubanks, when they treed a coon in the top of a very tall Sweet Gum tree.  Mr. Eubanks, being a tried and true tree climber, decided to climb to the top of the tree, poke the coon with a sharp stick and cause it to jump from said tree.  After making the arduous climb and locating the coon, as Mr. Eubanks poked the coon, it turned and revealed itself to be not a coon, but a Lynx.  Now, a Lynx is a particularly ill-tempered member of the wildcat family and evidently takes exception to being poked with a sharp stick while in the top of a very tall Sweet Gum tree.  It set upon Mr. Eubanks.  The results of this set-to were apparently unpleasant for Mr. Eubanks, as he began to yell to the hunters below, “Take out your guns and shoot up here amongst us.  One of us has got to have some relief.”

As community pharmacists, we can sympathize with Mr. Eubanks.  It often feels like we are fighting wildcats in the top of a tree.  It’s all pain and frustration, and no place to go to get away.  Unlike the coon hunters, though, I don’t recommend that someone just shoot up amongst us.  At least not yet.  I see relief coming if we can hold on.

Healthcare is undergoing a painful transition.  It’s not only pharmacy.  All facets of healthcare are being mandated to change from fee for service to reward for outcomes based on making patients healthier.  Change is difficult. Change is not profitable.  That’s the bad news.  The ray of sunshine coming through the Sweet Gum branches is that pharmacy is ready for the change.  We might not realize it, we might not have it quantified, but we’re ready, we’re already doing much of the heavy lifting, we just need to put it all together, bundle it up, and show payers our worth.

Enter pharmacy networking.  What better way to impact our own futures than align ourselves with others in our profession who are positively impacting patient health and lowering healthcare spend.  As our friend Dr. Troy Trygstad says, “Pharmacy is an investment, not a cost center.”  When we take this message to payers, circumvent PBMs, and demand to get paid for the work we do on behalf of the patient we are building our own futures.

This is not some pipe dream.  It’s happening.  Pharmacy is becoming the Lynx, not to be poked by the guy with a stick.  And it feels really good.


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Inundated.  That’s a really good word. It’s associated and friendly with other words like deluge, flood, and overwhelmed.  They’re all good words.  I could use any or all of those words to describe the correspondence pharmacies are getting from our PBM partners relating to switching patients to 90 day supply prescriptions.

It seems as if a 90 day supply of medication is the panacea healthcare is seeking to improve patient adherence, improve outcomes, and save money.  Everybody says so.  90 days supply is good.  It’s good for everybody on maintenance meds.  It’s good for you.  It’s good for me.  It’s good for us.  It’s good for them.  It’s good for the sick.  It’s good for the healthy.  It’s just plain good.

OK…..I live in  rural America.  One thing I have learned over the years is when you walk across a pasture, you are likely to step into something unpleasant and that something can stick to your boots.  The argument for 90 days supply (in most cases but not all) seems to be sticking to our boots.

The myth of the 90 day supply is if a person has plenty of medication on hand (remember PDC?) they will be adherent.  (Oops!  I’m going to have to scrape that one off my boots.)  In my experience, undocumented though it is, people who are not adherent on a 30 day supply are not sprinkled with fairy dust, given a 90 day supply and become magically adherent.  Granted, if a patient is motivated and adherent with a 30 day supply chances are the same will apply to a 90 day supply, and that can be more convenient.

In 2012 our friends at Express Scripts studied factors that contributed to patient nonadherence. One of the most telling findings……”69% of the problem (of nonadherence) is behavioral: Simple procrastination and forgetfulness.”  I’m thinking that whether you have 30 pills or 90 pills in a bottle you can still procrastinate or forget.  90 day supply isn’t an answer.  Adherence monitoring, patient engagement, and local healthcare professionals are the answers. 

The mandate of 90 day supply comes from Healthcare payers and PBMs who truly like 90 day supply scripts.  They like them so well they incentivize 90 day supply in patients whom they judge to be nonadherent.  That nonadherence judgement is based on claims data they see coming through their switches.  When we, as pharmacists, look at a patient we don’t see claims data or switches.  We see a patient in need of help becoming adherent.  Our first thought is not, “Woo, I need to give this nonadherent, out of control diabetic more Metformin tablets.”  Our first thoughts are, “What can I do to help this patient?  What is the reason for their nonadherence?”

If a person is nonadherent and 69% of the problem is behavioral, why more pills?  Sometimes more pills is just more pills.  If more pills is the solution, let’s give everybody a year’s supply and call it done.

That brings us to The Measure.  It’s a given.  People who are in need of chronic medication and don’t take their meds don’t respond well.  People who take their meds benefit from them and the healthcare system saves money in the long run.  With that in mind, payers have adopted a Proportion of Days Covered (PDC) as a standard metric to indicate adherence and quality performance.  PDC’s of 80% or higher are considered indicators of good adherence.  So enamored of the high PDC is CMS, that they reward their intermediary health plans based on aggregate PDC numbers across their pharmacies.  This reward ($) is great enough to entice these plans to mandate high performance via threat of withholding fees from individual pharmacies. 

While the PDC measure as a quality indicator can be a good one when done correctly, it can also be “gamed”.  Autofill programs can and have be used to artificially raise PDC without a corresponding benefit to the patient.  In order for PDC to be meaningful, it must be used in coordinated program that actually benefits the patient and addresses all of the reasons for their nonadherence.

Using a 90day supply as an easy end around to an elevated PDC is another example of a possible system “gamer”.  If you give a nonadherent patient 90 days worth of medication, to the plan they look adherent for 3 months whether they take the medication or not.  That games the system.  In my experience that can be a grave disservice to a patient.  My patients who struggle with adherence with a 30 day supply need more contact with the pharmacy and our adherence team not less.  Shouldn’t we focus on why the patient is nonadherent and not just give them more pills so their paid claims look like they are adherent?  We need to put those patients on a 15 day supply and assess them regularly at least until they become adherent.

In the last few years pharmacies have been deluged (or inundated) with requests and demands to switch patients to a 90 day supply of medication.  My question is this:  Is this for the patient’s benefit or is it to show a paid claim and game the system?  Hmmmmmmm.

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Adherence and Med-Sync

The patient was, at the time, about 96 years old.  She was extremely healthy, alert, lived alone and capably cared for herself.  She was a delight.  She also had hypertension.  It was her only treated condition.  For her hypertension she took one, small, pink pill every morning.  Or at least she was supposed to take one a day.  She was not very adherent.  Wishing to keep her around another 96 years, we enrolled her in our pharmacy’s adherence program.  We struggled.  She meant to take her medicine, but the days just got by her so quickly.  Enter my adherence technician (also my sister-in-law).  My technician engaged her in conversation (not hard since, according to her father, my technician had been vaccinated with a phonograph needle).  Through a continuing dialogue we learned much about that patient.  As she began to trust us and look forward to our calls, my technician developed a plan.  One day, on a “routine” call my tech said to this marvelous lady, “I know you are an early riser.  Do you get up and fix a big breakfast?” 

“No”, the lady replied, “I just get out of bed and make my coffee.  That’s enough for me.”

“Oh, coffee first thing in the morning?” my tech continued

“Yes, dear”, came the answer, “coffee every morning.”

“I love my morning coffee.” my tech replied, leading the lady into our trap.  “Do you drink yours black?”

“No, sweety,” came the reply as the jaws of the trap sprung, “I use one spoon of sugar in each cup.”

Wham!  We had her!  Clamping the jaws of the trap firmly shut, my tech said, “Put your pills in front of your sugar bowl to remind yourself to take them.”

Not realizing she had been thoroughly bamboozled, our patient put her pills in front of her sugar bowl and was adherent until the day her family came and moved her away.

If your pharmacy has a med-sync program that is focused on having pills filled on a set date each month, are you impacting a patient’s health or are you working on a convenient schedule for yourself and your pharmacy?  The best med-sync programs combine both.  The convenience of knowing when refills are due, if prescribed medications are appropriate, and the ability to have a conversation with patients are the hallmarks of quality patient care.  No matter how much we need to automate what we do for data collection, as a profession our greatest strengths, joys, and effectiveness come from simple conversations with patients.  Everything good starts at the pharmacy counter eye-to-eye.

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The Effects of DIR Fees

DIR fees are to community pharmacy what a millstone is to the neck of a distance swimmer. They drag us down, they keep us from doing what we are trained to do, and eventually they will suffocate us. So why are we accepting them? Is anybody doing anything to stop, roll back, slow, delay, or prevent these onerous fees from destroying practices?

Maybe we first need to ask, “Who really cares?”. If DIR fees are impacting your profitability, does anyone other than you really care? Nope! No one will care until it impacts them. They will only care when they can no longer get a prescription filled because your pharmacy is not there to provide the services they need. The current cry against DIR fees is almost universally community pharmacy driven. The chains don’t care. Chains can sell another package of Fruit of the Loom’s or another TV and make up the difference. Patient based, community pharmacies do not have that luxury. We depend upon the care we give to fund the care we can give. Therein lies the rub. We (community pharmacies) are being charged a premium in order to be able to provide inferior service to patients. When, all the while, we should be paid more to provide superior patient care.

Take a look at “performance DIR fees”. Supposedly a DIR fee based on performance will allow a “high quality pharmacy” to receive a greater reduction in fees as compared to a “low quality pharmacy”. (Understand that quality here is defined by a third party based on numbers not designed to “rate” pharmacy performance.) In fact, if you have a pharmacy that is perceived as high quality based on things like PDC adherence rates and MTM completion rates you should expect to receive lower fees and more patients because of that performance. If you receive more patients it is quite probable they will be less adherent and less likely to respond to MTM requests. In which case, your “quality numbers” tank, your DIR fees rise, and you have more patients that cause you to lose more money on each prescription filled. That is bad for the patient, bad for your pharmacy, bad for CMS, and bad for the healthcare system.

So, who’s doing something about this? We are. And we’ve got help. MedHere Today is assisting NCPA in their efforts to address this legislatively, we’re talking to CMS about access and quality issues, we’re speaking out in national forums to raise awareness, and talking to congressional and senatorial officers to help them understand the issues.

You think DIR fees are not fair? A fair is a place you go to eat greasy food and watch creepy clowns make balloon animals. Fair has no place in this discussion. This discussion must be joined around patient access (my pharmacies are dropping plans with particularly onerous DIR fees limiting those patients access to care) and quality of care. This discussion must center on the patient, not the impact the DIR fees have on your business. Once we convince congress of the deleterious effects of these impossibly high fees, and the limited positive impact on patients, we can then speak to their effects on our small businesses and what Main Street will look like without us.

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The Structure of DIR Fees
I liken DIR fees to purchasing a baby alligator.  At first, it’s interesting, you feed it a little hamburger and pretty much leave it alone.  After a while, however, the alligator grows and is threatening to eat your poodle.  Our poodle is in danger.  DIR fees have grown from very few dollars per claim to, in some cases a clawback worth more than the claim itself.

The DIR fee structure varies from plan to plan.  There are some plans that extract a flat fee per prescription.  Other plans determine the fee based on a percentage of the sale.  Still others, perhaps the most onerous of all, develop plan specific metrics that qualify a pharmacy for a “performance rebate“ of a portion of an inflated DIR fee.  This fee supposedly cannot be calculated at point of sale, but must be calculated months later, to be extracted from pharmacy claims much later, perhaps even well beyond the patient’s enrollment in that plan.

Many of these DIR fees are higher within a plans preferred network.  The theory, at least as far as pharmacy is concerned, is a trade off of higher prescription traffic for lower reimbursement.  The belief that lower fees and copays incentivize patients to flock to community pharmacies in favor of the PBM sponsored chain or mail order has not been realized.  The PBMs that contract with the plans spend a lot of advertising dollars trying to push patients to their brick and mortar or mail order pharmacies.

So, independent pharmacy owner, what are you to do?  How are you expected to survive in this landscape?

First and foremost you must quantify your DIR fees.  If you do not know the cost, you cannot make an intelligent decision. You must know what preferred networks you are in, and decide if you wish to remain in them. Did I mention that you must quantify your DIR fees?  Know what each plan requires, know what the financial impact is on each prescription you fill.  Only then will you get a true feel for the impact DIR fees have on your practice.  Know how your PSAO, if you belong to one, determines whether or not to sign a standard or preferred contract.  Some will sign most preferred contracts, some will sign no preferred contracts, some will pick and choose, and all will have criteria for signing any contract.

Knowing and quantifying your DIR fees will allow you to look at your practice, your patient mix, and plan mix to see if you, in fact, are able to continue with that plan, or need to opt out.  That decision is difficult if you have quantified your DIR fees, and impossible if you haven’t.  Continuing with a plan that costs your practice tens of thousands of dollars with no benefit, makes no sense.  If you lose fifteen dollars on each prescription in a plan, you would be better off dropping that plan and giving a patient ten dollars to go somewhere else.   You would come out five dollars ahead.
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An Overview of DIR Fees

Community pharmacies are facing large DIR fees associated with Medicare Part D plans.  Surprisingly few community pharmacists are aware of the history and significance of DIR fees.  The Direct and Indirect Remuneration (DIR) fees were included in the original Part D legislation as a way for Health Plans to benefit from drug manufacturer rebates in order to pass those rebates on to patients as a way to improve healthcare and/or lower costs.  

In the first years of Part D, pharmacy was not included in the DIR structure.   That began to change as PBMs began assessing pharmacies fees related to DIR.  These fees are assessed multiple ways.  They can either be assessed as a percentage of price, a set fee, or as a “performance based” fee. Some can be quantified at point of sale, some (the “performance” based ones) cannot be assessed until months later. However they are assessed, DIR fees mean large quantities of money flowing backwards from the provider of a service, to a middle man.  Currently, the benefit to the patient of these PBM derived fees, if any, rests with the PBM and the corresponding health plan.

Combine these onerous fees with drug prices set below cost for reimbursement, and you have a recipe for community pharmacy disaster.  Community pharmacies are paying fees in the tens to hundreds of thousands of dollars annually.  No practice can long withstand that sort of cash drain

What can be done?  Actions on DIR fees are taking both short term and long term views.  On the national level, NCPA is leading a legislative effort to define, quantify and, make transparent the DIR process.  The contention is that pharmacies, or any business, cannot function within a payment methodology where the reimbursement cannot be determined at time of sale.  Other national efforts, being led by MedHere Today and others, are focusing on “performance” based DIR fees.  Many are of the opinion that the PBM dictated performance metrics do not represent a pharmacy’s true value to the health system, and in fact create barriers to quality patient care.

Even though there are ongoing efforts to quantify, define, and mitigate the effects of DIR fees on your pharmacy.  Until, and if, these efforts come to fruition DIR fees as designed by PBMs will be a part of the pharmacy landscape. The question becomes: “What can I do at my practice to mitigate those fees and survive another year?”

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