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DIR is more than just pay-for-play and performance based fees. Together with NCPA, we outlined below some main takeaways about clawbacks based on AWP, also called effective rates.

Example: A claim is submitted to a popular Part D plan for Aripiprazole 5mg, 30 tablets, and at adjudication a negotiated price of around $600 comes back. All things considered, this looks really good. However a few months later at remittance, the reimbursement is now $134.

Q. How is this possible?

A. The Part D plan sponsor hides an “effective rate” in their contract.

“Effective Rates”:

-Usually specify a final negotiated price that’s AWP minus a certain percentage. In the example above, the plan’s rate for generics is AWP minus 86%.

-Not called a DIR, but functionally the same. Final reimbursements for some generics can be lower than their MAC list price.

Pharmacy owner Al Roberts of Remington Drug describes the effective rate as “another example of a subtle alteration in terminology having a very drastic effect on a pharmacy bottom line.”

Q. Why is this happening?

A. Some suspect the surge in DIRs is a loophole to avoid MAC transparency. According to the NCPA, “It is likely that the Plans/PBMs have determined that utilizing DIR reconciliation processes after claim adjudication allows them to keep published MAC amounts high while ultimately reducing the aggregate reimbursement for generic drugs at the end of an established reconciliation period, further obscuring true reimbursement amounts to pharmacy.”

Q. What can we do?

A. The CMS’ Final 2014 Part D rule included a “new definition of ‘negotiated price’ to include all pharmacy price concessions which can be reasonably determined at point of sale.” However “reasonably determined” was never clarified and never enforced.

To respond, NCPA supports HR 1038, which if passed, “will prohibit Medicare Part D plan sponsors/PBMs from retroactively reducing payment on Part D claims”. While this would not eliminate DIR fees, it would eliminate all retroactive DIR fees and provide pharmacists a more accurate picture of their reimbursement at the point of sale.

So what can individuals do? Click here to contact your legislators in support of HR 1038. And click here to join us in our efforts to start an independent-friendly Part D plan.