How DIR Fees Impact Pharmacies


Direct and indirect remuneration fees (DIR) can have a significant impact on pharmacy revenue and reimbursements. These fees, which are retroactive in nature, have increased by a noteworthy 91,500 percent over the past decade.

If you work in the pharmacy industry, you know all too well about DIR fees and their long-standing impact on your business. Keep reading to learn more about these pharmacy fees and how you can leverage smart data to meet your DIR goals and maximize your reimbursement.

DIR Fees: What They Are and How They Impact Pharmacies

Here’s how the Centers for Medicare and Medicaid Services (CMS) defines DIR fees:

“The Part D sponsor or its pharmacy benefits manager receives additional compensation after the point-of-sale that serves to change the final cost of the drug for the payer, or the price paid to the pharmacy for the drug. Examples of such compensation include rebates provided by manufacturers and concessions paid by pharmacies. Under Medicare Part D, this post point-of-sale compensation is called direct and indirect remuneration and is factored into CMS’ calculation of final Medicare payments to Part D plans.”

In simple language, DIR fees are collected from pharmacies in numerous forms after the initial point of sale, with the typical community pharmacy paying roughly $81,000 per year. DIR fees are often calculated based on performance, and different payers and PBMs use unique, varying formulas and rating systems. For example, many use Star Ratings as a basis for quality measures like medication adherence to certain drugs.

Learn how Walgreens was able to boost medication adherence with artificial intelligence. Download our case study now. >>

Using Smart Data to Achieve Your Pharmacy’s DIR Goals

In the era of value-based reimbursement, pharmacy leaders must achieve their quality performance and DIR contract goals to run a healthy, thriving business. Fortunately, modern advancements in artificial intelligence (AI) are enabling the use of smart data to meet performance standards and achieve pharmacy DIR goals.

Using AllazoHealth’s AI engine, pharmacies can leverage smart data to optimize their patient engagement programs and subsequent DIR performance. Our AI empowers pharmacies to deliver personalized patient engagement to encourage behavioral changes. The AI engine balances many complex factors to prioritize targeted patients and interventions, predicting:

  • The risk of each patient becoming non-adherent.
  • The patients who are most likely to be influenced.
  • The optimal outreach method for each patient.
  • The best content and timing for each message.

AI-powered patient engagement programs help pharmacies achieve effective resource allocation, positive clinical outcomes, and performance metric optimization. If you’re seeking ways to reduce your DIR fees, artificial intelligence is the answer. You can use AI to deploy more cost-effective patient adherence interventions and face DIR fees head-on—without losing money, wasting resources, or putting your business in jeopardy.

Take Walgreens for example: In 2019, Walgreens partnered with AllazoHealth to launch a pharmacy-based adherence program powered by AI and predictive analytics. AllazoHealth’s AI targeting resulted in a 5.5% to 9.7% increase in population adherence by predicting optimal interventions—and the same can be true for your pharmacy.

Curious about AllazoHealth’s AI engine and how it can optimize your performance and reduce your DIR fees? Schedule a demo to see smart data in action.

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