CMS Final Rule Phases Out PBM’s Ability to Retroactively Apply DIR Fees

CMS recently published “Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs; etc,”, effectively ending the retroactive application of direct and indirect renumeration (DIR) fees by Prescription Benefit Managers (PBM’s). DIR fees will now be required to be included in the negotiated price the patient pays at the point of sale. Additionally, CMS’ final rule prevents Medicare Advantage Part D plans and PBMs from deciding on the amount (or lack of) of pharmacy price concessions to be passed to patients at the point of sale during a coverage gap in the patients’ Part D program.

While this is a victory for the independent pharmacy community against the financial impact retroactive DIR fees have on their bottom line, the changes do not go into effect until January 1, 2024. Furthermore, CMS proposed no additional guidelines for the transition from calendar year 2023 to 2024 in which PBMs will continue to collect retroactive DIR fees from 2023 while pharmacies begin to see even lower reimbursement rates due to the new negotiated prices.

Boesen and Snow Law has successfully contested retroactive DIR fees on behalf of its clients and understands the complexities in effective rate contracting between pharmacies and PBMs. Contact Boesen and Snow Law today for assistance contesting retroactive DIR fees and to prepare for the transition to CMS’s negotiated price model effective January 1, 2024.