Question:

We are hearing a lot lately about something known as DIR. Does this apply to Medicare?

Answer:

Under Medicare Part D, the Centers for Medicare & Medicaid Services (CMS) make partially capitated payments to private insurers, also known as Part D sponsors, for delivering prescription drug benefits to Medicare beneficiaries. Medicare relies on transaction data reported by Part D sponsors to make sure these payments are accurate. Often, the Part D sponsor or its pharmacy benefits manager (PBM) 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 (DIR) and is factored into CMS’s calculation of final Medicare payments to Part D plans.

CMS explains DIR in detail at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-01-19-2.html.

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