Direct and Indirect Remuneration, most commonly known as DIR, refers to price concessions that affect the gross prescription drug cost of Medicare Part D plans that are not captured at point-of-sale. Part D Sponsors are required to certify the claims data and allowable costs submitted for purposes of risk corridor and reinsurance payment are accurate, complete, and truthful, and acknowledges that the information will be used for purposes of obtaining federal reimbursement on an annual basis. Each year, DIR will be factored into CMS’ calculations of the final Medicare payments to Part D Plan Sponsors.

What Monies Constitute DIR?

DIR has multiple categories that are specifically defined by CMS, but at its core level DIR are dollars that offset the costs of the Part D benefit claim costs. These offsets may directly offset a drug cost at point of sale, or they may offset the overall costs of the benefit in a way that is intended to create opportunity for lowered drug costs through premium decreases. What counts or does not count as DIR has been the subject of some debate and the topic has been historically contentious among industry stakeholders, particularly where it includes monies clawed back from pharmacy providers or the strongly contested mandating of point-of-sale rebates.

The Importance of Getting It Right

Over or under-reporting DIR has potential compliance and financial implications to a plan, so validating this important reporting prior to submission to CMS is critical for a high-functioning Sponsor organization. Not only do Sponsors attest to the accuracy of this reporting, it is also tested as part of the CMS Financial Audit review, where cited observations or findings can lead to costly and time-consuming compliance actions.

At PillarRx, we believe validating DIR is so important to a Sponsor’s finance, compliance, and pharmacy departments that we have developed a robust and extensive process of tracking rebates to the PBM contract throughout the year and using that information when reconciling DIR reporting, as well as validating other non-rebate DIR values to ensure compliance and confirmation of reported values. We ensure we are familiar with CMS guidance and clarifications regarding the submission requirements, how CMS is applying DIR defined values and allocations, and we work collaboratively with Sponsor and PBM to resolve any incongruences in the data prior to submission to CMS.

To learn more about how PillarRx’s DIR reconciliation and validation process can help your organization maintain best-in-class oversight, contact us here;