DIR Fees After the 2024 Reform: What Changed

Effective January 1, 2024, a Centers for Medicare and Medicaid Services final rule changed how pharmacy price concessions under Medicare Part D reach a pharmacy's bottom line. Direct and indirect remuneration fees, commonly called DIR fees, could previously be assessed months after a prescription was dispensed, reducing a pharmacy's payment long after the claim had closed. Under the amended definition of negotiated price at 42 CFR 423.100, Part D plan sponsors and their pharmacy benefit managers must now reflect substantially all pharmacy price concessions in the price a pharmacy receives at the point of sale. The reform changed when a pharmacy learns what it will be paid. It did not resolve every dispute a pharmacy can face over what a pharmacy benefit manager withholds, and several categories of fees and pricing decisions remain open to challenge.

The Point-of-Sale Requirement Under the 2024 Final Rule

The Centers for Medicare and Medicaid Services finalized this change as part of the Contract Year 2023 Medicare Advantage and Part D policy rule, published in the Federal Register in May 2022. The agency delayed the effective date to contract year 2024 to give plan sponsors and pharmacy benefit managers time to update claims systems. The final rule eliminated the exception that had allowed a plan sponsor to report a price concession after the point of sale whenever the amount could not be reasonably determined at the time a claim was adjudicated. With that exception gone, the negotiated price reported at adjudication, the figure that sets both the pharmacy's reimbursement and the beneficiary's cost-share, must reflect the lowest amount the pharmacy could receive for the drug, price concessions included. The change reaches every claim a plan sponsor's PBM audit process later reviews, since the negotiated price on file becomes the baseline for any later reconciliation.

Cash Flow Effects During the Transition

The shift produced a difficult first half of 2024 for many pharmacies. Retroactive DIR fees tied to prescriptions dispensed before January 1, 2024 continued to arrive on the same schedule plan sponsors had always used, while point-of-sale reductions on new claims began at the same time. A pharmacy could see 2023 clawbacks and 2024 point-of-sale deductions land in the same reporting period, compounding the short-term revenue effect rather than smoothing it out the way the reform intended. Trade publications tracking the transition described the overlap as a temporary hangover from the prior DIR structure, not a defect in the new rule itself, but the practical result for a pharmacy owner reconciling monthly remittance was less cash on hand than the point-of-sale change alone would suggest.

What the Point-of-Sale Rule Does Not Reach

Several categories of pharmacy payment sit outside the amended negotiated price definition. Pharmacy incentive payments, positive amounts a plan sponsor pays a pharmacy after dispensing based on performance measures, remain permissible as post-point-of-sale direct and indirect remuneration. The rule does not address manufacturer rebates, which a plan sponsor may still choose whether to apply against the negotiated price. Because the rule amends Medicare Part D regulations only, performance-based network fees charged under commercial and Medicaid pharmacy benefit manager contracts are untouched. A pharmacy benefit manager also retains substantial discretion over how it calculates the negotiated price and the underlying DIR methodology, and claim-level detail supporting that calculation is rarely provided to the pharmacy. That gap makes building the record for an audit appeal or a recoupment dispute over a contract rate discrepancy, whether the finding surfaces in a desk audit or an onsite audit, a document-intensive undertaking rather than a straightforward review of the point-of-sale figure.

The point-of-sale requirement tells a pharmacy what it will be paid. It does not tell the pharmacy why, and the methodology behind that number is where most PBM audit disputes now begin.

Why Early Legal Counsel Is Critical

A pharmacy owner who notices a persistent gap between the point-of-sale reimbursement reported at adjudication and the amount ultimately paid, or who is contesting a below-cost reimbursement rate, a network fee, or a recoupment tied to a PBM audit finding such as a Prime Therapeutics audit, benefits from involving counsel before responding to the pharmacy benefit manager directly. Correspondence sent without understanding how a specific contract defines negotiated price, incentive payments, or performance fees can concede points that are difficult to recover once an appeal deadline has passed. Early counsel can also help a pharmacy assemble the claim-level documentation a pharmacy benefit manager rarely volunteers, often the difference between an appeal that is heard and one dismissed for insufficient support.

How Health Law Alliance Can Help

Health Law Alliance represents pharmacies in disputes over PBM fee assessments, negotiated price calculations, and recoupments that surface during and after Medicare Part D audits, as part of the firm's PBM audit defense practice. If your pharmacy is contesting a DIR-related fee, a below-cost reimbursement, or another PBM audit finding that the 2024 point-of-sale reform did not resolve, contact us for a free, confidential consultation.