Administrative Services Agreement_Express ScriptsTHE CITY OF
DuB E MEMORANDUM
~-~~
April 28, 2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Amendment to the Administrative Services Agreement between the City of
Dubuque and Express Scripts, Inc.
Personnel Manager Randy Peck recommends City Council approval of the Amendment
to the Administrative Services Agreement between the City of Dubuque and Express
Scripts, Inc., the terms of which will be in effect until June 30, 2010. The revised
agreement provides improvements in the following areas:
1. Retail brand and generic average wholesale price discounts will increase by
approximately 10%.
2. Retail dispensing fees will be reduced by approximately 12%.
3. Mail order brand and generic average wholesale price discounts will increase by
approximately 9%.
4. Retail guaranteed rebates will increase by approximately 38%.
5. Mail order guaranteed rebates will increase by approximately 17%.
The City's prescription drug program does not provide for a mail order component.
However, the Health Care Committee is reviewing this option. Based on the projections
prepared by Gallagher, Inc., the new terms will provide a savings of 4% to 6%, or
$40,000 to $60,000 per year for the City's prescription drug program.
concur with the recommendation and respectfully request Mayor and City Council
approval.
a
~~
~ti,
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Randy Peck, Personnel Manager
THE CITY OF
DUB E
Memorandum
April 24, 2007
TO: Michael C. Van Milligen
City Manager
FROM: Randy Peck
Personnel Manager
SUBJECT: Amendment to the Administrative Services Agreement between the City of
Dubuque and Express Scripts, Inc.
The City of Dubuque is a member of the Iowa Employer Coalition which covers ten
employers and almost 25,000 members. Express Scripts is the third party administrator
for the prescription drug program for the City of Dubuque and all coalition members.
The City entered into an agreement with Express Scripts on August 18, 2004 and the
agreement is set to expire on June 30, 2007. A renewal agreement has been
negotiated which contains more favorable terms than the current agreement. The
revised agreement, which is set forth in the attached amendment, provides
improvements in the following areas:
1. Retail brand and generic average wholesale price discounts will increase
by approximately 10%.
2. Retail dispensing fees will be reduced by approximately 12%.
3. Mail order brand and generic average wholesale price discounts will
increase by approximately 9%.
4. Retail guaranteed rebates will increase by approximately 38%.
5. Mail order guaranteed rebates will increase by approximately 17%.
The City's prescription drug program does not provide for a mail order component.
However, the Health Care Committee is reviewing this option. Based on the projections
prepared by Gallagher, Inc., the new terms will provide a savings of 4% to 6% or
$40,000 to $60,000 per year for the City's prescription drug program.
The terms of the amendment will go into effect 10 days after Express Scripts, Inc.
receives the signed amendment. The terms of the amendment will be in effect until
June 30, 2010.
Bill Robinson of Gallagher Benefit Services, Inc., our benefit and actuarial consultant,
has reviewed the agreement and finds the terms acceptable. City Attorney Barry
Lindahl has also reviewed the agreement and found it acceptable as to its form. The
Health Care Committee recommends that the amendment to the agreement with
Express Scripts, Inc. be approved. I request that the City Council approve a motion
authorizing you to sign the attached amendment to the agreement with Express Scripts,
Inc.
RP:tlb
.'
AMENDMENT TO
EXPRESS SCRIPTS, INC.
PHARMACY BENEFIT MANAGEMENT AGREEMENT
This AMENDMENT (the "Amendment") is entered into as of the Effective Date, by and between
EXPRESS SCRIPTS, INC., a Delaware corporation ("ESI"), and CITY OF DUBUQUE, organized under
the laws of the State of Iowa ("Sponsor").
RECITALS
1. ESI and Sponsor are parties to a Pharmacy Benefit Management Agreement dated as of August
18, 2004, as amended from time to time (the "Agreement"), pursuant to which ESI provides certain
prescription drug benefit management services to Sponsor. Sponsor is a member of the Iowa
Prescription Drug Employers Coalition ("Coalition").
2. Sponsor and ESI desire to extend, update and amend the Agreement in accordance with the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and other conditions contained herein, the
parties hereto hereby agree as follows:
TERMS OF AMENDMENT
1. Definitions. For purposes of this Amendment, any capitalized term not otherwise defined herein
shall have the meaning set forth in the Agreement. The following are added to the Agreement:
"CareLogic Drug List" means the exclusive or open standard list of Specialty Products and their
reimbursement rates under the applicable (exclusive or open) option (described in Exhibit A-1) provided
to Sponsor with this Agreement and as updated from time to time. ESI will provide additional and/or
updated CareLogic Drug Lists at any time upon request.
"CuraScript" means CuraScript, Inc. or another pharmacy wholly-owned or operated by ESI or its wholly-
owned subsidiaries that primarily dispenses Specialty Products. For purposes of this Agreement,
CuraScript is not considered a Mail Service Pharmacy.
The following definition is hereby restated in its entirety as follows:
"Specialty Products" means those injectable and non-injectable drugs on the CareLogic Drug List and
typically having one or more of several key characteristics, including: frequent dosing adjustments and
intensive clinical monitoring to decrease the potential for drug toxicity and increase the probability for
beneficial treatment outcomes; intensive patient training and .compliance assistance to facilitate
therapeutic goals; limited or exclusive product availability and distribution; specialized product handling
and/or administration requirements and/or cost in excess of $500 fora 30 day supply. Specialty Products
elected for coverage shall be considered "Covered Drugs" as defined in the Agreement.
2. Fees and Rebates. The fees for the services ESI provides shall consist of the fees specified on
Exhibits A -1 through A-2 of this Amendment, which shalt replace the existing pricing terms of the
Agreement. Rebates shall be as specified on Exhibit B of this Amendment, which shall replace the
existing Rebate terms of the Agreement.
3. Section 3.1 (c) is deleted in its entirety and the following substituted therefor:
"(c) Specialty Products. Members may have prescriptions filled through CuraScript on an
exclusive basis if Sponsor selects the CareLogic Exclusive Option, or through CuraScript and
Participating Pharmacies if Sponsor elects the CareLogic Open option (each as described in
Exhibit A-1 ). ESI shall assist in the transfer of prescriptions to, or assist Members to obtain new
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prescriptions to be filled at, CuraScript for Members filling Specialty Products through the Mail
Service Pharmacy (if applicable). Sponsor hereby authorizes ESI and CuraScript to
communicate with Members and physicians regarding the transition from Mail Service Pharmacy
(or other pharmacies) to CuraScript, as well as to advise Members filling Specialty Products in
Participating Pharmacies of the availability of filling prescription through CuraScript as a preferred
Specialty Pharmacy provider. For Specialty Products filled through CuraScript only, Members will
receive the following services from CuraScript, depending on the particular therapy class or
disease state:
(i) Patient Intake Services: patient enrollment, initial referral processing, insurance
eligibility and benefits verification, alternative coverage searches, schedule of initial Specialty
Product order, and coordination of patient education and instruction for each new patient;
(ii) Pharmacy Dispensing Services: dispensing the Specialty Product pursuant to a
prescription in accordance with applicable law, deposit of such Specialty Product with a third
party carrier to facilitate the delivery of same per the Member's instructions, and the provision of
certain ancillary supplies (e.g., syringes, needles, and alcohol swabs) and related items in
connection with the Specialty .Product that may. be necessary or useful to the Member in
connection with the administration of the Specialty Product;
(iii) Ongoing Clinical and Specialty Pharmacy Support Services: self-injection
teaching support, patient education, assessment, clinical interventions and clinical screenings,
therapy adherence counseling and related clinical patient management activities and programs,
physician consultations, authorization maintenance, assistance with Member coverage
appeals, re-fill follow-up calls, managing ongoing medication orders, and insurance follow-up
and related ongoing delivery coordination; and
(iv) Social Services: patient advocacy, hardship reimbursement support, and
indigent and patient assistance programs.
The aforementioned services do not include home infusion supplies and related home health
services."
Performance Guarantees. Section 3.5 is added to the Agreement as follows:
"3.5 Performance Standards. ESI will conform to the performance standards set forth on
Exhibit G hereto. The payments set forth in Exhibit. G shall be Sponsor's sole monetary remedy
for any failure by ESI to meet a performance standard."
4. Section 6.1 is hereby restated in its entirety as follows:
"6.1 Change in Law; Pricing Benchmarks.
(a) Each party shall be responsible for ensuring its compliance with any laws and
regulations applicable to its business, including maintaining any necessary licenses and permits.
Sponsor shall be responsible for any governmental or regulatory charges and taxes imposed
upon the services provided hereunder, other than taxes based on the net income of ESI. If there
is a change in federal, state or local laws or regulations or the interpretation thereof, that, among
other things, materially burdens ESI, requires ESI to increase payments or shorten payment
times for Covered Drugs to Participating Pharmacies, or change the scope of services hereunder,
then there shall be an appropriate modification of the services, reimbursement rates,
administrative fees and/or Rebates such that the parties are returned to their comparable
economic position as of the Effective Date. If the parties cannot agree on a modification or
adjusted fee or rates, then either party may terminate the Agreement on thirty (30) days prior
written notice to the other.
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2
(b) The parties understand that pricing indices historically used, (and that are the
basis in this Agreement), for determining the financial components of pharmacy billing rates are
outside the control of Sponsor and ESI. The parties also understand that there are currently
extra-market industry, legal, government and regulatory activities, which may lead to changes
relating to, or elimination of, these pricing indices that could alter the financial positions of the
parties as intended under this Agreement. The parties agree that, upon entering into this
Agreement and thereafter, their mutual intent has been and is to maintain pricing stability as
intended and not to advantage either party to the detriment of the other. Accordingly, to preserve
this mutual intent, if ESI undertakes any or all of the following:
(i) changes the AWP source across its book of business (e.g., from First DataBank
to MediSpan); or
(ii) maintains AWP as the pricing index with an appropriate adjustment as described
below, in the event the AWP methodology and/or its calculation is changed,
whether by the existing or alternative sources; or
(iii) transitions the pricing index from AWP to another index or benchmark (e.g., to
Wholesale Acquisition Cost),
the Participating Pharmacy and Mail Service Pharmacy rates, rebates and guarantees, as
applicable, will be modified as reasonably and equitably necessary to maintain the pricing intent
under this Agreement. ESI shall provide Sponsor with at least ninety (90) days notice of the
change (or if such notice is not practicable, as much notice as is reasonable under the
circumstances}, and written illustration of the financial impact of the pricing source or index
change (e.g., specific drug examples). If Sponsor disputes the illustration or the financial impact
of the pricing source, the parties agree to cooperate in good faith to resolve such disputes."
5. Section 6.2 is amended by adding the following:
"State Fiduciary Laws. The parties acknowledge the existence of laws in Maine and the District
of Columbia that would require a party providing pharmacy benefit management services in those
jurisdictions to be a fiduciary in the provision of those services. ESI shall not provide services to
Plans organized or incorporated in Maine or D.C., or in certain cases, to Members residing in
Maine, unless and until the laws in those jurisdictions are repealed, permanently enjoined from
enforcement or otherwise found violative of state or federal law. ESI shall have the right to
immediately terminate PBM Services to any Plan (or, if applicable, Members) located in a state
requiring a pharmacy benefit manager to be a fiduciary to Sponsor, a Plan, a Member or other
third party relating to this Agreement."
6. Effective Date: Extension. This Amendment shall be effective the later of March 1, 2007, or the
date that is ten (10) days following ESi's receipt of an executed Amendment by Sponsor. The term of the
Agreement is extended until February 28, 2010, subject to extension thereafter as provided therein.
7. Effect of Amendment. Except as expressly provided herein, the terms and conditions of the
Agreement shall remain in full force. and effect. In the event of a conflict between this Amendment and
the Agreement, the terms of this Amendment shall prevail.
8. Choice of Law. This Amendment shall be construed by and governed in all respects according to
the laws of the state indicated in the Agreement.
127009v1
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the day and
year below set forth.
EXPRESS SCRIPTS, INC.
By:
Printed Name:
Title:
Date:
CITY OF DUBUQUE, IOWA
By:
Printed Name: Michael C. Van Plilligen
Title: City P4anaQer
Phone: 563-589-4125
Fax: 5h'~-69t7-hn 5
Federal ID Number: ~~_~nn45Ah
Date:
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EXHIBIT A
PHARMACY PROGRAM FEES
Sponsor shall pay to ESI the amounts set forth below, net of applicable Copayments. Sales or
excise tax or other governmental surcharge, if any, shall be the responsibility of Sponsor. If ESI pays. a
particular Participating Pharmacy a higher. rate because Sponsor has requested such pharmacy be
included in the network, the rate charged to Sponsor shall be the net ingredient cost plus the dispensing
fee paid by ESI to such pharmacy, plus applicable sales or excise tax or other governmental surcharge, if
any.
For purposes of this Exhibit A (including A-1 through A-2), the terms:
"Average Wholesale Price" or "AWP" means the average wholesale price of a Covered Drug
according to the most current information provided to ESI by First DataBank National Drug Data File, if
available, or another nationally recognized source in the prescription drug industry. Under the retail
pharmacy program, AWP is based on the package size submitted. The applicable AWP for prescriptions
filled in the Mail Service Pharmacy will be the AWP for the lesser of: (i) the NDC code for the package
size from which the prescription drug was dispensed, or (ii) package sizes of 100 units or 16 ounce
quantities, or the next larger quantity if such specified quantities are not available. The applicable AWP
for prescriptions whether filed in the Mail Service Pharmacy or a Participating Pharmacy, including retail
Prescription Drug Claims, retail on-line Prescription Drug Claims, and Member Submitted Claims, will be
the AWP for the actual eleven digit National Drug Code (NDC) package size acquired to fill the
prescription. If First DataBank or other applicable source changes the methodology for calculating or
reporting AWP in a way that materially changes the economics of this Agreement, the parties will discuss
in good faith a reasonable modification to the pricing terms to preserve the parties' relative economics
before such changed methodology. If the parties are unable to agree upon a modification to the pricing
terms within sixty (60) days, then the party seeking modification may terminate the agreement upon
ninety (90) days prior written notice to the other party.
"Brand Drug" means a prescription drug not designated as generic. The designation of a product
as "brand" is determined by ESI using data elements provided by First DataBank's National Drug Data
File, if available, or such other nationally recognized source in the retail and/or mail service prescription
drug industry and audited by Sponsor and/or Trivantage through standard audit protocol.
"Compound Drugs" means a customized medication derived from two or more raw chemicals,
powders and devices, of which at least one ingredient is a federal legend drug, prepared by a pharmacist
according to a doctor's specifications.
"Generic Drug" means a single source and/or multisource, nonbrand prescription drug, whether
identified by its chemical, proprietary, or non-proprietary name, that is therapeutically equivalent and
interchangeable with drugs having an identical amount of the same active ingredient(s) and approved by
the FDA. The designation of a product as "generic" and/or subject to MAC ("Maximum Allowable Cost") is
determined by ESI using data elements provided by First DataBank, if available, or other source
recognized in the retail and/or mail service prescription drug industry and audited by Sponsor and/or
Trivantage through standard audit protocol.
"MAC List" means a list of prescription drug products identified as readily available as a Generic
Drug, generally equivalent to a Brand Drug (in which case the Brand Drug may also be on the MAC List)
and which are deemed to require pricing management due to the number of manufacturers, utilization
and pricing volatility. The MAC List is intended to result in a weighted average discount range of 50% to
58%, but Sponsor's actual experience may vary within, or above or below this range depending upon
Sponsor's Generic Urug and Brand Drug mix and plan design.
"Maximum Reimbursement Amount" or "MRA" is the price charged to Sponsor for a prescription
drug on the MAC List.
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"Network Access Program" means a program in which Members obtain prescriptions through
Participating Pharmacies and bear the full cost of the Covered Drugs and may or may not be entitled to
reimbursement of a portion of the cost from Sponsor.
"Single Source Generic Drug" means a Generic Drug licensed and currently marketed from only
one non repackager generic labeler within a generic code number (GCN).
"Trivantage" means Trivantage Pharmacy Strategies, Inc. the appointed and recognized
pharmacy benefit consulting firm representing Sponsor. ESI acknowledges that Sponsor has informed
ESI that Trivantage has been selected and approved by Sponsor to act as a claims pricing validator or
auditor for Sponsor under the Agreement.
"Usual and Customary Price" or "U&C" means the retail price charged by a Participating
Pharmacy for the particular drug in a cash transaction on the date the drug is dispensed as reported to
ESI by the Participating Pharmacy.
127009v1
Exhibit A-1
Pharmacv Reimbursement Rates
t. Participating Pharmacv Reimbursement Rates (Does Not Apply to Specialty Products)
2-Tier Plan Design Network Access
Minimum 50,000 Participating or 100% Copay
Pharmacy Network 3-Tier Plan Design
ESI National Preferred Formulary with Copay Differential
Brand Ingredient Cost
Single Source Generic Drugs are The lower of AWP -16.5% or U&C* The lower of AWP -14.5% or U&C
riced as brands
Generic Ingredient Cost The lower of AWP -16.5%, MRA, or U&C* The lower of AWP -14.5%, MRA, or U&C
Ingredient Cost -Compound Drugs Lesser of U&C or combined AWP plus Lesser of U&C or combined AWP plus
a licable service fee a licable service fee
Dispensing Fee1Rx
Brand or Generic $1.50 $2.15
Administrative Fee1Rx $0.00 $0.90
* Notwithstanding the preceding, ESI will guarantee a minimum average discount for Brand Drugs and
Generic Drugs as set forth below (not applicable to the Network Access Program).
II. Mail Service Pharmacv Pricin4 (No Specialty Products)
2-Tier Plan Design
or
3-Tier Plan Design with Copay Differential
or
Network Access
100% Copay
ESI National Preferred Formulary
1-90
Da Su I
Brand Ingredient Cost
Single Source Generic AWP -24%*
Dru s are riced as brands
Generic Ingredient Cost AWP -58%*
Compound Drug Combined AWP plus applicable service fee
In redient Cost
Dispensing Fee 1 Rx
Brand and Generic
Subject fo change for changes in $0.00
delive rates
Minimum Rate 1 Rx $8.99
Administrative Fee $0.00
* Notwithstanding the preceding, ESI will guarantee a minimum average discount for Brand Drugs and
Generic Drugs as set forth below (not applicable to the Network Access Program).
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III. Pricing Guarantees (not applicable to Network Access Pros~ram)
ESI guarantees a minimum average generic discount as shown below on Generic Drugs and
Brand Drugs that are Covered Drugs dispensed through applicable Participating Pharmacies under either.
the 2-Tier or 3-Tier Plan Design, to be applied, measured and reconciled in the aggregate of all Sponsors
in the Coalition on an annual basis within ninety (90) days of the end of the Coalition's contract year. To
the extent Sponsor materially changes its benefit design or Formulary during the term of the Agreement,
the applicable guarantee will be equitably adjusted if there is a material impact on the generic or brand
discount achieved.
T e of Guarantee Partici atin Pharmac Mail Service Pharmac
Brand AWP -16.5% AWP -24%
Generic AWP -49.5 % AWP-58%
The overall discount guarantee must be based on: non-secondary claims, using the actual 11-
digit National Drug Code (NDC) submitted by an applicable Participating Pharmacy at the time of
adjudication for Federal Legend Drugs, at the decimal-level quantity dispensed. All Zero Balance Claims
(ZBCs) will be excluded from the guarantee. (ZBCs are claims that are equal to or less than a Member's
copay.) U&C claims greater than the Member's copay will be excluded from the guarantee.
Brand Drug Guarantee -Specific 11-digit multi-source drug claims when Generic Drugs are
dispensed will be excluded from the Brand Drug guarantee. The financial impact (e.g., difference
in cost between the Brand Drug and Generic Drug plus copay) of additional Member payments
that apply to multi-source drug claims due to specific mandatory generic penalties will be
excluded from the guarantee, but the actual discount on the Brand Drug claims (excluding any
penalty amounts) will be included.
Generic Drug Guarantee -Specific 11-digit multi-source drug claims when Brand Drugs are
dispensed will be excluded from the Generic Drug guarantee. Single-Source Generic Drug
claims will be excluded from the Generic Drug guarantee until such time as multiple
manufacturers exist, or only for the first six (6) months from the day of the first Generic Drug
approval as defined by First DataBank, whichever comes first. The financial impact (e.g.,
difference in cost between the Brand Drug and Generic Drug plus copay) of additional Member
payments that apply to mufti-source drug claims due to specific mandatory generic penalties will
be excluded from the guarantee, but the actual discount on the Generic Drug claims (excluding
any penalty amounts) will be included.
IV. Specialty Products
Sponsor shall elect the CareLogic Exclusive or Open option as set forth below.
(a) CareLogic Exclusive. CuraScript shall be the exclusive provider of Specialty Products for
the reimbursement rates shown on the CareLogic Drug List for CuraScript -Exclusive. Any Specialty
Product dispensed from a pharmacy other than CuraScript (for example, limited distribution products not
then available through CuraScript or overrides) shall be reimbursed at ESI's standard "open" network
Specialty Product rates shown below. Upon CuraScript acquisition of limited distribution products,
Members shall obtain prescriptions through CuraScript.
(b) CareLogic Open. Specialty Products shall be available through CuraScript and
Participating Pharmacies for the CareLogic Drug List for CuraScript -Open, and Participating Pharmacy
reimbursement rates.
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CareLogic (Exclusive or Ingredient Cost Dispensing Fee
Open
CuraScript See applicable CareLogic Drug List $0.00
Lower of AWP discount, U&C or MRA
Participating Pharmacy See retail CareLogic Drug List $2.75
Open Lower of AWP discount, U&C or MRA
(c) Specialty Products priced at U&C or MRA shall be excluded from price guarantees, if
any, set forth in the Agreement. CuraScript or ESI shall be entitled to charge a reasonable fuel surcharge
fee to cover fuel surcharges imposed by carriers in connection with the delivery of Specialty Products by
CuraScript. In no event shall the Mail Service Pharmacy or Participating Pharmacy pricing specified in
the Agreement apply to Specialty Products.
(d) ESI shall notify Sponsor no more frequently than monthly of new Specialty Products that
are introduced to the market and added to the CareLogic Drug List on or after the Effective Date of this
Agreement with their applicable CareLogic Drug List reimbursement rates ("Notice"). The parties agree
as follows:
(i) If Sponsor has expressly excluded a specific therapy class or .product on a Set-
Up Form, Specialty Products in such excluded classes will automatically be deemed excluded
from coverage and will reject as "NDC Not Covered" through Participating. Pharmacies, Mail
Service Pharmacy and CuraScript; otherwise, all other Specialty Products shall be implemented
as Covered Drugs at the rate specified in the applicable CareLogic Drug List or Notice, and
Sponsor acknowledges and agrees to same. If Sponsor desires to cover otherwise excluded
Specialty Products, Sponsor must notify ESI in writing that it desires to cover the Specialty
Product before ESI will adjudicate as a Covered Drug, and if ESI receives such confirmation of
coverage from Sponsor such Specialty Product will be loaded thereafter as a Covered Drug at the
applicable CareLogic Drug List reimbursement rate set forth in the Notice.
(ii) Sponsor must notify ESI in writing if it wants to exclude the Specialty Product
from coverage. The exclusion will be implemented within seven (7) business days after the date
of ESI's receipt of such the notification. There will not be any retroactive denials for Prescription
Drug Claims processed prior to ESI's receipt of the rejection notice and implementation of the
exclusion as provided above and Sponsor shall be responsible for the payment of such
Prescription Drug Claims processed prior to the rejection of coverage.
V. Administrative Fees
PBM Services Fees
• Customer Service for Members No additional fee
• Eligibility submission
• Electronic/on-line submission
Manual/hardcopysnbmission
FSA Feeds
No additional fee
$1.OOlupdate (includes initial entry)
No additional fee
• Software Training for Access to Our On-Line System(s) No additional fee
• Electronic Claims Processing No additional fee
• Member Submitted Paper Claims Processing $2.501claim
• COB (Coordination of Benefits)
Standard Process (reject for primary carrier)
Medicare Coordination +65 o ulation
No additional fee
$0.06 er claim
• Plan Setup No additional charge
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Participating Pharmacies Fees
• Pharmacy Audit Recoveries 20% of audit recoveries
• Pharmacy Help Desk No additional fee
• Pharmacy Network Management No additional fee
• Pharmacy Reimbursement No additional fee
• Network Development Upon Request No additional fee
Mail Services
• Benefit Education No additional fee
• Prescription Delivery -standard No additional fee
Reporting Services
• Web-based Client Reporting -produced by Sponsor No additional fee
• Web-based Client Reporting -produced by ESI $100 per report
• Ad hoc desk top parametric reports No additional fee
• Additional Reports
• Billing Reports
Annual Strate is Account Plan Re ort
No additional fee
No additional fee
• Custom Ad-Hoc Reporting $150 per hour, with a minimum of $500
• Claims detail extract file electronic (NCPDP format) No additional fee (avail. upon request)
Web Site
• Digital Certificates
• Up to 5 certificates
More than 5 certificates
No additional fee
U to $150 for additional users
• Express-Scripts.com for Clients-access to reporting tools,
eligibility update capability, contact directory, sales and
marketin information, and benefit and enrollment su ort No additional fee
• Express-Scripts.com for Members-access to benefit, drug,
health and wellness information; prescription ordering
ca abili ;and customer service No additional fee
• Express Choicesm enrollment option-available during open
enrollment to.enable Members to evaluate prescription benefit
Ian o tions. No additional fee
Implementation Package and Member Communications
• Implementation Support No additional charge
• New Member Packets (Includes 2 standard resin ID cards)
Member requested replacement packets
• Client requested Re-carding
• Customized materials No additional charge
$1.50 + postage /packet
$1.50 + postage I packet
Priced u on re uest
Appeals through UM Company
• Clinical appeals
Non-clinical a eals $350 per review
$160 per review
Medicare Part D Subsidy
Standard Reporting (ESI sends reports to Sponsor)
Notices of Credible Covera a $0.62 PMPM for Medicare qualified Members
with a minimum annual fee of $5,000
$1.35 er letter + osta e
Enhanced Reporting (ESI sends reports to CMS on behalf of
Sponsor)
Notices of Credible Covera a $1.12 PMPM for Medicare qualified Members
with a minimum annual fee of $7,500
$1.35 er letter + osta e
iz~oo9~~ 10
VI. Selected ClinicallTrend Programs.
ESI offers a comprehensive list of trend, safety, care and disease management. programs, a
limited number of which are identified below, and which may change or be discontinued from time to time.
ESI also offers savings guarantees under certain conditions. Information concerning such programs,
guarantees and fees, if applicable, is available from the ESI Account Team.
Programs Fees
Drug Quantity Management
• Standard per Rx $0.02 PMPM
• Select per Rx (optional)
• Select per day supply (optional)
Note: List of dru s subject to than eat the discretion of ESI
Prior Authorization-Administrative
• Lost/stolen overrides No charge
• Vacation supplies
Prior Authorization -Clinical Base List
Note: List of drugs available upon request; subject to No charge
change at the discretion of ESI.
Prior Authorization -Clinical Supplemental List
Note: List of drugs available upon request; subject to $0.03 PMPM
change at the discretion of ESI
Prior Authorization -Other Clinical Overrides
(e.g. Non-standard prior authorization medications, medical $20/request
exceptions) $25/physician review
Step Therapy Individual module or
combined available
Retro DUR $0.03/Rx
Retro DUR -Seniors $0.02/Rx
127009x1 11
EXHIBIT B
REBATES
Subject to the terms and conditions set forth below, ESI will pay an amount equal to the following:
A. Rebates I Rx~'~
ESI National Preferred Formulary
2-Tier Plan Design
or 3-Tier Plan Design with a Minimum Network Access Program
3-Tier Plan Design with less than a15 $15 Copay Differential or Minimum
Copay Differential 20% Coinsurance Differential
Participating Mail Service Participating Mail Service Participating Mail Service
Pharmac Pharmac Pharmac Pharmac Pharmac Pharmac
$2.25 $7.00 $3.25 $10.50 $0.75 $5.00
~'' ESI shall retain Rebates, if any, which exceed the Rebate per claim.
B. Conditions of the Rebate Program
1. Rebates are conditioned upon (a) Sponsor's election of, and conformance to, the
identified Formulary and qualifying copayment benefit designs; (b) distribution of the Formulary (or a
summary thereof) to Members and/or physicians, as applicable; and (c) Sponsor's compliance with other
reasonable, generally applicable requirements for participation by all clients in the Rebate Program, as
are communicated by ESI to Sponsor from time to time
2. Certain Member Submitted Claims where ESI is unable to submit to manufacturers for
Rebates and OTC products, Plans that do not meet eligibility requirements set forth herein, claims older
than 180 days, as well as claims for .100% copayment (cash and carry) plans not offered in connection
with a health plan benefit, may not be eligible for Rebates.
3. Guarantees are calculated in the aggregate. ESI retains Rebates in excess of any
guarantee, if applicable. Amounts representing the Rebates allocated to Sponsor pursuant to the terms
of this Agreement shall be paid on a quarterly basis approximately 150 days following the end of each
quarterly period; provided, however, that ESI shall make quarterly payments as provided herein only to
the extent of the Rebate payments it receives approximately 120 days following the end of the quarterly
period. Payments attributable to Rebate amounts that ESI receives later than 120 days following the end
of a quarter shall be included by ESI in the next quarterly payment. ESI retains all right, title and interest
to any and all actual Rebates received from manufacturers, except that ESI shall pay Sponsor amounts
equal to the Rebate amounts allocated to Sponsor, as specified above, from ESI's general assets (neither
Sponsor, its Members, nor Sponsor's plan retains any beneficial or proprietary interest in ESI's general
asse#s). Sponsor acknowledges and agrees that neither it, its Members, nor its Plan shall have a right to
interest on, or the time value of, any Rebate payments received by ESI during the collection period or
moneys payable under this Section. No Rebates shall be paid until this Agreement is executed by
Sponsor. ESI shall have the right to apply Sponsor's allocated Rebate amount to unpaid Fees and shall
have the right to delay payment of Rebates to allow for final adjustments upon termination of this
Agreement.
4. Sponsor acknowledges that it may be eligible for Rebates under this Agreement only so long as
Sponsor, its affiliates, or its agents do not contract directly or indirectly with anyone else for discounts,
utilization limits, rebates or other financial incentives on pharmaceutical products or formulary programs
for claims processed by ESI pursuant to the Agreement, without the prior writ#en consent of ESI. In the
iz~oo9~i
12
event that Sponsor negotiates or arranges with a pharmaceutical manufacturer for Rebates or similar
discounts for any Covered Drugs hereunder, but without limiting ESI's right to other remedies, ESI may
immediately withhold any Rebates earned by, but not yet paid to, Sponsor as necessary to prevent
duplicative rebates on Covered Drugs. To the extent Sponsor knowingly negotiates and/or contracts for
discounts or rebates on claims for Covered Drugs without prior written approval of ESI, such activity shall
be deemed to be a material breach of this Agreement, entitling ESI to suspend payment of Rebates
hereunder and to renegotiate the terms and conditions of this Agreement.
i2~oo9~~ 13
EXHIBIT G
PERFORMANCE STANDARDS
In the event that any failure by ESI to meet any performance standard is due to a "force majeure"
as defined in the Agreement, failure of Sponsor to perform its obligations under the Agreement, or actions
or inactions of Sponsor that adversely impact. ESI's ability to maintain the subject standard (e.g., faulty
eligibility, changes in benefit design not adequately communicated to Members and benefit designs that
substantially change the Members' rights under the Plan), ESI shall be excused from compliance with
such performance standards until such circumstances have been resolved and any existing backlogs or
other related effects have been eliminated.
The performance standards are for the renewal term of this Amendment. Within forty-five (45)
business days after the end of each measurement period, ESI shall provide Sponsor with a report (i)
assessing ESI's performance under each performance standard, and (ii) if ESI did not meet a
performance standard, calculating the applicable amount due to Sponsor. Amounts due, if any, shall be
paid to Sponsor on an annual basis within ninety (90) days of each anniversary of the Agreement. No
performance penalties, if any, shall be paid until this Amendment is executed by Sponsor.
All performance standards will be measured in the aggregate of the Coalition. The performance
standards are based on a minimum aggregate Coalition membership of 20,000 participants as of the
Effective Date. Any material change below such number may result in a renegotiation of the standards
and penalties set forth below. Payment shall not exceed an annual total of $120,000 for entire Coalition.
Annual maximum penalties will be pro-rated for any year for which the effective measurement year is less
than twelve (12) months.
Performance Standards
At the Coalition Level
Account Mana_ement
Service Feature
Satisfaction
Standard
ESI guarantees that Sponsor satisfaction with the Account .Management Services is rated as
satisfactory. The following categories will be measured annually by Sponsor as satisfactory or
not satisfactory:
• Timely issues resolution by the account management team (e.g. issues resolvable by
account management are acknowledged, responded to and closed within a reasonable
period of time). (20% of total amount of penalty at risk)
• Consultative services (20% of total amount of penalty at risk)
• Timeliness of reporting and annual reviews (20% of total amount of penalty at risk)
• Frequency of meetings/plan updates (20% of total amount of penalty at risk)
One mutual) a reed u on cate or 20% of total amount of enalt at risk
Penal
ESI will ut $6,700 as a total amount of enalt at risk.Penalties are aid annual) .
1z7oo9~t 14
Client Services Administration
Service Feature
Satisfaction Surve
Standard
One random sample member survey will be completed annually on a company wide basis. ESI
guarantees that 90% of survey participants' responses to a question measuring overall
satisfaction with the rescri tion benefit ro ram will indicate "satisfied" or "ve satisfied."
Penal
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annuall .
Contact Center
Service Feature
Customer Service Call - Avera e S eed of Answer
Standard
ESI guarantees that calls will be answered in an annual average of 30 seconds or less with the
exception of a failure in a third-party communication system. This. standard is predicated on the
installation of a toll-free telephone number unique to Sponsor. Express Scripts' Member Choice
Center calls will be excluded from this standard. This standard will be measured and reported
uarterl .
Penalt
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annuall .
Contact Center
Service Feature
Customer Service Res onse Time - Blocka a Rate Bus Si nal
Standard
ESI will guarantee an annual blockage rate of 2% or less with the exception of a failure in a
third-party communication system. Blockage is defined as a caller receiving a busy signal. This
standard is predicated on the installation of a toll-free number unique to Sponsor. Express
Scripts' Member Choice Center calls will be excluded from this standard. This standard will be
measured and re orted uarterl .
Penal
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annuall .
Contact Center
Service Feature
Customer Service Res onse Time To Written In uiries
Standard
ESI will guarantee that annually 95% or more of written inquiries will be responded to within five
(5) business days, and that annually 100% of written inquiries will be responded to within 10
business da s. This standard will be measured and re orted uarterl .
Penal
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annuall .
~2~009~~ 15
Contact Center
Service Fea#ure
Customer Service Res onse Time -Percent of Calls Abandoned
Standard
ESI guarantees that the annual call abandonment rate will be 4% or less with the exception of a
failure in a third-party communication system. The abandonment rates do not include calls
terminated by Members in less than 30 seconds. This standard is predicated on the installation
of a toll-free number unique to Sponsor. Express Scripts' Member Choice Center calls will be
excluded from this standard. This standard will be measured and re orted uarterl .
Penal
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annuall .
Mail Service
Service Feature
Prescri tion Accurac
Standard
Whereas ESI strives for 100% accuracy, ESI guarantees the annual accuracy in dispensing the
correct drug, at the correct strength and the correct dosage (excluding errors by prescribers) as
follows:
99.9%, for accounts with 34,999 or fewer annual mail scripts
99.95%, for accounts with 35,000 or more annual mail scripts
This standard will be measured and re orted uarterl .
Penal
ESI will ut $6,700 as the total amount of enalt at risk. Penalties are aid annuall .
Mail Service
Service Feature
Turnaround Time for Routine Prescri tions
Standard
ESI guarantees dispensing and shipping (or return) of prescriptions not subject to intervention
with an annual average of two (2) business days of receipt of the order at ESI's Pharmacy.
"Interventions" include all calls to members or prescribers to clarify the prescriber's direction, to
obtain consent for formulary programs, generic or therapeutic substitution, or otherwise.
This standard will be measured and re orted uarterl .
Penal
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annuall .
Mail Service
Service Feature
Turnaround Time for Prescri tions Sub'ect to Intervention
Standard
ESI guarantees dispensing and shipping (or return) of prescriptions subject to intervention within
an annual average of five (5) business days of receipt of the order at ESI's Pharmacy. This
standard will be measured and re orted uarterl .
Penait
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annuall .
tz~oo9~t 16
Data Systems
Service feature
S stem Availabilit
Standard
ESI guarantees an annual average 99% system availability of the point-of-sale adjudication
system. This standard excludes systems downtime attributed to regularly scheduled systems
maintenance or systems downtime attributed to telecommunications failure or other
circumstances outside the control of ESI. This standard will be measured and reported
uarterl .
Penal
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annual) .
Reportin_q
Service Feature
Time) Production of Mana ement Re orts
Standard
ESI guarantees the following time schedule for access to the agreed upon management report
information:
Online Reporting Tool - (Web-Based)
• Access to the online reporting data will be available within an annual average of 10 days
after month-end. Billing data will be available within an annual average of 10 days after the
billing cycle.
This standard will be measured and re orted uarterl .
Penal
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annual) .
Replacement ID Card Production
Service Feature
Time) Production of Re lacement ID Cards
Standard
ESI guarantees that standard replacement ID cards will be produced within an annual average
of five (5) business days of the receipt of machine readable eligibility information. This standard
will be measured and re orted uarterl .
Penal.
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annual) .
Electronic Adjudication
Service Feature
Point-of-Service POS Claims Accurac
Standard
ESI guarantees that 99.9% of point-of-service claims will be processed and paid accurately.
This standard will be measured and re orted uarterl .
Penalt
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annual) .
127009v1 17
Paper Claims
Service Feature
Pa er Claims Processin Time
Standard
ESI guarantees that 97% of Member Submitted Claims will be reimbursed or responded to
within an average of five (5) business days or less and 99% within an average of ten (10)
business da s or less. This standard will be measured and re orted uarterl .
Penalt
ESI will ut $6,700 as the total amount of enalt at risk. Penalties are aid annuall .
Eligibility
Service Feature
Eli ibilit -Timeliness of Installations
Standard
ESI guarantees that electronic eligibilityfiles will be installed and eligibility status will be effective
within an annual average of two (2) business days of receipt. This standard will be measured
and re orted uarterl .
Penal
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annuall .
Eli ibili
Service Feature
Eli ibilit - Accurac
Standard
ESI guarantees that electronic eligibility records will be loaded with 99.5% accuracy as provided
by Sponsor. This standard is contingent upon receipt of clean eligibility data delivered in an
agreed upon format and that it can be ascertained with certainty that ESI incorrectly loaded the
eligibility files. This standard will be measured across the ESI's client base and reported
uarterl .
Penal
ESI will put $6,700 as a total amount of penalty at risk. Penalties are paid annually.
Retail Pharmacy Nefwork
Service Feature
Network Pharmac Geo ra hic Access
Standard
ESI guarantees that at least 92% of Members, based on client-supplied eligibility, will have a
retail network pharmacy within atwo-mile radius of their residence in the Minimum 50,000
Participating Pharmacies network, if there is an existing pharmacy within that radius; and that
95% of Members based on client-supplied eligibility, will have access. to a retail network
pharmacy within afive-mile radius of their residence if there is an existing pharmacy within that
radius. This standard will be measured and reported annually using information provided by
GeoAccess or similar service.
Penal
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annuall .
~noo9~~ 18
Retail Pharmacy Network
Service Feature
Network Audits
Standard
ESI guarantees that 100% of participating pharmacies will be subject to statistical audits and
that 50% of Participating Pharmacies will be subject to further investigation (e.g., desk audits,
on-site audits, etc.) as a result of the statistical audits. This standard will be measured and
re orted uarterl .
Penal
ESI will ut $6,700 as a total amount of enalt at risk. Penalties are aid annual) .
t 2~oo9~t 19