HomeMy WebLinkAboutAgreement A-16-709 with Express Scripts Insurance Company.pdfAgreement No. 16-709
MEDICARE PART D
EMPLOYERIUNION-ONL Y SPONSORED GROUP WAIVER PLAN
PRESCRIPTION DRUG SERVICES AGREEMENT
THIS MEDICARE PART D EMPLOYER/UNION-ONLY SPONSORED GROUP WAIVER PLAN PRESCRIPTION
DRUG SERVICES AGREEMENT ("Agreement"), made as of the date of execution as set forth on the signature
page (the "Execution Date "), is entered into by and between Medco Containment Life Insurance Company, a
Pennsylvan ia corporation ("MCLIC"), and County of Fresno , with its principal place of business located at
2200 Tulare Street, Suite 1400 Fresno , CA 93721, on its own behalf and on behalf of the Client Group Health
Plan (as defined below) ("C lient").
RECITALS
A. MCLIC has received approval from the Centers for Medicare and Medicaid Services ("CMS ") to
serve as a Prescription Drug Plan Sponsor (a "PDP Sp o nsor") and to provide prescription drug coverage that
meets the requirements of, and pursuant to , the Voluntary Prescription Drug Benefit Program set forth in Part D
of the Medicare Prescription Drug, Improvement, and Modern ization Act of 2003 , 42 U.S.C. §1395w-101
through 42 U.S.C. §1395w-152 (the "Act") and all applicable and related rules and regulations promulgated ,
issued or adopted by CMS or other governmental agencies with jurisdiction over enforcement of the Act,
includ ing , but not limited to , 42 C .F.R. §423 .1 through 42 C .F.R. §423 .91 0 (with the exception of Subparts Q , R,
and S), and the terms of any PDP Sponsor contract between CMS and MCLIC (collectively, the "Medicare Drug
Rules "); and
B. Pursuant to the waivers granted by CMS under 42 U.S.C. §1395w-132(b), MCLIC offers
emp loyer/un ion-only sponsored group wa iver plans ("EGWPs") to employers/unions that wish to provide
prescri ption drug benefits to the ir Part D Eligib le Retirees (as defined below) in accordance with the Medicare
Drug Rules ; and
C. Cl ient desires to contract with MCLIC to offer a prescription drug benefit to Client's Part D
Eligible Retirees pursuant to an EGWP (the "EGWP Benefit") (as further defined below) as part of Client's group
welfare benefit plan (the "C li ent Group Health Plan "); and
E. Provided that the EGWP Benefit meets the actuarial equivalence standards of the Medicare
Drug Rules , as more fully described below, MCLIC desires to offer the EGWP Benefit to Client's Part D Eligible
Ret irees in accordance w ith the Medicare Drug Rules and pursuant to the terms and conditions of this
Agreement.
NOW, THEREFORE, in cons ideration of the mutual representations , warranties and covenants herein
conta ined , and pursuant to the terms and subj ect to the conditions set forth below, MCLIC and Client hereby
agree as follows :
TERMS AND CONDITIONS
ARTICLE I -DEFINITIONS
Terms not otherwise defined in this Agreement shall have the meanings ascribed to them as set forth below, or
as defined in the Med icare Drug Rules .
"Affiliate" means , with respect to MCLIC , individually or collectively , any other individua l, corporation ,
partnersh ip, limited liabil ity company , trust , joint venture or other enterprise or entity directly or indirectly
control li ng (i ncluding without limitation all directors and executive officers of such entity ), controlled by or under
d irect or ind irect common control of or with MCLIC .
"Ancil lary Supplies, Equipment, and Serv ices " or "ASES " means ancillary supp li es , equipment, and services
prov ided or coordinated by MCLIC Spec ialty Pharmacy in connection with MCLIC Specia lty Pharmacy's
dispensing of Spec ialty Products . ASES may inc lude all or some of the following : telephonic and/or in-person
train i ng , nursing /clinical services , in-home infusion and related support, patient monitoring, medication pumps ,
tub ing , syringes , gauze pads , sharps containers , lancets , test strips , other supplies, and durable medical
equ ipment. The aforementioned list is ill ustrative only (not exhaustive) and may include other supplies,
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equipment, and services based on the patie nt's needs , prescriber instructions , pa yer requirements , and /or the
Specialty Product manufacturer's requ irements .
"BASI " means Benistar Admin Service , Inc., a th ird party admin istrator and benefit consul t ant. Client
acknowledges and agrees that MCLIC may subcontract w ith BASI as an independent contractor to perform
certa in delegated adm inistrative functions on MCLIC 's behalf under this Agreement, consistent with the
Medicare Drug Rules . In addition , MCLIC engages BASI to perform certain market ing and sales services in
connection with MCLIC offeri ng the EGWP Benefit to Cli ent. In exchange for these services performed by BASI ,
MCLIC compensates BASI in the manner des cribed in Se ct ion 7 .3 below.
"Copayment" or "Copay" means that portion of the charg e for each Covered Drug d ispensed to an EGWP
Enrollee that is the responsib i lity of such EGWP Enrollee (e .g., copayment , co insurance , cost sharing , and /or
deductibles under init ial c overage limits and up to an nual out-of-poc ket thresh ol ds ) as prov ided under the
EGWP Benefit and shown on Exhibit A.
"Coverage Gap" means the stage of the benefit between the initial coverage limit and the catastrophic coverage
threshold , as described in the Medicare Part D prescription drug program adm inistered by the Un ited States
federal government.
"Coverage Gap Discount" means the manufacturer discounts available to el igible Med icare beneficiaries
receiving applicable , covere d Medicare Part D drugs , whi le in the Co verage Gap .
"Coverage Gap Discount Program " means the Med icare program that makes manufacturer disc ounts available
to eligible Med icare benefic iaries recei v ing applicable , covered Med icare Part D drugs, while in the Coverage
Gap .
"Covered Drug (s)" means those prescriptio n drugs , supplies , Specialty Produ cts and other items that are
covered under the EGWP Benefit , or treated as co vered pursuant to a coverage determ ination or appeal.
"EGWP Benefit" means the prescr iption drug benefit to be adm inistered by MCLIC under this Agreement , as
defined in the Re ci tals above and as further desc ri bed in Exhibit A , as may be amended from time to time in
accordance w ith the terms of th is Agreement.
"EGWP Enrollee " means each Part D Elig ible Ret iree who is enrolled in the EGWP Benefit in accordance with
the terms of this Agreement.
"EGWP Enrollee Submitted Claim " means (a) a cl aim s ubmitted by an EGWP Enro ll ee for Covered Drugs
dispensed by a pharmacy other than a Parti cipating Pharma cy, or (b) a claim for Covered Drugs filled at a
Partic ipating Pharmacy for which the EGWP Enrollee pa id the entire cost of the Covered Drug .
"En rollment Fi le" means the li st(s) submitted by C lient to MCLIC , in accordance w ith Article II , ind icating the Part
D Eligible Retirees that Client has submitted for enrollment in the EGWP Benefit , as verified by MCLIC through
CMS eligib i lity files .
"MCLIC Specialty Pharmacy" means CuraScript , Inc ., Accredo Hea lth Group , Inc ., Express Scripts Specialty
Distribution Services , Inc ., or another pharmac y or home health agency wholly-owned or operated by MCLIC or
one or more of its affiliates that primaril y dispenses Specialty Products or prov ides serv ices re lated thereto ;
provided , however, that when the Mail Serv ice Pharmacy dispenses a Specialty Product, it shall be cons idered
an MCLIC Specialty Pharmacy hereunder.
"HIPAA" means the Health Insu ran ce Portab ility and A ccountab ility Act of 19 96 , as amended , and the
regulations promulgated thereunder .
"Late Enrollment Penalty " or "LEP " means the fi nanc ial penalt y in c urred under t he Med icare Drug Rules by
Medicare Part D beneficiaries w ho have had a continu ed gap in cred itable coverage of si xty-three (63 ) days or
more after the end of the benefi ci ary's initial e lect ion period , adjusted from time to time by CMS .
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"Mail Service Pharmacy" means a duly licensed pharmacy wholly owned or operated by MCLIC or one or more
of its Affiliates , other than MCLIC Specialty Pharmacy , where prescriptions are filled and delivered to EGWP
Enrollees via ma il or other delivery service.
"Manufacturer Administrative Fees " means those admin istrative fees of up to 3.5% of the AWP of certain
Covered Drugs pa id by pharmaceutical manufacturers to , or otherwise retained by, MCLIC or its Affiliate
pursuant to a contract between MCLIC or its Affiliate and the manufacturer and directly in connection with
MCLIC or its Affiliate administering , invoicing , allocating and collecting the Rebates for the EGWP Benefit under
the Medicare Rebate Program.
"Med icare Formulary" means the list of prescription drugs and supplies developed , implemented and maintained
in accordance with the Med icare Drug Rules for the EGWP Benefit.
"Med icare Rebate Program " means MCLIC 's or its Affiliate 's manufacturer rebate program under which MCLIC
or its Affiliate contracts with pharmaceutical manufacturers for Rebates payable on selected Covered Drugs that
are reimbursed , in whole or i n part , through Medicare Part D, as such program may change from time to time .
"Members" has the meaning as set forth in that certain Pharmacy Benefit Management Agreement, if any , by
and between Express Scripts , Inc. ("ESI ") and Client , as amended from time to time (the "Commercial
Agreement").
"Part D" or "Medicare Part D" means the Voluntary Prescription Drug Benefit Program set forth in Part D of the
Act.
"Part D Elig ible Retiree " means an individual who is (a) elig ible for Part D in accordance with the Medicare Drug
Rules , (b) not enrolled in a Part D plan (other than the EGWP Benefit}, and (c) eligible to participate in Client's
Current Benefit.
"Participating Pharmacy " means any licensed retail pharmacy , includ ing retail , long-term care, home infusion ,
1/T/U pharmacies , with which MCLIC or one or more of its Affiliates has executed an agreement to provide
Covered Drugs to EGWP Enrollees . These shall not include any mail order or specialty pharmacy affiliated with
any such Participating Pharmacy.
"Pharmacy" or "Pharmacies" refers from time to time to any or all Participating Pharmacies , Mail Service
Pharmacy , or MCLIC Specialty Pharmacy as the conte xt of the provision dictates.
"Prescription Drug Cla im" means an EGWP Enrollee Submitted Claim or claim for payment of a Covered Drug
submitted to MCLIC by a Pharmacy .
"Prescription Drug Plan" or "PDP" shall have the meaning set forth in the Medicare Drug Rules .
"PHI " means protected health information as defined under HIPAA.
"Rebates " means retrospective formulary rebates that are paid to MCLIC or its Affiliate , pursuant to the terms of
a formulary rebate contract negotiated independently by MCLIC or its Affiliate with a pharmaceutical
manufacturer and directly attributable to the utilization of certain Covered Drugs by EGWP Enrollees under the
EGWP Benefit. Rebates do not include Manufacturer Administrative Fees , product discounts or fees related to
the procurement of prescription drug inventories by or on behalf of MCLIC or its Affiliates owned and operated
spec ialty or mail order pharmacies ; as more fully described in Exhibit B; fees received by MCLIC from
manufacturers for care management or other services provided in connection with the dispensing of Specialty
Products ; or other fee-for-serv ice arrangements whereby pharmaceutical manufacturers generally report the
fees pa id to MCLIC or its Affiliates for services rendered as "bona fide service fees" pursuant to federal laws and
regulations , including , but not lim ited to the Med icaid "Best Price " rule (collectively, "Other Pharma Revenue ").
Such laws and regulations , as well as MCLIC's contracts with pharmaceutical manufacturers, generally prohibit
MCLIC from sharing any such "bona fide service fees " earned by MCLIC , whether wholely or in part, with any
MCLIC client. MCLIC represents and warrants that it will not enter into any agreement with a pharmaceutical
manufacturer for Other Pharma Revenue in exchange for a reduction of Rebates .
"Spec ialty Product List" means the standard list of Specialty Products and their reimbursement rates ava i labl~ to
EGWP Enrollees as part of the EGWP Benefit provided to Client with this Agreement and as updated from ttme
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to time . MCLIC or its Affiliate will provide additional and/or updated Specialty Product Lists any time upon
request from Client.
"Specialty Products" means those injectable and non-injectable drugs on the Specialty Product List. Specialty
Products typically have one or more of several key characteristics , including : frequent dos in g ad j ustments and
intensive clinical monitoring to decrease the potential for drug toxicity and increase the probability for beneficia l
treatment outcomes ; intens ive patient train ing and compliance assistance to facil itate therapeut ic goals; limited
or exclusive product availability and distribution ; specialized product handling and/or adm inistration
requirements and /or cost in excess of $600 for a 30 day supply . Specialty Products elected for coverage shall
be considered "Covered Drugs" as defined in the Agreement.
"True Out-of-Pocket Costs" or "TrOOP" means costs incurred by an EGWP Enrollee or by another person on
behalf of an EGWP Enrollee , such as a deductible or other cost-shar ing amount, with respect to Covered Drugs ,
as further defined in the Medicare Drug Rules .
"UM Company" means MCMC , LLC or other in dependent th ird party utili zation management company
contracted by MCLIC, subject to and as further described herein .
ARTICLE II-PLAN STATUS UNDER APPLICABLE LAWS ; ENROLLMENT AND DISENROLLMENT IN THE
EGWP BENEFIT
2 .1 Medicare Part D. Client and MCLIC acknowledge and agree as follows :
(a) Under the Medicare Drug Rules , the EGWP Benefit will be deemed to be an EGWP
administered by MCLIC and each EGWP Enrollee will be deemed to be a Part D enrollee of MCLIC who is
covered by the EGWP Benefit.
(b) The design of and administratio n of the EGWP Benefit is subject to the applicable requirements
of the Medicare Drug Rules . Client shall cooperate with MCLIC and , upon MCLIC 's request , do , exe cute ,
acknowledge , deliver, and provide such further acts , reports , in formation , and instruments as may be
reasonably required or appropriate to admin ister the EGWP Benefit in compliance with the Med icare Drug
Rules , applicable state insurance laws and other applica ble laws .
2.2 HIPAA .
(a) Each of Client, the Clie nt Group Health Plan and MCLIC agrees to ta ke reasonable and
necessary actions to safeguard the privacy and security of information that identifies a particular EGWP Enrollee
in accordance with state and federal privacy and security requirements , including HIPAA and the confidentiality
and security prov isions stated in 42 C.F.R. §423 .136. Without limiting the generality of the forego ing , the
parties acknowledge that, for the purposes of HIPAA compliance , each of MCLIC and the Client Group Health
Plan is a Covered Entity , and that , with respect to the EGWP Benefit, MCLIC and the Client Group Hea lth Plan
shall be deemed to be an Organized Health Care Arrangement. MCLIC and the Client Group Health Plan may
transmit and receive PHI as necessary for the operation of the EGWP Benefit. In add itio n, MCLIC may transmit
PHI to the Client Group Health Plan for payment purposes and any other purpose permitted by HIPAA. Client
hereby represents and warrants that: (i) the Client Group Hea lth Plan 's documents have been amended to meet
the specification requirements set forth at 45 C.F.R. §164 .504(f); (ii) Client will use and disclose PHI solely in
accordance with these provisions ; and (iii) accordingly, MCLIC , at the direction of the Client Group Health Plan ,
may disclose PHI to Client consistent with the terms of this Section 2 .2 . The parties shall take reasonable steps
to ensure that all uses and disclosures of PHI by MCLIC , the Client Group Health Plan and Client only include
information that is minimally necessary to accompl ish the purpose (s) of the use or disclosure. Capitalized terms
used in this Section 2.2 and not otherw ise defined in this Agreement shall have the meaning set forth in HIPAA.
Notwithstanding the foregoing , the parties acknowledge that in providing services to EGWP Enrollees, MCLIC
Specialty Pharmacy and the Ma il Service Pharmacy are acting as separate health care provider covered entities
under HIPAA and not as business associates to the Plan covered by the Bus iness Associate Agreement. In
providing services , MCLIC Specialty Pharmacy and the Mail Services Pharmacy shall abide by all HIPAA
requirements applicable to covered entities and shall safeguard , use and disclose EGWP Enrollees PHI
accordingly.
(b) As MCLIC 's subcontractor contracted to perform certain delegated functions under this
Agreement, Client acknowledges that BASI is acting as a "bus iness associate" of MCLIC , as that term is defined
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under HIPAA. Accordingly , in order to facilitate BASI performing such delegated functions , Client hereby
authorizes MCLIC to disclose EGWP Enro ll ee PHI to BASI solely to perform its delegated functions under th is
Agreement and in a manner consistent with that certain Bu sin ess Associate Agreement by and between MCLIC
and BASI.
2.3 Group Enrollment. Subject to ea ch ind ivi dua l's righ t to opt out, as described below, Client shall enroll
Part D El ig ible Retirees in the EGWP Benefit th ro ugh a group enrollment process, as further described in and
perm itted under the Med ic are Drug Rules. Cl ient agrees that it will comply w ith all applicable requirements for
group enroll ment in EGWPs as set forth in the Medicare Drug Rules and related CMS guidance , and as
describ ed and requ ired by MCLIC's policies and procedures . C li ent's performance under this Section 2.3 sha ll
be a condition precedent to MCLIC 's performance under this Agreement.
2 .4 Enrollment File . No later than thirty (30) da ys prior to the Effective Date (unless otherwise agreed to by
the parties) and the first day of each EGWP Benefit enrollment period thereafter, so long as this Agreement is in
effect, Cli ent, or its authorized representativ e, shall provide an Enrollment Fil e to MCLIC via on-line or other
commun ic ation med ium reasonably requested by MCLIC that lis ts those Part D El igible Retirees that Client
intends to make app li cation for enrollment in the EGWP Benefit (i.e., those Part D E ligible Retirees who have
no t opted out of the group enrollment process) for that contract year. Client shall communicate all new
enro llm ents (i.e ., ind ivi dua ls who become el igi ble to parti ci pate in the EGWP Benefit outside of an annua l
election period ), requested retroactive enrollments of Part D Eligible Retirees , and disenrollments from the
EGWP Benefit v ia the commun ic ation med ium reasonab ly requested by MCLIC . MCLIC agrees to process
retroact ive enrollment requ es ts pursuant to th e requirements of the Medicare Drug Ru les . Cl ient acknowledges
and agrees that the requested effective date fo r any such retro active enrollment may not be prior to the date that
the enrollment request was completed by the indi vid ual , and that the effective date of enrollment may be
adjusted by no greater than ninety (90) days. Client represents and warrants that the Enrollment Fi le provided
to MCLIC pursuant to th is Section 2.4 , and all re troactive additions thereto , shall only include those indiv iduals
eli gible for enrollment in the EGWP Be nefit. Client 's performance under this Section 2.4 shall be a condition
precedent to MCLIC 's performance under th is Agree ment.
2.5 Implementatio n.
(a ) MCLIC 's Responsibilities . MCLIC shall implement the Enrollment File fo llowing confirmation of
the el igibili ty of the Part D Eligible Reti rees listed on the Enrollment File with CMS eligibility files . A Part D
Elig ible Retiree will not be enrolled in the EGWP Benefit unless such individual is listed on both the Enrollment
F il e submitted by Client and the CMS eligibility files . MCLIC will see k from CMS verification of elig ibi lity for all
Part D Eli gible Retirees w hose names are listed in the Enrollment File . If an individual is l isted on the
Enrollment File pro vi ded by Client , but is not eligible for participation acco rding to CMS eligibility f iles , then
MCLIC shall not if y Cl ient in a timely manner regarding su c h indi vidual 's ineligibility . MCLIC will work with Client
to determ ine if such ind ivi dua l has been rejected due to an adm inistrative or clerical error (e.g ., data field
standards errors , re j ections related to information input by MCLIC related to the EGWP Benefit into the CMS
system , etc.), or an error requiring individual retiree contact , and if so in either case , MCLIC will take appropriate
action and attempt to correct such error and resubm it the ind ivid ual through the CMS system . C li ent
acknowledges and agrees that MCLIC may update in the Enrollment File any and all information concerning
Part D Elig ible Retirees upon receipt of corrected information from CMS , and MCLIC may use such corrected
information to obtain a Part D El ig ible Retiree 's enrollment in the EGWP Benefit. For all Part D Eligible Ret irees
that have been included by Client in the Enrollment Fil e , but who are ultimately determined to be ineligible for
part icipation in the EGWP Benefit , MCLIC or its Affiliate shall notify the individual of his or her inel igibil ity in the
EGWP Benefit and ta ke all other action as re quired by app licable law. MCLIC shall communicate to Client any
changes to a Part D Elig ible Ret iree's info rmation in the Enro ll ment F ile based upon updates or corrections
recei ved from CMS .
(b) Incomplete Enrollment File Information . Client acknowledges that its subm ission to MCLIC of
an inaccurate or incomplete Enro llment File (e .g ., m iss ing date of birth , last name , first name, etc .) or otherwise
of incomplete information with respect to any ind ivi dual Part D Eligible Retiree , may result in a rejection of the
Part D El ig ible Retiree 's enrollment in the EGWP Benefit. MCLIC will pro vi de Cl ient with regular reports
providing the deta ils of all such incomplete info rmatio n needed to enroll Part D El igible Retirees . Upon Client's
request , MCLIC will perform research and may initiate contact and commun ication with all such Part D Eligible
Ret ire es to obta in all missing information needed to complete enrollment of the Part D Elig ible Retirees in the
EGWP Benefit. Client acknowledges and agrees that MCLIC may co ntact Client's Part D Elig ible Retirees to
obtain th e information required hereunder, and that MCLIC will update the Enrollment Fil e on Client's beha lf to
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reflect additional information needed to complete enrollment of the Part D El ig ible Retirees in the EGWP Benefit.
MCLIC shall provide to Client all such updated information through the regular reports provided hereunder.
After obtaining all information needed to complete enrollment of the Part D Elig ible Reti rees in the EGWP
Benefit, MCLIC shall complete such enrollment including verification with CMS ; prov ided, however, that if
MCLIC , using reasonable efforts, is not able to obtain all missing information from a Part D Eligible Retiree
w ith in twenty-one (21) days after receiving Client's initial request fo r enrollment of the Part D El igible Retiree in
the EGWP Benefit, then Cl ient's request shall be deemed cancelled and MCLIC or its Affiliate shall notify the
indivi dual of his or her non-enrollment in the EGWP Benefit and shall take all other action as required by
app licable law.
(c) Effective Date of Application for Enrollment into EGWP Benefit. Notwithstanding any prov ision
of this Agreement to the contrary , the effective date of the application f or any Part D Eligible Ret iree who MCLIC
seeks to enroll in the EGWP Benefit hereunder shall be the date on which the applicat ion for enrollment is
entered by MCLIC into its enrollment system , subject however to an y adjustments that MCLIC may ma ke for
retroactive enrollments as necessary to enroll the Part D Eligible Retiree in the EGWP Benefit.
2.6 Ind ividual Disenrollment. If Client or MCLIC determines that an EGWP Enrollee will no longer be
eligible to participate as an EGWP Enrollee in the EGWP Benefit (an "Ine lig ible Enrollee "), in accordance with
the EGWP Benefit's eligibility requirements and /or the Med ica re Drug Rules , then the fo llowing procedures sha ll
be implemented as applicable :
(a) Upon Client's determination , Cli ent sha ll notify MCLIC at least sixty (6 0) days prior to the
effective date of such Inel igible Enrollee 's ineligibility, in a manner and format ag reed upon by the parties ;
(b) MCLIC shall send a letter I notification to the Ineligible En ro llee alerting the Ineligible Enrollee
that he or she is no longer eligible to participate in the EGWP Bene fit and advising the Inel igible Enrollee of
other insurance options offered by the Client that ma y be available to the Ineligible Enro llee ;
(c) If Client offers other Medicare Part D options that the Ine ligible Enrollee may be el igible to
participate in , Client shall permit the Ineligible Enrollee to go th rough the appropriate pro cess to make an
enrollment choice concerning such Medicare Part D options with Client ;
(d) Cl ient shall provide all information to MCLIC that is requ ired for MCLIC to sub mit a comp lete
disenrollment request transact ion to CMS , as set forth in the Medicare Drug Ru les ; and
(e ) MCLIC shall submit the disenrollment request transaction to CMS in accordance w ith the
Medicare Drug Rules .
2.7 Group Disenrollment. If, upon the expiration of the then current term of this Agreement, Cl ient plans to
disenroll its EGWP Enrollees from the EGWP Benefit using a group d isenro ll ment process , then Client sha ll
implement the following procedures :
(a) Notification to EGWP Enrollees . Client shall provide at least th irty (30 ) days (or such other
minimum days ' notice as required by the Medicare Drug Rules) prior written notice to each EGWP Enro llee that
Client plans to disenroll him or her from the EGWP Benefit and shall include w ith such written notification an
explanation as to how the EGWP Enrollee may con tact CMS for information on other Med icare Part D options
that might be available to the EGWP Enrollee ; and
(b) Information to MCLIC . Client shall provide all the information to MCLIC that is requ ired for
MCLIC to submit a complete disenrollment request transaction to CMS , as set forth in the Medicare Drug Rules .
2 .8 Voluntary Disenrollment. If an EGWP Enrollee makes a voluntary request to be d isenro lled from the
EGWP Benefit (the "Voluntary Disenrollee") to Client , then Client shall notify MCLIC at least sixty (60 ) days (or,
if sixty (60) days is not possible , as soon as Client determines that an ind ividual has made a voluntary request to
disenrofl from the EGWP Benefit) prior to the effective date of such Voluntary Disen rollee 's disenro ll ment, in a
manner and format agreed upon by the parties . If Client does not t imely notify MCLIC of such Voluntary
Disenrollee 's disenrollment in the EGWP Benefit , then MCLIC shall subm it a retroactive disenrollment request to
CMS. Client acknowledges that CMS may only grant up to a ninety (90) day retroactive disen rollment in such
instances . If the Voluntary Disenroflee makes his or her request directly to MCLIC , then MCLIC sha ll submit the
disenrollment request to CMS , as set forth in the Medicare Drug Rules .
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2 .9 Res ponsib ili ty for C laims After Lo ss of Eligibility or Disenrollment. Client represents and warrants that
all information that C li ent, or its authorized representat ive , provides to MCLIC in the Enrollment File will be
complete and correct. Except for Pres cri pti on Drug Claims that are paid due to MCLIC 's negligence , Client shall
be respons ible for re imburs ing MCLIC pursuant to Section 5.1 for all Prescription Drug Cla ims processed by
MCLIC (a) wi th respect to an Inelig ible Enrollee during any period in which the Enrollment File indicated that
such Inelig ible Enrollee was eli gible and (b) w ith respe ct to a Vo luntary Disenrollee, in the event Client did not
pro vi de timely notice to MCLIC of such disenro ll men t as set forth in this Article II.
2 .10 General Support Serv ices . In add ition to an y other Client obligation under this Article II or elsewhere in
th is Agreement , Client shall be responsible for providing general support services to EGWP Enrollees
throughout the enro ll ment process , including , but not limi ted to , EGWP Enro ll ee education concern ing the
EGWP Benefit, communicating information conce rni ng premiums , provid ing information concerning alternative
benefit options offered by Client, and answering on-go ing inqu iries related to the payment of the applicable
EGWP Enrollee premium .
2.11 Effect On I Effect Of Commercial Agreement. Except as expressly provided in this Agreement, the
part ies ac k nowledge that MCLIC sha ll ha ve no obligations under the Commercial Agreemen t with respect to the
Cl ient Group Health P lan , and that C li ent shall be solely respons ible for determining the e li gibi li ty of Members
covered by the pres c ription drug ben e fit admin istere d pursuant to the Commercia l Agreement (the "Commercial
Benefit"). Upon a Member's enrollm ent as an EGWP Enrollee in the EGWP Benefit, such EGWP Enrollee's
eli gib ility as a Member in the Comme rci al Ben efi t shall immediate ly terminate . An EGWP Enrollee may not have
dual coverage under the EGWP Benefit and the Com mercial Benefit; and therefore , after any EGWP Enrollee's
enrollment in the EGWP Benefi t, all Prescription Drug Claims and Member Submitted Cla ims submitted to ESI
unde r the Commercia l Agreement shall be treated as Pres cript ion Drug Cla ims under this Agreeme nt and shall
be processed by MCLIC in accordance wi th the EGWP Benefit. A ny Pres c ript ion Drug Claim or Member
Subm itted Claim processed under the Commercial Agreement and the Commercial Benefit after the date of an
EGWP Enro ll ee 's enro ll ment in the EGWP Benefit sha ll be re versed and shall be re -processed under the EGWP
Benefit. Cl ient acknowledges that term ina tion of a Memb er's coverage under the C ommercial Benefit prior to
su ch Member's enrollment as an EGWP Enro llee in the EGWP Bene fi t may result in a loss of prescript ion drug
benefit cov erage for such Member; prov ided , however, notwithstanding the foregoing, the parties acknowledge
and agree that a Membe r's prescri pti on drug benef it co verage und e r the Commercial Benefit sha ll be so lely
determined by Clien t and not by MCLIC or any of its Affiliates, includ ing w ithout lim itation ESI.
A RT ICLE Ill -PRESCRI PT IO N DRUG SERVICES
3.1 Exclusivity . Client acknow ledges and agrees that , in the event Client offers its Part D E li gible Retirees
more tha n o ne Part D benefit opt io n, the el igibili ty de terminations , enrollment and disenrollment and other
adm ini st rat io n of such Part D options will requ ire extens ive coord ina ti on w ith the admin istration of the EGWP
Benefi t. For these reasons , Client agrees that Cl ient sha ll use MCLIC as Cl ient's exclusive prov ider of all
Med ic are Part D servi ces for its Part D Eligible Retirees during the term of this Agreement unless otherwise
requested by Cli ent and agreed to by MCLIC in writing . The terms and cond itions of Client's and MCLIC 's
arrangements for Part D options other than the EGWP Benefit shall be set f o rth in separate agreements.
3.2 Prescription Drug Serv ices . In e xchange for Client's payment to MCLIC of the amoun ts set forth in
Se ctio n 5.2 , MCLIC wi ll offer the EGWP Benefit to EGWP Enrollees in accordance with the terms and cond it ions
of this Agreement. In its capacity as a PDP Sp onso r with respect to the EGWP Benefit, MCLIC will be
respons ible fo r pharmacy network c o ntracting ; Ma il Se rv ice Pharmacy and Spe c ialty Products se rvi ces ;
Prescri ption Drug C la i m pro cessing ; Fo rmula ry and Rebate admin istration ; Medication Therap y Management;
and related services (colle ctivel y , "Pres cript ion Dru g Serv ices "), as further described in this Agreement. A ll
Prescr iption Drug Servi c es shall be pro vid ed by MCLIC in accordan c e w ith t he Med icare Drug Rules and the
ter ms of t he EGWP Benefit. C lien t ackn owl edges and agrees that MCLIC may prov ide Prescripti o n Drug
Servic es under t his Agreement through one or m ore of its Affili ates . MCLIC represents and warrants that it will
ha ve w ri tten agreements w ith each Affiliate that will perform serv ic es on behalf of MCLIC in c onnection with the
EG W P Benefit that meet the requ ire m ents the Med icare Drug Ru les for subcontractors of PDP Sponsors.
3.3 Compl ian ce with Med icare Drug Rul es and State Insuran c e Laws . Under the Med ica re Drug Rules ,
MCLIC is requ ired to mainta in licensure under appl ic able state insurance laws or to obtain appropriate waivers
from CMS of su ch requirem ents . No twi thstand ing an y pro vi sion to th e contrary in this Agreement, MCLIC shall
not be obligated to ta ke an y action or om it to ta ke any act ion wi th respect to the EGWP Benefit that is not in
7 146682.v l 3
compliance with the Medicare Drug Rules , applicable state insurance laws or other applicable laws .
3.4 The EGWP Benefit. The EGWP Benefit will satisfy all actuarial equivalence standards set forth in the
Medicare Drug Rules . Client hereby agrees to cooperate with MCLIC to perform the necessary actuarial
equivalence calculations to determine whether the EGWP Benefit meets the foregoing actuarial equiva lence
standards prior to the Effective Date . If MCLIC determines that the EGWP Benefit does not meet the actuarial
equivalence standards , then Client shall cooperate with MCLIC to make necessary adjustments to the EGWP
Benefit design to meet the actuarial equivalence standards.
3.5 Changes to the EGWP Benefit. Client shall have the right to request changes to the terms of the EGWP
Benefit from time to time by providing written notice to MCLIC . MCLIC shall implement any such requested
changes in its sole discretion . Any such changes shall be subject to the following requirements : (a) all changes
to the EGWP Benefit must be consistent with the Medicare Drug Rules ; (b) the EGWP Benefit, after
implementation of such changes, must continue to meet the actuarial equivalence standards referenced in
Section 3.4 above ; (c) EGWP Benefit changes may be implemented only at times and in the manner permitted
by the Medicare Drug Rules ; and (d ) any requested change that would increase MCLIC 's costs of administering
the EGWP Benefit without an equivalent increase in the PMPM Fees (as defined in Section 5.2 below) paid to
MCLIC from Client shall not be implemented unless and until Client and MCLIC agree in writing upon a
corresponding adjustment to the PMPM Fees .
3.6 EGWP Enrollee Communications . All standard EGWP Enrollee communications concerning the EGWP
Benefit (i.e ., summary plan description , evidence of coverage , etc .) shall be mutually developed by MCLIC and
the Client pursuant to the Medicare Drug Rules , including the CMS Marketing Gu idelines contained therein.
MCLIC shall be responsible , with assistance from Client , in completing the EGWP Enrollee communications and
distributing them to EGWP Enrollees as appropriate . Pursuant to the Medicare Drug Rules, Client
acknowledges and agrees that MCLIC must provide all such EGWP Enrollee communications , whether created
and/or distributed by MCLIC or Client , to CMS for review . If CMS notifies MCLIC that any such EGWP Enrollee
communication is deficient, Client agrees to assist MCLIC to make necessary revisions to such EGWP Enrollee
communication to correct such deficiency.
3.7 Network Access and Service Area Requirements . At least thirty (30 ) days prior to the Effective Date ,
Client shall provide MCLIC information concerning where : (A) all Part D Eligible Ret irees reside ; and (B ) all of
Client's employees reside , as necessary for MCLIC to determine whether MCLIC 's network of Participating
Pharmacies is sufficient to meet the needs of such ind ividuals . Cl ient represents and warrants that all such
information shall be accurate and complete . Client's performance under this Sect ion 3. 7 shall be a condition
precedent to MCLIC 's performance under this Agreement. If MCLIC determ ines that its network of Participating
Pharmacies is not sufficient to meet the needs of individuals eligible to participate in the EGWP Benefit, then
MCLIC shall use its best efforts to address such deficiencies . If MCLIC is not able to satisfactorily address such
deficiencies prior to the Effective Date , then MCLIC shall prov ide wr itten notice to Client prior to the Effective
Date and this Agreement shall automatically terminate .
3.8 Pharmacy Network . Subject to the terms of Section 3.7 above , MCLIC shall develop and maintain a
Participating Pharmacy network that , at a minimum , is sufficient to meet the needs of the EGWP Enrollees , as
provided in the CMS waiver guidance concerning network access under Medicare Drug Rules .
(a) Pharmacy Credentialing . MCLIC agrees to comply with all applicable Medicare Drug Rules
regarding credentialing requirements . MCLIC shall require Participating Pharmacies , MCLIC Mail Service
Pharmacy and MCLIC Specialty Pharmacy to meet MCLIC 's and the Medicare Drug Rules ' credentialing
requirements, includ ing but not limited to licensure , insurance and provider agreement requirements .
(b) Independent Contractors . Neither MCLIC nor its Affiliate directs or exercises any control over
the professional judgment e xercised by any pharmacist in dispensing prescriptions or otherwise prov iding
pharmaceutical related services at a Participating Pharmacy. Participating Pharmacies are independent
contractors of MCLIC or its Affiliate, and neither MCLIC nor its Affiliate shall have any liability to Client, any
EGWP Enrollee or any other person or entity for any act or omission of any Participating Pharmacy or its agents
or employees .
(c) Pharmacy Help Desk. MCLIC will provide 24-hour a day, 7-days a week toll-free telephone
support and Internet web site to assist Participating Pharmacies with EGWP Enrollee eligibility verification and
questions regarding reimbursement , and Covered Drug benefits under the EGWP Benefit.
8 146682 .v13
3.9 Audits of Participating Pharmacies ; Fraud and Abuse . MCLIC shall period ically audit Participating
Pharmacies to determine compliance with their agreements with MCLIC or its Affiliate and in order to meet the
anti-fraud provis ions of the Medicare Drug Rules applicable to POPs . MCLIC also shall perform fraud and
abuse reviews of EGWP Enrollees and physicians as required under the Medicare Drug Rules for POPs .
3.10 Claims Processing . Subject to Sections 3.1 O(a)-(h), MCLIC w ill be responsible for all claims processing
services for Covered Drugs dispensed to EGWP Enrollees by a Pharmacy consistent with the appl icable
standard transaction rules required under HIPAA and the Medicare Drug Rules . MCLIC also shall process
EGWP Enrollee Subm itted Claims.
(a) COB .
(i) MCLIC will coordinate benefits w ith state pharmaceutical assistance programs and
entities provid i ng other prescription drug coverage consistent with the Medicare Drug Rules. If Client , in
accordance with the Medicare Drug Ru les , elects to prov ide non-Medicare EGWP supplemental
coverage for EGWP Enrollees through other health in surance separately issued by a carrier with which
MCLIC or its Affiliate has contracted (t he "EGWP Supplemental Policy "), then MCLIC will perform the
following additional coordinat ion of benefits : Coordination of benefits for Medicare Part D appl icable
drugs throughout the EGWP Benefit and the EGWP Supplemental Policy ; sing le transaction for
Members at POS utili zing Med icare Part D eligibility and a single ID card ; utilize EGWP Enrollee
el igibil ity established under Med ic are Part D plan ; comprehensive EGWP Enrollee communications
package for the EGWP Supplemental Pol icy ; all CMS required reporting ; claims reporting deta ili ng
primary and secondary payments ; and finan ci al rep orting detailing applica tio n of Coverage Gap
Discount Program .
(ii ) The prem ium collected by MCLIC or its Affiliate for the EGWP Supplemental Pol icy ,
which is an amount set forth as a separate lin e item on Client 's invoice , is included in the PMPM Fees
pa id to MCLIC pursuant to this Agreement. PMPM Fees collected by MCLIC pursuant to th is
Ag reement will first be applied to all non-EGWP Supplemental Policy PMPM Fees owed to MCLIC
before applying any remain ing amounts to the EGWP Supplemental Policy premium amounts owned .
As a result , defau lt in payment of PMPM Fees by Client , in whole or in part, may result in a default
under the EGWP Supplemental Policy for failure to pay premium amounts thereunder . In addition to the
principal ESI revenue sources disclosed in Exhib it B (Financial Disclosure), in connection with the
EGWP Supp lemental Pol icy issued to Cl ient in connection with th is Agreement , MCLIC or its Affiliate is
paid an original commission in an amoun t equal to one percent (1 %) of the gross premium collected by
MCLIC or its Affiliate for the EGWP Supplemental Pol icy .
(i ii ) If MCLIC and /or the ca rri er wi th which MCLIC or its Affiliate has contracted to provide
the EGWP Supplemental Policy at any t ime does not receive authority to issue such EGWP
Supplemental Policy , or has such authority re voke d , then this Agreement is subject to immediate
termination by MCLIC upon written notic e to Client.
(b ) Utilization Management. Consistent w ith the terms of the EGWP Benefit, MCLIC will establish a
reasonab le and appropriate drug management program that includes incentives to reduce costs when medically
appropriate ; mainta ins policies and systems to assist in prevent ing over-utilization and under-utilization of
prescr ibed medications , accord ing to gu ide li nes specified by CMS and in accordance with the Medicare Drug
Rules .
(c) Quality Assurance. Consistent with the terms of the EGWP Benefit, MCLIC will estab li sh
quality assurance measures and systems to reduce medication errors and adverse drug interactions and
improve medication use in accordance with the Med icare Dru g Ru les .
(d) TrOOP . Consistent w ith the terms of the EGWP Benefit , MCLIC will establish and ma intain a
system to record EGWP Enrollees' TrOOP balances , and shall communicate TrOOP balances to EGWP
Enrollees upon request.
(e) Coverage Determ inations and Appeals. The parties acknowledge and agree that MCLIC is
requ ired under the Med ic are Drug Ru les to mainta in oversight of coverage determinations under the
EGWP Benefit, in clud ing pr ior authorizations and EGWP Enrollee Submitted Claims determinations ,
and to maintain an appeals process for EGWP Enrollees . Client acknowledges and agrees that ESI
9 146682 .vl3
may perform such services through the UM Company . MCLIC or the UM Company, as applicable_, will
be responsible for conducting the appeal in a manner consistent with the requirements of the Medicare
Drug Rules and shall ensure that the contract with the UM Company complies with the applicable
delegation requirements of the Med icare Drug Rules , including without lim itation 42 C .F .R. §423 .505 .
ESI represents to Client that UM Company has contractually agreed that: (A} UM Company will conduct
appeals in accordance with the the Medicare Drug Rules and the EGWP Benefit, (B) Client is a third
party beneficiary of UM Company's agreement with MCLIC or its Affiliate (a copy of which is ava ilable
upon request) and the remedies set forth therein , and (C) UM Company will indemnify Client for th ird
party claims caused by the UM Company's negligence or willful m isconduct in providing the appeal
services.
(f) EOBs. MCLIC will furnish EGWP Enrollees , in a manner specified by CMS, a written
explanation of benefits ("EOB") when prescription drug benefits are provided under qualified prescription drug
coverage consistent with the requirements of the Medicare Drug Rules . Client acknowledges and agrees that
MCLIC may delegate this function to BASI .
(g) EGWP Enrollee Services. MCLIC will provide 24-hours a day , 7-days a week to ll-free
telephone, IVR and Internet support to assist Client and EGWP Enrollees wit~ EGWP Enrollee eligibility,
benefits and TrOOP verification , location of Participating Pharmacies and other re lated EGWP Enrollee
concerns .
3 .11 Formulary and Medication Management.
(a) P&T Committee and Medicare Formulary . MCLIC or its Affiliate will maintain a pharmacy and
therapeutics committee ("P& T Committee") in accordance with the Medicare Drug Rules , which will develop a
Medicare Formulary for the EGWP Benefit consistent with the requirements of the Medicare Drug Rules . In
accordance with the Medicare Drug Rules , all Covered Drugs on the Medicare Formulary shall be Part D drugs
(within the meaning of the Medicare Drug Rules ) or otherwise permitted to be covered by a PDP under the
Medicare Drug Ru les . Client acknowledges and agrees that the Medicare Formu lary may not be modified by
removing Covered Drugs , adding additional utilization management restrictions , or making the cost-sharing
status of a drug less beneficial or otherwise modified in a manner not consistent with the Medicare Drug Rules .
(b) Medication Therapy Management. Consistent with the terms of the EGWP Benefit, MCLIC or
its Affiliate may implement a Medication Therapy Management program that is designed to ensure that Covered
Drugs prescribed to targeted EGWP Enrollees are appropriately used to optimize therapeutic outcomes through
improved medication use and reduce the risk of adverse events , including adverse drug interaction s in
accordance with the Medicare Drug Rules .
3.12 Medicare Rebate Program .
(a) MCLIC or its Affiliate will negotiate with pharmaceutical manufacturers regarding the terms of
the Medicare Rebate Program and will enter into agreements with such manufacturers for Rebates for certain
Covered Drugs and Manufacturer Administrative Fees. MCLIC and its Affiliate reta in all right, title and interest to
any and all actual Rebates and Manufacturer Administrative Fees received from manufacturers. Cl ient
acknowledges and agrees that it shall not have a right to any Rebate and Manufacturer Adm in istrative Fee
payments received by MCLIC or its Affil iates.
(b) Client shall not negotiate or arrange with , or enter into an agreement with , a pharmaceutical
manufacturer for rebates or similar discounts for any Covered Drugs d ispensed to EGWP Enrollees . A breach
of the prior sentence shall be deemed to be a materia l breach of this Agreement.
3 .13 Mail Service Pharmacy. EGWP Enrollees may have prescriptions filled through the Mail Service
Pharmacy. Subject to applicable law, MCLIC may communicate with EGWP Enrollees regard ing benefit design,
cost savings , ava ilability and use of the Mail Service Pharmacy , as well as provid e supporting services. MCLIC
may suspend Ma il Service Pharmacy services to an EGWP Enrollee who is in default of any Copayment amount
due MCLIC. Client will be responsible for any unpaid EGWP Enrollee Copayment amounts if payment has not
been received from the EGWP Enrollee within one hundred twenty (120) days following dispensing. Client will
be billed following the one hundred twenty (120) day collection period , with payment due in accordance with the
payment terms set forth in Article V of this Agreement.
10 146682.v13
3.14 Specialty Products
(a) Specialty Products and ASES . EGWP Enrollees may have prescriptions filled through MCLIC
Specialty Pharmacy and Partic ipating Pharmac ies . Subject to applicable law, MCLIC and its affiliates may
communicate w ith EGWP Enrollees and physicians to advise EGWP Enrollees filling Specialty Products at
Particip ating Pharmac ies of the availability of fill ing prescriptions through MCLIC Specialty Pharmacy.
(i) For Specialty Products filled through MCLIC Specialty Pharmacy only, EGWP Enrollees
may rece ive the follow ing services from MCLIC Specialty Pharmacy, depending on the particular
therapy class or disease state : ASES ; patient intake services ; pharmacy dispens ing services and/or
social services (patient advocacy, hardship reimbursement support, and indigent and patient assistance
programs ).
(ii) Subject to Client's prior authorization requirements , if applicable , MCLIC or its affiliates
will provide or coordinate ASES for EGWP Enrollees through MCLIC Specialty Pharmacy or through
other specialty pharmacies or other independent third party providers of ASES when ASES is required .
If MCLIC or affiliates engages a third party provider of ASES , MCLIC or affiliates shall contractually
obligate such third party provider of ASES to comply with all applicable laws , including , without
limitation , all applicable laws relating to professional licensure . Neither MCLIC nor its affiliates direct or
exercise any control over any third party provider of ASES in administering Specialty Products or
otherwise providing ASES .
(b) MCLIC shall notify Cl ient no more frequent ly than monthly of new Specialty Products that are
introduced to the market and added to the Specialty Product List on or after the Effective Date of this Agreement
("Notice ").
3.15 Late Enrollment Penalty . Client agrees to comply w ith the applicable CMS requirements of the LEP and
shall com ply with MCLIC 's LEP policy , inducing participating with MCLIC in the following process :
(a) Upon implementation, client has an option to provide an attestation to MCLIC to attest to
creditable coverage for all or a portion of its EGWP Enrollees
(b) Client will provide MCLIC wi th th e attestation in the form attached as Exhibit C of this
Agreement , and a f ile listing of all the EGWP Enrollees , their HICN , and effective date included in the
attestation .
(c) MCLIC will col lect respons es to the attestations from Client or EGWP Enrollees and submits
EGWP Enrollees informa tion to CMS for processing and determination of applicable LEP .
(d) CMS calculates the LEP amount and transmits the LEP amount to MCLIC on the daily TRR file ,
which is communicated to Client and Benista r. MCLIC shall invoice Beni star for payment of the LEP , wh ich
sha ll be due and owing by t he Client to Benistar and MCLIC . Per the Medicare Drug Rules , Cl ien t may elect to
either pay for the LEP on behalf of the EGWP Enrollee , or seek reimbursement of the LEP amount from the
EGWP Enrollee . Th is election must be made prior to the beginn ing of the plan year and must be appl ied
consi stently by Client for all EGWP Enrol lees throughout the plan year.
ARTICLE IV -PROGRAM OPERATIONS
4 .1 Program Reporting. MCLIC or its Affil iate shall make ava il able to Client MCLIC 's or its Affil iate 's
standard management information reporting applications . At the request of Client , MCLIC or its Affiliate may
develop special report ing packages at MCLIC 's or its Affiliate 's standard hourly rate for such services .
4.2 Regulatory Report ing . MCLIC sha ll comply with the report ing requirements set forth in 42 C .F.R.
§423 .514 , including reporting s ignificant bus iness transactions with parties in interest to CMS , notifying CMS of
any loans or other financial arrangemen ts that it makes with contractors , subcontractors, and related entities ,
and making such information available to EGWP Enro llees upon reasonable request.
4.3 Claims Data Retent ion . MCLIC and C lie nt will maintain , for a per iod of the then current plan year plus
an additional ten ( 1 0) years, the applicable books , contracts , medica l records , patient care documentation , and
othe r re cords relating to covered services under this Amendment. MCLIC may use and disclose both during
II 146682 .v l 3
and after the term of this Agreement the anonym ized claims data (d e-i dentified in accordance with HIPM)
including drug and related medical data collected by MCLIC or provided to MCLIC by Client for research ;
provider profil ing ; benchmarking , drug trend , and cost and other internal analy ses and comparisons ; clinical,
safety and/or trend programs ; ASES; or other MCLIC business purposes , in all cases subject to applicable law.
4.4 Government Audits . MCLIC and Client agree to allow the Un ited States Department of Hea lt h and
Human Services ("DHHS ") and the Comptroller General , or their designees , the right to aud it, evaluate , inspect
books, contracts , medical records , patient care documentation and other records relating to covered services
under this Agreement, as are reasonably ne cessary to verify the nature and extent of the costs of the services
provided to EGWP Enrollees under this Agreement , fo r a period of the then current plan year, plus an additional
ten (1 0) years following termination or expiration of the Amendment for any reason , or until completion of any
audit, whichever is later.
4 .5 Liability Insurance . Each party shall maintain such policies of general liability , professional liability and
other insurance of the types and in amounts customarily carried by their respect iv e bus inesses . Proof of such
insurance shall be ava i lable upon request. MCLIC agrees , at its sole expense , to maintain during the term of
th is Agreement or any renewal hereof, commercial general liability insurance, pharmacists profess io nal liability
insurance for the MCLIC Mail Service and MCLIC Specialty Pharmacies , and managed care liability with limits ,
excess of a self insured retention , i n amounts of not less than $5 ,000,000 per occurren c e, and in the aggregate .
MCLIC or its Affiliate does not maintain liability insurance on behalf of any Partici pating Pharmacy , but does
contractually require such pharmacies to maintain a minimum amount of commercial liab ility insurance or, when
deemed acceptable by MCLIC or its Affiliate , to have in place a self-i nsurance program .
ARTICLE V-MONTHLY PREMIUMS; FEES; BILLING AND PAYMENT
5.1 Monthly Premiums .
(a) Determination of Monthly Prem iu m Amounts . Pr io r to the Effective Date and each EGWP Benefit
enrollment period thereafter, MCLIC shall determ ine the amount of the monthly prem iu m to be charged for each
EGWP Enrollee for part ici pation in the EGWP Benefit, which shall be determined based on the CMS Medicare
Drug Rules and guidance for standard prescr iptio n drug coverage along with enhancements under the EGWP
Benefit as compared to the standard prescription drug coverage as permitted .
(b) Collection of Month ly Premium Amounts . In accordance with the Medicare Drug Ru les, MCLIC
hereby delegates the premium collection function to Client and /or BASI and hereby d irects Client, and /o r BASI ,
on behalf of MCLIC , to collect all monthly premium payments due from EGWP Enrollees for partic ipation in the
EGWP Benefit. In connection with MCLIC 's delegation of the prem ium collection function to Cli ent under this
Section 5 .1 (b), Client hereby agrees as follows :
(i) That in no event, including , but not limited to , MCLIC 's insolvency, or MCLIC 's breach
of this Agreement, will Client bill , charge , collect a deposit from , see k compensation, remunerat ion or
reimbursement from , or have any recourse against an EGWP Enrollee or persons acting on his or her
behalf for payments that are the f inancial responsibility of MCLIC under this Agreement. The foregoing
is not intended to prohibit Client and/or BASI from collecting prem ium amounts due by EGWP Enrollees
for participation in the EGWP Benefit ;
(ii) That DHHS , the Comptroller Genera l, or their designees shall have the right to inspect,
evaluate , and audit pertinent contracts , books , documents , papers and records of the Client and BASI
involving Cl ient's and/or BASI 's collection of premium amounts from EGWP Enrollees , and that DHHS ',
the Comptroller General's, or their designees' right to inspect, evaluate, and aud it any such pertinent
information will exist through ten (1 0) years from the date of terminat ion or expiration of this Agreement ,
or from the date of complet io n of any audit, whichever is later ;
(iii) That if MCLIC or CMS determ ines that Client or BASI is not performing the premium
collection fu nc tio n in compliance with all applicable Med icare Drug Rules and Client or BASI is unable to
cure such noncompliance within thirty (30) days following notice from MCLIC or CMS, then MCLIC may ,
at its sole dis cretion , either: (i) upon prior written notice to Client , revoke all or a port ion of such
delegated function as MCLIC deems necessary to effectuate MCLIC 's ultimate responsibility to CMS for
the performance of such delegated function under MCLIC 's contract with CMS ; or (ii) negotiate an
alternative remedy in lieu of revocation of delegation , so long as such remedy conforms to the
12 146682 .vl3
requirements of the Medicare Drug Rules . Noth in g in this Section 5.1 (b)(3), includ ing , but not lim ited to ,
the thirty (30) day cure period , shall be co nstrue d in any way to limit MCLIC 's right to suspend
performance under Section 8.2 for non-payment; and
(iv) That Cl ient shall not further delegate or s ubcontract the performance of the premium
collection function to a third party other than to BASI wi thout MCLIC 's prior written consent. If Cl ient
does further delegate or subcontract the performance of the premium collection function to a third party
other than BASI , then Client agrees that it shall : (i) amend its written agreement with such subcontractor
or enter into a separate written agreement with such subcontractor that contains the terms, conditions ,
and provisions set forth in Schedule 5.1 (b)(iv) attached hereto and incorporated herein by reference ;
and (ii ) ensure that such subcontractor's performance of the premium collection funct io n complies with
the provisions set forth on Schedule 5.1 (b)(iv).
(c) Determination of Monthly Premium Amounts (i f any) to be Subsidized by C li ent. In determining
the amount of the EGWP Enrollee 's monthly premium for participation in the EGWP Benefit that Client will
subsidize , Clie nt shall make such determ in ation subject to the following restrictions and any other restrictions
that may be i mposed by CMS :
(i) Cl ient may subsidize different amounts for different classes of EGWP Enrollees
provided such classes are reasonable and based on objective bus iness criteria , such as years of
service , business locatio n, job category, and nature of compensation (e.g., salaried vs . hourly).
Different classes cannot be based on eligibility for the Low Income Subsidy;
(ii)
Enrollees ;
Client may not vary the premium subsidy for individuals within a given class of EGWP
(iii) C li ent may not charge an EGWP Enrollee more than the sum of his or her monthly
beneficiary premium attributable to bas ic prescription drug coverage and 100% of the monthly
beneficiary premium attributable to his or her supplemental prescription drug coverage , if any ;
(i v ) Client shall directl y refund to the EGWP Enrollee (or shall allow MCLIC to do so ), within
forty-five (45 ) days of origina l receipt from CMS of the Low Income Subsidy premium , the full premium
subsidy amount up to the month ly benefici ary prem ium amount prev iou sly collected from the EGWP
Enrollee ; prov ided , however, that to the extent there are Low Income Subsidy premium amounts
remain ing afte r Client refunds the full monthly benefic iary premium amount to the EGWP Enrollee , then
Cli ent may apply that remaining port ion of the Low Income Subsidy premium to the portion of the
monthly premium pa id by Client ;
(v) If Client is not able to reduce the up-front monthly beneficiary premium as described in
subsection (i v) above , Client shall d irectly refund to the EGWP Enrollee (or shall allow MCLIC to do so),
with i n forty-five (45 ) days of original receipt from CMS of the Low Income Subs idy premium, the full
premium subsidy amount up to the monthly beneficiary premium amount previously collected from the
EGWP Enrollee ;
(vi) If the Low Income Subs idy amount for which an EGWP Enrollee is elig ible is less than
the port ion of the monthly benefici ary premium paid by the EGWP Enrollee, then Client must
communicate to the EGWP Enro llee the financial consequences for the beneficiary of enrolling in the
EGWP Benefit as compared to enrolling in another Medicare Part D plan with a monthly beneficiary
premium equal to or below the Low Income Subsidy amount; and
(vii) In the event of a change in an EGWP Enrollee 's Low Income Subsidy status or an
EGWP Enrollee otherwise becomes ineligible to receive the Low Income Subsidy after payment of the
Low Income Subsidy premium amount to the EGWP Enrollee , and upon MCLIC's receipt of notification
from CMS that such Low Income Subsidy premium amount will be recovered from MCLIC or withheld
from future payments to MCLIC , then MCLIC in its sole discre tion will invoice Client or set off from
amounts otherwise owed from MCLIC to Client , and in either ca se Client shall reimburse MCLIC for, all
amounts deemed by CMS to be inelig ible Low In come Subsidy prem ium payments with respect to the
EGWP Enrollee .
13 14 6682 .vl3
(d) Reporting and Auditing of Premium Amounts ; Non-Payment by EGWP Enrollees. As of the
Effective Date and on a monthly basis thereafter, Client shall , or shall cause BASI to , provide a report to MCLIC ,
in a form and manner as agreed to by the parties, that includes all information concerning monthly premium
amounts due by EGWP Enrollees for participation in the EGWP Benefit, including , without limitation , the monthly
premium amount charged to each class of EGWP Enrollees , the amount that is being subsidized by the Client,
and all premium amounts collected from EGWP Enrollees. Client represents and warrants that all information
that it or BASI provides to MCLIC pursuant to this Section 5 .1 (d) shall be accurate and complete . Client further
represents and warrants that it shall, or shall cause BASI to , collect only those monthly premium amounts that
are due from EGWP Enrollees, consistent with the information provided to MCLIC pursuant to this Section
5 .1 (d). Upon reasonable advance written notice , MCLIC or its Affiliate shall have access to Client's records in
order to audit the monthly premium amounts collected from EGWP Enrollees for the purposes of fulfilling
reporting requirements under the Medicare Drug Rules or applicable state insurance laws related to collection of
such premium amounts or to otherwise assess compliance with the Medicare Drug Rules in connection with the
collection of such premium amounts . Any audits performed by MCLIC or its Affiliate pursuant to this Section
5 .1 (d) will be at MCLIC's expense. Client acknowledges and agrees that neither MCLIC nor its Affiliate shall be
responsible to Client for non-payment by any EGWP Enrollee of any monthly premium amount due by such
EGWP Enrollee for participation in the EGWP Benefit. Client further acknowledges and agrees that in the event
that either Client or MCLIC (through any audit) determines that Client or BASI has collected a greater premium
amount from an EGWP Enrollee than is due , that Client shall , or shall cause BASI to , promptly refund any such
overpayment to the EGWP Enrollee .
5 .2 Billing . Once a month, on or about the first (1 51 ) day of the month beginning on the Effective Date , Client
shall be invoiced for an amount equal to the product of: (i) the then-current number of EGWP Enrollees;
multiplied by (ii) a "per member per month " fee (i.e ., member premium amount) determined by MCLIC on an
annual basis, as may be adjusted by MCLIC pursuant to the terms of this Agreement. The monthly fee shall be
referred to in this Agreement as the "PMPM Fees." During the Initial Term (as defined in Section 8.1 below) of
this Agreement, the "per member per month" fee used to calculate the PMPM Fees shall be Two Hundred Sixty-
five and 41/100 Dollars ($265.41). Thereafter, MCLIC shall provide written notice to Client of any annual
adjustment to the "per member per month " fee at least ninety (90) days prior to the commencement of any one
(1) year renewal term hereunder. The parties acknowledge and agree that MCLIC may facilitate billing and
remittance under this Agreement through BASI.
5.3 CMS Reimbursement. MCLIC and its Affiliate retain all right , title and interest to any and all
reimbursement received from CMS with respect to the EGWP Benefit and EGWP Enrollees , including the
following : (1) advance direct subsidy monthly payments with respect to EGWP Enrollees, (2) reinsurance
subsidy payments with respect to the EGWP Benefit, (3) low-income subsidy payments with respect to EGWP
Enrollees , and (4) any other reimbursement payment by CMS to MCLIC for coverage provided to EGWP
Enrollees under the EGWP Benefit for such period (each as further defined in the Medicare Drug Rules)
(collectively, "CMS Reimbursement"). Client acknowledges and agrees that neither it nor its EGWP Enrollees
shall have a right to any CMS Reimbursement payments received by MCLIC or its Affiliates during the collection
period or moneys payable under this Section . Notwithstanding the foregoing , to the extent that MCLIC receives
any low-income subsidy payments from CMS with respect to any EGWP Enrollee that qualifies for such
payments , MCLIC will remit amounts equal to such payments to Client. In such case, Client shall apply such
amounts received from MCLIC pursuant to Section 5 .1 (c)(iv) and (v) above .
5.4 Payment. Payment of the PMPM Fees is due by Client by the twentieth (201h) day of each month for the
monthly invoice received by Client on or about the first (1 51 ) day of that month . Client represents that it has an
arrangement with BASI pursuant to which BASI collects the PMPM Fees due hereunder from Client and/or its
EGWP Enrollees. Client hereby acknowledges and agrees that if payment of the PMPM Fees has not been
received by BASI so that MCLIC is paid by the twentieth (201h ) day of each month , then Client shall be
delinquent in payment of the PMPM Fees due hereunder. Client shall be responsible for all costs of collection
and s~all reimburse MCLIC for such costs and expenses , including reason.able attorneys' fees . Any amounts
not pa1d by the due date thereof shall bear interest at the rate of prime lending rate as published by The Wall
Street Journal plus two percent (2 %) per annum.
5.5 Deposit. If, at any time : (i) Client has one (1) or more outstanding past due invoices; or (ii) MCLIC has
reasonable grounds to believe that Client may become delinquent in payment of PMPM Fees to MCLIC based
on Client's published financial data (examples include, but are not limited to , persistent negative cash flow,
bankruptcy, and insolvency), then MCLIC may require that Client provide to MCLIC a deposit in an amount
equal to one (1) month 's billing , using the average of the last three (3) months of billing history as the basis for
14 146682 .vl3
determining the one ( 1) month deposit amount or, if three (3) months billing history is not available , the most
recent month of billing history as the basis . MCLIC shall retain the deposit until the earlier of: (i) termination of
this Agreement (following any run-off period); or (ii) si x (6) consecutive months of timely payments of all PMPM
Fees following submission of the deposit, and may apply the deposit to delinquent PM P M Fees until return of
the deposit.
5.6 Manufacturer Coverage Gap Discount. Pursuant to its CMS contract, MCLIC has agreed to administer
for EGWP Enrollees at point-of-sale the Coverage Gap Discount authorized by sect ion 1860D-14A of the Social
Security Act. In connection wi th the Coverage Gap Discount, CMS will coordinate the collection of discount
payments from manufacturers, and payment to MCLIC , through a CMS contractor (the "Coverage Gap Discount
Payments "). MCLIC and its Affi liate retain all right , title and interest to any and all actual Coverage Gap
Discount Paymen ts received from CMS . Client acknowledges and agrees that neither it nor its EGWP Enrollees
shall have a right to interest on , or the time va lue of , any Coverage Gap Discount Payments received by MCLIC
or its Affiliates under this Section .
ARTIC LE V I -CONFIDENTIALITY
6.1 Proprietary Information . Each party agrees that information of the other party, including , but not limited
to the following , shall constitute confidential and proprietary information ("Proprietary Information ") of the other
party unless otherwise public : (a) with respect to MCLIC and its Affiliate: reporting and system applications ,
(web-based and other media), and system formats , databanks , clinical and formulary management operations
and programs , f raud , waste and abuse tools and programs , manuals , and anonymized claims data (de-identified
in accordance with HIPAA), MCLIC Specialty Pharmacy and Mail Service Pharmacy data , information
concerning Rebates , prescription drug evaluation criteria, drug cho ice management, drug pricing i nformation ,
and Participating Pharmacy agreements ; and (b) with respect to Client: Participating Pharmacy Client and
EGWP Enrollee identifiable health information and data , Client information files , business operations and
strategies. Neither party shall use the other's Proprietary Info rmation or disclose it to any third party , at any time
during or after termination of this Agreement , except as specifically contemp lated by this Agreement, upon prior
written consent or as required by the Medicare Drug Rules or other app licable law. Upon termination of this
Agreement , each party shall cease us ing the other's Proprietary Information , and all such information shall be
returned or destroyed upon the owner's d irection .
6 .2 Non-Access to MCLIC 's or its Affiliate 's Systems . Cl ient will not, and will not permit any third party
acting on Client's behalf to, access , attempt to access , test or aud it MCLIC 's or its Affilia te 's systems or any
other system or network connected to MCLIC 's or its Affiliate 's systems . Without limiting the foregoing , Client
wi ll not: (i) access or attempt to access an y portion or feature of MCLIC 's or its Affiliate 's systems, by
c ircumventing such systems ' access control measures , either by hacking , password "mining " or a ny other
means ; or (ii) probe , scan , audit or test the vulnerabi lity of such systems , nor breach the security or
authentication measures of such systems.
ARTICLE VII -COMPLIANCE W ITH LAW ; FINANCI AL DI SCLOSU RE ; DISCLOS URE OF FEES PAID TO
BASI
7.1 Compliance with Law : Change in Law . MCLIC and Client hereby agree to perfo rm their respective
obligat ions under this Agreement in a manner that is consistent with and complies with the Medicare Drug Rules
and w ith MCLIC 's contractual obligations under its contract with CMS . In addition, each party shall be
responsible for ensuring its compliance with all federal, state , and loca l laws and regu lations appl icable to its
business, including mainta i ning any necessary licenses and permits . If the scope of MC LI C's duties under this
Agreement is made materially more burdensome or expensive due to a change in federa l, state or local laws or
regulations or the interpretation thereof, including actions by CMS, the parties shall negotiate an appropriate
modification of the services and/or an adjustment to the PMPM Fees paid to MCLIC . If the parties cannot agree
on a modification or adjusted PMPM Fees , then either party may terminate this Agreement upon no less than
th irty (30) days prior written notice to the other party .
7.2 Disclosure of Certa in Financia l Matters. Client acknowledges and agrees that MCLIC will contract with
its Affiliate , ESI , to provide the pharmacy benefit management serv ices contemplated by this Agreement on
MCLIC 's beha lf. In addition to the admin istrat iv e fees paid to MCLIC by Client, MCLIC and ES I's wholly-owned
subsid iaries or Affiliates derive revenue in one or more of the ways as further described in the ESI Financia l
Disclosure to PBM Clients set forth in Exhibit D hereto ("Financial Disclosure"), as updated by ESI from time to
time . Unlike the administrative fees , the re venues described in the Financial Disclosure are not direct or indirect
15 146682 .vl3
compensation to MCLIC from Client for services rendered to Client or the Client Group Health Plan unde r this
Agreement. In negotiating any of the fees and revenues described in the Financial Disclosure, ESI and ESI 's
wholly-owned subsidiaries and Affiliates act on their own behalf, and not for the benefit of or as agents for
Client , EGWP Enrollees or the EGWP Benefit. Exc ept for the Rebate amounts set forth in Exhibit B, if any ,
Client acknowledges and agrees that MCLIC and MCLIC 's wholly-owned subsidiaries and Affiliates retain all
interest , revenues , any or all Rebates and Manufacturer Administrative Fees not payable to Client, and all
Participating Pharmacy discounts, if any , in add ition to any administrative and other fees paid by Cl ient. Client
acknowledges for itself and its EGWP Enrollees that , except as may be exp ressly provided herein , neither it nor
any EGWP Enrollee has a right to receive , or possesses any beneficial interest in , any such discounts or
payments.
7.3 Disclosure of Fees Paid to BASI ; Broker Comm issions . In connection with MCLIC 's administration of
the EGWP Benefit for EGWP Enrollees pursuant to this Agreement , MCLIC engages BASI to perform certain
marketing , sales and delegated administrative services . In exchange for such services, MCLIC pays BASI a fair
market value fee . In addition , if Client worked with a benefits broker or consultant who advised Client or he lped
Client obtain the EGWP Benefit , BASI may pay that benefits broker or consultant a commission pursuant to an
arrangement between BASI and such broker or consultant. State law may require Client's broker or consultant
to disclose to Cl ient further detail regarding compensation from BASI.
ARTICLE VIII-TERM AND TERMINATION ; DEFAULT AND REMEDIES
8.1 Term . The initial term of this Agreement (the "Initial Term ") shall commence on the Ex ecution Date , and
coverage of EGWP Enrollees under the EGWP Benefit shall begin as of January 1, 2017 (the "Effective Date ").
Unless earl ier terminated as provided herein , the In itial Term shall continue until December 31 , 2017 .
Thereafter , this Agreement shall automatically renew with the same terms and conditions as set forth herein for
successive one (1) year renewal terms , unless and until either party notifies the other of its intent not to renew
the Agreement in writing at least ni nety (90) days prior to the ex piration of the then current term . This Agreement
may be terminated earlier during the Initial Term or any renewal terms pursuant to Section 8 .2 below.
8.2 Termination .
(a) Breach or Default. Either party may give the other written notice of a material , substantial and
continuing breach of th is Agreement. If the breaching party has not cured said breach within thirty (30) days
from the date such notice was sent , this Agreement may be terminated at the option of the non-breaching party .
If the amount of time commercially reasonable for the breach to be cured is longer than thirty (30) days, this
Agreement may not be terminated by the non-breaching party pursuant to this provision until such commercially
reasonable period of time has elapsed ; provided , however , that in no event shall such per io d exceed six ty (60)
days .
(b) Terminat ion of MCLIC 's Contract w ith CMS . If at any time throughout the term of th is
Agreement, CMS either does not renew its contract with MCLIC or terminates its contract with MCLIC such that
MCLIC may no longer provide services as a PDP Sponsor under the Med icare Drug Rules , then this Agreement
shall be automatically terminated conterminously with such CMS contract termination .
(c) Non-Payment. To the extent permitted by the Medicare Drug Rules and other appl icable
laws, MCLIC and its Affiliate may terminate or suspend the ir performance hereunder and cease providing or
authorizing provision of Covered Drugs to EGWP Enrollees upon forty-eight (48) hou rs written notic e if Client
fails to pay MCLIC or provide a deposit, if required , in accordance with the terms of th is Agreement. MCLIC
also may offset amounts overdue to MCLIC with amounts owed , if any , by MCLIC to Clie nt. To the e xtent
permitted by law, MCLIC may suspend Mail Service Pharmacy and/or MCLIC Specialty Pharmacy serv ices to
any EGWP Enrollee who is in default of payment of any Copayments or deductib les to the applicable Pharmacy .
(d) Insolvency ; Regulatory Action . To the extent permitted by appl ic able law, MCLIC may terminate
this Agreement , or suspend performance hereunder, upon the insolvency of Client, and Client may term inate
this Agreement upon the insolvency of MCLIC . The "insolvency" of a party shall mean the filing of a petition
commencing a voluntary or involuntary case (if such case is an involuntary case , then only if such case is not
dismissed within si xty (60 ) days fro m the filin g thereof) against such party under the Un ited States Bankruptcy
Code or applicable state law; a general assignment by such party for the benefit of creditors ; the inability of such
party to pay its debts as they become due ; such party 's seeking or consenting to , or acquiescence in, the
16 146682.vl3
appointment of any trustee , receiver or liquidation of it , or any material part of its property ; or a proceeding under
any state or federal agency declaration or imposition of receivership, composition , readjustment, liquidation ,
insolvency , dissolution , or like law or statute , which case or proceeding is not dism issed or vacated within sixty
(60 ) days. Notwithstand ing the preceding , in the event of Client's insolvency or other cessation of operations ,
MCLIC agrees to require Participating Pharmacies to continue to provide prescription drug services to EGWP
Enrollees if required by the Medicare Drug Rules and all other applicable federal and state laws relating to
insolvency or other cessation of operations or termination . Nothing herein shall be interpreted to require MCLIC
or Pharmacies to provide services w ithout being paid for Covered Drugs or Prescription Drug Services.
8.3 Remedies .
(a) Remedies Not Exclusive . A party 's right to terminate this Agreement under Article VIII sha ll not
be exclusive of any other remedies available to the terminating party under this Agreement or otherwise, at law
or in equity .
(b) Force Majeure . Neither party shal l lose any rights under this Agreement or be liable in any
manner for any delay to perform its obligations under this Agreement that are beyond a party 's reasonable
contro l, includ i ng, without limitation , any delay or failure due to strikes , labor disputes , riots , earthquakes,
storms , floods or other extreme weather conditions, f ires , ex plosions , acts of terrorism, epidemics or pandemics ,
embargoes , war or other outbreak of hostil ities , government acts or regulations, the failure or inability of carriers ,
suppliers , delivery serv ices , or telecommunications providers to provide services necessary to enable a party to
perform its obligations hereunder, or any other reason where failure to perform is beyond the party's reasonable
control , and is not caused by the negligence , intentional conduct or misconduct of the defaulting party ; provided,
however, that th is clause may not be invoked to e xcuse a party's payment obligations hereunder.
(c) Limitation of Liability . Except for the indemnification obligations set forth in Section 8.3(d), each
party's liability to the other hereunder shall in no event exceed the actual pro x imate losses or damages caused
by breach of this Agreement. In no event shall either party or any of their respective affil iates , directors,
employees or agents, be liable for any indirect, special , incidental , consequential , exemplary or punitive
damages, or any damages for lost profits relating to a relat ionship with a third party, however caused or arising ,
whether or not they have been informed of the possibility of their occurrence .
(d) Indemnification .
(i ) MCLIC will indemnify and hold Client harmless from and against any loss, cost ,
damage, expense or other liability , including , without limitation , reasonable costs and attorney fees
("Costs ") incurred in connection with any and all third party claims , suits, investigations or enforcement
actions , including claims of infringement of any intellectual property rights ("Claims ") which may be
asserted against, imposed upon or incurred by Client and arising as a result of (A) MCLIC's negligent
acts or omissions or willful m isconduct , (B) MCLIC's breach of this Agreement, (C) MCLIC 's
unauthorized use or disclosure of EGWP Enrollee PHI , or (D) MCLIC's breach of any representation or
warranty made by MCLIC under this Agreement.
(ii) Cl ient will indemnify and hold MCLIC harmless from and against any Costs for Claims
which may be asserted against, imposed upon or incurred by MCLIC and arising as a result of (A )
Cl ient's negligent acts or omiss ions or willfu l misconduct, (B ) Client's breach of this Agreement, (C)
Client's or the Client Group Health Plan 's unauthorized use or disclosure of EGWP Enrollee PHI , or (D)
Client's breach of any representation or warranty made by Client under this Agreement.
(iii) As a condition of indemnification , the party seeking indemnification shall notify the
indemnifying party in writing promptly upon learning of any Claim for which indemnification may be
sought hereunder, and shall tender the defense of such cla im to the indemnifying party . No party shall
indemn ify the other with respect to any claim settled without the written consent of the other.
8.4 Obligations Upon Termination . Client or its agent shall pay MCLIC in accordance with this Agreement
for all PMPM Fees due hereunder on or before the later of: (i) the effective date of termination , or (ii) the final
date that all EGWP Enrollees have been transitioned to a new Part D plan , as appl icable (the "Termination
Date "). The parties shall cooperate regarding the transition of Client and its EGWP Enrollees to a successor
PDP Sponsor in accordance with all applicable Medicare Drug Rules and MCLIC will take all reasonable steps
to mitigate any d isruption in serv ice to EGWP Enrollees . Notwithstanding the preceding , MCLIC may (a ) delay
17 146682.vl 3
payment of any amounts due Client , if any , to allow for any final adjustments to EGWP Enrollee enrollment
information, or (b) request that Client pay a reasonab le deposit in the event MCLIC is requested to process after
the Termination Date claims in curred on or pr ior to such date .
8.5 Survival. The parties ' rights and obl igations under Sect ion 3 .8(b) and 3.1 O(e ); Articles V and VI ; and
Sections 7.1, 8.3, 8.4 , and 8.5 shall survive the term ination of this Agreement for an y reason .
ARTICLE IX-MISCELLANEOUS
9.1 Notice . Any notice or document req uired or permitted to be delivered pursuant to this Agreement must
be in writing and shall be deemed to be effective upon mail ing and must be either (a) deposited in the United
States Mail , postage prepa id , certified or registered mai l, return rece ipt requested , or (b) sent by recognized
overnight delivery service , in either case properly addressed to the other party at the address set forth below , or
at such other address as such party shall spec ify from time to time by written notice delivered in accordance
herewith :
Express Scripts Insurance Co .
Attn : President
One Express Way
St. Louis , Missouri 63121
with copy to : General Counse l
Fa x : 800-41 7-8163
County of Fresno
Attn : Hollis Magill
2200 Tu lare Street , Suite 1400
Fresno , CA 93721
9.2 Independent Parties. No provision of th is Agreement is intended to create or shall be cons trued to
create any relationship between MCLIC or its Affiliate and Client other than that of independent entities
contracting with each other solely for the purpose of effect ing the prov isions of th is Agreement. Ne ither party ,
nor any of their respective representatives , sha ll be construed to be the partner, agent, f iduciary, employee , or
representative of the other and ne ither party shall ha ve the right to ma ke an y representat ions concern ing the
duties, obligations or serv ices of the other e xcept as cons istent with the e xpress terms of th is Agreement or as
otherwise authorized in writing by the party about whi ch su ch representation is asserted .
9.3 Assignment and Subcontracting . Client acknowledges and agrees that MCLIC may perform certain
services hereunder (e .g., mail serv ice pharmacy and specialty pharmacy services ) through one or more MCLIC
subsidiaries or Affiliates . MCLIC is responsible and liable fo r the performance of its subsidiaries and Affiliates in
the course of their performance of any such serv ice . To the e xtent that MCLIC subcontracts any PBM Service
under this Agreement to a third party , MCLIC is responsible and liable for the perfo rmance of any such th ird
party . In add ition , MCLIC may contract with third parties to pro vi de information techno logy support services and
other ancillary services, which services are not PBM Services hereunder, but rather are services that support
MCLIC's conduct of its business operations . This Agreement will be bind ing upon , and inure to the benefit of
and be enforceable by , the respective successors and permitted assigns of the part ies hereto.
9.4 Integration . This Agreement and a ll Exhibits hereto constitute the entire understanding of the parties
hereto and supersede any prior oral or written communication between the parties w ith respect to MCLIC 's plan
offering to EGWP Enrollees as a PDP Sponsor of the EGWP Benefit under the Med icare Drug Ru les . The
parties hereby expressly agree that th is Agreement and the Commercial Agreement are separate and
independent agreements that stand on the ir own and that , unless otherwise specifically set forth in this
Agreement , no term or condition in one such agreement shall have any connect ion to or bear any force or effect
on the other agreement.
9.5 Amendments . No modification , alterat ion , or wa iver of any term , covenant , or condition of this
Agreement shall be valid unless in writ ing and signed by both parties or the agents of the parties who are
authorized in writing .
18 146682.vl3
9.6 Choice of Law . Unless governed by the Medicare Drug Rules or applicable state insurance laws, th is
Agreement shall be construed and governed in all respects according to the laws in the State of Missouri,
without regard to the rules of conflict of laws thereof .
9. 7 Waiver. The failure of either party to insist upon the strict observation or performance of this Agreement
or to exercise any right or remedy shall not be construed as a waiver of any subsequent breach of this
Agreement or impair or waive any available right or remedy .
9.8 Taxes and Assessments . Any applicable sales , use , excise, or other similarly assessed and
administered tax , surcharge , or fee imposed on items dispensed , or services provided hereunder or the EGWP
Supp lemental Policy , or the fees or revenues generated by the items dispensed or services provided hereunder
or the EGWP Supplemental Policy , or any other amounts MCLIC or one or more of its subsidiaries or affiliates
may incur or be required to pay arising from or relating to MCLIC 's or its subs idiaries' or affiliates' performance
of services as a pharmacy benefit manager, third-party administrator, or otherwise in any jurisdiction , will be the
sole responsibility of Client or the EGWP Enrollee . If MCLIC is legally obligated to collect and remit , or to incur
or pay , any such sales , use , excise , or other similarly assessed and administered tax , surcharge , or fee in a
part icular jurisdiction , such amount will be reflected on the applicable invoice or subsequently invoiced at such
time as MCLIC becomes aware of such obligation or as such obligation becomes due . MCLIC reserves the right
to charge a reasonable admin istrative fee for collect ion and remittance services provided on behalf of Client.
9.9 Severability. In the event that any provision of th is Agreement is invalid or unenforceable , such inval id
or unenforceable provision shall not invalidate or affect the other provisions of this Agreement which shall
remain in effect and be construed as if such provision were not a part hereof; provided that if the invalidation or
unenforceability of such provision shall, in the op inion of either party to the Agreement, have a material effect on
such party 's rights or obligations under this Agreement , then the Agreement may be terminated by such party
upon thirty (30) days written notice by such party to the other party .
9.10 Third Party Beneficiary Exclusion . This Agreement is not a third party beneficiary contract, nor shall this
Agreement create any rights on behalf of EGWP Enrollees as against MCLIC . Client and MCLIC reserve the
right to amend , cancel or terminate this Agreement without notice to , or consent of, any EGWP Enrollee.
9.11 Trademarks. Each party acknowledges each other party's sole and exclusive ownership of its
respective trade names, commercial symbols , trademarks , and service marks , whether presently existing or
later established (collectively "Marks "). No party shall use the other party 's Marks in advertising or promotional
materials or otherwise without the owner's prior w ritten consent ; provided , however, that the parties may inform
Pharmacies that MCLIC provides prescription drug benefit management services to Client.
9.12 Debarment. MCLIC or its Affiliate shall not knowingly employ , or subcontract with , an individual or an
entity that employs or contracts with an individual , who is excluded from participation in Medicare under section
1128 or 1128A of the Act or from participation in a Federal health care program for the provision of health care ,
utilization review , medical social work, or admin istrative services .
9.13 Signatures . Any documents required to implement the terms of this Agreement shall be signed by a
representative of each party with legal authority to bind the entity .
9.14 Federal Funds . The parties acknowledge that information provided in connection with this Agreement is
used for purposes of obtaining federal funds and, as such, the parties are subject to certain laws that are
applicable to ind iv iduals and entities receiving federal funds .
19 146682 .vl 3
IN WITNESS WHEREOF, the undersigned have executed th is Ag reem en t as of the day a nd year below
set forth .
MEDCO CONTAINMENT LIFE INSURANCE
COMPANY
By : ___________ _
Printed Name: ________ _
Title: ___________ _
Date: ___________ _
COUNTY OF FRESNO
By: __________ __
Printed Name: ________ _
Title : ___________ _
Phone:. __________ _
Fa x : ___________ _
FederaiiD Number: ______ _
Date : ___________ _
20 146682.vl3
EXHIBIT A
County of Fresno
EGWP BENEFIT DESCRIPTION
Benistar Standard Plan Design:
BPL BXMA 79391
I Retail Pharmacy Ne twork Retail Maintenance Drug Express Scripts Home Delivery Program (MOP) Pharmacy
ay Supply Up to 3 1 day Up to 90 day 1-3 1 day (m irro rs retail cost sh are),
32-90 day (cost s ha re below)
itial Preferred Generic $0 $0
overage Generic $10 $15 eriod 1 Reta il co pay for 1-31 Day
ember Preferred Brand $20 Suppl y $50
ost Non-Preferred Drugs $30 $75
hare $20 Specialty $50
eductible N/A
aximum Out Pocket N/A
overage Gap• No Cov erage Gap; Mem be r Co-pa ys above apply.
atastrophic Coverage For 2017 member cost share post-TrOO P ($4 ,950) is t he greater of 5% or $3.30 for generic orpre ferre d mu tt
source druos and the greater of 5% o r $8.25 for all other bran ds wit h a maximum of the initial co pay.
)rmulary Premier Access
on Part D Drugs2 Mirror c urrent cove rage wi th in CMS gu id elines
1rt 8 and ESRD Drugs2 Not Cove red
enerics Policy V oluntary
tilization Management Program A ll Ap proved St and ard Part 0
ompound Management Solution Compo und Man age ment Solu tion appl ies. Com po und Manage ment Solution in place to mitigate com p ound
drug abu se by means of com m e rcia l incl usio n and exclu sion list s.
!deral Poverty Limits Standard Federa l Povert y Lim it (F PL) guidel ines appl y
0 1/01 /20 17 I 12/31 /2017 remium Per Member Per month (PMPM) Effective Date 1 Expiration Date
EGWP Premium (PMPM)
Enhanced Insurance Premium3 (PMPM)
Broker Commission (PMPM)
Total Premium4 (PMPM)
Ple ase note that most specialty medications c an only dispensed up to a 3 1 day s upply to Medicare m embers.
1 Coverage Gap begin s a t the Initial Coverage Limit which is $3 .700 m 2017 In cases wh ere the client's co-insurance in the Coverage Gap exceeds the
max1mum . beneficiaries ' co-insurance will be reduced in the Coverage Gap so as not to exceed the maximum allowable co-insurance as defined by CMS.
State of CT mandate: 3 1 day supply, Generic copay greater th an $5, copay not to exceed 50%, $5 minimum. maximum of Initial Coverage Level copay; Brand
copay grea ter than $6 0 copay no/to exce ed 45%, $60 minimum. maximum of Initial Coverage Le vel co pay.
2Some states require co ve ra ge for certain Non Part 0 , Part B. and ESRO drugs. Express Scripts will c omply with all state re quirements on your behalf.
3 This group Medica re Pa rt 0 pla n has additional b en efits to enhance the Medicare Part 0 coverage , as req uired by the Centers for Medicare and Medicaid
Se rvices (CMS). Per CMS regulations. the benefit enh ancements are considered o ther health insurance benefits and require filin g w ith and approval by the state
department o f ins urance. E xpress Scripts Medicar e will offer th is product in conjunct io n with Companion. Ni agara or P an American as applicable by st ate.
• Th e illus trated premium is subject to change in the event of CMS guidance and rate ch an ges. In com e Related Monthly Adjustment Amounts (IRMAA) apply for
high income b eneficiaries
2 1 146682.vl3
I
$14 6 .7
$11 8 .€
$0 .(
$265.4
SCHEDULE 5.1(b)(iv)
If Client engages a subcontractor ("Subcontractor"), other than BASI , to perform any of the functions that MCLIC
has delegated to Client to perform under this Agreement, Client shall do so pursuant to a written agreement that
includes the following terms , conditions , and provis ions :
1. The agreement between Cl ient and Subcontractor (the "Subcontract") must clearly identify the
parties to the Subcontract.
2. The Subcontract must describe the functions that are being delegated to and performed by the
Subcontractor.
3. The Subcontract must describe the manner in which Client will monitor the performance of the
Subcontractor on an ongo ing bas is ; specifically to monitor compliance with the Medicare Drug
Rules .
4 . The Subcontract must describe any reporting requ irements that the Sub contractor has to Client.
5. The Subcontract must describe the payment that the Subcontractor w ill receive for performance
under the Subcontract.
6. The Subcontractor must agree that the United States Department of Health and Human Services
("DHHS"), the Comptroll er General , or their designees have the right to inspect, evaluate, and audit
any pertinent contracts, books , documents , papers and records (including medical records and
documentation) of the Vendor involving transactions related to the Centers for Medicare and
Medicaid Services' ("CMS ") contract with MCLIC for a period of the then current plan year , plus an
additional ten (10) years following the expiration or termination of the Subcontract or the date of any
audit comp letion, whichever is later.
7. The Subcontractor must agree pursuant 42 CFR § 423 .505(i)(3)(iv ) to produce upon request by
CMS , or its des ignees , any books , contracts , records , including medical records and documentation
of the PDP Sponsor , relating to the Part D program , to either the PDP Sponsor to provide to CMS,
or directly to CMS or its designees .
8. The Subcontractor must agree that in no event , including , but not limited to , nonpayment by Client ,
Client's insolvency, or breach of the Subcontract, will the Subcontractor bill , charge, collects a
depos it from , seek compensation , remuneration or reimbursement from , or have any recourse
against a beneficiary of Client or persons acting on his or her beha lf for serv ices provided by the
Subcontractor pursuant to the Subcontract.
9. The Subcontract must: (i) specify that the Subcontractor will perform all services under the
Subcontract in a manner that is consistent w ith and that compl ies with MCLIC 's contractual
obligations under its contract with CMS ; (ii) specify that the Subcontractor agrees to comply w it h all
applicable federal laws , regulations , and CMS instructions ; and (iii) provide for revocation of the
Subcontractor's delegated activities and reporting responsibilities or specify other remedies in
instances when CMS , Client , or MCLIC determine that the Subcontractor has not performed
satisfactorily.
10. The Subcontract must require the Subcontractor to agree to comp ly with state and federal privacy
and security requirements , including the confidentiality and secur ity provis ions stated in 42 CFR
§423 .136 .
11 . The Subcontract must include an acknowledgment by the part ies that information prov ided in
connection with the Subcontract is used for purposes of obtaining federa l funds .
12 . If the Subcontract permits the Subcontractor to use a subcontractor to perform any of the services
delegated to it under the Subcontract, the Subcontract must require that the Subcontractor include
all of the above provisions in a written agreement with such subcontractor.
22 146682.vl3
13. The Subc ontra ct mu st be si gned by a representative of the Subcontractor with legal authority to
bind the Subcontractor.
14 . The Subcontract must conta in a representation by Client and the Subcontractor that they shall not
knowing ly employ , or subcontra ct with , an ind ivi dua l or an entity that employs or contracts with an
individua l, who is excluded from part ic ipat ion in Medicare under section 1128 or 1128A of the Act or
from participat ion in a Federal health care program for the provision of health care, utilization
rev iew , medical social work , or adm inistrative services .
15 . The Subcontract must contain language clearly indicating that the first tier, downstream , or related
entity has agreed to part ici pate in the PDP Sponsor's Medicare Prescription Drug Benefit program .
This req ui rement is not applicabl e for a network pharmacy if the exi sting contract would allo w
participat ion i n this program .
16 . The Subcontract must be for a term of at least the one-year c ontract period fo r wh ich the PDP
Sponsor's Med ica re Part D App li cat io n is subm itted . However, where the Subcontract is for services
or products to be used in preparat io n for the ne xt contract year's Part D operations (market ing ,
enro ll ment), the ini t ial te rm of such Sub co ntract must incl ude th is period of performance (e .g.,
co ntracts for enroll ment-re late d serv ic es must have a term beginn ing no later than November 15
extending through the full cont ract year en di ng on December 31 of the ne xt year ).
17. Insofar as the Subcontractor establ ishes the pharmacy network or select pharmacies to be included
in the netwo rk, the Subco ntracto r must agree : i) pursuant 42 CFR § 423 .505 (i)(5) that the PDP
Sponsor retains the right to ap prove, suspend , or term inate an y arrangement with a pharmacy; ii)
pursuant 42 CFR §423 .505 (i)(3)(v i) and co nsi stent with 42 CFR § 423 .520 to issue , mail , or
otherwise transmit payme nt o f al l clea n c la im to su ch pharmacies (excluding long-term care and
mail order ) submitted by or on beha lf o f pharmacies with in 14 days for electronic claims and w ith in
30 da ys for c laims submitted othe rwi se ; iii) pursuan t 42 CFR § 423 .505 (i)(3)(viii )(B) and 42 CFR §
423 .505 (i)(3)(v iii)(A) that if a pres c ript ion drug pric ing standard is used for reimbursement ,
Subcontractor w ill identify the sou rce used by the PDP Spons o r for the pres cription drug pric ing
standard of re imbursement and agree to a contractual provision that updates to such a standard
occur not less frequently than once ev ery 7 (se ven ) da ys beginning with an initial update on January
1 of each year, to accurately refl ect the market price of acquiring the drug .
23 1466 82 .vl3
EXHIBIT B
As provided in the Agreem ent, MCLIC m ay provide services un der th is Agreement through one or more of its
affiliates, including Express Scripts, Inc. ("ESI 'j . The following financial disclosure statement relates to the
rebate programs and other financial arrangements that may be used by Express Scripts, In c . ("ES I") in
connection with MCLIC 's administration of the EGWP Benefit under this Agreement.
FINANCIAL DISCLOSURE TO ESI PBM CLIENTS
This disclosure provides an overv iew of the prin cipal revenue sources of Express Scripts , Inc . and Medco
Health Solutions , Inc. (individually and co ll ectively referred to herein as "ESI "), as well as ESI's affi li ates . In
addition to administrative and dispensing fees paid to ESI by our clients for pharmaceutical benefit management
("PBM ") services , ESI and its affiliates derive revenue from other sources , includ ing arrangements with
pharmaceutical manufacturers, wholesale distributors, and retail pharmacies . Some of this revenue re lates to
uti lizat ion of prescription drugs by members of the c lients receiving PBM services . ESI may pass through
certain manufacturer payments to its clients or ma y reta in those payments for itself, depending on the co ntract
terms between ESI and the client.
Network Pharmacies -ESI contracts for its own account wi th reta il pharmacies to dispense prescription
drugs to client members . Rates paid by ESI to these pharmacies may differ among networks (e .g., Med icare ,
Worker's Camp , open and limited), and among pharma ci es wi thin a network, and by cl ient arrangements. PBM
agreements generally provide that a client pays ESI an ingred ient cost, plus dispensing fee , for drug cla ims . If
the rate paid by a clien t e xceeds the rate contra cted with a particular pharmacy , ESI w il l realize a positive
margin on the applicable claim . The re verse also may be true , resulting in negative marg in for ES I. ESI also
enters into pass-through arrangements whe re the client pays ESI the actual ingred ient cost and dispens ing fee
amount paid by ESI for the particular claim when the claim is adjud icated to the pharmacy . In add ition , when
ESI receives payment from a client before payment to a pharmacy , ESI reta ins the benefit of the use of the
funds between these payments . ESI may ma intain non-client spec ific aggregate guarantees with pharmac ies
and may realize positive margin . ESI ma y charge pharmac ies standard transaction fees to access ESI 's
pharmacy claims systems and for other re lated adm inistrat iv e purposes .
Brand/Generic Classifications -Prescription drugs may be c lassified as either a "brand " or "generic ;"
however, the reference to a drug by its chemica l name do es not ne cessaril y mean that the product is re cognized
as a generic for adjud ication , pricing or capay purposes . For the purposes of pharma cy reimbursement, ESI
distinguishes brands and generics through a prop rietary algorithm ("BGA") that uses certain pub li shed elements
provided by First DataBan k (FOB ) includ ing price ind icators , Generic Ind icator, Generic Manufactu rer Indicator,
Generic Name Drug Indicator, Innovator, Drug Class and AND A. The BGA uses these data elements in a
hierarchical process to categorize the products as brand or generic . The BGA also has processes to resolve
discrepancies and prevent "flipping " between brand and generic status due to price fluctuat ions and marketplace
availability changes. T he elements listed above and sources are subject to change based o n the ava ilability of
the specific fields . Upda ted summaries of the BGA are availab le upon request. Brand or generic classificat ion
for client reimbursement purposes is either based on the BGA or specific code indicators from Medi-Span or a
combinat ion of the two as reflected in the client's specific contract terms . A ppli catio n of an alternative
methodology based on spec ific cl ient contract terms does not affect ESI 's applic at ion of its BGA for ESI 's other
contracts .
Max imum Al lowable Cost ("MAC ")/Ma ximum Re imbursement Amount ("MRA") -As part of the
administration of the PBM services , ESI ma inta ins a MAC List of drug products identified as requiring pr ic ing
management due to the number of manufacturers , utilizat ion and /or pricing vo latility . The criter ia for inclus ion
on the MAC List are based on whether the drug has readily ava ilable generic produ ct(s ), is generally equivalent
to a brand drug, is cleared of any negative clinica l implications , and has a cost basis tha t w ill allow for pr icing
below brand rates . ESI al so ma intains MRA price li sts for drug products on the MAC List based on c urrent price
reference data provided by Med iSpan or other nationally recognized pricing source , market pricing and
availability information from generic manufacturers and on -line research of national who lesale drug company
files , and client arrangements . Similar to the BGA , the elements listed above and sources are subject to change
based on the ava ilabil ity of the spec ific fields . Updated summaries of the MAC methodology are availab le upon
request.
Manufacturer Programs Formulary Rebates . Associated Admin istrativ e Fees, and PBM Servic e Fees -
ESI contracts for its own account to obta in formulary rebates attributable to the utili z ation of certain brand drugs
and supplies (and poss ibly certain authorized gen erics ma rketed under a brand man ufacturer's new drug
application ). Formu lary rebate amounts rece iv ed vary based on cl ie nt spe ci fic utilization , the volume of
24 146682 .vl3
util ization as well as formulary posit ion applicable to the drug or supplies , and adherence to various formulary
management controls , benefit design requirements , claims volume , and other similar factors , and in certain
instances also may vary based on the product's market-share . ESI often pays an amount equal to all or a
portion of the formulary rebates it rece ives to a client based on the client's PBM agreement terms . ESI or its
affil iates may maintain non-client specific aggregate guarantees and may realize positive margin. In addition ,
ESI provides administrative services to contracted manufacturers , which include , for example, maintenance and
operation of systems and other infrastructure necessary for invoicing and processing rebates , pharmacy
discount programs , access to drug uti lization data , as allowed by law, for purposes of verifying and evaluating
appl icable payments , and for other purposes related to the manufacturer's products . ESI receives
adm inistrative fees from the participating manufacturers fo r these services. These administrative fees are
calcu lated based on the price of the drug or suppl ies along with the volume of utilization and do not exceed the
greater of (i ) 4.58 % of the average who lesale price, or (ii ) 5.5% of the wholesale acquisition cost of the products .
In its capacity as a PBM company , ESI also may receive other compensation from manufacturers for the
performance of various programs or services , including , for e xample , formulary compliance initiatives , clinical
services , therapy management services , education servi ces , inflation protection programs , medical benefit
management services , cost containment programs , discount programs , and the sale of non-patient identif iable
claim information . This compensation is not part of the formulary rebates or associated admin istrative fees , and
ESI may realize pos itive margin between amounts pai d to cl ients and amounts received from pharmaceut ical
manufacturers. ESI retains the f inanci al benefit of the use o f any funds he ld until payment is made to the client.
Cop ies of ESI 's standard formular ies may be re viewed at www.e xpress-scripts .com /wps/portal/. In
add it ion to formulary conside rations, other plan design elements are described in ESI 's Plan Des ign Re view
Guide , which may be reviewed at www.express -scripts .com /wps /porta l/.
ESI Subs idiary Pharmacies -ESI has several li censed pharmacy subsidiaries , includ ing our specialty
pharmaci es . These entities may ma intain prod uc t purchase discount arrangements and/or fee-for-service
arrangements with pharma ceu ti cal manufacturers, wholesale distributors , and other health care providers.
These subsidiary pharma cies contract for these arra ngements on the ir own account in support of their various
pharmacy operations. Many of these subs idiary arrangements relate to services provided outside of PBM
arrangements , and may be entered into irrespective of whether the particular drug is on one of ESI 's national
formularies . Discounts and fee-for-service pa yments re ceived by ESI 's subsid iary pharmacies are not part of
the PBM formu lary rebates or associated administrative fees paid to ESI in connection with ESI's PBM formulary
rebate prog rams . However, certa in purchase discounts received by ESI 's subsid iary pharmacies , whether
directly or through ESI , may be conside red for formu lary purposes if the value of such purchase discounts is
used by ESI to supplement the discount on th e ingredient cost of the drug to the client based on the client's
PBM agreement terms . From time to time , ESI and its affil iates also may pursue and maintain for its own
account other supply chain sourcing relat io nship s not described below as beneficial to ma ximize ESI 's drug
purchasing capabilit ies and efficiencies , and ESI or affiliates ma y realize an overal l positive margin with regard
to these init iatives .
The follo wi ng provi des add it ional informat ion regard ing examples of ESI subs idiary discount
arrangements and fee-for-serv ice arrangements w it h pharma ceutical manufacturers , and wholesale distr ibutors :
ESI Subs idiary Pharmacy Di scount Arrangements -ESI subs idiary pharma cies purchase prescription
drug inventories , either from manufa cturers or w ho lesalers , for dispensing to patients. Often , purchase
discounts off the acquisition cost of th ese products are made available by manufacturers and wholesalers
in the fo rm of either up-fro nt discounts or re t rospectiv e discounts . These purchase discounts , obtained
through sepa rate purchase contracts , are no t formu lary rebates pa id in connection with our PBM
formulary rebate programs. Drug purchase disco unts are based on a pharmacy's inventory needs and , at
times , the performance of re lated patient care serv ic es and other performance requirements . When a
subs id iary pharmacy dispenses a produ ct from its inventory, the purchase price paid for the dispensed
product , including applicable dispensing fees , may be greater or less than that pharmacy's acqu isition
cost for the product net of purchase discounts . In general , our pharmacies realize an overall pos itive
marg in between the net acquisit ion cost and the amounts paid for the dispensed drugs .
ESI Subs idiary Fee-For-Service Arrangements -One or mo re of ESI 's subsid iaries , inc luding , but not
limited to , its subsidiary pharmacies also ma y rece ive fee -for-service payments from manufacturers,
wholesa lers , or other health care provi ders in co njunction with various programs or services , including , for
example , patient assistance programs for ind igent patients , dispensing prescription med ications to
patients enrol led in clinical trials , various therapy adherence and fertility programs, admin istering FDA
co mpliance requirements related to the drug , 3408 contract pharmacy services , product reimbursement
support services , and various other c linical or pharma cy programs or services. As a cond ition to having
access to certain products , and sometimes relat ed to certain therapy adherence criter ia or FDA
2 5 146682 .vl3
requirements , a pharmaceutical manufacturer may require a pharmacy to report se lected informatio n to
the manufacturer regard ing the pharmacy's service levels and other dispens ing-re lated data with respe ct
to patients who receive that manufacturer's product. A portion of the discounts or other fee-for-serv ice
pay ments made available to our pharmacies may represent compensation for such report ing .
Other Manufacturer Arrangements -ESI also maintains other lines of bus iness that may in vo lve discount
and service fee relationships with pharmaceutical manufacturers and wholesa le d istributors . Examples of
these businesses include a wholesale distribution business , group pu rchasing organ izations (and related
group purchasing organization fees}, a med ical benefit management co m pany , and Un ited SioSource
Corporation ("USC"). Compensation derived through these business arrangements is not cons idered for
PSM formulary placement, and is in add ition to other amounts described here in. Of pa rt icular note , USC
partners with life sciences and pharmaceutical companies to deve lop , commercial ize, and support safe ,
effective use and access to pharmaceutical products . USC maintains a team o f research scien tists ,
biomedical experts , research operations professionals , tec hno logists and c li nicians who work w it h c lients
to conduct and support clinical trials , create , and validate and administer pre and post product sa fety and
risk management programs. USC also works on behalf of pharmaceutica l manufacturer s to pro v ide
product and disease state education programs , re imbursement ass istan ce, and other suppo rt se rv ices to
the publ ic at large. These service fees are not part of the formulary reba tes or associated adm inistrat ive
fees .
Third Party Data Sales -Consistent with any client contract limitations , ESI or its affiliates may se ll
HIPAA compliant information maintained in their capacity as a PSM , pharmacy , or otherwise to data
aggregators , manufacturers , or other third parties on a fee-for-serv ice basis or as a condit ion of disc o unt
eligibility. A ll such activities are conducted in compliance with applicab le patient and pharmacy privacy
laws and client contract restrictions.
October 1 , 2015
THIS EXHIBIT REPRESENTS ESI'S F INANCIAL POLICIES. ESI MAY PERIODICALLY UPDATE THIS
EXHIBIT AND THE FINANCIAL DISCLOSURES CON TAINED HEREIN T O REF L ECT CHANGES IN ITS
BUSINESS PROCESSES ; THE CURRENT FINANCIAL DISCLOSURE IS AVAILABLE UPON REQ UES T
AND ACCESSIBLE ON EXPRESS-SCRIPT S .COM AT WWW. EXPRES S-S CRIPT S.COM /W PS /PORT A LI.
26 146682.v l 3
EXHIBIT C
CERTIFICATION OF INFORMATION RELATING TO CREDITABLE
COVERAGE REQUIREMENT AND LATE ENROLLMENT PENAL TV
FOR PART D EMPLOYER GROUP WAIVER PLAN
Pursuant to the contract(s) between the Centers for Medicare & Medicaid Services ("CMS ") and Medco
Containm ent Life Insurance Company ("MCLIC"), governing the operation of the contract betwee n MCLIC and
County of Fresno ("Client"), an Employer Group Waiver Plan (EGWP), MCLIC hereb y requests from Client a
certification concerning the creditable coverage maintained for the Part D beneficiaries enrolled under the
contract with Client ("Enrollees ").
CMS REQU IREMENT -Under applicable CMS Part D regulations , 42 C FR 423 , CMS Manual Chapter 4 , and
related guidance as may be amended from time to t ime : plans , "using the Batch Eligibility Query (SEQ), (must]
determine whether the Enrollee was either enrolled in a Part D plan or was covered by an employer rece iving
the retiree drug subs idy (RDS) since the IEP end date . If the Enrollee was enrolled in a Part D Plan or by an
employe r receiving RDS or in an employer-sponsored plan providi ng coverage at least as good as the standard
Medicare part D plan since the end of the IEP , such that there is no gap in creditable coverage of si xty-three
(63 ) or more days, [the plan must] report to CMS that the Enrollee had zero (0) uncovered months ." This
coverage is deemed to be continuous "c reditable coverage ."
Under the same gu idance , plans may secure an attestation from employers and un ions such as Client , who
enroll groups of Enrollees into Medicare pres cription drug coverage . The attestation must provide t ha t
employer/Cl ient has been maintaining continuous creditable coverage for each applicable Enrollee for the time
during which the Enrollee was enrolled through Client.
Attestation
Client directs MCLIC to effectuate enrollment into an EGWP of all persons on such fi les. In doing so :
[J For persons on the initial file and subsequent files , Client attests that all Enrollees submitted by the
Client to MCLIC for enrollment under an Enhanced Plan were either enro lled under another
Prescription Drug Plan or had other cred itable cove rage as defined by the CMS applicable guidelines
prior to the ir coverage under Enhanced Plan . This Attestation applies to all enrollees Client has
submitted to MCLIC as of the date below , and shall further apply as a contin uing obligation to
submissions by Client at any time during the term of the Agreement.
[J For the initial file , Cl ient attests that all Enrollees submitted by the Client to MCLIC for enrollment
under an Enhanced Plan were either enrol led under ano th er Prescription Drug Plan or had other
cred itable coverage as defined by the CMS applicable guidelines prior to their coverage under
Enhanced Plan .
RELEASE TO DISCLOSE PROTECTED HEALTH INFORMATION (PHI) -PHI is collected by Express
Scripts , In c . and its affiliates ("ESI ") in connection with the prescr iption drug program of Client which is
administered by ESI pursuant to ESI 's arrangement with Client. Pursuant to the Standards for Privacy of
Protected Health Information ("Privacy Ru le") to the Health Insurance Portability and Accountabil ity Act of
1996 , Client represents and warrants that MCLIC may access information pertaining to the commercial
coverage , which includes RDS coverage of the Enrollees for the purpose of verifying whether Enro llees had
creditable prescr iption drug cove rage during the coverage gap assessed by the MCLIC pursuant to the
Chapter 4 -Creditable Coverage Period Determ inations and the Late Enrollment Penalty -of the Medicare
Prescription Drug Benefit Manual requirements .
ACCURACY -In provid ing said Certification, Client acknowledges that the informa tion directly affects the
calculation of CMS payments to the MCLIC and /or Cl ient or additional bene fit obligations of MCLIC and those
m isrepresentat ions to CMS about the accuracy of such information may result in Federal civil action and/or
criminal prosecution .
RESPONSIBILITY -Client will indemnify and hold MCLIC harmless from claims or causes of action asserted
against MCLIC arising from misrepresentation of information provided in this Attestation by Client. Cl ient agrees
27 146682.v l 3
to provide MC LI C proof of creditable coverage or documentat ion from me mbe rs in the event that MCLIC is
audited by any government authority .
APPEAL -MCLIC sha ll not be responsib le for appealing CMS ' determ in ation of Enro llees ' cred ita ble coverage
status , however, MCLIC shall honor the fina l d ispos ition of appeals tha t are file d by Client.
AGREEMENT -This Attestation supplements and is made a part of the Agreeme nt in effe ct between MCLIC
and Client.
Based on best kn ow ledge , information , and beli ef, as of the date ind ic ated be low , Cli ent is attest ing that all
information submitted to MCLIC is accurate, comp lete , and truthful.
Signature :--------------
Print Name :-------------
Cl ient:
Dated :--------------
28 146682.vl3
IN WITNESS WHEREOF , the parties hereto have executed this Agreement (Express
Scripts Insurance Co .-Plan Year 2017).
COUNTY OF FRESNO
Chairman , Board of Supervisors
DATE : _.3__:;__-~:f..~~.t....:....._-....:....\ ']-'--------
REVIEWED & RECOMMENDED FO
Paul Nerland, Director of Human Resources
AP PROVED AS TO LEGAL FORM
Daniel C. Ce derberg , County Coun~el ( .
APPROVED AS TO ACCOUNTING FORM
Oscar Garcia ,
Auditor-Controller!Treas
FOR ACCOUNTING USE ONLY:
Fund No :
Subclass :
ORG No :
Account No:
1060
10000
89250200
7185
/
AITEST:
BERNICE E. SEIDEL, Clerk
Board of Supervisors
By ,9,usfvx\ ~sb q-p
Deputy