HomeMy WebLinkAboutResolution - 2003-R0529 - Prescription Drug Program Agreement - Systemed, LLC - 11/24/2003Resolution No. 2003—RO529
November 24, 2003
Item No. 1
RESOLUTION
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK
THAT the Mayor of the City of Lubbock BE and is hereby authorized and
directed to execute for and on behalf of the City of Lubbock, by and between the City of
Lubbock and Systemed, L.L.C., a subsidiary of Medco Health Solutions, a Prescription
Drug Program Agreement for Systemed, L.L.C. to provide a prescription drug benefits
program and all related documents, and take appropriate action. Said Prescription Drug
Program Agreement is attached hereto and incorporated in this resolution as if fully set
forth herein and shall be included in the minutes of the City Council.
Passed by the City Council this 24th
ATTEST:
Rebecca Garza
City Secretary
APPROVED AS TO CONTENT:
illiam De Haas
Contract Manager
APPROVED AS TO FORM:
-.
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Ma ew L. Wade
Natural Resources Attorney
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November 19, 2003
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CUT I N C Resolution No. 2003-R0529
. .� ... j 1 \ {�,,, i,ij November 24, 2003
Item No. 1
INTEGRATED
PRESCRIPTION DRUG PROGRAM
AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of January 2004, (the "Effective Date") between Systemed,
L.L.C., located at 100 Parsons Pond Drive, Franklin Lakes, New Jersey 07417, a subsidiary of Medco Health
Solutions, Inc. ("Medco Health") and CITY OF LUBBOCK, located at 1625 13a` Street RM L04, Lubbock, Texas
79401 ("SPONSOR").
WHEREAS, SPONSOR provides for the payment of prescription drugs and related services for persons eligible to
receive such benefits through affiliation with a group that has a contract or other arrangement in effect with
SPONSOR; and
WHEREAS, Systemed, L.L.C. through Medco Health, provides prescription drug benefits programs and, in
connection therewith, has established networks of participating retail pharmacies and operates a system for the
processing, fulfillment and payment of claims for prescription drugs furnished by such pharmacies; and
WHEREAS, Systemed, L.L.C.'s home delivery pharmacy affiliates are licensed pharmacies which provide
prescription drugs via a home delivery service; and
WHEREAS, SPONSOR desires to retain the services of Systemed, L.L.C. and its affiliates (collectively,
"SYSTEMED"), to provide a prescription drug benefit program (the "Program") including, but not limited to, retail
pharmacy and home delivery pharmacy and specialty drug pharmacy services for eligible persons, point -of -care,
physician office communications and cost containment initiatives developed and implemented by SYSTEMED,
which may include communications with prescribers, patients and/or participating pharmacies, and financial
incentives to participating pharmacies for their participation in such initiatives (collectively, "PBM Services").
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto
agree as follows:
1. DEFINITIONS
1.1. "AWP" means the average wholesale price of the Covered Drug, as set forth in the current price
list in recognized sources such as First DataBank's National Drug Data File, or other nationally
recognized source determined by SYSTEMED, or the direct cost listed in those instances in which
only the direct cost is listed. Under the Retail Pharmacy Program, AWP is based on the package
size submitted. Under the Home Delivery Pharmacy Program, AWP is based on package sizes of
100 units for capsules and tablets and 16 oz. quantities for liquids (or smaller quantities if such
quantities are not available), and all other Covered Drugs will be priced as individual units or
smallest package size available (e.g., per vial, per suppository, etc.). If First DataBank or other
applicable source changes the methodology for calculating AWP in a way that materially changes
the economics of the Program, the parties agree to modify the Program Pricing Terms to preserve
the parties' relative economics before such changed methodology.
1.2. "Brand Name Drugs" means single or multisource brand drugs as set forth in First Databank's
National Drug Data File (or such other nationally recognized source reasonably determined by
SYSTEMED).
1.3. "Contract Quarter" means the full three (3) month period commencing on the Effective Date, and
each full consecutive three (3) month period thereafter that this Agreement remains in effect.
1.4. "Contract Year" means the full twelve (12) month period commencing on the Effective Date, and
each full consecutive twelve (12) month period thereafter that this Agreement remains in effect.
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1.5. "Copayment" and/or "Coinsurance" means the amount to be paid by an Eligible Person for each
prescription or authorized refill as determined in accordance with the Plan Design(s).
1.6. "Covered Drugs" means drugs which, under state or federal law, require a prescription. Excluded
from Covered Drugs are (i) cosmetic drugs, (ii) appliances, devices, bandages, heat lamps, braces,
splints, and artificial appliances, and (iii) health and beauty aids, cosmetics and dietary
supplements ("Exclusions"). Additional Covered Drugs and/or Exclusions applicable to any
individual Group will be designated by SPONSOR in the applicable Plan Design.
1.7. "Dispensing Fee" means the amount payable by SPONSOR pursuant to Sections 1, 2, or 3 of
Schedule A of this Agreement for a Participating Pharmacy or SYSTEMED to dispense a
prescription or authorized refill to an Eligible Person.
1.8. "Eligible Person" means each person who, through affiliation with a Group, is eligible for
prescription drug benefits pursuant to this Agreement, and such person's qualified dependents.
1.9. "Generic Drug" means a multisource generic drug as set forth in First Databank's National Drug
Data File (or such nationally recognized source reasonably determined by SYSTEMED) available
in sufficient supply from multiple manufacturers.
1.10. "Group" means a group of Eligible Persons that have the same Plan Design as designated by
SPONSOR.
1.11. "Home Delivery Pharmacy Program" means the program described in Section 4 in which Eligible
Persons may submit a prescription along with the applicable Copayment/Coinsurance to
SYSTEMED for dispensing via home delivery.
1.12. "Integrated Program" means a program in which Eligible Persons enrolled in such program may
have prescriptions dispensed either (i) by a Participating Pharmacy under the Retail Pharmacy
Program or (ii) by SYSTEMED under the Home Delivery Pharmacy Program. Reference to the
Retail Pharmacy Program and/or Home Delivery Pharmacy Program herein will include services
performed by SYSTEMED for Eligible Persons enrolled in the Integrated Program.
1.13. "MAC or the "Maximum Allowable Cost" consists of a list of off -patent drugs subject to
maximum allowable cost payment schedules developed by Medco Health. The payment schedules
specify the maximum unit ingredient cost payable by SPONSOR for drugs on the MAC list. The
MAC list and payment schedules are frequently updated.
1.14. "Minimum Enrollment" means an enrollment of not less than 1,500 Primary Eligible Participants
under the Program.
1.15. "Participating Pharmacy" means a retail pharmacy that has entered into an arrangement with
SYSTEMED that specifies the terms and conditions of services, including the reimbursement
rates that SYSTEMED will pay to participate in SYSTEMED's Broad National Network servicing
SPONSOR's Program.
1.16. "Plan Design" means Program drug coverage, days supply limitation, Copayment/Coinsurance,
Formulary (including Formulary drug selection and relative cost indication) and other Program
specifications applicable to the Program set forth in this Agreement or otherwise agreed to, in
writing, between the parties.
1.17. "Primary Eligible Participant" means each Eligible Person, excluding Eligible Persons who are
qualified dependents.
1.18. "Program Pricing Terms" means the (i) financial or pricing terms, set forth in this Agreement,
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1.19. "TeIePAID® System" or "TeIePAID®" means SYSTEMED's real time, on-line system for
adjudicating prescription drug claims submitted by retail pharmacies.
2. SPONSOR FURNISHED INFORMATION
SPONSOR will promptly furnish, in a format acceptable to SYSTEMED, all information necessary for
SYSTEMED to render the services set forth herein. Such information will include, but is not limited to:
2.1. A file of Eligible Persons, and subsequent timely additions and deletions to such file as changes
occur. SPONSOR will pay for any Covered Drug dispensed to a person reported by SPONSOR as
no longer an Eligible Person, if such notification is not received by SYSTEMED at least two (2)
full business days prior to the dispensing date of such prescription.
2.2. Designation, in writing, of those Plan Design features to be determined by SPONSOR.
2.3. The reimbursement terms applicable to direct reimbursement claims submitted by Eligible Persons
under the Retail Pharmacy Program.
2.4. The type, number, and description of Medco Health identification cards ("Identification Cards")
required under the Retail Pharmacy Program
3. RETAIL PHARMACY PROGRAM
The specific features of the Retail Pharmacy Program are as follows:
3.1. Program Coverage - The Program coverage (Covered Drugs/Exclusions) and days supply
limitation covered under the Retail Pharmacy Program will be as designated by SPONSOR. Up to
a thirty-four (34) day supply of Covered Drugs per prescription or refill may be dispensed under
the Retail Pharmacy Program.
3.2. Participating Pharmacy Networks - SYSTEMED will maintain a Participating Pharmacy Network
reasonably necessary to provide services under the Retail Pharmacy Program.
3.3. Identification Cards - SYSTEMED will (i) produce Identification Cards for those Eligible Persons
designated by SPONSOR, with an accompanying explanatory brochure, and (ii) make direct
reimbursement claim forms available through the www.medcohealth.com internet site for use by
Eligible Persons who have not received their Identification Cards, or have had them lost or stolen.
SYSTEMED will distribute Identification Cards and claim forms for distribution by SPONSOR to
the designated Eligible Persons. All costs associated with distributing and/or mailing such
materials are the responsibility of SPONSOR.
3.4. Claim Adjudication - SYSTEMED will adjudicate and pay approved claims for prescription drug
benefits in accordance with SYSTEMED's TeIePAID System and the applicable Plan Design.
Disapproved claims will be transmitted to the submitting pharmacy with a brief explanation of the
cause or causes for disapproval.
3.5. Claim Disputes - Any questions involving Program procedures or relating to applicable benefits
will be resolved prior to payment by SYSTEMED, and payment may be delayed following receipt
of a claim pending resolution of such questions. Subject to the terms and conditions herein,
SPONSOR will make the final determination regarding payment of all submitted claims. Should
SPONSOR determine that a previously disapproved claim should be paid, and so direct
SYSTEMED, payment of such claim will be accomplished promptly by SYSTEMED.
SYSTEMED will promptly refer to SPONSOR all non -routine inquiries by insurance departments,
attorneys, claimants, or other persons following the denial of any claims.
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3.6. Administrative Services — SYSTEMED will provide, as applicable, the Base Administrative
Services and the Additional Administrative Services set forth in Schedule A.
3.7. Pricing - The Program Pricing Terms applicable to the Retail Pharmacy Program are set forth in
Schedule A,
4. HOME DELIVERY PHARMACY PROGRAM
4.1. Program Coverage
4.1.1. The Program coverage (Covered Drugs/Exclusions) and days supply limitation under the
Home Delivery Pharmacy Program will be as designated by SPONSOR in the applicable
Plan Design.
4.1.2. SYSTEMED's home delivery pharmacies will not be required to dispense prescriptions
for greater than a ninety (90) day supply of Covered Drugs per prescription or refill,
subject to the professional judgment of the dispensing pharmacist, limitations imposed on
controlled substances and manufacturer's recommendations. Prescriptions may be
refilled providing the prescription so states. Prescriptions will not be filled (i) more than
12 months after issuance, (ii) more than 6 months after issuance for controlled drug
substances, or (iii) if prohibited by applicable law or regulation.
4.2. Dispensing Procedures
4.2.1. SYSTEMED's home delivery pharmacies will dispense Covered Drugs to Eligible
Persons, and dispense generic drugs when authorized, in accordance with (i) applicable
law and regulations in the state in which SYSTEMED's home delivery pharmacy is
located, and (ii) the terms of this Agreement and Plan Design(s).
4.2.2. All matters pertaining to the dispensing of Covered Drugs or the practice of pharmacy in
general are subject to the professional judgment of the dispensing pharmacist.
4.2.3. Any drug which cannot be dispensed in accordance with SYSTEMED's home delivery
pharmacy dispensing protocols, or which requires special record-keeping procedures,
may be excluded from coverage by SYSTEMED.
4.3. Pricing - The Program Pricing Terms applicable to the Home Delivery Pharmacy Program are set
forth in Schedule A,
5. FORMULARY
SPONSOR will be a participating plan sponsor in Medco Health's Preferred Prescriptions® Formulary as
set forth below for the term of this Agreement.
5.1. Formulary - The Preferred Prescriptions® Formulary is a prescription drug formulary
administered by SYSTEMED which lists FDA approved drugs that have been evaluated for
inclusion on the Preferred Prescriptions® Formulary. The drugs included on the Preferred
Prescriptions® Formulary will be modified by SYSTEMED from time to time as a result of
factors including, but not limited to, medical appropriateness, manufacturer rebate arrangements,
and patent expirations. SYSTEMED will implement SYSTEMED's formulary management
programs, which may include cost containment initiatives, communications with Eligible Persons,
Participating Pharmacies and/or physicians (including communications regarding generic
substitution programs), and financial incentives to Participating Pharmacies for their participation.
Compliance with the Preferred Prescriptions Formulary and SYSTEMED's Formulary
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management program will result in the Formulary Rebate Payment as set forth below.
SYSTEMED reserves the right to modify or replace the Preferred Prescriptions® Formulary
(including any modification or replacement, the "Formulary") and formulary compliance methods
and cost containment initiatives consistent with good pharmacy practice. SPONSOR agrees that
SYSTEMED will be the exclusive formulary administrator for SPONSOR's prescription drug
benefit programs during the term of the Agreement. SPONSOR is authorized to use the
Formulary only for its own Eligible Persons and only as long as the Program is in effect and
administered by SYSTEMED.
5.2. Formulary Rebates - Medco Health and its subsidiaries receive formulary rebates from certain
drug manufacturers as a result of the inclusion of those manufacturers' branded products on the
Formulary ("Formulary Rebates"). SYSTEMED will provide SPONSOR with a Formulary
Rebate Payment as set forth in Section 5.3 below based on each manufacturer's Formulary drugs
dispensed under SPONSOR's Program, with SYSTEMED retaining any remaining amounts.
Medco Health also receives and retains additional rebates and/or fees from certain manufacturers
which may take into account various factors, including the utilization of certain drugs within their
respective therapeutic categories for Medco Health's book of business in aggregate as a result of
various commitments, services, and programs including, but not limited to, formularies.
5.3. Formulary Rebate Payment - For SPONSOR's participation in the Formulary, and provided
SPONSOR complies fully with the Formulary and with the Formulary management programs
implemented by SYSTEMED, SYSTEMED will pay SPONSOR, within ninety (90) days
following the end of each calendar quarter during the Initial Term, the sum of (i) $1.00 times the
total number of prescriptions billed and paid for under SPONSOR's Retail Pharmacy Program,
plus (ii) $3.00 times the total number of prescriptions billed and paid for under SPONSOR's Home
Delivery Pharmacy Program during such calendar quarter (collectively, the "Formulary Rebate
Payment").
5.4. If a government action, change in law or regulation, change in the interpretation of law or
regulation, or action by any drug manufacturer or by SPONSOR has a material adverse effect on
the availability of Formulary Rebates, SYSTEMED may modify the Program Pricing Terms.
5.5. Any lines of SPONSOR's business, or any Group of Eligible Persons, for which SPONSOR funds
less than 50% of the costs of Covered Drugs under the Plan Design will not be entitled to the
Formulary Rebate Payment. Calculations and payments under Sections 5.2 and 5.3 will not
include prescriptions dispensed for any such lines of business or Groups.
6. BILLING/PAYMENT
6.1. SYSTEMED will provide SPONSOR with a bi-weekly consolidated invoice for services provided
by SYSTEMED under the Program, in accordance with the Program Pricing set forth in Schedule
A. All invoices will be paid in full by SPONSOR within fifteen (15) days of receipt by wire
transfer, electronic debit, or other method approved by SYSTEMED in writing.
6.2. SPONSOR will pay SYSTEMED for administrative products and services provided by
SYSTEMED under the Program in accordance with the Administrative Fee provisions set forth in
Schedule A. SYSTEMED will provide SPONSOR with an Administrative Fee invoice in
accordance with SYSTEMED's four (4) week Administrative Fee cycle. SPONSOR will pay
Administrative Fee invoices in full within fifteen (15) days of the invoice date.
6.3. In accordance with Section 13.7 of this Agreement, SYSTEMED may revise the Program Pricing
Terms during the term of this Agreement upon sixty (60) days' prior written notice to SPONSOR.
If any such Program Pricing Terms revision is unacceptable to SPONSOR, SPONSOR will notify
SYSTEMED, in writing, within fifteen (15) days of SPONSOR's receipt of notice of the pricing
revision. If the parties are unable to agree on acceptable pricing, either party may terminate this
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Agreement upon sixty (60) days' prior written notice to the other party, provided such notice is
given prior to the effective date of the proposed pricing revision.
6.4. Failure by SPONSOR to make any payments in accordance with the terms of this Agreement will
constitute a payment default. Notwithstanding Section 9.2 of this Agreement, if SPONSOR fails
to cure any such payment default within five (5) business days, in addition to other available
remedies, SYSTEMED may terminate this Agreement upon notice to SPONSOR. There will be a
late payment fee of 1% per month on the balance due on all late payments over two (2) days past
due. SPONSOR will reimburse SYSTEMED for all collection costs incurred by SYSTEMED as a
result of any payment default by SPONSOR under this Agreement.
7. RECORDS
7.1. SYSTEMED will maintain all claims records relating to services performed under this Agreement
as required by applicable law. Such claims records will be in their original form, on microfilm,
microfiche or other form determined by SYSTEMED. SPONSOR claims records may be audited
by SPONSOR or its representative approved by SYSTEMED, subject to execution of a
confidentiality agreement, for a maximum period of 24 months prior to the agreed upon audit date,
subject to applicable confidentiality provisions and legal requirements. Any audit by SPONSOR
may be conducted once annually upon adequate prior written notice, and during regular business
hours. Subject to Section 8.2, SYSTEMED may retain copies of such claims records for its own
use.
7.2. Medco Health's agreements with pharmaceutical manufacturers are subject to confidentiality
agreements. Any audits conducted pursuant to Section 5 above will not include any portion of
such pharmaceutical manufacturer agreements.
7.3. SPONSOR will furnish its most recent audited financial statement to SYSTEMED prior to the
Effective Date of this Agreement and upon request from SYSTEMED.
8. CONFIDENTIAL INFORMATION
8.1. Each party will not disclose any information or knowledge concerning any other party's operations
or procedures, which is hereby deemed confidential information, except as otherwise required by
law. To the extent permitted by law, each party also will keep the terms of this Agreement
confidential. If confidential information of a party is disclosed to or otherwise acquired by another
party to this Agreement, such information will be held in confidence and surrendered by the
acquiring party to the disclosing party upon the termination of this Agreement or upon prior
written request by the disclosing party. SPONSOR and SYSTEMED, may not utilize the service
marks, trademarks or tradenames of any other party to this Agreement, or any service marks,
trademarks or tradenames so similar as likely to cause confusion, without express written approval
of such other party. The programs implemented by SYSTEMED will remain the sole property of
SYSTEMED, and will only be used by SPONSOR in connection with the Program and so long as
SYSTEMED administer the Program.
8.2. SYSTEMED and SPONSOR will comply with all applicable laws and regulations regarding
patient confidentiality. SYSTEMED will not furnish any patient identifiable or SPONSOR
identifiable data or information to any third party without the written consent of SPONSOR,
except as reasonably necessary to implement and operate the Program and fulfill its obligations
pursuant to this Agreement or as required by applicable law. The restrictions set forth in this
Section 8 will not apply to claims data or information which is not identifiable on a SPONSOR or
patient basis.
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9. TERM OF AGREEMENT
9.1. This Agreement will remain in effect from January 1, 2004 through December 31, 2004.
Notwithstanding the termination of this Agreement, SYSTEMED agrees to continue to render
services hereunder and SPONSOR agrees to pay for services of SYSTEMED in accordance with
the terms of this Agreement for any claims incurred for prescription drug benefits by Eligible
Persons while this Agreement was in force.
9.2. In the event of a material breach of this Agreement, the party alleging such breach will give
written notice thereof to the other parties. If such breach is not cured within sixty (60) days of
receipt of such notice, the non -breaching party may terminate this Agreement upon written notice
to the other party.
10. FORCE MAJEURE
Neither SYSTEMED nor SPONSOR will be deemed to have breached this Agreement or be held liable for
any failure or delay in the performance of all or any portion of its obligations under this Agreement if
prevented from doing so by a cause or causes beyond its control. Without limiting the generality of the
foregoing, such causes include acts of God or the public enemy, fires, floods, storms, earthquakes, riots,
strikes, boycotts, lock -outs, acts of terrorism, acts of war, war -operations, restraints of government, power
or communications line failure or other circumstances beyond such party's control, or by reason of the
judgment, ruling or order of any court or agency of competent jurisdiction, or change of law or regulation
(or change in the interpretation thereof) subsequent to the execution of this Agreement.
11. INDEMNIFICATION/LIMITATION OF LIABILITY
11.1. SYSTEMED will indemnify and hold SPONSOR, its officers, directors and employees (each an
"Indemnified Party") harmless from claims or causes of action asserted against an Indemnified
Party arising from services rendered by SYSTEMED pursuant to this Agreement to the extent the
claim or cause of action arises out of (1) SYSTEMED's negligence or willful misconduct, or (ii)
SYSTEMED's release of patient identifiable information to outside third parties, provided that (a)
SPONSOR has given reasonable notice to SYSTEMED of the claim or cause of action, and (b) no
Indemnified Party has, by act or failure to act, compromised SYSTEMED's position with respect
to the resolution or defense of the claim or cause of action.
11.2. To the extent permitted by applicable law, SPONSOR will indemnify and hold SYSTEMED, its
parent, affiliates, and their respective officers, directors and employees (each an "Indemnified
Party") harmless from claims or causes of action asserted against an Indemnified Party arising
from (i) negligence or willful misconduct of SPONSOR, including without limitation, the
disclosure and/or use of Program data or information provided by SYSTEMED to SPONSOR,
unless such disclosure is required by law, (ii) the provision of patient identifiable data by
SYSTEMED or its affiliates to SPONSOR or SPONSOR's designees, or the subsequent use or
disclosure of such information by SPONSOR or its designees, or (iii) SPONSOR's release of
patient identifiable information to SYSTEMED, provided that (a) the Indemnified Parry has given
reasonable notice to SPONSOR of the claim or cause of action, and (b) no Indemnified Party has,
by act or failure to act, compromised SPONSOR's position with respect to the resolution or
defense of the claim or cause of action.
11.3. SYSTEMED will maintain, during the term of this Agreement, liability coverage with limits not
less than $1,000,000 per occurrence and in the aggregate per policy year, with excess liability
coverage in an amount not less than $5,000,000 per policy year. Evidence thereof will be
furnished to SPONSOR prior to the Effective Date of this Agreement.
11.4. Except as provided in Section 11.1 above, SYSTEMED or any affiliated company, or their
directors, officers or employees, will not be responsible for any claim, loss or damage sustained as
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a result of the provision of or failure to provide pharmaceutical goods or services or any other
action or failure to act by any retail pharmacy, pharmaceutical manufacturer or other
pharmaceutical providers pursuant to this Agreement.
11.5. The liability of SYSTEMED to SPONSOR for any negligent or willful misconduct by
SYSTEMED in the performance of its obligations hereunder will be limited to the liability
insurance amounts set forth in Section 11.3.
11.6. SYSTEMED or SPONSOR will not be liable to each other for incidental, consequential or
exemplary damages.
12. EXCLUSIVITY
SYSTEMED will be the exclusive provider and administrator of PBM Services to SPONSOR and its
subsidiaries while this Agreement is in effect. Nothing contained herein, however, will prohibit
SYSTEMED or any affiliated entity from providing or administering PBM Services and related programs
and services to any other entity while this Agreement is in effect.
13. GENERAL
13.1. Independent Contractor - The relationship between SYSTEMED and SPONSOR will solely be
that of independent contractors engaged in the operation of their own respective businesses.
13.2. Assignment - This Agreement may not be assigned by any party without the written approval of
the other parties provided, however, that services to be performed by SYSTEMED hereunder may
be performed by its subsidiaries, affiliates, divisions and/or designees.
13.3. No Third Party Beneficiary - This Agreement has been entered into solely for the benefit of
SPONSOR and SYSTEMED, and is not intended to create any legal, equitable or beneficial
interest in any third party or to vest in any third party any interest as to enforcement or
performance.
13.4. Notices - All notices required under this Agreement will be in writing and sent by certified mail,
return receipt requested, hand delivery or overnight delivery by a nationally recognized service
addressed as follows:
If to SPONSOR: City of Lubbock
Director of Human Resources
Mailing Address: P.O. Box 2000
Lubbock, Texas 79457
Physical Address: 1625 13'b Street
Lubbock TX 79401
If to SYSTEMED: Systemed, L.L.C.
100 Parsons Pond Drive
Franklin Lakes, NJ 07417
Attention: Thomas M. Moriarty
Vice President and Counsel
13.5. Amendments - This Agreement may be amended only in writing when signed by a duly authorized
representative of each party.
13.6. Financial Responsibility - If SYSTEMED has reasonable grounds to believe that SPONSOR may
not meet its payment obligations under this Agreement as they become due, SYSTEMED may
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request information and/or reasonable assurances (including a deposit) from SPONSOR as to its
financial responsibility. If the information or assurances are not furnished to SYSTEMED within
five (5) days, or are not satisfactory in SYSTEMED's reasonable judgment, SYSTEMED may
immediately terminate this Agreement.
13.7. Plan Design - The Program Pricing Terms set forth in this Agreement are based upon the Plan
Designs, Minimum Enrollment and Program specifications agreed to between the parties as
reflected in this Agreement and as otherwise hereafter agreed to by the parties in writing. The
Program Pricing Terms are also based upon SPONSOR funding 50% or greater of the costs of
Covered Drugs for its Eligible Persons. Any modification of the Plan Design or Program
specifications, failure to maintain Minimum Enrollment, or inclusion of Eligible Persons or
Groups with Covered Drugs funded less than 50% by SPONSOR, may result in a retroactive
modification by SYSTEMED of the Program Pricing Terms. SPONSOR will provide Eligible
Persons with at least thirty (30) days' prior notice of approved Plan Design changes.
13.8. Interpretation of Plan
13.8.1. SPONSOR will not name or represent that SYSTEMED, is, and SYSTEMED will not be,
a Plan Administrator or a fiduciary of SPONSOR's prescription drug benefit plan (the
"Plan"), as those terms are used in the Employee Retirement Income Security Act
("ERISA"), 29 U.S.C. §§ 1001 et seq., and the regulations promulgated under ERISA.
SPONSOR will have complete discretionary, binding, and final authority to construe the
terms of the Plan, to interpret ambiguous Plan language, to make factual determinations
regarding the payment of claims or provisions of benefits, to review denied claims and to
resolve complaints by Eligible Persons.
13.8.2. Notwithstanding the foregoing, SPONSOR hereby delegates to SYSTEMED the limited
authority and discretion solely to undertake administrative and clinical first level appeals
of claims eligibility and benefit applications determinations filed by Eligible Persons with
the Plan. SYSTEMED will process and determine all filed first administrative and
clinical level appeals under the procedures and within the time frames specified in the
Department of Labor claims processing regulations for first level appeals, 29 C.F.R. §
2560.503-1 (the "Claims Procedure Regulations"). SPONSOR and SYSTEMED agree
that notwithstanding the services of SYSTEMED under this section, all decisions
concerning the rendering of health care services are determined by the Eligible Person's
physician, hospital or other health care provider and the Eligible Person.
13.8.3. SPONSOR will provide second level (final and binding) appeals, and urgent appeals, and
retains all responsibilities for the undertaking of such second level appeals and urgent
appeals as those appeals are defined and governed by the Claims Procedure Regulations.
SPONSOR will have complete discretionary, binding, and final authority to construe the
terms of the Plan, to interpret ambiguous Plan language, to make factual determinations
regarding payment of claims or provisions of benefits, to review denied claims and to
resolve complaints by Eligible Persons. SYSTEMED will provide the first level appeal
files and other related claims record information necessary for the SPONSOR or its
designee to undertake second level appeals and urgent appeals.
13.9. Tax - Any sales, use, or other tax imposed on items dispensed, or services provided hereunder,
will be the sole responsibility of SPONSOR.
13.10. Governini Law -This Agreement will be construed and governed in accordance with the laws of
the State of Texas. However, all matters relating to the Home Delivery Pharmacy Program
operations of SYSTEMED will be governed by the laws of the state in which SYSTEMED's home
delivery pharmacy is located.
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13.11. Enforceability - The invalidity or unenforceability of any of the terms or provisions hereof will not
affect the validity or enforceability of any other term or provision.
13.12. Section Headings - Section headings are inserted for convenience only and will not be used in any
way to construe the terms of this Agreement.
13.13. Waiver - The waiver of any breach or violation of any term or provision hereof will not constitute
a waiver of any subsequent breach or violation of the same or any other term or provision.
13.14. Approvals - Whenever approval of any party is required under this Agreement, such approval will
not be unreasonably withheld.
13.15. Entire Agreement - This Agreement, together with the Schedules hereto, embodies the entire
understanding of the parties in relation to the subject matter hereof, supersedes any prior
agreement among the parties in relation to the subject matter hereof, and no other agreement,
understanding, or representation, verbal or otherwise, relative to the subject matter hereof exists
among the parties at the time of execution of this Agreement.
13.16. Survival - The provisions of Sections 6.4, 8, 11, and the last sentence of 9.1 will survive the
termination of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date indicated below.
SYSTEMED, L.L.C.
BY:
(signature)
NAME: David S. Machlowitz
CITY OF LUBBOCK
TITLE: Secretary TITLE: Mayor
DATE: 11"21—,03 DATE
44213v1 (11/17/03) SEC
SYSTEMED PERMFORM 27902.1 (10/16/03) efs
(Original 27902.1 - 10/16/03)
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44213v1
November 24, 2003
Re ecca Garza, City Secretary
APPROVED AS TO CONTENT
/t #r�
William de Haas, Contract Manager
APPROVED AS TO FORM
Ma ew L. Wade, Natural Resources Attorney
Resolution No. 2003—RO529
SCHEDULE A
PROGRAM PRICING TERMS
SPONSOR will pay SYSTEMED for services provided under the Program as follows:
1. RETAIL PHARMACY PROGRAM CLAIMS
SPONSOR will pay SYSTEMED for Covered Drugs dispensed and submitted by Participating Pharmacies
under the Retail Pharmacy Program in an amount equal to the lower of (i) the maximum allowable cost
("MAC"), where applicable, plus the Dispensing Fee set forth below, or (ii) an annual AWP discount of
minus (-) 14% plus the Dispensing Fee set forth below. The calculation of the annual AWP discount
above will include Covered Drugs priced at the Usual and Customary ("U&C") price of the Participating
Pharmacy. Payment by SPONSOR is subject to the applicable Copayment/Coinsurance or other coverage
features set forth in the Plan Design designated by SPONSOR under the Retail Pharmacy Program.
1.1 Dispensing Fee - The Dispensing Fee per prescription or authorized refill will be $2.10 for Brand
Name Drugs without MAC pricing, and $2.10 for Generic Drugs and Brand Name Drugs that are
billed at MAC, consistent with the Plan Design for each Group.
1.2 Copayment/Coinsurance - The Copayment/Coinsurance amount for each prescription or
authorized refill will be as designated for each Group in the applicable Plan Design(s). At the
point-of-sale, payment by the Eligible Person will not be greater than the U&C price of the
Participating Pharmacy. In those instances where the Eligible Person's Copayment/Coinsurance
would otherwise be greater than the U&C price of the Participating Pharmacy, the Eligible Person
will pay the U&C price and there will be no charge/credit to SPONSOR under this Section 1.
1.3 Minimum Charge at Retail — SPONSOR agrees there may be a minimum charge at retail for a
Covered Drug of the lower of (a) the U&C or (b) the applicable Copayment. For prescriptions or
refills where this minimum charge applies, there will be no charge/credit to SPONSOR under this
Section 1.
2. HOME DELIVERY PHARMACY PROGRAM CLAIMS
SPONSOR will pay SYSTEMED for Covered Drugs dispensed by a SYSTEMED home delivery pharmacy
under the Home Delivery Pharmacy Program in an amount equal to an Ingredient Cost plus Dispensing Fee
for each Covered Drug dispensed, less the applicable Copayment/Coinsurance amount, as such terms are
defined below:
2.1. Ingredient Cost - The Ingredient Cost is AWP minus (-) 20 % for Brand Name Drugs and the
lesser of AWP minus (-) 20% or MAC for Generic Drugs.
2.2. Dispensing Fee - The Dispensing Fee per prescription or authorized refill is $1.00. Dispensing
Fees are inclusive of postage.
2.3 Copayment/Coinsurance - The Copayment/Coinsurance amount for each prescription or refill
dispensed by a SYSTEMED home delivery pharmacy under the Home Delivery Pharmacy
Program shall be as designated for each Group in the applicable Plan Design(s). If the amount of
the applicable Copayment/Coinsurance paid by an Eligible Person for a prescription or refill
dispensed by SYSTEMED exceeds the Ingredient Cost (as defined in 2.1 above) plus Dispensing
Fee (as defined in Section 2.2 above) plus any applicable sales tax, then SYSTEMED shall return
to the Eligible Person an amount equal to the Copayment/Coinsurance amount, less the sum of the
applicable Ingredient Cost plus Dispensing Fee plus any applicable sales tax, for the prescription
or refill. Eligible Persons must pay the applicable Copayment or Coinsurance amount to
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44213v1
2063-�2o52y
SYSTEMED for each prescription or authorized refill under the Home Delivery Pharmacy
Program. SYSTEMED may suspend Home Delivery Pharmacy Program services to an Eligible
Person who is in default of any Copayment or Coinsurance amount due SYSTEMED. Group will
be responsible for any unpaid Eligible Person Copayment or Coinsurance amounts if payment has
not been received from the Eligible Person within one hundred twenty (120) days of dispensing.
Group will be billed following the one hundred twenty (120) day collection period, with payment
due in accordance with the payment terms set forth in Section 5.2 of this Agreement.
3. SPECIALTY DRUG CLAIMS
Notwithstanding anything to the contrary in Sections 1 and 2 above and elsewhere in the Agreement,
SPONSOR will pay SYSTEMED for Covered Drugs designated as Specialty Drugs on a separate
ingredient cost basis plus applicable Dispensing Fee, subject to the Copayment/Coinsurance in the
applicable Plan Design. "Specialty Drugs" means pharmaceutical products that are generally
biotechnological in nature, with many requiring injection or other non -oral methods of administration, and
that have special shipping or handling requirements. SYSTEMED may add or delete products, or modify
pricing terms on written notice to SPONSOR. SYSTEMED will provide its then current list of Specialty
Drugs upon SPONSOR's written request.
4. ADMINISTRATIVE FEES
4.1. SPONSOR will pay to SYSTEMED a Base Administrative Fee in the amount of $0.10 per
transaction processed by SYSTEMED under the Retail Pharmacy Program for the following Base
Administrative Services, as applicable:
• Administration of eligibility submitted via tape or telecommunication in a SYSTEMED standard
format
• Eligibility maintenance (minimum of weekly updates)
• Dependent Eligibility Certification System (DECS)
• SYSTEMED's client support system (e -SD) for on-line access to current eligibility (equipment,
installation and line charges are responsibility of SPONSOR)
• Administration of SPONSOR's Plan Design in Medco Health format
• In -network claims adjudication via TelePAID® on-line claims adjudication system
• Coordination of Benefits Level I (when flagged on eligibility records)
• Twelve months on-line claims history retention (for use in claims processing)
• Processing associated with Home Delivery Pharmacy Program prescriptions
• Announcement letter
• SYSTEMED descriptive brochure
• Pre -addressed home delivery order form/envelope
• Patient profile questionnaire card
• One SYSTEMED Identification Card per Primary Eligible Participant (two per family)
• Information on access to major Participating Pharmacy network chains
• SYSTEMED standard Medco Health Direct claim form
• Explanation of Benefits (EOB) for out -of -network claims
• Direct reimbursement claim form (also available via www.medcohealth.com)
• Coordination of benefits (COB) claim form
• TDD -TTY services for hearing impaired to access Customer Service Department
• Integrated Concurrent Drug Utilization Review (DUR) via TelePAID®
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4.2.
LIV
• Establish, maintain, credential, and contract an adequate panel of Participating Pharmacies
• Development and distribution of communication materials to Participating Pharmacies regarding
the Program
• Toll-free access to Help Desk for eligibility/claims processing assistance
• Toll-free access to Participating Pharmacies for DUR assistance
• Monitor Participating Pharmacy compliance, including submission of U&C, generic dispensing
rates, formulary program conformance, DUR intervention conformance, patient utilization, and
drug mix and managed through the Coordinated Rxsm Program
• Toll-free telephone access to voice response unit for location of Participating Pharmacies in zip
code area
• Medco Health Pharmacy Audit Program - Level I
• Toll-free telephone access to Customer Service for the program for use by Eligible Persons,
SPONSOR benefits personnel and physicians
• Gatekeeper program
• 24 hour access to a Medco Health pharmacist via toll-free telephone service
SPONSOR will also pay for Additional Administrative Services requested by SPONSOR and
provided by SYSTEMED under the Program as follows:
• Direct reimbursement (under Retail Pharmacy Program)/out-of- $1.25 per claim
network claims adjudication
• Hard copy eligibility submission Data entry charges
• Mailings direct to Eligible Persons or SPONSOR location Actual postage charges
• Coordination of Benefits Level II $2.50 per claim
• Adjudication of Medicaid subrogation claims (unless responsibility $3.00 per claim
is otherwise assigned by SPONSOR)
Note: Charge for additional services not listed above will be determined by SYSTEMED and
quoted upon request.
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