EXHIBIT 10.4
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
Managerial/Administrative Services Agreement
This Administrative Services Agreement (Agreement) is between the COUNTY
OF SUFFOLK (COUNTY), a municipal corporation of the State of New York, acting
through its duly constituted OFFICE OF THE COUNTY EXECUTIVE, having an office at
000 Xxxxxxxx Xxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 and its duly
constituted DEPARTMENT OF AUDIT & CONTROL/RISK MANAGEMENT AND BENEFIT DIVISION,
having an office at Woodlands Office Park, 000 Xxxxxxxx Xxxxxxxx Xxxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000; and
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC (NATIONAL), a New York business
corporation, having its principal office at 00 Xxxxxx Xxxx Xxxxx, Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000.
The parties hereto desire to provide to the COUNTY certain administrative
services for the self-funded EMPLOYEE MEDICAL HEALTH PLAN OF SUFFOLK COUNTY
(EMHP). Sufficient funding exists in the 1995,1996 and 1997 Suffolk County
Operating Budgets for funding such health plan.
Term of Agreement: Shall be January 1, 1995 through December 31, 1998.
Total Cost of Agreement: Shall be as set forth in Exhibits B and F attached.
Terms and Conditions: Shall be as set forth in Exhibits A through I attached.
In Witness Whereof, the parties hereto have executed this Agreement as of the
latest date written below.
NATIONAL MEDICAL HEALTH CARD COUNTY OF SUFFOLK
SYSTEM, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxx X. Xxxx
------------------------------ -------------------------------
XXXXX XXXXXXX XXXX X. XXXX
President Chief Deputy County Executive
Date: MARCH 9, 1998 Date: 4/13/98
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Law No. 98-IS-002
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APPROVED AS TO FORM, NOT APPROVED:
REVIEWED AS TO EXECUTION: DEPARTMENT OF AUDIT AND
CONTROL
XXXXXX X. XXXXXX
Suffolk County Attorney
By: /s/ Xxxxxxx Xxx Xxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------ --------------------------------
XXXXXXX XXX XXXXX XXXXXX X. XXXXXX
Assistant County Attorney Comptroller
Date: 3/4/98 Date: 3/16/98
---------------------------- -------------------------------
OFFICE OF THE COUNTY
EXECUTIVE
By: /s/ XXXXX X. XXXXXX
----------------------------------
XXXXX X. XXXXXX
Director of Personnel & Labor
Relations
Date: 3/20/98
-------------------------------
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Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
Table of Contents
Exhibit A
General Terms And Conditions
1. NATIONAL Responsibilities................................................. 7
2. Term and Termination...................................................... 7
3. Payment and Compensation.................................................. 8
4. Notice Requirements/Contact Persons....................................... 8
5. Not In Arrears............................................................ 10
6. Public Disclosure Law..................................................... 10
7. Gratuities Law............................................................ 11
8. Independent Contractor Status............................................. 11
9. Indemnification........................................................... 11
10. Insurance................................................................ 12
11. Non-discrimination Requirements.......................................... 13
12. Non-discrimination in Services........................................... 13
13. Assignment/Subcontract................................................... 14
14. Severability............................................................. 14
15. Entire Agreement......................................................... 14
16. No Modifications......................................................... 14
17. Governing Law............................................................ 14
18. Section Headings......................................................... 14
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Exhibit B
Responsibilities of NATIONAL........................................... 16
Exhibit C
Request for Proposal Issued by COUNTY in March 1994:
Incorporated by Reference.............................................. 22
Exhibit D
Proposal Submitted by NATIONAL in June 1994:
Incorporated by Reference.............................................. 23
Exhibit E
Two Proposal Addendums................................................. 24
Letter dated August 15, 1994 (consists of 9 pages); Letter dated
June 28, 1994 (consists of 5 pages).
Exhibit F
Managerial Fees........................................................ 25
Exhibit G
Wire Transfer Instructions............................................. 28
Exhibit H
Financial Guarantee.................................................... 29
Exhibit I
Description of Additional Services Relating to DUR and COB............. 33
Exhibit J
Payment by COUNTY to NATIONAL for Pharmaceutical
Claims Incurred........................................................ 37
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Exhibit K
Audit Letter - Sample.................................................. 38
Exhibit L
Rebate Report - Sample................................................. 39
Exhibit M
Employee Medical Health Plan of Suffolk County
Benefit Booklet
April 1995............................................................. 40
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Exhibit A
General Terms and Conditions
Whereas, the COUNTY, by Suffolk County Resolution No. 1031-91, entitled "Suffolk
County Resolution No. 1031-91 Authorizing the County of Suffolk to Withdraw from
Participation in the New York State Health Plan, Otherwise Known as the New York
State Empire Plan, and Establish a Separate Self-Insurance Program to Provide
Health Benefits to County Employees," has adopted the self-funded independent
Employee Medical Health Plan of Suffolk County (hereinafter referred to as the
"Plan" and/or "EMHP"); and
Whereas, the COUNTY issued a Request For Proposals ("RFP") in 1994 soliciting
proposals for the administration of its prescription drug plan; and
Whereas, NATIONAL responded to the RFP by proposal ("Proposal") and
Whereas, the Plan is set forth in its entirety in the plan document entitled
"Employee Medical Health Plan of Suffolk County" (hereinafter referred to as the
"Plan Document"), which may change from time to time in the COUNTY's discretion,
a copy of which is attached hereto as Exhibit M; and
Whereas, the Plan Document provides for the payment of certain medical benefits
on a self-funded basis to eligible employees and retirees of the COUNTY and
their eligible dependents (hereinafter individually referred to as a "Member"
and collectively as the "Members") and eligibility requirements are defined in
the Plan Document; and
Whereas, the Plan Document provides for the payment of certain medical,
radiological and diagnostic benefits on a self-funded basis to Members; and
Whereas, the COUNTY desires to provide a Prescription Drug Plan (hereinafter
referred to as the "Prescription Drug Plan") to eligible employees/members as
hereinafter defined; and
Whereas, NATIONAL has developed a system for paying claims and furnishing other
related services through a network of pharmacies, mail order facilities and home
infusion therapy providers based upon a specific plan design (hereinafter
referred to as the "System") for the purpose of managing the Prescription Drug
Plan; and
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Whereas, the COUNTY desires to engage NATIONAL to provide certain
managerial/administrative services with respect to the Prescription Drug Plan on
behalf of the COUNTY through the use of the System, and NATIONAL desires to
provide such services to the COUNTY.
Now, Therefore, in consideration of the premises above recited and the covenants
and obligations hereinafter contained, the parties hereby agree as follows:
1. NATIONAL and COUNTY Responsibilities:
a. The duties and representations of NATIONAL and the COUNTY are more
particularly described in this Exhibit A and Exhibits B through M,
which are attached to and made part of this Agreement.
b. NATIONAL shall perform such services as may be necessary to
accomplish the managerial/administrative services required to be
performed under and in accordance with this Agreement.
c. NATIONAL specifically represents and warrants that it has and shall
possess, and that its employees, agents and subcontractors have and
shall possess, such training, knowledge and experience as may be
necessary to qualify them individually for the particular duties
they perform under this Agreement.
d. The provisions of this Exhibit A shall prevail over any inconsistent
provisions of any other Exhibit, and over any other document not
specifically referred to in this Agreement or made part thereof by
this Agreement, or by any subsequent amendment in writing and signed
by both parties, except to the extent that such provisions of this
Exhibit A are specifically referred to and amended or superseded by
such exhibit, amendment or other document.
2. Term and Termination:
a. This Agreement shall be for the term (the "Term") provided on the
first page hereof. This Agreement may be extended by formal
amendment executed by both parties.
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b. Either party shall have the right to terminate this Agreement
effective thirty (30) days after written notice of such termination
is sent by such party in the event that a law or regulation becomes
effective after the date of this Agreement which would render the
services provided by NATIONAL under this Agreement, in its
reasonable judgment, in violation of such law or regulation or
substantially burden either party with respect to the provision of
such services.
c. In the event that NATIONAL shall be in default of this Agreement for
thirty (30) days after written notice of such default from the
COUNTY to NATIONAL of such default, and NATIONAL has not cured or
commenced to cure such default which cannot be reasonably cured
within thirty (30) days, and which default has not been caused by
the COUNTY, the COUNTY shall have the right to immediately terminate
this Agreement.
d. In the event that the COUNTY shall be in default of this Agreement
for thirty (30) days after written notice of such default from
NATIONAL to the COUNTY of such default, and the COUNTY has not cured
or commenced to cure such default which cannot be reasonably cured
within thirty (30) days, and which default has not been caused by
NATIONAL, NATIONAL shall have the right to immediately terminate
this Agreement.
e. Following written notice of termination by either party, the COUNTY
may contact and solicit another administrator for prescription drug
services and NATIONAL shall not, in any manner, hinder or prevent
the COUNTY from contacting any such other administrators.
f. Termination of this Agreement will not terminate the rights or
obligations of either party arising out of the period during which
this Agreement was in effect. Unless otherwise agreed to by the
parties at the time of termination, this Agreement shall continue to
be operative with respect to obligations incurred hereunder prior to
the date of termination, including, but not limited to any
obligations by virtue of issued and unexpired member identification
cards issued by NATIONAL on behalf of the COUNTY.
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3. Payment and Compensation:
a. In consideration of NATIONAL's complying with all of the obligations
set forth in this Agreement, the COUNTY shall compensate NATIONAL as
set forth in Exhibit B, entitled "Responsibilities of NATIONAL" and
Exhibit F, entitled "Managerial Fees" of this Agreement.
b. The parties acknowledge that NATIONAL has submitted a proposal,
dated November 10, 1997, requesting certain changes, including an
adjustment in the fee schedule; such proposal is in the process of
negotiation. When the parties reach agreement as to such changes, a
First Amendment of Agreement will be executed documenting such
changes as they shall apply to calendar year 1998 only.
4. Notice Requirements/Contact Persons:
a. Any communication, notice, claim for payment, report or other
submission necessary or required to be made by the parties regarding
this Agreement and applicable Amendments shall be deemed to have
been duly made upon receipt by the COUNTY or NATIONAL or their
designated representative at the following address or at such other
address that may be specified in writing by the parties:
For the COUNTY
Department of Audit & Control
Risk Management & Benefit Division
Xxxxxxxxx Xxxxxx Xxxx
000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn.: Xxxx Xxxxxxx, Risk & Benefit Manager
For NATIONAL:
National Medical Health Card Systems, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
Attn.: Xxxxx Xxxxxxx, President
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b. Any communication or notice regarding indemnification, termination
or litigation shall be deemed to have been duly made upon receipt by
the COUNTY or NATIONAL at the addresses specified in sub-paragraph
(a), above, with copies to:
Suffolk County Department of Law
000 Xxxxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Att.: Xxxxxx X. Xxxxxx
County Attorney
and
National Medical Health Card Systems, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
Attn.: Xxxxx Xxxxxxx, President
c. Each party shall give prompt written notice to the other party of
the appointment of successor(s) to the designated contact person(s)
or his or her designated successor(s).
5. Not in Arrears:
NATIONAL is not in arrears to the COUNTY upon any debt or contract and is
not in default as surety, contractor or otherwise on any obligation to the
COUNTY.
6. Public Disclosure Law:
NATIONAL represents and warrants that, unless exempt, it has filed with
the Comptroller of the COUNTY the verified public disclosure statement
required by Local Law No. 14 of 1976, as amended (ss. A5-7 of the Suffolk
County Code) and shall file an update of such statement with the said
Comptroller on or before the 31st day of January in each year of this
Agreement's duration. NATIONAL acknowledges that such filing is a
material, contractual and statutory duty and that the failure to file such
statement shall constitute a material breach of this Agreement, for which
the COUNTY shall be entitled, upon a determination that such breach has
occurred, to damages, in addition to all other legal remedies, of fifteen
(15%) of the amount of the Agreement.
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7. Gratuities Law:
NATIONAL represents and warrants that it has not offered or given any
gratuity to any official, employee or agent of the COUNTY or New York
State or of any political party, with the purpose or intent of securing an
agreement or securing favorable treatment with respect to the awarding or
amending of an Agreement or the making of any determinations with respect
to the performance of an agreement, and that the signer of this Agreement
has read and is familiar with the provisions of Local Law No. 32-1980 of
Suffolk County (Chapter 386 of the Suffolk County Code).
8. Independent Contractor Status:
It is expressly agreed that NATIONAL's status hereunder is that of an
independent contractor. Neither NATIONAL nor any person hired by NATIONAL
shall be considered employees of the COUNTY for any purpose.
9. Indemnification:
a. NATIONAL shall indemnify and hold harmless the COUNTY, its
consultant (if any), employees, agents and designated
representatives from and against all claims, costs, judgments,
liens, encumbrances and expenses, including attorney's fees, arising
out of the acts or omissions or negligence of NATIONAL in connection
with the services described or referred to in this Agreement.
b. To the extent permitted by law, the COUNTY shall indemnify and hold
harmless NATIONAL, its consultant (if any), employees, agents and
designated representatives from and against all claims, costs,
judgments, liens, encumbrances and expenses, including attorneys'
fees, arising out of the:
i. Acts or omissions or negligence of the COUNTY in
connection with the services described or referred to in
this Agreement; and
ii. The payment, or the denial thereof, of Benefit Payments;
and
iii. Plan Design issues.
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c. The indemnification obligations of this Paragraph 9 shall survive
the termination of this Agreement.
10. Insurance:
a. NATIONAL agrees to procure, pay the entire premium for and maintain
throughout the term of this Agreement insurance in reasonable
amounts and types specified by the COUNTY. Unless otherwise
specified by the COUNTY and agreed to by NATIONAL, in writing, such
insurance will be as follows:
i. Commercial General Liability insurance, including contractual
coverage, in an amount not less than One Million Dollars
($1,000,000.00) combined single limit for bodily injury and
property damage per occurrence.
ii. Worker's Compensation and Employer's Liability insurance in
compliance with all applicable New York State laws and
regulations. In accordance with General Municipal Law ss.108,
this Agreement shall be void and of no effect unless NATIONAL
shall provide and maintain coverage during the term of this
Agreement for the benefit of such employees as are required to
be covered by the provisions of the Workers' Compensation Law.
iii. Professional Liability insurance in an amount not less than
One Million Dollars ($1,000,000.00) on either a per occurrence
or claims made coverage basis.
b. All policies providing such coverage shall be issued by insurance
companies reasonably acceptable to the COUNTY.
c. NATIONAL shall furnish to the COUNTY Certificates of Insurance or,
on request, original policies, evidencing compliance with the
aforesaid insurance requirements. In the case of commercial general
liability insurance, said certificate shall name the COUNTY as an
additional insured. All such certificates or other evidence of
insurance shall provide for the COUNTY to be a certificate holder
and to be notified in writing thirty (30) days prior to any
cancellation, non-renewal or material change. Such certificates,
policies and other evidence of insurance and notices shall be
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mailed to Suffolk County Department of Audit and Control/Office of
Insurance and Risk Management, 000 Xxxxxxxx Xxxxxxxx Xxxxxxx,
Xxxxxxxxx Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, Attention: Risk &
Benefit Manager.
11. Non-discrimination Requirements:
In accordance with Article 15 of the New York State Executive Law (also
known as the Human Rights Law) and all other County, State and Federal
statutory and constitutional non-discrimination provisions, NATIONAL shall
not discriminate against any employee or applicant for employment because
of race, creed, color, sex, national origin, age, disability, marital
status or Vietnam Era Veteran status.
12. Non-discrimination in Services:
During the performance of this Agreement:
a. NATIONAL will not, on the grounds of race, creed, color, national
origin, sex, age, disability, Vietnam Era Veteran status or marital
status:
i. Deny any Member any service(s) or other benefits provided
under the Plan;
ii. Provide any service(s) or other benefits to a Member which are
different, or are provided in a different manner from those
provided to other Members under the Plan;
iii. Subject a Member to segregation or separate treatment in any
matter related to the Member's receipt of any service(s) or
other benefits provided under the Plan;
iv. Restrict a Member in any way in the enjoyment of any advantage
or privilege enjoyed by other Members receiving any service(s)
or other benefits provided under the Plan;
v. Treat a Member differently from other Members in determining
whether or not the Member satisfies any eligibility or other
requirements or condition which Members must meet in order to
receive any aid, care, service(s) or other benefits provided
under the Plan.
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b. NATIONAL will not utilize criteria methods of administration which
have the effect of subjecting Members to discrimination because of
their race, creed, color, NATIONAL origin, sex, age, disability,
Vietnam Era Veteran status or marital status, or have the effect of
defeating or substantially impairing accomplishment of the
objectives of the program in respect to individuals of a particular
race, creed, color, NATIONAL origin, sex, age, disability, Vietnam
Era Veteran status or marital status, in determining:
i. The types of service(s) or other benefits to be provided
under the Plan; or
ii. The class of Members to whom, or the situations in
which, such service(s) or other benefits will be
provided under the Plan; or
iii. The class of Members to be afforded an opportunity to
participate in the Plan.
13. Assignment/Subcontract:
a. NATIONAL shall not assign, transfer, convey, subcontract or
otherwise dispose of any material administrative responsibilities of
this Agreement, or any right, title or interest therein, to any
other person or corporation without the prior consent in writing of
the COUNTY, which may not be unreasonably withheld or delayed.
b. Notwithstanding anything else contained herein, NATIONAL may assign,
transfer and convey this Agreement and its obligations hereunder to:
i. Any subsidiary or affiliate; or
ii. To any successor-in-interest in connection with the sale
of all or substantially all of the assets, interests or
stock of NATIONAL, provided that in the event that this
Agreement is assigned pursuant to this sub-section (ii),
the COUNTY may terminate this Agreement upon one hundred
and twenty (120) days prior written notice during the
Term of this Agreement.
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14. Severability:
It is expressly agreed that if any term or provision of this Agreement, or
the application thereof to any person or circumstance, shall, to any
extent, be held invalid or unenforceable, the remainder of this Agreement,
or the application of such term or provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall
not be affected thereby; and every other term and provision of this
Agreement shall be valid and shall be enforced to the fullest extent
permitted by law.
15. Entire Agreement:
It is expressly agreed that this instrument represents the entire
agreement of the parties and that all previous understandings are merged
in this Agreement.
16. No Modifications:
No modification of this Agreement shall be valid unless written in the
form of an Addendum or Amendment signed by both parties.
17. Governing Law:
a. This Agreement shall be construed in accordance with, and governed
by, the laws of the State of New York.
b. The parties shall comply with all applicable federal, state and
local laws, rules and regulations.
18. Section Headings:
All section headings contained herein are for the convenience of reference
only and are not intended to define or limit the scope of any provision of
this Agreement.
End of Text for Exhibit A
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Exhibit B
Responsibilities of NATIONAL
1. Definitions:
a. An "eligible employee" or "member" is an employee of the COUNTY, or
a dependent of such employee, who has met the criteria required to
become a participant in the Plan.
b. A "member pharmacy" is a pharmacy which has entered into a Member
Pharmacy Agreement with NATIONAL to participate in the Prescription
Drug Plan.
c. A "non-member pharmacy" is a pharmacy which does not participate in
the Prescription Drug Plan.
d. A "bi-weekly account statement" is a statement provided by NATIONAL
to the COUNTY every two weeks, which details various claim and
payment information in addition to managerial fees incurred for a
specific period.
e. A "claim voucher" is utilized by a member pharmacy when filling a
prescription that is not communicated electronically.
f. An "out-of-network claim form" is utilized when filling a
prescription at a non-member pharmacy.
g. A "Concurrent DUR service" is described in Exhibit I attached hereto
and made part of this Agreement.
h. A "Retrospective DUR service" is described in Exhibit I attached
hereto and made part of this Agreement.
i. A "Prospective DUR service" is described in Exhibit I attached
hereto and made part of this Agreement.
j. The "Coordination Of Benefits (COB)" procedures are described in
Exhibit I attached hereto and made part of this Agreement.
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k. "Other Insurance Coverage" is representative of another carrier
which is the primary payor for prescription drug benefit.
l. A "member identification card" is an identification card issued to
each Plan member or dependent evidencing his participation in the
Plan.
2. Prescription Drug Plan to Be Managed:
a. NATIONAL has received from the COUNTY a written statement containing
the details of the Plan to be managed, which includes the following:
i. effective date of the Plan;
ii. classes of dependents covered, including any age
limitations;
iii. estimated number of employees, listed by location;
iv. basis by which payments are determined when
prescriptions are furnished by both member and
non-member pharmacies;
v. expiration date of the Plan, if applicable; and
vi. amount of co-payments; and\
vii. benefit plan design.
b. The COUNTY has provided to NATIONAL a list of names of all persons
to be covered as of the effective date of the Prescription Drug Plan
and such other information as may be required for the effectual
operation of the System. Eligibility updates on behalf of the COUNTY
will be provided to NATIONAL on a daily basis by VYTRA via
electronic media. The COUNTY shall be liable for all charges
incurred by persons unauthorized to use a member's identification
card, unless NATIONAL was notified in writing that the
identification card so identified was for an individual no longer
eligible to participate in the Prescription Drug Plan.
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c. The Prescription Drug Plan shall provide for reimbursement to the
employee of the cost of prescription drugs purchased at non-member
pharmacies only upon the submission of claims for direct
reimbursement, in a form approved by the COUNTY and NATIONAL,
together with the employee's proof of payment for the prescription
drugs. The level of reimbursement provided pursuant to this
Paragraph 3 shall be based upon the same schedule in effect for
pharmacies. See Exhibit J, entitled "Payment by COUNTY to NATIONAL
for Pharmaceutical Claims Incurred," attached hereto and made part
hereof for schedule of reimbursement.
d. The Prescription Drug Plan shall also provide that the benefits
payable under the Prescription Drug Plan with respect to
reimbursement to employees who deal with non-member pharmacies, are
not assignable and any assignment or attempted assignment thereof
shall be null and void.
3. Services:
NATIONAL agrees to:
a. Add pharmacies to the network as requested by the COUNTY and/or
members in order to insure that there are an adequate number of
member pharmacies. Currently, the network consists of over 37,000
participating pharmacies nationwide, while continuously adding new
members to various geographic areas;
b. Furnish each member pharmacy with a description of the Plan as
approved by the COUNTY, including the COUNTY's payment schedule for
covered prescriptions;
c. Require member pharmacies to comply with the terms of the NATIONAL's
Member Pharmacy Agreement;
d. Process claim vouchers and/or electronic claims received from member
pharmacies; process claim forms received from covered persons for
prescriptions which have been furnished by non-member pharmacies;
determine whether such claims qualify for reimbursement in
accordance with the terms of the Plan and the payment applicable for
such claim; and the return of unacceptable claim vouchers and claim
forms to the
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submitting party, pursuant to the System and in accordance with
applicable law;
e. NATIONAL shall be responsible for issuing timely reports, both
orally and in writing, to the COUNTY on the status of pending and
proposed activities, such reports shall include, but not be limited
to, the following:
i. Advise the COUNTY on a bi-weekly account statement the
amount of claims cost coming due on valid claim vouchers
as well as electronic claims processed and approved by
the NATIONAL for payment during the applicable period:
ii. Furnish the COUNTY with a bi-weekly account statement
which sets forth a computer-produced summary of claim
cost made on behalf of the Plan during the preceding
period. The summary shall indicate the total number of
payments made and shall include such other data and be
in such form as agreed upon by the parties, provided
that such form is compatible with the System;
iii. Provide management reports which include both retail and
mail order data. The mail order provider is responsible
for providing mail order claims data to the NATIONAL in
NATIONAL's format which conforms to the NCPD industry
standard for communication between pharmacies (retail
and mail order) and the Benefits Manager. The NATIONAL
shall provide such reports on a monthly basis for claims
dispensed on behalf of members during the preceding
month. The initial tape is to be generated by the mail
order provider on or about April 15, 1995 and will be
generated monthly thereafter and such initial tape will
include all claims dispensed since January 1, 1995;
f. Provide Concurrent and Retrospective DUR services;
g. Provide for "Coordination of Benefits" with respect to Prescription
Drug Benefits. The COUNTY or its agent will provide NATIONAL with a
list of employees who have Other Insurance Coverage. NATIONAL will
research and establish which prescriptions were payable as primary
by other insurance companies. NATIONAL shall contact and pursue
collection on
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those claims. At the end of each quarter NATIONAL will provide the
COUNTY with a payment for monies collected in accordance with the
terms of the Agreement and a list of the employees represented by
the payment;
h. Address all terms and conditions as outlined in this Agreement,
including all Exhibits;
i. Provide current pharmacy listings to the COUNTY upon request by the
COUNTY;
j. Provide a telephone call blockage rate of less than .01%;
k. Generate member identification cards on a weekly basis. Each member
will be provided with one identification card. All changes,
additions and corrections recorded in-house during the preceding
five business days are generated and mailed on the sixth business
day. In the event the schedule cannot be met due to circumstances
beyond the control of the NATIONAL, the COUNTY representative will
be notified by the NATIONAL of the situation and the anticipated
date on which the COUNTY will receive such identification cards.
l. Provide a representative to attend Suffolk County meetings upon
advance written notice received by the NATIONAL either forty-eight
(48) hours prior to the date of the meeting, or upon receipt by the
NATIONAL of a yearly schedule of meetings provided by the COUNTY.
4. Payments Due:
a. Upon review and acceptance by the COUNTY of the information
contained in the bi-weekly account statement, the COUNTY shall
reimburse NATIONAL the cost of claims as documented. Any alleged
discrepancies noted by the COUNTY will be reviewed by NATIONAL and
credited to the COUNTY on subsequent invoices, should it be
determined that such discrepancies are factual. The bi-weekly
account statement will also include an amount due to NATIONAL for
the auditing, approval and payment of claims processed during the
preceding period. The COUNTY shall pay fees to NATIONAL as outlined
on Exhibit F attached hereto and made part of this Agreement. The
COUNTY agrees to make all payments
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Law No. 98-IS-002
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by wire transfer within five (5) business days from receipt of the
bi-weekly account statement. (See Exhibit G, attached, for wire
transfer instructions.)
b. Any additional charges for special services, supplies, reports etc.,
not included in the Plan as discussed herein, for which a separate
fee is agreed to in writing by the parties, shall be remitted by the
COUNTY within thirty (30) days after receipt by the COUNTY of a
billing by NATIONAL.
5. Records:
a. NATIONAL shall maintain in electronic form, current and complete
files of all claims received, including any paper claims vouchers,
received from member pharmacies and covered persons for services
rendered by non member pharmacies. NATIONAL shall also maintain
adequate records to establish cost of drugs to the COUNTY. These
records shall remain accessible to the COUNTY for examination and
audit by the COUNTY throughout the calendar year in which they are
established and for three (3) calendar years thereafter. Such audits
may be conducted, upon written notice, at reasonable intervals
during the regular business hours of NATIONAL. All claims vouchers,
claims forms and other records pertaining to the management of the
Plan and the System are the property of NATIONAL.
b. All computer programs, software or other data generated or utilized
by NATIONAL are and at all times shall remain the property of
NATIONAL.
End of Text for Exhibit B
Page 21 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
Exhibit C
RFP Issued by COUNTY in March 1994
Incorporated by Reference
Page 22 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
Exhibit D
Proposal Submitted by NATIONAL
Incorporated by Reference
Page 23 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
Exhibit E
Two Proposal Addendums
Letter dated August 15, 1994 (consists of 9 pages);
Letter dated June 28, 1994 (consists of 5 pages).
Incorporated by Reference
Page 24 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
Exhibit F
Managerial/Administrative Fees
1. This Exhibit summarizes the managerial/administrative fees described in
the Proposal and Addendums (Exhibits D and E); to the extent there is a
conflict, this Exhibit F controls.
2. NATIONAL will manage the basic prescription program in accordance with the
accepted responses to the Request For Proposal and its subsequent
questionnaire for $0.25 per claim.
3. NATIONAL will provide for the following package of services to be included
for its standard per claim fee (plus any additional charges as described
below):
i. A Computerized bi-weekly claims report with each invoice,
which lists all claims for the prior two week period.
ii. Coordination of retail and mail order claims data between
NATIONAL, mail order provider and COUNTY.
iii. A monthly management report which includes both retail and
mail order data.
iv. Computerized quarterly drug usage reports.
v. Toll free WATS service throughout the United States.
vi. All standard forms needed for the effective operation of the
program.
vii. Handling and postage expense for checks to pharmacies and
members with explanation.
viii. Computer generated alphabetical membership listing as
required.
ix. Computer generated pharmacy listing as required.
x. Notification and explanation of benefits to members, only in
the case of a direct reimbursement.
Page 25 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
xi. Educational materials as needed for Plan participants,
physicians and pharmacists relative to the management of the
prescription benefit program.
xii. Audit of pharmacies and return of funds to clients where
appropriate.
xiii. Compliance with State Generic drug laws.
xiv. Client's logo on I.D. card.
xv. Concurrent and Retrospective Drug Utilization Review.
xvi. MAC program (as described in Response to Proposal).
xvii. Production and distribution of paper claim forms for members
who use non-member pharmacies.
xviii. Production of standard employee communication materials.
xix. Adjudication of claims from both member pharmacies and
members who utilize non-member pharmacies.
xx. Generic waiver appeals program.
xxi. Customer services.
xxii. Mailings direct to cardholders - Postage charges.
xxiii. Annual Audit Letter.
xxiv. Card costs $0.25 per card, plus cost of postage, when
appropriate.
xxv. NATIONAL will manage the Coordination of Benefits Program, at
a fee of 20% net of billed outstanding monies that are
recovered.
xxvi. Claims history tape (one tape each cycle) $50.00 per tape.
xxvii. Other mailings direct to cardholders - Postage charges.
Page 26 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
4. Additional Services may be requested in writing by the COUNTY. Charges for
such additional services not listed above will be at cost to NATIONAL.
End of Text for Exhibit F
Page 27 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
Exhibit G
Wire Transfers
Wire transfers shall be to:
BANK: Chase Manhattan Bank
ADDRESS: 00 Xxxxx Xxxxxx
Xxx Xxxx, XX
FOR ACCOUNT OF: National Medical Health Card Systems, Inc.
ACCOUNT NUMBER: 000-000-000
ABA NUMBER: 000000000
Both the managerial/administrative fees (as described in Exhibit F) and
the COUNTY payment per prescription (as described in Exhibit J) shall be
paid to NATIONAL by Wire Transfer.
Page 28 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
Exhibit H
Financial Guarantees
1. This exhibit summarizes financial guarantees described in the proposal and
addendums (Exhibits D and E); to the extent there is a conflict, this
Exhibit H controls.
2. All financial guarantees are based on:
a. There being no changes made to the plan design and/or the
administration of the program which would effect the utilization or
the reimbursement of the plan.
b. There are no additional inducements to members to use the mail order
pharmacy as opposed to the retail pharmacy network.
3. Rebates:
a. Initial rebate guarantee is $.80 per paid claim.
b. Any additional net rebates in excess of $.80 per claim minus
NATIONAL 20% administrative fee will be shared as follows:
i. Up to $1.00 will be remitted at the minimum amount
agreed upon ($.80)% minus administrative fee.
ii From $1.01 to $1.1499 will be remitted at 80% of earned
net rebates minus administrative fee.
iii. In excess net $1.15 will be shared respectively by the
County and NATIONAL in the ratio 85/15 (net of
administrative fees).
4. Administrative Fee is the fee NATIONAL is charged by its Rebate
Administrator and is a pass through to the County.
Page 29 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
5. Copies of the reconciliation will be forwarded to the County, and/or its
designated party as documentation for the rebates are made available to
NATIONAL. The lag time is generally nine months from the end of the
quarter and is available monthly from there on in, as payments are
received.
6. Rebates will not be reconciled nor remanded until NATIONAL has received
said reconciliation and funds from manufacturers.
Rebates are guaranteed for three years unless manufacturers cease
providing rebates or government intervention prohibits the practice.
7. Guarantee of Discounts
NATIONAL guarantees an effective blended AWP discount per script of
15.488% and an average blended dispensing per script fee no greater than
$3.04. This takes into account MAC pricing where applicable in the
program.
Any difference between the actual cost of the program and the guaranteed
savings will be credited to the County dollar for dollar.
AWP is determined by First Data Bank.
NATIONAL will semi-annually provide a report comparing ingredient cost on
file to total ingredient cost billed to the County. A similar report will
be provided for dispensing fees
8. Generic Dispensing Rate Guarantee
NATIONAL guarantees a generic dispensing rate of 35% of the total number
of scripts dispensed in each of the calendar years 1995, 1996, 1997 and
1998.
NATIONAL will provide copies of the Claims Analyses Report (CAR Report) to
document the generic substitution rate.
The 35% generic dispensing rate reflects the minimum guarantee. NATIONAL
is willing to renegotiate the minimum guaranteed generic dispensing rate
following any year when the actual generic dispensing rate achieved
exceeds the guaranteed rate by 3% or more.
Page 30 of 40
Law No. 98-IS-002
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9. Guarantees on Administrative Fees
Administrative fees as set forth in the Proposal are guaranteed for three
years.
10. Electronic Edits Guarantees
NATIONAL guarantees a minimum of 1.50% savings to the plan based on
electronic edits as set forth in paragraph 19 of the letter dated August
15, 1994.
To document the savings, NATIONAL will provide a rejected claims report.
The savings will be determined based on the cost to the program had the
scripts been filled. Attempts at refills will be included in calculated
cost savings.
Savings are guaranteed for each of the three contract years.
11. Concurrent DUR Savings
a. Concurrent DUR savings are guaranteed at 3%. Savings will be
documented on a report that includes:
i. Claims backed out of the system;
ii. Claims rejected as a result of DUR message
intervention;
iii. Claims denied as "refilled too soon."
Included in this category will be any savings to the COUNTY that may
be realized from a new pharmacy intervention program that NATIONAL
has implemented.
b. Savings will be calculated in accordance with paragraph 19 in the
letter dated August 15, 1994.
c. Savings are guaranteed for each of the three contract years.
Page 31 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
12. Retrospective DUR Savings:
Retrospective DUR savings cannot be guaranteed. Projected savings for
Retrospective DUR are 2% in the second and third year of the contract. The
projected savings are predicated upon the plan sponsor allowing NATIONAL
the latitude to communicate and intervene with plan outlines in the
physician and patient communities.
13. Pharmacy Audit Savings:
a. Pharmacy audit savings are guaranteed at 2%, provided the COUNTY
allows NATIONAL to communicate with outlined in the patient
community. A variety of reports will be provided to document these
savings.
b. Savings will not include savings from any new intervention program
unless, it is found that pharmacist was not in compliance with
program.
c. Savings are guaranteed for each of the three contract years.
Page 32 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
Exhibit I
DUR and COB
1. This Exhibit I serves as an addendum to the Proposal and Addendums
(Exhibits D and E).
2. Concurrent DUR:
a. NATIONAL's DUR drug utilization review system ("DUR System") detects
potential drug misutilization before a prescription is filled,
enhancing the quality of care and saving money. Driven by a
comprehensive clinical database and a full spectrum of sophisticated
clinical modules, the DUR System identifies problems in real time at
the point of service. When a pharmacist submits a claim for
approval, the DUR System processes the transaction concurrently with
the Claim adjudication system, ensuring rapid response time.
b. The DUR System includes nine clinical modules, which can be
separate, in combination, or as a complete package. Within each
module, user-defined parameters provide the flexibility needed to
manage the drug utilization review process successfully. Screening
parameters may be specified for specific carriers, plans, or member
groups. The patient drug profile is common to all configurations.
The DUR System builds and maintains this computerized list of active
drug ingredients from prescription data captured from claims
submitted for each patient. The DUR System includes, but is not
limited to the following interventions:
i. Drug interaction;
ii. Duplicate drug therapy and therapeutic overlaps;
iii. Pregnancy precautions;
iv. Breast feeding precautions;
v. Doses which exceed the recommended or absolute maxim for
a drug;
Page 33 of 40
Law No. 98-IS-002
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vi. Compliance checking;
vii. Age precautions.
c. To ensure that network pharmacists understand how to handle messages
returned by the DUR System, NATIONAL provides education to ensure
that pharmacists serving employees, retirees and their families use
the System's informational messages for the benefit of program
members.
3. Retrospective DUR
With the inclusion of concurrent and prospective DUR as tools in the
NATIONAL "managed care arsenal," retrospective DUR, while still important,
has captured a new emphasis. Retrospective DUR is now a major component of
the interface between the managed prescription plan administrator and the
managed medical care administrator. NATIONAL will analyze data
retrospectively, combining data with medical claims information, in order
to identify abuse; effect clinical outcomes and prescribing limitations.
4. Prospective DUR
Prospective DUR is performed before the patient has received the
prescription. Prospective DUR by definition allows for the cognitive
skills of the participating pharmacist to anticipate inappropriate
outcomes and to proactively intervene with the physician to suggest an
alternate measure. In April of 1994, NATIONAL, in conjunction with CCLI
and the Long Island Pharmaceutical Society, the first nonclinic based
Intervention program that recognizes the value of the cognitive services
offered by the pharmacist, and in addition, electronically tracks the
process from beginning to end in a single on-line transmission. Under a
program sponsored by CCLI for their HMO managed care participants, and
administered by NATIONAL, the pharmacist is financially incented to
intervene with physicians to positively affect patient outcomes and to
conserve health care dollars. The pharmacist receives twenty-five percent
(25%) of the savings on the initial script and ten percent (10%) of the
savings on the first three (3) refills.
Page 34 of 40
Law No. 98-IS-002
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5. Catastrophic:
a. All high tech, high cost therapies require prior approval and in
some instances special procedures which remove these claims from the
normal adjudication process. For example, Protropin is a costly
growth hormone which is used to stimulate growth in children
diagnosed with dwarfism. NATIONAL's prior approval process requires
the member, or the pharmacy provider, to contact NATIONAL before the
medication is dispensed. NATIONAL Health Card's Manager of Claims
Administration or a designated member of the Health Services
Department for our Managed Care Clients must provide approval and an
authorization code before the medication is dispensed. For this
particular medication, the same procedure is followed with each
refill.
b. Similar procedures are in place for home infusion therapy. Because
infusion therapy providers are required to contact NATIONAL when
beginning therapy, we are often able to negotiate significant
additional discounts with the provider and request that they accept
our negotiated discount as payment in full. Since people requiring
this type of treatment are often very ill, we are able to relieve
them of some financial concerns while saving the client money.
c. For other drug therapies which are costly but do not require
constant monitoring, NATIONAL keep's a doctor's certification letter
on file and the local pharmacist calls before dispensing the
medication. NATIONAL provides an override code enabling the
pharmacist to transmit the claim via standard electronic
transmission. NATIONAL is currently developing the capability of
indicating overrides on a member's record so that pharmacists will
not have to call for override codes on refills. However, there will
always be those therapies that NATIONAL may wish to keep out of
mains of electronic transmission due to cost, limited providers and
the limited duration of therapy, and/or the careful monitoring that
is required.
Page 35 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
d. Because of NATIONAL's reputation as a forward thinking company, it
is often notified as new high tech drug therapies such as Pulmozyne
and Beta Seron come to market. Often these drugs are in short supply
but NATIONAL establishes a procedure either with the manufacturer or
the distributor that enables it's subscribers to obtain the
necessary medication easily while allowing NATIONAL to monitor the
cost and duration of therapy. NATIONAL is currently working with
Berlex to ensure that NATIONAL's members who are eligible for Beta
Seron the new genetically engineered drug that is used to treat
Multiple Sclerosis is easily available to our members that have
qualified for the lottery.
6. COB:
a. The goal of NATIONAL'S COB Department is to maximize the collection
of COB dollars from other insurance carriers. It is the
responsibility of the COB department to actively pursue COB
investigation, confirmation, and the timely collection of all
recoverable monies. Those retrievable dollars are viewed as
incremental dollars ultimately contributing to the bottom line of a
client's prescription drug program. The function of the COB
department is to work in concert with the client in minimizing the
cost of the administration of the client's prescription drug
program.
b. The starting point for NATIONAL'S method of collection and process
of recovery stems from the list of 'Members with other Insurance' as
provided by the client. This list of 'Members with Other Insurance'
is entered into NATIONAL's system, and NATIONAL's computer program
sorts and identifies these 'Members with Other Insurance' into the
status of collectible. With this integrated database, NATIONAL's
system is equipped to maintain a turnaround time by establishing
trigger dates for the generation of letters to other insurance
carriers. Ten (10) days after the first request for reimbursement is
produced, a second request for recovery can be automatically
generated. Five (5) days thereafter, the system can prompt the
member account for the initiation of the phone call campaign.
Multiple phone calls are made to ensure prompt reimbursement of
projected monies.
Page 36 of 40
APPENDIX J
Payment by COUNTY to CONTRACTOR/MANAGER
for Pharmaceutical claims incurred
CHAINS (21 days or less) & (Over 21 days)
Brand = 87%AWP
Brand w/Generic = 75%BLP
Generic = 75%AWP
Disp. Fee = $2.90
================================================================================
INDEPENDENTS (21 days or less)
Brand = 90%AWP
Brand w/Generic = 90%BLP
Generic = 90%AWP
Dispense Fee = $3.50
(Over 21 days)
Brand = 87%AWP
Brand w/Generic = 75%BLP
Generic = 75%AWP
Disp. Fee = $2.90
Page 37 of 40
EXHIBIT K
AUDIT LETTER SAMPLE
HEALTH CARD 11/03
X.X. XXX 00
XXXXXX, X.X. 00000
XXXXXXXXXXX OF PRESCRIPTION BENEFITS
57850004
EMPLOYEE MEDICAL HEALTH PLAN
OF SUFFOLK COUNTY
00 X XXXXXX XXXXXXX
XXXXXXXXXX, XX 00000
FAMILY DATA INFORMATION
# NAME BIRTH DT
02 / /
The prescription drug benefits reimbursed on your behalf during the period from
07/01/94 to 09/30/94 totaled ****** 3587.59 ******. All of the medications which
you received are listed below. Please verify the prescription information.
Indicate any discrepancies on the form and return it to Health Card. If the
information is correct, do not return the form.
QUAN ALLOWED AMOUNT
PATIENT # RX NUMBER DATE DRUG DESCRIPTION TITY COST CO PAY PAID
------- - --------- ---- ---------------- ---- ------- ------ ------
0751159 07/15/94 PROCARDIA XL 90 163.38 5.00 158.38
0753860 07/01/94 QUESTRAN LIGHT (POWDER 50 71.98 5.00 66.98
0750066 08/30/94 *POTASSIUM CHLORIDE 200 17.97 5.00 12.97
0765731 08/11/94 QUESTRAN LIGHT (POWDER 180 210.14 5.00 205.14
0757666 08/30/94 *INDAPAMIDE 90 47.44 5.00 42.14
02 0752231 07/11/94 NEUPOGEN 10 1231.78 5.00 1226.78
02 0752232 07/11/94 EPOGEN 20 838.10 5.00 833.10
02 0755649 08/11/94 EPOGEN 10 1046.90 5.00 1041.90
------- ---- -------
TOTAL $3627.69 $40.00 $3587.59
*: Generic Drug Obtained
**: Brand name drug obtained but a generic was available
Page 38 of 40
EXHIBIT L
Rebate Report
Sample
Administrative Charge/ NMHC'S MANUFACTURER'S REBATE PROGRAM
DISTRIBUTION DETAIL SUMMARY-NMHC PPO
DISTRIBUTION FOR 11/94
TIME PERIOD: FILL DATES: 10/01/93-13/31/93
GROUP: Xxxxxxx Co.
Admin.
Group No Total Charge Net to Customer
collected share at 20% reflects 80%
94473204 1,157.48 231.50 925.98
-------- ------ ------
Client total 1,157.48 231.50 925.98
The above represents the standard rebate. Additional rebates beyond the standard
will be calculated and provided after the reconcilliation to the applicable
calendar year.
Page 39 of 40
Law No. 98-IS-002
Rev. 3/4/98 National Medical Health Card/Prescription Drug/EMHP
Exhibit M
Employee Medical Health Plan of Suffolk County
Benefit Booklet
April 1995
Incorporated by Reference
Page 40 of 40
