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HomeMy WebLinkAboutExpress Scripts-Drug Benefit Plan-06.22.2009 lif ° "' EXPRESS SCRIPTS®Vag I' ° June 22,2009 Mr.Tim Hurley City of Waterloo,Inc 715 Mulberry Street Waterloo,IA 50703 Dear Mr.Hurley: We are pleased that you have agreed to new terms under your Managed Prescription Drug Program Agreement with Express Scripts. This letter will serve to confirm that Express Scripts will continue to manage the costs and utilization of your prescription drug benefit plan. While the contracting process has been initiated,a definitive agreement/contract has not been executed. In order for Express Scripts to be able to implement agreed upon changes to your prescription drug program without a signed agreement,Express Scripts requires written confirmation from you concerning the financial terms of our arrangement. Subject to the requirements below,Express Scripts will implement the financial terms set forth in the attached to be effective July 1,2009 or 10 business days following our receipt of this letter,whichever is later,signed by an appropriate officer of your organization if received after July 1,2009. In addition,this pricing is conditioned upon a three year extension with ESI as your exclusive PBM. Due to the well publicized court settlement underway regarding the use of AWP Pricing/Benchmarks as a basis for pharmaceutical pricing, the pricing indices used for this Agreement may change due to factors outside the control of you and ESI. If benchmark changes are made under this Agreement and any subsequent definitive contract executed between the parties,our intent is to maintain pricing stability as intended and not to advantage either party to the detriment of the other. Should a change occur, ESI shall provide you with at least 90 days notice of the change(or if such notice is not practicable, as much notice as is reasonable under the circumstances), and we will provide written, financial illustrations demonstrating the price neutral impact of the drug file source or index change(e.g., specific drug examples). Express Scripts'policy prohibits the processing of subsidy reports as well as payments of such items as rebates,guarantees,commissions or other similar payments until a contract is fully executed. Please also note that we may not be able to bill for manufacturer rebates for any quarter for which a written contract is not in place. So if a legal contract is not in place by the time we bill the manufacturers(usually within two weeks of the end of a calendar quarter)we may not be able to bill for rebates for your program for that quarter. Express Scripts looks forward to a long and mutually satisfying working relationship with you.If you have any questions,please contact Pat Burns at 314-996-0910. Please sign and return this letter via fax to Ellen Wynne at 800-287-0359 and mail the original to her attention at the address below. Sincerely, Michael Fondell Vice President,Sales&Marketing Operations 1-800-332-5455,Ext.344180 Agreed to thistiaday of 3ctn(,2009 Company: C.0/1" a C0 Cf OoO Signature: `/// Printed Name: I VYl Hur Title: /'1 a ypr One Express Way .St.Louis,MO 63121 .314.996.0900.www.express-scripts.com frigairah EXPRESS SCRIPTS ® -mow PHARMACY BENEFIT MANAGEMENT SERVICES PRICING SUPPLEMENT FOR PUBLIC SECTOR COALITION CITY OF WATERLOO JULY 1, 2009 Copyright©2009 Express Scripts,Inc. All rights reserved. This document is proprietary and confidential and cannot be copied or reproduced without prior written permission of Express Scripts,Inc. This document has been delivered to the recipient solely for the purpose of permitting the recipient to evaluate a potential relationship with Express Scripts,Inc. All other uses prohibited. RETAIL PHARMACY NETWORK AND HOME DELIVERY PRICING Benefit Plan 1 2-Tier Plan Design/3-Tier Plan Design with less than$15.00 Differential Benefit Plan 2 3-Tier Plan Design with a minimum$15.00 Differential Option 1:Traditional Retail Retail Home Delivery Minimum 50K Network 1-83 Day 84-90 Day Discounts Supply Supply 1 —90 Day Supply The lower of The lower of Pricing AWP-18%or AWP-21% or AWP-25.5% Brands U&C U&C Dispensing fee $1.20/Rx $0.40/Rx $0.00/Rx Administrative fee $0.00/Rx $0.00/Rx $0.00/Rx The lower of The lower of AWP-18%, AWP-21%, The lower of AWP-25.5% Pricing MRA, or U&C MRA, or U&C or MRA (Guarantee (Guarantee (Guarantee average: Generics average:AWP- average:AWP- AWP-68%) 64%) 64%) Dispensing fee $1.30/Rx $0.50/Rx $0.00/Rx Administrative fee $0.00/Rx $0.00/Rx $0.00/Rx Rebate Guarantee- $12.00 $12.00 $36.00 Rebates— Benefit Plan 1 Per Brand Claim Rebate Guarantee- $16.00 $16.00 $48.00 Benefit Plan 2 Commission Per Claim Gallagher $0.12 Trivantage-$0.18 Pricing Guarantees: A. Ingredient Cost Guarantee. ESI will guarantee a minimum average discount as reflected below on Sponsor utilization to be calculated as follows: Discounted ingredient cost will be the lesser of MRA, U&C or AWP discount adjudication methodology. RETAIL BRAND AND GENERIC, DISCOUNT GUARANTEES IDENTIFIED IN THE CHART BELOW WILL ADHERE TO THE FOLLOWING CRITERIA: a. Retail Brand Discount Guarantees: The brand discount guarantees must be based on Non-secondary claims, using the actual eleven (11) digit National Drug Code (NDC), submitted by a Participating Pharmacy at the_timeof adj_udicaticriforFederal Legen_dDrugs_at_the decimal-level quantity dispensed. Usual and Customary (U&C) claims greater than the member's copay that apply will be excluded from the discount guarantee calculations. Specific 11-digit Multi-source drug claims when generic drugs are dispensed will be excluded from the brand Public Sector Coalition February 25, 2009 1 Pricing Supplement discount guarantee calculations. The financial impact (e.g. difference in cost between the brand and generic drug plus copay) of additional member payments that apply to multi-source drug claims due to specific mandatory generic penalties will be excluded from the discount guarantee calculations, but the actual discount on the brand drug claims excluding any penalty amounts will be included. (a)(i) Brand discount guarantee excluding Zero Balance Claims (ZBCs): Exclude all ZBCs from the discount guarantee calculation. (ZBCs are claims whose total cost are equal to or less than the member pay amount.) (a)(ii) Brand discount guarantee including Zero Balance Claims (ZBCs): Include all ZBCs in the discount guarantee calculation, where ZBCs are measured at the PBM-calculated discounted ingredient cost. b. Retail Generic Discount Guarantees: The overall generic discount guarantees must be based on Non-secondary claims, using the actual eleven (11) digit National Drug Code (NDC), submitted by a Participating Pharmacy at the time of adjudication for Federal Legend Drug at the decimal-level quantity dispensed. Usual and Customary (U&C) claims greater than the member's copay that apply will be excluded from the discount guarantee calculations. Specific 11-digit multi-source drug claims when brand drugs are dispensed will be excluded from the discount guarantee calculations. Sole-source generic drug claims will be excluded from the generic discount guarantee calculations until such time as multiple manufacturers/distributors of the generic product exist, or only for the first six months from the day of the first generic drug approval as defined by First DataBank, whichever comes first. The financial impact (e.g. difference in cost between the brand and generic drug plus copay) of additional member payments that apply to multi-source drug claims due to specific mandatory generic penalties will be excluded from the discount guarantee calculations, but the actual discount on the generic drug claims excluding any penalty amount will be included. (b)(i) Generic discount guarantee excluding ZBCs: Exclude all Zero Balance Claims (ZBCs) from the discount guarantee calculation. (Zero Balance Claims are claims whose total cost are equal to or less than the member pay amount.) (b)(ii) Generic discount guarantee including ZBCs: Include Zero Balance Claims (ZBCs) in the discount guarantee calculation, where ZBCs are measured at the PBM-calculated discounted ingredient cost. MAIL SERVICE BRAND AND GENERIC DISCOUNT GUARANTEES IDENTIFIED IN THE CHART BELOW WILL ADHERE TO THE FOLLOWING CRITERIA: a. Mail Service Brand Discount Guarantees: The brand discount guarantees must be based on Non-secondary claims, at the time of adjudication for Federal Legend Drugs at the decimal-level quantity dispensed. Multi-source drug claims when generic drugs are dispensed will be excluded from the brand discount guarantee calculations. The financial impact (e.g. difference in cost between the brand and generic drug plus copay) of additional member payments that apply to multi-source drug claims due to specific mandatory generic penalties will be excluded from the discount guarantee calculations, but the actual discount on the brand drug claims excluding any penalty amounts will be included. (a)(i) Brand discount guarantee excluding Zero Balance Claims (ZBCs): Exclude all ZBCs from the discount guarantee calculation. (ZBCs are claims whose total cost are equal to or less than the member pay amount.) 0_1O Brand discount auarante_e including Zero_Balance Claims (ZBC_s)i__ln_clude_all ZBCs in the discount guarantee calculation, where ZBCs are measured at the PBM-calculated discounted ingredient cost. Public Sector Coalition February 25, 2009 2 Pricing Supplement b. Mail Service Generic Discount Guarantees: The overall generic discount guarantees must be based on Non-secondary claims, at the time of adjudication for Federal Legend Drugs at the decimal-level quantity dispensed. Multi-source drug claims when brand drugs are dispensed will be excluded from the discount guarantee calculations. Sole-source generic drug claims will be excluded from the generic discount guarantee calculations until such time as multiple manufacturers/distributors of the generic product exist, or only for the first six months from the day of the first generic drug approval as defined by First DataBank, whichever comes first. The financial impact (e.g. difference in cost between the brand and generic drug plus copay) of additional member payments that apply to multi-source drug claims due to specific mandatory generic penalties will be excluded from the discount guarantee calculations, but the actual discount on the generic drug claims excluding any penalty amount will be included. (b)(i) Generic discount guarantee excluding ZBCs: Exclude all Zero Balance Claims (ZBCs) from the discount guarantee calculation. (Zero Balance Claims are claims whose total cost are equal to or less than the member pay amount.) (b)(ii) Generic discount guarantee including ZBCs: Include Zero Balance Claims (ZBCs) in the discount guarantee calculation, where ZBCs are measured at the PBM-calculated discounted ingredient cost. Calculation of the Guaranteed Pharmacy Network and Mail Service AWP Discounts and Dispensing Fees. The following calculations apply to retail brand, retail generic, mail service brand and mail service generic drug claims (collectively referred to herein as "Pricing Components") where certain types of drug claims (e.g. U&C, ZBC) may be included or excluded from individual calculations as required by the definitions of specific guarantees as set forth in this section Exhibit A. a) AWP Discount Calculaticns. The actual paid amount by Sponsor will be calculated separately for each of the Pricing Components by aggregating each Pricing Component's total discounted AWP billed to Sponsor for drug claims incurred during the Contract Year. The guaranteed AWP discount, for each Pricing Component will be calculated by multiplying the AWP for each drug claim dispensed during the Contract Year by one (1) minus the applicable discount as set forth in the Program Pricing Terms table in this section Exhibit A. (For reference, this can be expressed for each Pricing Component as AWP*(1-guaranteed discount as set forth in the Program Pricing Terms table). b) Dispensing Fee Calculations. No explicit Dispensing Fee will be charged for drug claims paid at U&C. Therefore, U&C drug claims will be excluded from guarantee calculations. Separately for each Pricing Component, the actual average dispensing fee billed to Sponsor will be calculated by summing all qualifying prescription drug claims divided by the number of qualifying claims. Dispensing fee guarantees will be calculated by multiplying the number of qualifying claims by the applicable fee as set forth in the Program Pricing Terms table in this section Exhibit A. c) True-up Procedure. i) If there is more than one guarantee for a Pricing Component Category (e.g. generic drug AWP discount guarantee, one inc uding ZBCs and one excluding ZBCs and MAC) then only the guarantee with the greatest (negative) financial impact to Sponsor, if applicable, will be used for reconciling that specific guarantee. The results for (a) and (b) above will be calculated for each Pricing Component. If an individual calculation results in a negative number (e.g. actual AWP discount or dispensing fee did not meet the guarantee to Sponsor referenced in this Exhibit A), that Pricing Component will be deemed "in Deficit". Any Pricing Component in Deficit based on Public Sector Coalition February 25, 2009 3 Pricing Supplement the guarantee will be aggregated for payment to Company in accordance with Section (d) below. Any Pricing Component calculation that results in a positive number (e.g. actual discount or dispensing fee exceeded the guarantee to Sponsor referenced in this Exhibit A), that Pricing Component will be deemed "in Surplus." No payment will be due PBM by Sponsor for "in Surplus" amounts. In any event, where more than one calculation is performed for either AWP discount guarantees or dispensing fee guarantees, only the single result in each category with the greatest (negative) financial impact to Sponsor will be used. ii) If the true-up process reveals a disparity in findings between Company's Auditor and those of the PBM, the PBM shall provide to Company and/or Company's Auditor, upon request and at no cost, a claim summary file of the disparate claims for each of the Pricing Components subcategorized by analysis rationale (e.g. brand vs. generic classification, single-source generic status, OTC status, etc.). The claim summary file must contain at least the following data elements for each subcategory of each Pricing Component: total number of claims, total dispensing fee, total ingredient cost and total AWP. d) Payments Under Guarantees. Within ninety (90) days following the end of the Contract Year, the calculations described as set forth in this section shall be made and will be consistent with the other requirements or exclusions provided for in this Exhibit A or elsewhere in the Agreement. If the calculations above result in a negative number (e.g., actual AWP discounts or dispensing fees did not meet the guaranteed amounts), then PBM shall credit or pay the absolute value of the negative number within 30 days from the date of mutual agreement by the parties of the reconciliation amount due. If credits apply after termination of this Agreement, then amounts will be reimbursed to Sponsor by check. If the result of the calculation is positive (e.g., actual AWP discounts and dispensing fees were better than the guaranteed amounts), no amounts shall be due PBM from Sponsor. Aggregate Minimum Discount Guarantees and Aggregate Maximum Dispensing Fee Guarantees Retail Pharmacy Network brand Measured and reconciled individually AWP discount guarantee Retail Pharmacy Network generic Measured and reconciled individually AWP discount guarantee Retail Pharmacy Network brand Dispensing Fee guarantee Measured and reconciled individually Retail Pharmacy Network generic Dispensing Fee guarantee Measured and reconciled individually Mail Service Pharmacy brand Measured and reconciled individually AWP discount guarantee Mail Service Pharmacy generic Measured and reconciled individually AWP discount guarantee Mail Service Pharmacy brand Measured and reconciled individually Dispensing Fee guarantee Mail Service Pharmacy generic Dispensing Fee guarantee Measured and reconciled individually Retail Type of Guarantee Associated Fees Guaranteed retail network brand discount off AWP AWP 18% (exclude usual and customary (U&C) and zero Public Sector Coalition February 25, 2009 4 Pricing Supplement balance claims) Guaranteed retail network brand discount off AWP AWP 18% (exclude usual and customary (U&C) and include zero balance claims) Guaranteed retail network generic discount off AWP-18% AWP (non-MAC) Overall generic MAC discount off AWP guarantee AWP-64% (includes zero balance claims) Guaranteed overall retail network generic discount AWP-64% off AWP (include MAC and non-MAC, exclude U&C and zero balance claims) Guaranteed overall retail network generic discount AWP-64% off AWP (include MAC, non-MAC, and zero balance claims, exclude U&C) Home Delivery Guaranteed mail service brand discount off AWP AWP-25 5`)/o (exclude zero balance claims) Guaranteed mail service brand discount off AWP AWP-25.5% (include zero balance claims) Guaranteed mail service generic discount off AWP AWP-68% (exclude zero balance claims) Guaranteed mail service generic discount off AWP AWP-68% (include zero balance claims) Guaranteed covered OTC non-drug items discount AWP-18% off AWP Guaranteed covered federal legend non-drug items AWP-18% discount off AWP Public Sector Coalition February 25, 2009 5 Pricing Supplement Guaranteed covered OTC drug items discount off AWP-1 8% AWP Public Sector Coalition February 25, 2009 6 Pricing Supplement B. Dispensing Fee: ESI will guarantee a maximum per claim dispensing fee on Sponsor utilization: Dispensing fees will be calculated using the lesser of MRA, U&C or AWP discount adjudication methodology Retail 1 -83 day Type of Guarantee Associated Fees supply: Guaranteed retail network brand dispensing fee $1.20/Rx Guaranteed retail network generic dispensing fee $1.30/Rx V. Generic Dispensing Rate Guarantee. ESI will guarantee that Generic Drugs will be dispensed from Participating Pharmacies and the Mail Service Pharmacy at the percentages reflected below for the entire Sponsor book of business claim volume: Generic Drug Dispensing Rate Guarantee Contract Year Participating Pharmacies Mail Service Pharmacy Year 1 74.75% 72.75% Year 2 0.5% Increment over actual of 0.5% Increment over actual of preceding year preceding year Year 3 0.5% Increment over actual of 0.5% Increment over actual of preceding year preceding year The guarantees will be calculated as follows: (a) The total Participating Pharmacy Generic Prescription Drug Claims divided by total Participating Pharmacy Generic and Brand Prescription Drug Claims (and the same for Mail Service Pharmacy Prescription Drug Claims). (b) The Generic Drug dispensing guaranteed percentage baseline in contract years two and three will be set to the preceding year's actual Generic Drug dispensing percentage plus the increment guaranteed for Participating Pharmacies and Mail Service Pharmacy, respectively. (c) ESI will pay a penalty for any shortfall between the actual percentage result and the guaranteed percentage for each of the Participating Pharmacy and Mail Service Pharmacy guarantees, respectively. If the actual Generic Drug dispensing percentage for a contract year is below the guaranteed percentage, the penalty will be calculated as the guaranteed Generic Drug -dispensing percentage p tage for the contract year minus_the actual -Generio-Brut disp-ensing- percentage for the contract year times the actual claims volume times the applicable Payment Public Sector Coalition February 25, 2009 7 Pricing Supplement Factor below. Separate calculations will be performed for Participating Pharmacies and Mail Service Pharmacy and for each contract year. Payment Factor Contract Year Participating Mail Service Pharmacies Pharmacy 1 $84.27 $200.96 2 $92.36 $217.23 3 $100.42 $232.58 (d) Guarantees will be measured and reconciled separately for Participating Pharmacy and Mail Service Pharmacy on an annual basis within ninety (90) days of the end of each contract year. To the extent Sponsor changes its utilization management programs, benefit design or Formulary, or there are material changes to the demographics and geography of the Members during the term of the Agreement, the guarantee will be equitably adjusted if there is a material impact on the Generic Drug dispensing percentage achieved. Guarantees will be measured and reconciled on an annual basis within 90 days of the end of each contract year. To the extent Sponsor changes its benefit design or Formulary during the term of the Agreement, the guarantee will be equitably adjusted if there is a material impact on the discount achieved. ESI will pay the difference of Sponsor's net cost for any shortfall between the actual result and the guaranteed result. Option 2: Pass Through Retail Retail Home Delivery Minimum 50K Network 1-83 DaySupply 84-90 DaySupply Discounts* pp y pp y 1 -90 Day Supply Pass through Pass through (Guarantee (Guarantee Pricing average:AWP- average:AWP- AWP-24.5% 17.2%-YEAR 1 20.2%-YEAR 1 17.5%-YEAR 2 20.5%-YEAR 2 17.7%-Year 3) 20.7%-Year 3) Brands Pass through Pass through (Guarantee (Guarantee Dispensing fee average: $1.50/Rx- average: $0.70/Rx- YEAR 1 YEAR 1 $0.00/Rx $1.35/Rx-YEAR 2 $0.55/Rx-YEAR 2 $1.20/Rx-YEAR 3) $0.30/Rx-YEAR 3) Administrative $3.00/Rx $3.00/Rx $3.00/Rx fee Pass through Pass through The lower of AWP (Guarantee (Guarantee 24.5%or MRA Pricing average: AWP- average:AWP- (Guarantee 66%) 66%) average:AWP- 69%) Pass through Pass through Generics (Guarantee (Guarantee Dispensing fee average: $1.50/Rx- average:$0.710/Rx- YEAR 1 YEAR 1 $0.00/Rx $1.35/Rx-YEAR 2 $0.55/Rx-YEAR 2 $1.20/Rx YEAR 3) $0.39/Rx-YEAR 3) Administrative fee $3.00/Rx $3.00/Rx $3.00/Rx Public Sector Coalition February 25, 2009 8 Pricing Supplement Home Delivery Option 2: Pass Through Retail Retail Discounts* Minimum 50K Network 1-83 Day Supply 84-90 Day Supply 1 -90 Day Supply Rebate Share 90% 90%(%) 90/o Rebate Greater of$12.00 Greater of$12.00 Greater of$36.00 Guarantee- or 90% or 90% or 90% Benefit Plan 1 Rebates Per Brand Claim Rebate Greater of$16.00 Greater of$16.00 Greater of$48.00 Guarantee- or 90% or 90% or 90% Benefit Plan 2 Manufacturer Administrative 90% 90% 90% Fee Share(%) Commission Per Claim Gallagher $0.12 Trivantage-$0.18 Pricing Guarantees: Ingredient Cost Guarantee ESI will guarantee a minimum average discount as reflected below on Sponsor utilization to be calculated as follows: [1-(total discounted AWP ingredient cost (excluding dispensing fees and claims with ancillary charges, and prior to application of Copayments) of applicable Prescription Drug Claims for the annual period divided by total undiscounted AWP ingredient cost (both amounts will be calculated as of the date of adjudication) for the annual period)]. Discounted ingredient cost will be the lesser of MRA, U&C or AWP discount adjudication methodology. Type of Participating Participating Mail Service Claims Included Claims Excluded Guarantee Pharmacy Pharmacy Pharmacy 1-83 Day 84.90 Day 1.90 Day Supply Supply MRA and AWP U&C,zero balance Generic AWP-66% AWP-69% due, and Specialty Products Brand YEAR1:AWP- YEAR1:AWP- AWP-24.5% MRA and AWP U&C, zero 17.2% 20.2% balance due, and YEAR2:AWP- YEAR2:AWP- Specialty 17.5% 20.5% Products YEAR3:AWP- YEAR3:AWP- 17.7% 20.7% B. Dispensing Fee: ESI will guarantee a maximum per claim dispensing fee on Sponsor utilization to be calculated as follows: [total dispensing fee of applicable claims for the annual period divided by total claims for the annual period]. Dispensing fees will be calculated using the lesser Public Sector Coalition February 25, 2009 9 Pricing Supplement of MRA, U&C or AWP discount adjudication methodology. Type of Participating Participating Claims Included Claims Excluded Guarantee Pharmacy Pharmacy 1.83 Day Supply 84-90 Day Supply Generic Drug YR1:$1,50/Claim YR1:$0.70/Claim MRA and AWP U&C, zero balance due, Dispensing YR2:$1.35/Claim YR2:$0.55/Claim and Specialty Products FeelClaim YR3:$1.20/Claim YR3:$0.30/Claim Brand YR1:$1.50/Claim YR1:$0.70/Claim MRA and AWP U&C, zero balance due, Dispensing YR2:$1.35/Claim YR2:$0.55/Claim and Specialty Products Fee YR3:$1.20/Claim YR3:$0.30/Claim Guarantees will be measured and reconciled on an annual basis within 90 days of the end of each contract year. To the extent Sponsor changes its benefit design or Formulary during the term of the Agreement, the guarantee will be equitably adjusted if there is a material impact on the discount achieved. ESI will pay the difference of Sponsor's net cost for any shortfall between the actual result and the guaranteed result. Express Scripts' Specialty Offering Exclusive Express Scripts' Exclusive specialty option is designed to offer clients maximum cost savings and superior patient care. Under this option, patients obtain all specialty medications through our CuraScript specialty pharmacy at the reimbursement rates set forth below. Specialty drugs will not be available through other pharmacies except for: • limited distribution products not available at CuraScript • initial courtesy fills as allowed by Sponsor's plan design, and • overrides for urgent situations. Open Under the Open specialty option, patients may obtain specialty products through either our CuraScript specialty pharmacy, when available, or participating pharmacies at the reimbursement rates set forth below. STANDARD DISCOUNTS: Except for the specific items listed in the Exceptions or Limited Distribution tables below, Specialty drugs will have the following discounts: Distribution Channel Standard Discounts Dispensing Fee CuraScript • Exclusive The lower of: • AWP—17%, or $0.00 • MRA • Open The lower of: • AWP— 15%, or $0.00 • MRA Participating Pharmacies The lowert of: Public Sector Coalition February 25, 2009 10 Pricing Supplement • AWP— 15% plus Dispensing Fee $2.00 • MRA plus Dispensing Fee or • U&C Specialty products will not be available through the Express Scripts Mail Service Pharmacy. Limited Distribution Drugs Distribution of a small number of all specialty drugs is limited by the manufacturer to specific pharmacy providers. The drugs, listed below, are not available through CuraScript. If CuraScript receives a prescription for one of the following Limited Distribution medications, CuraScript will: • Determine the pharmacy that is able to dispense the medication. • Validate that the pharmacy is contracted to provide the medication based on the patient's insurance information and will: o Work with the patient and prescribing physician to initiate the transfer of the script to the appropriate pharmacy for fulfillment, or o Provide the patient and physician with information regarding possible patient assistance programs. The cost of the medication will be billed through your regular invoice if it is a covered product. Drug Name ADAGEN FLOLAN REMODULIN APOKYN KEPIVANCE SOMAVERT ARALAST MIRENA VENTAVIS ARCALYST ORFADIN XYREM BEXXAR ORTHOCLONE OKT-3 ZEMAIRA CEPROTIN PRIVIGEN ZEVALIN EXJADE PROLASTIN Exceptions to Standard Pricing The following specialty drugs have the discounts shown for each distribution channel. Shaded cells indicate the Standard pricing above applies for the channel indicated. Retail CuraScript Open, CuraScript Exclusive % Discount from AWP %Discount from AWP %Discount from AWP ADVATE 25.0% 26.0% ALPHANATE 25.0% 26.0% ALPHANINE 25.0% 26.0% ATGAM 15.0% BEBULIN 16.0% BENEFIX 16.0% BONIVA 13.0% 13.0% 15.0% BOTOX 15.0% CELLCEPT 15.0% CIMZIA 15.0% CYCLOSPORINE 15.0% EUFLEXXA 15.0% FEIBA 25.0% 26.0% FORTED 1-30% 13 0% 13.0% HELIXATE FS 25.0% 26.0% HEMOFIL M 25.0% 26.0% HUMATE-P 25.0% 26.0% Public Sector Coalition February 25, 2009 11 Pricing Supplement HYALGAN 15.0% IMPLANON 0.0 0.0% 3.0% IRESSA 13.0% 13.0% 14.0% KOATE-DVI 25.0% 26.0% KOGENATE 25.0% 26.0% LUPRON 15.0% LUPRON DEPOT 15.0% METHOTREXATE 15.0% MONARC-M 25.0% 26.0% MONOCLATE-P 25.0% 26.0% MONONINE 25.0% 26.0% MYOBLOC 15.0% NOVOSEVEN 25.0% 26.0% ORTHOVISC 15.0% PROFILNINE 25.0% 26.0% PROGRAF 15.0% RECLAST 13.0% 13.0% 15.0% RECOMBINATE 25.0% 26.0% REFACTO 16.0% RIBAPAK 25.0% 30.0% RIBASPHERE 25.0% 30.0% RIBATAB 25.0% 30.0% RIBAVIRIN 50.0% 55.0% SANDIMMUNE 15.0% SOMAVERT 10.0% SUPARTZ 15.0% SYNVISC 15.0% XYREM 12.0% ZENAPAX 15.0% UPDATES Express Scripts updates the specialty drug lists as new products are introduced to the market, or as CuraScript gains access to additional limited distribution drugs, and provides a monthly notice of added drugs. Pricing for these new products will be determined by Express Scripts and Sponsor will have the option of covering or not covering the medication. The full current list is always available on request from your Account team. Pharmacy Management Fund (PMF) • Up to $5.00 per member implemented as of the effective date to reimburse Public Sector Coalition for the actual, fair market value of expense items and services related to managing the pharmacy benefit, such as, ID Cards, IT programming, formulary letters, member communications, and benefit set-up quality assurance. • Public Sector Coalition must submit adequate documentation of any applicable implementation expenses within 180 days of implementation at which time a final reimbursement of-eligible expenses-win be made rdequate cbcumentaticurof-any expenses not related to implementation must be submitted prior to contract termination for reimbursement. Public Sector Coalition February 25, 2009 12 Pricing Supplement • If the agreement terminates for any reason other than breach of the agreement by Express Scripts,Public Sector Coalition shall reimburse Express Scripts any amounts paid that have not been amortized by the effective date of termination. • If there is any Medicare subsidy membership or a PDP plan related to Public Sector Coalition business,the terms of the PMF may be subject to modification. Assumptions • Quoted fees and services are valid for 90 days from the date of the proposal. • Quoted fees are guaranteed for the term of the 3-year contract. • Minimum of 18,500 lives will be implemented on the effective date. • Express Scripts reserves the right to amend the price quotation set forth herein if there is a material change in the number of persons included in the prescription drug program or any material change in the benefit plan from that which was presented to Express Scripts and upon which this price quotation is based. • Public Sector Coalition agrees to adopt Express Scripts'National Preferred Formulary in order to be eligible for rebates,whether rebates are paid or applied. • Rebate guarantees assume the current benefit plan design, or new benefit plan design as disclosed by the client,will be implemented at the time these guarantees go into effect. Rebate guarantees are subject to adjustment if any clinical or trend programs intended to drive higher generic or over-the-counter(OTC)utilization are currently in place without Express Scripts' knowledge of both the program and drugs within the program. Rebate guarantees are also subject to adjustment if the client chooses to implement any clinical or trend management programs intended to drive higher generic or OTC utilization during the course of the contract. Rebates are paid only upon receipt of a signed contract. • Rebates are paid on specialty products dispensed through CuraScript or participating retail pharmacies. • Rebate allocations will be made quarterly within 150 days from the end of the quarter. Guarantee will be reconciled in aggregate annually with any payment due to Public Sector Coalition made within 240 days from the end of each annual period. • The rebate guarantee does not apply to claims processed through staff model/hospital pharmacies where such pharmacy is subject to its own manufacturer contracts(rebate or purchase discounts), or through pharmacies that participate in the Federal government pharmaceutical purchasing program. Public Sector Coalition February 25, 2009 13 Pricing Supplement • The parties understand that pricing indices historically used,(and that are the basis in this Agreement), for determining the financial components of pharmacy billing rates are outside the control of Public Sector Coalition and Express Scripts. The parties also understand that there are currently extra-market industry, legal, government, and regulatory activities,which may lead to changes relating to, or elimination of,these pricing indices that could alter the financial positions of the parties as intended under this Agreement. The parties agree that, upon entering into any resultant Agreement and thereafter,their mutual intent has been and is to maintain pricing stability as intended and not to advantage either party to the detriment of the other. Accordingly,to preserve this mutual intent, if Express Scripts undertakes any or all of the following: (i) changes the AWP source across its book of business(e.g., from First DataBank to MediSpan); or (ii) maintains AWP as the pricing index with an appropriate adjustment as described below, in the event the AWP methodology and/or its calculation is changed,whether by the existing or alternative sources; or (iii)transitions the pricing index from AWP to another index or benchmark(e.g.,to Wholesale Acquisition Cost), the Participating Pharmacy, Curascript, and Mail Service Pharmacy rates,rebates and guarantees,as applicable,will be modified as reasonably and equitably necessary to maintain the pricing intent under this Agreement. Express Scripts shall provide Public Sector Coalition with at least ninety(90)days notice of the change(or if such notice is not practicable, as much notice as is reasonable under the circumstances), and written illustration of the financial impact of the pricing source or index change(e.g., specific drug examples). If Public Sector Coalition disputes the illustration or the financial impact of the pricing source,the parties agree to cooperate in good faith to resolve such disputes. • For each eligible prescription-drug claim, ingredient cost will be calculated at the lesser of the applicable U&C, MRA, or AWP discount price in determining the discount achieved for purposes of the guarantee, including and excluding 100% member copayment (claims where full cost is paid by member). Public Sector Coalition February 25, 2009 14 Pricing Supplement Included Services Express Scripts' administrative fee includes the following services: PBM Services • Customer service for members • Electronic claims processing • Electronic/on-line eligibility submission • Plan setup • Standard coordination of benefits(COB) (reject for • Software training for access to our on-line primary carrier) system(s) • FSA eligibility feeds Network Pharmacy Services • Pharmacy help desk • Pharmacy reimbursement • Pharmacy network management • Network development(upon request) Home Delivery Services • Benefit education • Prescription delivery—standard Reporting Services • Web-based client reporting—produced by client • Annual Strategic Account Plan report • Billing reports • Ad-hoc desktop parametric reports • Inquiry access to claims processing system • Claims detail extract file electronic(NCPDP format) • Load 12 months claims history for clinical reports and reporting Website Services • Express-Scripts.com for Clients&Advisors— • Express Previews'"enrollment option—available access to reporting tools, eligibility update capability, during open enrollment to enable members to contact directory, sales and marketing information, evaluate prescription benefit plan options and benefit and enrollment support • Express-Scripts.com for Members—access to • Digital Certificates(up to five certificates) benefit, drug, health and wellness information; prescription ordering capability; arid customer service Implementation Package and Member Communications • New member packets(includes two standard resin • Implementation support ID cards) • Member replacement cards printed via web Safety Management • Concurrent Drug Utilization Review(DUR) • Emerging Therapeutics Trend Management • Prior Authorization—Administrative • Prior Authorization—Clinical Base List • Non-clinical Prior Authorization • Blood Glucose Meter program • Lost/stolen overrides • Therapeutic Interchange • Vacation supplies Public Sector Coalition February 25, 2009 15 Pricing Supplement Additional PBM Services PBM Services Fees • Manual/hardcopy eligibility submission $1.00/update (includes initial entry) • Member Submit Fee (includes Medicaid subrogation $2.50/claim claims) Network Pharmacy Services • Pharmacy audit recoveries 20% of audit recoveries Reporting Services • Web-based client reporting—produced by Express $100/report Scripts • Custom ad-hoc reporting $150/hour,with a minimum of$500 Replacement Member Communication Packets • Member requested replacement packets $1.50+ postage per packet • Client requested re-carding $1.50+ postage per packet Appeals by MCMC • Clinical appeals $350/review • Non-clinical appeals $160/review *Plans subject to state law(non-ERISA plans)will be charged a retainer fee of$1,000 per month for appeals handled by MCMC Medicare Part D • Part D Subsidy enhanced service (Express Scripts $1.12 PMPM for Medicare-qualified members with a sends reports to CMS on behalf of client) minimum annual fee of$7,500 • Notice of Creditable Coverage $1.35/letter+postage • Part D Subsidy standard service (Express Scripts $0.62 PMPM for Medicare-qualified members with a sends reports to client) minimum annual fee of$5,000 • Notice of Creditable Coverage $1.35/letter+postage • Using Outside Cost ReporterNendor(ESI provides $0.42 PMPM final rebate figures) Medicare Part B • Part B Services (Retail and Mail Benefit) $0.42 PMPM for Medicare-qualified members Public Sector Coalition February 25, 2009 16 Pricing Supplement Optional Total Health and Trend Management Services Express Scripts offers a comprehensive suite of trend and total health management programs. We have identified programs below most often implemented by our plan sponsors. This offering may change or be discontinued from time to time as we update our offering to meet the needs of the marketplace. Express Scripts also offers additional programs, as well as savings guarantees, under certain conditions. Information concerning such programs, guarantees, and fees, if applicable, is available on request. Trend Management Programs Fees • Drug Quantity Management* $0.02 PMPM • Prior Authorization—Clinical Supplemental List* $0.03 PMPM • Prior Authorization—Other Clinical Overrides(e.g. non- $20/request standard Prior Authorization medications, medical exceptions) $25/physician review • Step Therapy—Individual modules and packages available Pricing varies by module • More than 25 modules available. The most utilized include: ACE inhibitors and angiotensin-:2 receptor blockers(ARBs), non-steroidal anti-inflammatory drugs(NSAIDS) and COX-2s, proton pump inhibitors (PPIs), selective serotonin reuptake inhibitors(SSRIs), HMG-enhanced, calcium channel blockers, leukotriene pathway inhibitors,topical immunomodulators, other antidepressants. • Formulary Rapid Response $0.01 PMPM • $0 Generic Copay $1.25/member mailing or$1,000 for member identification and authorization * List of drugs subject to change at the discretion of Express Scripts. Total Health Management Programs** Fees Managing Medication Therapy and Safety • Medication Adherence $0.02 PMPM Includes all seven modules • Retrospective DUR $0.03/Rx • Retrospective DUR—Seniors $0.02/Rx • RxPredict$ $0.05 PMPM for six months each time the report is run (e.g. 100,000 members *$0.05 PMPM*six months). A subsequent charge will occur with the second report. There is a minimum charge of$3,000. Managing Overall Health • Care Management $0.01/claim—Asthma $0.01/claim—Cardiovascular Disease $0.02/claim—CHF $0.02/claim—Depression $0.01/claim—Diabetes $0.03/claim—GI Disease $0.02/claim—Hypertension $0.02/claim—Mi raine • Disease Management Priced upon request • Three-disease suite • Five-disease_suite • Six-disease suite Public Sector Coalition February 25, 2009 17 • Pricing Supplement Total Health Management Programs** Fees ExpressAlliance Level 1 5,000-20,000 lives $0.04 PMPM 20,000-50,000 lives $0.02 PMPM 50,000+ lives $0.01 PMPM ExpressAlliance Level 2 5,000-20,000 lives $0.20 PMPM 20,000-50,000 lives $0.10 PMPM 50,000+ lives $0.09 PMPM ExpressAlliance Level 3 5,000-20,000 lives $0.35 PMPM 20,000-50,000 lives $0.20 PMPM 50,000+ lives $0.18 PMPM RxPredict$ $0.05 PMPM for six months each time the report is run (e.g. 100,000 members*$0.05 PMPM*six months). A subsequent charge will occur with the second report. There is a minimum charge of$3000. ** All programs are optional and will only be implemented upon client request. Public Sector Coalition February 25, 2009 18 Pricing Supplement Billing and Payment Billing Information* Billing Frequency Weekly or twice per month Payment Options Wire Transfer Payments must be transferred within seven days of receipt of the Express Scripts invoice/billing statement Automated Clearing Payments must be made within seven days of receipt of the Express Scripts House(ACH) invoice/billing statement Pre-Authorized Debit Funds must be available in the client's bank account within 48 hours of receipt of Transaction the Express Scripts invoice/billing statement * Please note that each client is subject to a standard credit evaluation. Public Sector Coalition February 25, 2009 19 Pricing Supplement Financial Disclosure to Express Scripts Clients This disclosure provides an overview of the principal revenue sources of Express Scripts, Inc. ("ESI") and does not supersede any of the specific financial terms and conditions between ESI and an individual client. In addition to administrative and dispensing fees paid to ESI by our clients for pharmaceutical benefit management ("PBM") services, ESI derives revenue from other sources, including arrangements with pharmaceutical manufacturers, wholesale distributors, and retail pharmacies. Some of this revenue relates to utilization of prescription drugs by members of the clients receiving PBM services. ESI may pass through certain manufacturer payments to its clients or may retain those payments for itself, depending on the contract terms between ESI and the client. Network Pharmacies — ESI contracts for its own account with retail pharmacies to dispense prescription drugs to client members. Rates paid by ESI to these pharmacies may differ among networks (e.g., Medicare, Worker's Comp, open and limited), and among pharmacies within a network. PBM agreements generally provide that a client pay ESI an ingredient cost, plus dispensing fee, for drug claims at a uniform rate. If the rate paid by a client exceeds the rate contracted with a particular pharmacy, ESI will realize a positive margin on the applicable claim. The reverse also may be true, resulting in negative margin for ESI. ESI also enters into pass-through arrangements where the client pays ESI what the pharmacy is paid. In addition, when ESI receives payment from a client before payment to a pharmacy, ESI retains the benefit of the use of the funds between these payments. Brand/Generic Classifications. Prescription drugs may be classified as either a "brand" or "generic;"however, the reference to a drug by its chemical name does not necessarily mean that the product is recognized as a generic for adjudication, pricing or copay purposes. ESI distinguishes brands and generics through a proprietary algorithm ("BGA") that uses certain published elements provided by First DataBank (FDB) including price indicators, Generic Indicator, Generic Manufacturer Indicator, Generic Name Drug Indicator, Innovator, Drug Class and ANDA. The BGA uses these data elements in a hierarchical process to categorize the products as brand or generic. The BGA also has processes to resolve discrepancies and prevent "flipping" between brand and generic status due to price fluctuations and marketplace availability changes. The elements listed above and sources are subject to change based on the availability of the specific fields. Updated summaries of the BGA are available upon request. Maximum Allowable Cost/Maximum Reimbursement Amount("MAC") As part of the administration of the PBM services, ESI maintains a MAC List of drug products identified as requiring pricing management due to the number of manufacturers, utilization and/or pricing volatility. The criteria for inclusion on the MAC List are based on whether the drug has readily available generic product(s), is generally equivalent to a brand drug, is cleared of any negative clinical implications, and has a cost basis that will allow for pricing below brand rates. ESI also maintains correlative MAC price lists based on current price reference data provided by FDB or other nationally recognized pricing source, market pricing and availability information from generic manufacturers and on-line research of national wholesale drug company files. Similar to the BGA, the elements listed above and sources are subject to change based on the availability of the specific fields. Updated summaries of the MAC methodology are available upon request. Manufacturer PBM Formulary Rebates and Associated Administrative Fees— ESI contracts for its own account with manufacturers to obtain formulary rebates attributable to the utilization of certain brand drugs and supplies by PBM client members (and possibly certain authorized generics marketed under a brand manufacturer's new drug application). Formulary rebate amounts vary based on the volume of utilization as well as a client's benefit design and formulary position applicable to the drug or supplies, and in certain instances also may vary based on the product's market-share. ESI often pays an amount equal to all or a portion of the formulary rebates it receives to a client based on the client's PBM agreement terms. ESI retains the financial benefit of the use of any funds held until payment of formulary rebate amounts is made to the client. In addition, ESI provides administrative services to formulary rebate contracted manufacturers, which includes access to drug utilization data, as allowed by law, for purposes of verifying and evaluating the rebate payments and participation in ESI's PBM rebate program. ESI receives administrative fees from the participating manufacturers for the maintenance and operation of the systems and other infrastructure necessary for managing and administering the PBM formulary rebate process. These administrative fees are calculated based on the price of the rebated drug or supplies and do not exceed the greater of(i) 3.5% of the average wholesale price, or (ii) 4.375% of the wholesale acquisition cost of the products. (Currently 3:5"/o of AWP-is the-equivalent of 4.37 /0 of WAC) Public Sector Coalition February 25, 2009 20 Pricing Supplement ESI Subsidiary Pharmacies — ESI has several licensed pharmacy subsidiaries, including our specialty pharmacies. These entities may maintain product purchase discount arrangements and/or fee-for- service arrangements with pharmaceutical manufacturers and wholesale distributors. These subsidiary pharmacies contract for these arrangements on their own account in support of their various pharmacy operations. Many of these subsidiary arrangements relate to services provided outside of PBM arrangements, and are entered into irrespective of whether the particular drug is on one of ESI's national formularies. Discounts and fee-for-service payments received by ESI's subsidiary pharmacies are not part of the PBM formulary rebates or associated administrative fees paid to ESI in connection with ESI's PBM formulary rebate programs. In addition, these subsidiary pharmacy arrangements are negotiated separately from ESI's PBM formulary rebate contracts. The following provides additional information regarding ESI subsidiary pharmacy discount arrangements and fee-for-service arrangements: ESI Subsidiary Pharmacy Discount Arrangements — ESI subsidiary pharmacies purchase prescription drug inventories, either from manufacturers or wholesalers, for dispensing to patients. Often, purchase discounts off the acquisition cost of these products are made available by manufacturers and wholesalers in the form of either up-front discounts or retrospective discounts. These purchase discounts, obtained through separate purchase contracts, are not formulary rebates paid in connection with our PBM rebate programs since they are not based on any F'BM client's benefit design, formulary or member utilization. Drug purchase discounts are based on a pharmacy's inventory needs and, at times,the performance of related patient care services and other performance requirements. When a subsidiary pharmacy dispenses a product from its inventory, the purchase price paid for the dispensed product, including applicable dispensing fees, may be greater or less than that pharmacy's acquisition cost for the product net of purchase discounts. In general, our pharmacies realize an overall positive margin between the net acquisition cost and the amounts paid for the dispensed drugs. ESI Subsidiary Pharmacy Fee-For-Service Arrangements — ESI's subsidiary pharmacies also may receive fee-for-service payments from manufacturers, which may be in lieu of or in addition to product purchase discounts, in conjunction with various programs or services, such as: (i) patient assistance programs for indigent patients; (ii)dispensing prescription medications to patients enrolled in clinical trials; (iii) various therapy adherence and fertility programs, and (iv) various oTher specialty pharmacy programs and services. As a condition to having access to certain specialty products, and sometimes related to certain FDA requirements, a specialty pharmaceutical manufacturer often will require a specialty pharmacy to report selected information to the manufacturer regarding the pharmacy's service levels and other dispensing-related data with respect to patients who receive that manufacturer's product. A portion of the discounts or other fee-for-service payments made available to our specialty pharmacies represents compensation for such reporting. In addition, specialty pharmacies may sell non-patient identifiable claim information they receive in connection with the performance of their pharmacy services to data aggregators or manufacturers on a fee-for- service basis. All reporting activities are conducted in compliance with applicable patient and pharmacy privacy laws. Note, however, that ESI does not sell data resulting from its PBM services to healthcare data aggregators or similar entities at this time. Should this change, ESI would do so only if expressly permitted under the PBM agreements with its clients and applicable law. Other Manufacturer Arrangements — ESI also owns a wholesale distribution business, a group purchasing organization, and various other businesses that provide additional services for manufacturers. Compensation derived through these business arrangements is not part of the PBM formulary rebates or associated administrative fees paid to ESI in connection with ESI's PBM formulary rebate programs. In addition, these business arrangements are negotiated separately from ESI's PBM formulary rebate contracts and are unrelated to the PBM drug formulary development process. The following is an overview of these other businesses: Wholesale Distribution — ESI owns a wholesale distribution business. The wholesale distributor purchases products from pharmaceutical manufacturers and distributes products to h signs;- physician clinics and other health-care � Y providers (and—sometimes_.-secondary wholesalers). Often, purchase discounts (either up-front or retrospective) off the acquisition cost of these products are made available to Priority Healthcare by the pharmaceutical manufacturers. The purchase price paid by the physician or similar client for product Public Sector Coalition February 25, 2009 21 Pricing Supplement distributed by Priority Healthcare may be greater or less than Priority Healthcare's acquisition cost for the for the product from the pharmaceutical manufacturer,with Priority Healthcare often recognizing a positive margin on the sale transaction. In lieu of, or in addition to, these purchase discounts, Priority Healthcare may enter into various fee-for-service arrangements with pharmaceutical manufacturers related to its wholesale distribution services. Group Purchasing Organization — ESI owns a group purchasing organization, servicing primarily physicians who enroll as members of Matrix to obtain preferential product purchase rates made available to group purchasing organizations through pharmaceutical manufacturers. Matrix receives group purchasing organization administrative fees from manufacturers, and sometimes wholesale distributors, in addition to securing member product purchase discounts from pharmaceutical manufacturers. From time to time, Matrix may also enter into other ancillary fee-for-service arrangements with manufacturers to perform other services. ESI also maintains other lines of business that provide the following services for pharmaceutical manufacturers on a fee-for-service basis: (i) product reimbursement support service programs and related hub services; (ii) patient assistance program services; and (iii) drug and sample fulfillment and accountability, alternative sampling, and direct mail and literature fulfillment services through Phoenix Marketing Group, LLC. In addition, certain materials provided by ESI to patients and prescribers may be provided or funded by pharmaceutical manufacturers, in compliance with applicable laws. Services related to the Other Manufacturer Arrangements described above are provided to manufacturers irrespective of whether a drug is on one of ESI's national formularies. October 2008 THIS EXHIBIT REPRESENTS ESI'S CURRENT FINANCIAL POLICIES. ESI MAY PERIODICALLY UPDATE ITS FINANCIAL DISCLOSURES TO REFLECT CHANGES IN ITS BUSINESS PROCESSES; THE CURRENT FINANCIAL DISCLOSURE IS AVAILABLE UPON REQUEST AND ACCESSIBLE ON WWW.EXPRESS-SCRIPTS.COM. Public Sector Coalition February 25, 2009 22 PUBLIC SECTOR COALITION PERFORMANCE GUARANTEES The performance guarantees offered will be measured beginning on the date of implementation. Any penalties due will be held by Express Scripts(ESI)until final execution of a definitive agreement. Upon execution of a contract,any performance guarantee penalties owed will be available for release to Public Sector Coalition(Sponsor)in accordance with the penalty payment terms herein. In the event performance guarantees in the final agreement differ from those originally proposed,ESI will retroactively measure the guarantee for the prior annual reporting cycle based on the final agreement. The performance guarantees offered are considered to be a component of the financial offer. If the financial offer is accepted,ESI assumes the performance guarantees are accepted as well. If performance guarantees are renegotiated during the contracting process,ESI reserves the right to renegotiate all components of the financial offer. Unless otherwise stated,standards are measured and reported quarterly. Penalties are paid annually. Service Feature Guarantee Penalty Implementation ESI will guarantee the implementation of Sponsor to be completed in accordance within the mutually agreed upon timelines stated below. Each of ESI' guarantees is dependent upon receiving specific The following dollars will be pa information from Sponsor. Sponsor if ESI does not cornpl ESI' Assumptions: deliverables by the dates note( performance guarantee, assun • All Implementations are a 90-day Sponsor has provided the infor implementation project. necessary to complete these • Loading of eligibility and production of ID cards deliverables: are dependent upon receiving group structure Group Structure, Benefit Plan and benefit plan design sign-off from Sponsor. —$24,000tru • A delay in receipt of data or information from Implementation and Start- Sponsor may require rescheduling of all Eligibility Load—$24,000 up subsequent deliverable dates. ID Cards—$24,000 Group Structure, Benefit Plan Design Toll-Free Number—$24,000 The initial group structure and benefit plan design Communications— $24,000 will be entered in ESI' system by 00/00/00.** This The implementation performan guarantee is dependent on receiving final sign-off guarantees are one time only from Sponsor on the Benefit Plan Design Summary guarantees to be based on Spi Document by 00/00/00.** effective date. The maximum Eligibility Load implementation penalty will be Participant eligibility will be loaded by 00/00/00.** $120,000. This guarantee is dependent upon receiving a test file blr 00/00/00**with all corrections, if necessary, completed and re-tested by 00/00/00**with the final eligibility file to be received from Sponsor by Public Sector Coalition February 25, 2009 1 Performance Guarantees • Service Feature Guarantee Penalty 00/00/00.** ID Cards All participant ID cards will be mailed to Sponsor or participants on 00/00/00.** This guarantee is dependent on receiving the final eligibility from Sponsor by 00/00/00, and Sponsor's sign-off on sample materials, if requested, by 00/00/00. ** Toll-Free Telephone Number A single integrated and dedicated toll-free telephone number for both retail and mail-service assistance will be established and maintained effective 00/00/00. ** Communications ESI' Implementation Project Manager (IPM)will provide regular updates to Sponsor tracking the status of the implementation. A completed Sponsor implementation sign-off manual will be provided to Sponsor five (5) business days prior to the effective date. ESI's IPM will conduct a post-implementation review meeting with Sponsor within 30 days after the effective date. **The dates must be entered in by ESI' IPM. This will be coordinated with Sponsor. Account Management ESI guarantees that Sponsor satisfaction with Account Management is rated as satisfactory. The following categories will be measured annually by Sponsor as satisfactory or not satisfactory: • Timely issues resolution by the account management (20% of total amount of penalty at risk) Account Management— • Consultative services (20% of total amount of ESI will put$6,000 as a total a Satisfaction penalty at risk) penalty at risk. • Timeliness of reporting and annual reviews (20% of total amount of penalty at risk) • Frequency of meetings/plan updates (20% of total amount of penalty at risk) • One mutually agreed upon category (20% of total amount of penalty at risk) Public Sector Coalition February 25, 2009 2 Performance Guarantees Service Feature Guarantee Penalty Client Services Administration One random sample member survey will be completed annually on a company-wide basis. ESI Satisfaction Survey guarantees that 90% of survey participants' ESI will put$6,000 as a total a responses to a question measuring overall penalty at risk. satisfaction with the prescription benefit program will indicate"satisfied" or"very satisfied." Contact Center ESI guarantees that calls will be answered in an average of 30 seconds or less with the exception of a failure in a third-party communication system. ESI will pay Sponsor$2,000 fc This guarantee is predicated on the installation of a full second above the standard Average Speed of Answer toll-free telephone number unique to Sponsor. seconds on an annual basis. 7 maximum annual penalty will b ESI' Member Choice Center calls will be excluded $6,000. The calculation will be from this guarantee. on the average speed of answi This standard will be measured and reported quarterly. ESI will guarantee a blockage rate of 2% or less with the exception of a failure in a third-party communication system. Blockage is defined as a ESI will pay Sponsor$2,000 fc caller receiving a busy signal. full percentage point above the Blockage Rate This guarantee is predicated on the installation of a standard 2%, on an annual bar (Busy Signal) toll-free number unique to Sponsor. maximum annual penalty will b ESI' Member Choice Center calls will be excluded $6,000. The calculation will be from this guarantee. This standard will be measured on the blockage percentage. and reported quarterly. ESI will guarantee that annually 95% or more of Customer Service written inquiries will be responded to within five (5) Response Time to Written business days and that annually 100% of written ESI will put$6,000 as a total a Inquiries inquiries will be responded to within ten (10) penalty at risk. business days. ESI guarantees that the call abandonment rate will be 3% or less with the exception of a failure in a third-party communication system. The abandonment rates do not include calls terminated ESI will pay Sponsor$2,000 fc by members in less than 30 seconds. full percentage point above the Percent of Calls This guarantee is predicated on the installation of a standard 3% on an annual bas Abandoned toll-free number unique to Sponsor. maximum annual penalty will b ESI' Member Choice Center calls will be excluded $6,000. The calculation will be from this guarantee. on the average percentage of r abandoned. This standard will be measured and reported quarterly. Public Sector Coalition February 25, 2009 3 Performance Guarantees Service Feature Guarantee Penalty Customer Service—First ESI guarantees that greater than 85% of telephone Call Resolution inquiries to ESI' Contact Center will be resolved at ESI will put$6,000 as a total a the first point of contact. penalty at risk. Home Delivery ESI will pay Sponsor$2,000 fc Whereas ESI strives for 100% accuracy, ESI full percentage point below the guarantees 99.98% accuracy in dispensing the basis. Therd o 99.98/u, on n alp basis. maximum annual p Dispensing Accuracy correct drug, strength, and dosage, unless the error will be$6,000. The calculatior is a prescriber error. based on the average prescrip accuracy. ESI guarantees dispensing and shipping (or return) ESI will pay Sponsor$2,000 fc of prescriptions not subject to intervention within an full day above the standard twc average of two (2) business days of their receipt at business days on an annual bE Turnaround Time for ESI' Mail Service Pharmacy. The maximum annual penalty Routine (Clean) This standard will be measured and reported $6,000. The calculation will be Prescriptions quarterly. on the average turnaround time routine prescriptions. ESI guarantees dispensing and shipping (or return) ESI will pay Sponsor$2,000 fc of prescriptions subject to intervention within an full day above the standard fivf Turnaround Time for average of five (5) business days of their receipt at business days on an annual bE Prescriptions Subject to ESI' Mail Service Pharmacy. The maximum annual penalty Intervention This standard will be measured and reported $6,000. The calculation will be quarterly. on the average turnaround time prescriptions subject to interve Data Systems ESI guarantees an annual average 99% system availability of the point-of-sale adjudication system. This guarantee excludes systems downtime ESI will put$6,000 as a total a System Availability attributed to regularly scheduled systems maintenance or systems downtime attributed to penalty at risk. telecommunications failure or other circumstances outside the control of ESI. Reporting ESI guarantees access to the online reporting data Timely Production of will be available within an annual average of ten ESI will put$6,000 as a total a Management Reports (10) days after month-end. Billing data will be penalty at risk. available within an annual average of ten (10) days after the billing cycle. Replacement ID Card Production ESI guarantees that standard replacement ID cards Timely—Production—of wiW produced within an annual-average of five ESFwift-put$6,000 as a total-ar Replacement ID Cards (5) business days of the receipt of machine- penalty at risk. readable eligibility information. Public Sector Coalition February 25, 2009 4 Performance Guarantees Service Feature Guarantee Penalty Electronic Claims ESI guarantees that 100% of POS claims will be processed accurately. This is contingent upon the ESI will put$6,000 as a total a POS Accuracy claims adjudication system being 100% accurate, penalty at risk. which will be tested prior to contract start date and si ned off on. Paper Claims ESI guarantees that member submitted claims requiring no development will be reimbursed or responded to within an average of ten (10) business ESI will put$6,000 as the total days or less and claims requiring development will of penalty at risk. Paper Claims Processing be reimbursed within an average of fourteen (14) Time business days or less. Penalties are paid annually. This standard will be measured and reported quarterly. Eligibility ESI guarantees that electronic eligibility will be Eligibility—Timeliness of installed and eligibility status will be effective within ESI will put$6,000 as a total a Installations an annual average of two (2) business days of penalty at risk. receipt. ESI guarantees that electronic eligibility records will be loaded with 99.5% accuracy (as provided by Sponsor). This guarantee is contingent upon receipt of clean eligibility data delivered in an Eligibility—Accuracy agreed upon format and that it can be determined ESI will put$6,000 as a total a with certainty that ESI incorrectly loaded the penalty at risk. eligibility. This standard will be measured across ESI's client base. Retail Pharmacy Network ESI guarantees that at least 92% of members, based on client-supplied eligibility, will have a retail network pharmacy within a two-mile radius of their ESI will pay Sponsor$6,000 if residence in the Minimum 50,000 Participating standard is not met. Network Pharmacy Pharmacies Network, if there is an existing Geographic Access pharmacy within that radius. Additionally, ESI This standard will be measures guarantees that 95% of members, based on client- reported annually using inform supplied eligibility, will have access to a retail provided by GeoAccess or sim network pharmacy within a five-mile radius of their service. residence, if there is an existing pharmacy within that radius. ESI guarantees that 100% of participating ESI will pay Sponsor$6,000, if Network Audits pharmacies will be subject to statistical audits and standard is not met. that 25% of participating pharmacies will be subject _to further investigation (e__g., desk_audits_on site __ This standard will be measures audits, etc.) as a result of the statistical audits. reported annually. Public Sector Coalition February 25, 2009 5 Performance Guarantees Service Feature Guarantee Penalty Benefit Plan Less complex changes, such as the addition of new plan benefit(basic), or new benefit using an existing benefit, changes in benefit copays/days supply, or change in pharmacy network would be implemented within an average of five (5) business days. Moderately complex changes, such as benefit designs requiring research, adding copays for specific drugs, adding multiple groups involving lower level demographic changes, adding Benefit Design Changes— maintenance benefit/maintenance list, or drug ESI will put$6,000 as a total Set up only changes would be implemented within an average of penalty at risk. of ten (10) business days. Very complex changes such as Prescription Drug Program revisions with major changes/research, administration of extensive, client-specific clinical programs (e.g. Step Therapy), or creation of complex custom programs would be implemented within agreed upon time frames, generally greater than ten (10) days. All of the above standards are based upon the receipt of complete information on a signed benefit add/change form from the client. Terms and Conditions The performance guarantees offered will become effective from the date of implementation if a contract is executed prior to the effective date. ESI shall have no liability for the reporting of performance guarantees or performance guarantee penalties during any period ESI is administering the plan without an executed contract. The performance guarantees offered are considered to be a component of the financial offer. If the financial offer is accepted it is assumed the performance guarantees, offered as a component of the financial offer, are accepted as well. If, during the contracting process, performance guarantees are renegotiated, ESI reserves the right to renegotiate all components of the financial offer. All guarantees, excluding the implementation guarantees, are for the initial term of the contract. In no event shall the sum of the payments to Sponsor, as a result of ESI' failure to meet any performance guarantees, exceed $240,000 in year one(including the Implementation PG)and $120,000 in years two and three. The performance guarantees are based on an enrollment of 18,500 members on the effective date of the agreement. Within 45 business days after the end of each calendar quarter, ESI shall provide Sponsor with a report assessing ESI' performance under each performance guarantee. In the event ESI does not Public Sector Coalition February 25, 2009 6 Performance Guarantees meet a performance guarantee, ESI will calculate the applicable amount due to Sponsor within 90 days after the end of the contract year. All performance guarantees will be measured for Public Sector Coalition in aggregate, not at the individual group level. Public Sector Coalition February 25, 2009 7 j .� �i\ V