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HomeMy WebLinkAboutAddendum - 5AMENDMENT NO. 5 TO AGREEMENT FOR PROFESSIONAL BENEFIT CONSULTING SERVICES (CAG-19-368) THIS AMENDMENT, dated for reference purposes only as February 25, 2025, is by and between Gallagher Benefit Services, Inc.a foreign (Delaware) corporation. The City and the Consultant are referred to collectively in this Amendment this Amendment is effective as of the last date signed by both parties. Whereas, the City engaged the services of the Consultant under Agreement CAG-19-368, dated December 23, 2019, to provide necessary professional consulting and/or brokerage services to health plan and other benefits ( Whereas, the Parties wish to amend the Agreement to include the services contained in Exhibit A-5, in order to conduct a Request for Proposal (RFP) for pharmacy benefit manager (PBM) services. NOW THEREFORE, It is mutually agreed upon that CAG-19-368 is amended as follows: 1. Scope of Work: Exhibit A, Scope of Services, is amended to add workas specified in Exhibit A-5, which is attached and incorporated herein. 2.Time of Performance:Section 2, Term and Termination, is amended pursuant to the schedule(s) set forth in Exhibit A-5, specific to the RFP Project Timeline. All Work related to the RFP project shall be performed by no later than December 31, 2025. 3. Compensation: Section 3, Compensation, is amended so that the maximum amount of compensation payable to Consultant is increased by a one-time payment of $65,000from the annual fee of$84,900to $149,900, plus any applicable state and local sales taxes. The additional compensation shall be paid based upon Work actually performed according to the rate(s) or amounts specified in Exhibit A-5. 4.All terms of the Agreement not explicitly modified herein shall remain in full force and effect and such terms shall apply to Work performed according to this Amendment as if fully set forth herein. IN WITNESS WHEREOF, the Parties have voluntarily entered into this Amendment as of the date last signed by the Parties below. CAG-19-368, Adden #5-25 PAGE 2 OF 2 CITY OF RENTON By:_____________________________ CONSULTANT By:_____Corey Tracy__________ Armondo Pavone Mayor Corey Tracy Area Vice President, Pharmacy _____________________________ Date _____2/26/2025____________________ Date Attest _____________________________ Jason A. Seth City Clerk Approved as to Legal Form By: __________________________ Patrice Kent Sr. Assistant City Attorney Contract Template Updated 06/17/2021 2/27/2025 Approved by Patrice Kent via email 2/26/2025 5 | City of Renton 2025 Arthur J. Gallagher & Co. All rights reserved. | 18GBS34470 City of Renton Pharmacy Consulting Team Corey Tracy Corey joined Galla . Corey has been in the PBM industry for 19 years, prior to Gallagher Corey was with MedImpact Healthcare for 11 years and CVS Caremark/RxAmerica for 6 years. He held positions as Account Manager, Account Executive, Senior Account Executive and most recently as Director of Account Management MCO West. Corey built and maintained strong positive client relationships ensuring customer satisfaction, growth, retention for assigned account teams. Corey led the account management team for his Account Executives in regard to strategic plan on a day-to-day basis, focusing on service, client goals and operational efficiency initiatives. He has experience managing large complex health plans, Medicare, Medicaid, Self-Insured, Marketplace Exchange, Union Groups, Part D EGWP, Group Employer Plans, Hospital Systems and Consortium plans. Corey brings strong pharmacy contract and PBM pricing knowledge as well has several years of PBM RFP experience. Corey earned a BA in Mass Communication and a Minor in Business Administration from Benedictine College in Atchison, KS. He resides in Salt Lake City, UT. Corey Tracy Area Vice President, National Pharmacy Practice 6967 S. River Gate Drive Suite 200 Salt Lake City, UT 84047 M 801.906.3029 corey_tracy@ajg.com EXHIBIT A-5 Page 1 of 11 6 | City of Renton 2025 Arthur J. Gallagher & Co. All rights reserved. | 18GBS34470 Caroline Atwood As our Area Vice President of Pharmacy Consulting, Caroline is a licensed healthcare professional. She is known for building and maintaining solid executive level relationships with key decision makers in the healthcare and payor communities. Caroline is a national thought leader that identifies opportunities for innov ation, leader in therapeutic and economic outcomes, and delivers on promises and excellence in financial and clinical solutioning in a dynamic market. Caroline has twenty plus years in pharmacy consulting experience and can translate complex industry issues strategies, applying strategic and problem-solving analytical thinking, and building positive collaborative partnerships with clients. Her passion as a leader begins with an open mindset, valuing the human connection while thriving in a high energy environment that provides diverse perspectives.She is known as a trusted advisor providing exceptional guidance. Caroline holds a Doctor of Pharmacy degree from University of Southern California and San Diego. She is committed to continuous professional growth to deliver on high-quality member care and outcomes.Outside of her professional leadership, you can find Caroline along the coast. She is a native Californian and lives in Carlsbad, California. She is dedicated to her community supporting MindIgnite and making a positive impact for future leaders. Pharmacist Caroline Atwood, Pharm D Area Vice President M 760.473.6122 caroline_atwood@ajg.com EXHIBIT A-5 Page 2 of 11 7 | City of Renton 2025 Arthur J. Gallagher & Co. All rights reserved. | 18GBS34470 Kim Heany with her more than 20 plus years of experience in the Pharmacy Benefit Management Industry. She began her career at CVS as a Pharmacy Service Specialist and has since held various roles, including account management, proposals, client benefits, and product development.Throughout her career, Kim has served as a trusted advisor and primary point of contact for diverse clients providing strategic consultation on prescription benefit solutions. Kim is passionate about building meaningful relationships and fostering client trust by driving value through innovative pharmacy benefit strategies. Kim earned a BA in Biology from North Park University in Chicago. She resides in Arlington Heights, IL. Kim Heany, Pharmacy Account Executive, National Pharmacy Practice M 847.791.4031 kim_heany@ajg.com EXHIBIT A-5 Page 3 of 11 8 | City of Renton 2025 Arthur J. Gallagher & Co. All rights reserved. | 18GBS34470 Statement of Work PBM Procurement Process 1. Project Planning and Data Validation*: Leverage our industry leading data analytic tools to evaluate findings from an integrity check, confirm objectives, overall RFP approach, evaluation and selection criteria, and proposal scoring methodology for the RFP: Discuss unique business or legal requirements that City of Renton may wish to include in the RFP Review detailed project plan and timeline with delegated responsibilities for each component Identify appropriate bidders for inclusion in the RFP process, based on City of Renton unique characteristics Confirm of protocols for communication between Gallagher, bidders, and City of Renton stakeholders Dynamic information process to ensure the comprehensive collection of all crucial data components: -Current PBM service agreement -Rebate reconciliation report -Plan design information -Network reconciliation report -Claims data (most recent 12-24 months)-Member/employee headcounts -Clinical Programs -Specialty Pharmacy details *Please be advised that the delivery of this data may require formal approval and documentation and/or the execution of a Confidentiality Agreement or Non-Disclosure Agreement by one or more of the parties involved in the data exchange. Integrity Check This analysis will provide Gallagherwith a clearview of the current arrangement and allow Gallagher to identify the specific areas that City of Renton would deem beneficial. These may include: Data Validation Pricing and Financial Terms improving contract language that is no longer market-competitive. Desirable contract terms that may be missing (Market Check, Management Credits, etc.) Areas for potential audit or deeper analytic review Termination rights and caveats against guarantees RFP Development and Distribution (up to five bidders) A detailed catalogue of more than 60 specifictechnicalrequirements are designed to eliminate pricing gameplay and optimize the financialoutcome for Cityof Renton All financialand bidding requirementsare structured using -: RFP requires an Executable Contract with the proposal response Establishtheobjectivesand goalsfortheRFPincludingminimumvendorrequirements,and unique criteriasuch as narrow network requirements and flexibility for specialty Ensure bidding vendor compliance with City of Renton legal requirementsincluding, but not limited to, all Non-Disclosure Agreements, Confidentiality Agreements and Data Security Amendments Compile performanceguarantees focused on implementation and ongoing performance standards. Collectively identify the vendors who best fit City of Renton s objectives The RFP is comprehensive, and will address all financial and qualitative aspects of the vendor offerings. In addition, the customized RFP can account for the unique features of both large and small PBM offerings. -Pricing & Financial Terms -Account Services -Business Requirements -Member Services -Legal Requirements -Plan Management Tools & Innovation -Utilization Management Approach -Data Security & IT -HDHP Integration & Support -Service Performance Guarantees EXHIBIT A-5 Page 4 of 11 9 | City of Renton 2025 Arthur J. Gallagher & Co. All rights reserved. | 18GBS34470 -POS Rebates (if applicable)-EGWP Support, if applicable -Alternative Rebate Structures -Point Solutions, if applicable -Specialty Management Strategy, including -Audit Rights Copay and Manufacturers Assistance Programs Gallagher will manage the release of the RFP using our secure email delivery system. 4. Proposal Evaluation and Report Gallagher will conduct a comprehensive evaluation of the quantitative and qualitative aspects of each RFP response, using our proprietary pricing evaluation model and other data analytic tools, including: Review proposals for completeness and bidding requirement satisfaction Clarify proposals with bidders to ensure accurate interpretation and understanding Develop baseline cost projections under the current financial arrangements Evaluate bottom-line projected assumptions recommended by Gallagher Develop a line-item comparison of financial offers by each financial guarantee component Identify all deviations from the financial requirements and incorporate the financial impact of these deviations into our financial results (where feasible) Appraise City of Renton requirements including: account service, customer service, retail networks, retail network disruption, formulary, clinical management, and specialty pharmacy services and retail network, including detail on the most highly-utilized impacted drugs Identify opportunities for negotiation Review the transition process to ensure that member disruption is minimized At the completion of this evaluation process, Gallagher will produce and deliver an initial results report to City of Renton. 5. Finalist Selection and Assessment Gallagher and City of Renton will meet to review the final report and select finalists. Select up to three (3) finalists Determine follow up questions for the finalists Identify areas for negotiation with finalists Coordinate timing and process for scheduling the finalist meetings Develop meeting agendas and schedule meetings Hold calls with each finalist to prepare them for the meeting Solicit Best and Final Offers (BAFO), including financials, operational, clinical and any other commitment Evaluate BAFO proposals prior to the finalist meetings and update evaluation Facilitate finalist meetings Reference check Meet with City of Renton after the meetings to determine next steps 6. Final Contract Review Conduct a final contract review of the finalist bidder service agreements to ensure all contractual commitments made in the RFP are correctly incorporated into the proposed contract draft. Detailed redline versions of the service agreement will be provided to City of Renton for discussion and strategy review for final negotiations. Gallagher will follow-up directly with the PBM to revise the contract and re-negotiate a mutually beneficial agreement that removes unfavorable and ambiguous language that does not work in the best interest of City of Renton. Please note that Gallagher is not a law firm, as such our review of the service agreement will focus on technical, financial, and operational aspects of the vendor arrangement. We recommend you have your corporate legal staff EXHIBIT A-5 Page 5 of 11 10 | City of Renton 2025 Arthur J. Gallagher & Co. All rights reserved. | 18GBS34470 (or suitable outside counsel) conduct a parallel review of the agreement to address any legal or business concerns your organization may have. 7. Award of Business Once award of business is confirmed by City of Renton, Gallagher will notify all bidders of the award decision, concluding the RFP process. At your discretion, Gallagher will conduct bidder debrief discussions with all bidders on City of Renton behalf, to help each vendor understand the rationale for the final award decision. 8. Implementation Support After we complete the RFP and City of Renton has chosen a vendor, we will quickly turn our attention to the smooth transition. Gallagher will provide comprehensive oversight and support for the implementation, including: Participate in the implementation kick-off meeting Participate in ongoing weekly calls with the PBM to ensure a smooth and seamless transition system prior to programming Attend clinical program review meetings, and provide input on drug coverage, exclusion policies and clinical/utilization management programs Provide input on escalated implementation issues, and facilitate issue resolution as needed Post-Implementation Audit The purpose of the post implementation audit is to validate the new PBMcoded City of Renton pharmacy benefits as intended. The audit will be conducted after the plan goes live with the new PBM. FINANCIALS Average Wholesale Price (AWP) Accuracy:Verify the accurate AWP unit pricing was applied on the date of service for the 11 digit NDC dispensed and recalculate the extended AWP to assess the calculation of unit cost based on the quantity dispensed. Fixed AWP Discounts & Dispensing Fees: Conduct a claim level review to verify that claims adjudicated according to the contracted discounts & dispensing fees for each distribution channel subject to claim level pricing. Pass Through/Transparent Pricing: Verify pass-through pricing is set up accurately for a sample of network pharmacies. Lower of Pricing Logic:Conduct a claim level review to verify claims adjudicated accurately according to the lower of pricing language specified in the Agreement. (Discounted ingredient cost/U&C/MAC). Specialty Drug Discounts & Dispensing Fees:Validate that specialty drugs adjudicated at the contracted discounts and dispensing fees for each applicable specialty network (Exclusive, Open, Retail, Specialty). BENEFIT DESIGN (up to 6 Benefit Plans) Benefit Accumulators: Verify benefit accumulators are accurately coded according to benefit design documentation. only costs unless acceptable medical accumulator are provided for the reviews. Copay/co-insurance administration: Verify member copays and/or coinsurance are accurate according to City of Renton benefit design. DRUG COVERAGE & UTILIZATION MANAGEMENT PROGRAMS Excluded Products: Validate claims did not adjudicate for products excluded from the benefit. EXHIBIT A-5 Page 6 of 11 11 | City of Renton 2025 Arthur J. Gallagher & Co. All rights reserved. | 18GBS34470 Prior Authorizations:Validate claims for drugs subject to prior authorization adjudicated accurately with a PA. This review will be conducted on the top 25 drugs subject to PA. Quantity Limitations:Verify that claims did not adjudicate above specified quantity limitations. This review will be conducted on the top 25 drugs subject to quantity limitations. Step Therapy:Verify that members show history of a prerequisite drug prior to payment for a targeted drug. This review will be conducted on the top 5 step therapy programs. The Post Implementation audit will conclude with the delivery of a detailed audit results report to City of Renton. The report will clearly identify all findings with a course of action for the resolution of all open issues. Annual PBM Claims Audit FINANCIALS Gallagher will conduct and annual audit of pharmacy claims to verify and validate your contracted pricing and financial guarantees including: Administrative Fees:Validate base per claim administrative fees were charged according to the contracted fees outlined in the Agreement. Aggregate Ingredient Cost & Dispensing Fee Guarantees reconciliations Average Wholesale Price (AWP) Accuracy:Verify the accurate AWP unit pricing was applied on the date of service for the 11 digit NDC dispensed and recalculate the extended AWP to assess the calculation of unit cost and quantity dispensed. AWP Discounts & Dispensing Fees Per Claim: Conduct a claim level review to verify that claims adjudicated accurately for each distribution channel subject to claim level pricing (if applicable). Duplicate Claims:Conduct a claim level review to identify payments for duplicate claims. Lower of Pricing Logic:Conduct a claim level review to verify claims adjudicated accurately according to the lower of pricing language specified in the Agreement. (Discounted ingredient cost/U&C/MAC). Pass-Through Pricing: Verify pass-through pricing is set up accurately for a sample of network pharmacies. Rebate Guarantees: guarantees outlined in the Agreement. *This does not include an onsite rebate audit Specialty Drug Discounts & Dispensing Fees:Validate that specialty drugs adjudicated at the contracted discounts and dispensing fees for each applicable specialty network (Exclusive, Open, Retail, Specialty) BENEFIT DESIGN (up to 6 Benefit Plans) Benefit Accumulators:Verify benefit accumulators are accurately coded according to benefit design documentation. only costs unless acceptable medical accumulator are provided for the audit: o Deductible o Maximum Benefits o Maximum Out of Pocket Copay/co-insurance administration: Verify member copays and/or coinsurance are accurate according to benefit design: o Brand/Generic/Preferred/Non-Preferred o Day Supply Multiplier o Dispense As Written (DAW) Rules o Distribution Channel (Retail/Retail 90/Mail/Specialty) o Exception Copay Programs (Diabetic Supplies/OTC/ACA) EXHIBIT A-5 Page 7 of 11 12 | City of Renton 2025 Arthur J. Gallagher & Co. All rights reserved. | 18GBS34470 o Min/Max Copay and Coinsurance DRUG COVERAGE & UTILIZATION MANAGEMENT PROGRAMS Excluded Products: Validate claims did not adjudicate for products excluded from the benefit. Prior Authorizations:Validate claims for drugs subject to prior authorization adjudicated accurately with a PA. This review will be conducted on the top 25 drugs subject to PA. Quantity Limitations:Verify that claims did not adjudicate above specified quantity limitations. This review will be conducted on the top 25 drugs subject to quantity limitations. Step Therapy:Verify that members show history of a prerequisite drug prior to payment for a targeted drug. This review will be conducted on the top 5 step therapy programs. EXHIBIT A-5 Page 8 of 11 13 | City of Renton 2025 Arthur J. Gallagher & Co. All rights reserved. | 18GBS34470 Project Timeline A proposed timeline is provided below for each project process: Task Description Participants *Week # Project I PBM RFP Procurement Process Up to 24 weeks Step 1 Project Planning & Data Gathering Data request from PBM Kick-off meeting Gallagher /City of Renton 1 2 weeks Step 2 Current Contract Review and Data Integrity Check Gallagher 2-3 weeks Step 3 RFP Development and Distribution Gallagher/City of Renton 3-4 weeks Step 4 Proposal Evaluation and Report Gallagher 2-3 weeks Step 5 Finalist Selection and Assessment Gallagher /City of Renton 3-4 weeks Step 6 Final Contract Review Gallagher /City of Renton 1-2 weeks Step 7 Award of Business Gallagher Upon receipt of final executable contract Project II Post-Implementation Audit Gallagher / PBM 4-6 months Project III Annual PBM Claims Audit Gallagher / PBM 6-9 months Audit Notification Gallagher /City of Renton /PBM Typically PBMs require written notification from the client Kick-off Call Gallagher / PBM 2-4 weeks after notification Receipt of Deliverables Gallagher 4-6 weeks after kickoff Load and Verify Deliverables Gallagher 1-2 weeks after receipt of deliverables/claims data Conduct Audit of Financials/Benefits/Formulary Gallagher 8-10 weeks after receipt of deliverables Issue Initial Results to PBM Gallagher 1-2 weeks after completion of analysis PBM Response Period PBM 4-8 weeks depending on the PBM Review PBM Response Gallagher 2-4 weeks depending on the follow up required Issue Final Report Gallagher 1-2 weeks after reconciling PBM responses EXHIBIT A-5 Page 9 of 11 14 | City of Renton 2025 Arthur J. Gallagher & Co. All rights reserved. | 18GBS34470 Pricing Proposal There will be no direct out-of-pocket expenses to City of Renton for the projects outlined in the fee table below. We have developed an approach where we require the winning PBM to incorporate our consulting fees into their pricing proposal. City of Renton will only pay our fees directly in the event that: 1. City of Renton prefers to pay in this manner, OR 2. The winning PBM does not agree upfront to cover our consulting fees but City of Renton decides to allow them to bid and awards the business to them,OR 3. On conclusion of our work, City of Renton decides to contract with a PBM or carrier that falls outside of the Gallagher procurement process described in this proposal,OR 4. Pass-Through pricing arrangement is selected, the GBS Fee will be passed back to City of Renton *Most often, the selected vendor reimburses organizations for transition costs, including the cost of our implementation support services through an implementation allowance that is incorporated into the RFP. Project Change Control: In the process of engagement, additional work may be required based upon discovery or changes requested by City of Renton.If variations from the original SOW are deemed necessary and material, a mutually agreed-upon change request addendum willbecreated.Gallagher will provide a change request addendum for City of Renton to review and sign before any work outside the original scope is performed or additional expenses are incurred or invoiced to City of Renton. Service Component Select Services Consulting Fee PBM Procurement Services RFP Process (up to 5 bidders; each additional bidder will add $5,000 in expense) Implementation support (should City of Renton choose a new vendor) $65,000 Pharmacy Audits Post Implementation Audit Annual Comprehensive Audit (Financial/Benefit/UM Programs) Market Check Winning PBM Pays*Should the client elect to have the PBM fund the services there will be no out-of-pocket costs to the client. X EXHIBIT A-5 Page 10 of 11 15 | City of Renton 2025 Arthur J. Gallagher & Co. All rights reserved. | 18GBS34470 Commitment Signature We look forward to the opportunity to walk you through each element of the proposal at your convenience to ensure we have fully addressed all of your business needs. By signing below, City of Renton certifies its acceptance of the statement of work, terms, and fee described in the preceding proposal for consulting services. Accepted this __________________ day of _____________________, 2025 City of Renton By: By:Corey Tracy Signature:Signature:Corey Tracy Title:Title:Area Vice President, Pharmacy DISCLOSURE Consulting and insurance brokerage services to be provided by Gallagher Benefit Services, Inc. and/or its affiliate Gallagher Benefit Services (Canada) Group Inc. Gallagher Benefit Services, Inc., a non-investment firm and subsidiary of Arthur J. Gallagher & Co., is a licensed insurance allagher allagher Fiduciary Advisors, LLC, a Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Certain appropriately licensed individuals of Arthur J. Gallagher & Co. subsidiaries or affiliates, excluding Gallagher Fiduciary Advisors, LLC, offer securities through Kestra Investment Services (Kestra IS), member FINRA/SIPC and or investment advisory services through Kestra Advisory Services (Kestra AS), an affiliate of Kestra IS. Neither Kestra IS nor Kestra AS is affiliated with Arthur J. Gallagher & Co., Gallagher Benefit Services, Inc. or Gallagher Fiduciary Advisors, LLC. Neither Kestra AS, Kestra IS, Arthur J. Gallagher & Co., nor their affiliates provide accounting, legal, or tax advice. EXHIBIT A-5 Page 11 of 11