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'tare `""' CAG-09-184 PHARMACY BENEFIT MANAGEMENT SERVICES AGREEMENT This Pharmacy Benefit Management Services Agreement (the "Agreement") is effective the lst day of October, 2009 (the "Effective Date") by and between Envision Pharmaceutical Services, Inc., an Ohio Corporation (hereinafter "Envision"), and City of Renton, Washington ("Plan Sponsor"). RECITALS WHEREAS, Envision is a, URAC accredited, Pharmacy Benefit Management (PBM) company primarily engaged in the business of providing comprehensive pharmacy benefit management services nationwide to various employers, unions, and health plans which sponsor or administer health benefit plans covering outpatient prescription medications; and WHEREAS, from its inception, Envision's business model is to provide its clients with transparency and full disclosure, and to pass-through to its clients one-hundred percent of all discounts and rebates received by Envision for prescription medications dispensed to its clients' covered individuals; and WHEREAS, Plan Sponsor sponsors and/or administers one or more health benefit plans providing coverage for prescription medications to Plan Sponsor's Covered Individuals; and WHEREAS, Plan Sponsor desires to engage Envision to provide pharmacy benefit management services in accordance with the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual promises and agreements herein contained, Plan Sponsor and Envision hereby agree as follows: 1. DEFINITIONS 1.1 "Administrative Fee" means the amount that Envision charges Plan Sponsor for included services under this Agreement. Envision represents and warrants that the Administrative Fee and any fees for additional services set forth in Exhibit 1 are its sole compensation for the services rendered hereunder, and that it retains no revenues, directly or indirectly, from any other source. 1.2 "Average Wholesale Price" or "AWP" shall mean the average wholesale price of a prescription medication in effect on the date the prescription was dispensed as listed by Medi- Span, or another applicable industry standard reference on which pricing hereunder is based, for the actual package size dispensed. 1.3 `Benefit Plan" means the group health plan, insurance plan, prescription drug plan, or other benefit plan sponsored or administered by Plan Sponsor that covers the cost of prescription medications for Covered Individuals. 1.4 "Benefit Specification Form" means the form that is completed by Plan Sponsor, in conjunction with Envision, which details the specifics of the Benefit Plan such as which \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 1 of 20 - t prescription medications are covered by Plan Sponsor, any limitations or exclusions, the Benefit Plan's tier structure and Co-Payments, and any conditions associated with the specific services to be rendered by Envision under this Agreement (i.e. prior authorizations, drug therapy management, etc.). 1.5 "Brand Drug" means a drug where the Generic Indicator (GI) field in Medi-Span contains an "M" (co-branded product), an "N" (single source brand), or an "0" (multi-source brand). 1.6 "Co-Payment" means the amount of money (may be a fixed amount or percentage) a Covered Individual must pay to the Participating Pharmacy for each Covered Medication filled or refilled under this Agreement in accordance with the terms of the Benefit Plan. 1.7 "Covered Individual" means an Eligible Employee and each of such Eligible Employee's eligible dependents who are identified by Plan Sponsor on the Eligibility File as being entitled to receive Covered Medications under the Benefit Plan in accordance with this Agreement. 1.8 "Covered Medication" means a prescription drug, medication, or device that meets the requirements for coverage under the Benefit Plan, after applying all conditions and exclusions set forth therein, and which is dispensed by a Participating Pharmacy to a Covered Individual pursuant to a written prescription order or allowable refill. 1.9 "Eligible Employee" means an employee of Plan Sponsor on whose behalf Plan Sponsor has contracted with Envision to provide the services hereunder to such Employee and the Employee's eligible dependents. 1.10 "Eligibility File" means that electronic communication supplied to Envision by Plan Sponsor which identifies Covered Individuals along with other eligibility information necessary for Envision to provide PBM Services hereunder. Plan Sponsor acknowledges that eligibility begins on the first day the Covered Individual is reported by Plan Sponsor (or its designee) to be effective and continues through the last day the Covered Individual appears on the Eligibility File. 1.11 "Generic Drug" means a drug where the Generic Indicator (GI) field in Medi-Span contains a"Y" (generic). 1.12 "HIPAA" means the Health Insurance Portability and Accountability Act of 1996, as amended. 1.13 "Licensed Prescriber" means a licensed Doctor of Medicine (M.D.), Doctor of Osteopathy (D.O.), Doctor of Podiatry (D.P.M.), Doctor of Dentistry (D.D.S.), or other licensed health practitioner with independent prescribing authority in the state in which the dispensing pharmacy is located. 1.14 "Manufacturer Derived Revenue" means any discounts, rebates, pharmaceutical manufacturers administrative fees, and any other revenue received by Envision from \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 2 of 20 pharmaceutical manufacturers (whether as a result of the number of covered lives, other incentives or other amounts received) for Covered Medications dispensed to Covered Individuals. 1.15 "Maximum Allowable Cost" or"MAC"means the maximum unit ingredient cost payable by Plan Sponsor for a proprietary list of off-patent Brand Drugs which has been negotiated with Participating Pharmacies. The MAC list and associated drug prices are updated from time to time by Envision. Plan Sponsor will be charged the exact amount payable by Envision to Participating Pharmacies for the most current MAC list. 1.16 "Participating Pharmacy" means a pharmacy (including a designated mail order or specialty pharmacy) that has entered into a negotiated pricing agreement with Envision to dispense Covered Medications to Plan Sponsor's Covered Individuals. 1.17 "Plan Sponsor" means the entity (identified above as Plan Sponsor) that is financially responsible for the payment of Administrative Fees and Covered Medications dispensed to Covered Individuals hereunder. 1.18 "Point-of-Sale" means the location and time that a Covered Medication is dispensed to a Covered Individual, and the corresponding claim is submitted by the dispensing pharmacy for adjudication by Envision's on-line claims adjudication system. 1.19 "Preferred Drug List" (also known as the "Formulary") means Envision's published list of commonly prescribed medications which is made available to Participating Pharmacies, Licensed Prescribers, and Plan Sponsor for the purpose of guiding the prescribing and dispensing of Covered Medications. 1.20 "Specialty Drug" means those high cost biotech and other prescription drug products which require special ordering, handling and/or patient intervention. Specialty Drugs will be priced based on where the drug is dispensed (i.e. retail, mail order, or specialty pharmacy). 2. PBM SERVICES Envision shall perform the following pharmacy benefit management services ("PBM Services"): 2.1 Claims Processing: Envision shall accept, process, and adjudicate Claims for Covered Medications (i) submitted by Participating Pharmacies (via Envision's on-line electronic claims processing system in National Council for Prescription Drug Programs (NCPDP) formats); (ii) submitted by Covered Individuals as DMRs (as defined below); or (iii) received from third parties, such as Medicaid, for reimbursement by Plan Sponsor. Claims shall be checked for eligibility, benefit design, Co-Payments, and exclusions to determine which Claims are successfully processed, pended for prior authorization, or rejected for ineligibility or other factors in accordance with Plan Sponsor's specifications as set forth in Plan Sponsor's Benefit Specification Form (incorporated herein by this reference). For purposes of this Agreement, a Claim is an invoice or transaction (electronic or paper) for a Covered Medication dispensed to a Covered Individual that has been submitted to Envision by the dispensing pharmacy or a \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 3 of 20 Covered Individual (including transactions where the Covered Individual paid 100% of the cost). Claims that must be processed manually because they are (i) DMRs (as defined below) or (ii) claims received from third parties, such as Medicaid, for reimbursement by Plan Sponsor for ineligible payments, will incur a fee as set forth in Exhibit 1. 2.2 Pharmacy Network: Envision shall arrange for the dispensing of Covered Medications to Covered Individuals pursuant to contracts with Participating Pharmacies. Plan Sponsor understands and agrees that the network of Participating Pharmacies may change from time to time, including the mail order provider and/or specialty pharmaceuticals provider. The list of Participating Pharmacies is constantly updated to reflect any changes in the network, including pharmacy addresses and telephone numbers, and is accessible via Envision's website. Plan Sponsor acknowledges that (i) orders exceeding a thirty day supply from a retail pharmacy are not available at all Participating Pharmacies; (ii) Covered Medications shall not be dispensed to Covered Individuals without a prescription order by a Licensed Prescriber; and (iii) the availability of drugs are subject to market conditions and that Envision cannot, and does not, assure the availability of any drug from any Participating Pharmacy. 2.3 Drug Utilization Review(DUR) and Drug Therapy Management 2.3.1 Concurrent DUR: Envision shall program system edits which are applied to Claims during the adjudication process to identify the following: duplicate prescriptions; over- utilization/refill too soon; under-utilization; drug interactions; pediatric warnings; geriatric warnings; acute/maintenance dosing; formulary compliance; therapeutic duplication; drug inferred health state; drugs exceeding maximum dose; drugs below minimum daily dosage, and other financial and cost limitations which are specified by Plan Sponsor in the Benefit Specification Form. Envision's computer system will provide the dispensing pharmacy with the appropriate messaging to advise the pharmacy of DUR issues. 2.3.2 Retrospective DUR: Envision shall review Claims retrospectively, as specified in the Benefit Specification Form, to determine the drug utilization patterns of Covered Individuals, and report the results of retrospective reviews to Plan Sponsor. Retrospective DUR reports may include, but are not limited to: review of narcotic use with multiple physicians and pharmacies by a member, high cost/high utilization of a particular drug class, or therapeutic appropriateness of drug for a particular disease state, and other agreed upon reports. 2.3.3 Drug Therapy Management (DTM) and other Clinical Programs: Envision shall offer clinical programs as set forth in Exhibit 3 in addition to other clinical services specified herein. 2.4 Prior Authorization: If Plan Sponsor has elected to receive prior authorization services from Envision, Envision shall perform prior authorization for prescription medications that have been specified by Plan Sponsor in the Benefit Specification Form to require prior approval before being dispensed. When performing Prior Authorization, Envision will defer to the physician-patient relationship and the Licensed Prescriber's knowledge of the patient's medical condition. \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 4 of 20 2.5 Records: Envision shall maintain such business records at its offices in Twinsburg, Ohio, as may be required by applicable law or regulation, or as may be necessary to properly document the delivery of, and payment for, Covered Medications and the provision of services by Envision under this Agreement. 2.6 Preferred Drug List: Envision shall maintain and publish a Preferred Drug List to be used by Licensed Prescribers, Participating Pharmacies, and Covered Individuals. The Preferred Drug List has been developed by Envision's Pharmacy & Therapeutic Committee, in accordance with URAC standards and CMS guidelines using evidence-based evaluation criteria, and is modified from time to time as new medications and/or new clinical information becomes available. The Preferred Drug List is constantly updated to reflect any changes and is accessible via Envision's website. Any modifications to the Preferred Drug List desired by Plan Sponsor must be approved, in writing, by Envision and Plan Sponsor acknowledges that such modifications may affect yields in Manufacturer Derived Revenue. 2.7 Direct Member Reimbursement (DMR): Envision shall provide, via its website, a DMR form, for use by Covered Individuals. These forms will be used for Covered Individual self-pay reimbursements for amounts other than Co-Payments paid out for Covered Medications that have not otherwise been reimbursed by Plan Sponsor. Envision shall accept, process, and adjudicate DMR Claims within ten(10) business days of receipt of the claim form, but shall not be liable to reimburse a Covered Individual until Plan Sponsor provides funds for such purpose. 2.8 Reports: Envision shall provide Plan Sponsor with access to web-based report generator through which Plan Sponsor may create and download a variety of standard and customized reports. Envision shall provide training for a Plan Sponsor designated individual on the capabilities of Envision's web-based reporting program. Plan Sponsor represents that the designated individual has received training and has knowledge of the HIPAA privacy and security regulations. Any reports that are to be provided by Envision to Plan Sponsor without cost (other than those available from Envision's web-based reporting program) shall be mutually determined prior to the configuration of Plan Sponsor's Benefit Plan in Envision's computer system and shall be specified in the Benefit Specification Form. Plan Sponsor shall be charged a fee for any other reports requested by Plan Sponsor. 2.9 Identification Card: Envision shall provide Plan Sponsor with Envision approved identification cards ("ID Cards"), up to two per family, for distribution to Covered Individuals by Plan Sponsor. If requested by Plan Sponsor, Envision shall provide ID Cards directly to Covered Individuals at no additional cost, except for the cost of postage and handling. Additional ID Cards or replacement ID Cards (i.e. for lost or stolen ID Cards) will be provided at a cost as specified in Exhibit 1. Additional charges may apply for special graphic requests. 2.10 Distribution of Materials: Envision shall bulk ship ID Cards and other printed materials produced by Envision to Plan Sponsor at no additional charge. If Plan Sponsor requests ID Cards or other printed materials to be mailed directly to Covered Individuals, Plan Sponsor shall reimburse Envision its costs of postage and handling. \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 5 of 20 2.11 Business Associate Agreement: Envision shall execute and comply with a Plan Sponsor supplied HIPAA Business Associate Agreement, attached as Exhibit 2. 2.12 Customer Service: Envision shall maintain and operate a Help Desk with toll-free customer service numbers adequately staffed with trained personnel 24 hours a day, 7 days a week, 365 days a year, for the use of Plan Sponsor, Covered Individuals, Licensed Prescribers, and Participating Pharmacies. 2.13 Generic Substitution: Unless otherwise specified by Plan Sponsor in the Benefit Specification Form, Generic Drugs will be dispensed whenever possible. If a prescription is written for a Generic Drug, a Participating Pharmacy will dispense a Generic Drug consistent with the order of the Licensed Prescriber. If a prescription is written for a Brand Drug, and state law allows the substitution of a Generic Drug, a Participating Pharmacy may substitute a Generic Drug. 2.14 Pass-Through of Discounts: Envision shall use its best efforts to negotiate (on behalf of Envision's collective clientele) discounts with Participating Pharmacies. Envision shall pass through to Plan Sponsor one hundred percent (100%) of all negotiated Participating Pharmacy discounts. Envision will charge Plan Sponsor for Covered Medications dispensed to Covered Individuals at Envision's cost. 2.15 Pass-Through of Manufacturer Derived Revenue 2.15.1 Manufacturer Derived Revenue: Envision shall use its best efforts to negotiate (on behalf of Envision's collective clientele) Manufacturer Derived Revenue for Brand Drugs and to include such rebated Brand Drugs on the Preferred Drug List in consultation with Envision's Pharmacy & Therapeutics Committee. Envision shall pass through to Plan Sponsor one hundred percent (100%) of all negotiated Manufacturer Derived Revenue payable from pharmaceutical manufacturers by adjusting Plan Sponsor's cost of Covered Medications at the Point-of-Sale (unless otherwise specified herein). Specifically, the amount charged to Plan Sponsor by Envision (through the invoices provided under Section 4.3) for each Claim shall be the net price of the Covered Medication after applying applicable credits for expected Manufacturer Derived Revenue. (Plan Sponsor acknowledges that if Covered Individuals pay a percentage of the drug cost (co-insurance) under the Benefit Plan, a proportional amount of the rebate will be passed on to the Covered Individual at the Point-of-Sale.) Any unexpected Manufacturer Derived Revenue related to Plan Sponsor's Claims which is subsequently collected by Envision (i.e. market share rebates), shall be paid to Plan Sponsor upon receipt by Envision. Envision shall have no obligation to reduce Brand Drug costs on drugs for which Envision does not have a current manufacturer contract for Manufacturer Derived Revenue. 2.15.2 Revenue Yields: Plan Sponsor acknowledges that its yield of Manufacturer Derived Revenue is dependent on certain factors including, without limitation, the following: (i) Plan Sponsor's adherence to Envision's Preferred Drug List; (ii) the structure of Plan Sponsor's Benefit Plan; and (iii) the drug utilization patterns of Plan Sponsor's Covered Individuals. Notwithstanding anything herein to the contrary, Envision shall not be liable to Plan Sponsor for rebate yields that are lower than expected if (i) Plan Sponsor does not adhere to the Envision \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 6 of 20 Nmoe Preferred Drug List; (ii) Plan Sponsor makes a material change to the Benefit Plan; (iii) Plan Sponsor's Benefit Plan does not meet the conditions for rebates of pharmaceutical manufacturer contracts; (iv) there is a significant change in the drug utilization patterns of the Covered Individuals; (v) loss of rebates due to manufacturer drug patent expirations; (vi) changes in pharmaceutical manufacturer rebate contracting terms or policies; or (vii) any governmental regulation, ruling, or guidance that impacts Envision's ability to maintain current rebate yields. Plan Sponsor further agrees that it shall not, at any time, submit Claims which have been transmitted to Envision to another PBM or carrier for the collection of Manufacturer Derived Revenue or create a situation which would cause a manufacturer to decline payments to Envision. 2.16 Medicare Part D Services: Envision shall provide certain Medicare Part D or Retiree Drug Subsidy (RDS) services if included under an addendum to this Agreement. 2.17 Additional Services: Any services to be rendered under this Agreement which are not included in the Administrative Fee shall be itemized in the Exhibits and Addendums hereto along with any associated costs or charges. 3. PLAN SPONSOR RESPONSIBILITIES 3.1 Eligibility Data: Plan Sponsor shall provide Envision (either directly or through an authorized third party administrator) with an Eligibility File, at least monthly, in the HIPAA 834 standard transaction code set format, or such other format as has been previously agreed to by Envision. Plan Sponsor shall provide timely eligibility updates (for example, additions, terminations, change of address or personal information, etc.)to ensure accurate determination of the eligibility status of Covered Individuals. Plan Sponsor acknowledges and agrees that (i) Envision provides such eligibility data to the Participating Pharmacies and understands that Envision and Participating Pharmacies will act in reliance upon the accuracy of data received from Plan Sponsor; (ii) Envision will continue to rely on the information provided by Plan Sponsor until Envision receives notice that such information has changed; and (iii) Envision shall not be liable to Plan Sponsor for any claims or expense resulting from the provision by Plan Sponsor (or its designee) of inaccurate, erroneous, or untimely information. In addition, if Envision must create or update the Covered Individual eligibility file by manually entering employee data, Plan Sponsor will be charged a data entry fee as specified in Exhibit 1. In lieu of the Eligibility File, Plan Sponsor may provide eligibility information by updating Envision's eligibility system directly (except for the initial Eligibility File, which must be provided to Envision during the initial implementation), provided Plan Sponsor continues to meet Envision's conditions and specifications for direct eligibility updates. 3.2 Benefit Plan: Plan Sponsor shall provide Envision with complete information concerning the Benefit Plan. Plan Sponsor understands and agrees that Envision shall rely on the terms and conditions provided by Plan Sponsor on the Benefit Specification Form. The Benefit Specification Form may be changed from time to time by Plan Sponsor; provided, however, that Plan Sponsor changes must be communicated to Envision, in writing, at least thirty (30) days before any such change shall be implemented. The most recent executed Benefit Specification Form shall supersede any prior dated form. Plan Sponsor shall have sole authority to determine \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 7 of 20 the terms of the Benefit Plan and the coverage of benefits thereunder, however, Plan Sponsor understands and agrees that any change in the Benefit Plan (e.g. mandatory generic program, coverage of over-the-counter drugs or medications, etc.) may affect yields in Manufacturer Derived Revenue and average drug pricing, and that Envision will not be liable to Plan Sponsor for a reduction of such yields or increase in pricing which result from any change in the Benefit Plan. 3.3 Payment: Plan Sponsor shall timely pay, or cause its designee to timely pay, Envision for services rendered hereunder in accordance with Section 4 below and Exhibit 1. 3.4 Cooperation: Plan Sponsor shall provide cooperation and support to Envision to ensure all services described hereunder are provided in a timely, responsible, and professional manner. 4. TERMS OF PAYMENT 4.1 Pricing and Fees: Envision and Plan Sponsor agree that pricing for PBM Services shall be as set forth in Exhibit 1 hereto, as may be amended in writing from time to time. Plan Sponsor acknowledges that (i) Exhibit 1 has been reviewed and approved by Plan Sponsor; (ii) the fees and prices specified in Exhibit 1 are conditioned upon Plan Sponsor's use of Participating Pharmacies; (iii) the fees and prices specified in Exhibit 1 are subject to modification after the Initial Term of this Agreement and/or upon a material change in the negotiated discounts with Participating Pharmacies. Envision shall provide Plan Sponsor with at least 180 days prior written notice before implementing any changes in the fee and prices specified in Exhibit 1. If Plan Sponsor does not agree with the revised fees and prices, Plan Sponsor may terminate this Agreement with 90 days prior written notice. 4.2 Medicaid Reimbursement: If the negotiated prices reflected in this Agreement has any effect on the level of reimbursement Participating Pharmacies receive from any state Medicaid (Title XIX) Program under such state's law governing pharmaceutical discounts, the pricing set forth in Exhibit 1 of this Agreement will be adjusted so that this Agreement does not adversely affect the level of reimbursement Participating Pharmacies receive from the Medicaid Program in such state. 4.3 Payments for Claims: For each Covered Medication dispensed, Plan Sponsor agrees to reimburse Envision in accordance with this Section 4.3 and Exhibit 1, less applicable Co- Payments payable by Covered Individuals under the Benefit Plan. Envision shall provide Plan Sponsor with an invoice of payable Claims twice each month and Plan Sponsor shall pay Envision's invoices within ten (10) calendar days from receipt of said invoices. Nothing herein shall obligate Envision to pay Participating Pharmacies if Plan Sponsor fails to timely pay Envision as required under this Agreement. Plan Sponsor understands and agrees that Envision cannot obligate Participating Pharmacies to dispense any Covered Medications without receiving payment and that the provision of services hereunder may be suspended until any unpaid balance is received. In the event services are suspended hereunder, Envision may, as a condition of continuing to perform services under this Agreement, require Plan Sponsor to deposit with Envision a reasonable amount to ensure the timely payment of future invoices. Notwithstanding anything herein to the contrary, Plan Sponsor shall be and remain responsible for the payment of \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 8 of 20 all invoices for Covered Medications dispensed to Covered Individuals, along with any associated Co-payments not timely paid by Covered Individuals, and dispensing fees and taxes. 4.4 Payment of Administrative Fee: Plan Sponsor agrees to pay Envision's Administrative Fee by the last day of each month for the next month's services. The Administrative Fee is calculated by multiplying the number of Eligible Employees who are active at any time during the then ending month (as reflected in the Envision claims processing system), by the Administrative Fee amount set forth in Exhibit 1. 4.5 Fees for Additional Services and Miscellaneous Expenses: Plan Sponsor agrees to reimburse Envision for Additional Services and miscellaneous expenses (e.g. postage) specified under Additional Fees and Expenses in Exhibit 1 hereunder, within ten (10) days of receipt of an invoice. 4.6 Untimely Payments: Plan Sponsor agrees that, in the event it fails to pay Envision any amounts due hereunder within the time period specified above, it shall pay Envision, in addition to such unpaid amounts, interest at a rate of eighteen percent (18%) per annum on the out- standing balance (or, if lower, the rate of interest permitted under the law of Plan Sponsor's state of domicile.) 4.7 Retroactive Disenrollment: Retroactive termination or disenrollment of a group, Eligible Employee, or Covered Individual shall not release Plan Sponsor of its obligation to pay Claims incurred, at any time, on behalf of such Covered Individual, or Administrative Fees due to Envision for such Covered Individual during any period for which services were renderable hereunder based on the then current eligibility. 4.8 Taxes: Any sales or use taxes for Covered Medications sold to Covered Individuals shall be charged, collected, and paid to state and local taxing authorities by the dispensing pharmacy. Plan Sponsor shall reimburse Envision or the dispensing pharmacy for taxes paid as part of the reimbursement for Claims. 4.9 Financial Audit by Plan Sponsor: Plan Sponsor, at its sole expense, may audit Envision's records of Claims paid by Plan Sponsor annually. Envision shall make available to Plan Sponsor's auditor, any and all financial records containing Plan Sponsor's information and such other records as reasonably necessary for auditor to confirm that the amounts paid by Plan Sponsor are the cost to Envision on the day the Covered Medication was dispensed. Plan Sponsor agrees to not use as its auditors, any person or entity which, in the sole discretion of Envision, is a competitor of Envision, a pharmaceutical manufacturer representative, or any other person or entity which has a conflict of interest with Envision. Plan Sponsor understands that Envision's contracts with pharmaceutical manufacturers, Participating Pharmacies, and other third parties may contain non-disclosure provisions, and hereby agrees to comply with such non- disclosure provisions. Plan Sponsor's auditor shall execute a conflicts of interest disclosure and confidentiality agreement with Envision prior to the audit. Audits shall only be made during normal business hours following thirty (30) days written notice, be conducted without undue interference to Envision's business activity, and in accordance with reasonable audit practices. Plan Sponsor's auditor may inspect Envision's contracts with Participating Pharmacies and \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 9 of 20 pharmaceutical manufacturers at Envision's offices only, and no copies of such contracts may be removed from Envision's offices. 4.10 Financial Audit by Envision: Envision may, at reasonable intervals, request Plan Sponsor to provide records for Envision's inspection which provide support for the information contained in the Eligibility File. If warranted, Envision may, at its own expense, inspect and audit, or cause to be inspected and audited, once annually, the books and records of Plan Sponsor directly relating to the existence and number of Covered Individuals, and payment of invoices. 5. TERM AND TERMINATION 5.1 Term: This Agreement shall commence on the Effective Date and remain in full force and effect for an initial term of three (3) years ("Initial Term") unless earlier terminated as provided herein. Upon the expiration of the Initial Term, and each subsequent renewal term, this Agreement shall renew automatically for an additional term of one year; unless, at least ninety (90) days prior to the end of such term, either party hereto notifies the other, in writing, of its intent that the Agreement terminate at the end of the current term. 5.2 Termination: This Agreement may be terminated as follows: 5.2.1 For Cause: By either party hereto in the event the other party breaches any of its material obligations hereunder; provided, however, that the defaulting party shall have thirty (30) days to correct such breach after written notice is given by such non-breaching party specifying the alleged breach; 5.2.2 Insolvency: By either party hereto in the event the other party (i) is adjudicated insolvent, under state and/or federal regulation, or makes an assignment for the benefit of creditors; (ii) files or has filed against it, or has an entry of an order for relief against it, in any voluntary or involuntary proceeding under any bankruptcy, insolvency, reorganization or receivership law, or seeks relief as therein allowed, which filing or order shall not have been vacated within sixty (60) calendar days from the entry thereof; (iii) has a receiver appointed for all or a substantial portion of its property and such appointment shall not be discharged or vacated within sixty (60) calendar days of the date thereof; (iv) is subject to custody, attachment or sequestration by a court of competent jurisdiction that has assumed of all or a significant portion of its property; or (v) ceases to do business or otherwise terminates its business operations, is declared insolvent or seeks protection under any bankruptcy, receivership, trust deed, creditors arrangement or similar proceeding; 5.2.3 Failure to Pay: By Envision, upon reasonable notice, in the event Plan Sponsor fails to pay Envision according to terms in Exhibit 1. Plan Sponsor understands that, if Plan Sponsor has not paid within seven (7) days written notice by Envision, Envision may notify Participating Pharmacies that Plan Sponsor has not timely pay amounts due for Claims. 5.3 Notices: All notices required in this Section 5 shall be reasonably specific concerning the cause for termination and shall specify the effective date and time of termination. \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 10 of 20 5.4 Effect of Termination: Termination of this Agreement for any reason shall not release any party hereto from obligations incurred under this Agreement prior to the date of termination. All services required to be performed under the terms of this Agreement shall be provided through the effective date of termination. 6. CONFIDENTIAL INFORMATION 6.1 Confidentiality: Except as otherwise stated herein or required by law, neither party hereto shall disclose any information of, or concerning the other party which has either been provided by one party to the other or obtained by a party in connection with this Agreement (including this Agreement and the terms of this Agreement) or related to the services rendered under this Agreement, all of which information is deemed confidential information. All data, information, and knowledge supplied by a party hereto shall be used by the other party exclusively for the purposes of performing this Agreement. Upon termination of this Agreement, each party shall return to the other party, all confidential information provided including, without limitation, all copies and electronic magnetic versions thereof. Notwithstanding any of the foregoing to the contrary, "confidential information" shall not include any information which was known by a party prior to receiving it from the other party, or that becomes rightfully known to a party from a third party under no obligation to maintain its confidentiality, or that becomes publicly known through no violation of this Agreement. Envision acknowledges that Plan Sponsor is a governmental entity and, therefore, to the extent this Agreement is a public record, as that term is defined in Washington law, Plan Sponsor may comply with state law regarding public records disclosure and retention. Compliance with such requirements shall not constitute a breach of this Section 6. 6.2 Protected Health Information: Plan Sponsor will have access to Protected Health Information (PHI) (as defined by HIPAA) contained in reports provided by Envision or accessed by Plan Sponsor via Envision's website. Plan Sponsor agrees, for itself and its employees, that PHI shall not be used for any impermissible purpose, including, without limitation, the use of PHI for disciplinary or discriminatory purposes, and any user names and passwords assigned to designated individuals shall not be shared with non-designated individuals. 7. INDEMNIFICATION 7.1 Limited Indemnification by Envision: Envision hereby agrees to indemnify, hold harmless, and defend Plan Sponsor and its employees, officers, directors, trustees, shareholders, and agents from and against any and all liabilities, actions, claims, damages, costs, losses and expenses (including without limitation, reasonable costs of investigation and attorneys' fees) caused by or arising out of(i) any act or omission by Envision in the performance of the services provided under this Agreement; or (ii) any breach of any representation, covenant, or other agreement of Envision contained in this Agreement. 7.2 Limited Indemnification by Plan Sponsor: Plan Sponsor hereby agrees to indemnify, hold harmless, and defend Envision, the Participating Pharmacies, and their respective employees, officers, directors, shareholders, affiliates and agents from and against any and all liabilities, actions, claims, damages, costs, losses and expenses (including without limitation, \PBMSA(fnn080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 11 of 20 reasonable costs of investigation and attorneys' fees) caused by or arising out of(i) the provision by Plan Sponsor or its designee of erroneous information; or (ii) Plan Sponsor's failure to comply with state or federal law in the operation of its Benefit Plan. 7.3 Survival: This Section 7 shall survive the expiration or termination of this Agreement for any reason. 8. DISPUTE RESOLUTION Any controversy, claim or dispute arising out of or relating to this Agreement or the breach thereof, whether in tort or in contract, in law or in equity, shall be exclusively settled by binding arbitration in accordance with the commercial rules of the American Arbitration Association then in effect. The arbitration shall be conducted in King County, Washington. 9. RELATIONSHIP WITH CONTRACTED PHARMACIES Plan Sponsor acknowledges that Envision is neither an operator of pharmacies nor exercises control over the professional judgment used by any pharmacist when dispensing drugs or medications to Covered Individuals. Nothing in this Agreement shall be construed to require a Participating Pharmacy to dispense any Covered Medication to anyone if, in the pharmacist's professional judgment, such drug or medication should not be dispensed. Plan Sponsor further agrees that it shall hold harmless Envision from any claim arising from the dispensing of drugs by any pharmacy. 10. GENERAL 10.1 Legal Status: Nothing in this Agreement shall be deemed to confer upon Envision (i) the status of fiduciary as defined in either the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the Americans with Disabilities Act, as amended ("ADA"), except to extent, in the performance of its obligations under this Agreement, Envision exercises actual discretionary control over the property of Plan Sponsor; (ii) any liability for the terms or validity of the Benefit Plan; or (iii) any liability for disclosing or reporting information regarding the Benefit Plan or changes in the Benefit Plan (e.g., calculation of Co-Payments, deductibles; or creditable coverage) as may be required by law to be disclosed to governmental agencies or Covered Individuals. 10.2 Independent Contractors: Envision and Plan Sponsor are independent contractors. Neither party hereto, nor any of its respective employees, shall be construed to be the employee or representative of the other, or liable for any acts of omission or commission on the part of the other. 10.3 Exclusivity: During the term of this Agreement, Envision shall be the sole provider of PBM Services to Plan Sponsor, including, without limitation, the exclusive contractor of rebates with pharmaceutical manufacturers for Plan Sponsor's Claims. \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 12 of 20 10.4 Assignment: Except as follows, this Agreement may not be assigned by either party hereto without the express written consent of the other party, which may not be unreasonably withheld. Envision may assign this Agreement to a controlled subsidiary company or a controlling parent company. 10.5 Binding Effect: This Agreement and the exhibits and schedules attached hereto shall be binding upon and inure to the benefit of the respective parties hereto and their respective successors and assigns. Plan Sponsor's obligations hereunder are intended to inure to the benefit of and be enforceable by the Participating Pharmacies. 10.6 Intellectual Property: Each party hereto reserves the right to and control of the use of their names, symbols, trademarks or service marks presently existing or hereafter established, and no party may use any names, symbols, trademarks or service marks of any other party without the owner's written consent. 10.7 Waiver: Neither the failure nor any delay on the part of either party hereto to exercise any right, power or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right, power or privilege. In the event any party hereto should waive any breach of any provision of this Agreement, it will not be deemed or construed as a waiver of any other breach of the same or different provision. 10.8 Severability: The invalidity or non-enforceability of any term or provision of this Agreement shall in no way affect the validity or enforceability of any other term or provision. 10.9 Change in Law or Market Conditions: If any law, regulation, or market condition now existing or subsequently occurring (e.g. Medi-Span or another applicable industry standard reference on which pricing hereunder is based, changes the methodology for determining drug price in a way that materially changes the pricing or economics of the Agreement) affects the ability of either party hereto to carry out any obligation hereunder (a "Material Change"), Envision and Plan Sponsor shall renegotiate the affected terms of this Agreement, in good faith, to preserve, to the extent possible, the relative positions of the parties that existed prior to such Material Change. Either party may notify the other party of a Material Change. If a successful renegotiation is not achieved within thirty (30) days after notification of a Material Change, any failure of the affected party to meet its obligations hereunder due to the effect of such Material Change shall not be deemed to be a breach of this Agreement; however, if continuation of the Agreement without modification is in violation of any law or regulation, or makes it impracticable for the affected party to meet its obligations hereunder, either party may terminate this Agreement with sixty (60) days prior written notice. Plan Sponsor acknowledges that, due to the change in published Average Wholesale Prices by Medi-Span on September 26, 2009, as a result of the settlement reached in the FDB/McKesson lawsuit, Envision will adjust the discount calculation for affected drugs beginning September 26, 2009 as necessary to maintain overall equivalent pricing for covered drugs. The exact adjustment factor may vary from drug to drug and from pharmacy to pharmacy. However, the adjustment factor applied will be disclosed to the client and Envision will continue to pass-through to the client the actual negotiated charge of the dispensing pharmacy without any mark-up or spread by Envision. \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 13 of 20 10.10 Headings: The section or paragraph headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 10.11 Entire Agreement: This Agreement shall constitute the entire agreement between Envision and Plan Sponsor with respect to the subject matter herein and supersede any prior understanding or agreements of any kind preceding this Agreement with respect to such subject matter. Any modification or amendment to this Agreement, or additional obligation assumed by Envision or Plan Sponsor in connection with this Agreement, shall be binding only if evidenced in a writing signed by both parties hereto. No term or provision of this Agreement shall establish a precedent for any term or provision in any other agreement. 10.12 Acceptance of Offer: Notwithstanding anything herein to the contrary, this Agreement shall not be binding upon the parties hereto unless and until the Agreement is signed and executed by a duly authorized officer of each of the parties. The signing of this Agreement by Plan Sponsor constitutes an offer only until the same has been accepted by Envision. 10.13 Choice of Law: This Agreement shall be construed, interpreted, and governed according to the laws of the State of Washington, except to the extent such laws are preempted by applicable Federal law. 10.14 Notices: Any notice required to be sent by one party hereto to the other under this Agreement shall be in writing and may be sent to the other party by mail, courier, e-mail, and/or telefax at the address set forth on the signature page below; provided, however, that it shall be the burden of the sending party to establish that the receiving party, in fact, received the notice. 10.15 Representations: Each signatory named below represents and warrants that he or she has (i) read this Agreement, Exhibits, and other attachments, and fully understands and agrees to the content therein; (ii) entered into this Agreement voluntarily; (iii) not transferred or assigned or otherwise conveyed in any manner or form any of the rights, obligations or claims which are the subject matter of this Agreement; and (iv) the full power and authority to execute this Agreement. Each party hereto further represents and warrants that (i) it has no undisclosed conflicts of interest and (ii) entering into this Agreement for PBM Services is not in violation of any other agreement. Plan Sponsor further represents that it maintains, and shall continue to maintain throughout the term of this Agreement, any and all licenses, governmental authority, or other authorization required to operate an entity of its type. [SIGNATURE PAGE FOLLOWS] \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 14 of 20 Nos? r.r IN WITNESS WHEREOF, Envision and Plan Sponsor have executed this Agreement as of the Effective Date above. For ENVISION: For PLAN SPONSOR: By: /Cini,r1 By: ` f -1)0ri n"""' Denis Law, Mayor Print Name & Title Print Name & Title //-.3_aO0 Address: Address: 2181 East Aurora Road 1055 S. Grady Way Twinsburg, OH 44087 Renton, WA 98057 PH: 330-405-8080 PH: 425-430-7650 FX: 330-405-8081 FX: 425-430-7665 FEIN: 91-6001271 Attest: / ��JG�11iYl.f.L 1E1 1,d2. C tyk, Bonnie I . Walton, City Clerk //-3-a009 \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 15 of 20 Nos., ,fttof EXHIBIT 1 PRICING AND FEES Administrative Fee $3.00 Per Eligible Employee Per Month(PEPM) Drug Costs and Dispensing Fees A'B Plan Sponsor pays the best negotiated price or, if lower, the dispensing pharmacy's Usual and Customary(U&C)price: Retail Pharmacies (30 Days' Supply) For Brand Drugs, the estimated annual average price is AWP minus 15.5% (including U&C)plus a dispensing fee of$2.00. For Generic Drugs - • If on the MAC list, Plan Sponsor pays the MAC price plus a dispensing fee of$2.25; or • if not on the MAC list, the estimated annual average price is AWP minus 25%plus a dispensing fee of$2.10. • Average annual overall generic discount is AWP minus 68%. Mail Order Pharmacy—Costco Pharmacy For Brand Drugs, Plan Sponsor pays an estimated annual average price of AWP less 22%with no dispensing fee. For Generic Drugs - • on the MAC list, Plan Sponsor pays the MAC price with no dispensing fee; or • if not on the MAC list, the estimated annual average is AWP minus 56% with no dispensing fee (except for newly approved Generic Drugs within the first 180 days of release, in which case the price will be an estimated annual average of AWP minus 25% with no dispensing fee); • or$6.49, if higher than above. Specialty Pharmacy - Medmark Specialty Pharmacy • (See Price Sheet for Selected Vendor as Exhibit 1-A) A Plan Sponsor pays Envision's calculated price (plus applicable dispensing fees) for Covered Medications dispensed by the Participating Pharmacy to Covered Individuals on the date the prescription was dispensed for the actual package size dispensed. B Discounts shown are effective prior to September 26th, 2009. Due to the change in published Average Wholesale Prices by Medi-Span on September 26, 2009, as a result of the settlement reached in the FDB/McKesson lawsuit, Envision will adjust the discount calculation for affected drugs beginning September 26,2009 as necessary to maintain overall equivalent pricing for covered drugs. \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 16 of 20 Additional Fees and Miscellaneous Expenses 1. Option of mailing by Envision of initial ID Cards directly to Covered Individuals Actual cost of postage and handling 2. Replacement by Envision of lost or stolen ID Cards 1 $1.00 per card plus cost of postage 3. Manual Claims Processing and Direct Member Reimbursements (DMRs) $1.50 per Claim processed 4. Option of mailing by Envision of program related materials directly to Covered Individuals Actual cost of postage and handling 5. Manually create or update eligibility file $1.00 per Covered Individual data entry 6. Ad Hoc Computer or Report Programming I $150.00 per hour \PBMSA(frm080609)(r2) CO Envision Pharmaceutical Services,Inc. Page 17 of 20 EXHIBIT 2 BUSINESS ASSOCIATE AGREEMENT (To be supplied by Plan Sponsor) \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 18 of 20 BUSINESS ASSOCIATE AGREEMENT This BUSINESS ASSOCIATE AGREEMENT (the "Agreement") is entered into this 1st day of October, 2009 (the "Effective Date"), by and between Envision Pharmaceutical Services, Inc. ("Business Associate") and City of Renton ("Plan Sponsor"), each referred to individually herein as a "Party" or collectively as the "Parties". RECITALS A. Plan Sponsor sponsors a health benefit plan that provides coverage for prescription medications and supplies to covered members. Plan Sponsor has entered into a service agreement with Business Associate to provide certain administrative services to, or on behalf of, Plan Sponsor. B. In order for Business Associate to provide services to Plan Sponsor, Plan Sponsor may disclose certain Protected Health Information ("PHI") (as defined in Article 1 of this Agreement) of Plan Sponsor's members to Business Associate and anticipates that Business Associate will create or receive PHI on behalf of Plan Sponsor. C. The Parties also anticipate that Business Associate will be required to create, receive, maintain, or transmit ePHI (as defined in Article 1 of this Agreement) on behalf of Plan Sponsor in order to provide services to Plan Sponsor. D. Business Associate desires to provide the satisfactory assurances required by HIPAA to Plan Sponsor and further define the rights and responsibilities of the Parties under HIPAA for the exchange of PHI, including ePHI. NOW, THEREFORE, the Parties, in consideration of the mutual agreements herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, do hereby agree as follows: Article 1: Definitions For the purposes of this Agreement, the following defined terms shall have the following definitions. Except as otherwise stated herein, the defined terms used in this Agreement shall have the meanings given them under the Health Insurance Portability and Accountability Act of 1996 and the regulations thereunder, including any amendments thereto ("HIPAA"). 1.1 "Compliance Date" shall mean April 14, 2004 with regard to Subpart E of 45 C.F.R. Part 164 (regarding the privacy of PHI, otherwise known as the "HIPAA Privacy Standards") and April 20, 2006 with regard to Subpart C of 45 C.F.R. Part 164 (regarding the security of ePHI, otherwise known as the "HIPAA Security Standards"). 1.2 "Designated Record Set" shall have the meaning prescribed to it in the HIPAA Standards. \BAA(client)06-02-08 1 Nor 1.3 "Electronic Media" shall have the meaning prescribed to it in the HIPAA Standards. 1.4 "Electronic Protected Health Care Information" ("ePHI") shall mean PHI that is transmitted or maintained in Electronic Media. 1.5 "HHS" shall mean the U. S. Department of Health and Human Services. 1.6 "HIPAA Standards" shall mean the standards for privacy and security of Individually Identifiable Health Information found at 45 C.F.R. Parts 160 and 164. 1.7 "Individual" shall have the same meaning as the term "individual" in the HIPAA Standards and shall include a person who qualifies as a personal representative in accordance with the HIPAA Standards. 1.8 "Individually Identifiable Health Information" shall have the meaning prescribed to it in the HIPAA Standards. 1.9 "Protected Health Information" ("PHI") shall have the meaning prescribed to it in the HIPAA Standards, limited to Individually Identifiable Health Information transmitted or maintained in any form or medium that Business Associate creates or receives from or on behalf of Plan Sponsor. 1.10 "Required by Law" shall have the same meaning as the term "required by law" in the HIPAA Standards. 1.11 "Secretary" shall mean the Secretary of HHS or his or her designee. Article 2: Business Associate Use and Disclosure of PHI and ePHI 2.1 Purpose. As further described above under Recitals, Business Associate performs certain Services for the Plan Sponsor. 2.2 Receipt and Use of PHI. Performance of the Services requires that Business Associate receive and use PHI obtained from or on behalf of Plan Sponsor, or that Business Associate create, receive, maintain, or transmit ePHI on behalf of Plan Sponsor. To perform these Services, Business Associate may use or disclose PHI provided such use or disclosure would not violate the HIPAA Standards if done by Plan Sponsor. However, Business Associate may use PHI internally to carry out its legal responsibilities and for its proper management, internal auditing, and administration, and at the request of Plan Sponsor, to provide data aggregation services to Plan Sponsor as permitted by the HIPAA Standards. 2.3 Disclosure of PHI. Satisfactory completion of the Services by Business Associate may require that Business Associate disclose PHI to agents or subcontractors of Business Associate. Business Associate may disclose PHI to third parties with which it contracts to assist in providing Services, and to its agents to carry out Business Associate's legal responsibilities, for proper \BAA(client)06-02-08 2 management, internal auditing, and administration, only if (a) Business Associate obtains reasonable assurances from such third parties or agents that the PHI will be held by them confidentially and used or further disclosed only as Required by Law or for the purpose for which it was disclosed to them, (b) such third parties or agents agree to implement reasonable and appropriate safeguards to protect the confidentiality, integrity, and availability of ePHI, and (c) such third parties or agents agree to notify Business Associate of any instance of which they are aware that the confidentiality of the information has been breached or that a security incident has occurred. Notwithstanding the foregoing, Business Associate will be permitted to exchange PHI or ePHI freely with any Business Associates of the Plan Sponsor with which the Plan Sponsor has executed a Business Associate Agreement/Addendum. 2.4 Obligation for Use and Disclosure of PHI. All PHI does not fall within the definition of ePHI and therefore all PHI is not subject to the HIPAA Security Standards. However, all ePHI falls within the meaning of PHI and is therefore subject to the HIPAA Privacy Standards in the same manner as other PHI. 2.5 Satisfactory Assurances. After the Compliance Dates (as defined in Article 1 of this Agreement), Plan Sponsor may not transfer or transmit PHI or ePHI to Business Associate or permit Business Associate to create, receive, or transmit PHI or ePHI on behalf of Plan Sponsor without satisfactory assurances from Business Associate that it will appropriately safeguard the information. Article 3: Duties of Business Associate 3.1. Limitations on Use of PHI. Business Associate shall not use PHI except as permitted or required by this Agreement or as Required by Law. Business Associate shall only use PHI in a manner that is consistent with the HIPAA Standards. 3.2. Limitations on Disclosure of PHI. Business Associate shall not disclose PHI except as permitted or required by this Agreement or as Required by Law. Business Associate shall only disclose PHI in a manner that is consistent with the HIPAA Standards. 3.3. Safeguarding PHI and ePHI. Business Associate shall use appropriate safeguards to prevent the use or disclosure of PHI other than as permitted by this Agreement. Business Associate shall implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the ePHI that it creates, receives, maintains, or transmits on behalf of Plan Sponsor as required by the HIPAA Standards. 3.4. Third Party Agreements. Business Associate may need to enter into agreements with third parties, including agents or subcontractors, in order to satisfy its obligations to Plan Sponsor. Should Business Associate disclose to these third parties or agents any PHI received from Plan Sponsor, Business Associate shall require such third parties or agents to agree, in writing, to (a) be bound by the \BAA(client)06-02-08 3 same restrictions and conditions that apply to Business Associate under this Agreement, and (b) implement reasonable and appropriate administrative, technical and physical safeguards to protect PHI and the confidentiality, integrity and availability of ePHI. Notwithstanding the foregoing, Business Associate will be permitted to exchange PHI or ePHI freely with any Business Associates of the Plan Sponsor with which the Plan Sponsor has executed a Business Associate Agreement/Addendum. 3.5. Reporting of Unauthorized Uses and Disclosures and Security Incidents. If Business Associate becomes aware of any use or disclosure of PHI by Business Associate, its employees, subcontractors, or agents that is not permitted by this Agreement, or a security incident involving ePHI, Business Associate shall immediately report such violation, in writing, to Plan Sponsor within five (5) business days of making a determination that such a use, disclosure or incident has occurred. 3.6. Mitigation of Disclosure of PHI. Business Associate agrees to mitigate, to the extent practicable, any harmful effect that is known to Business Associate of a use or disclosure of PHI by Business Associate in violation of the requirements of this Agreement. 3.7. Access to PHI. Within ten (10) business days of Plan Sponsor's written request, Business Associate shall provide Plan Sponsor or an Individual who is the subject of the PHI with access to PHI in Business Associate's possession, if Business Associate's information consists of a Designated Record Set in order for Plan Sponsor to comply with 45 C.F.R. § 164.524. 3.8. Availability of PHI for Amendment. The parties acknowledge that the HIPAA Standards permit an Individual who is the subject of PHI to request certain amendments of his or her records. Within ten (10) business days of Plan Sponsor's written request, Business Associate shall make PHI contained in a Designated Record Set in Business Associate's possession available for amendment and shall incorporate any amendments in accordance with 45 C.F.R. § 164.526. 3.9. Accounting of Disclosures. Business Associate agrees to document disclosures of PHI and to make available, within ten (10) business days of Plan Sponsor's written request, information to Plan Sponsor concerning Business Associate's disclosure of PHI for which Plan Sponsor needs to provide an Individual with an accounting of disclosures as required by 45 C.F.R. § 164.528. Should an accounting of the PHI of a particular Individual be requested more than once in any twelve (12) month period, Business Associate may charge Plan Sponsor a reasonable, cost-based fee. 3.10. Availability of Books and Records. For purposes of determining compliance of Plan Sponsor with the HIPAA Standards, Business Associate agrees to make available to the Secretary its internal policies and procedures, books and records \BAA(client)06-02-08 4 blise relating to the use and disclosure of PHI received from, or created or received by Business Associate on behalf of, Plan Sponsor. 3.11. Return of PHI at Termination. Upon termination of this Agreement, Business Associate, as well as any agents or subcontractors of Business Associate, shall, where feasible, return to Plan Sponsor, or with the permission of Plan Sponsor, destroy all PHI received from or created or received by Business Associate on behalf of, Plan Sponsor and shall retain no copies of PHI. When return or destruction is not feasible, the duties of Business Associate under this Agreement shall be extended to protect the PHI retained by Business Associate. Business Associate agrees to limit further uses and disclosures of the information retained to those purposes that made the return or destruction infeasible. Article 4: Term and Termination 4.1. Basic Term. The term of this Agreement shall commence on the effective date stated above and shall terminate when all of the PHI provided by Plan Sponsor to Business Associate, or created or received by Business Associate on behalf of Plan Sponsor, is returned or, at the discretion of Plan Sponsor, is destroyed, in accordance with Section 3.11 of this Agreement. 4.2. Termination for Breach. In the event Business Associate breaches or otherwise defaults under this Agreement, Plan Sponsor may provide an opportunity for Business Associate to cure the breach within thirty (30) days, or immediately terminate this Agreement by providing written notice to Business Associate; provided, however, all of the obligations imposed on Business Associate hereunder shall continue. Article 5: Miscellaneous 5.1. Regulatory References. A reference in this Agreement to a section in the HIPAA Standards means the section as in effect or as amended. 5.2. Amendment. The Parties to this Agreement agree to take such action to amend this Agreement from time to time as is necessary for Plan Sponsor to comply with the requirements of HIPAA. 5.3. Prior Business Associate Agreements or Addenda. This Agreement shall supersede any prior Business Associate Agreement or Addenda between the Business Associate and Plan Sponsor. 5.4. Survival. The respective rights and obligations of Business Associate under Section 3.11 of this Agreement shall survive the termination of this Agreement. 5.5. Interpretation. Any ambiguity in this Agreement shall be resolved to permit Plan Sponsor to comply with the HIPAA Standards. \BAA(client)06-02-08 5 41 r *We IN WITNESS WHEREOF, the parties have, by their duly authorized representatives, executed this Agreement to be effective as of the date first above written. PLAN SPONSOR: BUSINESS ASSOCIATE: City of R nton tolve-1,i1) (\e(\L_ Envision Pharmaceutical Services, Inc. By: By: /7"//' , , V�1 Pi N C- , 0 AA I S-O ) �/"L, i u,ey . 2,4T2 x'f,� Print Name and Tile Print Name and Title V c: ,e c o /Mi-i. t /reeiC \BAA(client)06-02-08 6 • • *se New EXHIBIT 3 PROSPECTIVE - CONCURRENT—RETROSPECTIVE DRUG UTILIZATION REVIEW(DUR) The following Prospective DUR checks are performed before medication is dispensed, resulting in a message to the pharmacy: 1. Therapeutic duplication: If a Covered Individual is being treated with two or more similar drugs or drugs in the same therapeutic class. 2. Drug-drug interactions: If two or more of the drugs that are actively being used by the Covered Individual have the potential in combination to produce an untoward or adverse effect. 3. Over-utilization: This is, most commonly, too-early refills, which can also be a check on increasingly faster refill periods over time. This can signal an abuse pattern developing. This can also be seen by pharmacists who enter an unreasonably short day's supply indicator (say a one month supply 30 tablets, and place 5 days in the days supply field). 4. Under-utilization: If either the dosage of the drug is too small given the apparent circumstances or the Covered Individual is refilling the prescription at intervals that suggest that the Covered Individual is not taking the prescription according to the current physician's instructions. This is determined when the refill days are greater than the days supply. 5. High dose: If the dosage prescribed is higher than the maximum effective dosage as indicated by the medical literature 6. Drug-pregnancy: Determines if a harmful drug is being dispensed to a pregnant woman. Claims history of prenatal vitamins prescribed within 120 days for women who is pregnant. 7. Low dose: If the dosage prescribed is lower than the commonly accepted lowest accepted dosage for that particular drug. 8. Drug age: Most commonly used for children and the elderly, this looks at the date of birth and the drug prescribed to analyze the appropriateness of the drugs prescribed. 9. Drug-disease: When the disease states are known and the drugs prescribed don't appear appropriate for that disease state. 10. Duration of Therapy: When the drug prescribed is acute, but the duration and dosage is extended to what would be a much longer time than warranted. An example would be antibiotics prescribed for a month with 5 refills at a full dosage level. The clinical modules listed below are the eleven major Concurrent DUR modules that Envision uses during the processing of prescription drug claims. All of the clinical modules use NCPDP standard conflict codes: \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 19 of 20 P Nee • Duplicate Therapy- Drugs from the same therapeutic class • Drug-Drug Interaction - Combinations of drugs with potential for severe adverse affects • Low Dose Alert-Drug doses that exceed the suggested minimum daily dose • High Dose Alert- Drug doses that exceed the suggested maximum daily dose • Excessive Utilization("Too Soon Refill"Monitoring) - A refill sent before a defined percentage of the previous fill is used • Geriatric Precautions -Drugs inappropriate for patients over the age of 60 • Pediatric Precautions -Drugs inappropriate for pediatric patients based on age • Drug Duplication- Drugs containing the same ingredients • Drug-Gender Precaution - Drugs not indicated for a specific gender • Drug-Disease Precaution—Inappropriate drugs inappropriate • Under-Utilization(Late Refill Monitoring) (LR) -Refill for a chronic maintenance drug requested at an interval longer than directed by the prescriber In Retrospective DUR, patient medical charts or computerized records are screened to determine whether the drug therapy met approved criteria and aids prescribers in improving care for their patients, individually and within groups of patients, such as those with diabetes, asthma, or high blood pressure. Common types of Retrospective DUR Offered by Envision: • Therapeutic appropriateness • Over and underutilization • Appropriate generic use • Therapeutic duplication • Drug-disease contraindications • Drug-drug interactions • Incorrect drug dosage • Inappropriate duration of treatment • Clinical abuse/misuse \PBMSA(frm080609)(r2) ©Envision Pharmaceutical Services,Inc. Page 20 of 20