AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 20-001235
MEETING DATE:	01/26/21
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	All Districts
SUBMITTING Agency/Department:	County Executive Office (Approved)
Department contact person(s):	Kim Derrick (714) 834-2564
	Lauren Pierson (714) 834-5376

Subject: Amendment Number One to Contract with OptumRx, Inc.

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Agreement to Form

Discussion

3 Votes Board Majority

Budgeted: Yes

Current Year Cost: $92,500

Annual Cost: FY 2021-22: $185,000
FY 2022-23: $185,000
FY 2023-24: $92,500

Staffing Impact:

# of Positions:

Sole Source: No

Current Fiscal Year Revenue: N/A

Funding Source: Internal Service Fund 292: 100%	County Audit in last 3 years: No

Prior Board Action: 07/28/2020 #10, 06/04/2019 #40, 07/17/2018 #29, 08/22/2017 #54

RECOMMENDED ACTION(S):

Authorize the Chief Human Resource Officer, or designee, to execute Amendment Number One with OptumRx, Inc. for Pharmacy Benefit Management and Claims Administration to include the Additional Services fees and Pharmacy Benefit Allowance in Attachment B-Cost/Compensation for Contract Services, update the Specialty Discount Guarantee in Attachment A-Scope of Work and amend the Contract Performance Standard regarding Member Satisfaction in Attachment D-Contract Performance Standards effective January 1, 2021, through December 31, 2023.

SUMMARY:

Approval of Amendment Number One to the Contract with OptumRx, Inc. will continue to allow the County to work with OptumRx, Inc. for the administration of the Clinical Services and Utilization Management Programs as part of the Pharmacy Benefit Management and Claims Administration Program for the four self-funded PPO Plans, enable the County to receive the annual Pharmacy Benefit Allowance and effectively measure the Specialty Discount Guarantee and Member Satisfaction.

BACKGROUND INFORMATION:

OptumRx, Inc. (OptumRx) is the Pharmacy Benefit Manager for the self-insured PPO health plans the County offers to employees and retirees. The two current self-insured active employee PPO health plans are Wellwise Choice and Sharewell Choice with a total of 3,570 enrolled employees, and the two self-insured retiree PPO health plans are Wellwise Retiree and Sharewell Retiree, with a total of 2,490 enrolled retirees.

The contract with Optum Rx for Pharmacy Benefit Management and Claims Administration (Contract) only became effective on January 1, 2021. Amendment Number One to the Contract with OptumRx is requested to modify the Contract language to include the Additional Services fees and Pharmacy Benefit Allowance in Attachment B, update the Specialty Discount Guarantee in the Scope of Work and amend the Contract Performance Standard in Attachment D effective January 1, 2021.

The language to include the Additional Services fees in Attachment B was included in the prior contract with OptumRx and included the Retiree Drug Subsidy (RDS) support fee which is estimated to generate $1 million in RDS revenue for the County. In addition, fees are included for clinical programs such as Utilization Management and Medication Adherence that allow the County and participants to realize cost avoidance through effective management of pharmacy benefits.

The addition of the Specialty Discount Guarantee in Attachment A will allow OptumRx to offer the County a Pharmacy Management Allowance as part of the Contract. The County shall receive an allowance of up to $5.00 per member, or an estimated total of $45,000 annually, which must be utilized within the applicable year to offset the cost of actions intended to maximize the value of the pharmacy program.

The revised Member Satisfaction Surveys contract language will allow for a phone-based customer survey asking all members calling into the County’s dedicated customer service line at OptumRx to participate in a short survey. This methodology was previously approved in the prior contract and is a more effective approach to measuring satisfaction due to the immediate response from the member. Using post-call surveys will eliminate paper surveys and provide more accurate results as the call is fresh in the member’s mind.

The aggregate Specialty Pharmacy discount guarantee contract language will be updated to show it is reconciled and paid annually.

Contract and Prior Board Of Supervisors (Board) Actions:

On July 28, 2020, the contract with OptumRx for the administration of the pharmacy benefit management and claims administration program for the self-insured PPO health plans effective January 1, 2021, through December 31, 2023, with the option to renew for two additional one-year terms, was approved by the Board.

In December 2019, the Ninth Amendment was executed amending the compensation chart to reflect the reduction in the Medication Adherence pricing effective January 1, 2020. This Amendment did not require Board approval per County Procurement Office and Board policy.

On June 4, 2019, the Eighth Amendment was executed to include the Sharewell Choice and Sharewell Retiree plans in the administration of the Prescription Drug Program and Formulary by OptumRx, effective January 1, 2020, through December 31, 2020, that resulted in a reduction to the fee structure.

In December 2018, the Seventh Amendment was executed amending the compensation chart to reflect the reduction in the Retrospective Drug Utilization Review (RDUR) pricing effective January 1, 2019. This Amendment did not require Board approval per County Procurement Office and Board policy.

On July 17, 2018, the Sixth Amendment was executed to lower pharmacy pricing and increase drug rebates, revise the fee structure and enhance services for pharmacy management programs, revise the methodology for Customer Satisfaction Surveys and clarify external medical reviews and to assign the contract from OptumRx Administrative Services, Inc. to its affiliate, OptumRx.

On August 22, 2017, the Fifth Amendment was executed to allow changes to the formulary twice a year, to add the option for discontinuance of RDUR and Medication Therapy Management programs at the County’s discretion and to increase drug rebates paid to the County resulting from changes in the formulary.

The contract includes subcontractors. See Attachment C for information regarding subcontractors and the Contract Summary Form. The Contractor’s performance has been confirmed as at least satisfactory. Human Resource Services has verified there are no concerns that must be addressed with respect to Contractor’s ownership/name, litigation status or conflicts with County interests.

FINANCIAL IMPACT:

The estimated FY 2021-22 cost for the additional clinical programs and utilization managements and administrative fees is $92,500. The estimated annual cost is $185,000. The fees include RDS support services. Under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Medicare provides RDS to Plan sponsors such as the County to provide prescription drug coverage to retirees that do not enroll in Medicare Part D. OptumRx will provide data support services which will enable the County to file claims for RDS. Based on current enrollment, the 2021 RDS is estimated at $1 million.

Appropriations are included in the FY 2020-21 Adopted Budget and will be included in the budgeting process for the future fiscal years. This Contract is contingent upon funding by the County during the term of this Contract. If such funding is not approved, this Contract will be immediately terminated without penalty to the County.

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A – Amendment Number One to Contract with OptumRx, Inc.
Attachment B – Redline Changes to Contract with OptumRx, Inc.
Attachment C – Contract Summary Form