AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 22-000606
MEETING DATE:	07/19/22
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
	Diana Banzet (714) 834-2978

Subject: Amendment Number Three 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: $116,020

Annual Cost: FY 2023-24 $116,020

Staffing Impact:

# of Positions:

Sole Source: No

Current Fiscal Year Revenue: N/A

Funding Source: ISF 292: 100%	County Audit in last 3 years: No

Prior Board Action: 12/7/2021 #12, # 1/26/2021 #25, 7/28/2020 #10

RECOMMENDED ACTION(S):

Authorize the Chief Human Resource Officer or designee to execute Amendment Number Three with OptumRx, Inc. for Pharmacy Benefit Management and Claims Administration to include Exhibit F – Employer Group Waiver Plan Services Addendum, and to add Additional Service fees in table to Attachment B-Cost/Compensation, effective January 1, 2023.

SUMMARY:

Approval of Amendment Number Three 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, and permit OptumRx, Inc. to administer Employer Group Waiver Plan services.

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 3,307 enrolled employees, and the two self-insured retiree PPO health plans are Wellwise Retiree and Sharewell Retiree, with a total of 2,294 enrolled retirees.

The contract with OptumRx for Pharmacy Benefit Management and Claims Administration (Contract) became effective on January 1, 2021. Amendment Number Three to Contract is requested to add Attachment F – Employer Group Waiver Plan (EGWP) Services Addendum.

With the Wellwise Retiree Health Plan, the County currently applies for the Medicare Part D federal Retiree Drug Subsidy (RDS) under the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Medicare provides incentives to Plan sponsors, such as the County, to provide prescription drug coverage to retirees that do not enroll in Medicare Part D. RDS is used to reduce rates for Medicare-eligible retirees and spouses enrolled in the Wellwise Retiree PPO Plan.

RDS has been declining over the last few years. This has prompted the County’s health and welfare benefits consultant, Mercer Health and Benefits LLC (Mercer) to look at alternatives to RDS. Currently RDS provides approximately $425,000 in reimbursement. The EGWP solution is projected to generate $1.5 million. Based upon this significant increase in reimbursement Mercer recommends that the County transition to the EGWP. The EGWP Services Addendum will permit OptumRx to administer the EGWP services, effective January 1, 2023.

Additional changes include updates to Attachment B, Cost/Compensation, to include the Additional service fees for the Orphan Drug Program and Advanced Pharmacy Audit Services, effective January 1, 2023.

Orphan drugs are high-cost products often fast-tracked to market to treat cystic fibrosis, Lou Gehrig’s disease and approximately 7,000 other rare conditions. Orphan drugs may be effective for some people and not others because of differences in response and tolerability. That sensitivity, combined with often complicated dosing, opens up opportunities for pharmacists to optimize care. With the Orphan Drug program, OptumRx will provide ongoing personalized support for members who take one of 36 orphan drugs identified as having the greatest opportunity for clinical intervention. OptumRx pharmacists will tailor one-on-one experiences for these members, offering advanced clinical counseling to address unique medication needs. The fee for this program is $300 per counseled member per year. The cost of the services will be paid with the annual Pharmacy Management Allowance, which must be utilized within the applicable contract year and offsets the cost of actions intended to maximize the value of the pharmacy program.

The Advanced Pharmacy Audit Service offers additional protection against fraud, waste and abuse by providing increased claims and pharmacy oversight of questionable claims. Designated auditors, analysts and investigators monitor client-specific claims activity for all audit types (Real-time audit, desktop audit, on-site audit and investigative audit). Advanced Pharmacy Audit Services can help catch questionable pharmacy activity early to prevent, detect and recover losses. OptumRx uses predictive modeling to identify suspicious patterns. The model uses data from investigated pharmacies that had previously known outcomes that were potentially fraudulent. Next, it combines that data with evaluations of dozens of pharmacy- and claim-level risk attributes to assign a risk score. Pharmacies exhibiting suspicious behaviors receive higher risk scores, and investigators focus the bulk of resources on those pharmacies. The fee for this program is $0.10 per claim. OptumRx has offered a guaranteed return on investment (ROI) for the first year of this program.

Prior Board Actions:

On December 7, 2021, the Board approved Amendment Number Two to include the Additional Services fees, make updates to Scope of Work, and amend the Contract Performance Guidelines, effective January 1, 2022.

On January 26, 2021, the Board approved Amendment Number One to include the Additional Service fees and Pharmacy Management Allowance, update the Specialty Discount Guarantee and amend Contract Performance Standards, effective January 1, 2021.

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.

This contract does not currently include subcontractors or pass through to other providers. See Attachment C for 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 addition of the EGWP administrative cost is projected at $200,220 annually offset by the reimbursement from EGWP. The Advanced Pharmacy Audit Services is projected to annually cost $11,820. Optum has guaranteed an ROI on these services resulting in no net cost to the County. This totals $212,040 annually for 2023.

The addition of the Orphan Drug Program is projected to cost $1,500 annually depending on the number of members participating and will be paid by the Pharmacy Allowance program.

Appropriations are included in the FY 2022-23 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 Three to Contract with OptumRx, Inc.
Attachment B – Redline Changes to Contract with OptumRx, Inc.
Attachment C – Contract Summary Form