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5463
ENVISION PHARMACEUTICAL SERVICE, INC
Coverage Determination and Appeals Process Addendum
Human Resources
LEG 12-1
1/1/2015
12/31/2015
1/1/2016
2016
Comments:
DocuSign Envelope ID: EFA77179-1170-43F5-880B-949EE38DEBE7
COVERAGE DETERMINATION AND APPEALS PROCESS ADDENDUM
This Coverage Determination and Appeals Process Addendum (hereinafter "Addendum") is
entered into by and between Envision Pharmaceutical Services, Inc. (hereinafter "Envision") and
The City of Bremerton (hereinafter "Plan Sponsor") as follows. This Addendum is effective
January 1�, 2015 (hereinafter the "Effective Date").
BACKGROUND
Envision and Plan Sponsor aze parties to a Pharmacy Benefit Management Services Agreement
dated January 1 2015 (hereinafter "Agreement") under which Envision provides PBM Services
to Plan Sponsor. Plan Sponsor wishes for Envision to provide additional services under the
Agreement as set forth below.
NOW Tf�REFORE, Envision and Plan Sponsor agree as follows:
1. Initial Coverage Determinations and Appeals: Envision shall administer a Coverage
Determination and Appeals Process under Plan Sponsor's direction as described in Exhibit 1-A.
The Coverage Determination and Appeals Process will include: (i) Reai-time adjudication to
determine coverage/non-coverage status of a Claim; (ii) Initial Determinations (including
Clinical Prior Authorizations); (iii) Redeternainadons ("Internal Appeals"); and (iv) Extemal
Appeals utilizing an Independent Review Organization (IRO). The Coverage Detertnination and
Appeals Process will meet the requirements of the Department of Labor's Internal Claims and
Appeals and Extemal Review Processes under 29 CFR §2590.715-2719.
2. Compensation: Plan Sponsor shall pay Envision the following fees:
Provided lnternally by Envision
Coverage Determinations (including Clinical Prior $8.00 each
Authorizations)
Redeterminations (Intemal Appeals) $85.00 each
External Reviews Performed by IRO
Standard Turnaround Tune (2 days or greater) 100% pass through
Standard'I�rnaround Time for Complex Independent invoiced amount from IRO
Review*
Expedited Turnaround Time (within 72 hours)
Expedited Turnazound Time for Complex Independent
Review*
*Complex Independent Review is defined as requiring greater than one hundred pages of clinical
documentation
3. All other terms and conditions of the Agreement not modified by this Addendum or any
prior amendment or addenda shall remain unchanged.
Wppeals Process Addendum 120412
DocuSign Envelope ID• EFA77179-1170-43F5-880B-949EE36DEBE7
IN WITNESS WI�REOF, Envision and Plan Sponsor have executed this Addendum as of the
Effective Date above.
For ENVISION:
DoeuSigned by:
�� /
By:
For PLAN SPONSOR:
sy
Matthew A. Gi bbs , Pha� � Commerci al offi cer
Print Nazne and Title
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Print Name
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Wppeals Process Addendum 120412
DocuSign Envelope ID: EFA77179-1170-43F5-8806-949EE36DEBE7
EXHIBTT 1-A
EnvisionRxOptions
Coverage Determination, Redeterminatiou (Internal Appeal) and Independent Review
(External Appeal) Program Description
(Revision date 12/04/2012)
Envision maintains a process for Coverage Deternunations (including Clinical Prior
Authorizations), Redeterminations, and Extemal Reviews (Independent Review Organizadon
submissions). Envision utilizes a claim adjudication platform to determine real-time
coverage/non-coverage status for Claims submitted electronically at the Point-of-Sale. Claims
failing one or more Benefit Plan coverage niles are rejected at the Point-of-Sale and information
regarding the reject reason(s) is conveyed to the dispensing pharmacy at the Point-of-Sale.
Pharmacy personnel may contact Envision's Customer Service Department to begin the
Coverage Determination process or they may inform the Member of the reason(s) for the
rejection and provide the Member with instructions to contact the Customer Service Department
in the event the Member would like to initiate a Coverage Determination.
Covera�e Determinations (or Clinical Prior Authorizations)
When a Coverage Determination request is initiated, the information connected with the rejected
prescription is conveyed by Envision to the Prescriber via fax with a request for specific
information regarding the Member's medication history and disease diagnosis. The Prescriber
completes the form and retums it to Envision where the information provided by the Prescriber is
evaluated by an Envision clinical pharmacist. Expedited Coverage Determinations occur as soon
as possible, taking into account medical exigencies, but no later than 24 hours of receipt of the
request and standard determinations occur within 72 hours of receipt of the request.
If the information provided meets the criteria to allow an override of the initial rejection, an
override will be configured in the adjudication system that will allow the Claim to process. If the
clinical review deternunes the prescription fails to meet the coverage criteria, the prescription
will remain in rejected status.
The result of the Coverage Determination is communicated to the Member by written letter, the
Prescriber by fax, and the dispensing pharmacy by fax. In the event the Coverage Deternunation
results in an Adverse Benefit Determination, as defined below, the notice to the Member and
Prescriber includes information identifying the Claim involved, the specific reason for the
Adverse Benefit Determination, instructions about the right to initiate a Redetermination
(Internal Appeal), a link providing the availability and contact information of an agency offering
assistance to the Member with the appeals and external review processes, if one is available, and
may contain additional information as directed by Plan Sponsor.
An Adverse Benefit Determination is a denial, reduction, or terminetion of, or a failure to
provide or make payment (in whole or in part) for, a benefit, including any such denial,
reduction, tetmination, or failure to provide or make payment that is based on a determination of
a participant's or beneficiary's eligibility to participate in a plan, and including, with respect to
Wppeals Pmccss Addendum 120412
DocuSign Envelope ID: EFA77179-1170-43F5-880B-949EE36DEBE7
group health plans, a denial, reduction, or termination of, or a failure to provide or make payment
(in whole or in part) for, a benefit resulting from the application of any utilization review, as well
as a failure to cover an item or service for which benefits are otherwise provided because it is
determined to be experimental or investigational or not medically necessary or appropriate. 29
CFR 2560.503-1(m). An Adverse Benefit Determination also includes any rescission of coverage
as defined in the regulations restricting rescissions (26 CFR 54.9815-2712T(a)(2), 29 CFR
2590.715-2712(a)(2), and 45 CFR 147.128(a)(2)), whether or not there is an adverse effect on
any particular benefit at that time.
The availability and contact information of an agency offering assistance to the Member with the
appeals and external review processes can be found at: www.healthcare.�ov/usinQ-
insurancelmanasing/consumer-help/index.html.
Redetermination (Internal Appeal)
Upon initiation of a Redeternunation by the Prescriber or Member (or the Member's appointed
representative), additional supporting documentation may be requested by Envision from the
Prescriber. Expedited Redetermination request evaluations occur as soon as possible, taking into
account medical exigencies, but no later than 72 hours of receipt of the request to allow the
Member to submit additional information for consideration, and standard evaluations occur
within 72 hours of receipt of the request. The evaluadon is performed by a clinical pharmacist or
pharmacists other than the pharmacist or pharmacists that reviewed the original Coverage
Deternunation request, to maintain impartiality within the review process.
Envision will allow a Member to review the claim file and to present evidence and testimony as
part of the Internal Appeals process. Envision will provide the Member, free of chazge, with any
new or additional evidence considered, relied upon, or generated by the Redetermination as soon
as possible and sufficiently in advance of the date on which the notice of an Adverse Benefit
Determination is required to be provided, to give the Member a reasonable opportunity to
respond prior to that date.
If the Redetermination information supports an override of an Adverse Benefit Determination, an
override will be configured in the adjudication system which will allow the Claim to process. If
evaluation determines the Redetermination request fails to meet the coverage criteria, the Claim
will remain in rejected status.
The result of the Redetermination is communicated to the Member by written letter and the
Prescriber by fax. In the event the Redetermination results in an Adverse Benefit Determination,
the notice to the Member and Prescriber will include information identifying the Claim, the
specific reason for the Adverse Benefit Determinadon including a discussion of the decision
including the plan provision relied upon. instructions about their right to initiate an External
Review, if applicable, a statement that the Member has a right to bring a civil action under
ERISA Section 502(a) following a denial upon appeal, a link providing the availability and
contact information of an agency offering assistance to. the Member with the external review
process, if one is available, and may contain additional information as directed by Plan Sponsor.
Wppeals Process Addendum 120412
DocuSign Envelope ID: EFA77179-1170-43F5-8806-949EE3BDEBE7
The Member may, upon request and free of charge, receive reasonable access to and copies of all
documents, records, and other information used in the Coverage Determination
The availability and contact information of an agency offering assistance to the Member with the
appeals and external review processes can be found at: www.healthcare. ovg /using-
insurance/mana�glconsumer-help/index.html.
External Appeal (Independent Review Or�anization)
A Member may file a request for an Extemal Review with the plan within four months after the
date of receipt of notice of a final Adverse Benefit Determination. The Redetermination (Internal
Appeal) process must be exhausted before an External Appeal is requested; however a
simuItaneous request for a Redetermination and an External Appeal may be made in an urgent
care situation. When a Member (or the Member's duly appointed representative) initiates an
External Appeal request, Envision will complete a preliminary review of the request within five
business days of receipt for a standard request and immediately if expedited. This preliminazy
review will determine (i) if the Member was covered under the Benefit Plan on the date of
service, (u) if the rejection does not relate to the Member's failure to meet the requirements for
eligibility, (iii) if the Member has exhausted the Plan Sponsor's internal appeal process, and (iv)
if the Member has provided all infonnation required to process an Extemal Review.
After the preliminary review is complete, Envision will issue a notification in writing to the
Member. Notice will be sent inamediately for expedited requests and within one business day
after the completed preliminary review for standard requests. If the request is complete, but
determined to be ineligible for External Review, the Member notification will include the reason
the Claim has been determined to be ineligible and contact infornnation for the Employee
Benefits Security Administration. If the request is incomplete, the Member notification will
specify the information needed to make the request complete. The Member will have an
opportunity to provide the needed information within the four month filing period, or within 48
hours of receiving the notification, whichever is later. '
Once the preliminary review has been determined to be complete for aa External Review,
Envision will provide the Claim information, Benefit Plan exclusion and coverage criteria
documentation, and clinical review criteria to an Independent Review Organization (IRO).
Envision has contracted with three IROs. Extemal Appeal requests are assigned to the IROs by
rotation to avoid selection bias. Each contracted IRO holds URAC accreditation status to
conduct External Reviews. The IRO is not bound by the previous Redetermination decisian and
reviews each case in accordance with the terms of the Benefit Plan and coverage documentation.
The IRO will notify the Member once it receives the Member's claim information and the
Member will have ten business days to submit any additional information for the IRO to consider
in its Extemal Appeal.
The IRO will convey a final decision to Envision and the Member within 45 days for standard
reviews and within 72 hours for expedited reviews. Expedited reviews are permitted when
standard review timeframes would seriously jeopardize the life or health of the Member.
�Appeals Process Addendum 120412
DocuSign Envelope ID. EFA77179-1170-43F5-880B-949EE3BDEBE7
If the IRO reverses Envision's adverse Redetermination decision, then Envision will provide
coverage and/or payment of the Claim within twenty-four hours of notification of the IRO
decision. If the IRO upholds Envision's Adverse Benefit Redetermination decision, the IRO will
communicate the decision to Envision and the Member. If the Prescriber files the request on
behalf of the Member, then the Prescriber will be notified as well. The Member and Prescriber
(if applicable) are provided letters with the specific reasons including the plan provision relied
upon for the Adverse Benefit Deternrination, a statement that the Member may, upon request and
free of charge, receive reasonable access to and copies of all documents, records, and other
information used in the Coverage Determination, if applicable, a statement that the Member has
a right to bring a civil actioa under ERISA Section 502(a) following a denial upon appeal, and
may contain additional information as directed by Plan Sponsor.
The IRO's decision is binding, except to the extent that other remedies (including judicial review
of the decision) may be available under applicable law to either the Plan or the Member.
###
WppeaLs Procexs Addendum 120412
DocuSign Envelope ID. EFA77179-1170-43F5-880B-949EE3BDEBE7
PHARMACY BENEFTT MANAGEMENT SERVICES AGREEMENT
This Pharmacy Benefit ,Management Services Agreement (hereinafter this "Agreement") is
entered into by and between Envision Pharmaceutical Services, LLC, an Ohio Liavted Liability
Company (hereinafter "Envision"), and The City of Bremerton, a Washington Municipality
(hereinafter "Plan Sponsor"). This Agreement is effective January 1�, 2015 (hereinafter the
"Effective Date"). '
BACKGROUND
Envision is a URAC accredited Pharmacy Benefit Management (PBM) company providing
comprehensive phazmacy benefit management services nationwide to various employers, unions,
and Plan Sponsors that establish and fund health benefit plans covering outpatient prescription
medications. Plan Sponsor has established one or more health benefit plans providing coverage
for prescription medications to covered individuals and desires to engage Envision to pmvide
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. DEFINTTIONS
1.1 "Administrative Fee" means the amount that Envision chazges Plan Sponsor for included
services under this Agreement as set forth in Exhibit 1.
1.2 "Benefit Plan" means the Plan Sponsor's group insurance plan, prescription drug plan, or
other benefit plan established and funded by Plan Sponsor that covers the cost of Covered Drugs
dispensed to Covered Individuals.
1.3 "Benefit Specification Form" or "Benefit Specification Change Form" means the forms,
as modified from time to time, that are completed by Plan Sponsor that specify the terms and
provisions of the Benefit Plan and the configuration of System edits, such as which Prescription
Drugs are covered by Plan Sponsor (including, for example Limited Distribution Drugs or
Specialty Drugs), any limitations or exclusions, the Benefit Plan's tier stcucture and Cost Share
requirements, and any conditions associated with the specific services to be rendered by Envision
under this Agreement (i.e. Clinical Prior Authorizations, Drug Therapy Management, etc.). If
there is any inconsistency between the terms of this Agreement and the Benefit Specification
Form or any Benefit Specification Change Form submitted in connection with the services to be
provided under this Agreement, then the pmvisions of the most recent signed Benefit
Specification Form or Bene�t Change Form shall control. �
1.4 "Brand Drug" means a Prescripdon Drug designated as a branded drug product by Medi-
Span as indicated by the multisource (i.e. MONY) code attached to the 11 digit NDC for such
drug and adjusted by applicable modifiers, including those established by the FDA under 42
CFR 423.4 (i.e. NDA, ANDA, BLA, authorized generic, and/or bio-similaz), the Medi-Span
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Brand Code, and other criteria generally used in the industry to detemune brand-generic drug
status. The classification of a Covered Drug as a Brand Drug or Generic Drug will be determined
at the Point-of-Sale and shall not be reclassified thereafter for any purposes under this
Agreement.
1.5 "Claim" means an invoice or transaction (electronic or paper) for a Covered Drug
dispensed to a Covered Individual that has been submitted to Envision by the dispensing
pharmacy or a Covered Individual (including transactions where the Covered Individual paid
1009'0 of the cost). A"340B Claim" is a Claim which has been processed under Section 340B of
the Public Health Service Act.
1.6 "Claims Adjudication System" or "System" means Envision's on-line computerized
claims processing system. ,
1.7 "Compound Drug" means a medication that requires compounding by a pharmacist
because it is not available from a pharmaceutical manufacturer in the prescribed form or
strength. Compound Drugs consist of two or more solid, semi-solid or liquid ingredients, at least
one of which is a Prescription Drug. .
1.8 "Contract Yeaz" means the complete twelve month period commencing on the Effective
Date and each consecudve complete twelve month period thereafter that this Agreement remains
in effect.
1.9 "Cost Share" means the amount of money that a Covered Individual must pay to the
Participating Pharmacy to obtain a Covered Drug in accordance with the terms of the Benefit
Plan. The Cost Share may be a fixed amount (co-payment) or a percentage of the drug cost (co-
insurance), or a deductible that must be satisfied before drugs are covered under the Benefit Plan.
1.10 "Covered Drug" means a Prescription Drug or other permitted drug (OTC), medical
supplies (e.g: diabetic testing strips), or a medical device (e.g. blood glucose monitoring device)
which is dispensed to a Covered Individual and meets the requirements for coverage under the
Benefit Plan as communicated to Envision by Plan Sponsor. �
1.11 "Covered Individual" or "Member" means each individual (including the Eligible
Employee and each of his or her dependents) who has been identified by Plan Sponsor on the
Eligibility File as being eligible to receive Covered Drugs.
1.12 �"Eligibility File" means that electronic communication supplied to Envision by Plan
Sponsor (or Plan Sponsor's agent) which identifies the Covered Individuals covered under Plan
Sponsor's Benefit Plan, 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.
1.13 "Eligible Employee" means an active employee or a Retiree of Plan Sponsor covered
under Plan Sponsor's funded Benefit Plan. For purposes of this Agreement, a Retiree is a retired
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individual who is covered, primarily, by Plan Sponsor and not Medicare Part D.
1.14 "Formular�' means an index of Prescription Drugs, which have been compiled by
Envision and reviewed by Envision's Phatmacy 8t Therapeutics Committee for safety and
efficacy (using evidence-based evaluation criteria), that is used, in conjunction with the Benefit
Plan, as a guide in the selection of Covered Drugs. The Formulary may be modified by Envision
from time to time as new medications and/or new clinical information become available. '
1.15 "Generic Drug" means a Prescription Drug that is not a Brand Drug.
1.16 "HIPAA" means the Health Insurance Portability and Accountability Act of 1996, as
amended.
1.17 "Limited Distribution Drugs" means� Prescription Drugs that are distributed by
manufacturers through either one or a very limited number of pharmacies and wholesalers which
have been selected by the manufacriuer based on approved participation criteria. This group of
drugs is usually used to treat conditions that only affect a small patient population and may have
special and complex dosing requirements.
1.18 "Mail Order Pharmacy" means the contracted Mail Order Pharmacy to be used by Plan
Sponsor's Covered Individuals.
1.19 "Manufacturer Derived Revenue" means rebates, discounts, administrative fees, and any
other revenue eamed by Plan Sponsor for Claims which comply with the utilization and benefit
design requirements of pharmaceutical manufacturer contracts with Envision and otherwise meet
the terms and conditions hereunder.
1.20 "MAC List" means a proprietary list of Prescription Drugs for which Envision establishes
a maximum price ("MAC Price") payable to the dispensing pharmacy. Envision utilizes the
same MAC List to both determine the negotiated price payable to the dispensing pharmacy and
the price charged to Plan Sponsor. Plan Sponsor will be charged the exact negotiated amount
payable by Envision to the dispensing pharmacy without any tnarkup or spread. Envision
updates the MAC List from time-to-time as Prescription Drugs come on the market or come off
the mazket, or as their availability changes due to market circumstances.
1.21 "Participating Phaimacy" means a phazmacy (including the designated Mail Order or
Specialty Pharmacy) that has entered into a negotiated pricing agreement with Envision to
dispense Covered Dmgs to Covered Individuals.
1.22 "Plan Sponsor" means the entity (identified above as Plan Sponsor) which (i) has
established and underwrites the Benefit Plan on behalf of its Covered Individuals; (ii) has
determined the rules by which the Benefit Plan is to be administered; and (iii) is financially
responsible for the payment of Administrative Fees, Fees for Additional Services and
Miscellaneous Expenses (as set forth in Exhibit 1), and Covered Drugs dispensed to Covered
Individuals hereunder.
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1.23 "Point-of-Sale" means the location and time that a Covered Drug is dispensed to a
Covered Individual� and the corresponding Claim is submitted by the dispensing pharmacy for
adjudicadon by the Claims Adjudication System.
1.24 "Prescriber" means a licensed health practitioner with independent prescribing authority
in the state in which the dispensing pharmacy is located.
1.25 "Prescription Drug" means a substance intended for use in the diagnosis, cure, mitigation,
treatment, or prevention of disease which is dispensed by a duly licensed pharmacy and required
by federal law to be dispensed only upon the authorization of a Prescriber. For purposes of this
Agreement, over-the-counter medications, medical supplies, and medical devices aze not
Prescription Drugs, whether or not ordered by a Prescriber.
1.26 "Retail Pharmacy" means a state licensed retail community pharmacy that dispenses
prescription medications at its physical location. A Retail Pharmacy does not include a
pharmacy that dispenses medications to patients primarily through 'mail, nursing home
pharmacies, long-term care facility pharmacies, hospital pharmacies, or clinics, unless such
pharmacy is a Participating Pharmacy listed by Envision as a Retail Pharmacy.
1.27 "Specialty Drug" means a Prescription Drug that is typically a high-cost biotech,
injectable, infused, oral, or inhaled Prescription Drug, and/or a Prescription Drug that requires
special storage, handling, and/or requires close monitoring of the patient's drug therapy to ensure
appropriate use and clinical outcome. Specialty Drugs are typically dispensed at a Specialty
Pharmacy, but may also be available from other Participating Pharmacies. For purposes of this
Agreement, Specialty Drugs are not considered Limited Distribution Drugs.
1.28 "Specialty Pharmacy" means the non-retail Participating Pharmacy that primarily
dispenses Specialty Drugs to Plan Sponsor's Covered Individuals and performs special ordering,
handling and/or patient intervention services.
1.29 "Usual and Customary Price" or "UBtC Price" means the retail amount the phazmacy
chazges its cash paying customers for the drug dispensed, as reported to Envision by the
dispensing pharmacy.
2. STANDARD PBM SERVICES
Envision shall perform the following pharmacy benefit management services ("PBM Services").
Unless otherwise noted, the PBM Services specified below aze included in the Administrative
Fee.
2.1 Welcome Kit: If requested by Plan Sponsor, Envision shall provide an initial "Welcome
Kit" which may include, at Plan Sponsor's option, (i) a welcome letter; (ii) plastic identification
card ("ID Card"), up to two per family; (ui) a pocket Formulary; and (iv) Mail Order Pharmacy
brochure, as specified in the Benefit Specification Form. The standard Welcome Kits will be
mailed to Plan Sponsor or, at its option, directly to Covered Individuals. For any materials
mailed directly to Covered Individuals, Plan Sponsor shall reimburse Envision for its cost of
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postage. Addidonal ID Cazds or replacement ID Cazds (i.e. for lost or stolen ID Cazds) will be
provided at a cost as specified in Exhibit 1. If Plan Sponsor desires to re-design and/or re-issue
ID Cards, or for special graphic requests, additional charges may apply.
2.2 Clairns Processins: During the term of this Agreement, Envision shall accept. process,
and adjudicate Claims for Covered Drugs (i) submitted electronically by Participating
Pharmacies; (ii) submitted by Plan Sponsor's owned pharmacies or Plan Sponsor's contracted
pharmacies, if any, (not including 340B Claims, unless such claims aze included under a separate
340B Agreement); (iii) submitted by Covered Individuals as Direct Member Reimbursements
(DMRs, as defined below); or (iv) received from third parties, such as Medicaid, for
reimbursement by Plan Sponsor. Claims shall be checked for eligibility, benefit design, Cost
Shaze requirements, 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 specificadons as set forth in Plan Sponsor's Benefit Specification Form
(incorporated herein by tlus reference).
For Claims that must be processed manually or require special handling, including, without
limitation, (i) DMRs, (ii) Claims received from third parties, such as Medicaid, for
reimbursement by Plan Sponsor for ineligible payments, or (iii) paper Clauns, Plan Sponsor will
be charged a Manual Claims Processing fee as set forth in Exhibit 1. After termination of this
Agreement, Envision shall process Claims received for dates of service on or before the effective
date of temvnation for a period of ninety (90) days ("Run-Out Period"), subject to the following.
Plan Sponsor shall deposit and maintain, with Envision, an amount equal to the last Claims
invoice prior to termination. At the end of the Run-Out Period, the balance of the deposit shall
be prompfly refunded to Plan Sponsor and, thereafter, any Claims received by Envision shall be
rejected.
2.2.1 Direct 1Vlember Reimbursement (DMR): Envision shall provide, via its website, a
form for use by Covered Individuals to obtain reimbursement for amounts paid out-of-pocket
'(other than Cost Share) for Covered Drugs (e.g. Covered Drugs dispensed at a non-Participating
Pharmacy) ("DMR Form"). Envision shall accept and pmcess DMR Claims within ten (10)
business days of receipt of the DMR form, invoice Plan Sponsor for the Claim, and reimburse
the Covered Individual upon receipt of funds from Plan Sponsor.
2.2.2 Claims from Non-Participatin� Pharmacies: Unless otherwise directed by Plan
Sponsor, Envision shall accept and process Claims received from non-participating government
owned or operated pharmacies (e.g. Veterans Administration).
2.2.3 Claims Adjudication System Edits: Plan Sponsor's Benefit Plan may contain
additional rules which determine the way in which Claims are to be adjudicated. These niles
may include coverage limitations or exclusions, application of clinical intervention (e.g. step
therapy, drug therapy management), application of dispensed as written (DAV� codes (e.g. to
determine what portion of a Claim is payable by Plan Sponsor and what portion is payable by
Members), and administrative overrides to authorize the dispensing of Covered Drugs in certain
circumstances (e.g. requests for lost or stolen drugs, vacation supplies, certain package sizes,
dosage changes, invalid days' supply). For this purpose, Envision shall program edits into the
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Claims Adjudication System which aze applied to Claims during the adjudication process as
specifi� in the Benefit Specification Form. The Claims Adjudication System will provide the
dispensing pharmacy with the appropriate messagiag to advise the pharmacy of the applicable
limitation, program, rule, or override.
Envision shall �also program edits into the Claims Adjudication System which are applied to
Claims during the adjudication process to identify the following drug utilization conditions:
duplicate prescriptions; over-utilization/refill too soon; under-utilization; drug interactions;
pediatric warnings; geriatric wamings; acute/mai.ntenance dosing; therapeutic duplication; dtug
inferred health state; drugs excecding maximum dose; and drugs below minimum daily dosage,
as specified in the Benefit Specification Form. The Claims Adjudication System will pmvide the
dispensing phazmacy with the appropriate messaging to advise the pharmacy of drug utilization
issues.
2.3 Clinical Services
2.3.1 Clinical Prior Authorizations (Initial Covera�e Determinationsl: ff Plan Sponsor
has elected to receive Clinical Prior Authorization services from Envision, for those Covered
Drugs and circumstances specified by Plan Sponsor in the Benefit Spec�cation Form, Envision
shall contact the prescriber and verify that the requested drug is appropriate for the diagnosis in
the judgment of the prescriber. Plan Sponsor will be charged for Clinical Prior Authorizations as
specified in Exhibit 1. If additional internal appeals (redeterminations) and/or the services of an
Independent Review Organization are to be provided under this Agreement, such services shall
be included in an attached Coverage Determination and Appeals Process Addendum.
2.3.2 Drus Therapy Mana�ement (DTNn Progr, ams: Envision offers clinical programs
such as Drug Therapy Care Gap Management and Medication Adherence and Persistency. If
clinical programs aze to be provided under this Agreement, such services and any additional
chazges shall be set forth in an attached Clinical Services Addendum.
2.4 Phazmacy Network: Envision shall arrange for the dispensing of Covered Drugs to
Covered Individuals pursuant to contracts with one or more networks of Participating
Pharmacies (referred to herein as a"Network"). The Network designated for Plan Sponsor to be
used by Covered Individuals hereunder shall be specified in the Benefit Specification Form.
Plan Sponsor acknowledges that the phazmacies participating in a Network may be changed from
time to time by Envision, including the designated Mail Order Pharmacy and/or Specialty
Phatmacy 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
are not available at all Retail Phazmacies; (ii) Covered Drugs shall not be dispensed to Covered
Individuals without a prescription order by a Prescriber; and (iii) the availability of drugs are
subject to mazket conditions and that Envision cannot, and does not, assure the availability of
any drug from any Participating Pharmacy.
2.4.1 Plan Sponsor Owned Pharmacies. If Plan Sponsor desires to include one or more
of its owned or affiliated pharmacies in the network of pharmacies authorized to dispense
�PBMSA (frm072414) � Envisioa Pharmaceutical Servicea, LLC Page 6 of 24
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Covered Drugs to Plan Sponsor's Covered Individuals, it shall indicate same on the Benefit
Specification Form. If Plan Sponsor desires its pharmacy to be available to other Envision
clients using one or more of Envision's Networks, such pharmacy shall enter into an Envision
Participating Pharmacy Agreement (PPA). If the phaimacy will be for the use of Plan Sponsor's
employees only, such pharmacy 'shall complete an Envision-supplied form indicating the
amounts to be invoiced to Plan Sponsor for Claims processed. In either case, the pharmacy shall
submit all Claims to Envision for processing. Unless ind.icated otherwise in the Benefit
Specification Form, Envision shall invoice Plan Sponsor for Claims received from Plan
Sponsor's owned pharmacy. If the pharmacy is a Participating Pharmacy, Claims shall be
adjudicated at the Network rates included in the PPA.
2.5 C�stomer Service: Envision shall maintain and operate a customer service center with
toll-free customer service numbers and adequately staffed with trained personne124 hours a day,
7 days a week, 365 days a yeaz, for the use of Plan Sponsor, Covered Individuals, Prescribers,
and Participating Pharmacies. �
2.6 Records: Envision shall maintain such business records as may be required by applicable
law or regulation, or as may be necessary to properly document the delivery of, and payment for,
Covered Drugs and the provision of services by Envision under this Agreement. Upon
termination of this Agreement, Envision agrees to provide only industry-standard transfer files to
a subsequent phazmacy benefit manager at Plan Sponsor's written request. Plan Sponsor agrees
to pay or reimburse Envision for any cost chazged by a vendor or pharmacy related to the
transfer of files from or to such vendor or pharmacy at any time during this Agreement or
connected with the termination of this Agreement.
2.7 Reports: Envision shall provide Plan Sponsor with access to a 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 the Claims Adjudication
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.
Included in the web-based reports described above, or provided separately, Envision shall supply
Plan Sponsor with reports of retrospective reviews to determine the drug utilization patterns of
Members (e.g. high costlhigh utilization of a particulaz drug class, therapeutic appropriateness of
drug for a particular disease state).
2.7.1 Access to Third Parties: If Plan Sponsor desires Envision to provide one or more
third parties access to web-based or other reports, Plan Sponsor shall complete and submit an
Envision provided authorization form. Plan Sponsor acknowledges that any reports to be
provided to Plan Sponsor's authorized third parties which aze not accessible via the web-based
reports generator, shall be provided via a secure FTP server.
�PBMSA (frm072414) � Envision Phannaceutical Seivices, ta.c Page 7 of 24
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2.8 Retiree Dru Subsidy (RDS) Reports: For Plan Sponsors which submit requests for drug
subsidies under the Med.icare RDS program, Envision shall provide Plan Sponsor with quarterly
reports summarizing Claims paid by Plaa Sponsor for Medicare Part D drugs dispensed to
Covered Individuals who Plan Sponsor has identified on the appropriate form as Medicare
eligible retirees. Plan Sponsor aclmowledges that any estimated Manufacturer Derived Revenue
which has been passed-through to Plan Sponsor will have been deducted from the Claim
amounts reported. Unless otherwise specified herein or included under an addendum to this
Agreement, Envision shall not be responsible or liable to Plan Sponsor for any RDS services or
subsidies. Any assistance requested by Plan Sponsor andlor provided by Envision shall be solely
consultative and shall not be deemed to be an acceptance by Envision of any responsibility or
liability for the completion or submission of any RDS applicadon or request for subsidies under
Medicare Part D.
2.9 Additional Services: Any services to be rendered under this Agreement which are not
included in the Administrative Fee as specified in this Section 2 shall be itemized in the Exhibits
and Addendums hereto along with any associated costs or charges.
3. PRICING AND PASS-THROUGH METHODOLOGY
3.1 . Pass-Through of Discounts and Dispensin�Fees: Envision has negotiated discounted
drug prices and dispensing fees with Participating Pharmacies. Envision shall pass-through to
Plan Sponsor one hundred percent (100%) of the negotiated discount for the drug dispensed (plus
any applicable dispensing fee) without any reclassification, mark-up or spread by Envision. The
amount invoiced to Plan Sponsor shall be the exact drug ingredient cost and applicable
dispensing fee which is paid to the dispensing pharmacy, in accordance with the following:
3.1.1 For Ingredient Cost: Envision shall invoice Plan Sponsor the lower of:
(a) The calculated negotiated amount payable to the Participating Pharmacy
based on the 11 digit NDC number of the drug dispensed; or
(b) If included on the then current Envision MAC List, the MAC Price for the
drug dispensed; or
(c) The Participating Pharmacy's U&C Price (except for drugs dispensed by
the Mail Order Pharmacy or Specialty Phazmacy); less
any applicable Manufacturer Derived Revenue and/or any applicable Covered Individual Cost
Share.
3.1.2 For Dispensing Fees: Envision shall invoice Plan Sponsor the actual dispensing
fee amount payable to the Participating Pharmacy.
3.2 Manufacturer Derived Revenue
3.2.1 Pass-Throu�h of Manufacturer Derived Revenue: Envision has negotiated
contracts with pharmaceutical manufacturers to obtain Manufacturer Derived Revenue for
eligible Prescripdon Drugs, and shall pass thmugh to Plan Sponsor one hundred percent (100%)
�PBMSA (frm072414) 0 Envision PharmaceuNcal Services, t1.0 Page 8 of 24
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of all Manufacturer Derived Revenue earned by Plan Sponsor and paid to Envision by contracted
pharmaceutical manufacturers for Plan Sponsor's eligible Claims that comply with the terms of
this Agreement. Prescription Drugs eligible for Manufacturer Derived Revenue are included in
the Formulary provided by Envision. Plan Sponsor acknowledges that the Manufacturer Derived
Revenue earned by Plan Sponsor is dependent on certain factors including, without limitation,
the following; (i) the effect of terms and conditions of Plan Sponsor's Benefit Plan on the
application of the Formulary; (ii) the structure of Plan Sponsor's Benefit Plan, including but not
limited to Cost Share requirements and coverage niles such as Prior Authorizations, Quandty
Limits, and Step Therapy (as defined in the Benefit Specificadon Form); and (iii) the drug
utilization patterns of Covered Individuals. Plan Sponsor further aclmowledges that Plan
Sponsor's portion of mazket shaze rebates is based on (i) Plan Sponsor's ability to meet and earn
market share rebate levels by pharmaceutical manufacriuer and (ii) the ratio of Plan Sponsor's
Claims for a particular r�bated drug to the total number of Claims for such drug for all Envision
clients, as adjusted for the effect of Plan Sponsor's Benefit Plan (e.g. tier structure and Cost
Share differentials) on the overall yield of market share rebates. No Manufacturer Derived
Revenue shall be payable to Plan Sponsor for 340B Claims, Claims from any Plan Sponsor
owned or affiliated pharmacy which is not a Participating Pharmacy, Claims for which Envision
has not been paid in full, and other Claims not eligible for Manufacturer Derived Revenue.
3.2.2 Pass-Through Methodolosv: Manufacturer Derived Revenue shall be advanced
to Plan Sponsor by adjusting the Claim for an eligible Prescription Drug by an estimated amount
for applicable Manufacturer Derived Revenue using Envision's patented Point-of-Sale
Technology. Envision's Point-of-Sale Technology generates a Claim that will be invoiced to
Plan Sponsor at the net price after applying a credit for estimated Manufacturer Derived
Revenue. (Plan Sponsor acknowledges that, unless otherwise indicated by Plan 5ponsor on the
Bene�t Specification Form, if a Covered Individual pays a percentage of the drug cost (i.e. co-
insurance) under the Benefit Plan, a proportional amount of the Manufacturer Derived Revenue
will be passed on to the Covered Individual at the Point-of-Sale).
3.2.3 Sole Source: Plan Sponsor represents and warrants to Envision that, at no time
during or after the term of this Agreement, is Plan Sponsor receiving rebates and other revenues
from pharmaceuticat manufacturers other than through Envision, either directly or indirectly
(through a Group Purchasing Organization, drug wholesaler, or otherwise) for Claims processed
by Envision under this Agreement. Plan Sponsor agrees that it shall not, at any time, submit
Claims which have been transmitted to Envision to another pharmacy benefit manager or carrier
for the collection of rebates and other revenues from pharmaceutical manufacturers or create a
situation which would cause a pharmaceutical manufacturer to decline payments to Envision.
Envision reserves the right to recover from Plan Sponsor, and Plan Sponsor shall refund to
Envision, any Manufacturer Derived Revenue, including any related penalties and fees, advanced
to Plan Sponsor by Envision which is connected with any Claims for which Plan Sponsor
received rebates and other revenues from pharmaceutical manufacturers from any other source or
for amounts advanced to Plan Sponsor by Envision which have been withheld by a
pharmaceutical manufacturer as a result of such Claims not meeting conditions for rebates, the
ineligibility of Claims for Manufacturer Derived Revenue (i.e. 340B Claims), or breach of this
Agreement by Plan Sponsor.
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4. PLAN SPONSOR RFSPONSIBII.ITIES
4.1 Implementation: No later than thirty (30) days prior to the Effective Date, Plan Sponsor
shall provide Envision with an executed Benefit Specification Form and such data as reasonably
necessary for Envision to set up the Claims Adjudication System and commence the provision of
PBM Services as of the Effective Date. Such data includes, without limitation, prior utilization
reports, pharmacy transfer files, and eligibility.
4.2 Eli 'i�ility Data: Plan Sponsor shall provide Envision (either directly or through an
authorized third party administrator) with an Fligibility 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 acl�owledges 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; (u) Envision will continue to rely on the information provided by Plan
Sponsor undl 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 pmvision by
Plan Sponsor (or its designee) of inaccurate, erroneous, or untimely informadon. In addition, if
Envision must create or update eligibility by manually entering Covered Individual 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 the Clauns Adjudication System
directly (except for the initial Eligibility File, which must be provided to Envision during the
initial implementadon), provided Plan Sponsor continues to meet Envision's conditions and
spec�cations for direct eligibility updates.
4.3 Benefit Plan: Plan Sponsor shall provide Envision with complete information conceming
the Benefit Plan. Plan Sponsor understands and agrees that Envision shall rely on the terms and
provisians provided by Plan Sponsor on the Benefit Specification Form. The Benefit
Specification Form may be changed from time to time by Plan Sponsor by providing Envision
with a replacement Benefit Specification Form or a Benefit Specification Change Form;
provided, however, that the form must be signed by Plan Sponsor to be effective and the form
provided to Envision at least thirty (30) days before any such change shall be implemented. If,
however, Plan Sponsor provides Envision with an unsigned Benefit Spec�cation Form or
Benefit Specification Change Form, Envision shall not be bound by such form and Plan Sponsor
shall hold harmless Envision for any consequences resulting from any changes not implemented.
The most recent executed Benefit Specification Form shall supersede any prior dated form.
Plan Sponsor shall have sole authority to determine the terms of the Henefit Plan and the
coverage of benefits thereunder, however, Plan Sponsor understands and agrees that any change
in the Benefit Plan or System configuration (e.g. mandatory generic program, coverage of over-
the-counter drugs or medicadons, source of Covered Drugs, use of Plan Sponsor Owned
pharmacies, etc.) may affect yields in Manufacturer Derived Revenue and/or average drug
pricing. Plan Sponsor agrees that Envision shall not be liable to Plan Sponsor for any neduction
of such yields or increase in pricing which result from any such change. Further, any change to
�PBMSA (frm072414) � Envision Pharmeceudcal Savicea, LLC Page 10 of 24
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the Benefit Plan that affects a material term of this Agreement will require an amendment hereto.
Plan Sponsor agrees to execute an amendment, at Envision's request, before implementing the
change to the Benefit Plaa.
4.4 Formularv: Plan Sponsor shall adopt and adhere to the Formulary provided by Envision.
Any customization of the Formulary by Plan Sponsor or use by Plan Sponsor of an alternate
Formulary must be approved, in writing, by Envision. Plan Sponsor acknowledges that
adherence to the Formulary is necessary to maximize yields in Manufacturer Derived Revenue.
Plan Sponsor agrees that Envision shall not be Iiable to Plan Sponsor for any reduction in yields
of Manufacturer Derived Revenue or increase in drug pricing resulting from Plan Sponsor's
failure to adhere to the Formulary or a change to the Benefit Plan that affects the applicadon of
the Formulary.
4.5 Payment: Plan Sponsor shall timely pay, or cause its designee to timely pay, Envision for
services rendered hereunder in accordance with Section 5 below and Exhibit 1.
4.6 Cooperation: Plan Sponsor shall promptly provide Envision with all information (both
verbal and written) that is requested by Envision and reasonably necessary for Envision to
complete its obligations hereunder. Any information required to be provided by Plan Sponsor in
order for Envision to perform a function under this Agreement shall be deemed to be untimely if
not received by Envision at least five (5) business days prior to its due date. Further, Plan
Sponsor shall not obfuscate, delay, impede, or otherwise fail to cooperate with Envision.
5. TERMS OF PAYMENT
5.1 Fees and Rates: Plan Sponsor hereby accepts the fees and rates specified in Exhibit 1.
5.2 Pa ents for Claims: Envisian shall invoice Plan Sponsor twice each month for Claims
incurred. Plan Sponsor shall pay Envision's invoices no later than 12:00 p.m. Eastem time on
the tenth (10`�) calendar day from receipt of said invoices. Invoices shall be deemed to have
been received by Plan Sponsor upon the earliest delivery of the invoice by mail, e-mail, fax, or
courier.
5.3 Payment of Administrative Fee: Plan Sponsor agrees that the Administrative Fee set
forth in Exhibit 1 shall be added to the invoiced amount for each Invoiced Claim and shall be
paid by Plan Sponsor in conjunction with the payment of Claims as set forth in Section 5.2. For
purposes of this Section, an "Invoiced Claim" shall be a Clai.m payable by Plan Sponsor under
this Agreement, but shall not include transactions for Clauns which have been rejected under the
specifications of the Benefit Plan. transactions for previously paid Claims which have been
reversed (e.g. as a result of a reversal of a Claim by a Participating Pharmacy or by Envision as a
result of an audit), or transactions for reprocessed Claims (e.g. to correct a previously paid
Claim). ,
5.4 Fees for Additional Services and Miscellaneous Exnenses: Plan Sponsor agrees to
r�imburse Envision for Additional Services and Miscellaneous Expenses (e.g. postage) specified
in Exhibit 1 hereunder, within seven (7) calendar days of receipt of an invoice.
1PBMSA (fim072414) � Envision Phem�aceuflcal Services, LLC Page 1 I of 24
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5.5 Retroactive Disenrollment or Termination: Retroactive termination or disenrollment of a
Covered Individual shall not release Plan Sponsor of its obligation to pay Claims incuned, at any
time, on behalf of a Covered Individual or Administrative Fees due to Envision during any
period for which services were renderable hereunder based on the then curtent eligibility.
Further, termination of coverage of prescription drugs or the entering into a policy of insurance
that covers prescription drugs shall not constitute a permitted termination of this Agreement.
5.6 Taxes. Assessment or Fees: Any sales or use taxes for Covered Drugs sold to Covered
Individuals shall be charged, collected, and paid to state and local taxing authorities by the
dispensing pharmacy. As part of the reimbursement for a Claim, Plan Sponsor shall reimburse
Envision for such taxes payable by the dispensing phazmacy. These sales or use taxes will be
added to the overall amount of the Claim and invoiced to Plan Sponsor andlor Member, in
accordance with the Benefit Plan. Further, Plan Sponsor shall reimburse Envision for any
assessments or related fees required to be paid under state or federal regulations for Plan
Sponsor's Claims.
5.7 Financial Responsibility: Plan Sponsor shall be and remain responsible for the payment
of all invoices for Administrative Fees, Additional Services, Miscellaneous Expenses, and
Claims (along with any associated dispensing fees, taxes, assessments and fees, and Cost Shaze
not ultimately paid by Members). Plan Sponsor acknowledges that Envision will not pay
pharmacies for Plan Sponsor's Claims, nor be obligated to pay pharmacies for Claims, unless
and until adequate funds are received from Plan Sponsor.
5.7.1 Untime� Payments: If Plan Sponsor should fail to timely pay any amounts due
Envision hereunder for any reason, including, but not limited to, insolvency, bankruptcy,
termination of business, sale, or rebuff, Envision reserves the right to (i) suspend the provision of
services; (ii) offset such amounts owed to Envision by any amounts� owed by Envision to Plan
Sponsor andlor (iri) collect f�m Plan Sponsor, in addition to such unpaid amounts, interest at a
rate of 1.5°�o per month on the outstanding balance (or, if lower, the rate of interest permitted
under the law of Plan Sponsor's state of domicile). If Envision suspends the provision of
services, Covered Individuals will be required to pay 100% of the drug cost and any dispensing
fees (or the U&C Price, if lower) to receive Covered Drugs. In addition, as a condition of
continuing to perform services under this Agreement, Plan Sponsor shall deposit with Envision
additional amounts to ensure the timely payment of future invoices. Envision may also
discontinue advancing Manufacturer Derived Revenue to Plan Sponsor. Plan Sponsor further
agrees that Envision shall not be liable for any consequences resulting from the untimely
payment of Participating Pharmacies due to the failure of Plan Sponsor to timely pay Envision as
required under this Agreement.
5.7.2 Financial Viabilitv: Plan Sponsor acknowledges that Envision will periodically
conduct a credit check of Plan Sponsor. ff such credit check reasonably indicates that Plan
Sponsor is not fmancially viable, Envision may require Plan Sponsor to deposit with Envision a
reasonable amount to ensure the timely payment of future invoices.
\PBMSA {frm072414) � Envision Phaenaceutical Services, Page 12 of 24
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5.8 Financial Audit by Plan Sponsor: Within twelve months after the end of each Contract
Year hereunder, Plan Sponsor, at its sole expense, may audit Envision's records of Claims
adjudicated during the prior Contract Year. 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 Drug 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
phaimaceutical manufacturers, Participating Pharmacies, and other third parties may contain
non-disclosure provisions, and hereby agrees to comply with such non-disclosure provisions.
Plaa 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 pharmaceutical
manufacturers at Envision's offices only, and no copies of such contracts may be removed from
Envision's offices. Plan Sponsor agrees to disclose the findings and methodologies of a
completed audit, and provide Envision with a reasonable period of time to respond to such
findings and methodologies, before a demand is made by Plan Sponsor for amounts it believes
are due from Envision.
5.9 Financial Audit by Envision: Envision may, at reasonable intervals, request Plan Sponsor
to provide records for Envision's inspection which provide supporting documentation for the
information contained in the Eligibility File and the data provided by Plan Sponsor (or its
designate) upon which the financial terms herein were based. Plan Sponsor agrees to provide
such supporting documentation to Envision within ten (10) business days of such request. In
addition, and 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. Audits shall only be made during normal
business hours following thirty (30) days written notice, be conducted without undue
interference to Plan Sponsor's business activity, and in accordance with reasonable audit
practices. Envision agrees to execute a confidentiality agreement with Plan Sponsor prior to the
audit.
� 6. TERM AND TERMINATION
6.1 ' Term: The term of this Agreement shall commence on the Effective Date and shall
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 yeaz;
unless, at least thirty (30) days prior to the end of such term, either party hereto notifies the other,
in writing, that this Agreement will terminate at the end of the current term.
6.2 Termination: This Agreement may be terminated as follows:
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6.2.1 For Cause: By either party hereto in the event the other party breaches any of its
material obligations heieunder; 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;
6.2.2 Insolvencv: 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 d'ays 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 sigtuficant
portion of its property; or (v) ceases to do business or otherwise terminates its business
operations, is declared insolvent or seeks protection under any banlQUptcy, receivership, trust
deed, creditors arrangement or similar proceeding;
6.2.3 Failure to Pav: By Envision, in addition to any other remedy available to
Envision hereunder, in the event Plan Sponsor fails to pay Envision according to terms of this
Agreement.
6.2.4 Without Cause: � By either party hereto with at least thirty (30) days' written
notice to the other party. Notwithstanding the foregoing, neither party may terminate this
Agreement without cause under this Agreement before January 1 2016.
6.3 Notices: All notices required in this Section 6 shall be reasonably specific concerning the
cause for termination and shall specify the effective date and time of termination.
6.4 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 ternunation.
Except as otherwise agreed, in writing, no services shall be provided by Envision after the
effective date of termination. Envision �eserves the right to suspend advancing Manufacturer
Derived Revenue to Plan Sponsor upon Plan Sponsor's notification of termination.
7. CONFIDENTIAL INFORMATION
7.1 Confidentialitv: 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 or destroy (if such destruction is certif'ied)
all confidential informadon provided including, without limitation, all copies and electronic
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magnetic versions thereof. Notwithstanding any of the foregoing to the contrary, "confidential
information" shall not include any information which was lrnown 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.
7.2 Protected Health Information: Plan Sponsor will have access to Protected Health
Information (PHn (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, includi.ng, without lim.itation, 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. In addition, Plan
Sponsor, for itself and its Covered Individuals, authorizes Envision to use and share PHI as
necessary to carry its obligations hereunder. Envision and Plan Sponsor shall execute a HIPAA
Business Associate Agreement.
8. INDEMNIFICATION
8.1 Limited Indemnification by Envision: Envision hereby agrees to indemnify, hold
harmless, and defend Plan Sponsor and its employees, ofFcers, 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.
8.2 Linuted Indemnification by Plan S�onsor: Plan Sponsor hereby agrees to indemnify,
hold harmless, and defend Envision and its employees, officers, directors, shareholders, affiliates
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) the provision by Plan Sponsor or its designee of untunely,
incomplete, or erroneous information; or (u) Plan Sponsor's failure to comply with state or
federal law in the operation of its Benefit Plan.
8.3 Limitation of Liabiliri: Notwithstanding the indemnification obligations set forth above
(i) each party's liability to the other hereunder will in no event exceed the actual proximate losses
or damages caused by breach of this Agreement; and (ii) in no event will either party or any of
their respective affiliates, directors, employees or agents, be liable for any indirect, special,
incidental, consequential, exemplary or punidve damages, or any damages for lost profits
relating to a relationship with a third party, however caused or arising, whether or not they have
been informed of the possibility of their occurnence. For the avoidanc� of doubt, the previous
sentence shall not Iimit a party's right to recover under this Section 8 for any such damages to
the extent that such party is required to pay such damages to a third party in connection with a
matter for which such party is otherwise entitled to indemnification pursuant to this Section 8.
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8.4 Survival: This Section 8 shall survive the expiration or termination of this Agreement for
any reason.
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
medical supplies to Covered Individuals. Nothing in this Agreement shall be construed to usurp
the dispensing pharmacist's professional judgment with respect to the dispensing or refusal to
dispense any drugs or medical supplies to Covered Individuals. Plan Sponsor agrees that it shall
not hold Envision responsible, nor shall Envision be liable to Plan Sponsor or Covered
Individuals, for any liability arising from the dispensing of drugs or medical supplies to Covered
Individuals by any pharmacy.
10. GENERAL
10.1 Standards of Performance: Envision shall perform its obligations under this Agreement
with care, skill, prudence, and diligence, and in accordance with the stand.ards of conduct
applicable to a fiduciazy. Envision shall disclose all administrative fees and drug costs charged
to Plan Sponsor� disclose all Manufacturer Derived Revenue earned by Plan Sponsor and paid to
Envision by contracted pharmaceutical manufacturers for Plan Sponsor's eligible Claims, and
permit Plan Sponsor to audit such fees, costs, and revenues, as set forth in this
Agreement. Envision shall also disclose to Plan Sponsor any activity, policy, or� practice of
which Envision is aware that presents a conflict of interest with the performance of its
obligations hereunder. Plan Sponsor agrees that it retains the sole responsibility for the terms
and condirions of its Benefit Plan; its compliance with applicable law, and that of its Benefit
Plan, including, without limitation, the intetpretation and applicability of any state or federally
mandated requirements; and determinations of coverage under the Benefit Plan; and shall not
rely on any advice or recommendadons of Envision as a substitute for obtaining its own
independent accounting, tax, legal, or regulatory advice. Unless otherwise agreed in writing,
Plan Sponsor shall also be responsible for the disclosing or reporting of 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.
Notwithstanding anything herein to the contrary, neither party hereto, nor any of its respective
employees, shall be construed to be the employee, agent, or representative of the other for any
reason, or liable for any acts of omission or commission on the part of the other. Plan Sponsor
acknowledges that, notwithstanding anything herein to the contrary, Envision negotiates
contracts with pharmacies, pharmaceutical manufacturers, and vendors on its own behalf and not
specifically or exclusively for Plan Sponsor.
10.3 Exclusivitv: 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
�PBMSA (fmi072414) � Eavision Phaimaceutical Se�vices, LLC Page !6 of 24
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with pharmaceutical manufacturers for Plan Sponsor's Claims.
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 commonly controlled subsidiary or affiliate
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.
10.6 Intellectual Propertv: Each party hereto reserves the right to and control of the use of
their naunes, symbols, trademazks or service mazks presently existing or hereafter established,
and no party may use any names, symbols, trademazks 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 Severabilitv: The invalidity or unenforceability of any term or provision of this
Agreement shall in no way affect the validity or enforceability of any other term or provision.
I0.9 Change in Law or Mazket Conditions: If any law, regulation, or market condition (e.g. an
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 this Agreement), either now existing or subsequently occurring, affects the ability
of either party hereto to carry out any obligadon 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 aclueved 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 this
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.
10.10 Headinss: The section or paragraph headings contained in this Agreement aze for
reference purposes only and shall not affect the meaning or interpretation of this Agreement.
10.11 Entire Agreement: This Agreement shall constiiute the entire agreement between
Envision and Plan Sponsor with respect to the subject matter herein and supersede any prior
�PBMSA (fim(172414) � Envision Phazmaceudcal Services, �.�C Page 17 of 24
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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 pmvision 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 this 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 Dispute Resolution
10.13.1 Mediation: If either party to this Agreement should declare a breach of
this Agreement, or if any dispute arises from this Agreement or the subject of this Agreement,
the parties shall fust submit the matter to non-binding mediation (not arbitration) and attempt to
resolve the matter, in good faith, prior to the institution of any legal action. The parties agree
that legal action may be initiated only after each party has presented its case to a qualified
mediator associated with a professional mediation firm and such mediator has declazed an
impasse. Any statements made at such mediadon shall be for settlement purposes only and shall
not be construed to be an adrnission. A party demanding mediation shall be entitled to obtain a
court order mandating mediation if the other party does not agree to commence mediation within
thirty (30) days after written demand. The fees and costs incurred by the party seeking such
court order shall be reimbursed by the other party; otherwise, each' party shall pay its own costs
of inediation. All such mediation proceedings shall be conducted on a confidential basis. The
mediation shall be conducted in a mutually agreed upon location in the State of Washington.
10.13.2 Waiver of Trial by Jttty: The parties hereby irrevocably waive their rights
to a trial by jury with respect to any claim or controversy arising out of or related to this
Agreement.
10.14 Choice of Law and Venue: This Agreement shall be construed, interpreted, and govemed
according to the laws of the State of Ohio, without regard to its conflict of laws rules, except to
the extent such laws are preempted by applicable Federal law. Except for the process outlined in
Section 10.13 of this Agreement, the venue of any legal action taken pursuant to this Agreement
shall be the Superior Court of Washington State in Kitsap county.
10.15 Force Majeure: Neither Envision nor Plan Sponsor will be deemed to have breached this
Agreement or be held liable for any failure or delay in the performance of all or any portion of its
obligations under this Agreement if prevented from doing so by a cause or causes beyond its
control. Without limiting the generality of the foregoing, such causes include acts of God or the
public enemy, fires, floods, storms, earthquakes, riots, strikes, boycotts, lock-outs, acts of
terrorism, acts of war, war-operations, restraints of govemment, power or commwucations line
failure or other circumstances beyond such party's control, or by reason of the judgment, ruling
or order of any court or agency of competent jurisdiction, or change of law or regulation (or
change in the interpretation thereofl subsequent to the execudon of this Agreement. The party
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claiming force majeure must provide the other party with reasonable written notice. However, as
soon as the cause preventing performance ceases, the party affected thereby shall fiilfill its
�� obligations as set forth under this Agreement. This Section 10.15 shall not be considered to be a
waiver of any continuing obligations under this Agreement, including, without limitation, the
obligation to make payments.
10.16 Fax Communications: Plan Sponsor agrees that Envision may communicate with Plan
Sponsor via fax, and by doing so, such fax is not a violation of the Telephone Consumer
Protection Act, 47 U.S.C. §227.
10.17 Notices: All notices required under this Agreement shall be in writing, signed by the
party giving notice and shall be deemed sufficiently given immediately after being delivered by
hand, or by traceable overnight delivery service, or by registered or certified mail (return receipt
requested), to the other party at the address set forth below or at such address as has been given
by proper notice.
10.18 Representations: Plan Sponsor represents and warrants that (i) it is self-insured; (ii) the
entering into this Agreement for PBM Services is not in violation of any other agreement; (iu)
has no undisclosed conflicts of interest; and (iv) 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. Envision represents that there are no
orgaaizational arrangements that could potentially create a conflict of interest that affects clinical
or financial decisions. In addition, each signatory named below represents and warrants that he
or she (i) has read this Agreement, Exhibits, and other attachments, and fully understands and
agrees to the content therein; (ii) has entered into this Agreement voluatarily; (iii) has 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) has the fiill power
and authority to execute this Agreement.
10.19 Third Party Administrator: If Plan Sponsor uses the services of a Third Party
Administrator (TPA), consultant, broker, or other third party to carry out any of Plan Sponsor's
obligations under this Agreement, said entity(ies) shall be set forth in Exhibit 2 of this
Agreement.
[SIGNATURE PAGE FOLLOWS]
�PBMSA (frm072414) � Envision Pharmaceuacal Services, t,[.c Page 19 of 24
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IN WITNESS WHEREOF, Envision and Plan Sponsor have executed this Agreement as of the
Effective Date above.
For ENVISION:
For PLAN SPONSOR:
DocuSlgned by:
�%��� v�" '�l/ �C%� \/ ��/ /��
By. 77dA75F4n74F4F9 BS/ �./ .. . . /?i /b �/
Matthew A. Gibbs, Pharm D. � 1�i4� Lf.�t/ T� �f /¢ �/D�
Chief Commercial Officer Print Name & Ti e �
Address
Envision Pharmaceutical Services, LLC
2181 East Aurora Road
Twinsburg, OH 44087
PH: 330�05-8080
FX: 330-405-808I
Address
The City of Bremerton
345 6�' Street, Suite 600
Bremerton, WA 98337
PH: 360-473-5846
FX: 360-473-2333
E-MAII,:
charlotte.belmore @ ci.bremerton. waus
FEIN: 91-6001231
�PBMSA (fim072414) ����s�on Pna�maceuaca� saviccs, u.c Page 20 of 24
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EXHIB IT 1
FEES AND DRUG PRICING
Administrative Fee (Payable to Envision; not including fees payable to Plan Sponsor's TPAs,
consultants, or bmkers, if any)
For Contract Year 2015: $2.35 per Claim
For Contract Year 2016: $2.45 per Claim
For Contract Yeaz 2017: $2.55 per Claim
Fees for Additional Services and Miscellaneoua Expenses
1. Replacement by Envision of lost or stolen ID $1.00 per card plus $0.15 per packet and
Cazds cost of postage
2. Manual Claims Processing (inctuding DMRs) $1.SQ ger Claim processed
3. Claim Adjustment Checks (charged to Plan
Sponsor for reimbursements made to Covered
Individuals for Claim adjustments requested by
Plan Sponsor.) $8.50 per check
4. Manually create or update the Eligibility File $1.00 per Covered Individual data entry
5. Ad Hoc Computer or Report Programming $150.00 per hour
6. Clinical Prior Authorizations (Initial Coverage
Determinations) $8.00 per authorization
7. Drug Therapy Care Gap Management $0.55 per Member per month (PMP1Vn
8. Medication Adherence and Persistency (up to
three disease states) $0.55 PMPM
Drug Pricing and Dispensing Fees�"�
Supply/Source BRAND GENERIC
For Contract Year Drug Price � Dispensing Drug Price � Dispensing
2015 (Annual Average Fee «� (Annuai Average Fee ��
(based on 3 year Effect�ve Rate (Annusl Effective Rate (Annual
Agreement) �tlmate) Average Estimate) Average
Estimete) EsHmate)
30 Days' Supply at a AWP minus 15.60% $1.30 AWP minus $1.30
Retail Pharmacy 74.50%
84 Days' Supply (or
greater) at a Retail AWP minus 20.10% N/A AWP minus N/A
Pharmacy (non-Mail 76.50%
Order)
�PBMSA (frm077A 14) � Envision Phazmaceutical Services, LLC Page 21 of 24
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Mail Order Pharmacy AWP minus 20.50% N/A AWP minus 79% N/A
Specialty Pharmacy (Pass-Through of Contract Rate with Dispensing Pharmacy)
Supply/Source BRAND GENERIC
Drug Price � Dispensing Drug Price � Dispensing
For Contract Year �A°nual Average Fee «� (Aanual Average Fee t �
2016 EfPective Rate (p��� Effective Rate (Annual
F.stimate) Average Esdmate) Avecage
Estimate) Esdmate)
30 Days' Supply at a AWP minus 15.70°� $1.25 AWP minus 75°� $1.25
Retail Pharmacy
84 Days' Supply (or
greater) at a Retail AWP minus 20.20% N/A AWP minus 77% NlA
Pharmacy (non-Mail
Order)
Mail Order Pharmacy AWP minus 20.50% N/A A � �� N/A
79.50°k
Specialty Pharmacy (Pass-Through of Contract Rate with Dispensing Phazmacy)
Supply/Source BRAND GENERIC
Drug Price � Dispensing Drug Price � Dfspensing
For Contract Year (Annual Average Fee «� (Annual Average Fee «�
2017 Effective Rate (Annual Effective Rate (Annusl
EsNmate) Average F.stimatc) Average
EsHmete) F�timatc)
30 Days' Supply at a A� �us 15.80% A � ��
Retail Pharmacy $1.25 75.50°k $1.25
84 Days' Supply (or
greater) at a Retail AWP minus 20.30% N/A AWP minus N/A
Pharmacy (non-Mail 77.50%
Order)
Mail Order Pharmacy AWP minus 20.50% N/A AWP minus 80% N/A
Specialty Pharmacy (Pass-Through of Contract Rate with Dispensing Phazmacy)
�"� For purposes of this Agreement the "Average Wholesale Price" or "AWP" means the avecage wholesale
price of a Covered Drug indicated on the most curnent pricing file provided to Envision by Medi-Span� (or
other applicable industry standard reference on which pricing hereunder is based) for the actual drug
dispensed using the 11 digit National Drug Code (NDC) number provided by the dispensing pharmacy.
Envision uses a single source for determining AWP and updates the AWP source file at least once weekly.
� For purposes of this Agreement, the "Annual Average Effective Rate" means, for the category of drugs
�PBMSA (frm072414) O Envision Phermaceudcal Services, [.I.0 Page 22 of 24
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being reviewed, the result caiculated by the following formula:
1. (IGAWP)-1, where IC (the "Ingredient CosY') is the sum of all amounts paid by Plan Sponsor for
the ingredient costs of the Covered Drugs paid to Participating Pharmacies in the designated
Network during the Contract Year, before deducting applicable Manufacturer Derived Revenue; and
2. AWP is the sum of the Average Wholesale Price amounts associated with the same Covered Drugs
during the Cun�act Year. If the calculated price is lower than the allowable amount under any state
Medicaid "Favored Nations" rule, Envision shall pass-through, and Plan Sponsor shall pay, the
Medicaid allowable amount.
Annual Average Effective Rate is calculated using acmal price paid by Envision to Participating Pharmacies
in the designated Network, plus any Cost Share, (the Ingredient Cost) for all Claims for the applicable
category (including Claims paid at the U&C Price) during a Contract Year, excluding (i) Compound Drugs;
(ii) Limited Distribution Drugs; (iii) drugs dispensed at a Specialty Phazmacy; (iv) Claims from non-
Participating Pharmacies, LTC pharmacies, or govemment owned or operated pharmacies (e.g. Veterans
Administration); (v) Claims paid at government required amounts (e.g. Medicaid); (vi) 340B Claims; (vii)
vaccines; (viii) non-Prescription Drugs; and (ix) Claims from any Plan Sponsor owned or affiliated
pharmacy which is not a Participating Pharmacy.
«� Annual Average Dispensing Fee is the average per Claim fee for all Claims by Envision to Participating
Pharmacies in the designated Network (including Claims paid at the U&C Price) during a Contract Year,
excluding (i) Compound Drugs; (ii) Limited Distribution Drugs; (iii) drugs dispensed at a Specialty
Pharmacy; (iv) Claims from non-Participating Pharmacies, LTC pharmacies, or govemment owned or
operated pharmacies (e.g. Veterans Administration); (v) Claims paid at government required amounts (e.g.
Medicaid); (vi) 340B Claims; (vii) vaccines; (viii) non-Prescription Drugs; and ('vc) Claims from any Plan
Sponsor owned or affiliated pharmacy which is not a Participating Pharmacy.
Aanual Average Effective Rate and Annual Average Dispensing Fee Estimate
Plan Sponsor acknowledges that the Annual Average Effecdve Rates and Annual Average Dispensing Fees
specified in this Exhibit 1 are conditioned upon Plan Sponsor's adherence to certain conditions under this
Agreement and that the actual Annual Average Effective Rates and Annual Average Dispensing Fees will
also depend on Plan Sponsor's drug utilization and mix of Participating Phazmacies. Plan Sponsor
acknowledges the drug prici amounts specified in this Exhibit 1 are estimates only.
. . . .. . . .... .. ... :
- - - ,: -
Annual Average Msnufacturer Derived Revenue Estimate� .
For Contract Year 2015:
o For Brand Drugs at a Retail Pharmacy -$19.80 per paid Brand Drug Claim
• For 90 day supply of Brand Drugs at the Mail Order Pharmacy- $71.00 per paid Brand Paid
Claim
� Manufacturer Derived Revenue estimates are stated as annual average amounts per Contract Year.
� Estimates a� based on a Benefit Plan that has a tier structure with a minimum $20 differential in Cost
Share between preferned Brand Drugs and non-preferred Brand Drugs.
�� 340B Claims and other Claims not eligible for Manufactuc+er Derived Revenue, and Claims from any Plan
Sponsor owned or affiliated pharmacy which is not a Pazticipating Pharmacy, shall be excluded from the
calculation of the estimates above.
Plan Sponsor's yields for Manufacturer Derived Revenue may be affected if: (i) Plan Sponsor makes a
change to the Benefit Plan at any time (regardless of whether or not such change is required by law); (ii) the
configuration of System edits is modified by Plan Sponsor; (iii) Plan Sponsor does not adhere to the
Formulary; (iv) the utilization data provided by Plan Sponsor (or Plan Sponsor's agent) upon which the
�PBMSA (fim072414) � F�vision Phazmaceutical Servica, t�c Page 23 of 24
DocuSign Envelope ID• EFA77179-1170-43F5-880B-949EE36DEBE7
! calculation of estimates were based is inaccurate, incomplete, or there is a substantial change in drug
utilization patterns of Covered Individuals; (v) there is a loss of rebates due to pharmaceutical tnanufacturer
drug patent expirations, manufacturer bankruptcy, or removal of a drug from the tnarket; (vi) there are
i changes in pharmaceutical maaufacturer rebate contracting terms or policies; (vii) Plan Sponsor's Benefit
Plan does not meet the conditions for rebates of pharmaceutical manufacturer contracts including mazket
share rebates; (viii) if Plan Sponsor has been excluded by a manufacturer; or (ix) there is any governmental
regulation, ruling, or guidattce that impacts Envision's ability to maintain current Manufacturer Derived
Revenue yields. Plan Sponsor acknowledges the Manufacturer Derived Revenue amounts specified in this
Exhibit 1 are estimates only.
�PBMSA (frm072414) m Eavision Phermaceudcat Savices, [.t.,c Pege 24 of 24
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BUSINESS ASSOCIATE AG�
This BUSINESS ASSOCIATE AGREEMENT (the "Agreement") is effective January 1�, 2015
(the "Effective Date"), by and between �Envision Pharmaceutical Services� LLC ("Business
Associate") and The City of Bremerton ("Plan Sponsor"), each refeaed 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, receive, maintain or transmit PHI on behalf of Plan
Sponsor. ,
C. The Parties desire to protect the privacy and security of all PHI in compliance with the
Health Insurance Portability and Accountability Act ("HIPAA"), as amended by the
Health Information Technology for Economic and Clinical Health Act of 2009 ("the
HTTECH Act"), and the regulations promulgated there under. The purpose of this
Agreement is to ensure such compliance.
D. This Agreement incorporates provisions 42 U.S.C. § 17931(a) and 42 U.S.C. § 17934(a)
of the HITECH Act.
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 aze 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 HIPAA and the regulations thereunder, including any
amendments thereto.
1.1 "Breach" shall mean the acquisition, access, use, or disclosure of PHI in a manner not
permitted under Subpart E of 45 C.F.R. Part 164, which compromises the security or
privacy of the PHI.
"Breach" excludes:
(1) Any unintentional acquisition, access, or use of PHI by an employee or a person
acting under the authority of Business Associate, if such acquisition, access, or use was
\BAA- Plan Spansor [Rev. 09-23-2013]
DocuSign Envelope ID: EFA77179-1170-43F5-880B-949EE36DEBE7
made in good faith and within the scope of the authority, and does not result in further
use or disclosure in a manner not permitted under Subpart E of 45 C.F.R. Part 164.
(2) Any inadvertent disclosure of PHI by a person authorized to access PHI at Business
Associate to another person authorized to access PHI at Business Associate, and the
information received as a result of the disclosure is not further used or disclosed in a
manner not pernutted under Subpart E of 45 C.F.R. Part 164.
(3) A disclosure of PHI in which Business Associate has a good faith belief that an
unauthorized person to whom PHI is disclosed would not reasonably have been able to
retain the information.
1.2 "Designated Record Set" shall have the meaning prescribed to it in 45 C.F.R. § 164.501.
1.3 "HHS" shall mean the U. S. Department of Health and Human Services.
1.4 "HII'AA Standards" shall mean the standards for privacy and security of Individually
Identifiable Health Information found at 45 C.F.R. Parts 160 and 164.
1.5 "Individual" shall have the same meaning as the term "individual" in 45 C.F.R. § 160.103
and shall include a person who qualifies as a personal representative in accordance with
45 C.F.R. § 164.502(g).
1.6 "Individually Identifiable Health Information" shall have the meaning prescribed to it in
45 C.F.R. § 160.103.
1.7 "Protected Health Information" shall have the meaning prescribed to'it in 45 C.F.R. §
160.103, limited to Individually Identifiable Health lnformation transmitted or
maintained in any form or medium that Business Associate creates or receives from or on
behalf of Plan Sponsor.
1.8 "Required by Law" shal� have the same meaning as the term "required by law" in 45
C.F.R. § 164.103.
1.9 "Secretazy" shall mean the Secretazy of HHS or his or her designee.
1.10 "Security Incident" shall mean the attempted or successful unauthorized access, use,
disclosure, modification, or destruction of information or interference with system
operations in an information system.
1.11 "Unsecured PHI" shall mean PHI that is not rendered unusable, unreadable, or
indecipherable to unauthorized persons through the use of technology or methodology
� specified by the Secretary in the guidance issued under section 13402(h)(2) of Public
Law 111-5.
Article 2: Business Associate Use and Disclosure of PHI
2.1 P ose. As fiuther described above under Recitals, Business Associate perfornis certain
administrative services for Plan Sponsor.
1BAA- Plan Sponsor (Rev. 09-23-2013] 2
DocuSign Envelope ID: EFA77179-1170-43F5-880B-949EE3BDEBE7
2.2 Receipt and Use of PHI. Performance of administrative services by Business Associate
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 PHI on behalf
of Plan Sponsor. To perform these administrative 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 intemally 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. Performance of administrative 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 pmviding administradve services, and to its agents to carry out Business
Associate's legal responsibilities, for proper 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 unplement reasonable and appmpriate safeguards
to protect the confidentiality, integrity, and availability of PHI, 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 pertnitted to
exchange PHI freely with any Business Associates of the Plan Sponsor with which the
Plan Sponsor has executed a Business Associate AgreemendAddendum.
2.4 Satisfactory Assurances. Plan Sponsor may not transfer or transmit PHI to Business
Associate or pemvt Business Associate to create, receive, or transmit PHI 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 Minimum Necessarv. Business Associate shall request, use and disclose the minimum
amount of PHI necessary to accomplish the purpose of the request, use or disclosure, in
accordance with 42 U.S.C. § 17935(b).
3.4 Safe ii�g PHI. Business Associate shall use appropriate safeguards, and comply with
Subpart C of 45 CFR Part 164, to prevent the use or disclosure of PHI other than as
provided for hy this Agreement. Business Associate shall comply with the provisions of
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45 C.F.R. §§ 164.308, 164.310, 164.312 and 164.316, and implement administrative,
physical, and technical safeguazds that reasonably and appropriately protect the
confidentiality, integrity, and availability of the PHI that it creates, receives, maintains, or
transmits on behalf of Plan Sponsor as required by the HIPAA Standards.
3.5 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. In accordance with 45 C.F.R. § 164.502(e)(1)(ii) and 164.308(b)(2), should
third parties, agents, or subcontractors create, receive, maintain, or transmit PHI on
behalf of Business Associate, Business Associate shall require such third parties or agents
to agree, in writing, to (a) be bound by the same restrictions, conditions, and requirements
that apply to Business Associate with respect to such information, and (b) implement
reasonable and appropriate administrative, technical and physical safeguards to protect
PHI and the confidentiality, integrity and availability of PHI. Notwithstanding the
foregoing, Business Associate will be permitted to exchange PHI freely with any
Business Associates of the Plan Sponsor with which the Plan Sponsor has executed a
Business Associate AgreemendAddendum.
3.6 Re�orting of Security Incidents, Business Associate shall identify and report to Plan
Sponsor any suspected or l�own Security Incidents, mitigate, to the extent practicable,
� harmful effects of Security Incidents that are known to Business Associate, and document
Security Incidents and their outcomes.
3.7 Reportin� of Unauthorized Uses and Disclosures. If Business Associate becomes awaze
that Unsecured PHI has been, or is reasonably believed to have been accessed, acquired,
used, or disclosed as a result of a Breach by Business Associate, its employees, officers,
or other agents, except as provided in 45 C.F.R. § 164.412, Business Associate shall
notify Plan Sponsor of the Breach, in writing, without unreasonable delay, and no later
' than thirty (30) calendar days after discovering the Breach. Business Associate is
deemed to have discovered the Breach on the first day Business Associatc knows about
� the Breach, or by exercising reasonable diligence, would have been known to any person,
other than the person committing the Breach, who is an employee, officer, or other agent
of Business Associate.
3.8 Content of Notification. To the extent possible, Business Associate's notice to Plan
Sponsor shall include the identification of each Individual whose Unsecured PHI has
been, or is reasonably believed to have been, accessed, acquired, used, or disclosed
during the Breach.
At the time of notification or soon thereafter as information becomes available, Business
Associate shall provide the following information to Plan Sponsor:
(a) A brief description of what occurred, including the date of the Breach and the date
of discovery of the Breach, if known;
(b) A description of the types of Unsecured PHI involved in the Breach;
(c) Steps Individuals should take to protect themselves from potential harm resulting
from the Breach;
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(d) A brief description of what Business Associate is doing to investigate the Breach,
to mitigate harm to Individuals, and to protect against any further Breaches; and
(e) Contact procedures for Individuals to ask questions or learn additional
information, including a toll-free telephone number, an e-mail address, website or
postal address.
3.9 Burden of Proof. Business Associate shall have the burden of demonstrating that it made
all notifications to Plan Sponsor, including evidence showing the necessity of any delay,
or that the use or disclosure did not constitute a Breach.
3.10 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.
3.11 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.
3.12 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.
3.13 Accountin� 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.
3.14 Compliance with Subpart E of 45 C.F.R. Part 164. To the extent Business Associate
carries out Plan Sponsor's obligations under Subpar[ E of 45 C.F.R. Part 164, Business
Associate shall comply with the requirements of Subpart E that apply to Plan Sponsor in
the performance of such obligations.
3.15 Availabilitv of Books and Records. For purposes of determining compliance of Plan
Sponsor with the HIPAA Standazds, Business Associate agrees to make available to the
Secretary its internal policies and procedures, books and records relating to the use and
disclosure of PHI received from, or created or received by Business Associate on behalf
of, Plan Sponsor.
\BAA- Plan Sponsor [Rev. 09•23-2013] 5
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3.16 Treatment of PHI at Tennination
With respect to PHI received from Plan Sponsor, or created, maintained, or received by
Business Associate on behalf of Plan Sponsor, upon termination of this Agreement for
any reason, Business Associate, shall:
(a) Retain only that PHI which is necessary for Business Associate to continue its
proper management and administration or to carry out its legal responsibilides;
(b) Return to Plan Sponsor or, if agreed to by Plan Sponsar, destroy the PHI that is
not retained by the Business Associate under (a) above;
(c) Continue to use appropriate safeguards and comply with Subpart C of 45 CFR
Part 164 to prevent use or disclosure of the PHI, other than as provided for in this
Agreement, for as long as Business Associate retains the PHI;
(d) Not use or disclose the PHI retained by Business Associate other than for the
purposes for which such PHI was retained sud subject to the same conditions set
out in Section 2.2 and Section 2.3 which applied prior to termination; and
(e) Retum to Plan Sponsor or, if agreed to by Plan Sponsor, destroy the PHI retained
by Business Associate when it is no longer needed by Business Associate for its
pmper management and administration or to cazry out its legal responsibilities. •
Article 4: Duties of Plan Sponsor
4.1 Linutations in Notice of Privacy Practices. Plan Sponsor shall notify Business Associate
of any limitations in the notice of privacy practices of Plan 5ponsor under 45 C.F.R. §
164.520, to the extent that such limitation may affect Business Associate's use or
disclosure of PHI.
4.2 Changes in Permission. Plan Sponsor shall notify Business Associate of any changes in,
or revocation of, the permission by an Individual to use or disclose his or her PHI, to the
extent that such changes may affect Business Associate's use or disclosure of PHI.
4.3 Restriction on Use or Disclosure of PHI. Plan Sponsor shall notify Business Associate of
any restriction on the use or disclosure of PHI that Plan Sponsor has agreed to or is
required to abide by under 45 C.F.R. § 164.522, to the extent that such restriction may
affect Business Associate's use or disclosure of PHI.
Article 5: Term and Termination
S.1 Term. The term of this Agreement shall be effective as of the Effective Date stated
above, and shall terminate on the date Business Associate discontinues the provision of
services to or on behalf of Plan Sponsor, or on the date Plan Sponsor terminates for cause
as authorized in Section 5.2, whichever is sooner.
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5.2 Termination for Cause. Business Associate authorizes termination of this Agreement by
Plan Sponsor, if Plan Sponsor reasonably determines that Business Associate has violated
a material term of the Agreement and Business Associate has not cured the breach or
ended the violation within the time specified by Plan Sponsor or ten (10) business days.
whichever is greater. Plan Sponsor shall provide Business Associate notice of such
breach or violation, ,in writing, with suff'icient specificity as to reasonably permit
Business Associate to cure such breach or violation. Plan Sponsor understands that, upon
termination of this Agreement, Business Associate will no longer be authorized to create,
receive, or transmit PHI on behalf of Plan Sponsor, except as otherwise provided herein.
5.3 Survival of Certain Rights and Obli ations. The respective rights and obligations of
Business Associate under Section 3.16 of this Agreement shall survive the temiination of
this Agreement.
Article 6: Miscellaneous
6.1 Regulatory References. A reference in this Agreement to a' section in the HIPAA
Standards means the section as in effect or as amended.
6.2 Amendment. The Parties to this Agreement agree to take such action as is necessary to
amend this Agreement from time to time as is necessary to comply with the requirements
of the HIPAA Standards and any other applicable law.
6.3 Prior Business Associate A�reements or Addenda. This Agreement shall supersede any
prior Business Associate Agreement or Business Associate Agreement Addenda.
6.4 Inter�retation. Any ambiguity in this Agreement shall be interpreted to permit
compliance with the HIPAA Standards. ,
6.5 HIPAA. Business Associate will comply with all requirements under HIPAA that apply
to business associates.
[SIGNATURE PAGE FOLI:OWS]
\8AA- Plan Sponsor [Rev, 09-23-2013) 7
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IN WITNESS VVHEREOF, the Parties have, by their duly authorized representatives, executed
this Agreement to be effective as of the date first above written.
PLAN SPONSOR:
By: � Z /Z
� : 1.f�V T �!�1 �' OR.
Print Name. " �d Title
BUSINESS ASSOCIATE:
DocuSigned by:
/
sy:
Matthew ,a. Gibbs, Phar��ef Commercial officer
Print Name and Title �
�BAA• Plan SEwnsor [Rev. 09-23-2013]