Title
Pharmacy Benefits Manager Contract (Ordinance S-44590)
Description
Request to authorize the City Manager, or his designee, to enter into a contract with EnvisionRx to manage employee/retiree pharmacy benefits (e.g. pharmacy benefits manager). The financial impact of these services is $123 million over the initial three-year contract term, which is $29.5 million less that what is projected under the current contract. Funding is available in the Health Care Trust Fund. Further request authorization for the City Controller to disburse all funds related to this item.
Report
Summary
The City currently contracts with Cigna Pharmacy to administer Pharmacy Benefits Manager services. The current contract has been in place since 2011. It was extended in 2016, and is set to expire on Dec. 31, 2018.
Procurement Information
A Request for Proposals (RFP) for management of employee/retiree pharmacy benefits was issued on Nov. 8, 2017, and responses were due to the City's contracted pharmacy consultants at Willis Towers Watson on Dec. 7, 2017. Willis Towers Watson utilized proprietary software and the expertise of a team of pharmacists and pharmacy financial analysts to prepare a thorough analysis of the 10 proposals that were received. Financial results and rankings were reviewed as a first step to identify which proposers would move forward in the selection process. It was determined that the following four proposers would move forward: Employers Health, CVS, ESI, and EnvisionRx. Each of the vendor proposals contained savings for plan years 2019 through 2021 of at least $24 million, or approximately $8 million per year.
A seven-member selection committee comprised of representatives from the Human Resources Department, the Health Care Benefits Trust Board, the Finance Department, retirees, and the labor groups convened on Feb. 13 and 15, 2018, to review proposal details for these four proposals and conduct initial scoring. This resulted in a decision to interview three proposers: CVS, ESI and EnvisionRx, which were conducted on March 1 and 2, 2018. The selection committee conducted final scoring and unanimously selected EnvisionRx as the preferred vendor to contract with the City effective Jan. 1, 2019. The scores, out of 1,000 available points, for the top three proposers are:
EnvisionRx: 900 points
ESI: 850 points
CVS: 775 points
Contract Term
The contract term will be three years, starting Jan. 1, 2019. Provisions of the contract will include an option to extend the term for up to two years, in one-year increments, which may be exercised by the City Manager or designee.
Financial Impact
The financial impact of these services is $123 million over the initial three-year contract term, which is $29.5 million less that what is projected under the current contract. Funding is available in the Health Care Trust Fund.
Concurrence/Previous Council Action
This contract award was recommended for approval by a vote of 3-0 by the Sustainability, Housing, Efficiency, and Neighborhoods Subcommittee at its April 17, 2018 meeting.
Department
Responsible Department
This item is submitted by Acting Deputy City Manager Toni Maccarone and the Human Resources Department.