1.13 State of NV - Board Meeting Recommendation 07-27-17.pdf
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- Solicitation number
- 95PEBP-S1790
- Issued by
- Clark County, Nevada
About this file
This document is a recommendation from the Executive Officer to the Nevada Public Employees' Benefits Program (PEBP) Board regarding contract extensions for Pharmacy Benefit Management (PBM) services with Express Scripts, Inc. and Basic Life and Long-Term Disability services with The Standard. PEBP is seeking a 1-year extension with Express Scripts to increase specialty drug rebates, and a 4-year extension with The Standard to reduce premium rates. The anticipated additional rebates from Express Scripts over the 5-year extension are projected to total $8.1 million. The proposed rate reductions from The Standard are expected to save PEBP approximately $2 million over the 4-year extension.
The document outlines the current contract terms and the proposed extensions. For Express Scripts, the 1-year extension would begin January 1, 2018 with the same administrative fee but improved rebate levels. For The Standard, the 4-year extension would start July 1, 2018 with reduced premium rates of 4.77% for Basic Life and 5.17% for Long-Term Disability compared to the current rates. PEBP is recommending the Board approve both contract extensions as presented.
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8.
8. Discussion and possible action on approving the development of contract extensions for the following:
Express Scripts, Inc., Pharmacy Benefit
Management services, 1-year contract extension
The Standard Insurance Basic Life and Long Term
Disability, 4-year contract extension
(Damon Haycock, Executive Officer)
(For Possible Action)
AGENDA ITEM
X Action Item
Information Only
Date: July 27, 2017
Item Number: 8
Title: Contract Extension Opportunities
SUMMARY
The purpose of this report is to request the Board’s approval for extensions to the following contracts:
Express Scripts, Inc. (Pharmacy Benefits Manager Services) – 1-year extension The Standard (Basic Life and Long-Term Disability Services) – 4-year extension
REPORT
EXPRESS SCRIPTS
PEBP contracted with Express Scripts Inc. (ESI) for Pharmacy Benefits Manager (PBM) Services which began July 1, 2016. When PEBP negotiated the original contract, we were excited to finally receive a guaranteed level of rebates for specialty drugs not included in previous contracts with previous PBMs. To date, PEBP has already received four times the amount of drug rebates anticipated when building the budget for last year. After conversations with other health plans and our consultants, PEBP reached out to ESI and requested improved rebates to 100% of all available specialty drug manufacturer rebates. ESI agreed and requested an additional year on the current contract at the same administrative fee level. These increased rebates would begin January 1, 2018. The anticipated rebates are shown below:
Plan Year *Additional Rebates (Projected)
(only ½ of this Plan Year)
$900,000
2019 $1,800,000 2020 $1,800,000 2021 $1,800,000
(additional one year extension) $1,800,000
Total $8,100,000
STATE OF NEVADA
PUBLIC EMPLOYEES’ BENEFITS PROGRAM
901 S. Stewart Street, Suite 1001
Carson City, Nevada 89701
Telephone (775) 684-7000 · (800) 326-5496
Fax (775) 684-7028 www.pebp.state.nv.us
PATRICK CATES
Board Chairman
BRIAN SANDOVAL
Governor
DAMON HAYCOCK
Executive Officer
Contract Extension Opportunities July 27, 2017
*Rebates are accumulated by quarter but PEBP doesn’t receive them until approximately 180 days after the quarter ends. So for Plan Year 2018 3rd Quarter (January-March), PEBP will receive those rebates around September 2018 (in Fiscal Year 2019). For Plan Year 2018 4th Quarter (April-June), PEBP won’t receive those rebates until December 2018/January 2019.
THE STANDARD
PEBP has contracted with The Standard since July 1, 2003 (14 years) for Basic Life Insurance and Long Term Disability services. The current contract with The Standard is scheduled to expire on June 30, 2018. Traditionally, PEBP signs these types of contracts with a guaranteed rate for the first year, and subsequent years of the contract are experience rated and underwritten with potential increases. PEBP has seen the rates increase over the years and we are excited to present a 4-year extension with guaranteed rates at a reduced amount for the life of the contract.
The Standard has proposed reducing premiums as shown below:
Product Current Rate Proposed Rate
Cost Savings % Savings
Basic Life $0.566 per $1000 of Benefit
$0.539 per $1000 of Benefit
$0.027 per $1000 of Benefit
4.77%
Long Term Disability
$15.08 Per Member Per
Month
$14.30 Per Member Per
Month
$0.78 Per Member Per
Month
5.17%
These rates multiplied by our population and current benefit levels predict a savings over four years of approximately $2 million.
RECOMMENDATION
PEBP recommends the Board approve a 1-year extension with Express Scripts for PBM services and a 4-year extension with The Standard for Basic Life Insurance and Long Term Disability services as described in the report above.
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