TPharm5 Draft Section H 20191121.docx

SECTION H

SPECIAL CONTRACT REQUIREMENTS

SECTION H

SPECIAL CONTRACT REQUIREMENTS

H.1. Contract Clauses.

DFARS 252.203-7000, Requirements Relating to Compensation of Former DoD Officials (SEP 2011)

H.2. Organizational Conflicts of Interest.

H.2.1. General. The Contractor's attention is directed to FAR 9.5, Organizational and Consultant Conflicts of Interest.

H.2.2. Potential Conflicts of Interest. It is the position of DHA that close business relationships between the Contractor and other entities may pose a potential conflict of interest in the performance of the contract. This includes the following business arrangements: Ownership, either direct or a majority stake, of pharmacies by the Contractor; Ownership of the Contractor and pharmacies under a mutual parent company; Any other financial interest or minority ownership; or a Partnership Agreement. This potential conflict includes, but is not limited to, the Contractor’s performance as a fiscal intermediary for the Government and in its role in pursuing waste, fraud and abuse (TRICARE Operations Manual (TOM) Chapter 13). Such impaired objectivity, internal allegiances, or conflicting roles must be avoided, neutralized, or mitigated.

H.2.3. Contractor Responsibilities. The Contractor shall avoid, mitigate, or neutralize any organizational conflict of interest (OCI), or the appearance thereof. If the Contractor obtains any knowledge of an actual or potential OCI involving the Contract, the Contractor shall immediately notify the Contracting Officer, in writing, of the nature of the actual or potential OCI. The Contracting Officer will examine the information provided by the Contractor and assess whether the actual or potential OCI exists and as applicable, whether the actual or potential OCI can be avoided, mitigated, or neutralized. Upon request by the Contracting Officer, the Contractor shall provide a thorough and effective OCI plan to avoid, mitigate, or neutralize the actual or potential OCI. The Contractor shall submit the plan to the Contracting Officer no later than 15 days from receipt of the Contracting Officer's request.

H.2.4. Other Bids. To avoid conflicts which may create bias ground rules, impair the Contractor’s objectivity, or give the Contractor an unfair competitive advantage, the Contractor shall notify the Government should a potential conflict arise or when the Contractor plans to bid on a contract that could create a conflict.

H.2.5. Third Party Information. It may become necessary in the performance of this contract to review proprietary information from other Contractors. The Contractor shall protect all proprietary information from unauthorized use or disclosure and refrain from using the information for any purpose other than that for which it was furnished.

H.2.5.1. At the request of the other Contractor, or the CO, the Contractor shall execute agreements with third party companies furnishing data in connection with work performed under this contract.

H.2.5.1.1. Non-disclosure agreements shall be completed by the Contractor, all employees, and sub-Contractors who obtain access to proprietary information.

H.2.5.2. Safeguards shall be implemented to restrict access to proprietary information and to avoid, mitigate, or neutralize potential conflicts of interest.

H.3. Cost Control Incentives.

H.3.1. Incentive Basis. Each incentive is based on a table containing the “Guaranteed Average Price Adjustment Percentage” (Guarantee Percentage) for costs defined. Some cost incentives may also include a "Guaranteed Average Dispensing Fee" (Guaranteed Dispensing Fee) where specified.

H.3.1.1. Incentive Source Data. The Government's Pharmacy Data Warehouse (PDW) will accumulate reimbursement data from all applicable pharmacy transactions as incentive source data. The PDW will be the sole data source for calculating any performance incentive or guarantee penalty based on the total actual reimbursement cost and the total expected Government cost for reimbursement.

H.3.1.2. Calculation of Incentive. The Contractor may earn a performance incentive if the total reimbursement cost to the Government during each contract option period is less than the total expected Government cost for reimbursement that would have resulted from applying the Guaranteed Average Price Adjustment Percentage and the Guaranteed Average Dispensing Fee per prescription (if applicable) to the prescriptions filled under the Guarantee during the contract option period. The total expected Government cost for reimbursement will be calculated by first applying the Wholesale Acquisition Cost (WAC) published by First DataBank (FDB) in effect at the time the prescription transaction is processed and then by adjusting the WAC by applying the applicable WAC Guaranteed Average Price Adjustment Percentage in the applicable table. Next, for prescriptions for which no WAC published by First DataBank (FDB) is available at the time the prescription transaction is processed apply the Average Wholesale Price (AWP) rates published by Medispan in effect at the time the prescription transaction is processed, then adjust the AWP price by applying the applicable AWP Guaranteed Average Price Adjustment Percentage in the applicable table. Finally, add the applicable Guaranteed Average Dispensing Fee, if any, specified in the table for each processed.

H.3.1.2.1. Table H-1 — Calculation Example.

Calculation:

H.3.1.3. Positive Incentive Amount. Cost control incentives will equal 10% of the difference between the actual total reimbursement cost processed during the option period and the total expected Government cost for reimbursement. For example, if in any option period the Contractor's Guaranteed Average Price Adjustment Percentage and the Guaranteed Average Dispensing Fee per prescription result in a Total Expected Government Cost for Reimbursement of $5 billion, and the actual cost to the Government was $4.95 billion, this reflects a savings of $50 million. The Contractor would be eligible for an incentive fee of $5 million (10% of the savings of $50 million) for that option period. The amount of the incentive that the Contractor may earn has no limit.

H.3.1.4. Negative Incentive Amount. In the event the total actual reimbursement cost in a contract option period exceeds the total expected Government cost for reimbursement that would have resulted from applying the Guaranteed Average Price Adjustment Percentage and any applicable Guaranteed Average Dispensing Fee per prescription to the prescription transaction processed during the contract option period, the difference between the actual costs and the Total Expected Government Cost for Reimbursement will be recouped by the Government for that option period. For example, if in any option period the Contractor's Guaranteed Average Price Adjustment Percentage and the applicable Guaranteed Average Dispensing Fee per prescription result in a Total Expected Government Cost for Reimbursement of Retail Network Pharmacy Costs of $5 billion, and the actual cost to the Government was $5.01 billion, the Government would recoup the amount of $10 million (the entire difference) for that option period from the Contractor.

H.3.1.5. Additional Requirements. Additional requirements for the Contractor to be eligible for positive incentive are outlined in the specific incentive paragraphs below. In situations where these criteria are not met, the Contractor will not be able to earn a performance incentive but any negative recoupments will still apply. The determination of whether any such requirements have been met is at the sole discretion of the CO.

H.3.1.6. Timing. The Government will measure and calculate the incentive amounts after each option period and will notify the Contractor of the results. If the Contractor earns any performance incentives, the Contracting Officer will provide invoice and payment instructions.

H.3.2. Cost Control Incentive 1--Retail Network Cost Control Incentive (CLINs X016). The following table, Retail Network Reimbursement Table H.2.2, contains the Guarantee for WAC and AWP, and Guaranteed Average Dispensing Fee guaranteed by the Contractor and accepted by the Government for prescriptions for non-specialty brand and generic drug categories for each respective option period

H.3.2.1. Table H-4 — Retail Network Reimbursement Table for Use in Determining Incentives

Adjustment Percentage Guaranteed Average Dispensing Fee

AWP

AWP

AWP

AWP

AWP

AWP

AWP

AWP

AWP

WAC

AWP

AWP

AWP

AWP

AWP

Note for Retail Network Reimbursement Table H.3.2 Each applicable "Guaranteed Average Price Adjustment Percentage" and "Guaranteed Average Dispensing Fee" in this table will be used for the calculations described below.

H.3.2.2. Additional Requirement. No performance incentive referenced in paragraph H.3.1.3 will be paid to the Contractor for any option period in which the Contractor does not meet or exceed retail network access standards calculated in accordance with paragraph C.3.4.2 for a minimum of 11 months of the option period. The Department of Veterans Affairs (DVA), Public Health Service, and Indian Health Service pharmacies will not be included in retail network access calculations for incentive eligibility determination.

H.3.2.3. Exclusions. Coordination of benefits claims, DVA claims, Medicaid claims, Public Health Service claims, Indian Health Service claims, non-network claims, vaccines administered by retail network pharmacies, and prescriptions for supplies and compounded medications will not be included in the calculation for the performance incentive or guarantee recoupment calculation.

H.3.3. Cost Control Incentive 2--Specialty Network Cost Control Incentive (CLINs X017). The following table, Specialty Reimbursement Table H.3.3.1, contains the Guaranteed Average Price Adjustment Percentage and Guaranteed Average Dispensing Fee guaranteed by the Contractor and accepted by the Government for non-replenishable specialty medications dispensed in each respective option period. For those retail specialty drugs not replenished by the NPV, a guaranteed average dispensing fee paid to the dispensing pharmacy, which may include the cost of specialty services, delivery services or shipping fees, and supplies, will be used in calculating the Specialty Cost Control Incentive.

H.3.3.1. Table H-5 — Specialty Reimbursement for Use in Determining Incentives

Adjustment Percentage Guaranteed Average Dispensing Fee

H.3.4. Market Priced Pharmaceutical Program (MPPP) Incentive

H.3.4.1. Incentive Basis. The incentive is based on a demonstrated cost savings between the Contractor’s offer and the NPV’s price of the same product or an equivalent available alternative.

H.3.4.2. Incentive Source Data. This incentive shall be calculated based on CDRL M140.

H.3.4.3. Calculation of Incentive. Cost savings is defined as the difference between the unit price(s) for the NDC specified in the offer under C.5.8.19.2 as listed on the MMC (in effect at the time a prescription was dispensed), compared to the unit price of the MPPP recommended NDC actually dispensed; times the quantity of the NDC was dispensed during a given option period. If MMC prices for the drug in question have changed during the option period, cost savings will be measured correspondingly.

H.3.4.4. Calculation Example. For example, consider the situation in which one prescription for a drug is dispensed each month, and the MMC unit price for that drug is $1.00 during the first two months of an option period, but increases to $1.10 for the final 10 months; and the commercial source price for the same drug remains $0.50 throughout. Total savings is $7.00 (2 x ($1.00 - $0.50)) + (10 x ($1.10-$0.5)) and the resulting incentive of $0.70 to the Contractor.

H.3.4.5. Incentive Amount. The Contractor shall earn a performance incentive for demonstrated savings to the Government equaling 10% of the cost savings for each of the Contractor’s MPPP recommendations implemented at TMOP (this incentive applies only to savings offers, CLIN X028).

H.3.4.6. Additional Requirements. Incentives are only applicable if the government has accepted an offer under C.5.8.19.

H.3.4.7. Timing. This incentive will be calculated and settled on a quarterly basis for all savings commercial market recommendations which complete (i.e. the dispensing commercially acquired product was finished) in the preceding quarter.

H.3.4.8. Exclusions. If the savings generated by a particular offer is calculated to be negative, no incentive will apply for that offer. If the Contractor is not able to meet the terms of the recommendation as accepted by the Government, the incentive will not apply.

H.3.4.9. Calculation of Savings. If the savings generated by a particular offer is calculated to be negative, no incentive will apply for that offer.

H.3.4.10. Additional Requirement. The Contractor will be ineligible for this incentive for any period when beneficiaries do not have access to all covered specialty medications.

H.3.4.11. Exclusions. The following specialty medications are excluded from this guarantee:

H.3.4.11.1. Specialty medications replenished by the Government.

H.3.4.11.2. Specialty medications procured by the Contractor under the MPPP.

H.4. Performance Guarantees.

H.4.1. General. The performance guarantees described in this section are the Contractor’s guarantee that the Contractor’s performance will not be less than the performance standards described below. Each standard is guaranteed, measured, and assessed separately from contract standards specified in Section C and the referenced TRICARE Manuals. All self-reported Contractor data utilized in the assessment of performance relative to contract standards and performance guarantees is subject to review by the Government. The rights of the Government and remedies described in the performance guarantee section are in addition to all other rights and remedies of the Government.

H.4.1.1. Rights and Remedies. The rights of the Government and remedies described in the Performance Guarantee paragraphs are in accordance with, and in addition to all other rights and remedies of the Government. Specifically, the Government reserves the rights and remedies set forth in FAR Clause 52.246-4, Inspection of Services and FAR Clause 52.249-8, Default.

H.4.1.2. Rounding. For the assessment of performance guarantees, percentages shall be rounded the nearest tenth of a percentage. Example: A contract standard requires a minimum of 95%. If Contractor performance is 94.89%, performance shall be assessed at 94.9% and the Contractor deemed to have not met the standard. Performance of 94.95% will be assessed at 95% and the Contractor deemed to have met the standard.

H.4.2. Forfeiture. For each occurrence the Contractor fails to meet each guaranteed standard, the Contractor shall forfeit the amount listed in the schedule below. Performance guarantee forfeitures will be applied to each reporting period in which the Contractor fails to meet or exceed the standard. Performance will be measured as specified below. The Contractor will be notified of forfeitures accumulated and assessed subsequent to each contract quarter. For the purposes of section H.4, the term "performance standard" is defined as the standard specified in this section. Each standard will be measured and assessed independently.

H.4.2.1. Timing. For administrative purposes, the Contractor will be notified of performance guarantee forfeitures on a quarterly basis via a unilateral modification in accordance with FAR 43.103(b)(3) with this section as the cited authority for the modification. Unless arrangements are made otherwise, forfeited amounts will be deducted from the next available contract payment under any line item at discretion of the Government. Total performance guarantees assessed under this subsection (except for TEDS Edit Accuracy) for any option period shall not exceed $2,500,000. There will be no cap on total assessments for TEDS edit accuracy.

H.4.3. Performance Guarantee 1 — Mail Order Pharmacy Prescription Processing.

H.4.3.1. Standard: 100% within 10 calendar days H.4.3.2. Definition: Mail order prescriptions shall either be shipped, scheduled for delivery, returned, pended or denied within 10 calendar days from receipt, reported monthly. Prescriptions under the Deployment Prescription Program that require clarifications or intervention will not be included in the calculation of mail order pharmacy processing time, but are subject to the requirements of C.5.7.

H.4.3.3. Performance Guarantee Application: $125,000 each full calendar month the standard is not met.

H.4.3.4. Measurement: Calendar days. Calendar month. Self-reported by the Contractor. (CDRL Q040)

H.4.4. Performance Guarantee 2 — System Availability.

H.4.4.1. Standard: 99.5% of the time.

H.4.4.2. Definition: The Contractor’s claims processing system shall be available no less than 99.5% of the time, excluding external downtime. The system is considered to be unavailable when the failure rate for claims exceeds 25% for at least 30 minutes.

H.4.4.3. Performance Guarantee Application: $125,000 each full calendar month the standard is not met.

H.4.4.4. Measurement: Time measured in minutes per calendar month. Self-reported by the Contractor. (CDRL M060)

H.4.5. Performance Guarantee 3 — Paper Claims Processing.

H.4.5.1. Standard: 95% with 14 calendar days of receipt.

H.4.5.2. Definition: Paper claims shall be processed to completion with 14 calendar days of receipt.

H.4.5.3. Performance Guarantee Application: $125,000 each full calendar month the standard is not met.

H.4.5.4. Measurement: Calendar days. Calendar month. Self-reported by the Contractor. (CDRL Q050)

H.4.6. Performance Guarantee 4 — Clinical Review Processing.

H.4.6.1. Standard: 95% within 5 calendar days of receipt H.4.6.2. Definition: Clinical reviews shall be completed and notification sent to the beneficiary within 5 calendar days of receipt of a properly completed request, measured monthly.

H.4.6.3. Performance Guarantee Application: $125,000 each full calendar month the standard is not met.

H.4.6.4. Measurement: Calendar days. Calendar month. Self-reported by the Contractor. (CDRL Q010)

H.4.7. Performance Guarantee 5 — Telephone Service.

H.4.7.1. Standard: Average Speed of Answer of not more than 60 seconds H.4.7.2. Definition: Measured on a monthly basis, all beneficiary services calls received shall be transferred to a Beneficiary Service Representative (BSR) with an Average Speed of Answer (ASA) of not more than 60 seconds between the initial connection and when the phone is answered by the BSR. Calls where the beneficiary does not choose to speak to a BSR shall be excluded from this metric.

H.4.7.3. Performance Guarantee Application: $125,000 each full calendar month the standard is not met.

H.4.7.4. Measurement: Calendar days. Calendar month. Self-reported by the Contractor. (CDRL Q020)

H.4.8. Performance Guarantee 6 — Correspondence Processing.

H.4.8.1. Standard: 85% of priority correspondence will be processed to completion within 10 calendar days.

H.4.8.2. Definition: Measured on a monthly basis. Considered processed to completion after providing a response to the Government. Priority correspondence and completion standards are defined in TOM Chapter 11, Section 5.

H.4.8.3. Performance Guarantee Application: $125,000 each full calendar month the standard is not met.

H.4.8.4. Measurement: Calendar days. Calendar month. Self-reported by the Contractor. (CDRL Q030)

H.4.9. Performance Guarantee 7 — Formulary Search Tool Corrections.

H.4.9.1. Standard: 99% of identified errors corrected within 2 business days.

H.4.9.2. Definition: An error is defined as incorrect formulary status, PA/MN requirements, age or gender restrictions, quantity limit restrictions, point of service restrictions, BCF/ECF status, copay amount based on the current TRICARE benefit design at the time the error is identified.

H.4.9.3. Performance Guarantee Application: $125,000 each full calendar month the standard is not met.

H.4.9.4. Measurement: Business days. Calendar month. Self-reported by the Contractor. (CDRL M200).

H.4.10. Performance Guarantee 8 — TEDS Edit Accuracy.

H.4.10.1. Standard: TEDS edit accuracy will be measured on a monthly basis. The accuracy rate for TEDS edits shall be:

H.4.10.1.1. waived during first six months of OP1 H.4.10.1.2. 95% during months seven through nine of OP1 H.4.10.1.3. 99% for duration of contract

H.4.10.2. Definition: TEDS edit accuracy is defined in the TSM, Chapter 2.

H.4.10.3. Performance Guarantee Application: If the Contractor fails to meet the standard and falls below the standard, a performance guarantee amount of $1.00 for each TEDS record not meeting the standard will be forfeited. For example, if only 93.3% of all TEDS pass edits for each of months seven, eight, and nine, then a performance guarantee amount will be applied to 1.7% of all TEDS submitted during the period (1.7% equals the difference between the Contractor's actual performance and the standard in this example). If 1.7% equates to 153,000 TEDS records, the performance guarantee forfeiture amount will be $153,000.00 (i.e., 153,000 x $1.00).

H.4.10.4. Measurement: The number of TEDS failing to meet the standard will be determined each calendar month by the Government based on the DHA TEDS database.

H.5. Specialty Retail Replenished Dispensing Fees

H.5.1. For those retail specialty prescriptions replenished by the NPV, a single dispensing fee will be paid to the dispensing pharmacy, which may include the cost of specialty drug services, shipping fees, supplies, and costs associated with a dispensing pharmacy’s acceptance of replenishment.

H.5.1.1. Table H-6 — Negotiated Specialty Retail Replenished Dispensing Fees

H.6. Performance Metrics.

H.6.1. System Availability.

H.6.1.1. Standard: Claims Processing System is available no less than 99.5% of the time, excluding external downtime.

H.6.2. Paper Claims.

H.6.2.1. Standard: 95% of paper claims shall be processed to completion within 14 calendar days of receipt.

H.6.2.2. Standard: 100% of paper claims shall be processed to completion within 28 calendar days of receipt.

H.6.3. Retail Network Access.

H.6.3.1. Standard: [TBD - Contractor Proposed]

H.6.4. Mail Order Pharmacy:

H.6.4.1. Standard: 98% of Mail Order prescriptions not requiring intervention or clarification shall be shipped in 4 business days from receiving the prescription.

H.6.4.2. Standard: 100% of Mail order prescriptions shall be shipped, scheduled for delivery, returned, or denied within ten (10) business days of receipt H.6.4.3. Standard: Prescriptions dispensed from the TMOP shall be accurate 100% of the time, measured monthly.

H.6.5. Clinical Reviews.

H.6.5.1. Standard: 96% of all clinical reviews, to include those for compound medications, shall be completed and notification sent within five (5) days of receipt of a properly completed request, measured monthly.

H.6.5.2. Standard: 100% of all clinical reviews shall be completed and notification sent within ten (10) days of receipt of a properly completed request, measured monthly.

H.6.6. Beneficiary Support.

H.6.6.1. Standard: Average Speed of Answer (measured from initial connection to answer by a service representative): 60 seconds or less H.6.6.2. Standard: Telephone Call Blockage rate: 5% or less H.6.6.3. Standard: Abandoned Call rate at any point: 5% or less H.6.6.4. Standard: Telephone Calls Resolved at any point: 95% during initial call H.6.6.5. Standard: Telephone Calls Resolved at any point: 100% within 2 days H.6.6.6. Standard: Priority Correspondence - Complete and issue resolved (to the Government’s satisfaction, includes Electronic): 85% during 10 days H.6.6.7. Standard: Priority Correspondence - Complete and issue resolved (to the Government’s satisfaction, includes Electronic): 100% within 30 days H.6.6.8. Standard: Routine Correspondence (Includes Electronic): 85% within 15 days H.6.6.9. Standard: Routine Correspondence (Includes Electronic): 100% within 45 days

H.6.7. Pharmacy Help Desk.

H.6.7.1. Standard: Average Speed of Answer (measured from initial connection to answer by a service representative): 60 seconds or less H.6.7.2. Standard: Telephone Call Blockage rate : 5% or less H.6.7.3. Abandoned Call rate at any point: 5% or less

H.6.8. Formulary Search Tool.

H.6.8.1. Standard: The Contractor shall correct 99% of FST content inaccuracies within 2 business day of the inaccuracy being identified.

[All performance metrics included in section C]

H.7. Award Fee. The award fee will be administered semi-annually during each contract option period in accordance with the award fee plan. The award fee pool is shown in Section B and any awarded portions disbursed semi-annually in accordance with the TPharm5 Award Fee Plan (see Attachment J-7). Unearned portions of the award fee pool are not available for any subsequent award fee.

H.8. Integrated Product Teams (IPTs). The Government may develop major contract and program changes through Integrated Product Teams (IPTs). If asked to participate in this process, the Contractor shall provide the appropriate personnel (as agreed to by the CO and the Contractor) to serve on the IPTs to develop and/or improve the technical, business, and implementation approach to proposed TRICARE program changes. The Contractor shall participate in the process with the Government team from concept development through incorporating the change into the contract. This process includes developing budgetary cost estimates, preparing specification/statements of work, and establishing a mutually agreeable equitable adjustment to the contract price as a result of incorporating the change (including pricing, negotiation, etc.). IPTs will not be formed for all contract changes, but may be formed for complex, system-wide issues. The frequency and scheduling of IPT activities will vary depending on the topic.

H.9. Requirements for Minimum Level of Enhanced Safeguarding for Unclassified DoD Information. The Contractor shall implement and maintain information security in its project, enterprise, or company-wide unclassified information technology system(s) in accordance with the requirements set forth in DOD Directive-Type Memorandum (DTM) 08-027, Security of Unclassified DoD Information on Non-DoD Information Systems, July 31, 2009 (incorporating Change 2, September 2, 2011). The Contractor shall, at a minimum, comply with the specified National Institute of Standards and Technology (NIST) Special Publication (SP) 800–171 security controls. If a control is not implemented, the Contractor shall prepare a written determination that explains how either the required security control is not applicable or how an alternative control or protective measure is used to achieve equivalent protection.

H.9.1. Checklist and Certification. In connection with the Enhanced Safeguarding requirements, the Contractor shall annually provide the completed checklist and certification described in, CDRL A040, DoD/NIST Certification Report.

(End of Section H)

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