Title
Resolution to Authorize an Agreement with Blue Cross Blue Shield of Michigan / OptumRx for Pharmacy Benefit Management Services Effective January 1, 2023 ($8,964,668)
Memorandum
This resolution authorizes the City to enter into an agreement with Blue Cross Blue Shield of Michigan (BCBSM)/OptumRx for pharmacy benefit management services, which will be added to the existing services provided for administrative claims processing for the City's medical plan. The new contract will commence January 1, 2023 and be in effect through December 31, 2023 (the Agreement). The full contract (including both medical and pharmacy benefit services) will be brought back to the Council in January of 2023 for final approval.
Public Act 106 requires the City to competitively bid our medical, dental and vision coverage every three years. Marsh and McLennan Agency (MMA), our healthcare advisor, conducts the bidding on our behalf and recommends a service provider. We completed this bidding process for plan year 2023. BCBSM/OptumRx was the best option for prescription drug claims processing. By switching from our current provider, Express Scripts, to BCBSM/Optum Rx, the City is expected to save $1.37 million in calendar year 2023 relative to expected costs under the City's current program provided by Express Scripts.
Impacts on the City's operating result will be varied as the fiscal year runs from July-June each year; however, this change will result in cost savings within the prescription drug program in the current and next fiscal years with total amounts to be determined. Overall program fees, including those for group medical benefits administration, have decreased substantially, while Rx 'discounts' and rebates have been greatly enhanced in the City's favor for 2023, in alignment with the most favorable market terms available. Program fees are expected to decrease by an additional $287,000 compared to current 2022 administration fees. The overall costs for the progr...
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