Title
Resolution to Approve Amendment to Member Services Agreement with Keenan & Associates ($88,000.00)
Memo
The attached Resolution authorizes Amendment and extension of the City’s Member Services Agreement with Keenan & Associates. The Member Services Agreement granted the City membership in the Keenan Pharmacy Purchasing Coalition (“Coalition”) through the City’s current Pharmacy Benefit Manager, Express Scripts, Inc. The Coalition represents employer groups by negotiating discounts for pharmacy products for city employees and retirees, and their respective dependents. Employees and retirees, through their labor agreements or in accordance with the City’s employee benefit plans, have the option to use Express Scripts Network for their pharmacy service needs.
Public Act 106, requires the City to competitively bid our medical, dental and vision coverage every three years. Marsh and McLennan Agency, our healthcare advisor, conducts the bidding on our behalf and recommends a service provider. We completed this bidding process for plan year 2020. Keenan / Express Scripts remained the best option for prescription drug claims processing. We also completed the bidding process for 2022 plan year. Due to the COVID-19 pandemic as well as the potential disruption of benefits for employees and retirees, it was agreed to reevaluate options for the 2023 plan year.
Budget/Fiscal Impact: Coalition membership is on a calendar basis. Cost projections for the Amendment were budgeted in the FY22 budget and will be budgeted in the FY23 budget through the end of the 2022 calendar year. No additional funds are anticipated to be required to provide pharmacy coverage to City employees, retirees, and their respective dependents.
The Express Scripts Network, or its equivalent, is provided for under current labor agreements and our employee benefits program. The plan is administered by Express Scripts.
As part of the City’s Coalition membership benefits, an annual market check is performed to ensure that Coalition members receive the highest level of savings for the pharmacy programs. Pricing adjustments are made when identified.
Fees and premiums have remained the same for the period of January 1, 2022 through December 31, 2022:
$1.75 per member/per month - Keenan Fee
$0.29 per member/per month - Sub-Broker Fee
The overall costs for the program will fluctuate monthly depending both on the number of employees and retirees enrolled in the program during any given month, and the amount of incurred claims actually paid during any given month.
Staff
Prepared by: Jessica Hull, Employee Benefits Supervisor
Reviewed by: Marc Thompson, Interim Director of HR and Labor Relations
Approved by: Milton Dohoney Jr., Interim City Administrator
Body
Whereas, The City provides pharmacy product discount coverage to City employees, their eligible dependents, and retirees and their eligible dependents, in accordance with the employee benefits program and various labor contracts at an estimated annual cost of approximately $9,397,954.00, which is in line with current pharmacy trends;
Whereas, The City has been a member of the Keenan Pharmacy Purchasing Coalition (“Coalition”) for several years with the benefit that the City receives price adjustments in real-time to assure it is receiving the highest possible level of savings for its pharmacy program;
Whereas, Human Resources Services recommends approval of the attached Amendment to Member Services Agreement with Keenan & Associates (“Amendment”) to allow the City to continue in the Coalition;
Whereas, Funds have been appropriated in the FY22 budget to cover projected costs associated with the provision of pharmacy product discount coverage and will be budgeted in FY22 and FY23 to cover the remaining calendar year for the amendment term January 1, 2022 to December 31, 2022; and
Whereas, Keenan Pharmacy Purchasing Coalition complies with the requirements of the City’s Nondiscrimination and Living Wage Ordinances;
RESOLVED, That City Council approve the Amendment for the period January 1, 2022 to December 31, 2022, to provide pharmacy product discounts to City employees, their eligible dependents, retirees, and their eligible dependents;
RESOLVED, That the City Council approve a ten percent (10%) contingency to be expendable from the Risk Fund, subject to City Administrator approval; and
RESOLVED, That the City Council approve the per member expenditure under the Amendment for each eligible City member during the Amendment’s term, payable from the Risk Fund; and
RESOLVED, That the Mayor and City Clerk be authorized to sign the Amendment after approval as to substance by the City Administrator and approval as to form by the City Attorney; and
RESOLVED, That the City Administrator be authorized and directed to execute the necessary contract documentation after approval as to form and content by the City Attorney, and that the City Administrator be authorized to take any further necessary actions to implement this resolution including execution of amendments that do not exceed the amounts authorized herein.