REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
December 19, 2023
FROM
WILLIAM L. GILBERT, Director, Arrowhead Regional Medical Center
SUBJECT
Title
MedCare Pharmacy Network Agreement with MedImpact Health Systems, Inc. for Participation as an In-Network Provider
End
RECOMMENDATION(S)
Recommendation
1. Approve Non-Financial MedCare Pharmacy Network Agreement, including non-standard terms, with MedImpact Health System, Inc. for participation as an in-network provider, retroactively effective January 1, 2023 through December 31, 2027.
2. Direct the Clerk of the Board of Supervisors to maintain confidentiality of the agreement in Recommendation No. 1 above, pursuant to Health and Safety Code Section 1457(c)(1).
(Presenter: William L. Gilbert, Director, 580-6150)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Promote the Countywide Vision.
Provide for the Safety, Health and Social Service Needs of County Residents.
FINANCIAL IMPACT
Approval of this item will not result in the use of Discretionary General Funding (Net County Cost). The MedCare Pharmacy Network Agreement (Agreement) with MedImpact Health System, Inc. (MedImpact) is non-financial in nature.
BACKGROUND INFORMATION
This Agreement with MedImpact will enable Arrowhead Regional Medical Center (ARMC) to participate as a network provider, allowing ARMC to be reimbursed for the medications it administers to Inland Empire Health Plan (IEHP) members in the course of providing medical care. ARMC is requesting that this Agreement be entered retroactively effective on January 1, 2023, to receive payment for IEHP prescriptions filled from the beginning 2023. Due to lengthy contract negotiations with the vendor, it has taken over 11 months to complete negotiations causing this item to become retroactive. Based on this revenue agreement ARMC will receive back payment beginning January 1, 2023.
MedImpact is a pharmacy benefit manager for IEHP. Pharmacy benefit managers function as intermediaries between health plans and pharmaceutical manufacturers, create formularies, negotiate rebates with drug manufacturers, process claims, and make payments to health care providers in their network.
The Agreement is MedImpact’s standard commercial agreement, negotiated by the parties, and omit certain standard County contract terms or include non-standard contract terms, as follows:
1. MedImpact limits its indemnity obligations to claims arising out of its negligent acts or omissions or willful misconduct, except to the extent the claims arise out of the County’s negligence or willful misconduct.
• The County standard contract general indemnity provision requires the contractor to indemnify, defend, and hold County harmless from third party claims arising out of the acts, errors or omissions of any person.
• Potential Impact: MedImpact’s indemnity obligation is more limited in this Agreement compared to the standard County general indemnity provision. In the event a claim arises that falls outside the scope of the limited indemnity obligation, the County could be solely financially liable for the defense and any resulting judgment/settlement.
2. The County agrees to defend and indemnify MedImpact for any claims that arise out of any alleged malpractice negligence, misconduct or breach by the County, its employees, or agents and for the provision of pharmacy services.
• The County standard contract does not include any indemnification or defense by the County of a Contractor.
• Potential Impact: By agreeing to indemnify MedImpact, the County could be contractually waiving the protection of sovereign immunity. Claims that may otherwise be barred against the County, time limited, or expense limited could be brought against MedImpact without such limitations and the County would be responsible to defend and reimburse MedImpact for costs, expenses, and damages.
3. Any disputes that arise between the parties must be resolved by binding arbitration.
• The County standard contract does not require arbitration.
• Potential Impact: The Agreement requires binding arbitration for all disputes between the parties. Disputes that might otherwise be settled in small claims court would incur arbitration costs that would exceed the costs of a small claims action. Arbitration decisions are not appealable.
4. The prevailing party in arbitration is entitled to attorney’s fees.
• The County standard contract requires each party to bear its own costs and attorney fees, regardless of who is the prevailing party.
• Potential Impact: If an arbitration is held to resolve a dispute between the parties, the prevailing party will be entitled to recover reasonable attorneys' fees from the other party.
5. The Agreement does not require MedImpact to meet the County insurance standards.
• The County standard contract requires contractors to carry appropriate insurance at limits and under conditions determined by the County's Risk Management Department.
• Potential Impact: The Agreement does not include County standard insurance requirements. This means that the County has no assurance that MedImpact will be financially responsible for claims that may arise under the Agreement, which could result in expenses to the County.
ARMC recommends approval of the Agreement, including the non-standard terms, to provide for the safety, health and social needs of County residents by ensuring that ARMC is able to obtain reimbursements for the medications it administers to IEHP members.
PROCUREMENT
Not applicable.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Charles Phan, Deputy County Counsel, 387-5455) on December 15, 2023; Risk Management (Victor Tordesillas, Director, 386-8623) on November 2, 2023; ARMC Finance (Chen Wu, Budget and Finance Officer, 580-3165) on November 27, 2023; Finance (Jenny Yang, Administrative Analyst, 387-4884) on November 29, 2023; and County Finance and Administration (Valerie Clay, Deputy Executive Officer, 387-5423) on November 30, 2023.