Inter-Departmental Correspondence

Health Department





December 16, 2008







Honorable Board of Supervisors



Charlene A. Silva, Director, Health Department


Sang-ick Chang, CEO, San Mateo Medical Center


Louise Rogers, Director, Behavioral Health & Recovery Services



Amendment to Agreement with MedImpact Healthcare Systems, Inc.



Adopt a Resolution:

1) Waiving the Request for Proposals requirement for pharmacy benefit management services; and


2) Authorizing the President of the Board to execute an Amendment to the Agreement with MedImpact Healthcare Systems, Inc. for pharmacy benefit management services for Behavioral Health and Recovery Services and for the Well Program at the San Mateo Medical Center, extending the term through June 30, 2010, and increasing the maximum obligation by $15,644,000 to a new maximum of $28,888,000.



Commitment: Ensure basic health and safety for all.

Goal 8: Help vulnerable people—the aged, disabled, mentally ill, at-risk youth and others—achieve a better quality of life.


The Amendment to the Agreement contributes to this commitment and goal through the provision of pharmacy benefits management (PBM) services for Behavioral Health and Recovery Services (BHRS) and San Mateo Medical Center (SMMC) to increase the cost effectiveness and availability of pharmacy services.


Performance Measure:


    FY 2007-08

    FY 2008-09

Turnaround time for claims processing – monthly goal of 98% within four seconds.

    Average .09 seconds

    Average 1.2 seconds

System downtime not to exceed 1%.

99.8% system availability

    99% system availability



MedImpact was selected to provide PBM services through a Request for Proposals (RFP) process in 2002. That RFP requested provider commitment for a five-year contract period. MedImpact was also providing PBM services for the Health Plan of San Mateo (HPSM). On September 25, 2007, your Board approved a waiver of the RFP requirement for PBM services and an Agreement with MedImpact for the term July 1, 2007 through December 31, 2008. It was anticipated that an RFP process would be conducted jointly with HPSM prior to the end of the Agreement term. In the fall of this year the HPSM conducted an RFP process for PBM services and selected a new provider of these services.


BHRS currently has a unique funding arrangement with the State Department of Mental Health (DMH) for pharmacy services. DMH is planning to revise the funding structure for these services to match that of other counties, though a specific date has not been determined for this change. Once this occurs, BHRS will no longer be eligible to contract directly for PBM services. BHRS has requested that DMH transfer Medi-Cal funding for pharmacy and laboratory services to HPSM for BHRS clients in order to maintain both service continuity and the current level of services. BHRS and HPSM are negotiating with the State regarding the potential transfer of the program.



The Agreement with MedImpact is being amended to extend the term by eighteen months, through June 30, 2010. There is a provision to terminate the agreement with thirty days notice to accommodate a change in the State funding agreement. This contractor provides the following services: an extensive network of community pharmacies; member eligibility service; a physician eligibility list that keeps up-to-date records of all authorized prescribers; maintenance of a database of all authorized medications; benefit administration; and data reporting to track medications prescribed and dispensed to each client. MedImpact serves indigent BHRS mental health clients, clients served by the Mental Health Plan, and indigent patients of SMMC enrolled in the Well Program. SMMC patients may have prescriptions filled at local community pharmacies and at the SMMC pharmacy. The services for Well Program clients are included in this Amendment in order to maintain continuity of patient care while the Well Program transitions to HPSM.


BHRS and SMMC are requesting a waiver of the RFP process requirement for PBM services for an eighteen-month period. It is expected that State funding for pharmacy services will be clarified during this period. It is anticipated that at that time PBM services for BHRS mental health clients will be provided through the HPSM PBM provider.


The Amendment to the Agreement has been reviewed and approved by County Counsel. The contractor has assured compliance with the County's Contractor Employee Jury Service Ordinance, as well as all other contract provisions that are required by County ordinance and administrative memoranda, including but not limited to insurance, hold harmless, non-discrimination and equal benefits.



The term of the amended Agreement is July 1, 2007 through June 30, 2010. The maximum obligation is increased by $15,644,000 to a new maximum of $28,888,000. The increase in the contract amount is due to anticipated increases in pharmaceutical costs. The maximum for BHRS for FY 2008-09 is $9,340,000, which has been included in the BHRS FY 2008-09 Adopted Budget. Of that amount, State and Federal Medi-Cal will fund $7,939,000 and realignment will fund $934,000. The Net County Cost is $467,000. The maximum obligation for Well Program services for FY 2008-09 is increased by $68,000 to a new maximum of $136,000, which is included in the SMMC FY 2008-09 Adopted Budget. Similar arrangements will be in place for FY 2009-10.