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MEETING NOTICE AND AGENDA

Name of Organization: Public Employees’ Benefits Program Board Date and Time of Meeting: May 7, 2009 9:00 a.m. Place of Meeting: The Bryan Building

901 South Stewart Street, First Floor, Suite 1002 Carson City, Nevada

Video Conferencing: Department of Employment Training & Rehabilitation 2800 East St. Louis Avenue, Conference Room C

Las Vegas, Nevada Internet: www.pebp.state.nv.us

AGENDA

I. Open Meeting

* II. Approve Action Minutes from March 12, 2009 Board meeting

* III. Approve Minutes from February 19 2009 Board teleconference meeting

* IV. Discussion and possible action regarding 2009 legislative proposals1 affecting Chapter 287 of the Nevada Revised Statutes:

A. Assembly Bills 87, 162, and 399

B. Senate Bills 103, 283, 284, 381 and 400

* V. Discussion and possible action regarding the estimated State subsidy and possible Legislative proposals regarding plan design changes and the impact on Plan Year 2010 (November 1, 2009 – June 30, 2009) rates and participant contributions

1 Current 2009 Legislative Bills that may impact the Public Employees’ Benefits Program (PEBP) are listed under “PEBP Legislation” at www.pebp.state.nv.us.

STATE OF NEVADA

PUBLIC EMPLOYEES’ BENEFITS PROGRAM 901 S. Stewart Street, Suite 1001

Carson City, Nevada 89701 Telephone (775) 684-7000 · (800) 326-5496

Fax (775) 684-7028 www.pebp.state.nv.us

RANDALL J. KIRNER, EdD Board Chairman

JIM GIBBONS Governor

LESLIE A. JOHNSTONE Executive Officer

* VI. Discussion and possible action regarding modifications to the utilization management practices for the self-funded medical benefits beginning November 1, 2009

* VII. Discussion and possible action regarding the self-funded pharmacy benefit claim trend and possible plan design modifications beginning November 1, 2009

* VIII. Discussion and possible action regarding the draft in-state medical preferred provider network request for proposal effective July 1, 2010.

IX. Informational item regarding status of dental preferred provider organization network vendor effective July 1, 2009.

* X. Consideration and possible action regarding settlement of the following litigation: Wermers v. Standard Insurance Company and State of Nevada, Public Employee’s Benefits Program (Case No. CV08-00527). Action may be in the form of accepting or rejecting a proposed settlement.

XI. Public Comment

* XII. ADJOURNMENT

* Denotes items on which Board may take action. ** Denotes possible closed session. Unless noted as an action item, discussion of any item raised during a report or public comment is limited to that necessary for clarification or necessary to decide whether to place the item on a future agenda. All times are approximate. The Board reserves the right to take items in a different order to accomplish business in the most efficient manner. The Board reserves the right to limit Internet broadcasting during portions of the meeting that need to be confidential or closed. Note: We are pleased to make reasonable accommodations for members of the public who are disabled and wish to attend the meeting. If special arrangements for the meeting are necessary, please notify the Public Employees’ Benefits Program, in writing, at 901 South Stewart Street, Suite 1001, Carson City, NV 89701, or call Vicki Smerdon at (775) 684-7000, as soon as possible. Copies of both the Public Employees’ Benefits Program (PEBP) Board Meeting Action Minutes and Open Meeting Minutes in transcript form are available, at no charge, for inspection at the PEBP Office, 901 South Stewart Street, Suite 1001, Carson City, Nevada, 89701 or on the PEBP web site at www.pebp.state.nv.us. For additional information, contact Vicki Smerdon at (775) 684-7000 or (800) 326-5496. Notice of this meeting was posted on or before 9:00 a.m. on the third working day before the meeting at the following locations: BLASDEL BUILDING, 209 East Musser Street, Carson City; PUBLIC EMPLOYEES’ BENEFITS PROGRAM, 901 South Stewart Street, Suite 1001, Carson City; THE GRANT SAWYER STATE OFFICE BUILDING, 555 East Washington Avenue, Las Vegas, THE LEGISLATIVE BUILDING, 401 South Carson Street, Carson City, THE DEPARTMENT OF EMPLOYMENT TRAINING & REHABILITATION, 2800 East St. Louis Avenue, Las Vegas and on the PEBP web site at www.pebp.state.nv.us. In addition, the agenda was mailed to groups and individuals as requested.

I.

Open

Meeting

II.

Approve

Action

Minutes

of 6

STATE OF NEVADA PUBLIC EMPLOYEES’ BENEFITS PROGRAM BOARD

Public Employees’ Benefits Program Board Meeting Room 901 South Stewart Street, Carson City, Nevada

Videoconference to the Department of Education, Training and Rehabilitation 2800 East St. Louis Avenue, Las Vegas, Nevada ---------------------------------------------------------------

ACTION MINUTES (Subject to Board Approval) Thursday, March 12, 2009

MEMBERS PRESENT: Dr. Randy Kirner, EdD, Chairman

Ms. Jacque Ewing-Taylor, Member Ms. Julia Teska, Member Mr. Van Mouradian, Member Mr. George Campbell, Member Mr. Leo Drozdoff, Member MEMBERS PRESENT IN LAS VEGAS VIA VIDEOCONFERENCE: Mr. J. Angus MacEachern, Member Ms. Teresa Thienhaus, Member FOR THE BOARD: Mr. Michael Somps, Senior Deputy Attorney General FOR STAFF: Ms. Leslie A. Johnstone, Executive Officer Ms. Kateri Cavin, Operations Officer Ms. Donna Lopez, Quality Control Officer Mr. Jon Hager, Chief Financial Officer Ms. Vicki Smerdon, Executive Assistant Mr. Tim Nimmer, Actuarial Consultant I. OPEN MEETING

Chairman Kirner opened the meeting at 9:00 a.m.

II. APPROVE ACTION MINUTES FROM FEBRUARY 5, 2009 BOARD MEETING

– (Action)

MOTION: Move to approve the minutes BY: Member Mouradian SECOND: Member Teska

VOTE: The vote was unanimously in favor of the motion.

Public Employees’ Benefits Program Board Meeting Action Minutes March 12, 2009 Board Meeting

Page 2 of 6

III. PUBLIC HEARING TO RECEIVE COMMENT AND TAKE POSSIBLE ACTION ON THE PROPOSED AMENDMENT OF NEVADA ADMINISTRATIVE CODE 287.100 MODIFYING THE DEFINITION OF THE “PLAN YEAR” PUBLIC COMMENT

• Mr. Roger Maillard – AFSCME Retirees

MOTION: Move to approve the adoption of the definition of Plan Year under NAC 287.100.

BY: Member Teska SECOND: Member Drozdoff

VOTE: The vote was unanimously in favor of the motion. IV. DISCUSSION AND POSSIBLE ACTION REGARDING THE

IMPLEMENTATION OF PLAN YEAR 2009 EXTENSION TO OCTOBER 31, 2009 – (Action)

MOTION: Move to approve staff recommendations

BY: Member Teska SECOND: Member Mouradian

VOTE: The vote was unanimously in favor of the motion. V. DISCUSSION AND POSSIBLE ACTION REGARDING IMPACT OF

GOVERNOR’S RECOMMENDED BUDGET ON PLAN YEAR 2010 CONTRIBUTION RATES AND LONG TERM LIABILITIES REPORTED UNDER GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENTS 43/45 – (Action) No action taken on this agenda item

VI. DISCUSSION AND POSSIBLE ACTION REGARDING 2009 LEGISLATIVE

PROPOSALS AFFECTING PEBP – (Action)

A. Assembly Bills 87, 162 and 167 B. Senate Bills 87 and 103

No action taken on this agenda item

VII. HEALTH CLAIM AUDITORS, INC. AUDIT ON FISERV HEALTH PLAN

ADMINISTRATORS FOR THE QUARTER ENDING DECEMBER 31, 2008 – (Action)

A. Presentation of report by Health Claim Auditors B. Fiserv Health Plan Administrators response to audit report C. Discussion and possible action regarding audit report findings



Page 3 of 6

VIII. DISCUSSION AND POSSIBLE ACTION REGARDING SELECTED VENDOR

CONTRACTS, MODIFICATIONS TO THE VENDOR PROCUREMENT SCHEDULE AND APPROACH TO UPCOMING VENDOR REQUESTS FOR PROPOSALS – (Action)

MOTION: Move to approve the extension of the enrollment and eligibility

system Morneau Sobeco with the current contractor through December 31, 2012

BY: Member Teska SECOND: Member Campbell

VOTE: The vote was unanimously in favor of the motion.

MOTION: Move to approve the extension of the third-party contract with Fiserv UMR through June 30, 2012

BY: Member Mouradian SECOND: Member Teska

VOTE: The vote was unanimously in favor of the motion

MOTION: Move to follow staff recommendations on the RFP for the network with the inclusion that they bid regionally as well as statewide networks, and that the outline of the draft of the RFP be brought back to the Board

BY: Member Ewing-Taylor SECOND: Member Teska


MOTION: Move that the staff be directed to move forward with the proposal for an RFP for a comprehensive wellness vendor and that the RFP be brought back to the Board before it is released.

BY: Member Ewing-Taylor SECOND: Member Teska


MOTION: Move that on short term disability we have a short term two-year agreement to align with the extension on the basic and the voluntary life so that they all get to a June 30, 2013 expiration date.

BY: Member Mouradian SECOND: Member Teska

VOTE: The vote was unanimously in favor of the motion IX. DISCUSSION AND POSSIBLE ACTION CONCERNING THE WASHOE-

STOREY CONSERVATION DISTRICT APPLICATION TO PARTICIPATE WITH PEBP – (Action)


Page 4 of 6

MOTION: Move to approve the application and the rates with an effective

date with PEBP of April 1, 2009 BY: Member Campbell SECOND: Member Teska

VOTE: The vote was unanimously in favor of the motion. X. DISCUSSION AND POSSIBLE ACTION REGARDING CARDIAC WELLNESS

PILOT PROJECT, TO INCLUDE THE MANNER AND METHOD OF ADMINISTERING THE PROGRAM – (Action)


XI. PRESENTATION BY CHIEF FINANCIAL OFFICER OF SELF-FUNDED PLAN

UTILIZATION REPORT FOR THE QUARTER ENDING DECEMBER 31, 2008 – (Information Only)

XII. INFORMATION ITEM – IMPACT OF NEW FEDERAL REQUIREMENTS

REGARDING CONTINUATION OF COVERAGE (COBRA) BILLINGS AND PLAN ADMINISTRATION

XIII. INFORMATION ITEM – VENDOR REPORTS FOR QUARTER ENDING

DECEMBER 31, 2008 XIV. INFORMATION ITEM – PEBP STAFF REPORTS XV. PUBLIC COMMENT

• Mr. Marty Bibb – Retired Public Employees of Nevada • Mr. Pat Brunker – Retired Teacher • Mr. Roger Maillard – AFSCME Local 4041 Retirees

XVI. ADJOURNMENT

MOTION: Move to adjourn. BY: Member Teska

SECOND: Member Mouradian VOTE: The vote was unanimously in favor of the motion.

The meeting concluded at 11:28 a.m.


Page 5 of 6

PEBP BOARD MINUTES

Copies of both the Public Employees’ Benefits Program (PEBP) Board Meeting Action Minutes and Open Meeting Minutes in transcript form

at no charge are available for inspection at The PEBP Office

(775) 684-7000 or (800) 326-5496 901 South Stewart Street, Suite 1001

Carson City, NV 89701

Or on the PEBP Web site at www.pebp.state.nv.us

Free

Copies of audio recordings of the PEBP Board meetings conducted in the Legislature Building are available in CD recording format through

The Legislative Counsel Bureau Publications (775) 684-6835

$5 plus $4.50 for shipping

III.

Approve Minutes from

February 19, 2009

Board teleconference

meeting

of 5

STATE OF NEVADA PUBLIC EMPLOYEES’ BENEFITS PROGRAM BOARD

Public Employees’ Benefits Program Board Meeting Room 901 South Stewart Street, Carson City, Nevada

--------------------------------------------------------------- MINUTES (Subject to Board Approval)

Thursday, February 19, 2009 MEMBERS PRESENT: Mr. George Campbell, Member Mr. Leo Drozdoff, Member Ms. Teresa Thienhaus, Member MEMBERS PRESENT Dr. Randy Kirner, EdD, Chairman VIA: Ms. Jacque Ewing-Taylor, Member TELECONFERENCE: Mr. Van Mouradian, Member

Mr. J. Angus MacEachern, Member FOR THE BOARD: Mr. Michael Wilson, Chief Deputy Attorney General FOR STAFF: Ms. Leslie A. Johnstone, Executive Officer Ms. Kateri Cavin, Operations Officer Mr. Jon Hager, Chief Financial Officer Ms. Vicki Smerdon, Executive Assistant I. OPEN MEETING

Chairman Kirner opened the meeting at 10:31 a.m.

II. DISCUSSION AND POSSIBLE ACTION REGARDING 2009 LEGISLATIVE

BILLS THAT MAY IMPACT THE PUBLIC EMPLOYEES’ BENEFITS PROGRAM, INCLUDING THE FOLLOWING: – (Action)

A. ASSEMBLY BILL 87 B. SENATE BILL 87 C. SENATE BILL 103

DISCUSSION: Executive Officer Ms. Johnstone presented three bills for Board update. The first Bill is Assembly Bill 87. Ms. Johnstone explained the Bill was on the agenda because PEBP submitted a fiscal impact statement. This Bill would modify how state agencies would deal with the collection of debts owed to the state. As introduced the Bill would require agencies to turn to the State Controller for collection of any debt over 60 days old. There would be an administrative hearing process. PEBP put in a fiscal note for two reasons. One was a $10 fee would be assessed at the time the collection was turned over to the Controller to cover the cost of mailing to the individual notice of the collection effort, and PEBP also estimated the cost of additional staff time that would be required to attend the administrative hearings that would be permissible

Public Employees’ Benefits Program Board Meeting Action Minutes February 19, 2009 Board Meeting

Page 2 of 5

under this statute. The fiscal note for the biennium was $19,892. It is scheduled to be heard in front of Assembly Government Affairs February 25. PEBP’s Chief Financial Officer Jon Hager has been in contact with the Controller’s Office and there may be some amendments submitted by the Controller’s Office. The amendment would make it permissive rather than mandatory. PEBP will watch this Bill as it goes through the process. DISCUSSION: Ms. Johnstone presented information on Senate Bill 87. This Bill does not have a Fiscal impact on the PEBP but it would affect Chapter 287 of the statutes; although it would not be in the PEBP portion of the statute. This Bill allows local government plans to uncommingle their actives’ and retirees’ claims history when setting their rates. With the implementation of Senate Bill 544 from the 2007 Session, where PEBP has very limited local government participation in the Program, it makes it less of an issue for PEBP than it would have been if that eligibility restriction had not been put in place. Ms. Johnstone stated prior to 2008 local government retirees were put into the position of judging the PEBP Plan against their local plans. Ms. Johnstone stated at that time she thought it was important that we all be operating under the same rules and that would no longer be the case with this Bill. This Bill was heard in front of Senate Legislative Operations and Elections Committee this week, and PEBP was there, but PEBP did not make any comments. DISCUSSION: Ms. Johnstone presented information on Senate Bill 103. This is PEBP’s housekeeping Bill. This Bill includes clarifying language on how PEBP implemented Senate Bill 544 and Senate Bill 547 from the last Session. This Bill contains stronger language for PEBP to pursue collection from local jurisdictions that are not paying the retiree benefit which, at this time, is limited to the Las Vegas Metropolitan Police Department (LVMPD). PEBP included a fiscal note on this Bill that, in December, was $642,000. Ms. Johnstone stated that was the LVMPD late fees and the retiree subsidies that occurred prior to July 2005. Ms. Johnstone stated at the hearing that two areas came up. One was Senator McGinnis submitted an amendment responding to a constituent complaint about lack of knowledge of the eligibility cutoff that occurred as a result of Senate Bill 544. The amendment, if it is accepted, would require PEBP to allow a retiree to join the plan if somehow PEBP shows that they were not notified of the Senate Bill 544 deadline. Ms. Johnstone explained if that does go through there will be some administrative issues because, when you are doing something unpopular, the only way you can truly do it is to be consistent, and PEBP did not send out a notice to retirees, PEBP did not know who they were. Ms. Johnstone stated some jurisdictions might have sent out notices, and some might not have, so it may be awkward if PEBP has to implement it. Chairman Kirner asked Ms. Johnstone if she had a chance to comment on it. Ms Johnstone responded not in that setting. Ms. Johnstone had not seen the amendment in advance, and Senator McGinnis apologized. Ms. Johnstone stated PEBP was familiar with this particular constituent’s issue. Ms. Johnstone stated PEBP submitted a request for amendments for wording clarification.


Page 3 of 5

Ms. Johnstone also explained PEBP has gone through the dispute with LVMPD and PEBP has become more sensitive to potential arguments from that jurisdiction, or any other jurisdiction, about the wording in PEBP’s Bills. Ms. Johnstone stated there were some components having to do with that.

Ms. Johnstone explained PEBP asked the flexible benefit mandated in Senate Bill 544 for Medicare retirees, where PEBP implemented the Value Plan that provides dental, vision and prescription benefits, PEBP asked it be made permissive in the Bill starting July 1, 2010. Ms. Johnstone stated in the amendment she asked that it be made permissive November 1, 2009, because with the extension of the current Plan Year PEBP would have time to notify people and incorporate it into the rates for the upcoming Plan Year.

Ms. Johnstone stated the attorney from Las Vegas Metropolitan Police Department made a speech and gave arguments about why they were in the right and PEBP was in the wrong. Senator Raggio was very familiar with this issue so he helped by letting the other committee members know this is not a new issue, and we will see where it goes from there. With the Fiscal note attached to this Bill it will also go to the Finance Committee on the Senate side before it leaves that house. There is more familiarity in that Committee than in the Senate Operations and Elections Committee.

DISCUSSION: Member Campbell stated on Assembly Bill 87 he was not in favor of that unless the Bill is permissive. The last thing he wanted is plan participants being turned over to collection agencies and that could happen. Member Campbell stated if someone is behind and it becomes necessary to go after them he would want PEBP to go after them, not the Controller’s agency. DISCUSSION: Member Thienhaus asked Ms. Johnstone if there was any indication from the Committee on the part about the SB103, that would allow pursuing local government for the premiums, and could Ms. Johnstone gauge any reaction and whether or not this is going go forward? Ms. Johnstone responded the most common area of questioning had to do with the fairness attached to the provision that would allow PEBP to terminate a retirees’ coverage if their employer did not pay. Ms. Johnstone stated she made her testimony clear that PEBP is caught in the middle and if there is another way to make the program whole financially that’s fine. Ms. Johnstone stated the Committee asked their Legal Counsel, Brenda Erdoes, to come up with something creative. Chairman Kirner asked if it was something different than what PEBP submitted. Ms. Johnstone responded yes, that was the most common area of questioning. Ms. Johnstone said she doesn’t know the members well enough, other than Senator Raggio, to know how they interpreted Metro’s legal counsel’s testimony. Ms. Johnstone stated if they don’t know the topic she supposed Metro’s legal counsel could be quite persuasive. No action taken on this agenda item.


Page 4 of 5

III. PUBLIC COMMENT

Ms. Leslie Johnstone – PEBP Executive Officer Ms. Johnstone stated PEBP had the first official budget hearing for the session with the Joint General Government Finance Sub-Committee yesterday and she repeated the same presentation that she gave during the pre-session, the exception to that being that PEBP now has preliminary rates and contribution amounts that would be accessed under the Governor’s budget, and the presentation included some samples. Ms. Johnstone stated it was just a participant only and participant plus spouse tier. The reason she did that was because of the range, the low and the high end of the range impact. Ms. Johnstone stated the retirees can indicate their impression. There were a lot of retirees in the room so the Chairman was mindful allocating enough time for the audience to comment. Ms. Johnstone went through the presentation quickly, and didn’t focus on the rates or GASB projection because it was a packed house including an overflow room full of retirees. Member Drozdoff Member Drozdoff asked Ms. Johnstone that he heard there were people from the SAGE Commission in the audience but did they speak? Ms. Johnstone responded SAGE Commission Executive Director Frank Partlow and primary staff member Perry Comeaux were in the audience. They were not called to speak. Ms. Johnstone stated Jodi Stephens represented the Governor’s Office. Mr. Roger Maillard – AFSCME Local 4041 Retirees Mr. Maillard stated yesterday’s meeting was significant and Ms. Johnstone gave a true accounting of it. Mr. Maillard stated there were over 100 retirees there and they got some very good publicity on the front page of the Carson newspaper this morning on some of the comments made. Mr. Maillard stated Mr. Partlow was sitting in the front row next to him and when it came time for PEBP’s item on the agenda Mr. Partlow moved to the back row so he was with Mr. Comeaux. Mr. Maillard stated Mr. Partlow went into hiding as far as he was concerned. Mr. Maillard stated it was a good meeting and he thanked Senator Horsford after the meeting for doing his best to allow everyone to comment. Mr. Maillard stated everybody who wanted to be heard got heard. Mr. Maillard stated he is always an optimist because if he is not an optimist during legislative session he doesn’t know how he would survive. Mr. Maillard stated he came out of there feeling a lot better because the gist of the questions and the comments did make him feel more comfortable with regards to retirees – people who are currently retired and people who are coming up to retire. Mr. Maillard stated Ms. Johnstone did a wonderful job. Mr. Maillard stated Senator Horsford was trying to get them to move along because he knew there was going to be a lot of comment. Mr. Marty Bibb – Retired Public Employees of Nevada


Page 5 of 5

Mr. Bibb stated Mr. Maillard had given an accurate description of what happened. Mr. Bibb stated there were a number of groups involved, including not only the AFSCME retirees, but also RPEN, the Nevada System of Higher Education, the teachers, and the AFSCME actives were represented there. Mr. Bibb stated there were several rather persuasive presentations from others in Las Vegas, where there were about 30 people, as well as Carson City. Mr. Bibb stated there was an overflow crowd that had to be housed in a room that didn’t have the ability for witnesses to speak but to at least observe the presentations. Mr. Bibb stated the Executive Officer did a thorough job of presenting the Executive Branch proposal, and while none of them particularly liked all the budget cuts proposed here to date by this Board they understood it was something that had to be done. Mr. Bibb stated it was felt that it was not easy for the Board to make those decisions because they affect folk’s lives. Mr. Bibb stated he thought it went very well and he thought it was very important for the Committee to recognize visually what the concerns were for those in the plan. Mr. Bibb stated probably nine out of ten there were retirees and a couple representing local government, although there was no one who took the opportunity to speak on behalf of the budget. Ms. Leslie Johnstone

Ms. Johnstone stated she would like to indicate that PEBP would add two additional bills for informational items to the Board next time. She stated one is Assembly Bill 162 which will require additional benefits for Autism that the PEBP Plan does not currently provide. PEBP is submitting a fiscal note attached to that Bill. Ms. Johnstone stated PEBP also will have Assembly Bill 167 requiring plans to cover acupuncture which the PEBP Program covers so there is no fiscal note attached to that.

IV. ADJOURNMENT The meeting concluded at 10:56 a.m.

IV.

Discussion and possible action

regarding 2009 legislative

proposals affecting Chapter

287 of the Nevada Revised

Statutes:

A. Assembly Bills 87, 162

and 399

B. Senate Bills 103, 283,

284, 381 and 400

V.


regarding the estimated State

subsidy and possible

Legislative proposals

regarding plan design changes

and the impact on Plan Year

2010 (November 1, 2009 –

June 30, 2010) rates and

participant contributions

AGENDA ITEM x Action Item Information Only

Date: May 7, 2009

Item Number: V

Title: Estimated State Subsidy and Plan Design Changes for Plan Year 2010

Summary The PEBP Board will be asked at their June 30, 2009 meeting to approve contribution rates for Plan Year 2010 (effective November 1, 2009). In preparation for that action, today’s agenda item addresses the estimated State subsidy and the final plan design to be included in those contribution calculations. Due to the continued Legislative deliberations regarding the State budget, much of the information will be presented verbally by PEBP staff during the May 7, 2009 meeting. As the Board and most stakeholders are aware, the following factors go into the determination of contribution rates:

• Claims experience and projected trends – Aon Consulting is prepared to analyze the historical claims experience for PEBP’s self-funded benefits and incorporate those into the projections for Plan Year 2010.

• State subsidy for employees and retirees – A verbal update will be provided by staff at the meeting as to the status of State subsidies. A summary of the PEBP Board subsidization percentages presented to the Department of Administration in response to the budget target is shown below. Also shown is the subsidization included in the Governor’s Recommended Budget.

• Plan design –A summary of the PEBP Board plan design changes that were

presented to the Department of Administration in response to the budget target are listed below. The Health Maintenance Organization (HMO) proposals to comply

STATE OF NEVADA







Plan Year 2010 May 7, 2009 Page 2

with holding premium increases to no more than 5% are also included in this agenda item. The Governor’s Recommended Budget did not propose any other plan changes. A verbal update will be provided by staff at the meeting as to any Legislative action in this area. Staff has continued to review various aspects of plan cost and have included four additional areas for Board consideration:

a. Limiting plan payment for weight loss surgeries performed by out of network providers. A proposal is included in this report.

b. Adding additional pre-certification criteria for weight loss surgery. A proposal is included in this report.

c. Refinements to utilization management practices involving spinal care. A separate agenda item addresses this proposal.

d. Modifications to prescription drug co-payments. A separate agenda item addresses this proposal.

Report State Subsidies

• The PEBP recommendation to meet the budget target would reduce the composite

subsidies approximately 5% for employees and retirees. • The Governor’s Recommended Budget would make the following changes in State

subsidy: o Reduce the subsidy percentage for active employees to 75% o Eliminate subsidy for any employee who retires on or after July 1, 2009 o Eliminate subsidy for any retiree eligible for Medicare o Reduce subsidy for existing non-Medicare retiree by 25% in FY 2010 and an

additional 25% in FY 2011 • The resulting subsidization for the Governor’s Recommended Budget would be as

follows compared to current amounts. For informational purposes, the PEBP Board proposal is also reflected:


Current Subsidy

PEBP Proposal

Gov Rec FY2010

Gov Rec FY 2011

Active PrimaryBase Plan 100% 94% 75% 75%Other Plans 95% 94% 75% 75%

Active DependentBase Plan 85% 74% 75% 75%Other Plans 75% 74% 75% 75%

Retiree PrimaryBase Plan 73% 65% 55% 37%Other Plans 67% 65% 50% 34%

Retiree Dependent

Base Plan 51% 43% 38% 26%Other Plans 45% 43% 34% 23%

Non-Medicare Retirees retired prior to 7/1/09

The Board will recall that in the past, a ‘supplemental subsidy’ has been included in the contribution calculations in order to smooth out the impact of dramatic changes in rates. This ‘supplemental subsidy’ has been funded from the Reserve for Rate Stabilization. Due to the uncertainties surrounding the State subsidies at this time, staff will develop the contribution rates with one or more suggestions as to the application of any ‘supplemental subsidy’ in the agenda item to be considered on June 30, 2009. Plan Design The following items were tentatively approved by the PEBP Board in response to the Governor’s budget target: • Remove Health Assessment Questionnaire and its plan incentives (e.g. 50% reduction

in deductible levels and increase in annual dental benefit) • Implement single deductible option for the self-funded plan ($725 individual and

$1,450 family) • Index annual out-of-pocket and annual deductibles beginning July 1, 2010 • Eliminate ADD/ADHD neurotherapy & psychotherapy • Hold HMO increases to 5%

o HPN proposes modifying the prescription drug plan as shown in Attachment A in order to hold premium increases to 5%

o Hometown Health proposes increases in most aspects of plan design in order to hold premium increases to 5%. The comparison to current plan design is shown in Attachment B

At this time, PEBP staff would propose two additional modifications to plan design involving weight loss surgeries. First is to limit plan cost for weight loss surgeries performed by out of network providers as described below. The Plan has experienced an

Plan Year 2010 May 7, 2009 Page 4 increase by out of network providers during the past year. Even with the reduced out of network benefits, some of the costs have been in excess of in-network benefits paid.

Proposed modification to Master Plan Document:

“Weight loss surgeries should be performed at an in-network (PPO) outpatient or inpatient facility. If services are provided at an out of network facility, payment will be reduced to an amount equal to that of the nearest in-network outpatient or inpatient facility or the usual and customary charge, whichever is less. PEBP or its designee will determine the nearest in-network facility.”

The second change in regards to weight loss surgeries would be to add the following pre-certification criteria in the Plan Year 2010 Master Plan Document. Due to the increasing number of requests for weight loss surgeries, staff considers these enhanced criteria important for increasing the probability of positive outcomes for plan participants.

Proposed modification to Master Plan Document:

Clinical Criteria for Weight Loss Surgeries Procedure is indicated when ALL of the following are present:

• Treatment indicated by ANY ONE of the following: o Patient has a BMI exceeding 40 kg/m2. o Patient's BMI is greater than 35 kg/m2 and two or more clinically

serious conditions exist (e.g., obesity hypoventilation, sleep apnea, diabetes, hypertension (high blood pressure), cardiomyopathy, musculoskeletal dysfunction, joint replacement, GERD, hypertriglyceridemia or hypercholesteremia, back pain, urinary incontinence, renal failure, arthritis).

• Surgical intervention indicated because patient has ALL of the following present:

o Compliance for at least 6 months ( without a gap) within the past year of a multidisciplinary non-surgical weight management program observed by a physician including low- or very low-calorie diet, supervised exercise, behavior modification, and support, with possible medication.

o Compliance with a 6 month dietician program within the past year, focusing on diet and diet compliance, concurrent with the weight management program

o No thyroid disorder (excluding thyroid problems currently being successfully treated) found by your physician [e.g., an endocrine (hormone) disorder]

o Full growth over the age of 18. o PEPB participant will sign a contract of agreement to attend

support meetings, monthly for 1 year post surgery (provided by participating providers).


The Program will allow online waiver for patients residing 50 miles or greater from the obesity surgeon’s facility where the support meeting are held.

o PEBP participant is receiving treatment in a Obesity Surgery practice, characterized by surgeons experienced with gastric bypass and lap band a multidisciplinary approach, including ALL of the following:

Preoperative medical consultation and approval Preoperative psychiatric consultation and approval Nutritional counseling Exercise counseling Psychological counseling Support group meetings

Recommendation Instruct staff to proceed with development of Plan Year 2010 contribution rates based upon the following: 1. State subsidy as finally approved by the Legislature

2. Plan design changes listed above and as may be modified based upon any action

taken at today’s meeting for separate agenda items regarding a. out of network weight loss surgery b. additional pre-certification criteria for weight loss surgeries c. utilization management practices involving spinal care, and/or d. modification to prescription drug co-payments

3. HMO plan design modifications as proposed

Plan Year 2010 Attachment A May 7, 2009 Page 6 HPN Plan Design Changes

Covered Services

Current Plan Benefits Proposed Plan Design

effective 11/1/09

State of Nevada HPN 15 State of Nevada HPN 15

Medical Services

Non Specialist Office Visit

$15 per visit

$15 per visit

Specialist Office Visit

$15 per visit

$15 per visit

Hospital Services

In-Patient

$200 per admission

$200 per admission

Out-Patient

$50 per admission

$50 per admission

Physician Surgical Services

In-Patient

No Charge

No Charge Out-Patient

No Charge

No Charge

Physicians Office

No Charge

No Charge

Anesthesia

No Charge

No Charge

Emergency Services within the Service Area

Physician Services

$25 per visit

$25 per visit

Emergency Room

$50 per visit $50 per visit

Ambulance

No Charge

No Charge

Urgent Care Facility

$15 per visit

$15 per visit

Emergency Services outside the Service Area

Physician Services

$25 per visit

$25 per visit

Emergency Room

$50 per visit

$50 per visit

Ambulance

No Charge

No Charge

Urgent Care Facility

$15 per visit

$15 per visit

Diagnostic

Routine Lab

No charge

No charge

Routine X-Ray

No charge

No charge

Prescription Drug $7/$30/$50 $7/$35/$55

Plan Year 2010 Attachment B May 7, 2009 Page 7 Hometown Health Plan Design Changes

See chart on following two pages

State of NevadaSchedule of BenefitsComparison of 2009 Plan to 2010 Plan

2009 2010

Benefit Category Benefit Limits & CommentsHMO 15-0200 A OPEN

2008 (SON)HMO 20-0500 D OPEN

2010 (SON)

RX $07-$30 ($50) RX $07-$30 ($50)

Medical BenefitsOut-of-Pocket Co-Pay Maximum -

Single / Family $3,500 / $7,000 $3,500 / $7,000

Physician Office Visits –Physical exams Primary Care Physician $15 co-pay / visit $20 co-pay / visit

Specialty Care Physician $15 co-pay / visit $30 co-pay / visit

Obstetrics and gynecology Primary Care Physician $15 co-pay / visit $20 co-pay / visit


Vision and hearing exams Primary Care Physician $15 co-pay / visit $20 co-pay / visit


Wellness visit Primary Care Physician $15 co-pay / visit $20 co-pay / visit


Hospital Inpatient Services – (semi-private room, physician services, meals, operating room, imaging, and laboratory services)Acute care hospital Includes surgical procedures $200 co-pay / admit $500 co-pay / day

(3 day max copay)

Outpatient observation Includes surgical procedures $200 co-pay / admit $500 co-pay / day

(3 day max copay)

Skilled nursing facility Includes surgical procedures $200 co-pay / admit $500 co-pay / day

(3 day max copay)

Rehabilitation facility Includes surgical procedures $200 co-pay / admit $500 co-pay / day

(3 day max copay)

Emergency & Urgent Care ServicesUrgent Care Center Services Co-payments are waived if the member is admitted to the

hospital. Out-of-pocket max does not apply$15 co-pay / visit $35 co-pay / visit

Emergency Room Services Co-payments are waived if the member is admitted to the hospital.

$75 co-pay / visit $100 co-pay / visit

Ambulance Services (ground) Refer to the EOC for specific coverage limits and exclusions. Ambulance service co-payments are waived if the member is admitted to the hospital.

$100 co-pay / trip $100 co-pay / trip

Ambulance Services (air and water) Refer to the EOC for specific coverage limits and exclusions. Ambulance service co-payments are waived if the member is admitted to the hospital.

$100 co-pay / trip $200 co-pay / trip

Imaging & Diagnostic Testing –Computed Tomography (CT) $100 co-pay / procedure $200 co-pay / procedure

Magnetic Resonance Imaging (MRI)

General Nuclear Medicine

Positron Emission Tomography (PET) $750 co-pay / procedure $750 co-pay / procedure

All other imaging services Includes x-rays no charge no charge

Laboratory Services –General laboratory services Includes pathology no charge no charge

Preventative Screenings –Mammography screening Primary Care Physician $15 co-pay / visit $20 co-pay / visit


Colorectal screening Primary Care Physician $15 co-pay / visit $20 co-pay / visit


Pap smear Primary Care Physician $15 co-pay / visit $20 co-pay / visit


PSA test Primary Care Physician $15 co-pay / visit $20 co-pay / visit


Outpatient Therapy and Rehabilitation Services –Speech therapy

Occupational therapy

Physical therapy

Wound therapy

Chemotherapy

Infusion therapy

Radiation therapy

Cardiac and pulmonary rehabilitation Authorization required in excess of 40 visits per member per calendar year


Surgical Services –Performed in physician’s office Primary Care Physician $15 co-pay / visit $20 co-pay / visit


Performed in outpatient facility (same day surgery) Includes physician services $200 co-pay / procedure $250 co-pay / procedure

$20 co-pay / visit

$20 co-pay / visit

Authorization required in excess of 30 aggregate visits per member per calendar year.

$15 co-pay / visit

$15 co-pay / visit

State of NevadaSchedule of BenefitsComparison of 2009 Plan to 2010 Plan

2009 2010

Benefit Category Benefit Limits & CommentsHMO 15-0200 A OPEN

2008 (SON)HMO 20-0500 D OPEN

2010 (SON)

RX $07-$30 ($50) RX $07-$30 ($50)

Medical Supplies –Durable medical equipment (purchase and rental) $750 maximum benefit per member per calendar year,

authorization required in excess of $250no charge no charge

Orthopedic and prosthetic devices $750 maximum benefit per member per calendar year, authorization required in excess of $250

no charge $ 25 copay / item

Ostomy care supplies (30 day supply) $3,600 maximum benefit per calendar year no charge $ 25 copay / item

Special food products (30 day supply) $2,500 maximum benefit per calendar year no charge $ 25 copay / item

Alcohol and Substance Abuse Treatment –Inpatient - detoxification $200 co-pay / admit $500 co-pay / day

(3 day max copay)

Inpatient - rehabilitation $200 co-pay / admit $500 co-pay / day

(3 day max copay)

Outpatient - counseling $2,500 maximum benefit per calendar year $50 co-pay / visit $50 co-pay / visit

Medical Pharmacy –Special pharmaceuticals Separate calendar year out-of-pocket maximum: $2,000

individual, $6,000 family$75 co-pay / item $75 co-pay / item

All other medical pharmacy Authorization required for certain durgs $7 co-pay / item $7 co-pay / item

Mental Health –Inpatient services for severe mental illnesses $200 co-pay / admit $500 co-pay / day

(3 day max copay)

Partial hospitalization Each day counts as a 1/2 day toward the 40 day maximium for inpatient mental health services


Autism $3,000 maximum benefit per calendar year $15 co-pay / visit $20 co-pay / visit

Outpatient visit - general mental health 10 visit maximum benefit per calendar year $15 co-pay / visit $20 co-pay / visit

Outpatient visit - severe mental illnesses 40 visit maximum benefit per calendar year $15 co-pay / visit $20 co-pay / visit

Other Medical Services –Alternative Medicine (acupuncture) $1,000 maximum benefit per calendar year $15 co-pay / visit $30 co-pay / visit

Spinal manipulation $1,000 maximum benefit per calendar year $15 co-pay / visit $30 co-pay / visit

Home health care $5,000 maximum benefit per calendar year $15 co-pay / visit $20 co-pay / visit

Hospice care maximum benefit: cumulative 185 inpatient days or visits no charge no charge

Kidney dialysis service $60,000 maximum benefit per calendar year $15 co-pay / visit $30 co-pay / visit

Infertility services $2,500 maximum benefit per lifetime varies by site of service varies by site of service

Gastric restrictive services $5,000 physician, $5,000 hospital: max lifetime benefit varies by site of service varies by site of service

Genetic counseling and testing $2,500 maximum benefi per lifetime $50 co-pay / visit $50 co-pay / visit

Temporomandibular Joint Disorder (TMJ) $2,500 maximum benefi per lifetime 50% co-insurance 50% co-insurance

Prescription DrugsRetail Pharmacy

Generic drugs - tier 1 $7 co-pay per script $7 co-pay per script

Brand name drugs - tier 2 $30 co-pay per script $30 co-pay per script

$30 co-pay per script $30 co-pay per script

plus price difference plus price difference

Non-formulary drugs $50 co-pay per script $50 co-pay per script

Self-administered injectable co-insurance max out-of-pocket is $2500 30% co-insurance 30% co-insurance

Mail Order (90 day supply)Generic drugs - tier 1 $14 co-pay per script $14 co-pay per script

Brand name drugs - tier 2 $60 co-pay per script $60 co-pay per script

Non-formulary drugs - tier 3 $100 co-pay per script $100 co-pay per script

member is responsible for the retail price difference between the brand name drug and the generic alternative

Brand name drugs with generic alternatives

$1,500 maximum benefit per calendar year

40 days maximum benfit per calendar year

$9,000 maximum benefit per calendar year

VI.


regarding modifications to the

utilization management

practices for the self-funded

medical benefits beginning

November 1, 2009

Spinal Health for Nevada’s State Employees

An APS Proposal to the Public Employees’ Benefits

Program

April 15, 2009


Background

PEBP staff and APS have been working for the past several months to evaluate the effectiveness of medical reviews and precertification criteria for various services covered under PEBP’s medical benefits. A review of musculoskeletal treatments has initially included a focused review on spinal surgeries, both inpatient and outpatient. During the twelve month period of July, 2007 through June, 2008, PEBP plan costs for musculoskeletal totaled $27.2 million. Of this amount, $6.4 million was for medical issues relating to inpatient and outpatient spinal surgeries.

Inpatient Spinal Surgeries

In early 2009, with the guidance from PEBP Staff, APS initiated a spinal program in which a formal medical director review of all inpatient spinal surgeries are reviewed daily by an APS physician. Each request presented to the Medical Director requires final sign off for medical necessity considering the moderate defined Milliman Criteria used for UM review. This additional review does not constitute a change in the plan design. APS intends to evaluate the impact of the additional medical review after a six month period which will be in July 2009. Conclusions resulting from that evaluation will be shared with PEBP for discussion and decision on whether to continue the new procedures.

Outpatient Spinal Surgeries

Again, with PEBP staff approval, utilization reports of all outpatient spinal surgeries have been reported by FiServ Health for a baseline period starting in July 2007 and continuing to current. The number of participants affected by outpatient surgery in a six month period (7/08 to 1/09) was over 700 participants and cost the plan over $600,000. APS considers this service to be another candidate for implementation of a spinal program. Outpatient services include laminotomy, discectomy, stereotaxis and neurostimulators. Some aspects of a spinal program for outpatient services constitute a change to the self-funded plan design and thus require PEBP Board approval.

Building a Successful Program for both Inpatient and Outpatient Spinal Services

A comprehensive Care Coordination effort would be developed through collaboration with PEBP staff and vendors to provide the following:

• the most conservative health care services, such as weight loss programs or increased awareness for appropriate exercise routines available to help the participant achieve optimum health and fitness.

• alternative options other than surgery such as in network Chiropractic Care, Holistic Spinal Care, physical therapy, message therapy, appropriate therapeutic exercise therapy combined with weight management.

• an in-network provider referral system will be put in place through assistance with the PPO network provider for PEBP. This referral system involves patient’s participation in spinal health program that ties directly to their physician’s referral for a more complete holistic program. Providers receive information on their patient’s progress through progress notes made by APS Health Coaches outlining patient participation and concerns.

• spinal health education through worksite programs such as brown bag lunch and learns.

• with any surgery, there is the risk of complications. When surgery is done near the spine and spinal cord, these complications (if they occur) can be very serious. Complications could involve subsequent pain and impairment and the need for additional surgery. Some spinal operations are simply unsuccessful. One of the most common complications of spinal surgery is that it does not get rid of all of the patient’s pain. In some cases, it may be possible to actually increase their pain


and possible paralysis. The APS Health Coaches will work with the participant to provide the awareness of the risk before surgery and discuss alternative options at length with the participant if appropriate.

Recommendations for a PEBP-specific Spinal Health Program Effective November 1, 2009

• Utilization Management oversight of all spinal surgical requests. A physician will submit a request for a surgery which will be reviewed for medical necessity by an APS UM Nurse.

• Utilization Management oversight of all spinal stimulator requests made for spinal patients. A physician will submit a request for a spinal stimulator which will be reviewed for medical necessity by an APS UM Nurse.

• Utilization Management oversight of all spinal pain management programs in conjunction with Catalyst Rx. APS will work with Catalyst Rx to review options and medication compliance of a PEBP participant who is being treated for pain management.

• Care coordination to provide continuity of care for the spinal patient. Includes comprehensive efforts by a Health Coach (RN) to reduce any gaps the participant may encounter. APS Health Coach will work together along with the patient, provider and PEBP vendors to provide the highest quality of care for the PEBP participant.

Allyson Hoover RN, MSN Executive Director, APS Healthcare Nevada Service Center (702) 277-5618 [email protected]

VII.


regarding the self-funded

pharmacy benefit claim trend

and possible plan design

modifications beginning

November 1, 2009

AGENDA ITEM X Action Item Information Only

Date: May 7, 2009

Item Number: VII

Title: Self-Funded Prescription Drug Benefits – Trend Analysis and Plan Design Options

Summary When considering plan design changes during the fall of 2008, the Board was cautioned by both staff and Catalyst Rx against dramatic plan design changes involving prescription benefits. The primary concern at that time, as now, is that too much cost shifting may reduce patient adherence with prescriptions and possibly result in higher costs in other areas (e.g. medical benefits). Since that time however, there has been a significant increase in prescription cost trends. The change in rate of cost increase warrants revisiting the issue. Aon Consulting provided a summary of self-funded claim trends during the February 5, 2009 PEBP Board meeting. While most claims experience appears favorable when compared to projections for Plan Year 2009, prescription costs exceed projections by more than 6 percentage points. Plan Year 2009 rates were based upon an 11.3% growth in prescription costs. This projection was several percentage points above national trends to account for PEBP experience. However, actual costs rose 17.5% through November 2008 on a per participant basis. The purpose of this report is to provide the following:

• An analysis of the causes for the unexpected increase in plan cost, and • To provide some plan design options for Board consideration.

STATE OF NEVADA







Prescription Benefits Trend May 7, 2009 Page 2 Report Trend Analysis The following chart was provided by Aon for the February Board meeting and depicts the historical claims cost growth over the past three years1.

Historical Prescription Drug Trend Comparison

16.0%

13.3%12.5%

17.5%

11.3%11.9%

13.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

FY06/07 FY07/08 FY08/09 FY09/10

Year

Tren

d

Assumed

Actual

Catalyst Rx provided a great deal of assistance to PEBP in analyzing calendar year 2008 claim information. A similar analysis done by Catalyst Rx on a per member per month (PMPM) basis through December 2008 shows an 18.9% increase in plan cost compared to the previous calendar year. If the higher trend of 18.9% continues for the entire year, this will result in Plan costs of $2.6m above what was projected compared to the 11.3% trend use in developing the contribution rates. While total dollars spent on prescription benefits is important, most information in this report is represented on a per member basis. Per member information accounts for any change in enrollment such as that recently experienced with the growth in non-state retiree population. Given PEBP’s commingling requirements, any change in cost is spread over the entire population, no matter the reason. The only exception to this is the degree to which the population demographic changes are different between the state and

1 This information represents the plan cost on a per participant per month (PPPM) basis. Unless otherwise noted, all information presented in this report is on a PMPM basis.

FY08/09 based on claims cost through Nov

Prescription Benefits Trend May 7, 2009 Page 3 non-state groups. Regardless, plan design issues can legitimately be evaluated on an overall basis2. Particular aspects of the plan design, participant demographics and drug utilization patterns that have impacted the Plan’s cost over the past two years are as follows:

• A new policy effective July 1, 2007 that eliminated the generic prescriptions from being subject to the annual deductible.

• Holding the co-payment for brand drugs at the same level since 2003. • A shift in drug utilization from Tier 2 Brand to generic has been good but has

been more than offset by a higher cost in the Tier 2 Brand drugs utilized (i.e. drug mix). The change in drug mix for Tier 2 Brand drugs is likely attributable to the influx of non-state Retirees during 2008.

• A shift in Tier 2 Brand drugs from retail to mail order where the Plan pays a higher percentage of the cost.

Looking forward, the Plan’s cost is expected to be more and more influenced by the growth in specialty drugs. Aon’s pharmaceutical consulting practice is projecting that over the next five years, specialty will make up approximately 50% of all drug costs (paid through both the medical and pharmaceutical benefits). The following graphic displays this trend:

40.0%

60.0%

80.0%

59.8%

39.5%

19.0%

0.2% 0.5% 1.0%

2002 2007 ~2012

Generics Brands Specialty

# Rxs

Generic dispensing rates will approach 80%.

Generic spend will approach 25%.

Specialty utilization will reach 50% of all Rx spend.

Non Specialty Brands will drop from 85% to 25-30% of drug spend.

A 1% increase in generic dispensing will result in savings of 0.6% to 1% of total drug spend.

10.0%20.0%

25.0%

80.0% 60.0%

25.0%

10.0%20.0%

50.0%

2002 2007 ~2012

Generics Brands Specialty

Spend

2 Unless otherwise noted, all cost information in this report is based upon prescriptions paid through Catalyst Rx. It does not include any pharmaceutical costs incurred by the medical plan.

Prescription Benefits Trend May 7, 2009 Page 4 Total Prescription Costs - The table below shows the change in total prescription costs. Overall the costs increased 11.3%. However, the participants’ share actually decreased 4.8% while the Plan’s share increased 18.9%. Of the Plan’s increase, approximately half can be attributed to the number and mix of prescriptions written while the other half can be attributed to the price per prescription.

CY 2007 CY 2008 $ Diff % Diff CommentsTotal Cost

Plan Cost 57.36 68.21 10.85 18.9% 50% due to quantity 50% due to price

Participant Cost 26.84 25.54 (1.30) -4.8%Total 84.20 93.75 9.55 11.3%

Looking at the total cost by drug tier, there has been a slight decline in the percentage of overall cost attributable to second tier drugs (excluding Specialty drugs). Offsetting increases are seen in the generic tier and Specialty drugs. The table below provides the specific cost information by tier.

Total Cost Cost % of Total Cost % of TotalTier 1 Generic 19.48 23.1% 23.92 25.5%Tier 2 Brand (w/o Spec) 55.74 66.2% 58.39 62.3%Tier 2 Brand Spec 8.98 10.7% 11.44 12.2%Total 84.20 100.0% 93.75 100.0%

CY 2007 CY 2008

Of the total cost increase for this comparison, on a per participant per month basis, slightly less than half is attributable to the generic tier benefit with the remaining increase evenly attributable within the second tier for non-specialty and specialty. This information is represented in the following table:

CY 2007 CY 2008 % of TotalTotal Cost Increases Cost Cost Diff Difference

Tier 1 Generic 19.48 23.92 4.44 46.5%Tier 2 Brand (w/o Spec) 55.74 58.39 2.65 27.7%Tier 2 Brand Specialty 8.98 11.44 2.46 25.8%Total 84.20 93.75 9.55 100.0%

Prescription Benefits Trend May 7, 2009 Page 5 How the total cost is distributed between the participant (i.e. their co-payment) and the Plan (i.e. PEBP) is not consistent. The following tables show the cost by tier for each payor. For the costs paid by the Plan, the percentage change is much more evenly distributed amongst the tiers. It is important to remember that this information includes cost increases due to volume as well as quantity and drug mix.

CY 2007 CY 2008 % of TotalPlan Cost Increases Cost Cost Diff Difference

Tier 1 Generic 14.90 19.14 4.24 39.1%Tier 2 Brand (w/o Spec) 33.76 37.94 4.18 38.5%Tier 2 Brand Specialty 8.70 11.13 2.43 22.4%Total 57.36 68.21 10.85 100.0%

On the other hand, cost increases (or decreases) for participants vary greatly depending upon the benefit tier. Of the total $1.30 reduction in cost for the participant, more than this amount, $1.53, is due to a reduction in cost for the participant for second tier brand drugs (excluding Specialty). Please see the following table for this information:

CY 2007 CY 2008 % of TotalParticipant Cost Increase Cost Cost Diff Difference

Tier 1 Generic 4.58 4.78 0.20 15.4%Tier 2 Brand (w/o Spec) 21.98 20.45 (1.53) -117.7%Tier 2 Brand Specialty 0.28 0.31 0.03 2.3%Total 26.84 25.54 (1.30) 100.0%

Generic Prescription Costs - The next step in analyzing the claims cost is to compare the impact of plan and participant costs within each tier. The table below shows the generic drug information. With this drug tier, the overall cost increase was 22.8%. However, the participant cost only increased 4.4%. This low increase for the participant is due to a combination of holding the generic copayments at the same level since 2003 and forgoing the annual deductible for generic drugs effective July 1, 2007. For the same time period, the Plan’s costs for generic drugs increased 28.5%. This increase is almost entirely due to the number of generic prescriptions filled. Generic drug utilization increased from 63.4% in calendar year 2007 to 67.7% in calendar year 2008. On a PMPM basis, the increase in Plan cost for generics represents 39% of the overall Plan cost increase.

Prescription Benefits Trend May 7, 2009 Page 6

CY 2007 CY 2008 $ Diff % Diff CommentsTier 1 Generic Drugs


Participant Cost 4.58 4.78 0.20 4.4%Total 19.48 23.92 4.44 22.8%

Brand Drug Costs (excluding Specialty) - The table below shows the brand drug information (excluding Specialty drugs). With this class of drugs, the overall cost increase was 4.8%. However, the participant cost actually decreased 7%. This decrease is due to a slight increase in the proportion of brand prescriptions that are filled using mail order instead of at retail and the drug mix in this category. For the same time period, the Plan’s costs for brand drugs (excluding Specialty medications) increased 12.4%. For non-specialty brand drugs, this increase is entirely due to the price increases associated with brand prescriptions filled, and not with an increase in utilization, as utilization has shifted to generic alternatives. This is just the opposite of what occurred for generic drugs where very little of the overall increase was due to price increases. When the cost increase for brand drugs is broken down between retail and mail order, the situation is very similar. With a slight shift in the proportion of prescriptions being filled from retail to mail order, almost all of the cost increases for both groups is due to price increase and little is related to a change in volume.

CY 2007 CY 2008 $ Diff % Diff CommentsTier 2 Brand Drugs(w/o Specialty)

Plan Cost 33.76 37.94 4.18 12.4% -4% due to quantity 104% due to price

Participant Cost 21.98 20.45 (1.53) -7.0%Total 55.74 58.39 2.65 4.8%

Specialty Brand Drug Costs – Overall, specialty drugs consume 12% of all prescription benefit dollars. On a PMPM basis, Plan costs for Specialty drugs have increased 27.9%. Of this amount, approximately 60% is due to quantity and the remaining 40% is due to the drug prices. With the rapid development of new Specialty drugs and PEBP’s changing (i.e. aging) demographic, this class of drugs warrants very careful cost controls.


CY 2007 CY 2008 $ Diff % Diff CommentsTier 2 Brand Specialty


Participant Cost 0.28 0.31 0.03 10.7%Total 8.98 11.44 2.46 27.4%

Plan Design Options In general, two areas of plan design impact program costs. The first would be the actual formulary and the plan’s drug utilization control measures. Catalyst Rx has represented that PEBP’s plan is highly controlled when compared to other plans. Examples of these controls are summarized below:

• Catalyst Rx’s standard quantity limits (examples include : therapeutic categories for the management of depression, cholesterol, migraine, pain and sleep).

• Step therapy edits (examples include therapeutic categories for the management and appropriate utilization of allergy products, anti-fungal medications, diabetes and pain management

• Prior authorization program to ensure appropriate utilization for high cost medications, injectable products and medications that have age requirements or limitations Compliance focused Diabetic Sense Program that educates members and provides compliance outreach. This program provides members with necessary test strips and supplies at a $0.00 member copayment. Mail service requirement limited to maintenance medications which drives appropriate utilization Catalyst Rx incentive formulary with third tier medications at a member copayment of 100% of discounted cost

• Closed specialty network through Walgreens Specialty which includes both retail and central fill dispensing

The second area is cost sharing through the plan deductible and co-payment structure. With regard to the plan deductible, the current $50 annual deductible was instituted on July 1, 2003. The only change has been to remove generic drugs from being subject to the deductible effective July 1, 2007. The Board has agreed to begin indexing the annual deductible at the same rate as medical trend effective July 1, 2010. With regard to the retail co-payment structure, the $40 brand drug co-payment has been in place since July 1, 2003. The $5 generic drug co-payment has been in place since July 1, 2003 as well. For mail order, the $70 brand drug co-payment has been in place since July 1, 2003. The $10 generic drug co-payment has been in place since July 1, 2003.

Prescription Benefits Trend May 7, 2009 Page 8 PEBP staff asked Catalyst Rx to suggest some options in plan design for Board consideration. Some key points when reviewing these options are summarized below:

• When developing the Agency Budget last fall, plan design changes were approved that would institute indexing the amount of the deductible and copayment amounts for prescription benefits. As approved at that time, the deductible and copayment amounts are to increase at the same rate of medical trends beginning July 1, 2010. The options presented here could be in combination with, or instead of, those earlier changes. Implementation of any co-insurance structure would be a more direct method of adjusting participant share at the same rate as the specific prescription involved than indexing with a generalized trend factor.

• Each option carves out the copayment structure of specialty drugs from brand drugs. As noted earlier, the fastest area of growth in pharmaceuticals during the next several years is expected to be in the specialty category. A change in plan design in anticipation of the changing utilization patterns would proactively address the issue while utilization is still relatively low. Catalyst will be able to present an estimate of the number of individuals that would be impacted if such a change is approved. Leslie: this information was in the specialty presentation – we can consider adding after our discussion on Tuesday.

• Option #1 maintains a co-payment structure for generic and brand but changes the amount of each copayment.

• Options #2 and #3 would change to a co-insurance structure. Option #3 is simply a higher co-insurance rate than in Option #2. Each is presented with a dollar maximum to be incurred by the participant.

Current Option #1 Option #2 Option #3

Retail

• Generic $5 $8 Greater of $8 or 20%*

Greater of $8 or 30%*

• Brand $40 $50 Greater of $50 or 20%*

Greater of $50 or 30%*

• Specialty $40 Greater of $50 or 25%*

Greater of $50 or 25%**


• Non-Formulary 100% 100% 100% 100%


Current Option #1 Option #2 Option #3

Mail Order

• Generic $10 $20 Greater of $20 or 20%**


• Brand $70 $100 Greater of $100 or 20%**


• Non-Formulary 100% 100% 100% 100%

Savings to Plan $4.4 million $5.5 million $ 7.0 million

* Maximum of $100

** Maximum of $200

Recommendation Direct staff regarding prescription drug benefit plan design changes effective November 1, 2009.

VIII.


regarding the draft in-state

medical preferred provider

network request for proposal

effective July 1, 2010

AGENDA ITEM X Action Item Information Only

Date: May 7,2009

Item Number: VIII

Title: Draft Medical Preferred Provider Organization (PPO) Request for Proposal (RFP)

Summary During the March PEBP meeting, the Board requested that the medical PPO RFP outline be brought to the Board for approval prior to its release this summer. The draft RFP is included in this agenda item. Report The in-state medical PPO network is currently contracted with Hometown Health (HHP) and Sierra Healthcare Options (SHO). This vendor combination has provided the PPO network on a statewide basis since July 1, 2003. The initial contract expired on June 30, 2006. During a request for proposal (RFP) process in 2005, HHP/SHO was awarded the current contract with a term of July 1, 2006 to June 30, 2010. As indicated in the March agenda item, the following items have been identified as changes in approach or areas of emphasis in the upcoming RFP.

• The requirement for providing wellness fairs will be removed from the network RFP. Staff is anticipating the addition of a separate procurement effort to consolidate all wellness activities under a single vendor, including wellness fairs.

• Additional focus will be placed on understanding provider contract terms for each network proposal. Many of these items are “larger than PEBP” but should be understood when evaluating the network proposals. In particular will be the following items that have a significant impact on plan costs:

o Provision for hospitals to comply with any plan requirements for service pre-certification (i.e. not retrospectively)

STATE OF NEVADA







Medical Preferred Provider Organization Request for Proposal May 7, 2009 Page 2

o Whether any “specialized” networks exist for specific procedures such as gastric bypass or spinal/knee surgeries

o How treating physicians who are not part of the network are to be reimbursed when working at a network hospital

o Whether durable medical equipment provider agreements allow for the equipment purchase when that is less expensive than rental

o Subrogation provisions with contracting hospitals and other providers o Whether provider contracts can be entered into retroactively and how rates are

applied when service dates cross over different contract terms o Obtain contract pricing provisions for potentially high cost areas such as:

Hospital billings for drugs (e.g. percent of charges vs. as Average Wholesale Price)

Charges for implants (e.g. percent of charges vs. a cost-plus arrangement) • Networks will also be asked to identify all physician owned facilities.

Based upon comments received during the March PEBP Board meeting and discussions with Aon Consulting, the following approaches have been modified in this draft:

• Claim detail for the most highly populated areas will be provided with the RFP and proposing vendors will be asked to re-price those claims to reflect their network provider contract rates. Aon Consulting will review the repricing for comparability purposes.

• The RFP will not require a statewide PPO solution. Vendors will be asked to indicate which geographic areas are included in each proposal. The RFP does indicate that PEBP intends to select only one PPO vendor for any given geographic area.

• Vendors are asked to specify any exclusive provider arrangements for the most highly populated areas.

• Vendors are instructed to submit separate proposals if options are proposed regarding either geographic area covered or regarding provider exclusivity. Vendors are instructed that each separate proposal must be complete and stand alone for evaluation.

Recommendations Approve the draft Medical Preferred Provider Organization (PPO) Request for Proposal (RFP)

- - DRAFT as of May 7, 2009 - -

Nevada PEBP Medical PPO Network RFP No. **** Page 1 Approved 05/07/02 Revised 08/06/04

This document must be submitted in the “State Documents” section/tab of vendors’ technical proposal

Division of Purchasing Request For Proposal No. ***

for

Nevada PEBP Medical Preferred Provider Organization (PPO) Network Services

Release Date: July 14, 2009 Deadline for Submission and Opening Date and Time: XXXXXX, @2:00PM

For additional information, please contact: Kim Perondi, Purchasing Officer

(775) 684-0190 (TTY for the Hearing Impaired: 1-800-326-6868. Ask the relay agent to dial 1-775-684-****/V.)

Contact Information

See Page 24, for instructions on submitting proposals.

Company Name ___________________________________________________________________ Address _____________________________ City _______________ State ______ Zip _________ Telephone (___) ___________________________ Fax (___) _______________________________ E-Mail Address: Prices contained in this proposal are subject to acceptance within _________________ calendar days. Contact Person ____________________________________________________________________ Print Name & Title _________________________________________________________________

- - DRAFT as of May 7, 2009 - -


TABLE OF CONTENTS Contents

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A Request for Proposal process is different from an Invitation to Bid. The State expects vendors to propose creative, competitive solutions to the agency's stated problem or need, as specified below. Vendors may take exception to any section of the RFP. Exceptions should be clearly stated in Attachment A (Certification of Indemnification and Compliance with Terms and Conditions of RFP) and will be considered during the evaluation process. The State reserves the right to limit the Scope of Work prior to award, if deemed in the best interest of the State NRS §333.350(1). 1. OVERVIEW OF PROJECT AND SCOPE OF PROJECT

1.1 SERVICES BEING SOLICITED

The State of Nevada, Purchasing Division on behalf of the Public Employees’ Benefits Program (PEBP), headquartered in Carson City, Nevada, is soliciting proposals for medical preferred provider organization (PPO) network(s) within the State of Nevada, herein referred to as the Nevada PEBP Medical PPO Network. PEBP is governed by a nine-member board, each of whom is appointed by the Governor of Nevada. The Program offers medical benefits to its participants through a self-funded PPO plan or an HMO plan. PEBP oversees the administration of the health insurance benefits available to full-time state employees, certain non-state local government agencies, professional full-time employees of the Nevada System of Higher Education, members of the Nevada Legislature, and retirees covered under PEBP who are receiving benefits from a specified retirement system. The Program’s funding is derived from the statutory subsidy by the State of Nevada, contribution payments by participants and local governments in the State of Nevada. PEBP intends to select one or more vendors through this procurement process that, taken individually and in combination, meet the Program’s objectives of:

• Providing PEBP PPO participants access to a full complement of reputable, qualified medical professionals to include but not be limited to, board-certified specialist and primary care physicians, laboratories, behavioral health providers, urgent care facilities and the finest Nevada hospitals.

• Containing costs for the Plan and its participants through aggressive contract pricing. • Minimizes the disruption of existing patient-participant relationships.

While more than one PPO Network may be selected within the State, PEBP will limit its selection to one PPO Network within any one geographic area. Vendors will be required to declare specifically which county(ies) are included in their proposal. Vendors are not precluded from submitting a joint proposal with other vendors to offer a single statewide PPO network solution.

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PEBP is committed to providing the highest quality health benefits with an emphasis on customer service, preventive and wellness benefits, utilization management and promoting informed health care utilization while preserving individual choices and options. PEBP is soliciting proposals from vendors who will work in partnership with PEBP, provide exemplary services and make the desires and goals of this agency a priority. In addition, PEBP encourages interested bidders to provide creative, alternative solutions to PEBP’s current needs as they relate to medical PPO network services. PEBP appreciates that the medical provider business climate continues to evolve, sometimes in very significant ways. As a result, areas of emphasis that will be described in further detail in this RFP include the following: - Provider quality and the network’s vision of how to maintain this throughout the contract

term - Provider accessibility in terms of providers in the network as well as capacity to accept new

patients - Cost containment measures provided for in the provider contracts through contracted rates as

well as utilization control measures - Cost framework for the network as a whole. This refers to such factors as provider

ownership of referred practices and reimbursement structures for high cost or high utilization services (both inpatient and outpatient)

Vendors may submit multiple proposals to present PPO network options with and without any provider exclusivity for PEBP consideration. Vendors may also submit multiple proposals reflecting different geographic areas within the state. If multiple options are proposed, each proposal document submittal should be complete and stand alone for consideration. For this purpose, ‘exclusivity’ refers to a single provider option for the same medical service provider specialty or medical facility within a single geographic region. Only the following geographic regions will be considered for this purpose of considering exclusivity: Zip codes 897xx – Carson City Zip codes 895xx – Reno Zip codes 891xx – Las Vegas Nevada PEBP Medical PPO Network services apply to the self-funded PPO plan only. This solicitation does not include third party claims administration services or fully-insured medical, vision or prescription drug claims administration. This solicitation does not include wellness fairs, utilization management, disease management or case management services. This solicitation does not include eligibility management services. Proposals submitted that include these services will be deemed non-compliant. In this regard, PEBP is inviting organizations to only submit a proposal that addresses the items discussed herein.

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1.2 CONTRACT EFFECTIVE DATE The effective and termination dates for the Nevada PEBP Medical PPO Network contract, pursuant to this RFP, are tentative and subject to change. Currently, the effective date of this contract will be July 1, 2010, with a termination date of June 30, 2014. Possible term extensions may be entertained depending upon the successful vendor’s performance.

1.3 PLAN DESIGN The Public Employees’ Benefits Program (PEBP) oversees the administration of the self-funded PPO medical plan. This requires the services of a PPO to administer the Nevada PEBP Medical PPO Network. For information regarding the PEBP self funded PPO medical plan, please refer to the PEBP Master Plan Document at: http://www.pebp.state.nv.us/. Please note that, due to the state’s budget deliberations during the 2009 legislative session, PEBP extended its 2009 plan year from June 30, 2009 through October 31, 2009. A summary of changes that will go into effect November 1, 2009 can be found on the PEBP website once finalized. PEBP is currently sponsoring a Cardiac Wellness Program (CWP) pilot project. The successful vendor(s) will be required to assist PEBP and its CWP associates with creating and/or maintaining the current CWP provider listing. Providers who agree to participate with and treat CWP participants have different reimbursement rates than the standard contract rates. Providers are required to record the progress of the CWP patients in a data base maintained by the physician group assisting PEBP with the pilot project. Please refer to http://www.pebp.state.nv.us/informed/healthtips.htm for information regarding the CWP.

1.4 ClAIMS VOLUME (Total claims received by current TPA) From April 2008 through March 2009, the medical claims volume, including vision claims, averaged approximately 10,427 claims received per week or approximately 45,185 per month for an annual total of approximately 542,222 claims.

1.5 CLAIMS REPRICING PEBP’s current PPO Network vendor re-prices all northern Nevada in-network medical claims for the Program’s third party administrator. This procedure is coordinated electronically through an EDI (electronic data interchange) process developed by PEBP and its Third Party Administrator and current PPO Network. PEBP would prefer to continue this practice and ideally to have it extended to all in-state medical claims processing. EDI does not include modifiers, eligibility or benefit determination. Vendors will be asked to respond to questions in this RFP to their capacity to reprice some/ all network claims.

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1.6 CURRENT PEBP VENDORS

PEBP currently contracts with the following vendors.

• UMR – Third Party Claims Administrator (PPO Plan)

• Catalyst RX – Pharmacy Benefits Manager (PPO Plan) o Walgreens Pharmacy and Walgreens Specialty Pharmacy – Subcontractor of Catalyst RX

for mail order and specialty drug services

• APS Healthcare – Utilization Management Review, Large Case Management and Disease Management services (PPO Plan)

• Sierra Healthcare Options and Hometown Health Providers – Nevada Statewide Medical PPO Network (PPO Plan)

• Beech Street/Viant Inc. – National Medical PPO Network (PPO Plan)

• Diversified Dental Network – Dental PPO Network (PPO and HMO)

• Health Claim Auditors – Health Plan Auditor services (Excludes HMO vendors)

• AON Consultants – Actuary/Consultant services

• ASI – Flexible Spending Account

• Hometown Health Plans – Northern Nevada HMO

• Health Plan of Nevada – Southern Nevada HMO

1.7 CURRENT VENDOR RATES For July 1, 2009 – June 30, 2010 (FY 2010) the rate is $3.14 per participant per month (PPPM) paid to the Statewide Medical PPO Network for PPO access. Although not being solicited in this procurement process, Hometown Health is also responsible for coordinating and conducting PEBP’s annual wellness fairs. The cost for providing this service is included in the current PPO Network contract at a cost of $0.86 PPPM.

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1.8 CURRENT PARTICIPANT COUNT and CENSUS

As of April 2009, the PEBP self-funded medical PPO plan has approximately 42,685 total covered participants and dependents. The HMO plans have approximately 18,282 covered participants and dependents. Open enrollment for Plan Year 2010 (effective November 1, 2009) will occur during September 2009. Self-Funded PPO Counts (both in-State and out-of-state)

Enrollment as of April 2009

Participant Dependent Total Count

State Active 16,547 7,713 24,260

Non-State Actives 711 332 1,043

State Retirees 6,662 1,856 8,518

Non-State Retirees 7,438 1,426 8,864

Total 31,358 11,327 42,685 HMO Counts (Statewide)

Enrollment as of April 2009

Participant Dependent Total Count

State Active 9,429 4,545 13,974

Non-State Actives 267 128 395

State Retirees 938 246 1,184

Non-State Retirees 2,147 582 2,729

Total 12,781 5,501 18,282

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2. ACRONYMS/DEFINITIONS

For the purposes of this RFP, the following acronyms/definitions will be used: Awarded Vendor The organization/individual that is awarded and has an approved contract

with the State of Nevada for the services identified in this RFP.

Confidential Information Dependent

Any information relating to the amount or source of any income, profits, losses or expenditures of a person, including data relating to cost or price submitted in support of a bid or proposal. The term does not include the amount of a bid or proposal. See NRS §333.020(5)(b). An individual who meets PEBP’s eligibility requirements and is either a child or spouse of the eligible participant

Evaluation Committee HIPAA

An independent committee comprised of a majority of State officers or employees established to evaluate and score proposals submitted in response to the RFP pursuant to NRS §333.335. Health Insurance Portability and Accountability Act of 1996

LOI Letter of Intent - notification of the State’s intent to award a contract to a vendor, pending successful negotiations; all information remains confidential until the issuance of the formal notice of award.

May Medicare Advantage Plan

Indicates something that is not mandatory but permissible. A plan offered by a private company that contracts with Medicare to provide Medicare beneficiaries with Medicare Part A and Part B benefits.

NAC Nevada Administrative Code NRS Nevada Revised Statutes NOA Notice of Award- formal notification of the State’s decision to award a

contract, pending Board of Examiners’ approval of said contract, any non-confidential information becomes available upon written request.

Non-state Participant PEBP

A local (Nevada) governmental entity who has opted group health coverage under PEBP in accordance with NRS 287.025. An employee or retiree of the state of Nevada or other covered entity as defined in the PEBP Master Plan Document (i.e. the primary insured) Public Employee’s Benefits Program

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PEBP Board PERS Plan Plan Year PPPM PMPM

The appointed board of nine members that oversees the Nevada Public Employees’ Benefits operation and staff. Public Employees’ Retirement System Refers to the PEBP self funded PPO plan The 12-month period from July 1 through June 30 Per Participant Per Month Per Member Per Month

Proprietary Information

Any trade secret or confidential business information that is contained in a bid or proposal submitted on a particular contract.

Provider Exclusivity

Public Record All books and public records of a governmental entity, the contents of which are not otherwise declared by law to be confidential (see NRS §333.333 and NRS §600A.030(5)) must be open to inspection by any person and may be fully copied or an abstract or memorandum may be prepared from those public books and public records.

RFP Request for Proposal - a written statement which sets forth the requirements and specifications of a contract to be awarded by competitive selection NRS §333.020(7).

Shall/Must/Will Indicates a mandatory requirement. Failure to meet a mandatory requirement may result in the rejection of a proposal as non-responsive.

Should Indicates something that is recommended but not mandatory. If the vendor fails to provide recommended information, the State may, at its sole option, ask the vendor to provide the information or evaluate the proposal without the information.

State The State of Nevada and any agency identified herein. Subcontractor Third party, not directly employed by the vendor, who will provide services

identified in this RFP. This does not include third parties who provide support or incidental services to the vendor.

Trade Secret Means information, including, without limitation, a formula, pattern,

compilation, program, device, method, technique, product, system, process, design, prototype, procedure, computer programming instruction or code

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that: derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by the public or any other person who can obtain commercial or economic value from its disclosure or use; and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Vendor Organization/individual submitting a proposal in response to this RFP.

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3. VENDOR QUESTIONS

In order for your proposal to be considered and accepted, your organization must provide answers to the questions presented in this section. Each question must be answered specifically and in detail. Reference should not be made to a prior response, or to any existing contract, unless the question involved specifically provides such an option. Be sure to refer to the earlier sections of this request for proposals (RFP) before responding to any of the questions, so that you have a complete understanding of all of the State’s requirements with respect to the bid. If your proposal is different in any way (whether more or less favorable) from that indicated in this request for proposals, clearly indicate where. If you do not, the submission of your proposal will be deemed a certification that you will comply in every respect (including, but not limited to, coverage provided, funding method requested, benefit exclusions and limitations, underwriting provisions, etc.) with the requirements set forth in this RFP. If you are unable to perform any required service indicate clearly: a) what you are currently unable to do, and, b) what steps will be taken to meet the requirement, the timetable for that process and who will be responsible for the implementation, along with that person’s qualifications. Include any additional information in your proposal that you consider useful to PEBP. However, direct responses to all of the questions set forth below must be provided. If the cost to provide the service(s) described in your responses to any question is not included in your organization’s cost proposal, the cost must be included in your response to the particular question.

3.1 PROVIDER NETWORK 3.1.1 Complete the attached schedule to indicate your proposed provider network by type of

service and zip code (Attachment E).

3.1.2 Please state whether or not your network(s) are owned or leased. If leased, please provide, by geographic area, the owner’s name and address. All leased networks should be indicated as subcontractors.

3.1.3 Does your proposal contain any exclusive provider or facility contracts? If so, please list in detail. For this purpose, ‘exclusivity’ refers to a single provider option for the same medical service, provider specialty or medical facility within a single geographic region. Only the following geographic regions will be considered for this purpose: Zip codes 897xx – Carson City Zip codes 895xx – Reno Zip codes 891xx – Las Vegas

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3.1.4 Which of the following Nevada counties are covered in their entirety by your proposed PPO Network?

County Included in PPO Network Proposal Yes No

Carson City Churchill Clark Douglas Elko Esmeralda Eureka Humboldt Lander Lincoln Lyon Mineral Nye Pershing Storey Washoe White Pine

3.1.5 Please indentify which of your contracted (inpatient or outpatient) facilities are physician owned. If partially physician owned, please indicate the percentage of ownership. 3.1.6 Do you contract separately with a network of mental health and substance abuse providers? If so, please describe the provider and contractual agreement in detail.

3.1.7 What steps does the network take to insure participant needs are met? (e.g. access to quality providers, availability of customer service representatives for issue resolution, etc.)

3.1.8 Please explain what happens when a PEBP participant’s primary care physician (PCP) leaves the network and how participants are notified by your organization.

3.1.9 What percentage of primary care physicians are currently accepting new patients? 3.1.10 Please explain your network provider credentials process (e.g. out sourced, in-house, etc.). Provide the credentials of the person(s) or organization(s) providing this service. 3.1.11 How frequently does your organization recredential contracted providers? 3.1.12 Do your physician contracts allow the physician to work with patients before his/her credentials are certified?

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3.1.13 Are there any “sub-networks” for specific services, for example bariatric or spinal

surgeries? If so, please list in detail. 3.1.14 Is the network willing to provide Cardiac Wellness Program (CWP) provider contracts

under the current program provisions that may be different from the standard network contract? If so, is there any additional cost, not included in the cost proposal, for this service?

3.1.15 How frequently does your organization provide updates regarding providers who are not accepting new patients? 3.1.16 What are the network’s steps to add providers? Can PEBP and/ or plan participants request additions to the provider network? Please explain in detail the provider nomination process. 3.1.17 Please provide a copy of your provider network directory. We encourage the vendor to provide this information on a CD. 3.1.18 Please list all providers and facilities located outside of Nevada to which PEBP participants would have access through this contract.

3.1.19 Please describe your organizations complaint process. Depending on the severity of the complaint filed against a network provider, describe in detail your organizations typical action plan.

3.2 HOSPITAL CONTRACTS

The following general questions relate to your organizations contracts with acute care hospitals and ambulatory surgical centers. Where indicated, please provide the information in a table format or as an attachment to your proposal.

3.2.1 Please provide a copy of your organization’s standard hospital contract. This information should be provided as an attachment in your proposal. 3.2.2 Please describe the hospital contracts hold harmless language included in your organization’s proposal. Do the hold harmless agreements include denials and/or reductions determined by PEBP’s utilization review company? 3.2.3 Do your hospital contracts include a provision that would allow the hospital to place a lien against a PEBP participant as described in NRS 108.590-690?

3.2.4 Does your organization allow retroactive hospital contract agreements and/or contract amendments?

If so, how often does this occur and is there a limit to the period of retroactivity?

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3.2.5 If your organization does enter into retroactive contracts do you reimburse the Plan’s TPA for the cost of re-processing claims? Please describe how the amount of the reimbursement is determined.

3.2.6 What are your hospital contract provisions when service dates cross contract periods?

3.2.7 How frequently does your organization adjust hospital fee schedules? Is this a standard approach or does it vary amongst contracted hospitals? Please describe in detail and separate inpatient services from outpatient services if different.

3.2.8 Do any of your hospital contracts include stop loss provisions? If yes, please describe the standard stop loss language and provide the information requested in the following table.

Facility Name Location (city) Stop loss amount Allowable

percentage after stop loss is met

3.2.9 Do your hospital contracts include a “never events” provision? The following is an example of “never

events” language: “Never events is defined as there will be no reimbursement to hospitals for errors in medical care that are clearly identifiable, preventable and serious in their consequences for patients, and that indicate a real problem in the safety and credibility of a health care facility."

3.2.1 Inpatient Services

3.2.1.2 Please list the Nevada hospitals that you contract with that have trauma centers and the trauma level designation for each. If your organization does not contract with a trauma center please explain how your organization will indemnify the PEBP against charges incurred because a trauma center was not available through the network for the required services.

Facility Name Trauma Designation

3.2.1.3 If your organization provides an indemnification provision for trauma services, is there a contract stipulation regarding time limits for the non-network trauma facility to

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notify your organization about a trauma admission? If yes, please describe the time limit. If a notification is not received by your organization within the time limits, please describe the impact to PEBP and the PEBP participant. 3.2.1.4 Is there a contract provision for any “carve outs” from the normal case rate/ per

diem for high cost drugs, implants, etc.? If so, please describe in detail, including the basis for payment.

3.2.2 Outpatient/Ambulatory Hospital Services

3.2.2.1 Please describe the hold harmless language included in your organization’s proposal for outpatient hospital contracts. Do the hold harmless agreements include denials and/or reduction determined by PEBP’s utilization management company?

3.2.2.2 Do your outpatient hospital contracts allow for multiple surgery and bilateral reductions per the AMA guidelines.

3.2.2.3 How frequently does your organization adjust ambulatory surgical facility schedules? What is the maximum increase your organization will guarantee annually? Is the annual maximum increase based on medical CPI or another alternate index?

3.2.2.4 Please provide a sample contract of your participating outpatient surgery center. 3.2.2.5 Is there a contract provision for any “carve outs” from your organizations typical reimbursement structure for particular outpatient services? If so, please describe in detail, including the basis for payment.

3.3 PHYSICIAN AND ANCILLARY SERVICE CONTRACTS

3.3.1 How frequently does your organization adjust physician schedules? What is the maximum increase you will guarantee per year?

3.3.2 Does your organization allow retroactive contract agreements and/or contract amendments? If so, how often does this occur and is there a limit to the period of retroactivity?

3.3.2.1 If your organization does enter into retroactive contracts do you reimburse the Plan’s TPA for the cost of re-processing affected claims? Please describe how the reimbursement is determined.

3.3.3 Please describe the hold harmless language included in your physician and ancillary provider contracts.

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3.3.4 Please list the required amounts for liability coverage, malpractice, errors & omissions and total liability for your network providers.

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3.3.5 Please provide a sample copy of your participating network physician contract. This information should be provided as an attachment in your proposal. 3.3.6 Please provide a copy of your organizations typical contract for urgent care facilities, laboratories and durable medical equipment (DME) providers. 3.3.7 Do the DME provider contracts include language that would limit PEBP to rental only as opposed to purchase of medical equipment prescribed for long term use? 3.3.8 Do the DME provider contracts allow PEBP to purchase a maintenance agreement for high cost/long term medical equipment? If yes, please describe the applicable contract provision. 3.3.9 How often does your organization review DME provider contracts to assure that PEBP is receiving rates that are competitive and cost-effective? 3.3.10 PEBP is evaluating the cost-effectiveness of purchasing certain DME equipment, e.g. CPAP and BIPAP machines, through the Internet. Does your organization have experience with other clients who have considered or implemented a similar procedure? If yes, please describe.

3.4 Outpatient Facility Contracts

3.4.1 Please describe the hospital contracts hold harmless language included in your organization’s proposal. Do the hold harmless agreements include denials and/ or reductions determined by PEBP’s utilization review company?

3.4.2 How frequently does your organization adjust outpatient facility fee schedules? What is the maximum increase you will guarantee per year? 3.4.3 If your organization does enter into retroactive contracts do you reimburse the Plan’s TPA for the cost of re-processing claims? Please describe how the amount of the reimbursement is determined.

3.4.4 Please provide a sample contract of your participating outpatient surgery center, urgent care, lab and durable medical equipment (DME) contracts.

3.5 NETWORK CUSTOMER SERVICE

3.5.1 PEBP requires the network to create and manage an online provider directory. The online directory is provided to PEBP participants through a link on the PEBP homepage at www.pebp.state.nv.us. Does your organization agree to comply with this requirement and is there any additional fee not included in your cost proposal?

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3.5.2 How often is your online provider directory updated? 3.5.3 How do you communicate network directory additions and deletions to participants? 3.5.4 Do you provide electronic data interchange (EDI) claims repricing for some or all network services? If so, please describe in detail your EDI claims repricing process that will be coordinated with PEBP’s Third Party Administrator. If so, are all in-network claims repriced through EDI? If only some are repriced, describe which ones.

3.5.4.1 If so, How long has your organization been using EDI claims repricing?

3.5.4.2 Does your organization charge a fee for this service that is not included in your price proposal? If so, describe in detail.

3.5.4.3 If so, what types of internal audits are in place to monitor the accuracy of your repricing process and your EDI security? What is the frequency of these audits and who performs them?

3.5.4.4 Explain how you measure and track errors identified in your internal audit process relating to EDI repricing.

3.5.4.5 Please attach a copy of your most recent internal EDI audit reports, with each labeled and explained clearly.

3.5.4.5 Would your organization agree for PEBP’s auditor to conduct periodic audits of your claims repricing EDI process? 3.5.5 If your organization does not reprice all in-network claims through EDI, do you provide EDI fee schedules and provider data files to the Plan’s TPA? Describe the frequency and process in detail.

3.5.6 Provide a copy of your plan for managing the account, including periodic review of cost and utilization and recommendations for plan design changes as well as accessibility of member service representatives for answering inquires from our client’s representatives. 3.5.7 Please indicate any major changes to your business structure (e.g. business merger) that your organization may be subject to over the term of the proposed contract with PEBP. 3.5.8 Is your organization aware of any medical services that are currently available in the Service area(s) that would be considered out of network if your organization were selected to be PEBP’s Statewide PPO Medical Network? If yes, please list the services and the locations. 3.5.9 Provide a detailed description of the routine support services your organization provides to the plan administration and to the participants.

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3.5.10 What is your organization’s customer service philosophy and how would you rank it in order of priority when compared to the other aspects of your responsibilities as a PPO network? 3.5.11 Please provide an organizational chart of the support team that will be responsible for managing PEBP. Include the following:

• staff that would be responsible for managing the PEBP account • names, title, and business address. • credentials and describe their experience related to this type of service. • the number of other accounts which each team member is responsible.

3.5.12 How is PEBP notified of changes in the account team staffing and what is your approach to gaining PEBP’s acceptance of such changes? 3.5.13 Will an account manager be assigned to the PEBP account? If so, where will they be located and what percentage of their time is allocated to the PEBP account? 3.5.14 Does your organization maintain a website? If so, please describe the information and tools maintained on the site. 3.5.15 Please describe your organization’s business days and hours. Please include any holidays that your organization recognizes. 3.5.16 Will your organization maintain a toll-free line for PEBP plan participants? If so, what are the hours of operation? 3.5.17 How do you estimate turn-around times for assigned work activities and how are those schedules monitored? How is PEBP kept informed of the work activity schedule?

3.6 PROVIDER QUALITY

3.6.1 Is your organization currently accredited by any national accreditation organization? If so, which? Please indicate the date the accreditation was awarded. 3.6.2 What type of provider education will your organization communicate to the network providers regarding the PEBP plan? 3.6.3 How does your organization define provider quality? 3.6.4 Please describe your organization’s provider quality and reporting criteria.

3.6.5 Please outline your organizations quality assurance plan. 3.6.6 Please describe how PEBP participants would file a complaint regarding a PPO provider with your organization.

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3.6.7 Are provider complaints documented? If yes, please provide an example of your organizations complaint log to include timelines and resolution.

3.7 NETWORK PROVIDER COST

3.7.1 PEBP is requesting that interested vendors reprice PEBP medical claims incurred from January 1, 2008 through December 31, 2008 and paid through March 31, 2009 for the following locations: Carson City, Reno and Las Vegas. This information will be made available to vendors by contacting the Nevada State Purchasing Division and requesting a CD prepared by PEBP which includes two folders. One folder will provide detailed instructions and formatting requirements. The other folder will be the claims data file. The claims data file does not include any Personal Health Information for PEBP participants. Please reprice the claims as follows:

3.7.1.1 Reprice claims and indicate where in-network providers match 3.7.1.2 Where in-network providers do NOT match, reprice as in-network based on your network’s providers in the specific zip code. 3.7.1.3 If there is no provider in a specific zip code please make a note of it.

3.7.2 Provide a summary of your re-priced Network Provider costs as follows, use “allowed” costs for completing the table. If unable to reprice any claims, please use the amount of the claim originally provided.

Zip Codes 897XX Carson City

895XX Reno

891XX Las Vegas

Total

Inpatient cost Facility All Other Unable to Reprice Total Outpatient Cost Facility All Other Unable to Reprice Total TOTAL (inpatient + outpatient)

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3.8 TRANSITION

3.8.1 Please provide a detailed implementation schedule, which outlines the transition process and critical deadlines. Please be detailed and specific about the role of your implementation team including the account manager in this process. Describe in detail the schedule of events and elapsed time, and the communication materials. This information should be provided as an exhibit in your proposal.

3.8.2 The successful vendor will be responsible for providing the following reports in a format and frequency determined by PEBP.

• Annual customer service satisfaction survey results • Quarterly provider network savings and provider status report. Please see Attachment F for an

example of the current report format. • Cooperate and provide PEBP’s Actuary/Consultant with reports needed to analyze

utilization. The information that will be provided by the vendor will be determined by PEBP and PEBP’s Consultant/Actuary

• Copies of vendor’s internal audit reports will be provided periodically as determined by PEBP.

• Provider pattern of care reporting. • Other applicable reports as requested by PEBP. • Please indicate if any reporting limitations are anticipated based upon requirements

described above.

3.9 HIPAA COMPLIANCE

3.9.1 Does your organization certify that it is in full compliance with HIPAA's administrative simplification standards relating to electronic data interchange (EDI)?

3.9.2 Does your organization certify that it reports to the national Healthcare Integrity and Protection Databank (HIPDB) as required and, as may be necessary, submits inquiries to the HIPBD to determine whether any final adverse legal actions have been taken against its member providers?

3.9.3 Does your organization certify that it will not require that enrollment and eligibility information and eligibility information electronically transmitted by Client to Vendor comply with EDI?

3.9.4 Does your organization certify that it is in full compliance with HIPAA’s regulation protecting the privacy of individually identifiable health information (the Privacy Rule)? 3.9.5 Please provide a copy of your organization’s HIPAA privacy procedures and any certification you have with respect to HIPAA compliance.

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3.9.6 Does your organization agree to provide PEBP’s Actuary/Consultant access to protected health information under the employer's health plan (PEBP) if the Consultant/Actuary executes a Business Associate Agreement with the health plan?

3.9.7 Has your organization reviewed the ARRA Act of 2009 and performed an analysis to determine changes needed within your organization? Do you have an action plan to address these changes and how they would affect PEBP?

3.10 VENDOR CONTRACT COMPLIANCE

3.10.1 PEBP contracts with an independent third party to perform external audits of PEBP’s health plan vendors to assure contract compliance. These audits are done on-site at the office(s) responsible for the administration of the PEBP Medical PPO Plan. PEBP requires that the on site audit be conducted within 60 days of notification to the PEBP vendor by the health plan auditor. Please describe your organization’s experience with independent auditors. Please confirm that your organization will cooperate with PEBP and PEBP’s health plan auditor. Do you charge for cooperating and providing information to PEBP’s auditor during a claim audit? If yes, please indicate your fee in your cost proposal.

4. PERFORMANCE STANDARDS/GUARANTEES and PERFORMANCE PENALTIES

4.1 The requirements as indicated in Attachment G are areas where the awarded vendor will guarantee performance. Failure to meet the required standards will result in the assessment of financial penalties. Reducing a percentage of the administrative fees due to the Awarded Vendor will enforce financial penalties. Prompt resolution of problems or issues is expected, but will not reduce or eliminate any financial penalties imposed due to failure to meet the performance standards outlined.

PEBP will determine compliance with service performance standards and guarantees through

audits performed by the PEBP’s health plan auditor. Liquidated damages will be assessed per standard for each quarter of non-compliance. Please note the awarded vendor will have the opportunity to dispute any findings by PEBP’s Health Plan Auditor. The final outcome of the dispute however, will be decided by PEBP.

While PEBP is committed to Performance Guarantees and Penalties being part of the Nevada PEBP Medical PPO Network contract, PEBP encourages the bidder to propose an alternate method for possible consideration.

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5. COMPANY BACKGROUND AND REFERENCES

5.1 PRIMARY VENDOR INFORMATION

Vendors must provide a company profile. Information provided shall include: 5.1.2 Company ownership (Corporation, Limited Liability Company, etc).

5.1.3 Incorporated companies must identify the state in which the company is incorporated and the date of incorporation. Please be advised, pursuant to NRS §80.010, incorporated companies must register with the State of Nevada, Secretary of State’s Office as a foreign corporation before a contract can be executed between the State of Nevada and the awarded vendor, unless specifically exempted by NRS §80.015.

5.1.4 The selected vendor, prior to doing business in the State of Nevada, must be

appropriately 7.1.1.3 licensed by the Department of Taxation, in accordance with NRS §360.780.

5.1.5 Vendor shall have a Certificate of Registration issued by the Nevada Division of Insurance as required by NRS 683.085 prior to approval of the Board of Examiners. Vendor will be required to provide a copy of their approved Certificate of Registration before commencement of services.

5.1.6 Financial information and documentation to be included in Part III of your response in accordance with the Submittal Instructions.

5.1.6.1 Dun and Bradstreet number 5.1.6.2 Federal Tax Identification Number

5.1.6 Disclosure of any alleged significant prior or ongoing contract failures, contract breaches, any civil or criminal litigation or investigation pending which involves the vendor or in which the vendor has been judged guilty or liable with the State of Nevada.

5.1.7 Location(s) of the company offices and location of the office that will provide the services described in this RFP.

5.1.8 Is your firm a resident of Nevada or a resident of another state? If so, please list the state of residence. Does your resident state apply a preference, which is not afforded to bidders or vendors who are residents in the state of Nevada? This information may be utilized in determining whether an inverse preference applies pursuant to NRS §333.336.

5.1.9 Number of employees both locally and nationally.

5.1.10 Location(s) from which employees will be assigned.

5.1.11 Name, address and telephone number of the vendor’s point of contact for a contract resulting from this RFP.

5.1.12 Company background/ history and why vendor is qualified to provide the services described in this RFP.

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5.1.15 Length of time vendor has been providing services described in this RFP to the public and/or private sector. Please provide a brief description.

5.1.16 Has the vendor ever been engaged under contract by any State of Nevada agency?

[ ] Yes [ ] No If “Yes,” specify when, for what duties, and for which agency. 5.1.17 Is the vendor or any of the vendor’s employees employed by the State of Nevada, any of its political subdivisions or by any other government?

[ ] Yes [ ] No If “Yes,” is that employee planning to render services while on annual leave, compensatory time, sick leave, or on his own time?

5.1.18 Resumes for key staff to be responsible for performance of any contract resulting from this RFP.

6. REFERENCES

6.1.1 Vendors should provide a minimum of three (3) references from similar projects performed for private, state and/or large local government clients within the last three years. Vendors are required to submit Attachment D, Reference Form to the business references they list. The business references must submit the Reference Form directly to the Purchasing Division. It is the vendor’s responsibility to ensure that completed forms are received by the Purchasing Division on or before the proposal submission deadline for inclusion in the evaluation process. Business References not received, or not complete, may adversely affect the vendor’s score in the evaluation process. The Purchasing Division may contact any or all business references for validation of information submitted.

• Client name; • Project description; • Project dates (starting and ending); • Technical environment; (i.e., Software applications, Internet capabilities, Data

communications, Network, Hardware) • Staff assigned to reference engagement that will be designated for work per this RFP; • Client project manager name, telephone number, fax number and e-mail address.

7. SUBCONTRACTOR INFORMATION

7.1 Does this proposal include the use of subcontractors?

Yes ______ No ______ Unknown ______

If “Yes”, vendor must:

7.1.1 Identify specific subcontractors and the specific requirements of this RFP for which each proposed subcontractor will perform services.

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7.1.2 Provide the same information for any proposed subcontractors as requested in the

Primary Vendor Information section.

7.1.3 References as specified above must be provided for any proposed subcontractors.

7.1.4 The State may require that the awarded vendor provide proof of payment to any subcontractors used for this project. Proposals should include a plan by which, at the State’s request, the State will be notified of such payments.

7.1.5 Primary vendor shall not allow any subcontractor to commence work until all

insurance required of the subcontractor is provided to the using agency. 7.1.6 Primary vendor must notify the using agency of the intended use of any

subcontractors not identified within their response and receive agency approval prior to subcontractor commencing work.

8. NETWORK ACCESS COST

Note: All Cost Proposals shall be submitted to the State as a separate, sealed package and clearly marked: “Cost Proposal in Response to RFP No.***”, please refer to the Submittal Instructions for further instruction.

8.1 Vendors must provide detailed fixed prices for all costs associated with the responsibilities and related services in the format provided below. Clearly specify the nature of all expenses anticipated. PEBP strongly suggests that administrative costs be provided as PPPM (per participant per month). Please refer to the definition sections of this RFP for the definition of PPPM and participant.

Cost PPPM July 1, 2010-

June 30, 2011 July 1, 2011- June 30, 2012

July 1, 2012- June 30, 2013

July 1, 2013- June 30, 2014

Network Access EDI (claim repricing)

Provider data & fee schedule EDI (vendors without EDI claims re-pricing capability)

Other Total

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9. PAYMENT

9.1 Payment for the contracted service will occur within 15 days upon receipt of invoice and the using agency’s approval.

9.1 PEBP generally pays for services billed on a monthly basis, upon receipt of an invoice and using

agency approval. Invoices must be submitted by the 1st of each month. 9.2 Payment will be made to vendor based on headcounts determined by PEBP.

10. SUBMITTAL INSTRUCTIONS

10.1 In lieu of a pre-proposal conference, the Purchasing Division will accept questions and/or comments in writing, received either by mail, facsimile or e-mail regarding this RFP as follows:

Questions must reference the identifying RFP number and be addressed to the State of Nevada, Purchasing Division, Attn: *********, Purchasing Officer, 515 E. Musser, Suite 300, Carson City, NV 89701, e-mailed to [email protected] or faxed to (775) 684-0188. The deadline for submitting questions is XXXXX at 2:00 p.m., Pacific Time. All questions and/or comments will be addressed in writing and responses e-mailed or faxed to prospective vendors on or about XXXXX. Please provide company name, address, phone number, e-mail address, fax number, and contact person when submitting questions.

10.2 RFP Timeline

TASK DATE/TIME

Deadline for submitting questions August 7, 2009 @ 2:00pm Answers to all questions submitted available on or about on or about August 21, 2009 Deadline for submission of proposals September 18, 2009 @ 2:00pm Evaluation period September 21 – October 9, 2009 Selection of three (3) finalists on or about October 13, 2009 Health Plan Auditor and PEBP Consultant on or about October 20 thru Review of finalist’s capability and proposals October 30, 2009 Vendor presentations to PEBP Board to include on or about December 3, 2009

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Selection of Winning Vendor Contract submitted for Insurance Commissioner Approval on or about February 1, 2010 Contract Approval by Nevada Board of Examiners on or about March 9, 2010 NOTE: These dates represent a tentative schedule of events. The State reserves the right to

modify these dates at any time, with appropriate notice to prospective vendors.

10.3 Proposal submission requirements:

10.3.1 Vendors shall submit their response in three (3) parts as designated below:

Part I: Technical Proposal One (1) original marked “MASTER” Ten (10) identical copies One (1) identical copy on CD

THE TECHNICAL PROPOSAL MUST INCLUDE A SEPARATE TAB/SECTION LABELED “STATE DOCUMENTS” WHICH SHALL INCLUDE:

Page 1 of RFP All Amendments to the RFP All Attachments requiring signature Certificate of Insurance

Technical Proposal must not include cost or confidential information.

Technical Proposal shall be submitted to the State in a sealed package and be clearly marked:

“Technical Proposal in Response to RFP No. ***”

Part II: Cost Proposal: One (1) original marked “MASTER” Ten (10) identical copies One (1) identical copy on CD

Cost Proposal shall be submitted to the State in a sealed package and be clearly marked:

“Cost Proposal in Response to RFP No. ***”

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Part III:Confidential Information: One (1) original marked “MASTER” Ten (10) identical copies

Confidential Information shall be submitted to the State in a sealed package and be clearly marked:

“Confidential Information in Response to RFP No. ***”

If the separately sealed proposal, marked as required above, are enclosed in another container for mailing purposes, the outermost container must fully describe the contents of the package and be clearly marked:

REQUEST FOR PROPOSAL NO.: ****** PROPOSAL OPENING DATE: XXXXX

FOR: PEBP Statewide Medical Preferred Provider Organization (PPO) Network Services

10.3.2 Proposal must be received at the address referenced below no later than 2:00pm

Pacific Time, XXXXX. Proposals that do not arrive by proposal opening time and date WILL NOT BE ACCEPTED. Vendors may submit their proposal any time prior to the above stated deadline.

10.3.3 Proposal shall be submitted to:

State of Nevada, Purchasing Division ****, Services Purchasing

755 N. Roop St., No. 211 Carson City, NV 89701 10.4 The State will not be held responsible for proposal envelopes mishandled as a result of the

envelope not being properly prepared. Facsimile, e-mail or telephone proposals will NOT be considered; however, at the State’s discretion, the proposal may be submitted all or in part on electronic media, as requested within the RFP document. Proposal may be modified by facsimile, e-mail or written notice provided such notice is received prior to the opening of the proposals.

10.5 Although it is a public opening, only the names of the vendors submitting proposals will be

announced NRS §333.335(6). Technical and cost details about proposals submitted will not be disclosed. Assistance for handicapped, blind or hearing-impaired persons who wish to attend the RFP opening is available. If special arrangements are necessary, please notify the Purchasing Division designee as soon as possible and at least two days in advance of the opening.

10.6 If discrepancies are found between two or more copies of the proposal, the master copy will

provide the basis for resolving such discrepancies. If one copy of the proposal is not clearly

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marked “MASTER,” the State may reject the proposal. However, the State may at its sole option, select one copy to be used as the master.

10.7 For ease of evaluation, the proposal should be presented in a format that corresponds to and

references sections outlined within this RFP and should be presented in the same order. Responses to each section and subsection should be labeled so as to indicate which item is being addressed. Exceptions to this will be considered during the evaluation process.

10.8 If complete responses cannot be provided without referencing confidential information, such

confidential information must be provided in accordance with submittal instructions and specific references made to the tab, page, section and/or paragraph where the confidential information can be located.

10.9 Proposals are to be prepared in such a way as to provide a straightforward, concise delineation of

capabilities to satisfy the requirements of this RFP. Expensive bindings, colored displays, promotional materials, etc., are not necessary or desired. Emphasis should be concentrated on conformance to the RFP instructions, responsiveness to the RFP requirements, and on completeness and clarity of content.

10.10 Descriptions on how any and all equipment and/or services will be used to meet the requirements

of this RFP shall be given, in detail, along with any additional information documents that are appropriately marked.

10.11 The proposal must be signed by the individual(s) legally authorized to bind the vendor, see NRS

§333.337. 10.12 For ease of responding to the RFP, vendors are encouraged, but not required, to request an

electronic copy of the RFP. Electronic copies are available in the following formats: Word 6.0/7.0 via e-mail, diskette, or on the State Purchasing Division's website in PDF or EXE format at http://purchasing.state.nv.us. When requesting an RFP via e-mail or CD, vendors should contact the Purchasing Division for assistance. In the event vendors choose to receive the RFP on CD, unless vendors provide a Federal Express, Airborne Express, etc. account number and appropriate return materials, the CD will be returned by first class U.S. mail.

10.13 Vendors utilizing an electronic copy of the RFP in order to prepare their proposal should place

their written response in an easily distinguishable font immediately following the applicable question.

10.14 For purposes of addressing questions concerning this RFP, the sole contact will be the

Purchasing Division. Upon issuance of this RFP, other employees and representatives of the agencies identified in the RFP will not answer questions or otherwise discuss the contents of this RFP with any prospective vendors or their representatives. Failure to observe this restriction may result in disqualification of any subsequent proposal NAC §333.155(3). This restriction does not preclude discussions between affected parties for the purpose of conducting business unrelated to this procurement.

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10.15 Vendor who believes proposal requirements or specifications are unnecessarily restrictive or limit competition may submit a request for administrative review, in writing, to the Purchasing Division. To be considered, a request for review must be received no later than the deadline for submission of questions.

The Purchasing Division shall promptly respond in writing to each written review request, and where appropriate, issue all revisions, substitutions or clarifications through a written amendment to the RFP.

Administrative review of technical or contractual requirements shall include the reason for the request, supported by factual information, and any proposed changes to the requirements.

10.16 If a vendor changes any material RFP language, vendor’s response may be deemed non-

responsive. NRS §333.311. 10.17 Vendors are cautioned that some services may contain licensing requirement(s). Vendors shall be

proactive in verification of these requirements prior to proposal submittal. Proposals, which do not contain the requisite licensure, may be deemed non-responsive. However, this does not negate any applicable Nevada Revised Statute (NRS) requirements.

11. PROPOSAL EVALUATION AND AWARD PROCESS

11.1 Proposals shall be consistently evaluated and scored in accordance with NRS §333.335(3) based upon the following criteria listed in descending order of precedence:

• Reasonableness of provider reimbursement levels • Availability of network providers in all necessary specialties throughout the state of

Nevada • Demonstrated Competence and Customer Service • Reasonableness of cost (Network access fees) • Conformance with the terms of this RFP • Financial Stability Note: Financial stability will be scored on a pass/fail basis

Proposals shall be kept confidential until a contract is awarded. Finalist vendor(s) selected by the evaluation committee will be evaluated by the PEBP Board based on the following criteria listed in descending order of precedence. The PEBP Board will select the winning vendor.

• Evaluation committee consensus score • Reasonableness of provider reimbursement levels • Availability of network providers in all necessary specialties throughout the state of

Nevada

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• Reasonableness of cost (Network access fees) • Competence and experience • Formal presentation

11.2 The evaluation committee may also contact the references provided in response to the Section identified as Company Background and References; contact any vendor to clarify any response; contact any current users of a vendor’s services; solicit information from any available source concerning any aspect of a proposal; and seek and review any other information deemed pertinent to the evaluation process. The evaluation committee shall not be obligated to accept the lowest priced proposal, but shall make an award in the best interests of the State of Nevada NRS § 333.335(5)

11.3 Each vendor must include in its proposal a complete disclosure of any alleged significant prior or ongoing contract failures, contract breaches, any civil or criminal litigation or investigations pending which involves the vendor or in which the vendor has been judged guilty or liable. Failure to comply with the terms of this provision may disqualify any proposal. The State reserves the right to reject any proposal based upon the vendor’s prior history with the State or with any other party, which documents, without limitation, unsatisfactory performance, adversarial or contentious demeanor, significant failure(s) to meet contract milestones or other contractual failures. See generally, NRS §333.335.

11.4 Clarification discussions may, at the State’s sole option, be conducted with vendors who submit

proposals determined to be acceptable and competitive NAC §333.165. Vendors shall be accorded fair and equal treatment with respect to any opportunity for discussion and/or written revisions of proposals. Such revisions may be permitted after submissions and prior to award for the purpose of obtaining best and final offers. In conducting discussions, there shall be no disclosure of any information derived from proposals submitted by competing vendors.

11.5 A Notification of Intent to Award shall be issued in accordance with NAC §333.170. Any award

is contingent upon the successful negotiation of final contract terms and upon approval of the Board of Examiners, when required. Negotiations shall be confidential and not subject to disclosure to competing vendors unless and until an agreement is reached. If contract negotiations cannot be concluded successfully, the State upon written notice to all vendors may negotiate a contract with the next highest scoring vendor or withdraw the RFP.

11.6 Any contract resulting from this RFP shall not be effective unless and until approved by the

Nevada State Board of Examiners (NRS 284.173). 12. TERMS, CONDITIONS AND EXCEPTIONS

12.1 Performance of vendor will be rated based on the criteria indicated in the Service Performance

Standards and Financial Guarantees incorporated into this document.

12.2 In accordance with Nevada Revised Statute 333.336, if a vendor submitting a proposal in response to this solicitation is a resident of another state, and with respect to contracts awarded by that state, applies to vendors who are residents of that state a preference, which is not afforded

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to vendors or contractors who are residents of the State of Nevada, the State of Nevada, Purchasing Division shall, insofar as is practicable, increase the out of state vendor’s proposal by an amount that is substantially equivalent to the preference that the other state of which the vendor is a resident denies to vendors or contractors who are residents of the State of Nevada.

12.3 This procurement is being conducted in accordance with NRS chapter 333 and NAC chapter

333. 12.4 The State reserves the right to alter, amend, or modify any provisions of this RFP, or to withdraw

this RFP, at any time prior to the award of a contract pursuant hereto, if it is in the best interest of the State to do so.

12.5 The State reserves the right to waive informalities and minor irregularities in proposals received.

12.6 The State reserves the right to reject any or all proposals received prior to contract award (NRS

§333.350).

12.7 The State shall not be obligated to accept the lowest priced proposal, but will make an award in the best interests of the State of Nevada after all factors have been evaluated (NRS §333.335).

12.8 Any irregularities or lack of clarity in the RFP should be brought to the Purchasing Division

designee’s attention as soon as possible so that corrective addenda may be furnished to prospective vendors.

12.9 Proposals must include any and all proposed terms and conditions, including, without limitation,

written warranties, maintenance/service agreements, license agreements, lease purchase agreements and the vendor’s standard contract language. The omission of these documents renders a proposal non-responsive.

12.10 Alterations, modifications or variations to a proposal may not be considered unless authorized by

the RFP or by addendum or amendment. 12.11 Proposals which appear unrealistic in the terms of technical commitments, lack of technical

competence, or are indicative of failure to comprehend the complexity and risk of this contract, may be rejected.

12.12 Proposals from employees of the State of Nevada will be considered in as much as they do not conflict with the State Administrative Manual, NRS Chapter §281 and NRS Chapter §284.

12.13 Proposals may be withdrawn by written or facsimile notice received prior to the proposal opening time. Withdrawals received after the proposal opening time will not be considered except as authorized by NRS §333.350(3).

12.14 The price and amount of this proposal must have been arrived at independently and without consultation, communication, agreement or disclosure with or to any other contractor, vendor or

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prospective vendor. Collaboration among competing vendors about potential proposals submitted pursuant to this RFP is prohibited and may disqualify the vendor.

12.15 No attempt may be made at any time to induce any firm or person to refrain from submitting a

proposal or to submit any intentionally high or noncompetitive proposal. All proposals must be made in good faith and without collusion.

12.16 Prices offered by vendors in their proposals are an irrevocable offer for the term of the contract

and any contract extensions. The awarded vendor agrees to provide the purchased services at the costs, rates and fees as set forth in their proposal in response to this RFP. No other costs, rates or fees shall be payable to the awarded vendor for implementation of their proposal.

12.17 The State is not liable for any costs incurred by vendors prior to entering into a formal contract. Costs of developing the proposal or any other such expenses incurred by the vendor in responding to the RFP, are entirely the responsibility of the vendor, and shall not be reimbursed in any manner by the State.

12.18 All proposals submitted become the property of the State, selection or rejection does not affect

this right; proposals will be returned only at the State’s option and at the vendor’s request and expense. The master technical proposal, the master cost proposal and Confidential Information of each response shall be retained for official files. Only the master technical and master cost will become public record after the award of a contract. The failure to separately package and clearly mark Part III – which contains Confidential Information, Trade Secrets and/or Proprietary Information shall constitute a complete waiver of any and all claims for damages caused by release of the information by the State.

12.19 A proposal submitted in response to this RFP must identify any subcontractors, and outline the contractual relationship between the awarded vendor and each subcontractor. An official of each proposed subcontractor must sign, and include as part of the proposal submitted in response to this RFP, a statement to the effect that the subcontractor has read and will agree to abide by the awarded vendor’s obligations.

12.20 The awarded vendor will be the sole point of contract responsibility. The State will look solely

to the awarded vendor for the performance of all contractual obligations which may result from an award based on this RFP, and the awarded vendor shall not be relieved for the non-performance of any or all subcontractors.

12.21 The awarded vendor must maintain, for the duration of its contract, insurance coverages as set

forth in the Insurance Schedule of the contract form appended to this RFP. Work on the contract shall not begin until after the awarded vendor has submitted acceptable evidence of the required insurance coverages. Failure to maintain any required insurance coverage or acceptable alternative method of insurance will be deemed a breach of contract.

Notwithstanding any other requirement of this section, the State reserves the right to consider

reasonable alternative methods of insuring the contract in lieu of the insurance policies required by the above-stated Insurance Schedule. It will be the awarded vendor’s responsibility to

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recommend to the State alternative methods of insuring the contract. Any alternatives proposed by a vendor should be accompanied by a detailed explanation regarding the vendor’s inability to obtain insurance coverage as described above. The State shall be the sole and final judge as to the adequacy of any substitute form of insurance coverage.

12.22 Each vendor must disclose any existing or potential conflict of interest relative to the

performance of the contractual services resulting from this RFP. Any such relationship that might be perceived or represented as a conflict should be disclosed. By submitting a proposal in response to this RFP, vendors affirm that they have not given, nor intend to give at any time hereafter, any economic opportunity, future employment, gift, loan, gratuity, special discount, trip, favor, or service to a public servant or any employee or representative of same, in connection with this procurement. Any attempt to intentionally or unintentionally conceal or obfuscate a conflict of interest will automatically result in the disqualification of a vendor’s proposal. An award will not be made where a conflict of interest exists. The State will determine whether a conflict of interest exists and whether it may reflect negatively on the State’s selection of a vendor. The State reserves the right to disqualify any vendor on the grounds of actual or apparent conflict of interest.

12.23 The State will not be liable for Federal, State, or Local excise taxes NRS §372.325.

12.24 Attachment B of this RFP shall constitute an agreement to all terms and conditions specified in

the RFP, including, without limitation, the Attachment C contract form and all terms and conditions therein, except such terms and conditions that the vendor expressly excludes. Exceptions will be taken into consideration as part of the evaluation process.

12.25 The State reserves the right to negotiate final contract terms with any vendor selected NAC §333.170. The contract between the parties will consist of the RFP together with any modifications thereto, and the awarded vendor’s proposal, together with any modifications and clarifications thereto that are submitted at the request of the State during the evaluation and negotiation process. In the event of any conflict or contradiction between or among these documents, the documents shall control in the following order of precedence: the final executed contract, the RFP, any modifications and clarifications to the awarded vendor’s proposal, and the awarded vendor’s proposal. Specific exceptions to this general rule may be noted in the final executed contract.

12.26 Vendor understands and acknowledges that the representations above are material and important, and will be relied on by the State in evaluation of the proposal. Any vendor misrepresentation shall be treated as fraudulent concealment from the State of the true facts relating to the proposal.

12.27 No announcement concerning the award of a contract as a result of this RFP can be made without the prior written approval of the State.

12.28 The Nevada Attorney General will not render any type of legal opinion regarding this transaction.

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12.29 Any unsuccessful vendor may file an appeal in strict compliance with NRS 333.370 and chapter 333 of the Nevada Administrative Code.

12.30 Local governments (as defined in NRS §332.015) are intended third party beneficiaries of any

contract resulting from this RFP and any local government may join or use any contract resulting from this RFP subject to all terms and conditions thereof pursuant to NRS §332.195. The State is not liable for the obligations of any local government which joins or uses any contract resulting from this RFP.

12.31 Any person who requests or receives a Federal contract, grant, loan or cooperative agreement

shall file with the using agency a certification that the person making the declaration has not made, and will not make, any payment prohibited by subsection (a) of 31 U.S.C. §1352.

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13. SUBMISSION CHECKLIST This checklist is provided for vendor’s convenience only and identifies documents that must be

submitted with each package in order to be considered responsive. Any proposals received without these requisite documents may be deemed non-responsive and not considered for contract award.

Part I: Completed

1. Required number of Technical proposals (per Submittal Instructions) __________

2. Required Forms to be submitted with technical proposal under section/tab labeled “State Documents”; __________

a. Page 1 of the RFP completed and signed __________ b. All Amendments completed and signed __________

c. Primary Vendor Attachments A & B signed __________ d. Subcontractor Attachment A & B signed (if applicable) __________ e. Primary Vendor Information provided __________ f. Subcontractor Information provided (if applicable) __________ g. Certificate of Insurance __________

h. (other)_______________________________________ __________

Part II: 1. Required number of Cost proposals (per Submittal Instructions) __________ 2. (other)_______________________________________ __________

Part III:

1. Required number of Confidential Information (per Submittal Instructions and defined in Acronyms/Definitions) __________

2. Financial Information __________ REMINDERS: . 1. Send out Reference forms for Primary Vendor (with Part A completed) __________ 2. Send out Reference forms for Subcontractors (with Part A completed) (if applicable) __________

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Attachment A

CONFIDENTIALITY OF PROPOSALS AND CERTIFICATION OF INDEMNIFICATION

PRIMARY VENDOR Submitted proposals, which are marked “confidential” in their entirety, or those in which a significant portion of the submitted proposal is marked “confidential” will not be accepted by the State of Nevada. Pursuant to NRS §333.333, only specific parts of the proposal may be labeled a “trade secret” as defined in NRS §600A.030(5). All proposals are confidential until the contract is awarded; at which time, both successful and unsuccessful vendors’ technical and cost proposals become public information. In accordance with the Submittal Instructions of this document, vendors are requested to submit confidential information in a separate envelope or binder marked “confidential.” The State will not be responsible for any information contained within the proposal should vendors not comply with the labeling and packing requirements, proposals will be released as submitted. In the event a governing board acts as the final authority, there may be public discussion regarding the submitted proposals that will be in an open meeting format, the proposals will remain confidential. By signing below, I understand it is my responsibility as the vendor to act in protection of the labeled information and agree to defend and indemnify the State of Nevada for honoring such designation. I duly realize failure to so act will constitute a complete waiver and all submitted information will become public information; additionally, failure to label any information that is released by the State shall constitute a complete waiver of any and all claims for damages caused by the release of the information. This proposal contains either Confidential Information, Trade Secrets and/or Proprietary information as defined in Section 2 “ACRONYMS/DEFINITIONS.” YES__________ NO___________ SIGNATURE ________________________________ ___________________ Primary Vendor Date PRINT NAME ________________________________ Primary Vendor

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Attachment A

CONFIDENTIALITY OF PROPOSALS AND CERTIFICATION OF INDEMNIFICATION

SUBCONTRACTOR Submitted proposals, which are marked “confidential” in their entirety, or those in which a significant portion of the submitted proposal is marked “confidential” will not be accepted by the State of Nevada. Pursuant to NRS §333.333, only specific parts of the proposal may be labeled a “trade secret” as defined in NRS §600A.030(5). All proposals are confidential until the contract is awarded; at which time, both successful and unsuccessful vendors’ technical and cost proposals become public information. In accordance with the Submittal Instructions of this document, vendors are requested to submit confidential information in a separate envelope or binder marked “confidential.” The State will not be responsible for any information contained within the proposal should vendors not comply with the labeling and packaging submission requirements, proposal will be released as submitted. In the event a governing board acts as the final authority, there may be public discussion regarding the submitted proposal that will be in an open meeting format, the proposals will remain confidential. By signing below, I understand it is my responsibility as the vendor to act in protection of the labeled information and agree to defend and indemnify the State of Nevada for honoring such designation. I duly realize failure to so act will constitute a complete waiver and all submitted information will become public information; additionally, failure to label any information that is released by the State shall constitute a complete waiver of any and all claims for damages caused by the release of the information. This proposal contains either Confidential Information, Trade Secrets and/or Proprietary information as defined in Section 2 “ACRONYMS/DEFINITIONS.” YES__________ NO___________ SIGNATURE ________________________________ ___________________ Subcontractor Date PRINT NAME ________________________________ Subcontractor

This document must be submitted in the “State Documents” section/tab of vendors’

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Attachment B

CERTIFICATION OF COMPLIANCE WITH TERMS AND CONDITIONS OF RFP

PRIMARY VENDOR I have read, understand and agree to comply with the terms and conditions specified in this Request for Proposal. Checking “YES” indicates acceptance of all terms and conditions, while checking “NO” denotes non-acceptance and vendor’s exceptions should be detailed below. In order for any exceptions to be considered they MUST be documented. YES _______ I agree. NO _______ Exceptions below: SIGNATURE ________________________________ ___________________ Primary Vendor Date PRINT NAME ________________________________ Primary Vendor

EXCEPTION SUMMARY FORM RFP SECTION NUMBER

RFP PAGE NUMBER

EXCEPTION (PROVIDE A DETAILED EXPLANATION)


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Attachment B

CERTIFICATION OF COMPLIANCE WITH TERMS AND CONDITIONS OF RFP

SUBCONTRACTOR I have read, understand and agree to comply with the terms and conditions specified in this Request for Proposal. Checking “YES” indicates acceptance of all terms and conditions, while checking “NO” denotes non-acceptance and vendor’s exceptions should be detailed below. In order for any exceptions to be considered they MUST be documented. YES _______ I agree. NO _______ Exceptions below: SIGNATURE ________________________________ ___________________ Subcontractor Date PRINT NAME ________________________________ Subcontractor

EXCEPTION SUMMARY FORM RFP SECTION NUMBER

RFP PAGE NUMBER

EXCEPTION (PROVIDE A DETAILED EXPLANATION)

Attach additional sheets if necessary. Please use this format.


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Attachment C

CONTRACT FORM

The following State Contract Form is provided as a courtesy to vendors interested in responding to this RFP. Please review the terms and conditions in this form, as this is the standard contract used by the State for all services of independent contractors. It is not necessary for vendors to complete the Contract Form with their proposal responses. All vendors are required to submit a Certificate of Insurance in the “State Documents tab/section of their technical proposal identifying the coverages and minimum limits currently in effect. Please pay particular attention to the insurance requirements, as specified in paragraph 16 of the attached contract. As with all other requirements of this RFP, vendors may take exception to any of the terms in the Contract Form, including the required insurance limits. Exceptions will be considered during the evaluation process. Unless specified as above, the insurance minimum limits will be negotiated at the time the State issues a Letter of Intent to Award.


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CONTRACT FOR SERVICES OF INDEPENDENT CONTRACTOR

A Contract Between the State of Nevada Acting By and Through Its

(NAME, ADDRESS, PHONE AND FACSIMILE NUMBER OF CONTRACTING AGENCY) and

(NAME, CONTACT PERSON, ADDRESS, PHONE, FACSIMILE NUMBER OF INDEPENDENT CONTRACTOR) WHEREAS, NRS 284.173 authorizes elective officers, heads of departments, boards, commissions or institutions to engage, subject to the approval of the Board of Examiners, services of persons as independent contractors; and WHEREAS, it is deemed that the service of Contractor are both necessary and in the best interests of the State of Nevada; NOW, THEREFORE, in consideration of the aforesaid premises, the parties mutually agree as follows: 1. REQUIRED APPROVAL. This Contract shall not become effective until and unless approved by the Nevada State Board of Examiners. 2. DEFINITIONS. “State” means the State of Nevada and any state agency identified herein, its officers, employees and immune contractors as defined in NRS §41.0307. “Independent Contractor” means a person or entity that performs services and/or provides goods for the State under the terms and conditions set forth in this Contract. “Fiscal Year” is defined as the period beginning July 1 and ending June 30 of the following year. 3. CONTRACT TERM. This Contract shall be effective from subject to Board of Examiners’ approval (anticipated to be ) to , unless sooner terminated by either party as specified in paragraph (10). 4. NOTICE. Unless otherwise specified, termination shall not be effective until ____ calendar days after a party has served written notice of default, or without cause upon the other party. All notices or other communications required or permitted to be given under this Contract shall be in writing and shall be deemed to have been duly given if delivered personally in hand, by telephonic facsimile with simultaneous regular mail, or mailed certified mail, return receipt requested, postage prepaid on the date posted, and addressed to the other party at the address specified above. 5. INCORPORATED DOCUMENTS. The parties agree that the scope of work shall be specifically described; this Contract incorporates the following attachments in descending order of constructive precedence; a Contractor's Attachment shall not contradict or supersede any State specifications, terms or conditions without written evidence of mutual assent to such change appearing in this Contract: ATTACHMENT AA: STATE SOLICITATION (RFP #_______) and ATTACHMENTS #1, ETC.; SCOPE OF WORK ATTACHMENT BB: CONTRACTOR'S RESPONSE ATTACHMENT CC: SERVICE PERFORMANCE STANDARDS AND FINANCIAL GUARANTEES 6. CONSIDERATION. The parties agree that Contractor will provide the services specified in paragraph (5) at a cost of $ ____________ per ____________ (state the exact cost or hourly, daily, or weekly rate exclusive of travel or per diem expenses) with the total Contract or installments payable: ______________, not to exceed $ __________. The State does not agree to reimburse Contractor for expenses unless otherwise specified in the incorporated attachments. Any intervening end to a biennial appropriation period shall be deemed an automatic renewal (not changing the overall Contract term) or a termination as the results of legislative appropriation may require. 7. ASSENT. The parties agree that the terms and conditions listed on incorporated attachments of this Contract are also specifically a part of this Contract and are limited only by their respective order of precedence and any limitations specified.

For Purchasing Use Only:

RFP/CONTRACT #

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8. TIMELINESS OF BILLING SUBMISSION. The parties agree that timeliness of billing is of the essence to the contract and recognize that the State is on a fiscal year. All billings for dates of service prior to July 1 must be submitted to the State no later than the first Friday in August of the same year. A billing submitted after the first Friday in August, which forces the State to process the billing as a stale claim pursuant to NRS 353.097, will subject the Contractor to an administrative fee not to exceed $100.00. The parties hereby agree this is a reasonable estimate of the additional costs to the State of processing the billing as a stale claim and that this amount will be deducted from the stale claim payment due to the Contractor. 9. INSPECTION & AUDIT. a. Books and Records. Contractor agrees to keep and maintain under general accepted accounting principles (GAAP) full,

true and complete records, contracts, books, and documents as are necessary to fully disclose to the State or United States Government, or their authorized representatives, upon audits or reviews, sufficient information to determine compliance with all state and federal regulations and statutes.

b. Inspection & Audit. Contractor agrees that the relevant books, records (written, electronic, computer related or otherwise), including, without limitation, relevant accounting procedures and practices of Contractor or its subcontractors, financial statements and supporting documentation, and documentation related to the work product shall be subject, at any reasonable time, to inspection, examination, review, audit, and copying at any office or location of Contractor where such records may be found, with or without notice by the State Auditor, the relevant state agency or its contracted examiners, the Department of Administration, Budget Division, the Nevada State Attorney General's Office or its Fraud Control Units, the State Legislative Auditor, and with regard to any federal funding, the relevant federal agency, the Comptroller General, the General Accounting Office, the Office of the Inspector General, or any of their authorized representatives. All subcontracts shall reflect requirements of this paragraph.

c. Period of Retention. All books, records, reports, and statements relevant to this Contract must be retained a minimum three years and for five years if any federal funds are used in the Contract. The retention period runs from the date of payment for the relevant goods or services by the State, or from the date of termination of the Contract, whichever is later. Retention time shall be extended when an audit is scheduled or in progress for a period reasonably necessary to complete an audit and/or to complete any administrative and judicial litigation which may ensue.

10. CONTRACT TERMINATION. a. Termination Without Cause. Any discretionary or vested right of renewal notwithstanding, this Contract may be

terminated upon written notice by mutual consent of both parties or unilaterally by either party without cause. b. State Termination for Nonappropriation. The continuation of this Contract beyond the current biennium is subject to

and contingent upon sufficient funds being appropriated, budgeted, and otherwise made available by the State Legislature and/or federal sources. The State may terminate this Contract, and Contractor waives any and all claim(s) for damages, effective immediately upon receipt of written notice (or any date specified therein) if for any reason the Contracting Agency’s funding from State and/or federal sources is not appropriated or is withdrawn, limited, or impaired.

c. Cause Termination for Default or Breach. A default or breach may be declared with or without termination. This Contract may be terminated by either party upon written notice of default or breach to the other party as follows:

i. If Contractor fails to provide or satisfactorily perform any of the conditions, work, deliverables, goods, or services called for by this Contract within the time requirements specified in this Contract or within any granted extension of those time requirements; or

ii. If any state, county, city or federal license, authorization, waiver, permit, qualification or certification required by statute, ordinance, law, or regulation to be held by Contractor to provide the goods or services required by this Contract is for any reason denied, revoked, debarred, excluded, terminated, suspended, lapsed, or not renewed; or iii. If Contractor becomes insolvent, subject to receivership, or becomes voluntarily or involuntarily subject to the jurisdiction of the bankruptcy court; or

iv. If the State materially breaches any material duty under this Contract and any such breach impairs Contractor's ability to perform; or

v. If it is found by the State that any quid pro quo or gratuities in the form of money, services, entertainment, gifts, or otherwise were offered or given by Contractor, or any agent or representative of Contractor, to any officer or employee of the State of Nevada with a view toward securing a contract or securing favorable treatment with respect to awarding, extending, amending, or making any determination with respect to the performing of such contract; or

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vi. If it is found by the State that Contractor has failed to disclose any material conflict of interest relative to the performance of this Contract.

d. Time to Correct. Termination upon a declared default or breach may be exercised only after service of formal written notice as specified in paragraph (4), and the subsequent failure of the defaulting party within 15 calendar days of receipt of that notice to provide evidence, satisfactory to the aggrieved party, showing that the declared default or breach has been corrected.

e. Winding Up Affairs Upon Termination. In the event of termination of this Contract for any reason, the parties agree that the provisions of this paragraph survive termination:

i. The parties shall account for and properly present to each other all claims for fees and expenses and pay those which are undisputed and otherwise not subject to set off under this Contract. Neither party may withhold performance of winding up provisions solely based on nonpayment of fees or expenses accrued up to the time of termination;

ii. Contractor shall satisfactorily complete work in progress at the agreed rate (or a pro rata basis if necessary) if so requested by the Contracting Agency; iii. Contractor shall execute any documents and take any actions necessary to effectuate an assignment of this Contract if so requested by the Contracting Agency; iv. Contractor shall preserve, protect and promptly deliver into State possession all proprietary information in accordance with paragraph (21).

11. REMEDIES. Except as otherwise provided for by law or this Contract, the rights and remedies of the parties shall not be exclusive and are in addition to any other rights and remedies provided by law or equity, including, without limitation, actual damages, and to a prevailing party reasonable attorneys' fees and costs. It is specifically agreed that reasonable attorneys' fees shall include without limitation $125 per hour for State-employed attorneys. The State may set off consideration against any unpaid obligation of Contractor to any State agency in accordance with NRS 353C.190. 12. LIMITED LIABILITY. The State will not waive and intends to assert available NRS chapter 41 liability limitations in all cases. Contract liability of both parties shall not be subject to punitive damages. Liquidated damages shall not apply unless otherwise specified in the incorporated attachments. Damages for any State breach shall never exceed the amount of funds appropriated for payment under this Contract, but not yet paid to Contractor, for the fiscal year budget in existence at the time of the breach. Damages for any Contractor breach shall not exceed 150% of the contract maximum “not to exceed” value. Contractor’s tort liability shall not be limited. 13. FORCE MAJEURE. Neither party shall be deemed to be in violation of this Contract if it is prevented from performing any of its obligations hereunder due to strikes, failure of public transportation, civil or military authority, act of public enemy, accidents, fires, explosions, or acts of God, including, without limitation, earthquakes, floods, winds, or storms. In such an event the intervening cause must not be through the fault of the party asserting such an excuse, and the excused party is obligated to promptly perform in accordance with the terms of the Contract after the intervening cause ceases. 14. INDEMNIFICATION. To the fullest extent permitted by law, Contractor shall indemnify, hold harmless and defend, not excluding the State's right to participate, the State from and against all liability, claims, actions, damages, losses, and expens-es, including, without limitation, reasonable attorneys' fees and costs, arising out of any alleged negligent or willful acts or omissions of Contractor, its officers, employees and agents. 15. INDEPENDENT CONTRACTOR. Contractor is associated with the State only for the purposes and to the extent specified in this Contract, and in respect to performance of the contracted services pursuant to this Contract, Contractor is and shall be an independent contractor and, subject only to the terms of this Contract, shall have the sole right to supervise, manage, operate, control, and direct performance of the details incident to its duties under this Contract. Nothing contained in this Contract shall be deemed or construed to create a partnership or joint venture, to create relationships of an employer-employee or principal-agent, or to otherwise create any liability for the State whatsoever with respect to the indebtedness, liabilities, and obligations of Contractor or any other party. Contractor shall be solely responsible for, and the State shall have no obligation with respect to: (1) withholding of income taxes, FICA or any other taxes or fees; (2) industrial insurance coverage; (3) participation in any group insurance plans available to employees of the State; (4) participation or contributions by either Contractor or the State to the Public Employees Retirement System; (5) accumulation of vacation leave or sick leave; or (6) unemployment compensation coverage provided by the State. Contractor shall indemnify and hold State harmless from, and defend State against, any and all losses, damages, claims, costs, penalties, liabilities, and expenses arising

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or incurred because of, incident to, or otherwise with respect to any such taxes or fees. Neither Contractor nor its employees, agents, or representatives shall be considered employees, agents, or representatives of the State. The State and Contractor shall evaluate the nature of services and term negotiated in order to determine "independent contractor" status and shall monitor the work relationship throughout the term of the Contract to ensure that the independent contractor relationship remains as such. To assist in determining the appropriate status (employee or independent contractor), Contractor represents as follows:

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Contractor's Initials

YES NO

1. Does the Contracting Agency have the right to require control of when, where and how the independent contractor is to work?

2. Will the Contracting Agency be providing training to the independent contractor?

3. Will the Contracting Agency be furnishing the independent contractor with worker's space, equipment, tools, supplies or travel expenses?

4. Are any of the workers who assist the independent contractor in performance of his/her duties employees of the State of Nevada?

5. Does the arrangement with the independent contractor contemplate continuing or recurring work (even if the services are seasonal, part-time, or of short duration)?

6. Will the State of Nevada incur an employment liability if the independent contractor is terminated for failure to perform?

7. Is the independent contractor restricted from offering his/her services to the general public while engaged in this work relationship with the State?

16. INSURANCE SCHEDULE. Unless expressly waived in writing by the State, Contractor, as an independent contractor and not an employee of the State, must carry policies of insurance in amounts specified in this Insurance Schedule and pay all taxes and fees incident hereunto. The State shall have no liability except as specifically provided in the Contract. The Contractor shall not commence work before: 1) Contractor has provided the required evidence of insurance to the Contracting Agency of the State, and 2) The State has approved the insurance policies provided by the Contractor. Prior approval of the insurance policies by the State shall be a condition precedent to any payment of consideration under this Contract and the State’s approval of any changes to insurance coverage during the course of performance shall constitute an ongoing condition subsequent this Contract. Any failure of the State to timely approve shall not constitute a waiver of the condition. Insurance Coverage: The Contractor shall, at the Contractor’s sole expense, procure, maintain and keep in force for the duration of the Contract the following insurance conforming to the minimum requirements specified below. Unless specifically specified herein or otherwise agreed to by the State, the required insurance shall be in effect prior to the commencement of work by the Contractor and shall continue in force as appropriate until the latter of:

1. Final acceptance by the State of the completion of this Contract; or 2. Such time as the insurance is no longer required by the State under the terms of this Contract.

Any insurance or self-insurance available to the State shall be excess of and non-contributing with any insurance required from Contractor. Contractor’s insurance policies shall apply on a primary basis. Until such time as the insurance is no longer required by the State, Contractor shall provide the State with renewal or replacement evidence of insurance no less

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than thirty (30) days before the expiration or replacement of the required insurance. If at any time during the period when insurance is required by the Contract, an insurer or surety shall fail to comply with the requirements of this Contract, as soon as Contractor has knowledge of any such failure, Contractor shall immediately notify the State and immediately replace such insurance or bond with an insurer meeting the requirements.

Workers’ Compensation and Employer’s Liability Insurance

1) Contractor shall provide proof of worker’s compensation insurance as required of Nevada Revised Statutes Chapters 616A through 616D inclusive.

2) Employer’s Liability insurance with a minimum limit of $500,000 each employee per accident for bodily injury by accident or disease. If this contract is for temporary or leased employees, an Alternate Employer endorsement must be attached to the Contractor’s workers’ compensation insurance policy.

3) If the Contractor qualifies as a sole proprietor as defined in NRS Chapter 616A.310, and has elected to not purchase industrial insurance for himself/herself, the sole proprietor must submit to the contracting State agency a fully executed “Affidavit of Rejection of Coverage Under NRS 616B627 and NRS 617.210” form.

Commercial General Liability Insurance

1) Minimum Limits required: $ 10,000,000.00 General Aggregate $ 10,000,000.00 Products & Completed Operations Aggregate $_ 5,000,000.00_Personal and Advertising Injury

$ 5,000,000.00_Each Occurrence 2) Coverage shall be on an occurrence basis and shall be at least as broad as ISO 1996 form CG 00 01 (or a

substitute form providing equivalent coverage); and shall cover liability arising from premises, operations, independent contractors, completed operations, personal injury, products, civil lawsuits, Title VII actions and liability assumed under an insured contract (including the tort liability of another assumed in a business contract).

Business Automobile Liability Insurance

1) Minimum Limit required: $5,000,000.00 Each Occurrence for bodily injury and property damage. 2) Coverage shall be for “any auto” (including owned, non-owned and hired vehicles). The policy shall be written on ISO form CA 00 01 or a substitute providing equivalent liability coverage. If

necessary, the policy shall be endorsed to provide contractual liability coverage.

Professional Liability Insurance 1) Minimum Limit required: $_15,000,000.00_Each Claim

2) Retroactive date: Prior to commencement of the performance of the contract 3) Discovery period: Three (3) years after termination date of contract. 4) A certified copy of this policy may be required.

Umbrella or Excess Liability Insurance

1) May be used to achieve the above minimum liability limits. 2) Shall be endorsed to state it is “As Broad as Primary Policy”

Commercial Crime Insurance

Minimum Limit required: $_WAIVED Per Loss for Employee Dishonesty This insurance shall be underwritten on a blanket form amending the definition of “employee” to include all employees of the Vendor regardless of position or category.

Performance Security

Amount required: $ __ WAIVED _______________ 1) Security may be in the form of surety bond, Certificate of Deposit or Treasury Note payable to the State of

Nevada, only.

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2) The security shall be deposited with the contracting State agency no later than ten (10) working days following award of the Contract to Contractor.

3) Upon successful Contract completion, the security and all interest earned, if any, shall be returned to the Contractor.

General Requirements:

a. Additional Insured: By endorsement to the general liability insurance policy evidenced by Contractor, The State of Nevada, Public Employees’ Benefits Program, its officers, employees and immune contractors as defined in NRS41.0307 shall be named as additional insureds for all liability arising from the Contract.

b. Waiver of Subrogation: Each liability insurance policy shall provide for a waiver of subrogation as to additional insureds.

c. Cross-Liability: All required liability policies shall provide cross-liability coverage as would be achieve under the standard ISO separation of insureds clause.

d. Deductibles and Self-Insured Retentions: Insurance maintained by Contractor shall apply on a first dollar basis without application of a deductible or self-insured retention unless otherwise specifically agreed to by the State. Such approval shall not relieve Contractor from the obligation to pay any deductible or self-insured retention. Any deductible or self-insured retention shall not exceed $5,000 per occurrence, unless otherwise approved by the Risk Management Division.

e. Policy Cancellation: Except for ten days notice for non-payment of premium, each insurance policy shall be endorsed to state that; without thirty (30) days prior written notice to the State of Nevada, c/o Contracting Agency, the policy shall not be canceled, non-renewed or coverage and /or limits reduced or materially altered, and shall provide that notices required by this paragraph shall be sent by certified mailed to the address shown below.

f. Approved Insurer: Each insurance policy shall be: 1) Issued by insurance companies authorized to do business in the State of Nevada or eligible surplus lines insurers

acceptable to the State and having agents in Nevada upon whom service of process may be made, and 2) Currently rated by A.M. Best as “A- VII” or better.

Evidence of Insurance:

Prior to the start of any Work, Contractor must provide the following documents to the contracting State agency: 1) Certificate of Insurance: The Acord 25 Certificate of Insurance form or a form substantially similar must be submitted to the State to evidence the insurance policies and coverages required of Contractor. 2) Additional Insured Endorsement: An Additional Insured Endorsement (CG20 10 or C20 26) , signed by an authorized insurance company representative, must be submitted to the State to evidence the endorsement of the State as an additional insured per General Requirements, Subsection a above. 3) Schedule of Underlying Insurance Policies: If Umbrella or Excess policy is evidenced to comply with minimum limits, a copy of the Underlyer Schedule from the Umbrella or Excess insurance policy may be required.

Review and Approval: Documents specified above must be submitted for review and approval by the State prior to the commencement of work by Contractor. Neither approval by the State nor failure to disapprove the insurance furnished by Contractor shall relieve Contractor of Contractor’s full responsibility to provide the insurance required by this Contract. Compliance with the insurance requirements of this Contract shall not limit the liability of Contractor or its sub-contractors, employees or agents to the State or others, and shall be in addition to and not in lieu of any other remedy available to the State under this Contract or otherwise. The State reserves the right to request and review a copy of any required insurance policy or endorsement to assure compliance with these requirements.

Mail all required insurance documents to the Contracting Agency identified on page one of the contract. 17. COMPLIANCE WITH LEGAL OBLIGATIONS. Contractor shall procure and maintain for the duration of this Contract any state, county, city or federal license, authorization, waiver, permit, qualification or certification required by statute, ordinance, law, or regulation to be held by Contractor to provide the goods or services required by this Contract. Contractor will be responsible to pay all taxes, assessments, fees, premiums, permits, and licenses required by law. Real

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property and personal property taxes are the responsibility of Contractor in accordance with NRS 361.157 and 361.159. Contractor agrees to be responsible for payment of any such government obligations not paid by its subcontractors during performance of this Contract. The State may set-off against consideration due any delinquent government obligation in accordance with NRS 353C.190. 18. WAIVER OF BREACH. Failure to declare a breach or the actual waiver of any particular breach of the Contract or its material or nonmaterial terms by either party shall not operate as a waiver by such party of any of its rights or remedies as to any other breach. 19. SEVERABILITY. If any provision contained in this Contract is held to be unenforceable by a court of law or equity, this Contract shall be construed as if such provision did not exist and the nonenforceability of such provision shall not be held to render any other provision or provisions of this Contract unenforceable. 20. ASSIGNMENT/DELEGATION. To the extent that any assignment of any right under this Contract changes the duty of either party, increases the burden or risk involved, impairs the chances of obtaining the performance of this Contract, attempts to operate as a novation, or includes a waiver or abrogation of any defense to payment by State, such offending portion of the assignment shall be void, and shall be a breach of this Contract. Contractor shall neither assign, transfer nor delegate any rights, obligations or duties under this Contract without the prior written consent of the State. 21. STATE OWNERSHIP OF PROPRIETARY INFORMATION. Any reports, histories, studies, tests, manuals, instructions, photographs, negatives, blue prints, plans, maps, data, system designs, computer code (which is intended to be consideration under the Contract), or any other documents or drawings, prepared or in the course of preparation by Contractor (or its subcontractors) in performance of its obligations under this Contract shall be the exclusive property of the State and all such materials shall be delivered into State possession by Contractor upon completion, termination, or cancellation of this Contract. Contractor shall not use, willingly allow, or cause to have such materials used for any purpose other than performance of Contractor's obligations under this Contract without the prior written consent of the State. Notwithstanding the foregoing, the State shall have no proprietary interest in any materials licensed for use by the State that are subject to patent, trademark or copyright protection. 22. PUBLIC RECORDS. Pursuant to NRS 239.010, information or documents received from Contractor may be open to public inspection and copying. The State will have the duty to disclose unless a particular record is made confidential by law or a common law balancing of interests. Contractor may label specific parts of an individual document as a "trade secret" or "confidential" in accordance with NRS 333.333, provided that Contractor thereby agrees to indemnify and defend the State for honoring such a designation. The failure to so label any document that is released by the State shall constitute a complete waiver of any and all claims for damages caused by any release of the records. 23. CONFIDENTIALITY. Contractor shall keep confidential all information, in whatever form, produced, prepared, observed or received by Contractor to the extent that such information is confidential by law or otherwise required by this Contract. 24. FEDERAL FUNDING. In the event federal funds are used for payment of all or part of this Contract: a. Contractor certifies, by signing this Contract, that neither it nor its principals are presently debarred, suspended,

proposed for debarment, declared ineligible, or voluntarily excluded from participation in this transaction by any federal department or agency. This certification is made pursuant to the regulations implementing Executive Order 12549, Debarment and Suspension, 28 C.F.R. pt. 67, § 67.510, as published as pt. VII of the May 26, 1988, Federal Register (pp. 19160-19211), and any relevant program-specific regulations. This provision shall be required of every subcontractor receiving any payment in whole or in part from federal funds.

b. Contractor and its subcontractors shall comply with all terms, conditions, and requirements of the Americans with Disabilities Act of 1990 (P.L. 101-136), 42 U.S.C. 12101, as amended, and regulations adopted thereunder contained in 28 C.F.R. 26.101-36.999, inclusive, and any relevant program-specific regulations.

c. Contractor and its subcontractors shall comply with the requirements of the Civil Rights Act of 1964, as amended, the Rehabilitation Act of 1973, P.L. 93-112, as amended, and any relevant program-specific regulations, and shall not discriminate against any employee or offeror for employment because of race, national origin, creed, color, sex, religion, age, disability or handicap condition (including AIDS and AIDS-related conditions.)

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25. LOBBYING The parties agree, whether expressly prohibited by federal, State or local law, or otherwise, that no funding associated with this contract will be used for any purpose associated with or related to lobbying or influencing or attempting to lobby or influence for any purpose the following:

a. Any federal, state, county or local agency, legislature, commission, counsel or board; b. Any federal, state, county or local legislator, commission member, counsel member, board member, or other elected official; or c. Any officer or employee of any federal, state, county or local agency; legislature, commission, counsel or board.

26. WARRANTIES. a. General Warranty. Contractor warrants that all services, deliverables, and/or work product under this Contract shall be

completed in a workmanlike manner consistent with standards in the trade, profession, or industry; shall conform to or exceed the specifications set forth in the incorporated attachments; and shall be fit for ordinary use, of good quality, with no material defects.

b. System Compliance. Contractor warrants that any information system application(s) shall not experience abnormally ending and/or invalid and/or incorrect results from the application(s) in the operating and testing of the business of the State. This warranty includes, without limitation, century recognition, calculations that accommodate same century and multicentury formulas and data values and date data interface values that reflect the century. Pursuant to NRS 41.0321, the State is immune from liability due to any failure of any incorrect date being produced, calculated or generated by a computer or other information system.

27. PROPER AUTHORITY. The parties hereto represent and warrant that the person executing this Contract on behalf of each party has full power and authority to enter into this Contract. Contractor acknowledges that as required by statute or regulation this Contract is effective only after approval by the State Board of Examiners and only for the period of time specified in the Contract. Any services performed by Contractor before this Contract is effective or after it ceases to be effective are performed at the sole risk of Contractor. 28. GOVERNING LAW; JURISDICTION. This Contract and the rights and obligations of the parties hereto shall be governed by, and construed according to, the laws of the State of Nevada, without giving effect to any principle of conflict-of-law that would require the application of the law of any other jurisdiction. The parties consent to the jurisdiction and venue of the First Judicial District Court, Carson City, Nevada for enforcement of this Contract. 29. ENTIRE CONTRACT AND MODIFICATION. This Contract and its integrated attachment(s) constitute the entire agreement of the parties and such are intended as a complete and exclusive statement of the promises, representations, nego-tiations, discussions, and other agreements that may have been made in connection with the subject matter hereof. Unless an integrated attachment to this Contract specifically displays a mutual intent to amend a particular part of this Contract, general conflicts in language between any such attachment and this Contract shall be construed consistent with the terms of this Contract. Unless otherwise expressly authorized by the terms of this Contract, no modification or amendment to this Contract shall be binding upon the parties unless the same is in writing and signed by the respective parties hereto and approved by the Office of the Attorney General and the State Board of Examiners.

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IN WITNESS WHEREOF, the parties hereto have caused this Contract to be signed and intend to be legally bound thereby. Independent Contractor's Signature Date Independent's Contractor's Title Signature Date Title Signature Date Title Signature Date Title APPROVED BY BOARD OF EXAMINERS Signature - Board of Examiners On Approved as to form by: (Date) On Deputy Attorney General for Attorney General (Date)

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Attachment D

REFERENCE QUESTIONNAIRE

The State of Nevada, as a part of the RFP process, requires proposing vendors to submit business references as required within this document. The purpose of these references is to document the experience relevant to the scope of work and provide assistance in the evaluation process. The proposing vendor or subcontractor is required to complete Part A and send the following reference form to each business reference listed for completion of Part B. The business reference, in turn, is requested to submit the Reference Form directly to the State of Nevada, Purchasing Division by the requested deadline for inclusion in the evaluation process. The form and information provided will become a part of the submitted proposal. The business reference may be contacted for validation of the response.

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RFP # **** REFERENCE QUESTIONNAIRE FOR:

Part A: (Name of company requesting reference)

As Primary Vendor As Subcontractor of _________________________

Name of Primary Vendor Part B: This form is being submitted to your company for completion as a business reference for the company listed above. This form is to be returned to the State of Nevada, Purchasing Division, via e-mail at [email protected] or facsimile at (775) 687-1376, no later than ___________________________, and must not be returned to the company requesting the reference. For questions or concerns regarding this form, please contact the State of Nevada Purchasing Division, Services Procurement Section by telephone at (775) 684-8671 or by e-mail at [email protected]. When contacting us, please be sure to include the Request for Proposal number listed at the top of this page.

CONFIDENTIAL INFORMATION WHEN COMPLETED Company providing reference: Contact name and title/position Contact telephone number Contact e-mail address QUESTIONS: 1. In what capacity have you worked with this vendor in the past?

COMMENTS:

2. How would you rate this firm's knowledge and expertise? (3 = Excellent; 2 = Satisfactory; 1 = Unsatisfactory; 0 = Unacceptable) COMMENTS:

3. How would you rate the vendor's flexibility relative to changes in the project scope and timelines? (3 = Excellent; 2 = Satisfactory; 1 = Unsatisfactory; 0 = Unacceptable) COMMENTS:

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4. What is your level of satisfaction with hard-copy materials produced by the vendor? (3 = Excellent; 2 = Satisfactory; 1 = Unsatisfactory; 0 = Unacceptable) COMMENTS:

5. How would you rate the dynamics/interaction between the vendor and your staff? (3 = Excellent; 2 = Satisfactory; 1 = Unsatisfactory; 0 = Unacceptable) COMMENTS:

6. Who were the vendor’s principal representatives involved in your project and how would you rate them individually? Would you comment on the skills, knowledge, behaviors or other factors on which you based the rating? (3 = Excellent; 2 = Satisfactory; 1 = Unsatisfactory; 0 = Unacceptable)

Name: Rating:

Name: Rating:

Name: Rating:

Name: Rating:

COMMENTS:

7. How satisfied are you with the products developed by the vendor? (3 = Excellent; 2 = Satisfactory; 1 = Unsatisfactory; 0 = Unacceptable) COMMENTS:

8. With which aspect(s) of this vendor's services are you most satisfied? COMMENTS:

9. With which aspect(s) of this vendor's services are you least satisfied? COMMENTS:

10. Would you recommend this vendor's services to your organization again? COMMENTS:

Provider Network as of 9/1/09:Unique counts only (if a physician works in more than one location, only include in count for most predominate location)

Area/City Zip CodeNo. of PEBP Participants

Family Practice

Internal Medicine

Pediatrics OB/GYN Other TotalAcute

HospitalsOutpatient

SurgeryUrgent Care

FacilitiesTotal

Radiology Centers

Lab Facilities

Total

Physicians Facilities Ancillary Services

Nevada PEBP Medical PPO Network RFP No. **** Attachment E

Hometown Health/Sierra Healthcare Options1st Quarter 2008/2009

Total charge Net Discount Other Ineligible Total charges Network Net PPO As % ofBilled charges PPO Discount Charges Allowed Fee Savings billed charges

October-08 23,715,260$ 6,193,825$ 8,411,361$ 9,110,074$ 34,826$ 6,158,999$ 26.0%November-08 15,443,291$ 4,112,427$ 4,542,268$ 6,788,596$ 34,826$ 4,077,601$ 26.4%December-08 17,523,586$ 4,124,910$ 6,026,020$ 7,372,656$ 34,826$ 4,090,084$ 23.3%Total 56,682,137$ 14,431,162$ 18,979,649$ 23,271,326$ 104,478$ 14,326,684$ 25.3%

Total charge Net Discount Other Ineligible Total charges Network Net PPOBilled charges PPO Discount Charges Allowed Fee Savings


Total charge Net Discount Other Ineligible Total charges Network Net PPO As % ofBilled charges PPO Discount Charges Allowed Fee Savings billed charges


FY 2008-2009 Qtr 1, 2, 3, 4 TotalsTotal charge Net Discount Other Ineligible Total charges Network Net PPO As % of

Billed charges PPO Discount Charges Allowed Fee Savings billed chargesQuarter 1 110,782,352$ 35,188,871$ 39,128,011$ 56,086,495$ 265,433$ 34,923,438$ 31.5%Quarter 2 213,400,773$ 68,447,016$ 85,216,961$ 95,148,234$Quarter 3Quarter 4Total 324,183,125$ 103,635,887$ 124,344,972$ 151,234,729$ 265,433$ 103,370,454$ 31.9%

Sierra Health

Hometown Health

Hometown Health and Sierra Health

Nevada PEBP Medical PPO Network RFP No. ****Attachment F

PEBP Quarterly Vendor Report - Hometown Health Provider Turnover

I. Vendor Information:

Company Name: Hometown Health Providers Insurance Company, Inc.Company Mailing Address: 830 Harvard Way, Reno, NV 89502Company Representative: Marilyn StephensRepresentative Contact Phone Numbers: (775) 982-3128Product(s) Contracted with PEBP: PEBP's Statewide PPO Medical NetworkContract Start Date: July 1, 2003Time Period Report is covering: October 1, 2008 - December 31, 2008

II. Provider Services for Fiscal Year 2008, 32nd QTR

a) Provider Additions 8-Oct 8-Nov 8-Dec FY 2nd Qtr Total FY Total to Date

Family/General Practice 7 1 2 10 22Internal Medicine 4 0 5 9 14Pediatrics 4 0 3 7 10OB/GYN 1 0 0 1 1Cardiology 2 0 0 2 3Endocrinology 1 0 0 1 2Gastroenterology 0 0 0 0 1General Surgery 2 0 0 2 4Orthopedics 1 3 1 5 6Pulmonology 0 0 0 0 0Rheumatology 0 1 0 1 1Urology 0 1 0 1 2Acute Hospital 0 0 0 0 0Outpatient Surgical Facility 0 0 0 0 0Ancillary 0 0 1 1 2Urgent Care 1 0 0 1 9All Other Specialists 12 7 11 30 55Total Additions 35 13 23 71 130

1Nevada PEBP Medical PPO Network RFP No. ****

Attachment F

PEBP Quarterly Vendor Report - Hometown Health Provider Turnover

a) Provider Deletions 8-Oct 8-Nov 8-Dec FY 2nd Qtr Total FY Total to Date

Family/General Practice 2 2 0 4 8Internal Medicine 0 1 2 3 6Pediatrics 0 0 0 0 0OB/GYN 1 0 0 1 2Cardiology 0 1 0 1 2Endocrinology 0 0 0 0 0Gastroenterology 0 1 0 1 2General Surgery 0 0 0 0 0Orthopedics 0 1 0 1 2Pulmonology 0 0 0 0 0Rheumatology 0 0 0 0 0Urology 0 0 0 0 0Acute Hospital 0 0 0 0 0Outpatient Surgical Facility 0 0 0 0 0Ancillary 2 0 1 3 6Urgent Care 0 0 0 0 0All Other Specialists 5 6 1 12 24Total Deletions 10 12 4 26 52

b) Deletion Reasons 8-Oct 8-Nov 8-Dec FY 2nd Qtr Total FY Total to Date

Left Group 8 11 3 22 74Per Provider 2 1 1 4 4Per Network 0 0 0 0 28Left Service Area 0 0 0 0 0Retired 0 0 0 0 0Death 0 0 0 0 0Closed Practice 0 0 0 0 7Credentialing 0 1 0 1 4Reimbursement 0 0 0 0 0Personal Leave 0 0 0 0 0Other 0 0 0 0 2

Please Note: Provider termination/deletions are based upon "true terms". True Terms means - providers who have been terminated from the network for greater than 120 days. Provideradditions are based upon "true adds". True Adds means - providers who have not previously participated in the network for over 120 days. Termination/Deletion and Adds of Ancillary, UrgentCare, Outpatient Surgical Facilities and Acute Hospitals are based upon "real time terms/adds". Real Time Terms/Adds means - activity is reported based on providers actual reported term/adddate without the use of the 120 day window of time. Real Time Terms/Adds will not report re-contracting activity.

2Nevada PEBP Medical PPO Network RFP No. ****

Attachment F

Draft as of May 7, 2009

Nevada PEBP Medical PPO Network RFP No. **** Attachment G

Service Performance Standards and Financial Guarantees For PEBP Medical Statewide PPO Network Services

Service Performance Standard

Guarantee

Method of Measurement

Penalty

I. EDI claims re-pricing (if electronic repricing is provided by vendor)

95%

97%

A. Turnaround time: At least 95% of medical claims covered under the PEBP Medical PPO Network must be electronically re-priced within the timeline established by PEBP and PEBP’s Third Party Administrator.

B. Accuracy: At least 97% of claims re-priced by the PPO Network must be accurate and must not cause a claim adjustment by PEBP’s TPA.

A. 2.0% of PPO network access fees for each quarter in non-compliance. Non-compliance will be determined during quarterly audit of PEBP’s claims.

B. For each percentage point, or fraction thereof, below the performance guarantee, a factor of 1.0 will be used to calculate the penalty.

II. Provider data changes, e.g. TIN, address, name, etc., provider additions, terminations and fee schedule revisions (for vendors without EDI claims re-pricing capability)

100%

100%

A. Provider data changes, e.g. TIN, address, name, etc., provider additions and terminations must be provided to PEBP’s TPA within two weeks following the effective date of the change.

B. Provider fee schedule revisions must be submitted to PEBP’s TPA within two weeks following the effective date of the change.

A. 2.0% of quarterly PPO network access fees for each instance of non-compliance. Non-compliance will be determined during quarterly audits of PEBP’s TPA.

B. 2.0% of quarterly PPO network

access fees for each occurrence of non-compliance. Non compliance will be determined during quarterly audits of PEBP’s TPA.

III. Data Reporting 100.0% A. Standard reports must be delivered within 10 days of end of reporting period or event as determined by PEBP.

B. Special reports requested by

PEBP and/or PEBP’s Consultant/Actuary must be delivered within 10 days of agreed response date.

A.1.0% of PPO network access fees for each day greater than 10 days not to exceed 5%.

B. 1.0% of PPO network access

fee for each day greater than 10 days not to exceed 5%.

IV. Website 100% A. Network website must be updated within 3 business days as provider information changes take effect (e.g. adds, deletes, address change, etc.).

A. 0.5% of PPO network access fee for each occurrence. Non-compliance will be determined by PEBP’s Health Plan Auditor.

Aggregate Penalties total for all Service Performance Standards (Categories I through IV), shall not

exceed 25.0% of total PPO Network access fees per quarter.

IX.

Informational item

regarding status of

dental preferred

provider organization

network vendor

effective July 1, 2009

X.

Consideration and possible action

regarding settlement of the following

litigation: Wermers v. Standard

Insurance Company and State of

Nevada, Public Employees’ Benefits

Program (Case No. CV08-00527).

Action may be in the form of accepting

or rejecting a proposed settlement.

XI.

Public

Comment

XII.

Adjournment