Document:

exv10w30

Exhibit 10.30

Execution Version

PHARMACY BENEFIT MANAGEMENT SERVICES AGREEMENT

by and among

WellPoint, Inc., on behalf of itself and its Designated Affiliates

and

Express Scripts, Inc., on behalf of itself and its subsidiaries

          THIS PHARMACY BENEFIT MANAGEMENT SERVICES AGREEMENT (“Agreement”) is dated as of December 1,
2009, by and among WellPoint, Inc., on behalf of itself and its Designated Affiliates (hereinafter
referred to collectively as “WellPoint”), and Express Scripts, Inc., on behalf of itself and its
subsidiaries (“PBM”) (collectively, WellPoint and PBM are referred to as the “Parties,” and each
separately as a “Party”).

RECITALS

          WHEREAS, WellPoint offers health benefit plans in the group, individual, and federal market
places;

          WHEREAS, WellPoint desires to retain PBM to provide certain pharmacy benefit management
services, as more fully set forth in this Agreement, with respect to such health plans;

          WHEREAS, PBM desires to provide WellPoint certain pharmacy benefit management services, as set
forth in this Agreement, with respect to health plans;

          NOW, THEREFORE, in consideration of the terms and conditions set forth in this Agreement, the
Parties agree as follows:

	1.	 	DEFINITIONS

	 	1.1	 	“Affiliate” shall mean any entity controlling or controlled by or under common control
with a Party, at the time of execution of the Agreement and any time thereafter, where
“control” is defined as (a) the ownership of at least fifty percent (50%) of the equity or
beneficial interest of such entity, or (b) any other entity with respect to which such
Party has significant management or operational responsibility (even though such Party may
own less than fifty percent (50%) of the equity of such entity).
	 
	 	1.2	 	“Assistance Event” shall mean an insourcing occurrence or termination of this
Agreement.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

 

 

	 	1.3	 	“Association” shall mean the Blue Cross Blue Shield Association, an association of
independent Blue Cross and Blue Shield Companies.
	 
	 	1.4	 	“Average Wholesale Price” or “AWP” shall mean the average wholesale price of a
prescription drug as established and reported by the Pricing Source. The applied AWP of a
drug shall be the AWP for the actual eleven (11) digit National Drug Code (“NDC”), drug
specific, quantity appropriate to the actual package size dispensed to a Covered Individual
and submitted by a Network Pharmacy, mail order Pharmacy, or Specialty Pharmacy at the time
that the prescription is filled. For mail order prescription drugs, PBM shall not use AWPs
of licensed re-packagers where the data source identifies an AWP price greater than the AWP
price reported by the pharmaceutical manufacturer. PBM shall update AWP data no less than
weekly.
	 
	 	1.5	 	“Brand” shall mean the marks, symbols or logos of the Association.
	 
	 	1.6	 	“Brand Drug” shall mean a prescription drug product that is not a Generic Drug.
	 
	 	1.7	 	“Brand Regulations” shall mean any and all rules promulgated by the Association that
set standards regarding the use of any Blue Cross and Blue Shield products, services,
programs, marks, symbols or logos.
	 
	 	1.8	 	“Claim” shall mean an electronic or paper request for reimbursement as a result of a
Pharmacy (or other provider in a manner described in Section 1.51 hereof) dispensing a
Covered Prescription to a Covered Individual.
	 
	 	1.9	 	“Compound Drug” shall mean a mixture of two or more ingredients when at least one of
the ingredients in the preparation is a federal legend drug or state restricted drug in a
therapeutic amount. It excludes the addition of only water or flavoring to any
preparation.
	 
	 	1.10	 	“Contract Quarter” means, throughout the term of this Agreement, the three (3) month
period (or portion thereof) commencing on the Effective Date and each January 1, April 1,
July 1 or October 1 thereafter.
	 
	 	1.11	 	“Contract Year” means, throughout the term of this Agreement, the twelve (12) month
period (or portion thereof) commencing on the Effective Date and each January 1 thereafter.
	 
	 	1.12	 	“Cost Share” shall mean, with respect to Covered Services, an amount which a Covered
Individual is required to pay under the terms of the applicable Plan. Such payment may be
referred to as an allowance, coinsurance, copayment, deductible, penalty or other Covered
Individual payment responsibility, and may be a fixed amount or a percentage of applicable
payment for Covered Services rendered to the Covered Individual.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	1.13	 	“Coverage Document” shall mean a written document, and any addenda or endorsements that
provide for administrative services by WellPoint, and describe the benefits, services,
exclusions, limitations and conditions that are available for or applicable to coverage
under the applicable Plan’s prescription drug benefit program. Prior to implementation
of any Plan pursuant to this Agreement, WellPoint shall complete PBM’s standard set-up
forms, which when completed and signed by WellPoint, will describe the essential benefit
elements of the Coverage Document, including, but not limited to, the coverage rules
adopted by the Plan sponsor. PBM shall use these completed set-up forms for purposes of
administering a Plan’s prescription drug program.
	 
	 	1.14	 	“Covered Individual” shall mean an individual who is eligible, as determined by
WellPoint, to receive Covered Services under a Plan.
	 
	 	1.15	 	“Covered Quantity” shall mean a quantity of a Covered Prescription as allowed by law
and the Plan and authorized by a prescriber.
	 
	 	1.16	 	“Covered Refill” shall mean refills of a Covered Quantity of a Covered Prescription as
allowed by law and the Plan and authorized by a prescriber.
	 
	 	1.17	 	“Covered Service” or “Covered Prescriptions” shall mean any medically necessary drugs,
devices, supplies, equipment, and other items (which may include insulin, disposable
insulin syringes, and other diabetic supplies) dispensed to a Covered Individual for which
such Covered Individual is entitled to receive in accordance with and subject to the terms
and conditions (including any Covered Quantity, Covered Refill, or other limiting
provisions) of the applicable Plan, including all services usually and customarily rendered
by a Pharmacy in the normal course of business, including but not limited to dispensing,
counseling, and product consultation.
	 
	 	1.18	 	“Delegated Organization Policy and Procedure Manual” or “Delegation Manual” shall mean
the manual furnished by WellPoint to PBM which describes WellPoint’s policies and
procedures and sets forth NCQA/URAC standards to be followed by PBM for those activities
that WellPoint has delegated to PBM under this Agreement.
	 
	 	1.19	 	“Designated Affiliates” shall mean an Affiliate of WellPoint that receives services
from PBM pursuant to this Agreement. The initial Designated Affiliates as of the Effective
Date are identified in Exhibit M. WellPoint shall, following the Effective Date and
throughout the Term promptly: (i) update Exhibit M to include any such future Designated
Affiliate; and (ii) coordinate execution of a written instrument between the parties to
amend Exhibit M accordingly. WellPoint shall ensure absolutely, be responsible for and
liable for the performance of any and all obligations (monetary or otherwise) of the
Designated Affiliates (and any such Designated Affiliates’s successors and assigns) in
connection with, and under, this

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	 	 	Agreement. In no event shall WellPoint take any position (legal or otherwise)
inconsistent whatsoever with the intent of the foregoing sentence.
	 
	 	1.20	 	“Dispensing Fee” shall mean the amount charged by PBM to WellPoint and Covered
Individuals for professional services rendered by a licensed pharmacist for providing
Covered Services to Covered Individuals.
	 
	 	1.21	 	“Duplicate Claim” shall mean a Claim that has the same Pharmacy, Covered Individual,
date of service, prescription number and NDC as another Claim.
	 
	 	1.22	 	“Effective Date” shall mean December 1, 2009.
	 
	 	1.23	 	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and regulations issued thereunder from time to time by the Department of Labor.
	 
	 	1.24	 	“FEHBP” shall mean the Federal Employees Health Benefits Program.
	 
	 	1.25	 	“Formulary” shall mean any continually updated list and classification of approved
prescription drugs based on a review of their clinical efficacy, safety, uniqueness and
cost effectiveness.
	 
	 	1.26	 	“Generic Drug” shall mean a prescription drug, whether identified by its chemical,
proprietary, or non-proprietary name that is accepted by the U.S. Food and Drug
Administration as therapeutically equivalent and interchangeable with drugs having an
identical amount of the same active ingredient. For purposes of the [*], the Generic Drug
determination will be made by PBM, for all of its clients, using indicators from the
Pricing Source on the basis of PBM’s standard proprietary brand/generic algorithm, a copy
of which will be provided to WellPoint upon request. [*]. PBM shall provide written
notice of changes (i.e., additions or deletions) to the list of Generic Drugs within thirty
(30) days of any such changes to the list.
	 
	 	1.27	 	“Government Entity” shall mean the United States of America, the states, counties,
municipalities, any district, department, agency, or other political division thereof, or
any political subdivision of any of the foregoing, and any court or instrumentality having
or exercising jurisdiction over either of the Parties.
	 
	 	1.28	 	“HIPAA” shall mean the Health Insurance Portability and Accountability Act of 1996 and
regulations issued thereunder from time to time.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	1.29	 	“Implementation” shall mean the migration of in-force WellPoint business to PBM,
addition to new Plans sold or business acquired and the implementation of new benefits
for existing benefits.
	 
	 	1.30	 	“Ingredient Cost Charge” shall mean the ingredient cost portion of the amount charged
by PBM to WellPoint and Covered Individuals for a prescription drug at the time PBM bills
WellPoint.
	 
	 	1.31	 	“MAC List” means a list of prescription drug products identified as readily available
as Generic Drugs, generally equivalent to a Brand Drug (in which case the Brand Drug may
also be on the MAC List) and which are deemed to require pricing management due to the
number of manufacturers, utilization and pricing volatility. PBM shall provide WellPoint
with a list of the drugs on the MAC List quarterly. Whether a Claim processes at the
generic Ingredient Cost Charge is subject to the Covered Prescription’s inclusion on the
MAC List and the application of “dispensed as written” protocols and Plan defined plan
design and coverage policies. [*]
	 
	 	1.32	 	“Mail Order Pharmacy Services” shall mean the dispensing of prescription drugs and
products through PBM’s licensed mail order Pharmacy.
	 
	 	1.33	 	“Manufacturer Administrative Fee” shall mean the fees paid to PBM by pharmaceutical
manufacturers pursuant to a contract between PBM and the pharmaceutical manufacturer and
directly in connection with PBM’s administering, invoicing, allocating and collecting the
Rebates under PBM’s Rebate program.
	 
	 	1.34	 	“Maximum Reimbursement Amount” or “MRA” is the price charged to WellPoint for a
prescription drug product on PBM’s MAC List.
	 
	 	1.35	 	“Medically Necessary” or “Medical Necessity” shall mean the prescription drug(s) that a
physician, exercising prudent clinical judgment, would provide to a patient for the purpose
of preventing, evaluating, diagnosing or treating an illness, injury, disease or its
symptoms, and that is (1) in accordance with generally accepted standards of medical
practice; (2) clinically appropriate, in terms of type, frequency, extent, site and
duration, and considered effective for the patient’s illness, injury or disease; and (3)
not primarily for the convenience of the patient, physician, or other health care provider,
and not more costly than an alternative service or sequence of services at least as likely
to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of
that patient’s illness, injury or disease. For these purposes, “generally accepted
standards of medical practice” shall mean the standards that are based on credible
scientific evidence published in peer-reviewed medical literature generally recognized by
the relevant medical community, physician specialty society recommendations and the view of
physicians practicing in relevant clinical areas and any other relevant factors, along with
any other materials or compendia required by law or accreditation standard.
	 
	 	1.36	 	[*]

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	1.37	 	[*]
	 
	 	1.38	 	“Network Pharmacy” shall mean a Pharmacy (including PBM’s mail order Pharmacy and
Specialty Pharmacies) that has: (a) met the credentialing and re-credentialing standards of
PBM and the applicable requirements of federal or state law; (b) contracted as an
independent contractor directly with PBM or is operated by PBM or one of its Affiliates;
and (c) agreed to accept discounted rates or fees as payment in full for Covered
Prescriptions provided to Covered Individuals, subject to applicable Cost Share.
	 
	 	1.39	 	“NCQA” shall mean the National Committee for Quality Assurance, an accreditation
program for managed care organizations.
	 
	 	1.40	 	“Other Manufacturer Revenues” shall mean any monetary amount that is to be remitted to
PBM or its Affiliates from a pharmaceutical manufacturer pursuant to a written agreement
between PBM or its Affiliates or agent of PBM or its Affiliates and such pharmaceutical
manufacturer or agent of the pharmaceutical manufacturer which may or may not be based on
the utilization of specific products processed for a Covered Individual. Other
Manufacturer Revenues shall include any other administrative fees, fees for data, or fees
for Formulary management communications or other clinical services paid by pharmaceutical
manufacturers to PBM. Notwithstanding the foregoing, Other Manufacturer Revenues shall not
include Pharma Revenue, Rebates or Manufacturer Administrative Fees as defined herein.
	 
	 	1.41	 	“Paid Claim” shall mean a Claim that meets coverage requirements and is subsequently
paid. All Claims with an associated Rejected Claim, Reversed Claim, or Duplicate Claim
shall not be considered Paid Claims and are excluded from the financial and/or service fee
considerations.
	 
	 	1.42	 	“PBM Agents” shall mean the agents, subcontractors and representatives of the PBM.
	 
	 	1.43	 	“Pharma Revenue” shall mean Rebates and Manufacturer Administrative Fees.
	 
	 	1.44	 	“Pharmacy” means a retail, mail order, or Specialty Pharmacy whose license is in good
standing with the appropriate licensing or governing body of the applicable government
authority.
	 
	 	1.45	 	“Plan” shall mean any group or individual benefit plan issued or administered by
WellPoint, including but not limited to group health plans subject to ERISA, state and
local government plans, and plans offered through Medicare, Medicaid or FEHBP, which
receive prescription drug benefits under this Agreement.
	 
	 	1.46	 	“Pricing Source” shall mean First DataBank or other nationally recognized third-party
pricing source selected by PBM for all of its clients. PBM shall consult with

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

6

 

	 	 	 	WellPoint concerning, and provide [*] prior written notice of, any change in the Pricing
Source. Pricing Source changes shall be subject to the price adjustment provisions in
Section 5.4(e). PBM shall not utilize more than [*] Pricing Source hereunder and shall
use the same updated national drug file for invoicing WellPoint and for paying Network
Pharmacies.
	 
	 	1.47	 	“Rebate” shall mean the contractual retrospective formulary rebates that are paid to
PBM from a pharmaceutical manufacturer pursuant to a written agreement between PBM and such
pharmaceutical manufacturer that is negotiated independently by PBM with such
pharmaceutical manufacturer, and directly attributable to the utilization of certain
pharmaceuticals by Covered Individuals. Rebates shall not include Manufacturer
Administrative Fees, Other Manufacturer Revenues, and any other administrative fees, fees
for data, or fees for Formulary management communications or other clinical services paid
by pharmaceutical manufacturers, or any other fees paid to PBM or its Affiliates, should
they exist.
	 
	 	1.48	 	“Rejected Claim” shall mean a Claim that is not paid.
	 
	 	1.49	 	“Reversed Claim” shall mean a Claim that initially is paid but a subsequent Claim with
the same Pharmacy, Covered Individual, prescription number, and NDC was submitted for
reversal of payment.
	 
	 	1.50	 	“Single Source Generic Drugs” shall mean those Generic Drugs which are provided by [*],
including an authorized Generic Drug. Single Source Generic Drugs shall cease to be
considered Single Source Generic Drugs at such time as [*], or after the first [*] from the
day of the first Generic Drug approval as reported by the Pricing Source, whichever comes
first. PBM shall provide WellPoint with the list of Single Source Generic Drugs quarterly.
	 
	 	1.51	 	“Specialty Drug” shall mean those injectable and non-injectable drugs typically having
one or more of several key characteristics, including but not limited to: frequent dosing
adjustments and intensive clinical monitoring to decrease the potential for drug toxicity
and increase the probability for beneficial treatment outcomes; intensive patient training
and compliance assistance to facilitate therapeutic goals; limited or exclusive product
availability and distribution; specialized product handling and/or administration
requirements and/or cost in excess of $500 for a 30-day supply. PBM’s current Specialty
Drug list is attached hereto as Exhibit F. PBM shall update such list of Specialty
Drugs as new drugs are brought to market and will consult with and add drugs at the
reasonable request of the WellPoint Specialty Steering Committee. Notwithstanding the
foregoing, WellPoint acknowledges and agrees that PBM shall price all such additional drugs
consistent with its standard practices, acting reasonably and in good faith. All such
updates shall be made available to WellPoint and Plans in a timely manner. Specialty Drug
shall not include specialty drugs obtained through a physician or any other provider other
than a Network Pharmacy, unless WellPoint is able to transmit a Claim for such specialty
drug in an electronic manner consistent with this Agreement.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	1.52	 	“Specialty Pharmacy” shall mean a Network Pharmacy that provides Specialty Drugs to
Covered Individuals. Notwithstanding the foregoing, WellPoint agrees that except for those
limited instances where WellPoint is contractually obligated with one or more of its
providers to provide access to Specialty Drugs through the provider’s owned or operated
specialty pharmacy (e.g., an academic medical center) (a “WellPoint-Contracted Specialty
Pharmacy”), or where PBM is unsuccessful in securing access to limited distribution or
other Specialty Drugs, WellPoint and the Plans shall use PBM’s wholly-owned Specialty
Pharmacy (“PBM’s Specialty Pharmacy”) as the exclusive provider of Specialty Drugs.
WellPoint agrees to administer benefit designs for its Plans accordingly to the extent
permitted by law. Nothing herein shall be deemed to restrict or limit in any manner
WellPoint’s or the Plans’ ability to contract directly with Specialty Pharmacies (or
specialty pharmacies) to provide specialty pharmacy services which are covered under the
Plan’s medical benefit, rather than the pharmacy benefit.
	 
	 	1.53	 	“Term” shall mean the period beginning on the Effective Date and continuing until the
later of: (i) ten (10) years from the Effective Date, or (ii) December 31, 2019.
	 
	 	1.54	 	“Transition Assistance Period” shall mean each period of time, as agreed to by
WellPoint and PBM, after the commencement of an Assistance Event, during which period PBM
shall provide Transition Assistance Services.
	 
	 	1.55	 	“Transition Assistance Services” shall mean (a) services as described in Section 6.4
provided by PBM (including the terminated, insourced, or expired services and, in each
case, any replacements thereof or supplements thereto), to the extent WellPoint requests
such services during a Transition Assistance Period, (b) PBM’s cooperation with WellPoint
or any third party designated by WellPoint in the transfer of the services (or replacement
or supplemental services) to WellPoint or a third party and (c) any services described in
Section 6.4 which are requested by WellPoint in order to facilitate the transfer of
services (or replacement or supplemental services) to WellPoint or a third party.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

8

 

	 	1.56	 	“Transition Services Agreement” shall mean that certain Transition Services Agreement by
and between WellPoint and PBM, dated December 1, 2009.
	 
	 	1.57	 	“URAC” shall mean an accreditation program for pharmacy benefit management entities.
	 
	 	1.58	 	“Usual and Customary (U&C) Charge” shall mean the amount a regular cash-paying customer
pays a Pharmacy for a pharmaceutical good or service and is submitted to PBM. PBM shall
require Network Pharmacies to submit their Usual and Customary Charges with all Claim
submissions.
	 
	 	1.59	 	“Usual and Customary (U&C) Claim” shall mean a Claim where the Ingredient Cost Charge
plus the Dispensing Fee is greater than or equal to the Usual and Customary Charge for a
Pharmacy for a pharmaceutical good or service. [*]. The calculation for the identification
of these Claims will be as follows: Usual and Customary Claim Calculation: U&C —
(Ingredient Cost Charge + Dispensing Fee) = Less than or equal to “0” (zero).

2. DUTIES AND AUTHORITY OF WELLPOINT

	 	2.1	 	Offer Drug Benefits to Plans.

	 	(a)	 	WellPoint will offer to Plans the prescription drug benefits
administered by the PBM pursuant to this Agreement. WellPoint will be the entity
that enters into the Coverage Documents with a Plan or sponsor(s) of such Plan, and
such Coverage Documents may make available other WellPoint products and services.
	 
	 	(b)	 	WellPoint will have exclusive authority and responsibility for account
management of all Plans. PBM shall, at the request of WellPoint, support
WellPoint’s account management teams in the support of WellPoint’s Plans, including
cooperating with, and supporting, Plan audits.
	 
	 	(c)	 	WellPoint shall provide Covered Individuals with access to websites
which will provide the Covered Individual with various services, information and
tools related to the pharmacy benefit. PBM shall provide WellPoint, at no
additional charge, with web support and assistance, including PBM’s web tools,
content and enhancements currently in place and those developed in the future. PBM
will provide such services in accordance with all applicable provisions of this
Agreement, including, but not limited to, Exhibit L. PBM will ensure that all
Covered Individuals have access to all of PBM’s functionality and services. PBM
will also ensure that Covered Individuals do not have direct access to PBM’s
website and are redirected to the WellPoint or Plan site, in a manner specified or
approved by WellPoint. Initially, WellPoint and PBM shall provide Covered
Individuals with single sign-on link(s) from their respective Plan sites (i.e.,
Anthem.com) to an express-

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

9

 

	 	 	 	scripts.com co-branded site. The co-branding shall consist of the PBM’s logo
and the applicable Plan logo. In addition, PBM will work with WellPoint on the
development of an integrated approach, wherein the Covered Individual would have
access to PBM’s functionality and services within the architecture of the Plan
site. The parties shall make a good faith effort to continue the development of
an integrated approach and implement as soon as reasonably possible, in a
timeframe and manner consistent with the release of WLP/Anthem next generation
website and the planned migrations to ESI systems.
	 
	 	(d)	 	WellPoint will produce and distribute ID cards which shall include
PBM’s bin number and customer service number to Covered Individuals.

	 	2.2	 	Furnish Data to PBM. WellPoint shall provide eligibility, enrollment and other data
reasonably necessary for PBM to perform its obligations under this Agreement as determined
by the Parties (“WellPoint Data”) via electronic media transfer in a form mutually
agreeable to the Parties (the “Eligibility File”), and on a periodic basis as agreed
between the Parties. In the event PBM knows or has reason to know that the WellPoint Data
is inaccurate or incomplete, PBM shall notify WellPoint of the same as soon as feasible.
WellPoint shall be responsible for payment to PBM for all Claims during the period of the
Covered Individual’s eligibility as indicated on the Eligibility File, including for
retroactively termed Covered Individuals, except in the event of PBM’s error in loading
and/or administering the Eligibility File. [*]
	 
	 	2.3	 	Regulatory Compliance. WellPoint, at its own cost, shall (i) obtain and maintain all
federal, state, and local licenses, permits, certificates, and other regulatory approvals
that are necessary for WellPoint to perform its obligations under this Agreement and shall
supply evidence of such licensure, compliance and certifications to PBM upon request; (ii)
comply with all applicable laws in offering the prescription drug benefits to Plans and
performing its obligations under this Agreement, including, but not limited to, all federal
or state laws relating to fraudulent, abusive, or unlawful practices connected in any way
with the provision of health care items or services, cost reporting requirements, or the
billing for or claims for reimbursement for such items or services provided to a
beneficiary of any state, federal, or other governmental health care or health insurance
program or any non-governmental health care plan or health insurance arrangement; and (iii)
use best efforts to provide promptly to PBM, but not later than ten (10) business days
after receipt by WellPoint (or such longer period of time as reasonable under the
circumstances, but in all cases promptly), information regarding potentially adverse
material inquiries received by WellPoint, which are directly related to WellPoint’s
performance of this Agreement, from accreditation agencies or governmental authorities,
subject to applicable confidentiality constraints.
	 
	 	2.4	 	Benefits Design. WellPoint shall consult with PBM concerning modifications to benefits
design, which shall include consideration of the impact of any such modification to the
respective economic position of each Party. To the extent that

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

10

 

	 	 	 	any such plan design modification would have the effect of materially lowering the
amount of Pharma Revenue paid to PBM, WellPoint agrees that it shall only implement such
plan design modification after the Parties have mutually agreed to an equitable
adjustment to the Pharma Revenue guarantees as necessary to maintain PBM’s contracted
economic position as of the Effective Date. Subject to the foregoing, WellPoint shall
retain discretion and control regarding benefit design decisions with respect to Plans.
	 
	 	2.5	 	Formulary Design.

	 	(a)	 	WellPoint shall consult with PBM on a regular basis concerning
modifications to Formulary design, which shall include consideration of the impact
of any such modification to the respective economic position of each Party. To the
extent that any such Formulary design modification would have the effect of
materially lowering the amount of Pharma Revenue paid to PBM, WellPoint agrees that
it shall only implement such Formulary design modification after the Parties have
mutually agreed to an equitable adjustment to the Pharma Revenue guarantees as
necessary to maintain PBM’s contracted economic position as of the Effective Date.
Subject to the foregoing, WellPoint shall retain discretion and control with
respect to all Formulary designs.
	 
	 	(b)	 	WellPoint is the sole owner of the Formularies which are administered
on its behalf by PBM. WellPoint maintains all right, title, and interest in the
Formularies, as updated and amended from time to time, and such Formularies shall
be considered the work product of WellPoint. For all non-material changes to the
Formulary, WellPoint shall provide notice to PBM of Formulary changes within thirty
(30) business days after formulary change determinations. For all Formulary
changes that would have the effect of materially lowering the amount of Pharma
Revenue paid to PBM, Section 2.5(a) above shall control (i.e., any such change
shall not be made until the process set forth in Section 2.5(a) above is
concluded). PBM shall cease using such Formularies upon termination of this
Agreement for any reason. PBM shall have no right to use any Formulary developed
by WellPoint after the termination of this Agreement for any reason.

	 	2.6	 	P&T and VA Committees. Throughout the Term of this Agreement, WellPoint shall maintain
its own Pharmacy and Therapeutic (“P&T”) and Value Assessment (“VA”) committees. WellPoint
will control all P&T and VA committee processes and functions including, without
limitation, the continued use of WellPoint’s Health Technologies Assessment Guidelines and
clinical appraisal Clinical Review Committee (“CRC”) process.
	 
	 	2.7	 	Right to Negotiate Rebates. [*] In general, PBM will utilize its standard proprietary
Rebate processes and contracts with respect to this Agreement in order to maximize
efficiencies. [*]

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

11

 

	 	2.8	 	Approval and Distribution of Materials to Plans. WellPoint shall review and approve
(which approval shall not be unreasonably withheld) any and all communications (written,
electronic or otherwise) to Plans, Covered Individuals, WellPoint contracted providers
(nothing in the foregoing shall be construed to grant WellPoint review and approval rights
with respect to PBM’s communications with PBM contracted Network Pharmacies), or other
WellPoint stakeholders relating to prescription drug services provided under this Agreement
and shall have the authority to distribute directly, or direct the PBM to distribute on its
behalf, such materials. PBM shall comply with all applicable Brand Regulations, as
directed by WellPoint, in connection with its preparation and distribution of
communications under this Agreement.
	 
	 	2.9	 	Administrative Fees, Pricing and Other Costs. WellPoint shall pay PBM compensation for
Claims (other than amounts that are reasonably disputed) according to the Claims payment
method described in Exhibit C. WellPoint shall pay the administrative and other fees set
forth in Section 5 and Exhibit A (other than amounts that are reasonably disputed)
according to the administrative service fee payment method described in Exhibit C.
	 
	 	2.10	 	Pricing Differential.

	 	(a)	 	WellPoint reserves the right to offer its Plans a network reimbursement
rate and/or Rebate payment that is different from the [*] and Pharma Revenue
Guarantees set forth in this Agreement, provided that WellPoint shall provide such
disclosures to Plans as may be required by applicable law or as it otherwise deems
appropriate under the circumstances. Such pricing differentials shall include, but
not be limited to, Brand Drug and Generic Drug discounts, Specialty Drug discounts,
Dispensing Fees, access fees, administrative fees, and Pharma Revenue payments for
Prescription Drugs dispensed at retail, mail and specialty Network Pharmacies.
Further, such pricing differentials may include any or all of WellPoint’s lines of
business, including without limitation any group, individual, Medicare, Medicaid or
FEHBP customers.
	 
	 	(b)	 	Upon request from WellPoint, and on a Plan by Plan basis, PBM shall
load the pricing received from WellPoint at the Plan level prior to the
implementation of the effective date of such pricing. The Plan level pricing shall
be included in the Claims Detail Layout file provided by PBM to WellPoint. Such
Claims Detail Layout file shall be used by WellPoint to invoice its Plans.
Additionally, PBM shall reconcile the Plan level pricing with the contract pricing
no less than monthly and provide WellPoint with a credit on the next invoice
immediately following such reconciliation.

	 	2.11	 	Complaints/Appeals and Grievances. WellPoint shall be responsible for all Plan,
provider and Covered Individual grievances and appeals.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

12

 

	 	2.12	 	Access to Eligibility System. WellPoint will provide PBM personnel access to its
eligibility system for the purpose of addressing customer service calls. In addition,
WellPoint will be responsible for providing appropriate training to PBM personnel relating
to its online system.
	 
	 	2.13	 	Prior Authorization/ Utilization Review/Specialty Care Management. WellPoint shall
delegate certain utilization management and Specialty Drug care management functions
(hereinafter referred to collectively as “Delegated Functions”) to the PBM with respect to
Plans and Covered Individuals as described in Exhibit G or WellPoint’s Specialty Drug Care
Management Guidelines (“Specialty Guidelines”), as appropriate. Such activities will be
implemented in accordance with WellPoint’s prior authorization and Specialty Guidelines
(including Specialty Drug dose management guidelines which specify that the medication
dosage billed to the Covered Individual shall be consistent with WellPoint’s and standard
medical practice guidelines for dosage) and as detailed in Exhibit G or the Specialty
Guidelines, as appropriate. WellPoint may revoke or modify this delegation at any time and
to any extent during the Term of this Agreement.
	 
	 	2.14	 	Pharmacy and Therapeutics Programs, Clinical Programs and Services. WellPoint shall
have the authority to offer existing and new pharmacy and therapeutics programs and
clinical programs and services (collectively, “Programs”) to Plans and Covered Individuals.
WellPoint shall provide P&T drug monographs to its Plans. WellPoint shall consult with
PBM regarding the potential operational efficiencies related to such Programs. PBM agrees
to provide consulting and technical support in the development, improvement and
implementation of such Programs and to administer such Programs.
	 
	 	2.15	 	Insourcing of PBM Duties and Authority. WellPoint may insource any of the duties and
authority allocated to PBM under this Agreement only pursuant to the process provided for
in this Section 2.15. Prior to insourcing any such duties, WellPoint shall identify issues
with regard to PBM’s performance of any such duties under this Agreement for resolution by
the Joint Operating Pharmacy Committee pursuant to the procedures provided for in Section
4.1. Any such issue must rise to the level of non-performance by PBM such that it would
provide a basis for termination by WellPoint under Section 6.2(a). If such issues are not
resolved by the Joint Operating Pharmacy Committee, WellPoint may insource services
performed by PBM under this Agreement solely to the extent necessary to resolve the issues
identified by WellPoint. The Parties agree that, to the extent WellPoint exercises such
authority, the Parties will in good faith negotiate a revision to the economic terms of the
Agreement to preserve the Parties’ relative economics prior to WellPoint’s exercise of such
authority. Upon WellPoint’s request, PBM shall provide Transition Assistance Services with
respect to any such insourced or resourced Services as provided in Section 6.4(a) through
(c).
	 
	 	2.16	 	WellPoint Systems.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

13

 

	 	(a)	 	WellPoint will retain ownership over certain current information
systems that support WellPoint’s affiliated pharmacy benefit management business as
set forth in the separate Transition Services Agreement. Until WellPoint’s
business is fully migrated over to PBM’s systems and operations, WellPoint shall
continue to provide support services pursuant to the terms of the Transition
Services Agreement. Notwithstanding WellPoint’s provision of such support services
under the Transition Services Agreement, PBM shall not be relieved of its duties
under this Agreement, except that during the migration of WellPoint’s business over
to PBM’s systems and operations, PBM shall not be subject to the performance
guarantees set forth on Exhibit D or Exhibit I (except as mandated
by CMS and at such CMS mandated levels) for groups and individuals, covered under
Plans, that are not fully migrated to PBM’s systems and operations. Penalties for
missed performance guarantees for fully migrated groups and individuals shall be
prorated based on the percentage of lives fully migrated to PBM’s systems and
operations. Groups and individuals will be migrated to the following PBM systems
during the transition: (1) adjudication platform; (2) call center systems; (3)
order processing systems; and (4) fulfillment management systems. When a group or
individual is fully migrated to all four (4) of these PBM systems (“Completed
Migration”), the PBM shall thereafter by held accountable under the following
operational performance guarantees for such migrated groups and individuals during
the transition:

	 	-	 	Account Management Services
	 
	 	-	 	Member Customer Service
	 
	 	-	 	Pharmacy Customer Service
	 
	 	-	 	Pharmacy Network
	 
	 	-	 	Retail Claims Processing
	 
	 	-	 	Mail Order Services
	 
	 	-	 	Reporting
	 
	 	-	 	Generic Dispensing Rates
	 
	 	-	 	Miscellaneous Services
	 
	 	-	 	Utilization Management
	 
	 	-	 	Medicare Part D

	 	(b)	 	Implementation Services guarantees are calculated every six (6) months
following the Effective Date. At each such period, the Implementation Services
guarantees will be calculated in the aggregate for those groups and individuals
that have been fully migrated to PBM systems and operations. This measurement
process (i.e., every six (6) months) will continue until every group and individual
served by a Plan is fully migrated to PBM’s systems and operations. Any penalties
that may be due as a result of PBM failing to meet the Implementation Services
guarantees will be prorated based on the percentage of lives fully migrated to
PBM’s systems during any such six (6) month period.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

14

 

	 	(c)	 	Once WellPoint’s business is fully migrated over to PBM’s systems and
operations, as mutually agreed to by the parties acting in good faith, the
performance guarantees set forth on Exhibit D and Exhibit I shall
thereafter be of full force and effect.
	 
	 	(d)	 	Notwithstanding anything in this Agreement to the contrary, in no event
shall WellPoint’s right to terminate this Agreement pursuant to Section 6.2(a) as a
result of a Material PG Breach by PBM be of any force or effect until such time as
WellPoint’s business is fully migrated over to PBM’s systems and operations as
determined by the Parties pursuant to Section 2.16(c) above.

	 	2.17	 	[*]

3. DUTIES AND AUTHORITY OF PBM

	 	3.1	 	Administrative Services.

	 	(a)	 	PBM shall provide the administrative services (including the
Implementation support services) to WellPoint, Plans and Covered Individuals set
forth in this Agreement. To the extent services to be performed by PBM are not
more fully described in this Agreement the Parties agree to execute an addendum to
the Agreement to reflect the rights and obligations of the Parties with respect to
those services. WellPoint shall cooperate with PBM’s performance of the
administrative services to be provided by PBM pursuant to this Agreement. PBM
shall perform these services on behalf of WellPoint in a prudent and expert manner
in accordance with this Agreement and all applicable laws.
	 
	 	(b)	 	Except to the extent that, following the Effective Date, WellPoint
elects to implement programs or additional services (with PBM administrative fees
agreed to by the Parties), the fees set forth in Exhibit A shall include all of the
fees and compensation to be paid by WellPoint for the administrative services set
forth in this Agreement. PBM agrees that it shall not impose any additional fee
for any services during the Term of this Agreement without the prior written
consent of WellPoint.

	 	3.2	 	Regulatory Compliance.

	 	(a)	 	During the Term of this Agreement, PBM shall, at its own cost: (i)
obtain and maintain all federal, state, and local licenses, permits, certificates,
and other regulatory approvals that are necessary for PBM to perform its
obligations under this Agreement, including any state law requirements imposed upon
WellPoint, Plans, or PBM that relate to PBM’s contracting with Network Pharmacies,
and shall supply evidence of such licensure, compliance and certifications to
WellPoint upon request; (ii) comply with all applicable laws in performing its
obligations under this Agreement, including, but not limited to, all federal or
state laws relating to fraudulent, abusive or unlawful practices

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

15

 

	 	 	 	connected in any way with the provision of health care items or services, cost
reporting requirements, or the billing for or claims for reimbursement for such
items or services provided to a beneficiary of any state, federal or other
governmental health care or health insurance program or any non-governmental
health care plan or health insurance arrangement; and (iii) use best efforts to
provide promptly to WellPoint, but not later than ten (10) business days after
receipt by PBM (or such longer period of time as reasonable under the
circumstances, but in all cases promptly), information regarding potentially
adverse material inquiries received by PBM from accreditation agencies,
governmental authorities, or pharmaceutical manufacturers regarding PBM services
delivered pursuant to this Agreement subject to applicable confidentiality
constraints. Without limiting the generality of the foregoing, PBM shall, in
the timeframe set forth above, forward to WellPoint all Department of Insurance
complaints received by PBM, with respect to services provided under this
Agreement, for response by WellPoint. PBM shall cooperate fully with WellPoint
in responding to such complaints, including providing all information reasonably
necessary, and to the extent PBM has such information, for WellPoint to respond
to Department of Insurance complaints. From time to time legislative bodies,
boards, departments or agencies may enact or issue laws, rules, or regulations
pertinent to this Agreement, and, subject to Section 16.3, PBM agrees to abide
by all said laws, rules, or regulations to the extent applicable.
	 
	 	(b)	 	PBM represents and warrants that at the time of entering into this
Agreement, neither it nor its Affiliates nor any of their employees, contractors,
subcontractors or agents are ineligible persons identified on the General Services
Administration’s List of Parties Excluded from Federal Programs (available through
the internet at http://www.epls.gov/ or its successor) and the Health and Human
Services Department/Office of Inspector General (“HHS/OIG”) List of Excluded
Individuals/Entities (available through the internet at
http://www.oig.hhs.gov/fraud/exclusions.asp or its successor), or as otherwise
designated by the federal government. If PBM or any employees, subcontractors or
agents thereof becomes an ineligible person after entering into this Agreement or
otherwise fails to disclose its ineligible person status, PBM shall have an
obligation to: (1) immediately notify WellPoint of such ineligible person status
upon PBM becoming aware of such status through initial and periodic checks, and (2)
within ten (10) days of such notice, remove such individual from responsibility
for, or involvement with, the PBM’s business operations related to this Agreement.

	 	3.3	 	Pharmacy Network.

	 	(a)	 	Retail Network. PBM shall arrange through Network Pharmacies for the
reasonable availability (more specifically described in Exhibit D) in number and
geographic coverage to Covered Individuals of Covered Prescriptions from a network
of Pharmacies and shall, during the entire period this

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

16

 

	 	 	 	Agreement is in effect, maintain a network of Network Pharmacies of sufficient
size to meet the needs of the Plans and Covered Individuals. PBM will use its
best efforts to incorporate all Pharmacies that have been in WellPoint’s
Pharmacy network (including WellPoint’s open specialty pharmacy network) so long
as such Pharmacies meet PBM’s standard terms and conditions for contracting,
including PBM’s credentialing requirements, and will also incorporate PBM’s mail
order Pharmacy into the PBM’s network as Network Pharmacies no later than the
Effective Date of this Agreement. PBM shall not use the Brands in contracting
with the Pharmacies in such network. PBM shall give WellPoint at least thirty
(30) days’ advance notice (or such lesser days’ notice if the provision of
thirty (30) days’ notice is not feasible under the circumstances, but in such
case, PBM shall be obligated to provide as reasonable amount of notice as
feasible) of any material change in the network.
	 
	 	(b)	 	PBM shall require its Network Pharmacies to be contractually obligated
to meet PBM’s credentialing and re-credentialing standards including, but not
limited to, maintenance of licensure and malpractice insurance, and shall meet the
applicable requirements of federal and state law. PBM shall periodically monitor
the continued compliance of Network Pharmacies with its standards and shall take
appropriate action, which may include termination, suspension or placement in a
probationary status, if a Network Pharmacy fails to comply.
	 
	 	(c)	 	PBM shall provide on-line, real time, accurate and updated Network
Pharmacy information to WellPoint.
	 
	 	(d)	 	WellPoint may require PBM to terminate any specific Network Pharmacy
from the Pharmacy networks serving WellPoint and its Plans.
	 
	 	(e)	 	WellPoint may from time to time propose to PBM that PBM include a
Pharmacy or group of Pharmacies in the Pharmacy Network. PBM shall use its best
efforts to enter into a pharmacy contract with such Pharmacy, based on PBM’s
standard terms and conditions. If PBM is unable to execute a pharmacy contract
with the Pharmacy within sixty (60) days thereafter, WellPoint may, with PBM’s
approval, have reasonable participation in the negotiations with that Pharmacy in
order for PBM to enter into an agreement with that Pharmacy based upon PBM’s
standard terms and conditions.
	 
	 	(f)	 	Upon request from WellPoint, PBM shall create a custom retail Pharmacy
network at no charge to WellPoint.
	 
	 	(g)	 	Relationship of PBM and Network Pharmacies. PBM represents and
warrants that it has contracted with Network Pharmacies, as independent contractors
of PBM, to provide the prescription drug services described in this Agreement.
Neither WellPoint nor PBM shall be responsible or liable for any claims that may
arise from the provision of prescription drug services to

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

17

 

	 	 	 	Covered Individuals by the Network Pharmacies. PBM shall disclose to WellPoint
the extent to which the Network Pharmacies include entities owned by, or
affiliated with, PBM.
	 
	 	(h)	 	Hold Harmless. Prior to providing to a Covered Individual any of the
benefits or services to which such Covered Individual is or may be entitled under a
Plan, Network Pharmacies shall be required to collect from the Covered Individual
the amount of any applicable Cost Share. Additionally, Network Pharmacies shall
not recover any unpaid balances (over the Cost Share) due Network Pharmacies from
such Covered Individuals, but are instead required to recover any unpaid balances
from WellPoint or the PBM only.
	 
	 	(i)	 	PBM will perform computerized system audits of all retail Network
Pharmacy Claims under the Plan. In addition, during the Term of this Agreement,
PBM will perform focused desk audits, telephone audits, and on-site field audits of
retail Network Pharmacies selected by PBM consistent with PBM’s standard Network
Pharmacy audit compliance procedures to examine the selected retail Network
Pharmacy’s compliance with its agreement with PBM. PBM will, from time to time,
but at least semiannually, report to WellPoint the results of its auditing efforts.
PBM agrees to credit or refund to WellPoint [*] of any applicable funds recovered
due to Pharmacy audits.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

18

 

	 	(j)	 	Notwithstanding the foregoing, PBM acknowledges and agrees that
WellPoint may contract directly with Network Pharmacies for immunization services
which are covered under the Plan’s medical benefit, rather than the pharmacy
benefit.

	 	3.4	 	Furnish Data to WellPoint. PBM shall provide such data to WellPoint or its designees
as WellPoint may reasonably request, including without limitation prescription data feeds
to [*], [*], and [*]. Such data shall be provided via electronic media transfer in a form
mutually agreeable to the Parties, and on a periodic basis as agreed between the Parties.
	 
	 	3.5	 	Eligibility & Information Systems.

	 	(a)	 	PBM agrees to accept WellPoint’s current eligibility format, [*].
Further, PBM will process multiple eligibility files per day as supplied to PBM by
WellPoint. PBM will confirm eligibility files and changes received electronically
from WellPoint within [*], and shall apply and activate the same in the PBM system
within [*] of receipt [*]. Manually submitted eligibility changes will be applied
to the system within [*] of receipt. PBM will perform a full file comparison of
the WellPoint eligibility data on a monthly basis.
	 
	 	(b)	 	WellPoint shall be responsible for determining the eligibility of any
Covered Individual for Covered Prescriptions. Upon the request of a Network
Pharmacy, PBM shall verify the eligibility of Covered Individuals, based upon the
information provided to PBM by WellPoint.
	 
	 	(c)	 	PBM will reasonably accommodate transmission of historical and current
WellPoint member and group eligibility. PBM will confirm that all Plan, Covered
Individual eligibility, and Claims data are loaded correctly by PBM. PBM will
accept (from multiple source systems) and apply daily Covered Individual
eligibility data, and all updates to include additions and deletions, at no
additional cost to WellPoint. PBM will provide back-end error reporting on
eligibility submissions within [*] of submission by WellPoint, electronically.
	 
	 	(d)	 	[*] In addition, PBM will be responsible for providing unlimited
training, as determined by WellPoint, on its online system to WellPoint personnel,
at no cost to WellPoint.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

19

 

	 	(e)	 	PBM will provide on-line management reports with [*] in the standardized file
layout acceptable to WellPoint.
	 
	 	(f)	 	PBM shall provide a call center for Network Pharmacies and Covered
Individuals. PBM or its subcontractors shall not provide the call center or
customer services provided to Covered Individuals and Network Pharmacies through an
offshore entity without WellPoint’s prior written approval, which shall not be
unreasonably withheld. PBM shall acquire one or more designated toll free numbers
for the call center. In the event of a termination of the Agreement, the toll free
numbers shall remain the sole property of WellPoint.
	 
	 	(g)	 	PBM will apply its usual and customary policies and practices to
concurrent DUR edits upon approval from WellPoint, which DUR edits shall be
customized and supplemented in accordance with Section 3.9(c) hereof, provide
customizable messaging to enhance clinical outcomes and ensure member safety at
WellPoint’s reasonable request, customize its practices at the reasonable request
of WellPoint, and assist WellPoint in WellPoint’s performance of similar
activities. PBM will use its usual and customary policies and practices in testing
all eligibility, Claims, benefit plans, clinical programs and system platforms and
will customize its practices at the reasonable request of WellPoint. PBM will
support a monitored sign-off process during the conversion process as well as for
system change initiatives that may take place during the term of the contract. PBM
will provide the ability to transmit data from and to its site via a secured direct
transmission line or any other federally approved means of data transmission, at no
additional cost to WellPoint. PBM will identify eligibility and billing testing
strategies for the conversion and for ongoing system changes.
	 
	 	(h)	 	PBM is liable for reconciling any and all incorrect payments due to
Plans not being set up correctly and/or errors in eligibility administration made
by PBM for the Term of this Agreement.
	 
	 	(i)	 	Subject to the remaining terms of this Agreement, PBM shall administer
any and all of the current Plan designs, including the administration of
accumulators, in use by WellPoint as provided herein.
	 
	 	(j)	 	PBM shall provide support for WellPoint’s e-prescribing programs and
initiatives [*].

	 	3.6	 	Invoice WellPoint. PBM shall invoice WellPoint for Paid Claims according to the Claims
payment method described in Exhibit C. PBM shall invoice WellPoint for the administrative
and other fees set forth in Section 5 and Exhibit A according to the administrative service
fee payment method described in Exhibit C.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

20

 

	 	3.7	 	Claims Processing Services.

	 	(a)	 	PBM shall process Claims in real time consistent with applicable law,
including ERISA and any other applicable state or federal law.
	 
	 	(b)	 	PBM shall provide to WellPoint daily accumulator files for each of
WellPoint’s systems and in accordance with WellPoint’s specifications for each
system.
	 
	 	(c)	 	With respect to Plans subject to ERISA, PBM will comply with the
applicable Plan terms, ERISA and the regulations thereunder regarding Claims
appeals. PBM will forward all appeals and related information received to
WellPoint within [*] of receipt. PBM shall arrange prompt payment of benefits if
the initial denial is not affirmed by WellPoint. PBM shall have no responsibility
for Plan, provider or Covered Individual grievances and appeals.
	 
	 	(d)	 	PBM shall enter into its electronic on-line Claims adjudication system
certain Plan design information necessary for PBM to perform automated Claims
processing services in accordance with this Agreement, including information
regarding Cost Share, Covered Individual out-of-pocket maximums, benefit maximums
and any other features of the Plan design to be used in processing Claims. PBM
will instruct Network Pharmacies to transmit certain information to PBM when a
Covered Individual presents a Plan identification card. PBM will transmit to
Network Pharmacies the Claim status; the Cost Share amount (if applicable); and any
applicable drug utilization review messaging or other messages that are part of the
Claims adjudication process.
	 
	 	(e)	 	PBM shall process Claims under this Agreement in accordance with the
terms hereof.
	 
	 	(f)	 	PBM will perform electronic, telephone, and on-site audits of Network
Pharmacies to determine compliance with their pharmacy agreements. PBM will
attempt recovery of identified overpayments to Network Pharmacies through offset,
demand or other reasonable means; provided that PBM will not be required to
institute litigation. Recovered overpayments shall be credited to WellPoint.
	 
	 	(g)	 	If PBM determines that, through its error (e.g., PBM processed
eligibility incorrectly or incorrectly set up benefit design), it has paid any
Covered Individual on a manually submitted Claim less than the Covered Individual
is entitled to under the Coverage Document, PBM shall adjust the underpayment
consistent with its standard policies. If PBM determines that, through its error,
it has overpaid any Network Pharmacy or paid benefits not covered under the terms
of a Coverage Document, PBM shall, at its own expense, recover the overpayment or
incorrect payment and credit WellPoint accordingly. In addition, PBM also performs
electronic, telephone, and on-

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

21

 

	 	 	 	site audits of Network Pharmacies. PBM will attempt recovery of identified
overpayments through offset, demand or other reasonable means; provided that PBM
will not be required to institute litigation. [*] of recovered overpayments
shall be credited to WellPoint.
	 
	 	(h)	 	For WellPoint claims processed and paid prior to the Effective Date and
for Runout Claims (as defined in Exhibit I, Section 4.1.10) processed by PBM and
paid after the Effective Date, PBM shall provide the following audit support: (1)
regulatory and accreditation audit support for Part D and commercial business; and
(2) customer audit support for commercial business only. WellPoint shall provide
all information necessary for such audits (or access to such information) to the
extent PBM does not have such information, and WellPoint shall reimburse [*] in
providing such audit support services. WellPoint shall be solely liable for all
audit recoveries or regulatory actions resulting therefrom.

	 	3.8	 	Appeals and Grievances/Complaints.

	 	(a)	 	PBM shall provide support and recommendations to WellPoint in
connection with the grievance and appeal responsibility retained by WellPoint
pursuant to Section 2.11 of this Agreement and shall provide to WellPoint all
information reasonably necessary for WellPoint to respond to such grievances and
appeals, to the extent PBM has such information.
	 
	 	(b)	 	PBM shall be responsible for assisting WellPoint with Covered
Individual complaints and providing periodic reporting to WellPoint regarding such
complaints in a manner reasonably specified by WellPoint in its discretion.

	 	3.9	 	Clinical Services, Utilization Management, Quality Safety Programs.

	 	(a)	 	WellPoint Pharmacy and Therapeutics Programs, Clinical Programs, and
Services. PBM shall administer and support the WellPoint-owned Pharmacy policy,
pharmacy and therapeutics programs, clinical programs, and other services as
directed by WellPoint pursuant to Section 2.14.
	 
	 	(b)	 	Clinical Services. At the direction and advance written approval of
WellPoint, subject to PBM fees as agreed to by the Parties, if any, PBM will
provide to WellPoint its pharmaceutical care consultation programs, Covered
Individual compliance programs and other programs designed to ensure proper drug
utilization, encourage the use of cost-effective medications, and encourage the use
of mail service, if applicable. These programs may include mailings to Covered
Individuals with active prescriptions for targeted drug products or drug classes or
to let Covered Individuals know that they may qualify for participation in a
clinical trial program. Such mailings may include Covered Individual and drug
specific information and/or general educational material. PBM agrees to reasonably
modify the clinical services it

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

22

 

	 	 	 	provides in order to coordinate them with other clinical services provided by
WellPoint.
	 
	 	(c)	 	PBM Concurrent and Retrospective DUR Services. At the direction and
prior written approval of WellPoint, PBM will provide its automated concurrent DUR
programs for Claims that are adjudicated at the point of sale in the Pharmacy and
its retrospective DUR services. PBM will from time to time consult with WellPoint
concerning its concurrent DUR programs and may implement customized changes to such
programs if such changes are mutually agreed to by the parties. In addition, PBM
agrees to customize and supplement its retrospective DUR services as requested by
WellPoint. In certain instances, a Claim that is denied or otherwise rejected by
the system may actually represent appropriate drug therapy as determined by the
applicable physician or pharmacist in his/her professional judgment. In these
instances, the pharmacist will exercise his/her professional judgment to either (i)
dispense the prescribed drugs at the Covered Individual’s expense or (ii) call PBM
and PBM is authorized to override the denial edit. Clinical and quality of care
issues detected by some DUR edits do not affect Claim payment but result in
transmission of a warning or alert message transmitted at the time of dispensing to
the pharmacist as part of the Paid Claim response from PBM. Network Pharmacies are
directed to review the messages as they are received and to use their professional
judgment as to whether action is required.
	 
	 	(d)	 	DUR Limitations. The information generated in connection with DUR
services is intended as a supplement to, and not as a substitute for, the
knowledge, expertise, skill, and judgment of physicians, pharmacists, or other
health care providers in providing patient care. Providers are individually
responsible for acting or not acting upon information generated and transmitted
through the DUR services, and for performing services in each jurisdiction
consistent with the scope of their licenses. Except as set forth in paragraph (b)
above, in performing DUR services, PBM will not, and is not required by this
Agreement to, deny Claims or require physician, pharmacist, or patient compliance
with any norm or suggested drug regimen, or in any way substitute PBM’s judgment
for the professional judgment or responsibility of the physician or pharmacist.
	 
	 	(e)	 	PBM represents and warrants that it will update DUR databases on an
ongoing and timely basis to reflect changes in available standards for
pharmaceutical prescribing.
	 
	 	(f)	 	Switching Programs. WellPoint shall consult with PBM concerning PBM’s
implementation and administration of WellPoint-developed switching programs.PBM
shall review all such WellPoint-developed programs to ensure compliance with PBM’s
policies and applicable law. As mutually agreed to following PBM’s review, PBM
shall implement and administer WellPoint-

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

23

 

	 	 	 	developed switching programs. Prior to the implementation of any PBM switching
programs, PBM shall obtain WellPoint’s written consent. In offering such drug
switching programs, PBM shall comply with WellPoint’s Formulary alternative
rules.

	 	3.10	 	Support Formulary, Benefits Design, and P&T and VA Committee.

	 	(a)	 	PBM shall provide consulting, technical and analytical support as
requested by WellPoint to support WellPoint’s Formulary administration, benefit
design and P&T and VA Committee functions for both Specialty Drugs and products
payable under the medical or pharmacy benefits specified in this Agreement.
	 
	 	(b)	 	Subject to Sections 2.4 and 2.5 above, PBM agrees to administer the
Formulary and benefit design decisions of WellPoint.

	 	3.11	 	Prior Authorization/ Utilization Review/Specialty Care Management. PBM shall conduct
the Delegated Functions (as defined in Section 2.13) in accordance with this Agreement.
Such activities will be implemented in accordance with WellPoint’s prior authorization,
drug utilization review or specialty care management guidelines and as detailed in Exhibit
G or Specialty Guidelines, as appropriate. PBM shall not make any substantive changes to
WellPoint’s prior authorization, drug utilization review or specialty care management
guidelines without WellPoint’s prior review and approval. PBM agrees to perform the
Delegated Functions during the hours of operations set forth in Exhibit G and the reviews
will be completed within the turnaround timeframes set forth in Exhibit G. PBM
acknowledges and agrees that WellPoint may revoke this delegation of any Delegated
Functions at any time and to any extent during the term of this Agreement.

	 	(a)	 	Licensing and Compliance. At all times during the term of this
Agreement, PBM, PBM Agents and PBM’s employees shall be and remain licensed and
certified in accordance with all applicable state and federal laws and regulations
(including those applicable to utilization review), and shall comply with and abide
by all state, federal and local laws and regulations relating to the provision of
pharmacy benefit services to Covered Individuals. PBM shall supply evidence of
such licensure, compliance and certifications to WellPoint upon request. At all
times during the term of this Agreement, PBM, when applicable, shall: (i) maintain
itself in good professional standing; and (ii) maintain all required professional
credentials and meet all continuing education requirements necessary to retain its
agents or employees professional designation.
	 
	 	(b)	 	Permits. PBM has obtained, and will maintain in good standing, all
licenses, permits and other necessary or appropriate governmental approvals
(collectively, the “Permits”) to perform its duties hereunder. PBM has complied
with all conditions and requirements imposed by the Permits, and PBM has not
received any notice of, and has no reason to believe, that any

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

24

 

	 	 	 	governmental authority intends to cancel or terminate any of the Permits or that
valid grounds for such cancellation or termination exist. Each Permit is valid
and in full force and effect, and will not be terminated or adversely affected by
the transactions contemplated hereby. PBM agrees to obtain Utilization
Management (“UM”) licensure in all states where WellPoint’s Utilization Review
(“UR”) agent (Anthem Utilization Management Services, Inc.-AUMSI.) has obtained
UR licensure.
	 
	 	(c)	 	Compliance. PBM’s Delegated Function processes will comply with all
applicable federal, state, and local laws, rules and regulations, and NCQA/URAC
accreditation standards; including without limitation the applicable utilization
review requirements in the states where the Covered Individual’s Coverage Document
is issued or delivered. PBM agrees to comply with any state law that exerts
extraterritorial jurisdiction of their UM regulations for members residing in their
state, regardless of where the Coverage Document is issued or delivered.
	 
	 	(d)	 	Licensure and Clinical Staff Requirements. PBM warrants and
represents, to the best of its knowledge that each nurse or pharmacist providing
Delegated Functions is and will continue to be, as long as the delegation of
services remains in effect, the holder of a currently valid, unrestricted license
to practice nursing or pharmacy under applicable state law, to the extent the
function warrants such license.
	 
	 	(e)	 	PBM’s Medical Management System. PBM agrees to supply WellPoint
reasonable access to its proprietary application for processing prior authorization
requests, to the extent necessary to facilitate the services contemplated by this
Agreement.

	 	3.12	 	Group/Member/Intermediary Communication.

	 	(a)	 	Except as necessary to perform services pursuant to this Agreement, PBM
will not communicate with Plans, Covered Individuals, or Plan intermediaries
(including, without limitation, consultants, brokers, or third party
administrators) regarding the drug benefit and their services under the Plan
without WellPoint’s prior written approval, which approval will not be unreasonably
withheld. Any such communications will be in the normal course of PBM’s services
under this Agreement and will not involve solicitation or marketing communications.
All such communications shall be compliant with Brand Regulations as applicable,
and subject to review and approval by WellPoint.
	 
	 	(b)	 	PBM will provide all the Plan and Covered Individual communication
materials, in English and shall meet any state’s applicable foreign language
requirements (including detailed Formulary migration materials), to WellPoint to
review prior to distribution to ensure a successful

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

25

 

	 	 	 	transition/communications campaign. PBM will provide multiple toll-free
telephone lines necessary to meet WellPoint’s business requirements, IVR,
Internet support and implementation management, including website support, to
assist WellPoint, Plans and Covered Individuals with eligibility and benefits
verification, location of Network Pharmacies and other related concerns. Upon
request from WellPoint, PBM will mail all transition and on-going maintenance
communication materials, including but not limited to ID cards and welcome
packets, to Plans and/or Covered Individuals on an agreed-upon schedule either
electronically or manually.
	 
	 	(c)	 	PBM will log all customer service complaints, issues and resolutions
and provide them to WellPoint on a weekly basis, per a mutually agreed upon format.
PBM will initiate and/or provide member issue resolution within [*] of receipt of
an issue. PBM will support specific Plan and Covered Individual inquiries to its
Customer Service and web site. PBM will provide multiple dedicated toll-free
numbers as needed for WellPoint’s business requirements for inquiries and a Post
Office Box for Plans and Covered Individuals to send paper Claims at no cost to
WellPoint. PBM will setup a transfer connect system.

	 	3.13	 	Rebate Contracting and Administration.

	 	(a)	 	In general, PBM will utilize its standard proprietary Rebate processes
and contracts with respect to this Agreement in order to maximize efficiencies and
value. PBM shall pay WellPoint Pharma Revenue amounts as provided in Section 5.3
and Exhibit A, and will provide the Pharma Revenue reports listed in Exhibit B. In
administering PBM’s Rebate program under this Agreement, PBM shall use its best
efforts to process, invoice, and collect promptly all Rebates from pharmaceutical
manufacturers pursuant to PBM’s agreements with manufacturers.
	 
	 	(b)	 	PBM’s Affiliate, NextRx, maintains written agreements with
pharmaceutical manufacturers relating to the payment of Pharma Revenue for
WellPoint utilization. PBM shall maintain any such NextRx Pharma Revenue
agreements or shall renegotiate its own Pharma Revenue agreements with the same
pharmaceutical manufacturers, or shall maintain PBM’s own Pharma Revenue agreements
with the same pharmaceutical manufacturers in a manner such that (i) WellPoint will
not be required to repay any Rebate amounts previously paid to WellPoint or to pay
any penalty with respect to such Rebate amounts, and (ii) WellPoint will be paid
Rebate amounts due to WellPoint for prescription drugs purchased prior to the
Effective Date of this Agreement but not yet paid. The foregoing is contingent
upon: (i) WellPoint’s continued compliance with the terms and conditions of
NextRx’s obligations, to the extent applicable to WellPoint, under any such Pharma
Revenue agreements; and (ii) WellPoint not making any Formulary decisions that
result in non-compliance or breach of any such Pharma Revenue agreements.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

26

 

	 	(c)	 	If any NextRx Pharma Revenue agreement that PBM maintains pursuant to
Section 3.13(b) above or otherwise, prior to the orderly transfer by PBM of the
rebating function to its own Rebate contracts and processes, prohibits PBM from
sharing or otherwise paying an amount equal to all or any portion of Manufacturer
Administrative Fees related to utilization invoiced under such NextRx Pharma
Revenue agreements, WellPoint acknowledges and agrees that, notwithstanding
anything in this Agreement to the contrary, PBM shall not be required to include
(and shall not be in breach of this Agreement for not including) any such amounts
in the [*] or [*] Pharma Revenue amounts to be paid to WellPoint pursuant to
Sections 5.3(c) and (d) hereunder. Nothing in this Section 3.13 shall affect the
Commercial or Part D Pharma Revenue Per Branded Claim Guarantees set forth in
Exhibit A.

	 	3.14	 	Reports to WellPoint and WellPoint Plans.

	 	(a)	 	Prior to Completed Migration (as defined in Section 2.16(a)), PBM will
provide to WellPoint, with respect to services provided by PBM for groups and
individuals that have not yet fully migrated to PBM’s systems, the reports that are
listed on Exhibit B except to the extent that any such report would contain
confidential and proprietary PBM information, including, but not limited to, PBM’s
contracted Network Pharmacy rates or PBM’s licensed mail order Pharmacy or
Specialty Pharmacy acquisition rates. Thereafter, with respect to services
provided by PBM for groups and individuals that have achieved Completed Migration,
PBM will provide its standard reporting and will provide WellPoint access to its
standard on-line reporting tools. In no event will the reporting and access to
on-line reporting tools provided by PBM to WellPoint hereunder be any less than the
reporting and access provided to any other PBM client. For reporting after
Completed Migration, PBM shall also comply with the opening paragraph of Exhibit B.
	 
	 	(b)	 	PBM will provide to WellPoint any other reports not specifically
contemplated in this Agreement (custom or ad hoc reports) or shall customize PBM’s
standard reports as WellPoint shall from time to time reasonably request at [*].
This Section 3.14(b) shall not apply to necessary changes, as mutually agreed to by
the parties acting in good faith, to accommodate CMS reporting requirements imposed
on WellPoint or its Plans.

	 	3.15	 	Finance and Analytical Support and General Consulting. As requested by WellPoint, PBM
shall provide general consulting assistance to WellPoint with respect to cost projections,
benefit design issues, Formulary, underwriting, legal, and regulatory compliance, and other
similar Plan matters at no cost to WellPoint. Such services shall be available to support
WellPoint’s responsibilities with respect to benefits design, Formulary design, sales and
marketing, account management and development and implementation of Pharmacy and
Therapeutics programs and Clinical Services.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

27

 

	 	3.16	 	Compliance with Brand Regulations. PBM shall comply with all Brand Regulations of the
Association in connection with its provision of services under this Agreement
	 
	 	3.17	 	Programming Services.

	 	(a)	 	To the extent that WellPoint retains additional third party
administrators or other service providers that require additional programming by
PBM such arrangements shall be programmed free of charge.
	 
	 	(b)	 	PBM, at its own cost, will provide for WellPoint’s approval, a systems
specification document and requirements document outlining all programming needs
and changes to accurately administer a Plan’s benefit program design.
	 
	 	(c)	 	PBM shall provide tracking reports for all clinical programs
implemented to demonstrate outcomes impact.

	 	3.18	 	Fee Disclosures. PBM will, as reasonably requested, provide to WellPoint or any Plan
information that may be necessary for WellPoint or such Plan to satisfy its requirements
under ERISA, or any other federal or state law or regulation, including information
necessary to complete annual reports required to be filed with the Department of Labor, to
the extent PBM possesses such information.
	 
	 	3.19	 	Notice to WellPoint of Regulatory Inquiries and Claims Against PBM. PBM shall notify
WellPoint in writing of: (i) all material claims, investigations and inquiries that may
materially impact PBM’s ability to perform its obligations under this Agreement, whether in
writing or orally (“Inquiries”) by any Government Entity, pharmaceutical manufacturer,
attorney, or other individual, including, without limitation, providing related press
releases to WellPoint before general distribution whenever not prohibited by federal,
state, and local rules, laws, or regulations; provided, however, that the term Inquiries
does not include consumer reports, complaints, or grievances processed by PBM in the
ordinary course and that are not material to PBM’s performance of its obligations under
this Agreement; and (ii) any material Inquiry from any Government Entity or material
litigation that relates to PBM’s general business practices or operations, in each case as
soon as reasonably practicable. PBM shall, from time to time, furnish WellPoint with
regular and timely updates regarding the status of each Inquiry. If PBM’s response to any
Inquiry specifically involves WellPoint in any manner, then PBM shall provide WellPoint
with at least [*] to comment before PBM provides a response, and PBM shall consider in good
faith all of WellPoint’s comments before providing a response.
	 
	 	3.20	 	Support WellPoint FEHBP Contract Administration. PBM agrees to participate in
WellPoint’s FEHBP program and to provide WellPoint any information necessary to support
WellPoint’s continued participation and future applications to participate as

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

28

 

	 	 	 	a sponsor of drug benefits under the FEHBP. PBM’s specific responsibilities and duties
under this Section 3.20 are set forth in Exhibit H. All services performed by PBM for
WellPoint as part of the administration of its FEHBP product service line shall be in
accordance with those requirements adopted by the Office of Personnel Management (“OPM”)
as part of its administration of the FEHBP and any other applicable laws and
regulations. Requirements under FEHBP laws and regulations shall supersede any contrary
or inconsistent agreement between the Parties set forth in this Agreement. Any changes
made by OPM to FEHBP law and regulations shall be automatically incorporated herein. To
the extent such changes have a material negative financial impact to PBM hereunder, the
Parties will agree to an appropriate adjustment to the fees paid by WellPoint to PBM.
All services shall be furnished by PBM in compliance with any contract between
WellPoint, on behalf of its FEHBP product service line, and OPM for participation in the
FEHBP program. PBM acknowledges and agrees that in accordance with the terms of such
contract, WellPoint shall have the ultimate responsibility for ensuring the services
performed are in compliance with the administration of its FEHBP product service line.
	 
	 	3.21	 	Support WellPoint Government Services/Medicare Part D and Medicaid Administration. PBM
agrees to participate in WellPoint’s Senior and State Sponsored Business Programs and to
provide WellPoint any information and services provided for under this Agreement necessary
to support WellPoint’s continued participation and future applications to participate as a
sponsor of drug benefits for Medicare and Medicaid. Such support shall include all
contractual obligations for WellPoint’s Senior Sponsored Business Programs, as described
and set forth in Exhibit I, all contractual obligations for WellPoint’s State Sponsored
Business, as described and set forth in Exhibits J-1 through J-7, and all contractual
obligations for WellPoint’s provision of services under the Kentucky Access program, as
described and set forth in Exhibit P. PBM shall comply with all applicable state Medicaid
laws, as applicable, and shall abide by Exhibits J-1 through J-7, which contain the
specific contractual provisions applicable to Medicaid programs administered by WellPoint
that are required to be included in any subcontract entered into by WellPoint in connection
with such Medicaid programs, to the extent the terms therein are applicable to the pharmacy
benefit management services provided by PBM hereunder. All services performed by PBM for
WellPoint under this Section 3.21 shall be in accordance with those requirements adopted by
the Centers for Medicare & Medicaid Services (“CMS”) and any other applicable federal or
state laws and regulations. Requirements under Medicare and Medicaid laws and regulations
shall supersede any contrary or inconsistent agreement between the Parties set forth in
this Agreement. Any changes made by CMS to Medicare law and regulations and any changes
made to Medicaid law and regulations shall be automatically incorporated herein. To the
extent such changes have a material negative financial impact to PBM hereunder, the Parties
will agree to an appropriate adjustment to the fees paid by WellPoint to PBM.
	 
	 	3.22	 	Dedicated Management Support Team/Account Management and Implementation Support.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

29

 

	 	(a)	 	During the term of this Agreement, PBM shall, at its own cost: (i)
maintain the Dedicated Management Support Team to perform its obligations under
this Agreement; (ii) operate the Dedicated Management Support Team to support all
of WellPoint’s business segments and geographic structure; (iii) maintain the
Dedicated Management Support Team fully operational during the Term of this
Agreement; The Dedicated Management Support Team shall have the necessary
knowledge and experience to support all WellPoint business lines and shall include,
but not be limited to:

	 	i)	 	[*]

	 	(b)	 	WellPoint has the right to review, meet with and reasonably approve the
lead individual in each of the following roles: [*]. PBM agrees not to change the
lead individual assigned to the roles of [*] without the reasonable prior consent
from WellPoint, unless a promotional opportunity or employment termination is the
reason for the change.
	 
	 	(c)	 	PBM will provide no less than [*] in-person account team reviews to
WellPoint on the utilization and performance of the WellPoint prescription drug
program. The reviews will also include cost saving recommendations (with return on
investments) and suggestions to implement such recommendations.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

30

 

	 	(d)	 	PBM shall hire, maintain and supervise the personnel necessary to perform PBM’s
duties under this Agreement. PBM also may retain accountants, attorneys or
other service providers it deems necessary to fulfill its duties under this
Agreement, the costs of which shall not be billed to WellPoint, unless WellPoint
has specifically consented in writing to pay the same.
	 
	 	(e)	 	In the event any key account management team personnel assigned by PBM to
perform services for WellPoint pursuant to this Agreement are terminated or
re-assigned, PBM shall notify WellPoint as early as feasible in advance of such
termination or re-assignment.
	 
	 	(f)	 	PBM will provide at least annually an executive review/strategy session with
executive level participation from PBM on the performance of and future direction
of WellPoint’s prescription drug program.
	 
	 	(g)	 	PBM will provide training to the appropriate personnel at WellPoint on
the processes, procedures, and capabilities pre and post implementation, at no cost
to WellPoint.
	 
	 	(h)	 	PBM will provide training to the appropriate personnel at WellPoint on
the processes, procedures, and capabilities of the PBM for the duration of the
Agreement, at no cost to WellPoint.
	 
	 	(i)	 	The Parties will agree upon responsibilities relative to the
Implementation and PBM shall consult with WellPoint concerning the account
management process upon execution of the Agreement.
	 
	 	(j)	 	PBM will provide the necessary data and support to WellPoint for the
identified third party to perform a pre-audit of, including but not limited to,
system set-ups, Plan designs, eligibility, and adjudication rules [*] prior to the
Effective Date.
	 
	 	(k)	 	PBM shall provide appropriate assistance and support for consultation
on clinical programs, formulary analysis, and clinical plan of record (POR)
development.
	 
	 	(l)	 	PBM shall provide appropriate assistance and support for sales support
including, but not limited to, RFP development, market intelligence, preparation of
finalist presentations, sales training, etc.
	 
	 	(m)	 	PBM shall provide appropriate assistance and support for operational,
client/member services issue resolution.
	 
	 	(n)	 	PBM shall provide appropriate assistance and support for new clients or
contract renewal change implementation.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

31

 

	 	(o)	 	PBM shall provide appropriate assistance and support for client
retention and introduction of new products to Plans.
	 
	 	(p)	 	PBM shall provide all other duties as reasonably necessary to support
the WellPoint relationship.

	 	3.23	 	Information Technology and Standards. PBM represents and warrants that its information
systems shall comply with the requirements and standards set forth in Exhibit K.
	 
	 	3.24	 	Fraud Detection Activities. PBM shall be responsible for specific activities designed
to prevent, detect, investigate, and remediate potential or existing member and provider
fraud in connection with the services to be provided by PBM under this Agreement. PBM
shall implement those activities that it determines are best suited to attain this goal,
but at a minimum PBM’s fraud and abuse detection activities shall include the following
components:

	 	(a)	 	Claims Monitoring. PBM shall perform a quarterly review of Claims to
identify potential fraudulent patterns in Paid Claims data, which shall include for
Medicare Part D services, using retrospective drug utilization tools, including
retrospective review programs for drugs that may be abused and for patients taking
multiple medications (polypharmacy). Such retrospective drug utilization tools may
also be implemented by PBM with respect to non-Medicare Part D services as
requested by WellPoint, and for the Claim sample size requested by WellPoint,
subject to [*] per Claim fee.
	 
	 	(b)	 	Cooperate and Support Investigations. PBM shall cooperate and support
any investigations that are identified through any channel.
	 
	 	(c)	 	Train Employees to Detect Fraudulent Claims. PBM shall train all
Claims processors to detect suspicious Claims.
	 
	 	(d)	 	WellPoint Member Hot Line. PBM shall cooperate with WellPoint’s
maintenance of and shall assist in the investigation of allegations of Plan,
Covered Individual, or provider fraud received through WellPoint’s Member Hotline.
Further, PBM shall refer appropriate cases to WellPoint’s Fraud Investigation Unit.
	 
	 	(e)	 	Educate Members About Fraud. PBM shall cooperate with WellPoint’s
provision of educational materials to Plans and Covered Individuals concerning what
constitutes fraud (e.g., providing false employer group and/or group membership
information; sharing ID card with a non-member; using ID card after benefits
terminated).

	 	3.25	 	[*]

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

32

 

4. DUTIES OF WELLPOINT AND PBM

	 	4.1	 	Joint Pharmacy Operating Committee. The Parties shall jointly establish a Joint
Pharmacy Operating Committee (“Committee”) to oversee the operation of this Agreement,
enhance communications between the Parties, and attempt to resolve disputes between the
Parties. Each Party shall appoint three or four members to the Committee. The Committee
shall meet as frequently as required by WellPoint, but no less frequently than quarterly.
Meetings of the Committee will be convened by WellPoint and the agenda for such meetings
will be set by WellPoint after consulting with PBM. Any disputes that cannot be resolved
by the Committee will be referred by the Committee to senior management for further review
and consideration.
	 
	 	4.2	 	Service Level Agreement. PBM shall provide the Information Technology Support
Services, with respect to any PBM system that WellPoint utilizes to service Covered
Individuals, as set forth in the Service Level Agreement attached hereto as Exhibit L (the
“Service Level Agreement”). The performance guarantees that apply to system availability
along with the penalties for such services are set forth in Exhibit D under System
Availability.

5. PRICING, COMPENSATION AND PAYMENTS TO PBM

	 	5.1	 	Payment of Administrative and Other Fees. WellPoint shall pay PBM the administrative
and other fees pursuant to the terms set forth in Exhibit A in the time and manner
specified in Exhibit C. In the event of any overpayment by WellPoint to PBM or nonpayment
of any amounts to be paid by PBM to WellPoint hereunder (including, without limitation,
Pharma Revenue), PBM acknowledges and agrees that WellPoint reserves the right of offset
with regard to any payments due to PBM under this Agreement. In the event of any
overpayment to WellPoint by PBM of Pharma Revenue amounts or nonpayment by WellPoint of any
fees or other amounts due to PBM hereunder, WellPoint acknowledges and agrees that PBM
reserves the right to offset any such PBM overpayment or WellPoint nonpayment with Pharma
Revenue amounts otherwise due to WellPoint under this Agreement.
	 
	 	5.2	 	Disclosure of Certain Financial Matters.

	 	(a)	 	In addition to the fees paid to PBM by WellPoint, PBM and PBM’s
wholly-owned subsidiaries derive margin from fees and revenue in one or more of the
ways as further described in the Financial Disclosure to PBM Clients set forth in
Exhibit N hereto (“Financial Disclosure”). In negotiating any of the fees and
revenues described in the Financial Disclosure or in this Agreement, PBM and PBM’s
wholly-owned subsidiaries act on their own behalf, and not for the benefit of or as
agents for WellPoint, any Plan, or Covered Individuals. PBM and PBM’s wholly-owned
subsidiaries retain all proprietary rights and beneficial interest in such fees and
revenues described in the Financial Disclosure and, accordingly, WellPoint
acknowledges that neither it, nor any Plan, nor any Covered Individual, has a right
to receive, or possesses any

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

33

 

	 	 	 	beneficial interest in, any such fees or revenues, except as otherwise provided
herein. Nothing in the Financial Disclosure is intended to supersede any of the
specific financial terms and conditions agreed to under this Agreement.
	 
	 	(b)	 	[*]

	 	5.3	 	Pharmacy Revenue Guarantees and Payments.

	 	(a)	 	In General. Pharma Revenue related to Brand Drug Claims shall be
guaranteed and paid to WellPoint in accordance with the terms of this Agreement.
PBM shall notify pharmaceutical manufacturers with whom PBM has Pharma Revenue
contracts of PBM’s contractual relationship with WellPoint and the Effective Date
of this Agreement.
	 
	 	(b)	 	Covered Individual submitted and subrogation Claims, OTC products,
Claims older than one hundred and eighty (180) days, Claims through 340B
pharmacies, claims for one hundred percent (100%) copayment (cash and carry) Plans
not offered in connection with a health plan benefit, and other similar Claims may
not be eligible for Rebates.
	 
	 	(c)	 	Commercial. Subject to Section 3.13(c) above, PBM shall pay WellPoint
[*] of the Pharma Revenue collected on Brand Drug Claim prescriptions filled,
during each calendar quarter hereunder, within [*] of the end of such calendar
quarter. Subject to Section 3.13(c) above, PBM shall also pay WellPoint [*] of the
residual Pharma Revenue, if any, on such Brand Drug Claims related to such calendar
quarter, which are collected by PBM in subsequent calendar quarters. On an annual
basis, PBM shall reconcile the Commercial Pharma Revenue Per Branded Claim
Guarantees set forth in Exhibit A within [*] and shall credit WellPoint for any
deficit in one or both Commercial Pharma Revenue Per Branded Claim Guarantees on
the next invoice immediately following the reconciliation. Notwithstanding the
foregoing, PBM may use a surplus in one of the Commercial Pharma Revenue Per
Branded Claim Guarantees (Retail or Mail) to reduce a deficit in the other
Commercial Pharma Revenue Per Branded Claim Guarantee hereunder. Notwithstanding
anything in this Section 5.3(c) or otherwise in this Agreement to the contrary, the
Parties acknowledge and agree that no Pharma Revenue guarantees shall apply for
[*].
	 
	 	(d)	 	Part D. Subject to Section 3.13(c) above, PBM shall pay WellPoint [*]
of the Pharma Revenue collected on Brand Drug Claim prescriptions filled, during
each calendar quarter hereunder, within [*] of the end of such calendar quarter.
Subject to Section 3.13(c) above, PBM shall also pay WellPoint [*] of residual
Pharma Revenue, if any, on such Brand Drug Claims related to such calendar quarter,
which are collected by PBM in subsequent quarters. On an annual basis, PBM shall
reconcile the Part D Pharma Revenue Per Branded Claim Guarantees set forth in
Exhibit A within [*] of each calendar

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

34

 

	 	 	 	year and shall credit WellPoint for any deficit in one or both Part D Pharma
Revenue Per Branded Claim Guarantees on the next invoice immediately following
the reconciliation. Notwithstanding the foregoing, PBM may use a surplus in one
of the Part D Pharma Revenue Per Branded Claim Guarantees (Retail or Mail) to
reduce a deficit in the other Part D Pharma Revenue Per Branded Claim Guarantee
hereunder. Notwithstanding anything in this Section 5.3(d) or otherwise in
this Agreement to the contrary, the Parties acknowledge and agree that no Pharma
Revenue guarantees shall apply for [*].
	 
	 	(e)	 	PBM retains all right, title and interest to any and all actual Pharma
Revenues received from pharmaceutical manufacturers; PBM will pay WellPoint amounts
equal to the Pharma Revenue amounts due to WellPoint, as specified in this
Agreement, from PBM’s general assets (neither WellPoint, nor Plans, nor Covered
Individuals retain any beneficial interest in PBM’s general assets). WellPoint
acknowledges and agrees that neither it, nor any Plan, nor any Covered Individual
will have a right to interest on, or the time value of, any actual Pharma Revenue
payments received by PBM from pharmaceutical manufacturers. No Pharma Revenue
amounts will be paid until this Agreement is executed by WellPoint. PBM will have
the right to delay payment of Rebate amounts (up to an amount as reasonably
necessary to cover anticipated Claims reimbursements and other administrative fees
due to PBM by WellPoint) to allow for final adjustments upon termination of this
Agreement.
	 
	 	(f)	 	WellPoint acknowledges that it may be eligible for Pharma Revenue under
this Agreement only so long as WellPoint, or its Affiliates, or its agents do not
contract directly or indirectly with anyone else for: (i) discounts, utilization
limits, Rebates, Manufacturer Administrative Fees, or other financial incentives on
pharmaceutical products related to Formulary programs for Claims processed by PBM
pursuant to this Agreement; or (ii) prescription drug specific adherence or
compliance programs, without the prior written consent of PBM. If WellPoint
contracts directly or indirectly with a pharmaceutical manufacturer in violation of
the foregoing (i) and (ii), then, without limiting PBM’s right to other remedies,
PBM may immediately withhold any Pharma Revenue earned by, but not yet paid to,
WellPoint as necessary to prevent duplicative rebates on Covered Prescriptions. To
the extent WellPoint knowingly negotiates and/or contracts for discounts or Pharma
Revenue on Claims for Covered Prescriptions without prior written approval of PBM,
such activity will be deemed to be a material breach of this Agreement, entitling
PBM to suspend payment of Pharma Revenue hereunder and to renegotiate the terms and
conditions of this Agreement. Nothing herein shall be deemed to prevent WellPoint
from establishing and maintaining relationships with pharmaceutical manufacturers
which involve community wellness programs, clinical research services, rebates on
claims covered under the medical benefit, and, within the context of a
comprehensive medical

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

35

 

	 	 	 	program, member wellness programs, quality improvement programs, and adherence
and compliance programs.

	 	5.4	 	Pharmacy Claim Charges.

	 	(a)	 	For all prescription drug Claims, PBM shall apply [*] set forth in
Exhibit A. For purposes of Exhibit A, prescription drugs that are provided to
Plans described in Sections 3.20 and 3.21, other than Medicare Part D Plans, will
be treated as Commercial Drugs.
	 
	 	(b)	 	[*]
	 
	 	(c)	 	[*]
	 
	 	(d)	 	[*]
	 
	 	(e)	 	In the event that there are court or government imposed or
industry-wide or pricing source initiated changes in the AWP reporting source or
source changes in the methodology used for calculating AWP, including, without
limitation, changes in the mark-up factor used in calculating AWP (collectively,
the “AWP Changes”), WellPoint shall negotiate in good faith with PBM to effect a
modification to the terms of any financial relationship between the Parties that
relate to AWP such that the value of AWP for the purpose of such relationship(s)
shall have the same economic equivalence in the aggregate to the value used by the
Parties prior to the AWP Change. For purposes of this Section 5.4(e), having the
same economic equivalence in the aggregate to the value used by the Parties prior
to the AWP Change means that the relevant financial terms, including, but not
limited to, the Ingredient Cost Charge of a particular drug will be the same under
any new methodology as it was immediately before the AWP Change.

	 	5.5	 	Cost Share.

	 	(a)	 	[*]
	 
	 	(b)	 	[*]
	 
	 	(c)	 	[*]

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

36

 

	 	5.6	 	Periodic Pricing Review. WellPoint or a third party consultant retained by WellPoint
will conduct a market analysis every [*] during the Term of this Agreement to ensure
that WellPoint is receiving competitive benchmark pricing. In the event WellPoint or
its third party consultant determines that such pricing terms are not competitive,
WellPoint shall have the ability to propose renegotiated pricing terms to PBM and
WellPoint and PBM agrees to negotiate in good faith over the proposed new pricing terms.
Notwithstanding the foregoing, to be effective any new pricing terms must be agreed to
by PBM in writing.
	 
	 	5.7	 	[*]

6. TERM AND TERMINATION

	 	6.1	 	Term. This Agreement shall commence on the Effective Date and shall continue for the
Term, as specified in Section 1.53. Subject to the remaining provisions of this Section 6,
the Agreement shall continue after the Term for [*] unless terminated upon provision of
written notice at least [*] prior to the end of the then-current term.
	 
	 	6.2	 	Termination. Notwithstanding Section 6.1, the Agreement may be terminated during the
Term as follows:

	 	(a)	 	Subject to Section 16.5, either Party may terminate this Agreement if
the other Party fails to comply with a material term of this Agreement and such
failure is not cured within [*] written notice to the other Party. For purposes of
this Section 6.2(a), failure to comply with a material term of this Agreement shall
include PBM’s failure to meet any two (2) or more of the following performance
guarantee categories set forth in Exhibit D for [*] (a “Material PG Breach”): (i)
Implementation Services (collectively, the items under the “Implementation
Services” category set forth on Exhibit D), (ii) Member Satisfaction Survey (item
#7 (Member Satisfaction Survey for Members Utilizing the Pharmacy Benefit) under
the “Member Customer Service” category set forth on Exhibit D), (iii) Pharmacy
Access (item #3 under the “Pharmacy Network” category set forth on Exhibit D), or
(iv) Retail Claims Processing (collectively, the items under the “Retail Claims
Processing” category set forth on Exhibit D). In determining whether PBM has
failed to meet either the Implementation Services or the Retail Claims Processing
performance guarantee categories referenced above for purposes of this Section
6.2(a), for each such performance guarantee category, PBM shall be deemed to have
failed to meet the category for purposes of this Section 6.2(a) if PBM fails to
meet [*]of the individual performance guarantees within such category [*].
WellPoint shall have a right to terminate this Agreement with [*] written notice to
PBM of a Material PG Breach if PBM has failed to cure

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

37

 

	 	 	 	such Material PG Breach within such [*] (i.e., the cure period for a Material PG
Breach shall be [*] versus the [*] cure period for any other breach of a
material term of this Agreement by either party). During the [*] following
PBM’s notice of a Material PG Breach, PBM shall have the right to submit a
remediation plan to WellPoint for WellPoint’s consideration. Section 16.5 shall
not apply in the case of a termination for a Material PG Breach.
	 
	 	(b)	 	Either Party may terminate this Agreement if the non-terminating Party
becomes insolvent, assigns all or any part of its assets for the benefit of
creditors, or upon the filing of any petition in bankruptcy, voluntary or
involuntary.

	 	6.3	 	Post-Termination Services. If this Agreement is terminated for any reason, then, if
requested by WellPoint, Claims for services rendered prior to the effective date of the
termination shall be administered and processed by PBM per the terms of this Agreement for
a run-out period of twelve (12) months following the termination, unless a shorter period
is agreed to by the Parties. Performance guarantees and penalties, as listed on Exhibit D
and Exhibit I, shall also remain in effect throughout any run-out period.
	 
	 	6.4	 	Transition upon Termination.

	 	(a)	 	In the event WellPoint elects to extend the performance of this
Agreement for up to twelve (12) months beyond the termination or expiration of this
Agreement for purposes of facilitating the transfer of services from PBM to another
vendor, both WellPoint and PBM shall continue to perform all of their respective
obligations in accordance with this Agreement during this period (including, but
not limited to, WellPoint’s fee payment obligations) and provide Transition
Assistance Services in accordance with a written transition plan. The transition
plan shall include (1) a description of the information systems operations being
transitioned; (2) a description of the methods and procedures, personnel and
organization PBM will use to perform the Transition Assistance Services; (3) a
schedule of transition activities and timelines for completion; (4) a detailed
description of the respective roles of WellPoint and the PBM; and (5) such other
information and planning as are necessary to ensure that the transition takes place
according to an agreed upon schedule and without disruption to WellPoint or PBM’s
operations. The transition plan shall be subject to approval by WellPoint prior to
implementation.
	 
	 	(b)	 	Notwithstanding PBM’s continued provision of services under this
Agreement, in the event of any Assistance Event WellPoint shall have the right to
enter into a new pharmacy benefit management agreement with another vendor during
the Transition Assistance Period. PBM agrees to cooperate with such vendor to
ensure the transition of services to such new vendor in such a manner as to avoid a
disruption in the level of service to

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

38

 

	 	 	 	Covered Individuals and WellPoint. There shall be no charge for the Transition
Assistance Services to the extent that resources included in the fees being paid
by WellPoint to PBM can be used to provide the Transition Assistance Services.
To the extent the resources included in the fees being paid by WellPoint to PBM
cannot be used to provide Transition Assistance Services, such Transition
Assistance Services shall be provided at PBM’s standard rates then in effect for
such services immediately prior to the occurrence of the Assistance Event.
After the expiration of a Transition Assistance Period, PBM shall (a) answer
questions from WellPoint regarding the services on an “as needed” basis at PBM’s
then standard billing rates and (b) upon WellPoint’s request, deliver to
WellPoint any remaining WellPoint-owned reports and documentation still in PBM’s
possession.
	 
	 	(c)	 	Transfer of Records. Following termination or expiration of this
Agreement, at the request of WellPoint, PBM shall provide WellPoint all relevant
Plan, Covered Individual, administrative, financial and medical files in the
possession of PBM to WellPoint or its designee, including without limitation
another pharmacy benefit management company. PBM shall cooperate with WellPoint in
maintaining the confidentiality of such Covered Individual medical records at all
times. PBM will provide WellPoint with all electronic files related to the
provision of services hereunder (including, without limitation, files related to
groups, group to plan conversions, prior authorizations, Claims history,
prescriptions, and related ancillary files) at PBM’s cost.
	 
	 	(d)	 	Contact with Covered Individuals Upon Termination. PBM and WellPoint
agree that in the event this Agreement should terminate for any reason, WellPoint,
in consultation with PBM, shall develop a written communication which advises
WellPoint Plans and Covered Individuals not less than [*] prior to the date of
termination of (i) the termination of this Agreement; and (ii) Covered Individuals’
rights and responsibilities regarding such termination.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

39

 

	 	(e)	 	PBM agrees that the WellPoint communication set forth above concerning
termination of this Agreement shall be the exclusive communication with Plans or
Covered Individuals, and PBM shall not interfere in any way with the relationship
between WellPoint and Plans and Covered Individuals. If PBM should (i) communicate
with Plans or Covered Individuals concerning termination of this Agreement and/or
attempt directly, indirectly or by implication to advise or encourage such Plans or
Covered Individuals to switch to either another health care service plan (including
HMOs), or to dis-enroll from WellPoint for any reason, or (ii) submit the
WellPoint-provided Plans or Covered Individuals list or its equivalent to another
health care service plan (including HMOs) for any purposes, or (iii) use the
WellPoint-provided Plans or Covered Individuals information to invite Covered
Individuals to attend sales presentations by any other health care service plan
(including HMOs) on or off PBM premises, such activity shall constitute a breach of
this contractual provision and WellPoint may promptly seek a temporary restraining
order and/or injunction to preclude such activity as well as all appropriate
damages resulting from PBM’s breach of this provision.
	 
	 	(f)	 	Notwithstanding the above, PBM shall be permitted to communicate,
subject to applicable Brand Regulations, with Covered Individuals pertaining to
issues involving their specific patient care and specific reimbursement/collection
issues.
	 
	 	(h)	 	Upon termination pursuant to Section 6.2, PBM shall not recover any
unpaid balances owed to PBM by WellPoint from Covered Individuals or Plans.

7. AUDIT

	 	7.1	 	WellPoint reserves the right to audit twice annually on-site for purposes of ensuring
and verifying PBM’s compliance with the terms of this Agreement (including services and
operations of PBM Agents).
	 
	 	7.2	 	Audits will be done by a third party auditor as mutually agreed to by the Parties
(hereinafter “Auditor”). [*] PBM will provide a detailed Claims data file containing all
Claims and other pertinent information incurred during each contract year, at no cost to
WellPoint. The audit sample shall be sufficient to provide a statistically appropriate
sample size of total Claim volume as determined by WellPoint in consultation with its
Auditor. WellPoint shall provide PBM with at least thirty (30) days advance written notice
of an audit and WellPoint shall submit to PBM a scope of audit document in connection with
the audit. Once WellPoint’s Auditor contacts PBM, PBM shall respond to any request for an
audit within thirty (30) days. The Parties, including the Auditor, will enter into
customary confidentiality agreements to ensure that PBM and WellPoint data is kept
confidential. After the earlier of the thirty (30) day response period or the PBM response
the audit will commence within five (5) business days. Upon completion of the audit,
WellPoint will share the results
with the PBM.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

40

 

	 	7.3	 	PBM shall provide full support as required to the Auditor in all audits conducted,
including all contractual obligations as described and set forth above.
	 
	 	7.4	 	PBM shall have the right to appeal the findings of an audit that was performed under
this Section 7. The appeal, including all supporting documentation, must be submitted in
writing within sixty (60) days from the date the audit report was received by PBM and must
address issues identified in the audit report cover letter. Any and all supporting
documentation pertaining to the appeal must be included to allow for a detailed review by
the Auditor. If WellPoint or the Auditor does not receive an appeal, including supporting
documentation, from the PBM within sixty (60) days of the receipt of the audit report, one
appeal extension will automatically be granted by WellPoint for an additional fifteen (15)
days. WellPoint will respond to the appeal within sixty (60) days from the date of receipt
of the request (the “WellPoint Response”). Thereafter, PBM shall have sixty (60) days to
respond to the WellPoint Response (the “PBM Response”). WellPoint shall issue a final
response to the PBM Response within thirty (30) days of receipt of the PBM Response.
WellPoint shall only be required to consider issues raised in response to the WellPoint
Response, and shall not be required to consider additional issues raised by PBM which are
outside the scope of the WellPoint Response. All issues not resolved by the process set
forth above shall be submitted to the Joint Operating Pharmacy Committee for resolution.

8. PERFORMANCE GUARANTEES AND IMPLEMENTATION GUARANTEE

	 	8.1	 	PBM agrees that the performance standards and guarantees are a contractual obligation
of PBM and PBM shall meet or exceed the performance standards and guarantees as set forth
in Exhibit D and, if it fails to do so, shall pay to WellPoint the penalty amount set forth
in Exhibit D within [*] of the end of the evaluation period for which the performance
guarantee is measured. Further, PBM shall adhere to the implementation guarantee set forth
in Exhibit D. PBM performance standards set forth in Exhibit D are guaranteed for the Term
of this Agreement. The percentage of the aggregate penalties to the various guarantees
shall be allocated and assigned as provided in Exhibit D.
	 
	 	8.2	 	To the extent any action by PBM were to result in the payment of a performance
guarantee, the payment of such performance guarantee shall be in addition to any other
remedies available to WellPoint and shall in no way limit WellPoint’s ability to seek
damages, remedies, or payments to make WellPoint whole for losses for failure by PBM to
fulfill its obligations under this Agreement.

9. RELATIONSHIP OF THE PARTIES

PBM shall at all times be acting as an independent contractor for WellPoint and Plans. Nothing in
this Agreement shall be deemed or construed to create a joint venture, fiduciary, partnership or
employer/employee relationship between the Parties, including, but not limited

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

41

 

 to, as between PBM and any Plan. In addition, neither Party shall have any power or authority to
act for or on behalf of, or to bind the other except as expressly granted, and no other or greater
power or authority shall be implied by the grant or denial of power or authority specifically
mentioned.

10. [*]

	 	10.1	 	[*]

	 	(a)	 	[*]
	 
	 	(b)	 	[*]

	 	10.2	 	[*]
	 
	 	10.3	 	[*]

	 	(a)	 	[*]
	 
	 	(b)	 	[*]
	 
	 	(c)	 	[*]

11. INDEMNIFICATION

WellPoint and PBM shall each indemnify, defend and hold harmless the other Party, and their
Affiliates and subsidiaries, and all of their directors, officers, employees, and agents, from and
against any and all losses, claims, damages, liabilities, costs and expenses (including, without
limitation, reasonable attorneys’ fees and costs) arising from third party claims resulting from
(i) the indemnifying Party’s failure to perform its obligations under this Agreement, (ii) the
indemnifying Party’s violation of any law, statute, ordinance, order, rule or regulation, and/or
(iii) the indemnifying Party’s negligence or willful misconduct. The obligation to provide
indemnification under this Agreement shall be contingent upon the Party seeking indemnification
(i) providing the indemnifying Party with prompt written notice of any claim for which
indemnification is sought, (ii) allowing the indemnifying Party to control the defense and
settlement of such claim, provided however that the indemnifying Party agrees not to enter into
any settlement or compromise of any claim or action in a manner that admits fault or imposes any
restrictions or obligations on an indemnified Party without that indemnified Party’s prior written
consent, which will not be unreasonably withheld, and (iii) cooperating fully with the
indemnifying Party in connection with such defense and settlement.

12. EXCLUSIVITY/NON-COMPETE

	 	12.1	 	Exclusivity.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

42

 

	 	(a)	 	WellPoint agrees that PBM shall be the exclusive provider of the
pharmacy benefit management services to be provided by PBM under the terms of this
Agreement for WellPoint and its Affiliates except for the following: (i) if
WellPoint or an Affiliate acquires, directly or indirectly, another entity that has
contracted with another pharmacy benefit manager for similar services, such
acquired entity may honor the terms of said other agreement until the earlier to
occur of: (1) the expiration of the then current term of such agreement, or (2) the
earliest date on which such agreement can be terminated without adversely impacting
the acquired entity and its customers, which adverse impact may include less
favorable financial terms, and without breach of the agreement by such entity or
financial penalty to such entity; (ii) if WellPoint acquires another entity that
owns a pharmacy benefit management company, that entity may continue to utilize the
services of such pharmacy benefit management company solely for such acquired
entity’s own purposes or to continue to provide pharmacy benefit management
services for plans administered by such acquired entity (provided, however, that in
no event may WellPoint or any WellPoint Affiliate transition any other Plans or
Covered Individuals from WellPoint or any WellPoint Affiliate to such acquired
entity such that they receive pharmacy benefit management services from the
pharmacy benefit management company owned by such acquired entity); (iii) WellPoint
shall have the ability to contract with another pharmacy benefit manager to provide
similar services in a geographic region in which PBM does not have established
programs; or (iv) WellPoint shall have the ability to contract with another
pharmacy benefit manager to provide similar services outside of the United States.
Nothing in this Section 12.1 shall prohibit Plans or Plan sponsors that elect to
carve out the prescription drug benefit from an Integrated Arrangement administered
by WellPoint from entering into separate agreements for pharmacy benefit management
services on their own behalf. For purposes of the foregoing, an “Integrated
Arrangement” means an arrangement pursuant to which a client receives prescription
benefit management services or products in combination with medical benefits.
	 
	 	(b)	 	Notwithstanding Section 12.1(a) above, the Parties acknowledge and
agree that:

	 	(i)	 	As of the Effective Date of this Agreement, WellPoint
currently contracts with another vendor to administer its Cash Card
Program. For purposes of the foregoing, WellPoint’s “Cash Card Program”
means a program whereby the group or individual contracts with WellPoint
for a medical benefit without the prescription drug benefit, but such group
or individual purchases a discount card in order to make prescription drug
purchases. WellPoint may continue its Cash Card Program with such vendor
following the Effective Date; provided, however, that following the
Effective Date, WellPoint agrees to negotiate in good faith with PBM
concerning administrative services with respect to such existing Cash Card
Program and to enter

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

43

 

	 	 	 	into an agreement with PBM related thereto, subject to the parties,
acting in good faith, mutually agreeing to pricing and other contractual
terms which are as favorable to WellPoint as the existing vendor contract
and which would take effect on the earliest date on which such vendor
contract can be terminated without adversely impacting WellPoint and its
customers and without breach of the vendor contract by WellPoint or
financial penalty to WellPoint. If the Parties cannot reach an agreement
on terms, acting in good faith, WellPoint may continue to utilize its
existing vendor contract, provided that the claim volume thereunder shall
not increase by more than [*] on a cumulative basis. Except for the
foregoing, WellPoint agrees that, during the Term of this Agreement,
WellPoint and PBM shall negotiate in good faith for PBM to administer any
other WellPoint prescription drug cash card program business under this
Agreement (if the parties can, acting in good faith, agree on mutually
acceptable terms and amend this Agreement accordingly).
	 
	 	(ii)	 	With respect to Federal Employee Plan (FEP) PPO plan
and the Part D plan jointly offered in CMS Region 2, WellPoint represents
and PBM acknowledges that as of the Effective Date, WellPoint is not the
contracted vendor with respect to such plans for the provision of
prescription drug benefit services and that such services are provided by
other third party pharmacy benefit managers. In the event that during the
Term of this Agreement, WellPoint is the contracted vendor for either such
plan for the provision of prescription drug benefit services, WellPoint
acknowledges and agrees that all such services will be provided by PBM
under this Agreement.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

44

 

	 	12.2	 	Non-Compete. In consideration of the mutual covenants and consideration provided for
herein and other consideration given to WellPoint in connection with the Parties entering
into this Agreement, throughout the Term of this Agreement, except as provided below or in
Section 12.1 above, neither WellPoint nor any of its Affiliates will engage, directly or
indirectly, (or hold any equity interest in any entity that engages directly or indirectly)
in all or any portion of a pharmacy benefit management business within the United States of
America; provided, however, that (i) no owner of less than [*] of the outstanding stock of
any publicly-traded corporation shall be deemed to be so engaged solely by reason thereof
(provided, further, that neither WellPoint nor any of its Affiliates, in connection with an
investment in such securities, has any right to appoint directors to such entity, or direct
the nominating committee of such entity to nominate directors designated by WellPoint or
its Affiliates or otherwise control the business or affairs of such entity) and (ii) this
Section 12 shall not in any manner limit, restrict or otherwise preclude WellPoint or its
Affiliates from continuing throughout the Term of this Agreement to operate its other
non-pharmacy benefit management businesses as such businesses exist as of date hereof. For
purposes of this provision, pharmacy benefit management business means services provided by
PBM to WellPoint or its Designated Affiliates under the terms of this Agreement.
Notwithstanding the above, this Section 12.2 shall not in any manner limit, restrict or
otherwise preclude [*], [*], [*], or [*] or their successors from providing drug
information services, cost of care or quality of care programs or any other services
(except for core pharmacy benefit management services of the type provided by PBM
hereunder) to WellPoint or third parties throughout the Term of this Agreement, provided
however, that before beginning to offer services to third parties that are not currently
offered or in development as of the Effective Date, WellPoint, [*], [*], [*], or [*], as
appropriate, agrees to consult with PBM in good faith to determine whether it might be
beneficial for WellPoint, [*], [*], [*], or [*] or their successors to offer such new
services in conjunction with the pharmacy benefit management services provided by PBM
hereunder and the parties shall thereafter cooperate in good faith concerning the
implementation of any such agreed upon new services.
	 
	 	12.3	 	Restrictions Reasonable. WellPoint and PBM agree that the covenants set forth in
Section 12.1 and 12.2 above are reasonable with respect to its duration, geographical area,
and scope. If the final judgment of a court of competent jurisdiction declares that any
term or provision of Section 12.1 or 12.2 above is invalid or unenforceable, the parties
agree that the court making the determination of invalidity or unenforceability shall
reduce the scope, duration, or area of the term or provision, delete specific words or
phrases, or replace any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be enforceable as so
modified after the expiration of the time within which the judgment may be appealed.
WellPoint acknowledges that the consideration that it receives pursuant to this Agreement
is sufficient consideration for the enforcement of Sections 12.1 and 12.2 above.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

45

 

13. CONFIDENTIALITY, MARKETING, AND USE OF DATA

	 	13.1	 	Confidential Information. PBM shall keep confidential all information received in the
performance of its duties, including, but not limited to medical records and shall not
disclose such information except where such disclosure:

	 	(a)	 	Is reasonably necessary to perform the PBM’s duties under this
Agreement;
	 
	 	(b)	 	Has been authorized by the Covered Individual;
	 
	 	(c)	 	Is required or permitted by applicable law; or
	 
	 	(d)	 	Is requested by WellPoint or persons designated by WellPoint, in which
case any information so obtained by WellPoint shall be kept confidential, as
required by applicable state and federal law. This provision shall include
disclosure to WellPoint’s Plans.

	 	13.2	 	Confidentiality of Personally Identifiable Information. Both Parties agree to abide by
state and federal laws and regulations regarding confidentiality of the Covered
Individual’s personally identifiable information. PBM agrees to comply with all terms and
conditions set forth in this Agreement and Exhibit E.
	 
	 	13.3	 	Unauthorized Contact with Plans and Covered Individuals. PBM may not contact Plans or
Covered Individuals in any manner, other than as specifically approved by WellPoint or
required for PBM to perform its obligations under this Agreement.
	 
	 	13.4	 	[*]
	 
	 	13.5	 	Use of Name. PBM shall not publish, copy, reproduce, or use in any way WellPoint’s
name, symbols, service mark(s) or trademark(s), without WellPoint’s prior written
permission, which may be withheld for any reason. If WellPoint approves use of its name,
symbols, service mark(s) or trademark(s), it may later withdraw that permission at any
time, and for any reason, with notice to PBM. PBM has no license to use the Brands and
nothing in this Agreement shall be deemed to grant a license to PBM to use the Brands. Any
references to the Brands made by PBM in its own materials are subject to review and
approval by WellPoint.
	 
	 	13.6	 	Proprietary Materials. All information and material provided by either Party in
contemplation of or in connection with this Agreement remains proprietary to the disclosing
Party. Neither Party shall disclose any information proprietary to the other, or use such
information or material except: (1) as otherwise set forth in this Agreement; (2) as may be
required to perform the disclosing Party’s obligations hereunder; (3) as required to
deliver pharmacy benefit management services or administer a Plan; (4) to Plan or its
designees; (5) upon the express written consent of

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

46

 

	 	 	 	the other Party; or (6) as required by law or regulation; provided that either Party may
disclose such information to its legal advisors, lenders and business advisors, provided
that such legal advisors, lenders and business advisors agree to maintain
confidentiality of such information.
	 
	 	13.7	 	Plan Data Transmission. All data transmitted to and from PBM will be transacted in
accordance with applicable federal and state law, including the privacy and security
standards set out in HIPAA and the regulations thereunder.

14. RECORDS

All records associated with this Agreement, including Claims records, and excluding any and all of
PBM’s Business Proprietary Information, in the possession of PBM are and shall remain the property
of WellPoint upon termination of this Agreement. PBM shall return in their entirety and at no
cost to WellPoint full and complete data sets of such property in a form as agreed upon by the
parties. PBM will retain electronic or paper copies of its Claims and Plan information for a
period of time no less than the period required by ERISA, or WellPoint’s record retention policy,
whichever is greater, and shall abide by the Business Associate Agreement between PBM and the
WellPoint as set forth in Exhibit E, attached hereto and incorporated by reference.
Notwithstanding the preceding, prior to destroying any Plan Claim records, PBM will provide
WellPoint the opportunity to take possession of the records.

15. INFORMATION SECURITY

	 	15.1	 	PBM represents that it currently follows its usual and customary policies and practices
as a means to prevent any compromise of its information systems, computer networks, or data
files (“Systems”) by unauthorized users, viruses, or malicious computer programs
(“Malicious Functionalities”) which could in turn be propagated via computer networks,
email, magnetic media or other means to WellPoint. PBM agrees to immediately give
WellPoint notice if the security of its Systems is breached and such breach affects
WellPoint’s or any Plan’s data or PBM’s performance of services pursuant to this Agreement.
	 
	 	15.2	 	PBM agrees to apply appropriate internal information security practices, including, but
not limited to: using appropriate firewall and anti-virus software; maintaining said
countermeasures, operating systems, and other applications with up-to-date virus
definitions and security patches; installing and operating security mechanisms in the
manner in which they were intended sufficient to ensure WellPoint will not be impacted nor
operations disrupted; and permitting only authorized users access to computer systems and
applications.
	 
	 	15.3	 	PBM specifically agrees to: use up-to-date anti-virus tools to remove known Malicious
Functionalities from any email message or data transmitted to WellPoint; prevent the
transmission of attacks on WellPoint via the network connections between WellPoint and the
PBM; and prevent unauthorized access to WellPoint systems via PBM’s networks and access
codes.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

47

 

	 	15.4	 	In accordance with all applicable US and International privacy laws, PBM agrees to
safeguard confidential protected individually identifiable personal information (health,
financial, identity) which are received, transmitted, managed, processed, etc. and to
require any subcontractor or agent that transmits or receives such information to meet
these same security agreements.
	 
	 	15.5	 	Subject to reasonable notice, PBM will provide WellPoint an opportunity to conduct a
security audit of PBM’s systems that are applicable to the services provided to WellPoint
by PBM, provided that such audits are not conducted more than once a year.
	 
	 	15.6	 	PBM acknowledges that it maintains personally identifiable financial information of
consumers and agrees to maintain a current SAS 70 Type II Technical and Procedural audit.
PBM will provide WellPoint a copy of the SAS 70 Type II Technical and Procedural audit by
the end of April each year during the term of this Agreement. PBM acknowledges and agrees
that it will provide a copy of PBM’s then-current SAS 70 Type II Technical and Procedural
audit to Plans upon request.

16. GENERAL PROVISIONS

	 	16.1	 	Entire Agreement. This Agreement and all Exhibits, and other documents furnished
pursuant to this Agreement and expressly made a part hereof, shall constitute the entire
agreement relating to the subject matter hereof between the Parties hereto, and supersedes
all other agreements, written or otherwise. In the case of any inconsistency with this
Agreement the order of precedence will be as follows: federal law, state law, this
Agreement and WellPoint’s provider manual(s). This Agreement may be amended by mutual
agreement of the Parties hereto at any time, but, to be effective, any amendment hereto
must be in writing and signed by an authorized representative of each Party.
	 
	 	16.2	 	Applicable Law; Venue. This Agreement shall be governed by and construed in accordance
with the laws of New York. However, coverage issues specific to a Plan or Covered
Individual are governed by the state laws where the Plan is issued, unless such state laws
are otherwise preempted by federal law. Any dispute arising out of or related in any
manner to this Agreement shall be referred exclusively to the United States District Court
for the Southern District of New York.
	 
	 	16.3	 	Change in Law. From time to time, federal, state and local legislative bodies, boards,
departments or agencies may enact or issue laws, rules, or regulations pertinent to this
Agreement. To the extent that any such enactment or issuance has the effect of materially
altering the obligations of either PBM or WellPoint or has a material negative financial
impact to either party hereunder, or to the extent that any court of competent jurisdiction
makes a determination or otherwise takes action that renders invalid or unenforceable, or
has the effect of materially altering, any term or provision of this Agreement, or has a
negative financial impact to either Party

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

48

 

	 	 	 	hereunder, the Parties shall negotiate in good faith a modification of the services
and/or pricing terms as necessary to maintain the Parties’ comparable economic positions
as of the Effective Date.
	 
	 	16.4	 	Notices. All notices under this Agreement shall be in writing and shall be delivered
or mailed, certified or registered mail, or overnighted by use of a nationally recognized
courier, to the other Party at the address listed below or in the applicable Exhibit to
this Agreement. Notices under this Agreement may also be emailed or sent by facsimile
(with a paper copy also delivered or mailed as described in this Section 16.3).

	 	 	 	 	 
	 

	 	If to WellPoint
	 	WellPoint, Inc.
	 

	 	 	 	120 Monument Circle
	 

	 	 	 	Indianapolis, IN 46204
	 

	 	 	 	Attn: General Counsel
	 

	 	 	 	Fax: (317) 488-6821
	 
	 	 	 	 
	 

	 	If to PBM:
	 	Express Scripts, Inc.
	 

	 	 	 	One Express Way
	 

	 	 	 	St. Louis, Missouri 63121
	 

	 	 	 	Attn: President
	 
	 	 	 	 
	 

	 	with a copy to:
	 	General Counsel
	 

	 	 	 	Fax: (800) 417-8163

	 	16.5	 	Dispute Resolution Prior to Termination for Cause. Neither Party shall exercise any
termination right under Section 6.2(a) other than a termination by WellPoint for a Material
PG Breach, unless the following steps are followed:

	 	(a)	 	In the event of any material dispute regarding this Agreement, the
Parties agree that at the earliest time the dispute will be referred to the Joint
Operating Pharmacy Committee. The Committee shall have a fifteen (15) day period
to review the dispute during which the Committee will meet in person as soon as
practicable and make good faith efforts to resolve the dispute to the satisfaction
of the Parties.
	 
	 	(b)	 	If such dispute is not resolved by the Committee, the Parties agree
that the dispute will be referred to the President of WellPoint and the President
of PBM. The Presidents shall have a fifteen (15) day period to review the dispute
during which the Presidents will meet in person as soon as practicable and make
good faith efforts to resolve the dispute to the satisfaction of the Parties.
	 
	 	(c)	 	In the event the dispute is not resolved by the Presidents, the Parties
agree that the dispute will be subject to non-binding mediation under the rules of
the American Arbitration Association.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

49

 

	 	16.6	 	Assignment and Subcontracting.

	 	(a)	 	This Agreement and/or any of the Parties’ respective rights or
obligations hereunder may not be assigned or transferred, directly or indirectly,
by operation of law or otherwise, by either Party without the prior written consent
of the other Party.
	 
	 	(b)	 	PBM shall remain fully responsible and liable for performance of any
such services to be performed by PBM under this Agreement but delegated to any
other agent or subcontractor. This Agreement shall, however, be binding on any
assignees, delegees or successors in interest to the Parties to the Agreement. For
purposes of this Section 16.6(b), the term “successors” shall include any entity:
(i) that acquires all or substantially all of the assets of any Party to this
Agreement; (ii) that results from the consummation of a reorganization,
recapitalization or similar restructuring of any Party to this Agreement; or (iii)
that is the surviving entity resulting from a merger, consolidation or similar
business combination with any Party to this Agreement.
	 
	 	(c)	 	PBM will disclose to WellPoint any other subcontractors that perform
material functions on behalf of PBM in connection with this Agreement and shall
obtain advance approval of WellPoint of such subcontractors and of any changes in
such subcontractors, which approval will not be unreasonably withheld.
	 
	 	(d)	 	PBM represents and warrants that it and all of its agents and
subcontractors will comply with all applicable law and the terms of this Agreement.

	 	16.7	 	Force Majeure. Neither Party shall be deemed to be in violation of this Agreement if
such Party is prevented from performing any of its obligations hereunder for any reason
beyond its reasonable control, including without limitation, acts of God, acts of any
public enemy, floods, statutory or other laws, regulations, rules, or orders of the
federal, state, or local government or any agency thereof; provided, however, that work
stoppages, labor actions, and union strikes shall not constitute a force majeure under this
Section 16.7. PBM shall create and maintain disaster avoidance procedures and a disaster
recovery plan designed to safeguard WellPoint’s data and the business continuity of the
processes for which PBM is responsible throughout the Term, and such procedures shall be
subject to WellPoint’s review. PBM’s disaster avoidance procedures and disaster recovery
plan shall comply with applicable federal or state laws and regulations, including without
limitation OPM requirements regarding flexibility for pharmacy restrictions, refills,
additional supplies of medications as backup, and mail order pharmacy. PBM shall revise
such procedures as may be reasonably required by WellPoint from time to time throughout the
Term. For all documents or materials of any type produced in whole or in part in
connection with a

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

50

 

	 	 	 	Statement of Work at any location, PBM shall use offsite storage in which it shall
retain copies of all such items on no less frequently than a twice monthly basis. Items
so stored shall include but not be limited to work in process, work papers, drafts and
internal PBM memoranda.
	 
	 	16.8	 	[*]
	 
	 	16.9	 	Definitions. Unless otherwise specifically noted, the capitalized terms set forth in
Section 1 of this Agreement will have the same meaning when used in any Exhibit attached
hereto.
	 
	 	16.10	 	No Third Party Beneficiaries. WellPoint and PBM specifically state, acknowledge and
agree that this Agreement is intended solely for the benefit of each Party hereto and their
respective successors or permitted assigns, and it is not the Parties’ intent to confer any
third party beneficiary rights hereunder and no such rights are conferred hereunder to any
third party including, without limitation, Covered Individuals.
	 
	 	16.11	 	Authorization of Agreement. PBM and WellPoint each represent to the other, that this
Agreement constitutes a valid and enforceable obligation of PBM and WellPoint in accordance
with its terms.
	 
	 	16.12	 	Counterpart Copies. This Agreement may be executed in two counterparts, each of which
shall be an original, but such counterparts shall constitute one and the same instrument.
	 
	 	16.13	 	Exhibits. The Exhibits attached to this Agreement are an integral part of this
Agreement and are incorporated herein by reference.
	 
	 	16.14	 	Headings. The headings of the various Sections of this Agreement are inserted merely
for the purpose of convenience and do not expressly or by implication limit, define or
extend the specific terms of the Section so designated.
	 
	 	16.15	 	HIPAA Privacy and Security. PBM shall at all times act in accordance with the privacy
and security standards set out in HIPAA and the regulations thereunder when performing
under this Agreement, and shall abide by the Business Associate Agreement set forth in
Exhibit E. PBM represents and warrants that its subcontractors shall likewise comply with
all applicable provisions of HIPAA and the regulations thereunder in performing services
and duties in connection with or related to this Agreement.
	 
	 	16.16	 	No waiver. All rights and remedies given to WellPoint or the PBM under this Agreement
are distinct, separate and cumulative, and the use of one or more thereof shall not exclude
or waive any other right or remedy allowed at law or in equity, unless specifically waived
in this Agreement. Further, the fact that a Party may not have insisted upon strict
compliance with this Agreement, in connection with an act, omission or transaction of the
other, shall not relieve the other Party of the obligation

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

51

 

	 	 	 	to perform strictly in accordance with the terms of this Agreement. Waiver of a breach
of any provision of this Agreement shall not be deemed a waiver of any other breach of
the same or a different provision.
	 
	 	16.17	 	Survival. The rights and obligations of the Parties hereto set forth in Sections 2.3,
2.5(b), 2.9, 2.11, 2.16, 2.17 (and Exhibit O), 3.2, 3.3(g), 3.6, 3.9(d), 5.1,
5.2(a), 5.3(e) and (f), 6.3, 6.4, 7, 9, 11, 13, 14, 16.2, and 16.17 (and any other Section
where, by its context, is intended to survive termination or expiration of this Agreement)
shall survive and continue after expiration or termination of this Agreement and shall bind
the Parties and their successors and assigns.
	 
	 	16.18	 	Solicitation. During the Term of this Agreement, PBM agrees that it will not
knowingly respond to a Request for Proposal (RFP) for an Integrated Arrangement, whether
from an existing or prospective client of WellPoint or PBM. For purposes of this Section
16.18, the term “Integrated Arrangement” has the meaning set forth in Section 12.1(a) of
this Agreement. PBM will provide WellPoint reasonable assistance with respect to any such
RFP consistent with Section 3.22(l). PBM agrees that WellPoint is entitled to enforce the
terms of this Section 16.18 through equitable and injunctive relief as well as other
remedies permitted by law. If this Section 16.18 is declared unenforceable in any judicial
proceeding for being of too long a duration or too broad in scope, then this Section 16.18
shall still be enforceable for such maximum period of time and for such scope as will make
the provisions hereof enforceable. PBM acknowledges that the rights and privileges granted
to WellPoint in this Section 16.18 are of special and unique character, which gives them a
peculiar value, the loss of which may not be reasonably or adequately compensated for by
damages in an action at law, and that a breach by PBM of this Section 16.18 will cause
WellPoint great and irreparable injury and damage. Accordingly, PBM hereby agrees that
WellPoint shall be entitled to remedies of injunction (without the posting of any bond),
specific performance or other equitable relief to prevent a breach of this Section 16.18.
This provision shall not be construed as a waiver of any other rights or remedies which
WellPoint may have for damages. WellPoint shall be entitled to recover against PBM all
attorneys’ fees, court costs and the costs of posting bond (if any) incurred by it in
enforcing any provisions of this Section 16.18.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

[Signature Page Follows]

52

 

	 	 	 	 	 
	 	WELLPOINT, INC.,

on behalf of itself and its Designated Affiliates,

 	 
	 	By:  	 	 
	 	Print Name:  	 
	 	Title:  	 	 	 
	 	Date:  	 	 
	 
	 	EXPRESS SCRIPTS, INC.

 	 

	 	By:  	 	 
	 	Print Name:  	 
	 	Title:  

	 	 	 
	 	Date:  	 	 

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

53

 

EXHIBIT A

FEES AND PRICING

[*]

3 pages
redacted in their entirety

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

54

 

EXHIBIT A-2

Miscellaneous Fees

[*]

7 pages
redacted in their entirety

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

55

 

Execution Version

EXHIBIT B

REPORTS TO WELLPOINT

To the extent applicable and as requested by WellPoint from time to time, PBM shall provide the
reports set forth in this Exhibit B, subject to Section 3.14. All monthly reports are due within
ten (10) days following the end of the period to which the report relates. All quarterly reports
are due within ten (10) business days following the end of the period to which the report relates.
Upon notification by WellPoint of any reporting discrepancies, PBM will correct and resubmit a new
report within ten (10) days. In the event there is any change in the data dictionary for any of
the following reports, PBM shall provide the updated data dictionary and other information
necessary for mapping of data elements to be completed. In addition to the following reports, PBM
shall provide copies of PBM’s applicable policies as required by WellPoint for regulatory
compliance purposes (e.g., policies related to PBM’s operations, pharmacy management, timely
payment, formulary management).

Standard Reports:

	 	•	 	Billing Summaries (available at the group level for ASO groups)
	 
	 	•	 	Claims Detail Report
	 
	 	•	 	Claims Summary Report
	 
	 	•	 	Financial Detail Report (including adjustments)
	 
	 	•	 	Financial Fee Invoices (balanced with the electronic Claims file and the
miscellaneous charges
	 
	 	•	 	Detail for Miscellaneous charges (group, member ID, fee description, and amount)
	 
	 	•	 	Electronic claim files standard card (separate files for lines of business or as
designated by WellPoint)
	 
	 	•	 	Electronic Claims Files 100% co-payment funded
	 
	 	•	 	PBM will provide electronically a display of all WellPoint Paid Claims data
accumulated for all Network Pharmacies by each Plan (commonly referred to as a paid
Claims file) on a monthly basis in a format mutually agreed to by the Parties.

Rebate Reports (through December 31, 2009):

	 	•	 	Formulary Rebate Allocation (by group/client)
	 
	 	•	 	Summary by Plan/Client
	 
	 	•	 	Rebate Distribution (group level)
	 
	 	•	 	Rebate Minimum
	 
	 	•	 	Reconciliation Update

Rebate Reports (following December 31, 2009)

	 	•	 	PBM’s Standard Rebate Reports supplemented by claim level Rebate data feed

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

 

 

Audit Reports:

	 	•	 	SAS 70 or equivalent
	 
	 	•	 	PBM’s Ethical Guidelines (provided on an annual basis)
	 
	 	•	 	Performance Guarantees (as described in Exhibits D and I)

Eligibility Report:

	 	•	 	Exception (a list of member records from electronic eligibility updates that are not
accepted by the system along with a detailed explanation of why the record was not
loaded.

On-line Reporting Access:

	 	•	 	PBM shall provide WellPoint and WellPoint customers on-line access to WellPoint’s
Claims data via PBM’s proprietary software package. PBM shall provide software
upgrades, unlimited log-on identification numbers, and twenty-four (24) months of
Claims data storage at no additional charge.

Utilization Reports (monthly):

	 	•	 	Break out by all WellPoint business segments (i.e., Commercial, Individual, Fully
Insured (FI), ASO, National Accounts (NA), Large Group (LG), Small Group (SG), Part D,
Medicare, State Sponsored Business (SSB)) and break out by Customer, Client, Group
	 
	 	•	 	Clinical Management Savings separate edit (DO, PA, ST, QL) saving report by program
	 
	 	•	 	Clinical Management Utilization (approval and denial rates based on rejects)
	 
	 	•	 	Generic Utilization Reporting
	 
	 	•	 	Generic Initiatives Program Savings
	 
	 	•	 	Half Tab Savings Report
	 
	 	•	 	Specialty Utilization Reporting
	 
	 	•	 	Mail Order Utilization Reporting

Formulary Management:

	 	•	 	Estimated total savings from VAC
	 
	 	•	 	Estimated savings from approved P&T clinical edits
	 
	 	•	 	Total COC Savings from Total COC VAC models

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

57

 

PBM’s Operations Performance Report, including:

	 	•	 	Turn Around Time (TAT) tracking report
	 
	 	•	 	Call Center Metrics
	 
	 	•	 	Home Delivery Metrics
	 
	 	•	 	Reject Reporting

PBM’s Trend Central Reports, including:

	 	•	 	PA Approval and Denial Reports

PBM’s ACES Reporting, including:

	 	•	 	Letter Intervention Reporting

OTC Initiatives:

	 	•	 	Break out by all WellPoint business segments (i.e., Commercial, Individual, Fully
Insured (FI), ASO, National Accounts (NA), Large Group (LG), Small Group (SG), Part D,
Medicare, State Sponsored Business (SSB)) and break out by Customer, Client, Group
	 
	 	•	 	OTC
	 
	 	•	 	ELIZA

Plan Performance Reports (monthly):

	 	•	 	Break out by all WellPoint business segments (i.e., Commercial, Individual, Fully
Insured (FI), ASO, National Accounts (NA), Large Group (LG), Small Group (SG), Part D,
Medicare, State Sponsored Business (SSB)) and break out by Customer, Client, Group
	 
	 	•	 	Executive Summary
	 
	 	•	 	Trend Reports
	 
	 	•	 	Top 20 therapeutic classes
	 
	 	•	 	MMAC Savings
	 
	 	•	 	Effective network discount rate
	 
	 	•	 	Network Savings

Medication Management, Strategic Alliances, and Clinical Health Policy (quarterly):

	 	•	 	Break out by all WellPoint business segments (i.e., Commercial, Individual, Fully
Insured (FI), ASO, National Accounts (NA), Large Group (LG), Small Group (SG), Part D,
Medicare, State Sponsored Business (SSB)) and break out by Customer, Client, Group
	 
	 	•	 	Level 1 DUE edits for safety
	 
	 	•	 	MedVantx

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

58

 

	 	•	 	ELIZA
	 
	 	•	 	Benefit Design
	 
	 	•	 	Prospective Impact Modeling tools (member impact and estimated savings) similar to
consultative Analysis
	 
	 	•	 	Pharmacy Predictive Modeling
	 
	 	•	 	Care Management:

	 	o	 	Diabetes, Hypertension compliance, Hypertension Persistence (new for 2010)
	 
	 	o	 	Behavioral Health follow up
	 
	 	o	 	Controller Meds for asthmatics
	 
	 	o	 	Appropriate treatment for URI

	 	•	 	Clinical outcomes:

	 	o	 	Diabetes, CHF & Asthma ER Visits

	 	•	 	Osteoporosis Screening (new for 2010)
	 
	 	•	 	Patient Safety:

	 	o	 	Persistent meds monitoring

	 	•	 	Drug compliance and persistency by drug
	 
	 	•	 	Delegated Organization Performance Report (included in WellPoint’s Delegation
Manual)
	 
	 	•	 	VIP Programs

Medicaid Program Reporting Requirements

	 	 	 	 	 	 	 
	Data Elements Report / Encounter Data

	 	MRMIP
	 	N/A
	 	Mail directly; notify Compliance
	 
	 	 	 	 	 	 
	Data Elements Report / Encounter Data

	 	AIM
	 	Electronic File
	 	Mail directly; notify Compliance
	 
	 	 	 	 	 	 
	Pharmacy Prior Authorization Denial Log

	 	Los Angeles
	 	N/A
	 	Mail directly; notify Compliance
	 
	 	 	 	 	 	 
	Pharmacy Denial Letters (mbr & phys)

	 	Los Angeles
	 	Hard Copy
	 	Mail directly; notify Compliance
	 
	 	 	 	 	 	 
	Formulary Changes

	 	Tulare
	 	 	 	Compliance mails
	 
	 	 	 	 	 	 
	Formulary Changes

	 	Stanislaus-DHS
	 	 	 	Compliance mails
	 
	 	 	 	 	 	 
	Formulary Changes

	 	Sacramento
	 	 	 	Compliance mails
	 
	 	 	 	 	 	 
	Formulary Changes

	 	Central Valley/Bay Area
	 	Electronic File
	 	Compliance mails
	 
	 	 	 	 	 	 
	Pharmacy Utilization

	 	Los Angeles
	 	 	 	Compliance mails
	 
	 	 	 	 	 	 
	AN-DUR-1 PDL Comparison of Select Therapeutic Classes, Open Access With No

	 	Indiana
	 	MS Excel
	 	Mail directly; notify Compliance

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

59

 

	 	 	 	 	 	 	 
	AN-DUR-2 PDL Comparison of Select Therapeutic Classes, Clinical Edits With Rationale

	 	Indiana
	 	MS Excel
	 	Mail directly; notify Compliance
	 
	 	 	 	 	 	 
	AN-DUR-3 Number of Prior Authorizations By Drug

	 	Indiana
	 	MS Excel
	 	Mail directly; notify Compliance
	 
	 	 	 	 	 	 
	AN-DUR-4 Pharmacy Prior Authorizations

	 	Indiana
	 	MS Excel
	 	Mail directly; notify Compliance
	 
	 	 	 	 	 	 
	AN-DUR-5 Pharmacy-Related Grievances

	 	Indiana
	 	MS Excel
	 	Mail directly; notify Compliance
	 
	 	 	 	 	 	 
	Pharmacy Ranking of Drugs by Volume of Prescription Paid

	 	Kansas
	 	 	 	Compliance mails
	 
	 	 	 	 	 	 
	Pharmacy Reports Ranking Top 100 Drugs by Dollars Paid

	 	Kansas
	 	 	 	Compliance mails
	 
	 	 	 	 	 	 
	Pharmacy Ranking of Drugs by Volume of Prescription Paid

	 	Kansas
	 	 	 	Compliance mails
	 
	 	 	 	 	 	 
	Pharmacy Reports Ranking Top 100 Drugs by Dollars Paid

	 	Kansas
	 	 	 	Compliance mails
	 
	 	 	 	 	 	 
	RX Exclusion DMHC Filing

	 	Sacramento
	 	 	 	Mail directly; notify Compliance
	 
	 	 	 	 	 	 
	Medallion II/FAMIS — Formulary and Pre-Auth Requirements

	 	Virginia
	 	 	 	Compliance Mails
	 
	 	 	 	 	 	 
	Medallion II/FAMIS — Formulary Updates

	 	Virginia
	 	 	 	Compliance Mails
	 
	 	 	 	 	 	 
	Medallion II — Notify DMAS prior to implementation of any co-payments on prescription drugs

	 	Virginia
	 	 	 	Mail directly; notify Compliance
	 
	 	 	 	 	 	 
	I — Monthly Pharmacy Rebate Accrual

	 	South Carolina
	 	 	 	Compliance Mails

	 	 	 
	Mainstream HW21 Compound Paid

	 	Monthly
	 
	 	 
	Mainstream HW21 Non-Compound Paid

	 	Monthly
	 
	 	 
	Mainstream HW21 Reversals

	 	Monthly
	 
	 	 
	Mainstream HW19 Compound Paid

	 	Monthly
	 
	 	 
	Mainstream HW219 Non-Compound Paid

	 	Monthly
	 
	 	 
	Mainstream HW19 Reversals

	 	Monthly
	 
	 	 
	Cerner

	 	Weekly
	 
	 	 
	Managed Care

	 	Monthly
	 
	 	 
	Mainstream/ Compound Paid

	 	Weekly
	 
	 	 
	Mainstream/ Non-Compound Paid

	 	Weekly
	 
	 	 
	Mainstream/ Reversals

	 	Weekly
	 
	 	 
	Mainstream / Denied

	 	Weekly
	 
	 	 
	Managed Care

	 	Monthly
	 
	 	 
	IHEA

	 	Monthly

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

60

 

	 	 	 
	Maintstream
	 	 
	WPDP.NONX.WPD110IM.PLAN190(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN310(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN340(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN341(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN342(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN343(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN345(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN344(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN048(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN998(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN311(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN358(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN180(0)
	 	 
	WPDP.NONX.WPD110IM.PLAN359(0)

	 	Monthly
	 
	 	 
	LACARE

	 	Monthly
	 
	 	 
	Mainstream Paid

	 	Monthly

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

61

 

EXHIBIT C

BANKING

1. [*]

2. [*]

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

62

 

3. Contact Information

Persons to contact at WellPoint regarding banking issues are:

Primary Contact:

Name: Judy Laws

Phone Number: 317-488-6031

E-mail: judy.laws@wellpoint.com

Submit Invoice To: chris.barone@wellpoint.com

Secondary Contact:

Name: Kurt Briggs

Phone: 317-488-6666

E-mail: kurt.briggs@wellpoint.com

Persons to contact at the PBM regarding banking issues are:

Primary Contact:

Name: Donna Flieg

Phone Number: 314-810-6722

E-mail: dflieg@express-scripts.com

Secondary Contact:

Name: Suzanne Dolph

Phone: 314-810-3125

E-mail: srdolph@express-scripts.com

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

63

 

EXHIBIT D

[*]

15 pages
redacted in their entirety

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

64

 

EXHIBIT E

BUSINESS ASSOCIATE AGREEMENT

If, during the term of the Agreement, the PBM performs services for WellPoint which require the use
or disclosure of Protected Health Information (as defined herein), then PBM shall be deemed a
Business Associate of WellPoint and the following provisions shall apply:

This agreement (“Agreement”) is effective on December 1, 2009 and is between PBM (“Business
Associate”) and WellPoint (“Company”) on behalf of itself and its affiliates who are Covered
Entities or Business Associates and who have a business relationship with Business Associate, if
any (hereinafter collectively “Company”). The purpose of this Agreement is to comply with the
requirements of the Health Insurance Portability and Accountability Act of 1996 and its
implementing regulations (45 C.F.R. Parts 160-64), any applicable state privacy laws, any
applicable state security laws, any applicable implementing regulations issued by the Insurance
Commissioner or other regulatory authority having jurisdiction and the requirements of the Health
Information Technology for Economic and Clinical Health Act, as incorporated in the American
Recovery and Reinvestment Act of 2009 (the “HITECH Act”) and any regulations adopted or to be
adopted pursuant to the HITECH Act that relate to the obligations of business associates. Business
Associate recognizes and agrees it is obligated by law to meet the applicable provisions of the
HITECH Act.

All capitalized terms in this Agreement that are not defined in this Agreement will have the
meaning ascribed to those terms by 45 C.F.R. Parts 160-164, or applicable insurance regulations
that are applicable to Company’s relationship with Business Associate.

	A.	 	Privacy of Protected Health Information 

	 	1.	 	Permitted and Required Uses and Disclosures. Business Associate is permitted
or required to Use or disclose Protected Health Information (“PHI”) it requests, creates or
receives for or from Company (or another business associate of Company) only as follows:

	 	a)	 	Functions and Activities on Company’s Behalf. Business Associate is
permitted to request, Use and disclose PHI it creates or receives for or from Company
(or another business associate of Company), consistent with the Privacy Rule and the
HITECH Act, only as described in this Agreement, or other agreements during their term
that may exist between Company and Business Associate. Specifically, Business Associate
is permitted to use and disclose PHI for the purposes as follow:

	 	(i)	 	to use in information technology systems testing during the integration
process to prepare for the ultimate transition of Companies members to Business
Associate for PBM and pharmacy services.

	 	b)	 	Business Associate’s Operations. Business Associate may Use PHI it
creates or receives for or from Company as necessary for Business Associate’s proper

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	 	 	management and administration or to carry out Business Associate’s legal
responsibilities. Business Associate may disclose such PHI as necessary for Business
Associate’s proper management and administration or to carry out Business Associate’s
legal responsibilities only if:

	 	(i)	 	The Disclosure is Required by Law; or
	 
	 	(ii)	 	Business Associate obtains reasonable assurance evidenced by written
contract, from any person or organization to which Business Associate will disclose
such PHI that the person or organization will:

	 	a.	 	Hold such PHI in confidence and Use or further disclose
it only for the purpose for which Business Associate disclosed it to the
person or organization or as Required by Law; and
	 
	 	b.	 	Notify Business Associate (who will in turn promptly
notify Company) of any instance of which the person or organization becomes
aware in which the confidentiality of such PHI was breached.

	 	c.)	 	 Data Aggregation Services. If specifically directed by the Company,
the Business Associate will provide Data Aggregation services relating to the Health
Care Operations of the Company.
	 
	 	d)	 	Minimum Necessary and Limited Data Set. In any instance when Business
Associate Uses, requests or discloses PHI under this Agreement or in accordance with
other agreements that exist between Company and Business Associate, Business Associate
shall utilize a Limited Data Set, if practicable. Otherwise, Business Associate may
Use or disclose only the minimum amount of PHI necessary to accomplish the intended
purpose, except that Business Associate will not be obligated to comply with this
minimum necessary limitation with respect to:

	 	(i)	 	Disclosure to or request by a Health Care Provider for Treatment;
	 
	 	(ii)	 	Use for or Disclosure to an Individual who is the subject of Company’s
PHI, or that Individual’s Personal Representative;
	 
	 	(iii)	 	Use or Disclosure made pursuant to an authorization compliant with 45
C.F.R. §164.508 that is signed by an Individual who is the subject of Company’s PHI
to be used or disclosed, or by that Individual’s Personal Representative;
	 
	 	(iv)	 	Disclosure to the United States Department of Health and Human Services
(“HHS”) in accordance with Section B(5) of this Agreement;
	 
	 	(v)	 	Use or Disclosure that is Required by Law; or
	 
	 	(vi)	 	Any other Use or Disclosure that is excepted from the Minimum Necessary
limitation as specified in 45 C.F.R. §164.502(b)(2).

	 	e)	 	Use by Workforce. Business Associate shall advise members of its
workforce of their obligations to protect and safeguard PHI. Business Associate shall
take appropriate disciplinary action against any member of its workforce who uses or
discloses PHI in

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	 	 	contravention of this Agreement.

	 	2.	 	Prohibitions on Unauthorized Requests, Use or Disclosure.

	 	a)	 	Business Associate will neither Use nor disclose Company’s PHI it creates or
receives from Company or from another Business Associate of Company, except as
permitted or required by this Agreement or as Required by Law or as otherwise permitted
in writing by Company. This Agreement does not authorize Business Associate to
request, Use, disclose, maintain or transmit PHI in a manner that will violate 45
C.F.R. Parts 160-164.
	 
	 	b)	 	Business Associate will not develop any list, description or other grouping of
Individuals using PHI received from or on behalf of Company, except as permitted by
this Agreement or in writing by Company. Business Associate will not request, Use or
disclose any list, description or other grouping of Individuals that is derived using
such PHI, except as permitted by this Agreement or in writing by Company.

	 	3.	 	Sub-Contractors and Agents. Business Associate will require any of its
subcontractors and agents to provide reasonable assurance, evidenced by written contract,
that subcontractor or agent will comply with the same privacy and security obligations as
Business Associate with respect to such PHI, including the obligations described in Section
4 herein.
	 
	 	4.	 	Information Safeguards. Business Associate will develop, implement, maintain
and use a written information security program that contains the necessary administrative,
technical and physical safeguards that are appropriate to the Business Associate’s size and
complexity in order to achieve the safeguarding objectives as detailed in Social Security
Act § 1173(d) (42 U.S.C. § 1320d-2(d)), 45 C.F.R. Part 164.530(c) and any other
implementing regulations issued by the U.S. Department of Health and Human Services, as
well as industry best practices, to preserve the integrity and confidentiality of and to
prevent non-permitted or prohibited Use or Disclosure of PHI created or received for or
from Company and any other applicable state law imposing information security requirements.
Business Associate will document and keep these safeguards current.
	 
	 	 	 	Business Associate shall provide Company with such information concerning such safeguards as
Company may from time to time request, and shall, upon reasonable request, give Company
reasonable access to Business Associate’s facilities used for the maintenance or processing
of PHI, for inspection and reasonable access to its books, records, practices, policies and
procedures concerning the Use and Disclosure of PHI, and its general security policies, for
the purpose of determining Business Associate’s compliance with this Agreement.
	 
	 	 	 	The following items a) through r) are required to protect all WellPoint Confidential
Information, including, but not limited to PHI and Company proprietary information
(hereinafter collectively designated “Data” for these items) in addition to, or as required
by the above safeguards, Business Associate shall:

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	a)	 	Establish and maintain a Security Awareness Program that communicates and
provides training on its security policies to the workforce.
	 
	 	b)	 	Establish and implement a data backup program to create and maintain
retrievable exact copies of Data.
	 
	 	c)	 	Establish and implement an access management program designed to guard against
the unauthorized access, alteration, or destruction of Data and supporting systems and
applications. The program shall require the establishment, maintenance and tracking of
individual user IDs, passwords, and associated access levels to Data in accordance with
minimum access necessary to perform job functions providing services to Company.
Access should be reviewed at least annually to ensure access is appropriate for the job
function. Such measures shall include the installation and use of software which: (i)
requires all users to enter a user identification and password prior to gaining access
to the information systems; (ii) controls and tracks the addition and deletion of
users; (iii) controls and tracks user access to areas and features of the information
systems; and (iv) offers other security features to protect the confidentiality,
availability and integrity of Data. Require that user passwords be changed at least
every ninety (90) days, or sooner if a specific trained operator is no longer
responsible for accessing Data, or if there is reasonable cause to believe that an
unauthorized person has learned the password. All user IDs that are no longer
authorized to obtain access to Data must be immediately deleted, revoked or disabled.
	 
	 	d)	 	Restrict access to its physical facilities and environments, electronic
networks, applications, and media by providing authorized users the minimum access
necessary to perform their job function. Access permissions to electronic networks,
applications and media shall be reviewed and modified/removed as appropriate no less
then annually, upon change of user job function or upon user termination from
employment or job assignment.
	 
	 	e)	 	Implement and maintain adequate controls to restrict perimeter access to its
facilities and sensitive areas such as, employee work areas, data centers,
telecommunications closets, server rooms, and media libraries. Physical security
access controls and lists shall be reviewed and modified as necessary, and at least
annually. Computing devices used to access, receive, store, maintain or process Data
must be located in a limited access room within the facility.
	 
	 	f)	 	Establish and maintain an anti-virus program designed to guard against the
introduction and propagation of any virus. Implementation must require at least daily
virus scans and deployment of virus signature updates upon availability. Computing
devices used to access, receive, store, maintain or process Data must be configured
with up-to-date virus protection software.
	 
	 	g)	 	Establish and maintain a security-patching program designed to guard against
the exploitation of vulnerabilities. Implementation must require the periodic review of

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	 	 	security patch levels and ensure the timely application of updated security patches upon
availability. Computing devices used to access, receive, store, maintain or process
Data must be current with security related patches as they become available. Document
and make available to Company on-site at Business Associate’s offices during the course
of any Company audit, upon request, 1) the recommended configuration for devices on
Company’s network, 2) the process for maintaining configurations and the application of
patches and fixes when they become available, and 3) the process for secure deployment
and device maintenance on Company’s network.
	 
	 	h)	 	Establish and maintain an intrusion detection and/or intrusion prevention and
firewall program designed to guard against unauthorized access to the Business
Associate’s systems. Implementation must require periodic review of firewall and
IDS/IPS updates. Application of updates must be deployed upon availability. Computing
devices used to access, receive, store, maintain or process Data must be protected by a
firewall to prevent unauthorized access from the public network. Only authorized
services and protocols required by Business Associate to provide services will be
permitted access to such computing devices. All other protocols and services must be
denied. An intrusion detection system shall be deployed, properly configured, and
actively monitored to detect network or computing device compromises.
	 
	 	i)	 	To the extent that Business Associate operates electronic networks or
applications that are accessible through the Internet, Business Associate shall conduct
periodic penetration tests, and as necessary, implement in an expedient manner,
corrective actions to mitigate vulnerabilities. Appropriate corrective action plans for
vulnerabilities must be implemented in an expedient manner. All remote access to the
network, network devices, servers or applications for any employee, vendor, consultant
or contractor must utilize an acceptable two-factor authentication system. All remote
access provided to any application for a customer or client that provides the
capability of performing or displaying financial transaction data, or provides the
capability of displaying or updating Personal Healthcare Information (PHI), Non-public
Personal Information (NPI) or Personally Identifiable Information (PII) must utilize an
acceptable two-factor or multi-factor authentication system. Computing devices used to
access, receive, store, maintain or process Data remotely (such as from home or a
hotel) must ensure the appropriate security controls are implemented to match those
stated in this Exhibit, including, but not limited to, firewalls, current anti-virus
signature, and two-factor authentication.
	 
	 	j)	 	Encrypt all Data transmitted (e.g. email, file transfers, etc) over, or stored
on public (open) networks at a minimum 128-bit encryption or such higher level as may
be required by industry best practices or governmental regulations. Data must be
protected while being transmitted on a private network using methods such as switched
network and/or encryption.
	 
	 	k)	 	Ensure that Data is not accessible by unauthorized persons on portable
electronic and telecommunications devices such as laptop computers, through (a)
adequate

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

69

 

	 	 	 	encryption software installed and activated and/or (b) policies that prohibit saving
Data to the local drive, except as may be authorized in writing by Company and (c)
policies that require the device to be physically secured when not in use. Ensure that
comparable safeguards must be in place for personal digital assistants (PDAs),
BlackBerries and other portable devices that house Data.

	 	l)	 	Data shall not be stored on desktops, laptops, personal digital assistants
(PDAs), or other removable storage devices, such as diskettes, reels/tapes, compact
discs (CDs), memory sticks or similar devices. All Data must be encrypted, using
industry standard encryption processes.
	 
	 	m)	 	Ensure proper custody and destruction of Data after it is no longer needed,
including shredding of paper and erasing/wiping of electronic data in accordance with
best practices (e.g. U.S. Department of Defense 5200-28-STD). Data must be securely
stored at all times to prevent loss and unauthorized access or disclosure. Data
requires secure disposal or destruction when no longer required, when requested by
Company or upon the termination or expiration of the Agreement. Data must be burned,
pulverized or shredded if in print or hard copy form using methods or techniques so
that the media cannot practicably be read or reconstructed. When destruction methods
utilize a two-step shred and pulverization approach, the shred portion of the
destruction process should, at a minimum, render the paper media to a final size not to
exceed 5/8 inch by approximately 2 inch, crosscut segment, with the shredded material
stored and sealed in a container until the second pulverization step is completed.
Data stored electronically, including, but not limited to information stored on tapes,
disks or hard drives, must be deleted and wiped using industry best practices to ensure
the information is thoroughly removed.
	 
	 	n)	 	Develop and maintain a Disaster Recovery Plan and a Business Continuity Plan,
which are tested annually and revised at a minimum quarterly. These shall include a
written file/database back-up and recovery strategy, including procedures that create
and maintain retrievable exact copies of Data, as appropriate, or as otherwise provided
for in any contracts between Company and Business Associate.
	 
	 	o)	 	 Maintain audit trails of its physical facilities and environments and
electronic networks, applications and media electronic consistent to maintain the
confidentiality, integrity and availability of Data. Processes must be in place to
create the appropriate audit trails to determine who has accessed Data.
	 
	 	p)	 	Ensure an independent review, by internal or external professionals, of
administrative, physical and technical policies and procedures and technological
mechanisms comprising its security risk management program no less than annually, in
accordance with industry standards. Corrective action plans, as necessary and
appropriate, shall be implemented.
	 
	 	q)	 	To the extent applicable, Business Associate shall take no action that would
subject any PHI to regulation under

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

70

 

	 	(i)	 	the EU PHI Protection Directive;
	 
	 	(ii)	 	national legislation implementing the EU PHI Protection Directive in
any Member State of the European Union; or
	 
	 	(iii)	 	the Law of any other country that would

	 	a.	 	restrict the ability of Company or Business Associate
to transfer or process such Data; or
	 
	 	b.	 	grant to the individual to whom such Data pertains any
greater rights or control over Company’s or Business Associate’s use of
such Data than such individual has under the relevant laws of the United
States (including relevant subordinate jurisdictions), without the prior
written consent of Company that expressly approves subjecting such Data to
such regulatory scheme. Company may withhold such approval in its sole
discretion.

	 	r.)	 	Data shall not be used for test or development data, unless express Company
approval is provided.
	 
	 	s.)	 	 In addition to reporting to Company any Use or Disclosure of PHI not permitted
by the Agreement, Business Associate will also promptly report any Security Incidents
of which Business Associate is aware, as detailed in Section C(1)of this Agreement.

	B.	 	PHI Access, Amendment and Disclosure Accounting.

	 	1.	 	Access. Business Associate will promptly upon Company’s request make
available to Company or, at Company’s direction, to the Individual (or the Individual’s
Personal Representative) for inspection and obtaining copies any PHI about the Individual
which Business Associate created or received for or from Company and that is in Business
Associate’s custody or control, so that Company may meet its access obligations pursuant to
and required by applicable law, including but not limited to 45 C.F.R. 164.524, and where
applicable, the HITECH Act. Business Associate shall make such information available in
electronic format where directed by the organization.
	 
	 	2.	 	Amendment. Business Associate will, upon receipt of notice from Company,
promptly amend or permit Company access to amend any portion of the PHI which Business
Associate created or received for or from Company, pursuant to and required by applicable
law, including but not limited to 45 C.F.R. Part 164.526.
	 
	 	 	 	Business Associate will not respond directly to an Individual’s request for an amendment of
their PHI held in the Business Associate’s Designated Record Set. Business Associate will
refer the Individual to Company so that Company can coordinate and prepare a timely response
to the Individual.
	 
	 	3.	 	Disclosure Accounting. So that Company may meet its Disclosure accounting
obligations pursuant to and required by applicable law, including but not limited to 45
C.F.R. Part 164.528:

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	a)	 	Disclosure Tracking. Business Associate will promptly, but no later
than within seven (7) days of the Disclosure, report to Company for each Disclosure,
not excepted from Disclosure accounting under Section B(3)(b) below, that Business
Associate makes to Company or a third party of PHI that Business Associate creates or
receives for or from Company, (i) the Disclosure date, (ii) the name and (if known)
address of the person or entity to whom Business Associate made the Disclosure, (iii) a
brief description of the PHI disclosed, and (iv) a brief statement of the purpose of
the Disclosure (items i-iv, collectively, the “disclosure information”). For repetitive
Disclosures Business Associate makes to the same person or entity (including Company)
for a single purpose, Business Associate may provide (x) the disclosure information for
the first of these repetitive Disclosures, (y) the frequency, periodicity or number of
these repetitive Disclosures and (z) the date of the last of these repetitive
Disclosures. Business Associate further shall provide any additional information, to
the extent required by the HITECH Act or any regulation adopted pursuant thereto.
	 
	 	b)	 	Exceptions from Disclosure Tracking. Business Associate need not
report Disclosure of information or otherwise account for Disclosures of PHI that this
Agreement or Company in writing permits or requires (i) for the purpose of Company’s
Treatment activities, Payment activities, or Health Care Operations (except where such
recording or accounting is required by the HITECH Act), and as of the effective dates
for any such requirements; (ii) to the Individual who is the subject of the PHI
disclosed, to that Individual’s Personal Representative or to another person or entity
authorized by the Individual; (iii) to persons involved in that Individual’s Health
Care or Payment for Health Care; (iv) for notification for disaster relief purposes;
(v) for national security or intelligence purposes; (vi) to Law Enforcement Officials
or Correctional Institutions regarding Inmates; or (vii) disclosed in a limited data
set.
	 
	 	 	 	Business Associate need not report any Disclosure of PHI that was made before April 14,
2003.
	 
	 	c)	 	Except as provided in subsection d) below, Business Associate will not respond
directly to an Individual’s request for an accounting of Disclosures. Business
Associate will refer the Individual to Company so that Company can coordinate and
prepare a timely accounting to the Individual.
	 
	 	d)	 	Disclosure through an Electronic Health Record. However, when Business
Associate is contacted directly by an individual based on information provided to the
individual by Company, Business Associate shall make the accounting of disclosures
available directly to the individual, but only if required by the HITECH Act or any
related regulations.

	 	4.	 	Confidential Communications and Restriction Agreements. Business Associate
will promptly, upon receipt of notice from Company, send an Individual’s communications to
the identified alternate address. Business Associate will comply with any agreement

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	 	 	Company makes that restricts Use or Disclosure of Company’s PHI pursuant to 45 C.F.R.
§164.522(a), provided that Company notifies Business Associate in writing of the restriction
obligations that Business Associate must follow. Company will promptly notify Business
Associate in writing of the termination or modification of any confidential communication
requirement or restriction agreement.

	 	5.	 	Disclosure to U.S. Department of Health and Human Services. Business
Associate shall make its internal practices, books, and records relating to the Use and
Disclosure of PHI received from Company (or created or received by Business Associate on
behalf of Company) available to the Secretary of the United States Department of Health and
Human Services, for purposes of determining Company’s compliance with 45 C.F.R. Parts
160-164. Unless the Secretary directs otherwise, Business Associate shall promptly notify
Company of Business Associate’s receipt of such request, so that Company can assist in
compliance with that request.

	C.	 	Breach of Privacy and Security Obligations.

	 	1.	 	Reporting. Business Associate will report to Company: (i) any Use or
Disclosure of PHI (including Security Incidents) not permitted by this Agreement or in
writing by Company; (ii) any Security Incident; (iii) any Breach, as defined in the HITECH
Act; or (iv) any other breach of a security system, or the like, as such may be defined
under applicable state law (collectively a “Breach”). Except as described in subparagraph
“e)” below, Business Associate will, without unreasonable delay make the report to Company
pursuant to such reasonable reporting guidelines provided by Company and on a form made
available to Business Associate, or by such other reasonable means of reporting as may be
communicated to Business Associate by Company, after Business Associate discovers such
Breach. Business Associate shall cooperate with Company in investigating the Breach and in
meeting Company’s obligations under the HITECH Act, and any other security breach
notification laws or regulatory obligations.

	 	a.	 	Report Contents. To the extent such information is available, Business
Associate’s report will at least:

	 	(i)	 	Identify the nature of the non-permitted or prohibited access, Use or
Disclosure, including the date of the Breach and the date of discovery of the
Breach;
	 
	 	(ii)	 	Identify the PHI accessed, used or disclosed, and provide an exact copy
or replication of the PHI, as appropriate, in a format reasonably requested by
Company, and to the extent available;
	 
	 	(iii)	 	Identify what corrective action Business Associate took or will take
to prevent further Breaches;
	 
	 	(iv)	 	Identify what Business Associate did or will do to mitigate any
deleterious effect of the Breach; and
	 
	 	(v)	 	Provide such other information, including a written report, as Company
may reasonably request.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

73

 

	 	b.	 	Examples of Security Incidents. Company requires prompt notification
from Business Associate if Business Associate experiences any Security Incidents that
impact the confidentiality, integrity or availability of Company data or information
systems. Below are some examples:

	 	(i)	 	Business Associate’s information systems are exposed to malicious code,
such as a virus or worm, and such code could be transmitted to Company data or
systems.
	 
	 	(ii)	 	Unauthorized access is granted or obtained to servers or workstations
that contain Company data or Business Associate discovers that Company data is
being used, copied, or destroyed inappropriately.
	 
	 	(iii)	 	Business Associate experiences an attack or the compromise of a server
or workstation containing Company information requiring that it be taken offline.
	 
	 	(iv)	 	Unauthorized access or disclosure has occurred involving Protected
Health Information, which is an obligation under the HIPAA Privacy Rule.

	 	c.	 	Unsuccessful Security Incidents. Except as noted in C.1(e) below, the
parties acknowledge and agree that this section constitutes notice by Business
Associate to Company of the ongoing existence and occurrence of attempted but
Unsuccessful Security Incidents (as defined below) for which no additional notice to
Company shall be required. “Unsuccessful Security Incidents” shall include, but not be
limited to, pings and other broadcast attacks on Business Associate’s firewall, port
scans, unsuccessful log-on attempts, denials of service and any combination of the
above, so long as no such incident results in unauthorized access, use or disclosure of
PHI.
	 
	 	d.	 	Breach of Unsecured Protected Health Information. A Breach of
Unsecured Protected Health Information includes any Breach as defined in the HITECH act
or regulations adopted pursuant thereto.
	 
	 	e.	 	Medicare Vendor Reporting Requirements. To the extent that Business
Associate is subject to any Center for Medicare and Medicaid (“CMS”) incident reporting
requirements (including applicable timeframes for such reporting) as detailed in the
services agreement between Company and Business Associate (including any amendments,
exhibits or addenda), Business Associate shall comply with all such reporting
requirements, in addition to those imposed hereby.

	 	2.	 	Breach. Without limiting the rights of the parties elsewhere set forth in
the Agreement or available under applicable law, if Business Associate breaches its
obligations under this Agreement, Company may, at its option:

	 	a.	 	Exercise any of its rights of access and inspection under paragraph 4 of
section A of this Agreement;
	 
	 	b.	 	Require Business Associate to submit to a plan of monitoring and reporting, as
Company may determine appropriate to maintain compliance with this Agreement

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

74

 

	 	 	 	and Company shall retain the right to report to the Secretary of HHS any failure by
Business Associate to comply with such monitoring and reporting; or

	 	c.	 	If for any reason Company determines that Business Associate has breached the
terms of this Agreement and such breach has not been cured, Company may report such
breach to the U.S. Department of Health and Human Services.

	 	3.	 	Mitigation. Business Associate agrees to mitigate to the extent
practicable, any harmful effect that is known to Business Associate of any security
incident related to PHI or any use or disclosure of PHI by Business Associate in violation
of the requirements of this BA Agreement. To the extent Company incurs any expense Company
reasonably determines to be necessary to mitigate any Breach or any other non-permitted use
or disclosure of Individually Identifiable Information, Business Associate shall reimburse
Company for such expense.

	D.	 	Compliance with Standard Transactions.

	 	1.	 	If Business Associate conducts in whole or part Standard Transactions, for or on behalf
of Company, Business Associate will comply, and will require any subcontractor or agent
involved with the conduct of such Standard Transactions to comply, with each applicable
requirement of 45 C.F.R. Part 162 for which HHS has established Standards. Business
Associate will comply by a mutually agreed date, but no later than the date for compliance
with all applicable final regulations, and will require any subcontractor or agent involved
with the conduct of such Standard Transactions, to comply, with each applicable requirement
of the Transaction Rule 45 C.F. R. Part 162. Business Associate agrees to demonstrate
compliance with the Transactions by allowing Company to test the Transactions and content
requirements upon a mutually agreeable date. Business Associate will not enter into, or
permit its subcontractors or agents to enter into, any trading partner agreement in
connection with the conduct of Standard Transactions for or on behalf of Company that:

	 	a)	 	Changes the definition, data condition or use of a data element or segment in a
Standard Transaction.
	 
	 	b)	 	Adds any data elements or segments to the maximum defined data set;
	 
	 	c)	 	Uses any code or data element that is marked “not used” in the Standard
Transaction’s Implementation Specification or is not in the Standard Transaction’s
Implementation Specification; or
	 
	 	d)	 	Changes the meaning or intent of the Standard Transaction’s Implementation
Specification.

	 	2.	 	Concurrence for Test Modification to Standard Transactions. Business Associate
agrees and understands that there exists the possibility that Company or others may request
from HHS an exception from the uses of a Standard in the HHS Transaction

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

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	 	 	 	Standards. If this request is granted by HHS, Business Associate agrees that it will
participate in such test modification.

	 	3.	 	Incorporation of Modifications to Standard Transactions. Business Associate
agrees and understands that from time-to-time, HHS may modify and set compliance dates for
the Transaction Standards. Business Associate agrees to incorporate by reference into this
Agreement any such modifications or changes.
	 
	 	4.	 	Code Set Retention (Only for Plans). Both parties understand and agree to keep
open code sets being processed or used in the Agreement for at least the current billing
period or any appeal period, whichever is longer.
	 
	 	5.	 	Guidelines and Requirements. Business Associate further agrees to comply with
any guidelines or requirements adopted by Company consistent with the requirements of HIPAA
and any regulations promulgated thereunder, governing the exchange of information between
Business Associate and the Company.

	E.	 	Obligations upon Termination.

	 	1.	 	Return or Destruction. Upon termination, cancellation, expiration or other
conclusion of the Agreement, Business Associate will if feasible return to Company or
destroy all PHI, in whatever form or medium (including in any electronic medium under
Business Associate’s custody or control), that Business Associate created or received for
or from Company, including all copies of and any data or compilations derived from and
allowing identification of any Individual who is a subject of the PHI. Business Associate
will complete such return or destruction as promptly as possible, but not later than 30
days after the effective date of the termination, cancellation, expiration or other
conclusion of Agreement. Business Associate will identify any PHI that Business Associate
created or received for or from Company that cannot feasibly be returned to Company or
destroyed, and will limit its further Use or Disclosure of that PHI to those purposes that
make return or destruction of that PHI infeasible and will otherwise continue to protect
the security any PHI that is maintained pursuant to the security provisions of this
Agreement for so long as the PHI is maintained. Within such 30 days, Business Associate
will certify in writing to Company that such return or destruction has been completed, will
deliver to Company the identification of any PHI for which return or destruction is
infeasible and, for that PHI, will certify that it will only Use or disclose such PHI for
those purposes that make return or destruction infeasible.
	 
	 	2.	 	Continuing Privacy and Security Obligation. Business Associate’s obligation to
protect the privacy and security of the PHI it created or received for or from Company will
be continuous and survive termination, cancellation, expiration or other conclusion of this
Agreement, so long as the data is maintained.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

76

 

	F.	 	General Provisions.

	 	1.	 	Definitions. The capitalized terms in this Agreement have the meanings set
out in 45 C.F.R. Parts 160-164, as it may be amended from time to time. As of the execution
date of this Agreement, the following are some of the relevant definitions set out in the
Code of Federal Regulations.

	 	a.	 	Disclosure means the release, transfer, provision of, access to, or
divulging in any other manner of information outside the entity holding the
information.
	 
	 	b.	 	Electronic Media means (1) Electronic storage media including memory
devices in computers (hard drives) and any removable/transportable digital memory
medium, such as magnetic tape or disk, optical disk, or digital memory card; or (2)
Transmission media used to exchange information already in electronic storage media.
Transmission media include, for example, the internet (wide-open), extranet (using
internet technology to link a business with information accessible only to
collaborating parties), leased lines, dial-up lines. Private networks and the physical
movement of removable/transportable electronic storage media. Certain transmissions,
including of paper, via facsimile, and of voice, via telephone, are not considered
transmissions via electronic media, because the information being exchanged did not
exist in electronic form before the transmission.
	 
	 	c.	 	Individual means the person who is the subject of Protected Health
Information.
	 
	 	d.	 	Individually Identifiable Health Information means information that is
a subset of Protected Health Information, including demographic information collected
from an Individual; and

	 	(i)	 	is created or received by a Health Care Provider, Health Plan,
Employer, or Health Care Clearinghouse; and
	 
	 	(ii)	 	relates to the past, present or future physical or mental health
condition of an Individual; the provision of Health Care to an Individual; or the
past, present, or future payment for the provision of Health Care to an Individual;
and

	 	a)	 	that identifies the Individual; or
	 
	 	b)	 	with respect to which there is a reasonable basis to
believe the information can be used to identify the Individual.

	 	e.	 	Protected Health Information (“PHI”) means any information without
regard to its form or medium, gathered by Business Associate in connection with
Business Associate’s relationship with Covered Entity that identifies an individual or
that otherwise would be defined as Protected Health Information under HIPAA.
	 
	 	f.	 	Security Incident means an attempted or successful unauthorized access,
use, disclosure, modification or destruction of information or interference with system
operations in an information system, involving Protected Health Information that is

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

77

 

	 	 	 	created, received maintained or transmitted by or on behalf of Company in electronic
form.

	 	g.	 	Use means, with respect to Individually Identifiable Health
Information, the sharing, employment, application, utilization, examination, or
analysis of such information with an entity that maintains such information.

	 	2.	 	Amendment. From time to time local, state or federal legislative bodies,
boards, departments or agencies may enact or issue laws, rules, or regulations pertinent
this Agreement. In such event, Business Associate agrees to immediately abide by all said
pertinent laws, rules, or regulations and to cooperate with Company to carry out any
responsibilities placed upon Company or Business Associate by said laws, rules, or
regulations.
	 
	 	3.	 	Conflicts. The terms and conditions of this Agreement will override and
control any conflicting term or condition of any other agreement between the parties with
respect to the subject matter herein. All non-conflicting terms and conditions of the said
other agreement(s) remain in full force and effect.
	 
	 	4.	 	Owner of PHI. Company is the exclusive owner of PHI generated or used under
the terms of the Agreement.
	 
	 	5.	 	Disclosure of De-identified Data. The process of converting PHI to
De-identified Data (DID) is set forth in 45 C.F.R Part 164.514. In the event that Company
provides Business Associate with DID, Business Associate shall not be given access to, nor
shall Business Associate attempt to develop on its own, any keys or codes that can be used
to re-identify the data. Business Associate shall only use DID as directed by Company.
	 
	 	6.	 	Assignment/Subcontract. Company shall have the right to review and approve
any proposed assignment or subcontracting of Business Associate’s duties and
responsibilities arising under the Agreement, subject to the provisions of Section 16.6 of
the Agreement, as it relates to the Use or creation of PHI (or DID if applicable).
	 
	 	7.	 	Audit. Company shall have the right to audit and monitor all applicable
activities and records of Business Associate to determine Business Associate’s compliance
with the requirements relating to the creation or Use of PHI (and DID, if applicable) as it
relates to the privacy and security sections of this Agreement.
	 
	 	8.	 	Intent. The parties agree that there are no intended third party
beneficiaries under this Agreement.
	 
	 	9.	 	Indemnity. Business Associate will indemnify and hold harmless Company and
any Company affiliate, officer, director, employee or agent from and against any claim,
cause of action, liability, damage, cost or expense, including attorneys’ fees and court or
proceeding costs, arising out of or in connection with any non-permitted or prohibited

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

78

 

	 	 	 	Use or Disclosure of PHI or other breach of this Agreement by Business Associate or any
subcontractor, agent, person or entity under Business Associate’s control.

	 	a)	 	Right to Tender or Undertake Defense. If Company is named a party in
any judicial, administrative or other proceeding arising out of or in connection with
any non-permitted or prohibited Use or Disclosure of PHI or other breach of this
Agreement by Business Associate or any subcontractor, agent, person or entity under
Business Associate’s control, Company will have the option at any time either (i) to
tender its defense to Business Associate, in which case Business Associate will provide
qualified attorneys, consultants and other appropriate professionals to represent
Company’s interests at Business Associate’s expense, or (ii) undertake its own defense,
choosing the attorneys, consultants and other appropriate professionals to represent
its interests, in which case Business Associate will be responsible for and pay the
reasonable fees and expenses of such attorneys, consultants and other professionals.
	 
	 	b)	 	Right to Control Resolution. Company will have the sole right and
discretion to settle, compromise or otherwise resolve any and all claims, causes of
actions, liabilities or damages against it, notwithstanding that Company may have
tendered its defense to Business Associate. Any such resolution will not relieve
Business Associate of its obligation to indemnify Company under Section F(9) of this
Agreement.

IN WITNESS WHEREOF, Company and Business Associate execute this Agreement in multiple originals to
be effective on the date written above:

WELLPOINT, INC.

On behalf of itself and its Designated Affiliates,

By:                                                             

Print Name:

Title:

Date:

EXPRESS SCRIPTS, INC. (Business Associate)

By:                                                             

Print Name:

Title:

Date:

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

79

 

EXHIBIT F

LIST OF SPECIALTY DRUGS

[*]

12 pages
redacted in their entirety

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

80

 

Execution Version

EXHIBIT G

DELEGATED SERVICES AND OVERSIGHT REQUIREMENTS

This document specifies the functions that have been delegated to PBM by WellPoint, the services
that PBM will provide for WellPoint and requirements for both parties in the oversight process for
the functions that have been delegated. Throughout this Exhibit G and Schedules G-1 and G-2,
Delegate refers to PBM. This Exhibit G and Schedules G-1 and G-2 are in incorporated into the
Agreement as follows:

	1.	 	Delegated Functions

	 	1.1	 	Delegated Functions. WellPoint hereby delegates the responsibility for
delegated activities, as set forth in Schedule G-1 to this Exhibit and as further
clarified in the Delegation Inventory Document. (“Delegated Functions”). Delegate
shall perform such Delegated Functions for WellPoint’s affiliates as designated in
Exhibit G. Delegate agrees to abide by the WellPoint Delegation Oversight and
Operations Documents (hereinafter “Delegation Documents”) and coordinate with the
appropriate WellPoint committee or leadership to strengthen Delegate’s performance of
its Delegated Functions. The Delegation Inventory Document (DID) is a working
collaborative document between the parties and may be updated by the parties from time
to time and is not subject to the Amendment provisions of this Agreement.

	2.	 	Programs, Polices and Procedures

	 	2.1	 	Establishing Programs, Policies and Procedures. Delegate shall
establish policies and procedures for implementing WellPoint’s prior authorization/drug
utilization program (“Program”) for the delegated activities set forth in Schedule G-1.
Such Program shall be consistent with WellPoint’s programs, policies and procedures.
Delegate warrants that all Delegated Functions shall be performed in accordance with
such Program. Delegate shall provide a copy of its Program to WellPoint. Delegate
shall annually review its Program and shall give WellPoint at least thirty (30) days
prior written notice of any material revisions. If such revisions are unacceptable to
WellPoint, PBM will be given the opportunity to cure the noncompliance in accordance
with Section 4.2 (delegation Oversight) of this Attachment. If the parties are unable
to resolve the issue within the timeframes set forth in section 4.2 (Delegation
Oversight) of this Exhibit, WellPoint may terminate this Attachment and/or delegation
of the Delegated Functions immediately. PBM will develop standard drug utilization
policies, utilization management criteria, and formularies consistent with CMS rules
and regulations, supplemented and informed by CMS approved compendia. Where WellPoint
establishes criteria for drug utilization and utilization management, and formularies,
the reasonableness, medical necessity and CMS compliance of the established criteria
will be the sole responsibility of WellPoint.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

 

 

	 	2.2	 	Modification of Programs, Policy and Procedures. The parties
acknowledge that the Program is subject to modification from time to time in order to
meet WellPoint’s standards for said Program or to meet an external accreditation
agency’s or association’s standards, such as National Committee on Quality Assurance
(“NCQA”), Centers for Medicare & Medicaid Services (“CMS”), URAC (“URAC”), or
Consortium Health Plans (“CHP”), or to meet legislative requirements. Either party may
initiate an amendment for such purposes, and the other party shall not unreasonably
withhold acceptance of such amendment.

	3.	 	Reporting/Notification Requirements

	 	3.1	 	Reporting Requirements. In addition to the reporting requirements set
forth in the Agreement Delegate shall comply with WellPoint’s reporting requirements in
WellPoint’s Delegation Documents. Delegate shall complete and submit all applicable
reports related to the Delegated Functions set forth In Schedule G-1.
	 
	 	3.2	 	Agency Reviews. From time to time associations or agencies such as
state regulators, URAC, CMS, NCQA, or CHP, may review and evaluate WellPoint’s
delegation procedures for its Delegated Functions. When applicable, WellPoint shall
make best efforts to provide PBM sixty (60) days prior notice of such reviews. To
assist WellPoint with such review, Delegate shall, within one (1) business day of
WellPoint’s request, provide information to WellPoint needed for the agency’s review.
During such agency review, Delegate shall make a member of its staff available to
assist WellPoint and/or the agency with such review.
	 
	 	3.3	 	New Requirements. When WellPoint receives notification of new
legislation or accreditation requirement, WellPoint will notify the Delegate. Within
thirty (30) days of receipt of the notification, Delegate shall provide WellPoint with
an action plan describing how Delegate will comply with the new requirement and shall
implement such action plan.
	 
	 	3.4	 	Priority Reporting. Delegate shall report incidents or situations that
may give rise to liability attributable to WellPoint.

	4.	 	Oversight

	 	4.1	 	Annual Oversight. At least annually, but as needed, WellPoint shall
visit Delegate to conduct an evaluation of its Delegated Functions and programs,
policies and procedures. WellPoint shall use best efforts to provide PBM sixty (60)
days prior notice of such visit. Delegate shall assist WellPoint and/or its designee
with conducting the evaluation. Within thirty (30) days of the completion of the
evaluation, WellPoint shall provide a written report to Delegate assessing Delegate’s
performance. In the event the evaluation indicates a need for Delegate to revise or
improve one or more of its Programs, Delegate shall develop a corrective action plan
and submit such plan to WellPoint. Such corrective action plan shall be submitted to
WellPoint within thirty (30) days of receiving

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

82

 

	 	 	 	notice regarding the need to submit a plan. Within six (6) months from WellPoint’s
receipt of Delegate’s corrective action plan, WellPoint shall provide a follow-up
report or schedule a follow-up on-site review to assess the effectiveness of
Delegate’s corrective action plan.

	 	4.2	 	Delegation Oversight. In the event WellPoint and/or its designee
determines that Delegate’s performance of one or more of the Delegated Functions fails
to comply with WellPoint’s standards or an external accrediting agency’s or
association’s standards, such as NCQA, or Delegate fails to comply with the
aforementioned evaluations and/or fails to submit or implement an appropriate
corrective action plan, as specified above, WellPoint shall give Delegate a detailed
notice of such noncompliance(s). Delegate shall have thirty (30) days from receipt of
such notice to cure the noncompliance(s). During such time, WellPoint and/or its
designee shall use its best efforts to work with Delegate to correct such noncompliance
issue(s).
	 
	 	4.3	 	Oversight Tools. The oversight tools utilized by WellPoint to perform
the review and the list of documents and/or information that WellPoint will review
during such evaluations are available to the Delegate upon request.
	 
	 	4.4	 	Delegate’s Committees. A WellPoint representative may attend
Delegate’s Committee meetings relevant to Delegate’s Delegated Functions, if such
committee exists.

	5.	 	Revocation of Delegation

	 	5.1	 	Revocation. WellPoint may revoke one or more of the Delegated
Functions set forth in Schedule G-1 to this Exhibit in the event WellPoint determines
that Delegate fails to comply with WellPoint’s standards and/or an external accrediting
agency’s or association’s standards, such as CMS or NCQA, regarding the Delegated
Function(s), and Delegate has failed to cure the noncompliance(s), as specified above.

	6.	 	Sub-Delegation.

	 	6.1	 	Notification of Sub-delegation. Prior to sub-delegation, Delegate is
to inform WellPoint of any potential sub-delegated activity. Delegate shall not
sub-delegate any Delegated Function without WellPoint’s prior written consent.
WellPoint reserves the right to perform a pre-assessment of any potential sub-delegate
prior to authorizing the sub-delegation. If the sub-delegate is authorized by
WellPoint, Delegate remains accountable for the particular function to be carried out
properly and shall insure that sub-delegate complies with the terms of this Exhibit.
Sub-delegate is subject to the agreement between the Delegate and WellPoint and in
accordance with NCQA, URAC and regulatory requirements.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

83

 

	 	6.2	 	Oversight of Sub-delegate. WellPoint shall review, at a minimum,
documentation of Delegate’s oversight of the Sub-Delegate’s activities to ensure that
WellPoint’s oversight process is being followed and that all WellPoint’s standards are
met or exceeded. WellPoint may reserve the right to perform oversight of
Sub-Delegate’s activities and has the right at any time to request the termination of
the sub-delegation. Delegate shall prepare an annual on-site assessment report for the
Sub-Delegate. The report shall include an assessment of the Sub-Delegate’s performance
of the delegated activities. Such report shall be submitted to WellPoint and/or its
designee on an annual basis, at the time of the anniversary date of the Agreement, and
shall be reviewed by WellPoint.
	 
	 	6.3	 	Written Agreement with Sub-delegate. Upon approval by WellPoint of the
sub-delegation, Delegate shall enter into a written contract with the Sub-Delegate,
obligating Sub-Delegate to the terms and conditions of the Agreement and any
Attachments or Exhibits thereto and shall provide a copy of such contract, upon
request. It is understood that Delegate may contract with Sub-Delegate for purposes
outside the scope of this Agreement.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

84

 

SCHEDULE G-1

DELEGATED FUNCTIONS

The Delegated Functions that Delegate will perform and the specific activities for each are
attached hereto as Schedule G-1.

UTILIZATION MANAGEMENT

	 	 	 
	UM Structure

	 	WellPoint approves PBM’s UM program and plan annually. The
plan meets all compliance standards stipulated by WellPoint.
	 
	 	 
	 

	 	PBM will adhere to the clinical staff oversight requirements.
(*Listed under URAC core 19, 20, and 24)
	 
	 	 
	 

	 	PBM agrees to designate a senior clinical lead (physician or
pharmacist) with substantial involvement in UM program
development and oversight.
	 
	 	 
	 

	 	PBM agrees to define organization structure and provide
WellPoint timely notice of any significant change in key
utilization management personnel, including without
limitation, the Medical Director/Pharmacist or Director of
Utilization Management.
	 
	 	 
	Clinical Criteria

	 	The PBM is not delegated management of clinical criteria.
WellPoint retains the development/maintenance or adoption of
clinical criteria and application policies for the UM
program. PBM agrees to support development and utilize
WellPoint criteria and policies.
	 
	 	 
	 

	 	PBM will evaluate their Level 1 (advocates) quality and
consistency in applying criteria quarterly. Reporting will
occur at least annually.
	 
	 	 
	 

	 	PBM will evaluate their Physician/Pharmacist Reviewers’
quality and consistency in applying clinical criteria at
least annually.
	 
	 	 
	 

	 	PBM will report Physician/Pharmacist Reviewer quality and
consistency to WellPoint.
	 
	 	 
	 

	 	PBM’s policies and procedures address this process.
Policies and procedures will be reviewed annually for
compliance with standards stipulated by WellPoint.
	 
	 	 
	Communication Services

	 	WellPoint and PBM collaborate on the Communication Standards
in the shared Utilization Management process.
	 
	 	 
	 

	 	PBM will be responsible for ensuring their UM reviewers are
accessible by phone to ordering providers and WellPoint UM
staff.
	 
	 	 
	 

	 	PBM’s policy and procedures support this process.
	 
	 	 
	 

	 	WellPoint reviews PBM’s Policies and procedures annually for

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

85

 

	 	 	 
	 

	 	compliance with standards stipulated by WellPoint.
	 
	 	 
	Appropriate
Professionals

	 	WellPoint and PBM collaborate on the Appropriate Professional
Standards in the shared Utilization Management process.
	 
	 	 
	 

	 	PBM will be responsible for ensuring the appropriate clinical
personnel perform the initial prior authorization in
accordance to NCQA, URAC, and state regulations
	 
	 	 
	 

	 	PBM’s policy and procedures support this process.
	 
	 	 
	 

	 	WellPoint reviews PBM’s Policies and procedures annually for
compliance with standards stipulated by WellPoint.
	 
	 	 
	 

	 	A sampling of associate, consultant and UM files will be
audited annually
	 
	 	 
	Timeliness of UM
Decisions

	 	WellPoint and PBM will collaborate on the Timeliness of UM
Decisions Standards in the shared Utilization Management
process.
	 
	 	 
	 

	 	PBM will be responsible for ensuring that their UM associates
support the turnaround times as described in Schedule G-2
Notification Requirements.
	 
	 	 
	 

	 	PBM complies with State and Federal laws and accrediting
entity’s timeliness requirements.
	 
	 	 
	 

	 	PBM’s policy and procedures address this process.
	 
	 	 
	 

	 	WellPoint reviews PBM’s Policies and procedures annually for
compliance with standards stipulated by WellPoint.
	 
	 	 
	 

	 	A sampling of MD authorization files will be audited annually.
	 
	 	 
	Clinical Information

	 	WellPoint and PBM collaborate on the Clinical Information
needed for UM Decisions in the shared Utilization Management
process.
	 
	 	 
	 

	 	PBM clinical personnel will only collect additional info
necessary for making appropriate medical necessity
authorization determinations or redirection. (Note:
	 

	 	Educated decision-making will be utilized to process
pharmaceutical requests. Such informed decisions will be
made using WellPoint Clinical Criteria, or when WellPoint
Clinical Criteria is not available for a particular review,
evidence-based standards of medical practice involving
individual consideration.)
	 
	 	 
	 

	 	PBM’s policy and procedures address this process.
	 
	 	 
	 

	 	WellPoint reviews PBM’s Policies and procedures annually for
compliance with standards stipulated by WellPoint.
	 
	 	 
	 

	 	A sampling of MD/Pharmacist authorization files will be
audited annually.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

86

 

	 	 	 
	Denial Notices

	 	PBM shall not have the responsibility to make UM denials.
WellPoint retains responsibility for making UM decisions.
	 
	 	 
	Policies for Appeals

	 	PBM is not delegated WellPoint appeals or grievances related
to UM decisions. WellPoint retains responsibility for appeals
and grievances.
	 
	 	 
	Appropriate Appeals
Handling

	 	PBM is not delegated WellPoint appeals or grievances related
to UM decisions. WellPoint retains responsibility for appeals
and grievances.
	 
	 	 
	Evaluation of New
Technology

	 	PBM is not delegated evaluation of new technology. WellPoint
retains the evaluation of new and the new application of
existing technology.
	 
	 	 
	 

	 	WellPoint will notify delegate of revisions and updates to UM
criteria and procedures allowing agreed upon time for
implementation.
	 
	 	 
	Satisfaction with the
UM Process

	 	PBM will administer a provider satisfaction survey to
Participating Providers as set forth in the Agreement,
measuring provider satisfaction with the PBM’s physician
review UM process.
	 
	 	 
	 

	 	PBM is not delegated evaluation of member and provider
satisfaction with WellPoint’s UM Process.
	 
	 	 
	 

	 	WellPoint retains responsibility for evaluation of
satisfaction with UM Process.
	 
	 	 
	Emergency Services

	 	PBM is not delegated management of Emergency Services.
WellPoint retains responsibility for management of Emergency
Services.
	 
	 	 
	Pharmaceutical
Management Process

	 	WellPoint and PBM will work collaboratively in developing the
Pharmaceutical Management Process. PBM agrees to support or
development of these programs.
	 
	 	 
	 

	 	PBM’s policies and procedures address this process.
	 
	 	 
	 

	 	Policies and procedures will be reviewed annually for
compliance with standards stipulated by WellPoint.
	 
	 	 
	Ensuring Appropriate
Utilization

	 	PBM is not delegated monitoring of appropriate Utilization.
	 
	 	 
	 

	 	WellPoint retains responsibility for ensuring appropriate
utilization. WellPoint may seek PBM’s input & feedback on
appropriate goals, benchmarks, interventions and outcomes
related to utilization of pharmacy service
	 
	 	 
	 

	 	PBM shall not specifically reward practitioners or other
individuals

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

87

 

	 	 	 
	 

	 	conducting utilization review.
	 
	 	 
	 

	 	WellPoint reviews PBM’s Policies and procedures annually for
compliance with standards stipulated by WellPoint.
	 
	 	 
	Behavioral Health
Care Triage &
Referral

	 	PBM is not delegated Behavioral Health Care Triage & Referral
management.
	 
	 	 
	 

	 	WellPoint retains responsibility for Behavioral Health Care
Triage & Referral management
	 
	 	 
	UM Delegation

	 	PBM must gain WellPoint’s approval before they would contract
to sub-delegate UM activities. If sub-delegation occurs,
WellPoint reserves the right to audit the sub-delegate, if
needed.
	 
	 	 
	 

	 	WellPoint reviews PBM’s Policies and procedures annually for
compliance with standards stipulated by WellPoint as part of
the delegation oversight process.
	 
	 	 
	Compliance with State
& Federal Mandates

	 	PBM will comply with existing state (as noted by WellPoint)
and federal mandates (including CMS-Medicare Advantage
requirements).
	 
	 	 
	 

	 	PBM will comply with future state and federal mandates within
a reasonable timeframe.
	 
	 	 
	 

	 	WellPoint reviews PBM’s Policies and procedures annually for
compliance with standards stipulated by WellPoint.
	 
	 	 
	 

	 	A sampling of MD/Pharmacist authorization files will be
audited annually.

MEMBER RIGHTS & INFORMATION

	 	 	 
	Member
Complaints

	 	PBM is responsible for resolving member complaints about
pharmacy service in a manner specified by WellPoint.
	 
	 	 
	 

	 	Delegate shall immediately forward to WellPoint all Department
of Insurance complaints related to utilization management and
shall, upon request, respond to such complaints, or provide all
information necessary for WellPoint to respond to Department of
Insurance complaints.
	 
	 	 
	 

	 	PBM is not delegated WellPoint appeals or grievances. WellPoint
retains the responsibility for appeals and grievances.
	 
	 	 
	 

	 	WellPoint reviews PBM’s Policies and procedures annually for

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

88

 

MEMBER RIGHTS & INFORMATION

	 	 	 
	 

	 	compliance with standards stipulated by WellPoint.
	 
	 	 
	 

	 	A sampling of WellPoint complaint files will be audited annually.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

89

 

SCHEDULE G-2

Case Turnaround Timeframes1

PBM will perform pharmacy reviews in accordance with the following turnaround times:

	 	 	 
	Type of Review	 	PBM Case Turnaround Timeframe2
	Prospective Urgent
	 	Taking into consideration the medical urgency
of the situation, PBM will complete its review
and return the case to WellPoint ASAP, but no
greater than eight (8) hours from receipt of
case.
	 
	 	 
	Prospective Non-Urgent
	 	PBM will complete its review and return the
case to WellPoint within one (1) business day
from receipt of case.
	 
	 	 
	Concurrent Urgent
	 	To the extent PBM performs this type of
pharmacy review, taking into consideration the
medical urgency of the situation, PBM will
complete its review and return the case to
WellPoint ASAP, but no greater than eight (8)
hours from receipt of case.
	 
	 	 
	Concurrent Non-Urgent
	 	To the extent PBM performs this type of
pharmacy review, PBM will complete its review
and return the case to WellPoint within one (1)
business day from receipt of case.
	 
	 	 
	Retrospective (pre-claim)
	 	Except for IN, CT, ME, and NH membership: PBM
will complete its review and return the case to
WellPoint within ten (10) calendar days from
receipt of case.

IN, CT, ME, and NH membership only: PBM will
complete its review and return the case to
WellPoint within one (1) business day from
receipt of case.

 

			
	1	 	Schedule G-2 applies to all lines of
WellPoint’s business including, but not limited to, commercial and government
business.
	 
	2	 	The day PBM receives the case is considered
day one for purposes of calculating the case turnaround timeframe.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

90

 

	 	 	 
	Retrospective (post-claim)

	 	Except for CT, ME, and NH membership: PBM will
complete its review and return the case to
WellPoint within ten (10) calendar days from
receipt of case.
	 
	 	 
	 

	 	CT, ME, and NH membership only: PBM will
complete its review and return the case to
WellPoint within one (1) business day from
receipt of case.
	 
	 	 
	Reconsideration/Re-review

	 	PBM will complete its review and return the
case to WellPoint within one (1) business day
from receipt of case.

Additional information: If PBM determines that additional information is needed in order to
complete its review, the case will be returned to WellPoint as soon as possible but no later than
the timeframes outlined above.

Hours of Operation

Staff will be available at least eight (8) hours a day during normal business hours (9:00 a.m. to
4:00 p.m.) within the time zone where at least 2% of PBM’s business is conducted for inbound calls
regarding UM issues.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

91

 

EXHIBIT H

FEHB SERVICES ADMINISTRATION

This Exhibit sets forth the duties and obligations of PBM with respect to WellPoint’s FEHBP
operations.

I. FEDERAL SUBCONTRACT PROVISIONS

Federal Acquisition Regulation Clauses (FAR)

This Agreement is a subcontract under a federal procurement contract of the United States
Government (The Office of Personnel Management) with WellPoint. This Agreement is subject to
certain federal procurement clauses pursuant to 48 C.F.R. Chapter 16.

This Agreement incorporates by reference the clauses set forth herein with the same force and
effect as if they were given in full text. Upon request, FEP will make their full text available
to PBM.

The clauses are applicable to this Agreement and to its lower tier contracts if the cost of this
Agreement or lower tier agreements are equal to or greater than the amount required by the listed
clause, unless specifically exempted by applicable rules, regulations, or Executive Agreements.
References in the Federal Acquisition Regulation clauses to the “Government” shall be deemed to be
references to WellPoint, as appropriate, and references to the “contractor” shall be deemed to be
references to PBM, as appropriate

In the event of a conflict between the terms of this Exhibit and other terms in the Agreement, the
terms of this Exhibit shall control.

II. FAR CLAUSES APPLICABLE TO THIS AGREEMENT

The clauses in FAR Subpart 52.2 referenced in subparagraph (a), the clauses applicable at the
dollar thresholds in subparagraphs (b) and (c), those clauses referenced and checked in
subparagraph (d), and those clauses in subparagraph (e) for Underwriting Agreements, in effect on
the date of this Agreement, are incorporated herein and made a part of this Agreement. Certain
clauses in the above-identified subparagraphs will not be incorporated if the Agreement does not
meet the threshold characteristic set forth in parentheses after the name and date of the clause.
To the extent that an earlier version of any such clause is included in the Prime Contract or
agreement under which this Agreement is issued, the date of the clause as it appears in such Prime
Contract or agreement shall be controlling and said version shall be incorporated herein. PBM
agrees to abide by the provisions of the FEHB and FAR regulations applicable to subcontractors.

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     (a) The following clauses are applicable to this Agreement regardless of dollar amount:

	 	 	 
	FAR Reference	 	Title of Clause
	52.202-1

	 	Definitions (Jul 2004)
	 
	 	 
	52.209-6

	 	Protecting the Government’s Interest when Subcontracting With Contractors Debarred,
Suspended, or Proposed for Debarment (Sept 2006) (only applicable if agreement exceeds
$30,000)
	 
	 	 
	52.222-4

	 	Contract Work Hours And Safety Standards Act-Overtime Compensation (Jul 2005)
	 
	 	 
	52.222-21

	 	Prohibition Of Segregated Facilities (Feb 1999)
	 
	 	 
	52.222-26

	 	Equal Opportunity (Mar 2007)
	 
	 	 
	52.222-35

	 	Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other
Eligible Veterans (Sept 2006) (only applicable if agreement exceeds $100,000)
	 
	 	 
	52.222-36

	 	Affirmative Action for Workers with Disabilities (Jun 1998) (only applicable if agreement
exceeds $10,000)
	 
	 	 
	52.222-37

	 	Employment Reports on Special Disabled Veterans, Veterans of the Vietnam Era, and Other
Eligible Veterans (Sept 2006) (only applicable if agreement exceeds $100,000)
	 
	 	 
	52.222-39

	 	Notification of Employee Rights Concerning Payment of Union Dues or Fees (Dec 2004)
	 
	 	 
	52.222-50

	 	Combating Trafficking in Persons (April 2007)
	 
	 	 
	52.227-1

	 	Authorization and Consent (Dec 2007)
	 
	 	 
	52.244-6

	 	Subcontracts for Commercial Items (Feb 2009)
	 
	 	 
	52.247-63

	 	Preference for U.S. Flag Air Carriers (June 2003)
	 
	 	 
	52-247-64

	 	Preference for Privately owned U.S. Flag Commercial Vessels (February 2006)

FEHBAR CLAUSES APPLICABLE TO THIS AGREEMENT:

	 	 	 
	1652.203-70

	 	Misleading, Deceptive or Unfair Advertising (Jan 1991)
	 
	 	 
	1652.204-70

	 	Contractor Records Retention (July 2005)
	 
	 	 
	1652.204-74

	 	Large Provider Agreements (Oct 2005)
	 
	 	 
	1652.222-70

	 	Notice of Significant Events (July 2005)
	 
	 	 
	1652.232-72

	 	Non-Commingling of Funds (Jan 1991) (substitute “contractor and/or subcontractor” for
“Carrier and/or its Underwriter”)
	 
	 	 
	1652.246-70

	 	FEHB Inspection (July 2005)
	 
	 	 
	1652.249-71

	 	FEHBP Termination for Convenience of the Government – Negotiated Benefits Contracts
(Jan 1998)
	 
	 	 
	1652.249-72 
	 	FEBHP Termination for Default-Negotiated Benefits Contracts (Jan 1998)

     (b) The following FAR clauses are applicable to this Agreement if it exceeds $100,000:

	 	 	 
	FAR Reference	 	Title of Clause
	52.203-7.1

	 	Anti-Kickback Procedures (Jul 1995)
	 
	 	 
	52.203-12

	 	Limitation on Payments to Influence Certain Federal Transactions (Sept 2007)
	 
	 	 
	52.215-2

	 	Audit and Records – Negotiation (Jun 1999) (only if agreement (1) is cost-reimbursement,
incentive, time-and-materials, labor-hour, or price-redeterminable or

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	FAR Reference	 	Title of Clause
	 

	 	any combination thereof; (2) requires submission of cost or pricing data; or (3)
requires Contractor to furnish certain cost, funding, or performance reports)
	 
	 	 
	52.222-4

	 	Contract Work Hours and Safety Standards Act—Overtime Compensation (Jul 2005)
	 
	 	 
	52.227-2

	 	Notice And Assistance Regarding Patent and Copyright Infringement (Dec 2007)

     (c) The following FAR clauses are applicable to this Agreement if it exceeds $500,000:

	 	 	 
	FAR Reference	 	Title of Clause
	52.215-10

	 	Price Reduction for Defective Cost or Pricing Data (Oct 1997)
	 
	 	 
	52.215-12

	 	Subcontractor Cost or Pricing Data (Oct 1997)
	 
	 	 
	52.215-13

	 	Subcontractor Cost or Pricing Data-Modifications (Oct 1997)
	 
	 	 
	52.219-8

	 	Utilization of Small Business Concerns (May 2004)
	 
	 	 
	52-219-9

	 	Small Business Subcontracting Plan (July 2005)

     (d) The following FAR clauses are applicable to this Agreement:

Clause No. & Title

	 	 	 
	FAR Reference	 	Title of Clause
	52.215-15

	 	Pension Adjustments and Asset Reversions (Oct 2004)
	 
	 	 
	52.215-18

	 	Reversion or Adjustment of Plans For Postretirement Benefits (PRB) Other than Pensions
(Jul 2005)

     (e) The following FEHBAR clauses are applicable to all underwriting agreements:

	 	 	 
	FAR Reference	 	Title of Clause
	1652.203-70

	 	Misleading, Deceptive, or Unfair Advertising (Jan 1991) (All Underwriting)
	 
	 	 
	1652.215-71

	 	Investment Income (Jan 1998) (All Underwriting) (substitute “Underwriter” wherever
“Carrier” is utilized in the clause)
	 
	 	 
	1652.216-71

	 	Accounting and Allowable Cost (Jan 2003)
	 
	 	 
	1652.232-72

	 	Non-commingling of FEHBP Funds (Jan 1991)
	 
	 	 
	1652.246-70

	 	FEHB Inspection (Jan 2005) (All Underwriting and Administrative Services)

	 	(f)	 	Business Ethics and Conduct. This clause will only apply if the aggregate value of
this Agreement exceeds $5 million and lasts for more than 120 days.

	 	1.	 	Definitions. As used in this clause—

	 	a.	 	“Agent” means any individual, including a director, an officer, an
employee, or an independent contractor, authorized to act on behalf of the
organization.
	 
	 	b.	 	“Full cooperation” means disclosure to the Government of the
information sufficient for law enforcement to identify the nature and extent of the
offense and

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	 	 	 	the individuals responsible for the conduct. It includes providing timely and
complete response to Government auditors’ and investigators’ request for documents
and access to employees with information.

	 	c.	 	“Principal” means an officer, director, owner, partner, or a person
having primary management or supervisory responsibilities within a business entity
(e.g., general manager; plant manager; head of a subsidiary, division, or business
segment; and similar positions).

	 	2.	 	Code of business ethics and conduct. Within 30 days after contract award,
unless WellPoint establishes a longer time period, PBM shall—

	 	a.	 	Have a written code of business ethics and conduct; and
	 
	 	b.	 	Make a copy of the code available to each employee engaged in
performance of this Agreement.

	 	3.	 	PBM shall—

	 	a.	 	Exercise due diligence to prevent and detect criminal conduct; and
	 
	 	b.	 	Otherwise promote an organizational culture that encourages ethical
conduct and a commitment to compliance with the law.
	 
	 	c.	 	Timely disclose, in writing, to the WellPoint Compliance Officer
whenever, in connection with the award, performance, or closeout of this Agreement
or any subcontract thereunder, PBM has credible evidence that a principal,
employee, agent, or subcontractor of PBM has committed—

	 	(i)	 	A violation of Federal criminal law involving fraud, conflict
of interest, bribery, or gratuity violations found in Title 18 of the United
States Code; or
	 
	 	(ii)	 	A violation of the civil False Claims Act (31 U.S.C.
3729-3733); or
	 
	 	(iii)	 	Has received a significant overpayment.

	 	4.	 	WellPoint shall, to the extent permitted by law and regulation, safeguard and
treat information obtained pursuant to the PBM’s disclosure as confidential where the
information has been marked “confidential” or “proprietary” by PBM. To the extent
reasonably possible and permitted by law and regulation, such information will not be
disclosed to the public pursuant to a Freedom of Information Act request, 5 U.S.C.
Section 552, without prior notification to PBM. WellPoint may transfer documents
provided by PBM to any department or agency within the Executive Branch of the United
States Government if the information relates to matters within the organization’s
jurisdiction.

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	 	5.	 	PBM shall establish the following within 90 days after the effective date of
this Agreement, unless WellPoint establishes a longer time period:

	 	a.	 	An ongoing business ethics awareness and compliance program.

	 	(i)	 	This program shall include reasonable steps to communicate
periodically and in a practical manner PBM’s standards and procedures and other
aspects of PBM’s business ethics awareness and compliance program and internal
control system, by conducting effective training programs and otherwise
disseminating information appropriate to an individual’s respective roles and
responsibilities.
	 
	 	(ii)	 	The training conducted under this program shall be provided to
PBM’s principals and employees, and as appropriate, PBM’s agents and
subcontractors.

	 	b.	 	An internal control system.

	 	(i)	 	PBM’s internal control system shall establish standards and
procedures to facilitate timely discovery of improper conduct in connection
with this Agreement; and ensure corrective measures are promptly instituted and
carried out.
	 
	 	(ii)	 	At a minimum, PBM’s internal control system shall provide for
the following:

	 	c.	 	Assignment of responsibility at a sufficiently high level and adequate
resources to ensure effectiveness of the business ethics awareness and compliance
program and internal control system.
	 
	 	d.	 	Reasonable efforts not to include an individual as a principal, whom
due diligence would have exposed as having engaged in conduct that is in conflict
with PBM’s code of business ethics and conduct.
	 
	 	e.	 	Periodic reviews of company business practices, procedures, policies,
and internal controls for compliance with PBM’s code of business ethics and conduct
and the special requirements of Government contracting, including—

	 	(i)	 	Monitoring and auditing to detect criminal conduct;
	 
	 	(ii)	 	Periodic evaluation of the effectiveness of the business ethics
awareness and compliance program and internal control system, especially if
criminal conduct has been detected; and
	 
	 	(iii)	 	Periodic assessment of the risk of criminal conduct, with
appropriate steps to design, implement, or modify the business ethics awareness
and compliance program and the internal control system as necessary to reduce
the risk of criminal conduct identified through this process.

	 	f.	 	An internal reporting mechanism, such as a hotline, which allows for
anonymity or confidentiality, by which employees may report suspected instances of

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	 	 	 	improper conduct, and instructions that encourage employees to make such reports.
	 
	 	g.	 	Disciplinary action for improper conduct or for failing to take
reasonable steps to prevent or detect improper conduct.

	 	6.	 	Subcontracts. PBM shall include the substance of this clause, including this
paragraph (d), in subcontracts that have a value in excess of $5,000,000 and a
performance period of more than 120 days.

III. ADDITIONAL TERMS AND CONDITIONS

	 	(a)	 	PBM certifies that it is not majority-owned or majority-controlled by a pharmaceutical
manufacturing company.
	 
	 	(b)	 	PBM agrees to credit WellPoint either as a price reduction, a credit, or by cash refund
all Manufacturer Payments to the extent negotiated and received by WellPoint from PBM
solely with respect to the FEHBP plans. For purposes of this section, Manufacturer
Payments are any and all compensation or remuneration PBM receives from a pharmaceutical
manufacturer, including but not limited to, discounts; credits; rebates, regardless of how
categorized; market share incentives, commissions, and administrative or management fees.
The term also includes any fees received for sales of utilization data to a pharmaceutical
manufacturer. This term does not include purchase discounts based upon invoiced purchase
terms.
	 
	 	(c)	 	To the extent WellPoint has negotiated with PBM to receive all or a portion of
Manufacturer Payments as described in (b) above, PBM will provide WellPoint with quarterly
and annual Manufacturer Payment Reports identifying the following information solely with
respect to the FEHBP plan. This information shall be presented for both the total of all
prescription drugs dispensed through PBM, acting as a mail order pharmacy, and its retail
network and [in the aggregate for the 25 brand name drugs that represent the greatest cost
to the FEHBP plan or such number of brand name drugs that together represent 75% of the
total cost to the FEHBP plan, whichever is the greater number]

	 	1.	 	the dollar amount of Total Product Revenue for the reporting period, with
respect to the FEHBP plan. Total Product Revenue is the PBM’s net revenue with respect
to the FEHBP plan which consists of sales of prescription drugs to clients, either
through retail networks or PBM-owned or controlled mail order pharmacies. Net revenue
is recognized at the prescription price negotiated with clients and associated
administrative fees;
	 
	 	2.	 	the dollar amount of total drug expenditures for the FEHBP plan;
	 
	 	3.	 	the dollar amount of all Manufacturer Payments earned by the PBM with respect
to the FEHBP plan for the reporting period;

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	 	4.	 	the percentage of all Manufacturer Payments earned by the PBM with respect to
the FEHBP plan for the reporting period that were Manufacturer Formulary Payments,
which are payments the PBM receives from a manufacturer in return for formulary
placement and/or access, or payments that are characterized as “formulary” or “base”
rebates or payments pursuant to the PBM’s agreements with pharmaceutical manufacturers;
and
	 
	 	5.	 	the percentage of all Manufacturer Payments received by the PBM during the
reporting period that were Manufacturer Additional Payments, which are all Manufacturer
Payments other than Manufacturer Formulary Payments.

	 	(d)	 	PBM agrees to provide WellPoint, at least annually, with all financial and utilization
information requested by WellPoint relating to the provision of benefits to eligible
enrollees solely with respect to the FEHBP plan through the PBM and all financial and
utilization information relating to services provided to Carrier solely with respect to the
FEHBP plan.
	 
	 	(e)	 	PBM agrees that WellPoint may provide any information it receives from PBM, including a
copy of its contract with the PBM, to OPM. PBM providing information to WellPoint under
this subsection may designate that information as confidential commercial information.
PBM, by contracting with WellPoint, consents to the disclosure of this information to OPM.
PBM acknowledges and agrees that, although its information may be marked as confidential
commercial information, the information may be subject to FOIA disclosure under 5 U.S.C.
Section 552. PBM agrees that WellPoint is not liable for any release of information under
FOIA.
	 
	 	(f)	 	Integrity Standard. PBM agrees to adopt and adhere to a code of ethics promulgated by
a national professional association, such as the Code of Ethics of the American Pharmacists
Association (dated October 27, 1994), for their employed pharmacists.
	 
	 	(g)	 	Performance Standards. PBM shall develop and apply a quality assurance program
specifying procedures for ensuring contract quality on the following standards at a minimum
and submit reports to WellPoint on their performance. PBM must meet, at minimum, the
member inquiry, telephone customer service, paper claims processing, and other applicable
standards set for WellPoint under its applicable contracts with OPM. All other standards
discussed below will have specific target goals PBM is expected to achieve. WellPoint may
permit PBM to measure compliance using statistically valid samples for PBM’s book of
business.
	 
	 	(h)	 	Retail Pharmacy Standards

	 	1.	 	Point of Service (POS) system response time. PBM’s network electronic
transaction system provides rapid response to network pharmacies.
	 
	 	2.	 	POS system availability. PBM’s network electronic transaction system generally
is

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	 	 	 	available to, and accessible by, network pharmacies.

	 	3.	 	Licensing – PBM verifies the appropriate licensing of its network pharmacies.

	 	(i)	 	Mail Service Pharmacy Standards

	 	1.	 	Dispensing accuracy – PBM dispenses its prescriptions to the correct patient
and for the correct drug, drug strength and dosage in accordance with the physician’s
prescription not less than 99.9% of the time.
	 
	 	2.	 	Turnaround time – PBM promptly dispenses and ships at least 98% on average of
all prescriptions not requiring intervention or clarification within 3 business days or
meets an equivalent measure approved by OPM.

	 	(j)	 	Prior Approval – if applicable – PBM promptly reviews and responds to requests for
prior approval for specific drugs following receipt of all required information.
	 
	 	(k)	 	Alternative Drug Options. PBM shall, at a minimum, utilize the following protocols for
PBM initiated drug interchanges (any change from the original prescription) other than
generic substitutions:

	 	1.	 	PBM must treat the prescribing physician, and not itself, as the ultimate
decision-maker. Furthermore, to the extent appropriate under the circumstances, the
PBM must allow the patient input into that decision-making process. At a minimum, PBM
must provide the patient with a written notice in the package sent to the patient that
the drug interchange has occurred with the approval of the Prescriber.
	 
	 	2.	 	PBM will obtain authorization for a drug interchange only with the express,
verifiable authorization from the Prescriber as communicated directly by the
Prescriber, in writing or verbally, or by a licensed medical professional or other
physician’s office staff member as authorized by the Prescriber.
	 
	 	3.	 	PBM must memorialize in appropriate detail all conversations with patients and
physicians in connection with drug interchanging requests, including the identity of
the contact person at the physician’s office and the basis for his or her authority.
	 
	 	4.	 	PBM will only interchange a patient’s drug from a lower priced drug to a higher
priced drug to patient or Plan when authorized by WellPoint or the Plan.
	 
	 	5.	 	PBM will permit pharmacists to express their professional judgment to both PBM
and physicians on the impact of drug interchanges and to answer physicians’ questions
about dosing. PBM will not require pharmacists to, and will not penalize pharmacists
for refusing to, initiate calls to physicians for drug interchanges that in their
professional judgment should not be made.

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	 	6.	 	PBM will offer to disclose, and if requested, will disclose to physicians,
WellPoint, and patients (i) the reason(s) why it is suggesting a drug interchange and
(ii) how the interchange will affect the patients financially.

	 	(l)	 	PBM understands that any information it provides to WellPoint under this Exhibit,
including a copy of this Agreement, may be provided to OPM. PBM has the sole obligation to
designate any information provided under this Exhibit as confidential. PBM consents to the
disclosure of this information to OPM. PBM acknowledges and agrees that, although its
information may be marked as confidential commercial information, the information may be
subject to FOIA disclosure under 5 U.S.C. Section 552. PBM agrees that WellPoint is not
liable for any release of information under FOIA.

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EXHIBIT I

MEDICARE ADVANTAGE AND MEDICARE PART D ADMINISTRATION

This Exhibit I, MEDICARE ADVANTAGE & MEDICARE PART D ADMINISTRATION (hereinafter “Part D Exhibit”)
Exhibit is applicable solely for the Medicare Advantage and Medicare Part D services provided by
PBM pursuant to and as part of the attached Agreement between WellPoint and its commonly owned and
controlled affiliates and subsidiaries who offer Medicare Prescription Drug Plans and/or Medicare
Advantage Prescription Drug Plans (hereinafter individually and collectively referred to as
“WellPoint”) and Express Scripts, Inc. on behalf of itself and its subsidiaries (herein
individually and collectively “PBM”) . To the extent that any term or requirement in the Part D
Exhibit conflicts with the Agreement, as reasonably determined by WellPoint, the terms and
conditions of the Part D Exhibit shall control as they relate to Covered Services provided to or
for Medicare Covered Individuals.

Collectively, WellPoint and the PBM may herein be referred to as “Parties” or “Party” as the
context may require.

1.0 APPOINTMENT OF SUBCONTRACTORS BY WELLPOINT.

To the extent WellPoint appoints a Subcontractor to perform any applicable service related to the
Agreement and this Part D Exhibit, and WellPoint provides the PBM with reasonable notice and
instructions regarding the scope of services to be provided by such Subcontractor, the PBM agrees
to provide support and services to such Subcontractor consistent with the terms of the Agreement
and this Part D Exhibit.

	2.0	 	DEFINITIONS.

For purposes of the Medicare Part D Exhibit, the Agreement and any Exhibits, addenda, attachments
or schedules to the Agreement, all terms that are not defined in the Agreement and this Part D
Exhibit shall have a meaning ascribed to such terms that is consistent with corresponding terms
defined or identified in 42 C.F.R. Part 423 and 422, or applicable Part D statute, regulations or
CMS guidance. The following terms shall have the meaning noted, unless explicitly stated
otherwise:

	2.1	 	CMS. Centers for Medicare and Medicaid Services.
	 
	2.2	 	Claim. A written or electronic notice of a request for reimbursement of benefits
provided under the Plan to a Covered Individual on or after the effective date of the
Agreement and this Part D Exhibit, which formula for reimbursement is set forth in applicable
Exhibits that are attached to the Agreement.
	 
	2.3	 	Explanation of Benefits or EOB. Consistent with CMS requirements, an EOB is a
written document that Plans must furnish to Covered Individuals when they access Prescription
Drug Program benefits. Generally, an EOB must include the following data elements:

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	 	•	 	A list of the items or services for which benefits were authorized and the payment
amount for each item or service.
	 
	 	•	 	A notice of the individual’s right to request an itemized statement.
	 
	 	•	 	The cumulative, year-to-date total amount of benefits provided, in relation to the
Deductible for the current year, the initial coverage limit for the current year and
the annual out-of-pocket threshold for the current year.
	 
	 	•	 	The cumulative, year-to-date total of incurred costs to the extent practicable.

	2.4	 	Medication Therapy Management Program or MTMP. A program that is designed to help:

	 	•	 	Promote clinically recognized and proven uses of Covered Prescriptions to Targeted
Beneficiaries in an effort to optimize therapeutic outcomes through improved medication
use;
	 
	 	•	 	Reduce the risk of adverse events, including adverse drug interactions, for Targeted
Beneficiaries;

	 	 	For purposes of MTMP programs, Targeted Beneficiaries are Covered Individuals who have
multiple chronic diseases, are taking multiple Part D drugs, and are likely to incur annual
costs for covered Part D drugs that exceed a predetermined level as specified by CMS.
	 
	2.5	 	Medically Necessary or Medical Necessity. When using PBM’s standard Medicare
formularies, formulary exception criteria, and utilization management criteria, prescription
drug coverage determination decisions, which WellPoint acknowledges and agrees are the sole
responsibility of WellPoint, for drug and biological requests will be based on reasonableness
or medical necessity as defined by the Centers for Medicaid and Medicare Services (CMS)
(currently Chapter 15, Section 50.4 of the Medicare Benefit Policy Manual); or so modified by
CMS)), and will include accepted standards of medical practice. “Accepted standards of
medical practice” shall mean the standards that are based on credible scientific evidence
published in peer-reviewed medical literature generally recognized by the relevant medical
community, physician specialty society recommendations, and/or the view of physicians
practicing in relevant clinical areas and any other relevant factors. Reasonable and
medically necessary prescription drug coverage determination decisions made by WellPoint will
consider both “approved” (FDA approved and labeled) and “unlabeled” (clinical uses and
indications that do not have official FDA approval) drug and biological uses, (currently
defined and guided by in Chapter 15, Section 50.4.1, 50.4.2, 50.4.5 of the Medicare Benefit
Policy Manual); or so modified by CMS. When WellPoint elects to create its own formularies,
formulary exceptions, and utilization management criteria (considered non-standard by PBM),
PBM will, subject to Section 2.5 of the Agreement, administer per the criteria established by
WellPoint. The PBM will ensure that, subject to Section 2.5 of the Agreement, all WellPoint
criteria are loaded to its system and that all applicable PBM staff will be trained in a
timely manner consistent with the remaining terms of this Agreement. In all instances the
reasonableness, medical necessity, and CMS compliance of the established

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	 	 	criteria will be the sole responsibility of WellPoint. PBM does not and will not make
medical necessity determinations hereunder, but rather administers the Plans’ pharmacy
benefits pursuant to WellPoint adopted plan designs and formulary(ies).
	 
	2.6	 	MMA. The Medicare Modernization Act of 2003 (Social Security Act sections 1860D-1
through 1860D-41), and its implementing regulations (42 C.F.R. Part 423).
	 
	2.7	 	Part B. Those Covered Services that are also covered under Medicare Part B of the
Social Security Act, and which are dispensed by a Pharmacy to a Covered Individual under their
Plan. For purposes of Covered Individuals or Claims that are covered by this Part D Exhibit,
references to Covered Service or Covered Prescriptions in the Agreement and the Part D Exhibit
shall be presumed to include Part B.
	 
	2.8	 	Part D. The Voluntary Prescription Drug Benefit Program established by the amendment
of Title XVIII of the Social Security Act, Section 101 and its implementing regulations (42
C.F.R. Part 423).
	 
	2.9	 	Prescription Drug Program or Program or PDP. The outpatient prescription drug
services and/or benefits that WellPoint has agreed to afford Covered Individuals access to in
accordance with the terms of the Coverage Document. For purposes of Covered Individuals or
Claims that are covered by this Part D Exhibit, references to Covered Service or Covered
Prescription in the Agreement and the Part D Exhibit shall be presumed to include Prescription
Drug Program, Program and/or PDP.
	 
	2.10	 	True Out-Of-Pocket or TrOOP. The Cost Sharing for Covered Prescriptions including
the deductible, the Initial Coverage Limit and the annual out-of-pocket threshold during a
Program year.
	 
	2.11	 	Value Added Items and Services. The additional services the PBM and WellPoint
mutually agreed that PBM shall afford to WellPoint, Plans or Covered Individuals under the
Agreement and this Part D Exhibit. Value Added Items and Services are not benefits.
	 
	2.12	 	Vendor. A person or entity that has been retained by PBM, with WellPoint’s approval,
to provide services or work pursuant to or in connection with the Agreement and this Part D
Exhibit. Vendor includes first tier, down stream, related entities and/or subcontractors as
those terms are defined or identified in the Part D regulations or CMS guidance.

3.0 WELLPOINT OBLIGATIONS.

WellPoint shall be responsible for providing the following information and services in addition to
those described in attached Agreement:

	3.1	 	Appeals, Grievances and/or Complaints. WellPoint or its designee shall be
responsible for handling all matters and procedures related to appeals, grievances and/or
complaints (hereinafter “Appeals”), as required under the MMA. WellPoint further acknowledges
and agrees that it is responsible for ensuring that such matters/procedures are conducted

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	 	in accordance with the requirements of CMS, the Employee Retirement Income Security Act
(hereinafter “ERISA”) or other law, as applicable. The PBM agrees to cooperate with and
provide reasonable support for the provider, Pharmacy and Covered Individual Appeals
procedures established by WellPoint or Plan. The PBM agrees to provide support, research,
and documentation to allow WellPoint to administer the Grievance Procedures as required
under the MMA.
	 
	3.2	 	Notice of Changes in WellPoint Design to Covered Individuals. WellPoint or Plan
shall be primarily responsible for notifying all Covered Individuals of changes in any of the
Prescription Drug Programs administered by the PBM. The PBM acknowledges and agrees that CMS
has authority to review and approve certain Program materials.
	 
	 	 	In those situations where WellPoint is responsible for communicating changes to each Plan,
the PBM agrees to provide WellPoint with reasonable notice of any material change covered by
the Agreement.

4.0 PBM OBLIGATIONS.

In addition to the Covered Services listed in the attached Agreement, and subject to WellPoint’s
payment to PBM pursuant to the fees and pricing terms set forth in the Agreement related to Part D
services, PBM agrees to provide the delegated activities and reporting responsibilities listed
below. PBM agrees that such delegated activities and reporting responsibilities shall be provided
in accordance with, but not limited to, the Part D and Medicare Advantage regulations found at 42
CFR 423.505(i)(3) & (i)(4), and 42 CFR 422.504(i)(4)(i).

	4.1	 	Claims Administration and Management. PBM agrees to perform the Claims
administration services listed below in accordance with the requirements and time frames
required by CMS and the Part D regulations. In pertinent part, these Claims administration
services shall support, but are not limited to, Plan to Plan, State to Plan, Coordination of
Benefits, Prescription Drug Events, Explanation of Benefit and TrOOP.

	 	4.1.1	 	Receive Claims for Covered Prescriptions and for other pharmaceuticals
believed to be Covered Prescriptions provided to Covered Individuals which are incurred
during the term of the Agreement and this Part D Exhibit, and expeditiously investigate
and review such Claims to determine eligibility and what amount, if any, is due and
payable with respect thereto in accordance with the terms and conditions of the Covered
Individual’s Prescription Drug Program, the Agreement and this Part D Exhibit.
	 
	 	4.1.2	 	Disburse, to the person or entity entitled thereto, benefit payments that are
due in accordance with the provisions of the Covered Individual’s Prescription Drug
Program as well as agreements with Network Pharmacies. Both Parties agree that
WellPoint is primarily responsible for making determinations of eligibility for Part D
or Part B benefits.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	4.1.3	 	The PBM shall promptly provide to Network Pharmacies or Covered Individuals
(through the Network Pharmacy) notification as to the disposition of a Claim for
benefits. If a Claim is incomplete when received, the PBM shall request such further
information that is needed to complete the Claim.
	 
	 	4.1.4	 	Tracking True Out-of-Pocket Costs (TrOOP). PBM’s on-line Claim system
will accept, maintain and update data provided with respect to a Covered Individual’s
TrOOP costs.
	 
	 	4.1.5	 	Data Processing and Management System Requirements. PBM agrees that
its data management processes and data systems will be capable of accomplishing the
following:

	 	4.1.5.1	 	Collection of data in either an NCPDP or X12 format in accordance with the
Health Insurance Portability and Accountability Act of 1996, and regulations
issued there under (“HIPAA”). The data to be collected will encompass
quantity, type, and costs of pharmaceutical prescriptions filled for Covered
Individual and will be linked to Medicare beneficiary identification numbers
(HIC#);
	 
	 	4.1.5.2	 	Submission of prescription drug Claims information for Covered Individuals
for Part D Covered Services in the format required by CMS, using batch
submission processes. Data to be submitted will encompass quantity, type, and
costs of Covered Prescriptions filled for Covered Individuals and will be
linked to Medicare beneficiary identification numbers (HIC#);\
	 
	 	4.1.5.3	 	Submission of data to CMS via the Medicare Data Communications Network
(MDCN) in compliance with CMS requirements;
	 
	 	4.1.5.4	 	Performance of data edit and quality control procedures to help ensure
accurate and complete prescription drug data;
	 
	 	4.1.5.5	 	Correction of all data errors identified by CMS;
	 
	 	4.1.5.6	 	Collection of data for dates of service within the coverage period with a
3-month close-out window for the submission of remaining unreported Claims
data;
	 
	 	4.1.5.7	 	Provision of additional information for the purposes of reconciliation of
risk factors, low income subsidy payments, reinsurance payments, and risk
corridor as required by CMS, and
	 
	 	4.1.5.8	 	Sending and receiving Claims data for third party payers from the CMS
contractor that will serve as the clearinghouse for all Part D beneficiary
outpatient drug Claims.

	 	4.1.6	 	System Description. PBM agrees that it will have written policies and
procedures that provide a complete description of the Claims adjudication process and
system, including but not limited to the following:

	 	4.1.6.1	 	Hardware and software;
	 
	 	4.1.6.2	 	Operating system;

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	4.1.6.3	 	Drug file, including number of iterations saved;
	 
	 	4.1.6.4	 	Number of sites processing Claims (including disaster recovery back-up
system); and
	 
	 	4.1.6.5	 	System volume in Covered Individuals, including the number of transactions
the system can support per day and per hour.

	 	4.1.7	 	System Testing. PBM agrees to have a testing process and
corresponding written policies and procedures that are designed to identify and correct
WellPoint, Plan and PBM configuration errors prior to implementation and to document
the manner and extent to which it has performed such testing. PBM will provide testing
results upon WellPoint’s request.
	 
	 	4.1.8	 	Policies and Procedures. The PBM shall develop and maintain written
policies and procedures as reasonably required to demonstrate PBM’s compliance with CMS
requirements, guidance Part D regulations and applicable laws. Such policies and
procedures shall be made available to WellPoint and/or CMS upon request.
	 
	 	4.1.9	 	Coordination of Benefits. The parties acknowledge and agree that in
accordance with 42 CFR 423.464, WellPoint is required to comply with administrative
processes and requirements established by CMS to ensure effective exchange of
information and coordination between WellPoint and SPAPs, Medicaid programs, group
health plans, FEHBP, military coverage (including TRICARE), Indian Health Services,
Federally qualified health centers, rural health centers, and other health benefit
plans or programs that provide coverage or financial assistance for prescription drugs
and/or Part D Covered Services. PBM shall provide applicable COB support and
coordination of benefits for Covered Individuals. PBM’s support and services shall be
consistent with Part D, Part B and CMS requirements. The PBM will not impose fees or
collect other payments from entities attempting to coordinate benefits with WellPoint’s
Plans, unless such fees or other payments are permitted under applicable laws and
approved by WellPoint. PBM will process COB claims based upon provided eligibility,
Member Other Coverage files, and benefit set up requirements as prescribed by
WellPoint.
	 
	 	4.1.10	 	[*]
	 
	 	4.1.11	 	[*]

	4.2	 	Claims Payment Method. The PBM, or its designee, will maintain a record of Covered
Prescriptions (hereinafter referred to as the “Claims Invoice Report”) dispensed to Covered
Individuals from the PBM’s Network Pharmacies and Mail Order Pharmacy in a format mutually
agreed to by the parties, and provide such report to WellPoint by the end of the fifteenth
business day following the end of the Settlement Period. For purposes of this Part D Exhibit,
the end of the Settlement Period shall mean [*] for the PBM’s

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	 	Network Pharmacies, Mail Order Pharmacy, and direct Covered Individual reimbursement.
	 
	4.3	 	Reporting. Unless directed otherwise by WellPoint, PBM shall prepare and deliver the
Standard Reports listed below in an electronic format acceptable to WellPoint. [*] consistent
and reliable during any calendar year covered by the Agreement and this Part D Exhibit.

	 	4.3.1	 	Quarterly Management Report Package and Report Summary. PBM will
deliver an Executive Summary Report Package, consisting of the reports identified
below, within [*] the PBM may provide other management reports as mutually agreed upon
between the parties. Reports will be available by Individual Part D Plan, MAPD Plan
and/or group.
	 
	 	4.3.2	 	[*]

	 	•	 	 

	 	4.3.3	 	Standard Regulatory Reports. Tracking and Reporting Covered
Individual Utilization, Performance Standards, and Pricing Guarantees. PBM’s Part D
specific programs shall comply with CMS and Medicare Part D requirements, and shall be
subject to review and periodic reporting as agreed to by both parties. Such tracking
and reports shall include, but are not limited to, the necessary elements and data
required to accurately identify or create the following:

	 	•	 	Eligible Covered Individual true out of pocket (TrOOP) cost in accordance
with 1860D-2;
	 
	 	•	 	CMS-compliant explanations of benefits (EOBs) for Covered Individuals;
	 
	 	•	 	Actual paid prescription drug costs as defined in 42 CFR § 423.308;
	 
	 	•	 	Applicable data within PBM’s control that is used to determine if a Covered
Individual’s utilization is eligible for reinsurance payments from CMS;
	 
	 	•	 	Data within PBM’s control that allow WellPoint to determine whether any of
its Covered Individuals are subject to any applicable risk corridor
adjustments.

	 	4.3.4	 	Billing reports. Upon request of the Plans, the PBM shall provide
billing reports to include information on Claims paid, utilizing Covered Individuals,
administrative fees, reconciliation, accounting transactions and cash flow.
	 
	 	4.3.5	 	CMS Required Reports. The PBM shall prepare and deliver to WellPoint
applicable CMS reports for services rendered, including but not limited to the
following:

	 	4.3.5.1	 	Provide CMS reports and complete QA checklist as required by and in
accordance with the CMS “Medicare Part D Reporting Requirements” for that
calendar year. (“Part D Reporting Requirements”). PBM will provide attestation
as to the accuracy of information provided to WellPoint for CMS required
reports.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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107

 

	 	4.3.5.2	 	Prescription Drug Event (PDE) pricing report as required by and in
accordance with the latest CMS requirements.

	 	4.3.6	 	MTMP Eligibility Reporting. The PBM will perform a query and generate
a report to identify Covered Individuals eligible to participate in the MTMP
program[*]

	4.4	 	Drug Utilization Management Reporting. In accordance with 42 CFR 423.505(b)(6) and
42 CFR 423.153(b) and upon WellPoint’s request, the PBM will provide drug utilization
management programs designed to meet CMS requirements, which may include incentives to reduce
costs when medically appropriate such as encouragement of generic utilization and policies and
systems to assist in preventing over-utilization and under-utilization of prescribed
medications (such as compliance programs designed to improve adherence/persistency with
appropriate medication regimens, monitoring procedures to discourage over-utilization through
multiple prescribers or multiple pharmacies, quantity versus time edits, early refill edits).
WellPoint acknowledges and agrees that it is the ultimate decision maker on drug utilization
management programs. The PBM shall adhere to and participate in utilization management
programs adopted by WellPoint, and shall abide by the decisions made in accordance therewith.
	 
	4.5	 	Claims Adjustments. The parties acknowledge that from time to time Claims
adjustments are necessary as a result of COB, PDE, subrogation, workers’ compensation, payment
errors, pharmacy audit recovery and the like, and that these adjustments take the form of
debits (for additional amounts paid by the PBM) or credits (for amounts refunded to the PBM).
The parties agree that such Claims adjustments shall be a retroactive adjustment to the Claim
as initially paid.
	 
	4.6	 	Claims Audits. In addition to the other audit rights provided to WellPoint under the
Agreement, WellPoint shall have the right, at its own expense, to audit any Claims paid by PBM
on behalf of WellPoint or Plan in accordance with the Agreement and this Part D Exhibit.
	 
	4.7	 	Hold Harmless. In accordance with, but not limited to, 42 C.F.R. sections 423.505(i)
and 423.505(g), it is agreed by the parties that the obligations for payment of Claims
hereunder is for the benefit of Covered Individuals, and such Covered Individuals shall be
held harmless from the payment of Claims whether either or both of the parties to the
Agreement default on their obligations. The PBM agrees to bill, collect and accept
compensation solely from WellPoint, Plan, or WellPoint’s designee for Covered Prescriptions
provided to Covered Individuals under the PBM’s owned or affiliated Mail Order Pharmacy except
that the PBM shall bill, collect and accept compensation for Covered Prescriptions from
Covered Individuals for applicable Co-payments, Deductibles, Coinsurance, and any discount
card arrangements covered under the Agreement and this Part D Exhibit. Except as specifically
stated in this Part D Exhibit, in no event shall the PBM directly or indirectly collect,
attempt to collect or accept compensation, remuneration or reimbursement from a Covered
Individual, including but not limited to, disputes of payment between the PBM and WellPoint,
the pharmacy

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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108

 

	 	 	service not being a Covered Prescription, WellPoint’s insolvency, WellPoint’s failure to pay
the PBM or any other breach by WellPoint of the terms of the Agreement. This provision
shall survive termination of the Agreement, the Part D Exhibit and shall be for the benefit
of Covered Individuals.
	 
	 	 	Notwithstanding the foregoing, the PBM may seek payment from a Covered Individual for
pharmacy services or other items dispensed to a Covered Individual through the PBM Mail
Order Pharmacy Program which are not Covered Prescriptions pursuant to the Covered
Individual’s Prescription Drug Program for reasons other than not being medically necessary.
The PBM may seek payment from the Covered Individual for pharmacy services which are not
Covered Prescriptions because the pharmacy services have been deemed not medically
necessary, only if the Covered Individual has requested the pharmacy service to be provided
notwithstanding WellPoint’s determination, and only if the PBM has provided the Covered
Individual written notice, prior to providing the pharmacy service, of the approximate cost
said Covered Individual will incur, and the Covered Individual has agreed to receive the
pharmacy service having had the benefit of said information. The PBM may bill the Covered
Individual at the lesser of its customary rate or contracted rates for any such
pharmaceutical.
	 
	4.8	 	E-Prescriptions. The PBM shall comply with Part D required e-Prescribing
requirements.
	 
	4.9	 	Web Updates. CMS required updates to PBM’s web sites will be provided to WellPoint
via the intranet within ten (10) business days from WellPoint’s request. In addition to any
other intranet or web based services and support, PBM shall also provide the following
Medicare specific Internet and Intranet websites services:

	 	•	 	Network Pharmacies information
	 
	 	•	 	Formulary with clinical edits, such as step therapy, quantity limits, and prior
authorization requirements
	 
	 	•	 	Formulary updates will be made to the web site within 30 days post changes.

	4.10	 	Explanation of Benefit (EOB). PBM shall deliver EOBs, as well as transition letters,
to beneficiaries upon request and on a monthly basis, consistent with CMS requirements.
	 
	4.11	 	Prescription Drug Event (PDE) File Submission, Processing, Management and Reporting.
The PBM shall be responsible for collecting, creating and submitting Prescription Drug Event
(PDE) files to CMS containing claims data as required by CMS in the format and time frame
specified by CMS. The Plan shall provide reasonable and applicable information within its
control to the PBM to assist in PBM reconciliation and restatement activities. In pertinent
part, PBM shall provide the following PDE related services:

	 	4.11.1	 	[*]
	 
	 	4.11.2	 	Provide detailed tracking and reporting on PDE transmissions and CMS response files.
Summary information on transmissions and responses must be available to the Plan [*]

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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109

 

	 	4.11.3	 	The PBM shall be responsible for receiving the PDE response file from CMS, processing
the PDE response file, resolving any PBM owned errors, and resubmitting impacted
records with resolved errors to CMS for acceptance within [*]. The PBM shall make
available to the Plan a copy of each PDE response file received from CMS within [*].
	 
	 	4.11.4	 	The PBM shall be responsible for making necessary adjustments to PDE records and
resubmitting these to CMS for acceptance. Events that would require an adjustment to
the PDE record include, but are not limited to adjustments resulting from updates to
eligibility for retroactive LIS changes, CMS PBP/ Contract ID updates, TrOOP/Drug Spend
transfers, N-1 transactions, claim adjustments and reversals made after creation of the
initial PDE record or other claims impacts.
	 
	 	4.11.5	 	[*]:
	 
	 	4.11.6	 	The PBM shall report on a weekly basis all PDE errors to the Plans, status of error
resolution and actions taken. The PBM shall notify the Plan on a [*] basis of any
errors that cannot be resolved by the PBM and reason for lack of resolution.
	 
	 	4.11.7	 	The PBM must be able to readjudicate claims based on new or updated eligibility
information provided by the plan. Readjudication must be done on a monthly basis.
Information on any member over or underpayments as a result of readjudication must be
made available to the plan on a monthly basis. Where PBM is made aware of Member
overpayment due to incorrect Cost Share, PBM shall promptly refund the amount of the
overpayment to the Covered Individual or the Covered Individual’s designee.
	 
	 	4.11.8	 	The PBM will notify the plan of any planned or unplanned system outages, expected
durations and impacts to claim or PDE processing. Likewise the PBM will pass on any
communication from CMS relative to their system maintenance and downtimes.
	 
	 	4.11.9	 	The PBM will review any planned or proposed changes to the PDE process with the Plan
to ensure that systems and processes are designed, modified and tested well in advance
of the effective date. This applies to changes initiated by CMS or the PBM.

	4.12	 	Participating Retail Pharmacy Network Access & Management.

	 	4.12.1	 	The PBM shall be responsible for creating and maintaining a pharmacy network in
WellPoint’s Part D Service Areas that is compliant with CMS and Medicare Part D
standards. The PBM shall be responsible for developing and maintaining a Pharmacy
Network that satisfies CMS and Medicare Part D access standards and contracting
requirements. Further, the PBM shall be responsible for contracting with Home
Infusion, Long Term Care Pharmacies, Indian Health Service, I/T/U

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	 	 	and Safety Net Pharmacies consistent with Medicare Part D requirements and CMS
instructions. The PBM shall provide WellPoint with a template for each such type of
Pharmacy Network agreement and/or amendment for Part D purposes, together with a
completed crosswalk of CMS required terms using the form set forth in CMS’ PDP
application. Upon reasonable written notice, the PBM shall also make the signature
pages for the applicable Pharmacies in the Part D Pharmacy Network available for
inspection and copy by WellPoint or CMS.
	 
	 	4.12.2	 	Requirements for Participation. The PBM shall require each Network Pharmacy
to enter into agreements consistent with applicable laws and CMS participation
requirements. In pertinent part, but not limited to, PBM shall ensure that Network
Pharmacy Agreements include a provision that:

	 	•	 	If and when such CMS regulatory requirement goes into effect,
requires PBM to issue, mail or transmit payment to Pharmacies within fourteen
(14) days of PBM’s receipt of an electronic claim, and within thirty (30) days
of PBM’s receipt of a non-electronic claim; and
	 
	 	•	 	To the extent PBM utilizes an external pricing source to calculate
reimbursement to Network Pharmacies (such as AWP), PBM shall explicitly
identify such source in Network Pharmacy Agreements. In addition, PBM shall
also add a provision to such Network Pharmacy Agreements indicating that
updates to such pricing source shall occur on January 1st of each
year, and thereafter no less frequently than once every seven (7) days.

	 	4.12.3	 	Network Pharmacy Agreements. WellPoint reserves the right to review PBM
agreements, as they relate to Part D and this Part D Exhibit, with Network Pharmacies
to help ensure compliance with applicable law. If Network Pharmacy Agreements conflict
with this Part D Exhibit, the Agreement or CMS requirements under Part D, PBM agrees
that the CMS requirements under Part D shall control.
	 
	 	4.12.4	 	Retail Network Access. Covered Individuals will have access to the retail
network of Network Pharmacies established and maintained by the PBM to deliver Covered
Prescriptions to Covered Individuals. The PBM will maintain or develop a contracted
retail network in WellPoint’s service areas to help ensure Part D required access
standards are supported for the Agreement and this Part D Exhibit.
	 
	 	4.12.5	 	Retail Network Management. The PBM shall [*] enforce its agreements with the
retail Network Pharmacies to help ensure that Network Pharmacies provide Covered
Prescriptions to Covered Individuals under the standards and other terms and conditions
set forth in the Network Pharmacy Agreements.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	4.12.6	 	Network Auditing. The PBM and WellPoint shall retain the right to perform
audits of the PBM’s retail Network Pharmacies, consistent with, but not limited to, the
requirements set forth in the Agreement and this Part D Exhibit.
	 
	 	4.12.7	 	Pharmacy Network Additions or Deletions. PBM agrees to notify WellPoint [*]
of any deletions or additions to PBM’s Part D Network Pharmacy that materially affects
the Network Pharmacy access in a State or Part D Region as defined by CMS.
Notwithstanding the above, PBM agrees that it shall, upon reasonable request from
WellPoint or Plan, terminate a Network Pharmacy from its network, with respect to
WellPoint Covered Individuals. Furthermore, PBM shall notify WellPoint [*] any Network
Pharmacy terminated for cause from the PBM Pharmacy Network or of any final legal
actions taken against a Network Pharmacy related directly to the provision of Covered
Prescriptions to Covered Individuals.
	 
	 	4.12.8	 	The PBM agrees to arrange for the creation and distribution of all Network Pharmacy
directories. WellPoint shall be responsible for submitting such directories to CMS.

	4.13	 	Mail Order Pharmacy.

	 	4.13.1	 	The PBM shall maintain, and provide WellPoint’s Plan access to the mail service
pharmacy(s) network to provide Covered Prescriptions to Covered Individuals through the
United States Postal Service or private shipping enterprises.
	 
	 	4.13.2	 	Nothing in the Agreement or this Part D Exhibit shall prohibit the PBM from utilizing
or contracting with third-party mail service pharmacies to provide Covered
Prescriptions to Covered Individuals. The rates applicable to the Pharmacies
participating in the Mail Order Pharmacy network shall be consistent with the rates set
forth in Exhibit A. Collectively, the PBM’s owned or affiliated mail order Pharmacies
and other third-party mail order Pharmacies shall be referred to as “Mail Order
Pharmacy.”
	 
	 	4.13.3	 	Mail Order Pharmacy shall receive prescriptions from Covered Individuals via the U.S.
mail or commercial carrier at an address specified by each Mail Order Pharmacy from
time to time. Subject to reasonable processing parameters, Mail Order Pharmacy or its
designee shall dispense drugs covered by the Plan in accordance with such
prescriptions, and mail the Covered Prescriptions to Covered Individuals at addresses
designated by such Covered Individuals, so long as such addresses are located in the
United States or Puerto Rico.
	 
	 	4.13.4	 	Mail Order Pharmacy and its designees shall dispense Covered Prescriptions according
to applicable state and federal law and in accordance with standards of care prevalent
in the mail service pharmacy industry. Mail Order Pharmacy shall have no obligation to
fill any prescription for Covered Prescriptions, which is not accompanied by an
appropriately completed order form and the payment of any applicable Co-payment,
Co-insurance or Deductible. The PBM shall implement

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	 	 	applicable measures to help ensure Mail Order Pharmacies implement appropriate
monitoring and quality control measures in an effort to promote accurate and timely
dispensing and communication of patient specific information. The PBM shall ensure
that Mail Order Pharmacies provide a professional pharmacist staff to evaluate the
appropriateness of prescriptions to the extent required by standard pharmacy
practice and laws.
	 
	 	4.13.5	 	Mail Order Pharmacy shall provide to Covered Individuals toll-free telephone access
to pharmacists and service representatives.
	 
	 	4.13.6	 	Claims submitted by Covered Individuals through Mail Order Pharmacy or its designee
shall be processed in a manner similar to the manner in which retail Claims are
processed under the Agreement and this Part D Exhibit.
	 
	 	4.13.7	 	Nothing herein shall be construed to prohibit or otherwise limit the ability of any
pharmacist employed by a Mail Order Pharmacy to exercise his or her professional
judgment, including the refusal to fill a prescription. Further, nothing herein shall
be construed to require the PBM’s Mail Order Pharmacy or any other Mail Order Pharmacy
to stock all federal legend drugs.

	4.14	 	Payment of Claims and Reimbursement of Network Pharmacies.
	 
	 	 	Pharmacy Submitted Point of Sale (“POS”) Claims. The PBM or its designee will accept Claims
submitted by Network Pharmacies to the PBM or its designee via its designated on-line
electronic Claims processing system (or as otherwise permitted under the Network Pharmacy
Agreement) and process such Claims in accordance with the Agreement and this Part D Exhibit
as follows:

	 	4.14.1	 	The PBM will instruct Network Pharmacies to transmit certain prescription,
eligibility, and WellPoint information to the PBM or its designee when the Covered
Individual presents a WellPoint identification card, and if the on-line electronic
processing system is unavailable, as soon as possible after the system becomes
available. If the on-line electronic processing system is unavailable, the Network
Pharmacy may submit the prescription at a later time and/or call the PBM customer
service center to verify eligibility and reimbursement.
	 
	 	4.14.2	 	The PBM or its designee will perform system edits and transmit to such Network
Pharmacy the Claim status, the applicable reimbursement amount, the
Copay/Coinsurance/Deductible amount (if applicable), and any applicable DUR (as defined
below) or other messages.
	 
	 	4.14.3	 	The PBM or its designee will instruct the Network Pharmacy to collect the
Copay/Coinsurance/Deductible (if applicable), and the PBM will pay the Network Pharmacy
the balance, if any, of the agreed upon reimbursement amount contained in the Network
Pharmacy Agreement between such Network Pharmacy and the PBM.
	 
	 	4.14.4	 	Pharmacy Help Desk. PBM shall provide Network Pharmacies with toll-free
telephone support twenty-four (24) hours a day, seven (7) days per week to assist

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	 	 	Network Pharmacies with Member eligibility verification and questions regarding
reimbursement, Covered Drug benefits under the PDP.

	4.15	 	Disaster Recovery. During the term of the Agreement and this Part D Exhibit, PBM
shall have an effective disaster recovery plan consistent with industry standards. In
pertinent part, such disaster recovery plan shall include a process to backup all data related
to the Agreement at least weekly and shall also store said data at an off-site location. In
addition, PBM’s disaster recovery process should address the following circumstances or
issues: (1) respond to a contingency event, (2) restore the environment, (3) restore
Information Technology applications, (4) synchronize data and restore transactions that have
occurred since the failure backlog processing, (5) resume or start up business functions, (6)
if necessary, occupy and populate a shell site or contract for a business recovery facility,
and (7) return to a rebuilt or restored campus site. The PBM shall maintain all appropriate
documentation relating to such disaster recovery plan.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	4.16	 	Rebates.

	 	4.16.1	 	Part D Rebates. Consistent with the terms of the Agreement, PBM shall
contract for Part D Rebates from pharmaceutical manufacturers.
	 
	 	4.16.2	 	Rebate Payments. The PBM shall pay WellPoint amounts for Rebates consistent
with the terms of the Agreement. Notwithstanding the Rebates amounts paid to
WellPoint, to the extent required by applicable law and CMS regulations and guidance,
PBM shall disclose to WellPoint upon its written request all Part D related Rebates and
any other Price Concessions (as defined under the Part D regulations) and related data.
	 
	 	4.16.3	 	Invoicing. The PBM shall be responsible for invoicing pharmaceutical
manufacturers consistent with its contracts with such pharmaceutical manufacturers.
PBM shall pay WellPoint Rebate amounts consistent with the terms of the Agreement.
	 
	 	4.16.4	 	Submission reports. The PBM shall provide standard Rebate submission reports
as defined in the Agreement. The standard Rebate Reports shall include information on
Rebates invoiced, administrative fees, reconciliation, accounting transactions and cash
flow.

	4.17	 	Medication Therapy Management Program. The PBM shall develop, implement, and
administer a Medication Therapy Management Program (“MTMP”) for Covered Individuals. Such
program shall be consistent with Part D requirements and shall be approved by WellPoint in
writing prior to implementation for Covered Individuals.
	 
	4.18	 	Customer Service. WellPoint will be responsible for all calls from Covered
Individuals related to retail Claims, benefits, and eligibility. The PBM will handle Covered
Individual calls related to the PBM’s mail order pharmacy and calls from Retail Network
Pharmacies and participating Mail Order Pharmacies regarding Covered Individual Claims
adjudication, except as they relate to inquiries associated with denials, grievances, appeals
and other functions that are considered utilization management or utilization review.
	 
	4.19	 	Fraud Detection Activities. PBM shall implement, or cause to be implemented,
procedures and processes that are reasonably designed to prevent, detect, investigate, and
remediate potential or existing member, Pharmacy and provider fraud in connection with the
services to be provided by PBM under the Agreement and this Part D Exhibit. PBM shall
implement those activities that it determines are best suited to attain this goal, but at a
minimum PBM’s fraud and abuse detection activities shall include the following components:

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	4.19.1	 	PBM Member Fraud Detection Activities:

	 	4.19.1.1	 	Claims Monitoring. PBM shall perform a quarterly review of Claims
to identify potential fraudulent patterns in paid Claims data using
retrospective drug utilization tools, including retrospective review programs
for drugs that may be abused and for patients taking multiple medications
(polypharmacy).
	 
	 	4.19.1.2	 	Train Employees to Detect Fraudulent Claims. PBM shall train all
Claims processors to detect suspicious Claims.
	 
	 	4.19.1.3	 	Covered Individual Line. PBM shall cooperate with WellPoint
maintenance of and shall assist in the investigation of allegations of Covered
Individual fraud received through WellPoint Covered Individual Hotline.
	 
	 	4.19.1.4	 	Educate Covered Individuals About Fraud. PBM shall cooperate with
WellPoint’s provision of educational materials to members concerning what
constitutes fraud (e.g., providing false employer group and/or group membership
information; sharing ID card with a non-member; using ID card after benefits
terminated).

	 	4.19.2	 	Network Pharmacy Fraud Detection Activities:
	 
	 	 	 	The PBM shall undertake the auditing described below (and report to WellPoint all
suspected or potential fraud pertaining to services that the PBM identifies through
these audits [*] after the PBM learns of the suspected or potential fraud). The PBM
shall notify WellPoint promptly of any material and substantiated compliance issues
of which it becomes aware related to PDP, including, without limitation, fraud or
violations of law, investigation reports and conclusions.
	 
	 	4.19.3	 	Disclosure Required by Law. In the event WellPoint becomes aware of any
incidents of fraud or violations of law which both WellPoint and the PBM reasonably
believe should be disclosed by the PBM under applicable law, WellPoint shall notify the
PBM, and the PBM shall make any disclosures required by law, in a manner agreed to by
the parties. The WellPoint reserves the right to make additional disclosures which it
reasonably deems necessary to comply with applicable law, without any liability to the
PBM to the extent such disclosures are reasonable, appropriate and consistent with the
terms of the Agreement and this Part D Exhibit, after consulting with the PBM and
giving the PBM the opportunity to make such additional disclosures.

	4.20	 	If at any time during the term of this Agreement and this Exhibit the statutes, regulations
and/or guidance governing Part D plans is changed in such a way that it materially alters the
services and economic terms contemplated at the inception of this program, both parties agree
to re-negotiate applicable terms and provisions of the Agreement and/or this Exhibit to
achieve substantially similar results provided such results are fair and reasonable based upon
the total impact of such changes on both parties.

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	4.21	 	Program Support. On an annual basis or as otherwise agreed by the parties, PBM shall
work with WellPoint to develop Programs with corresponding cost of care savings and
commitments that the PBM must achieve. Unless both parties agree otherwise, these cost of
care savings and commitments will be measured on an annual basis. Both parties agree to use
best efforts to agree on such cost of care savings and commitments prior to the Part D bid
submission date.
	 
	4.22	 	Agreement Implementation and On-Going Support. PBM agrees to appoint a designated
team to support the effective and efficient implementation and on-going support of WellPoint’s
Part D plans (Part D Team). The Part D Team shall be subject to WellPoint’s prior review and
approval. Any changes to the Part D Team shall be in accordance with the terms of the
Agreement. In addition to the terms and conditions noted in this Exhibit, the Part D Team
shall act in accordance with and consistent with the applicable terms in the attached
Agreement, including but not limited to Sections 3.14 and 3.24 of the attached Agreement.
	 
	4.23	 	Post Termination Support and Run-Out Services. Consistent with the other post
termination support and run-out services listed in the attached Agreement, PBM explicitly
agrees to provide the following additional Part D related post termination and run-out
support. Subject to reasonable fees as mutually agreed to by the Parties, for a period of
three (3) years following termination of this Exhibit I and/or the Agreement, PBM agrees to
provide post termination and run-out support and services for applicable Covered Services
consistent with the terms of this Exhibit and the Agreement. This post termination support
and run-out services include, but is not limited to, Part D and Retiree Drug Subsidy
reconciliation, COB and plan to plan transactions.

5.0 PAYMENT.

Rates, Fees, and Financial Terms. Unless explicitly noted otherwise in the Agreement,
applicable exhibits to the Agreement and this Part D Exhibit, WellPoint shall compensate the PBM
for services provided under this Part D Exhibit pursuant to the rates and terms set forth in the
Agreement and corresponding exhibits.

6.0 AUDIT RIGHTS.

WellPoint Audits. In addition to any CMS required oversight and monitoring audits for
delegated functions, WellPoint shall have audit rights consistent with those set forth in the
Agreement. Notwithstanding any conflicting provisions in the Agreement or this Exhibit, if
required by applicable law and CMS regulations and guidance, subject to the confidentiality
requirements in this Agreement between the PBM and WellPoint, WellPoint shall have the right to
audit, on-site, any and all sources of Rebates and Price Concessions as they relate to this Exhibit
I.

Subject to the confidentiality requirements in the Agreement between the PBM and WellPoint, as
required by applicable law and CMS regulations and guidance, and as they relate to this Exhibit I,
the PBM agrees to provide appropriate disclosure of: [*] The audit rights of WellPoint

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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include, but shall not be limited to, its right to inspect and/or audit on-site applicable (i)
Rebates and other information necessary to verify the accuracy of all disclosures made by the PBM
pursuant to and directly related to this Part D Exhibit, including, but not limited to, any and all
records necessary to validate and account for the Rebate amounts agreed to by the Parties, as well
as agreements with pharmaceutical manufactures to verify the represented aggregate amount of the
[*] (ii) retail pharmacy agreements, as necessary to validate the terms and conditions of the
agreements, including, but not limited to, the ability of WellPoint to validate the rates set forth
in those agreements; and (iii) any other business records of the PBM that are directly related to
the Agreement, this Part D Exhibit and that may be necessary to validate compliance with the terms
and conditions of the Agreement, this Part D Exhibit and applicable laws.

	6.1	 	WellPoint Audit of the PBM. Upon request and in accordance with the terms of the
Agreement, the PBM shall provide WellPoint reasonable access to or comparable information
regarding the systems, programs, procedures, policies, contracts, records, and reports to
management, manufacturer agreements, and all other applicable data in the PBM’s possession as
they reasonably relate to WellPoint Plans and which are reasonably necessary to satisfy the
WellPoint’s written audit objective as it relates to the services provided by the PBM to
WellPoint under the Agreement and this Part D Exhibit (“WellPoint Audit”).
	 
	 	 	WellPoint agrees to maintain the confidentiality of any and all information resulting from
the aforementioned audits in accordance with the other terms of the Agreement. WellPoint
agrees to require any WellPoint retained third-party auditors who receive access to such
Rebate information to maintain the confidential nature of such information in accordance
with the terms of the Agreement or similar terms that are design to preserve the
confidential nature of such information. Consistent with the record retention requirements
applicable to Part D and/or Part B, WellPoint or its designee may audit the PBM for such
retention period. All data required for the audit shall be provided in a timely manner.
	 
	6.2	 	PBM Audits. PBM’s Pharmacy Audit Program shall include and implement audit protocols
that are reasonably expected to identifying Pharmacies with questionable prescription Claims
activity and/or high volumes.

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7 PART D REQUIRED TERMS.

	7.1	 	Compliance with Law. Each Party shall be responsible for ensuring its compliance
with any applicable laws and/or regulations implicated by the terms of the Agreement and this
Part D Exhibit, including, but not limited to, maintaining any necessary licenses permits,
filings and compliance with Part D and MMA requirements. The Parties acknowledge and agree
that WellPoint or Plans are responsible for and accountable to CMS for any functions or
responsibilities performed by the PBM as a Subcontractor under the Agreement and this Part D
Exhibit. Notwithstanding this fact and consistent with the Plan requirements under 42 C.F.R.
423.505(k)(3), the PBM shall provide reasonable periodic certifications to WellPoint or the
Plans based upon best information and belief regarding the accuracy, completeness, and
truthfulness of the Claims data or other information provided by PBM to WellPoint or Plans.
The PBM acknowledges that the Claims data will be used for the purposes of obtaining federal
reimbursement.
	 
	7.2	 	Accountability/Oversight. WellPoint delegates to the PBM its responsibility under
its Medicare Part D contract with CMS to provide the services set forth in the Agreement and
this Part D Exhibit to Covered Individuals. WellPoint may revoke this delegation, including,
if applicable, the delegated responsibility to meet CMS reporting requirements, and thereby
terminate the Agreement if CMS or WellPoint determines that the PBM has not performed
satisfactorily. Such revocation shall be consistent with the termination provisions of the
Agreement. The PBM’s performance shall be monitored by WellPoint on an ongoing basis as
provided for in this Part D Exhibit. The PBM further acknowledges that WellPoint is
accountable to CMS for the functions and responsibilities described in this Part D Exhibit and
ultimately responsible to CMS for the performance of all services. The PBM acknowledges that
WellPoint shall oversee and is accountable to CMS for the functions and responsibilities
described in the Part D regulatory standards and that WellPoint may only delegate such
functions and responsibilities in a manner consistent with the standards set forth under 42
CFR §423.505(i)(4) . The PBM further acknowledges that WellPoint retains the right to
approve, suspend, or terminate any arrangement with a pharmacy to provide services in
connection with WellPoint’s Programs if the pharmacy fails to comply with applicable laws,
regulations, CMS instructions, or the terms of WellPoint’s Prescription Drug Program contracts
with CMS.
	 
	7.3	 	Non-Discrimination. In accordance with, but not limited to, 42 C.F.R. 423.505(b)(3)
& 423.34(a), the PBM shall not deny, limit, or condition the furnishing of Covered Services to
Covered Individuals of WellPoint on the basis of any factor that is related to health status,
including, but not limited to medical condition; Claims experience; receipt of health care;
medical history; genetic information; evidence of insurability, including conditions arising
out of acts of domestic violence; or disability.
	 
	7.4	 	Timely Access to Care. Where appropriate and applicable, the PBM agrees to promote
access to covered services in accordance with recognized standards for timely access to care
and member services.

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	7.5	 	Cultural Competency. The PBM shall take reasonable measures to ensure that Covered
Services rendered to Covered Individuals, both clinical and non-clinical, are accessible to
all Covered Individuals, including those with limited English proficiency or reading skills,
with diverse cultural and ethnic backgrounds, the homeless, and individuals with physical and
mental disabilities. The PBM shall take reasonable measures to provide information regarding
treatment options in a culturally-competent manner.
	 
	7.6	 	Standards of Care. The PBM agrees to provide Program related services in a manner
consistent with professionally recognized standards.
	 
	7.7	 	Hold Harmless. In accordance with, but not limited to, 42 C.F.R. 423.505(i) and
423.505(g), the PBM agrees that in no event, including but not limited to non-payment by
WellPoint, insolvency of WellPoint or breach of the Agreement, shall the PBM bill, charge,
collect a deposit from, seek compensation, remuneration or reimbursement from, or have any
recourse against a Covered Individual for covered prescription services provided pursuant to
the Agreement. This provision does not prohibit the collection of Cost Sharing made in
accordance with the terms of the Covered Individual’s Prescription Drug Program benefits.
	 
	7.8	 	Survival of Agreement. The PBM further agrees that: (1) the hold harmless provision
shall survive the termination of the Medicare Part D Covered Individual; and (2) the hold
harmless provision supersedes any oral or written contrary agreement now existing or hereafter
entered into between the PBM and an Covered Individual or persons acting on their behalf that
relates to liability for payment for, or continuation of, covered services provided under the
terms and conditions of these clauses.
	 
	7.9	 	Compliance with WellPoint’s Clinical and Quality Management Programs. The PBM agrees
to cooperate with WellPoint’s clinical and quality management programs. Nothing in this Part
D Exhibit or Agreement is intended or should be construed to limit a pharmacist’s professional
judgment or violate applicable law.
	 
	7.10	 	Data Submissions. The PBM agrees to provide to WellPoint all relevant information in
the PBM’s possession necessary for WellPoint to meet its data reporting and submission
obligations to CMS, including but not limited to, data necessary to characterize the context
and purpose of each encounter between a Covered Individual and a pharmacy.
	 
	7.11	 	Data. The data furnished by the PBM in connection with its performance of its
obligations under the Agreement and this Part D Exhibit will be used by WellPoint to obtain
payments from CMS, to support WellPoint’s bids for Program renewals and contracts with CMS in
future years, or both. WellPoint and CMS will be acting in reliance on the accuracy,
completeness, and truthfulness of any data the PBM provides. The PBM agrees to employ
at least the same degree of care and diligence in reporting such data to WellPoint, but no
less care than what is commercially reasonably or required under Part D regulations or CMS
guidance, as the PBM employs and applies to any such data that the PBM reports to CMS or other
Part D Sponsors under similar Medicare prescription drug programs it administers.

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	7.12	 	Approval of Materials. The PBM agrees to comply, and to require any of its
subcontractors to comply, with all applicable Federal and State laws, regulations, CMS
instructions, and policies relevant to the PBM’s marketing activities under the Agreement and
this Part D Exhibit including, but not limited to, CMS marketing guidelines for Medicare Part
D Prescription Drug Plans and any requirements for CMS prior approval of materials. Any
printed materials including, but not limited to, letters to Covered Individuals, brochures,
advertisements, telemarketing scripts, packaging prepared or produced by the PBM or any of
his/her/its subcontractors pursuant to the Agreement and this Part D Exhibit must be submitted
to WellPoint for review and approval at each planning stage (i.e., creative, copy,
mechanicals, blue lines, etc.) to assure compliance with Federal, State, and other applicable
guidelines. WellPoint agrees its approval will not be unreasonably withheld or delayed.
	 
	7.13	 	Subcontractors. The PBM agrees that if the PBM enters into subcontracts to perform
services under the terms of this Part D Exhibit, the PBM’s subcontracts shall include: (1) an
agreement by the subcontractor to comply with all of the PBM obligations in this Part D
Exhibit, including the “PART D REQUIRED TERMS”; (2) a provision setting forth the term of the
subcontract (preferably one year or longer); and (3) dated signatures of all the parties to
the subcontract. To the extent services under the Agreement and this Part D Exhibit are
delegated to a subcontractor (i.e., first tier, down stream or related entities as those terms
are defined in the Part D regulations), WellPoint retains the right to approve, and, if CMS or
WellPoint determines that the subcontractor has not performed satisfactorily, to terminate
such arrangement, notwithstanding any other conflicting provision.
	 
	7.14	 	Inspection of Books/Records. Consistent with, but not limited to, 42 C.F.R.
423.505(i), the PBM acknowledges that HHS, the Comptroller General, or their designees have
the right to inspect, evaluate, and audit any books, contracts, records, patient care
documentation, and other records of the PBM, or its subcontractors or transferees involving
transactions related to Medicare Part D through ten (10) years from the final date of the
Prescription Drug Plan contract period or from the date of the completion of any audit, or for
such longer period provided for in other applicable law, whichever is later. For the purposes
specified in this provision, the PBM agrees to make available the PBM’s premises, physical
facilities and equipment, records relating to Covered Individuals, and any additional relevant
information that CMS may require.
	 
	7.15	 	Record Retention. The PBM shall retain all records relating to the Agreement and
this Part D Exhibit for a period of not less than 10 years or, under the conditions set forth
at 42 CFR § 423.505(e)(4), whichever is longer.
	 
	7.16	 	Confidentiality and Security of Records. The PBM shall be responsible for storing,
transmitting, and reporting Protected Health Information, in accordance with and as defined in
the federal regulations at 45 CFR Parts 160 and 164, which implement the Health Insurance
Portability and Accountability Act of 1996, Pub. L. 104-191 (“HIPAA”). The PBM agrees to
comply with all applicable Federal and State privacy

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	 	 	and security laws, including but not limited to (a) the requirements of HIPAA and its
implementing regulations and 42 CFR § 423.136.
	 
	7.17	 	Compliance with Laws.

	 	7.17.1	 	Medicare Laws/Regulations. In accordance with, but not limited to, 42 C.F.R.
423.505(i)(4), the PBM agrees to comply, and to require any of its subcontractors and
network pharmacies to comply, with all applicable Medicare laws, regulations, and CMS
instructions. Further, the PBM agrees that any covered services provided by the PBM or
its subcontractors to Covered Individuals will be consistent with and will comply with
WellPoint’s Prescription Drug Program contractual obligations.
	 
	 	7.17.2	 	General Federal Laws. The PBM shall comply with all laws applicable to
individuals and entities receiving Federal funds and all other applicable Federal and
State laws, regulations and governmental issuances, including but not limited to Title
VI of the Civil Rights Act of 1964, the Age Discrimination Act of 1975, the American
with Disabilities Act, the Drug-Free Workplace Act and the Rehabilitation Act of 1973.

	7.18	 	Compliance: Appeals/Grievances. The PBM agrees to comply with policies and
procedures in performing its responsibilities under the Agreement. The PBM specifically
agrees to comply with Medicare requirements regarding Covered Individual appeals and
grievances and to cooperate with WellPoint in meeting its obligations regarding Covered
Individual appeals, grievances and expedited appeals, including the gathering and forwarding
of information in a timely manner and compliance with appeals decisions.
	 
	7.19	 	Illegal Remunerations. Both parties specifically represent and warrant that
activities to be performed under this Part D Exhibit are not intended to constitute illegal
remunerations (including kickbacks, bribes or rebates) as defined in 42 USCA § 1320(a)-7b.
	 
	7.20	 	Termination for Medicare Exclusion. The PBM acknowledges that this Part D Exhibit
shall be terminated if the PBM, or a person or entity with significant ownership or control
interest in the PBM, is excluded from participation in Medicare under § 1128A of the Social
Security Act or from participation in any other Federal health care program.
	 
	7.21	 	Ineligible Persons. PBM represents and warrants that:

	 	7.21.1	 	Its principals, employees, subcontractors and Part D Network Pharmacies providing
services under the terms of this Part D Exhibit, shall not at any time during the term
of this Part D Exhibit be (a) listed by a governmental agency as debarred from work
with that federal agency; or (b) otherwise precluded from participating in any federal
health care program. PBM agrees to notify WellPoint in writing within seven (7)
business days of any event which causes a violation of any of the foregoing provisions
(“Legal Event”).

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	 	7.21.2	 	If, at any time during the term of this Part D Exhibit, WellPoint learns that PBM is
not in compliance with the requirements of this clause, in addition to other remedies
available to WellPoint, WellPoint may terminate this Part D Exhibit for convenience, at
its sole discretion.

	7.22	 	Interpret According to Medicare Laws. The PBM and WellPoint intend that the terms of
the Agreement and this Part D Exhibit as they relate to the provision of Covered Services
under WellPoint’s Part D Prescription Drug Program shall be interpreted in a manner consistent
with applicable requirements under Federal law.

8 [*]

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EXHIBIT J

MEDICAID ADMINISTRATION

PBM shall execute and abide by agreements relating to Medicaid services for the states identified
in this Exhibit J, which agreements are substantially similar to the agreements attached as
Schedules hereto.

Schedule J-1 — California

Schedule J-2 — Indiana

Schedule J-3 — Kansas

Schedule J-4 — Massachusetts

Schedule J-5 — New York

Schedule J-6 — South Carolina

Schedule J-7 — Virginia

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EXHIBIT J-1

CALIFORNIA MEDI-CAL, HEALTHY FAMILIES, AND ACCESS TO INFANTS AND MOTHERS ATTACHMENT

The following terms and provisions are applicable to the provision of services by Express Scripts,
Inc. to Anthem Blue Cross Life and Health Insurance Company and Blue Cross of California
(collectively “Anthem”), in support of Anthem’s provision of services under the California
Medi-Cal, Healthy Families, and Access to Infants and Mothers programs.

	1.	 	This Attachment is limited to the terms and conditions governing the provision of and payment
for Covered Services provided to the following individuals (hereinafter individually and
collectively referred to as “Medicaid Members”): (a) State of California Medi-Cal
beneficiaries who are also enrolled in Anthem’s Medi-Cal Managed Care Program for the State of
California; and (b) individuals covered pursuant to a contract between Anthem and the
California Managed Risk Medical Insurance Board (“MRMIB”) who are also enrolled in Anthem’s
Healthy Families and Access to Infants and Mothers (“AIM”) Programs. PBM agrees to
participate as a network provider in Anthem’s Medi-Cal Managed Care, Healthy Families and AIM
networks (hereinafter “Medi-Cal Network”) and to provide Covered Services to Medicaid Members.
	 
	2.	 	For purposes of this Attachment:

	 	(a)	 	“Medi-Cal” means medical assistance provided under a state plan approved under
Title XIX of the Social Security Act.
	 
	 	(b)	 	“Medicaid Covered Services” means those Covered Services for which a Medicaid
Member is eligible under the applicable Anthem managed care organization contract with
the California Department of Health Care Services (“Department”) or with MRMIB.

	3.	 	All of PBM’s duties and obligations to Covered Individuals set forth in the Agreement shall
also apply to Medicaid Members. In addition, with respect to Medicaid Members PBM agrees to:

	 	(a)	 	Indemnify and hold harmless the State of California, its agencies, officers,
and employees from all claims and suits, including court costs, attorney’s fees, and
other expenses, brought because of injuries or damages received or sustained by any
person, persons, or property that is caused by any act or omission of PBM;
	 
	 	(b)	 	Comply with the terms applicable to providers set forth in Anthem’s managed
care organization contract, including incorporated documents, between Anthem and the
Department and MRMIB, which applicable terms are incorporated herein by reference.
Anthem agrees to provide PBM with a description of the applicable terms;

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	 	(c)	 	Comply with all State and Federal laws, rules, regulations and ordinances
applicable to the delivery of medical services and/or supplies to Medicaid Members
including, but not limited to, the applicable requirements specified in Title 22
California Code of Regulations, Division 3, Subdivision 1, Chapters 3 and 4;
	 
	 	(d)	 	Cooperate and comply with the Provider Appeals Process set forth in the Anthem
Blue Cross PBM Agreement Provider Manual for purposes of claims dispute resolution;
	 
	 	(e)	 	Provide the following information to the Department: (i) the names of the
officers and owners of PBM; (ii) stockholders owning more than ten percent (10%) of the
stock issued by PBM; and major creditors holding more than five percent (5%) of the
debt of PBM;
	 
	 	(f)	 	Be duly licensed in accordance with the applicable state licensing board of the
State of California. PBM further agrees to remain in good standing with said board;
	 
	 	(g)	 	Obtain and maintain all required permits, licenses and approvals and comply
with all applicable health, safety and environmental statutes, rules, regulations or
ordinances necessary for the performance of Medicaid Covered Services;
	 
	 	(h)	 	Submit all claims for Medicaid Covered Services rendered to Medicaid Members
that do not involve a third party payor within ninety (90) calendar days from the date
of service;
	 
	 	(i)	 	Cooperate with any program designed to monitor Medi-Cal, Healthy Families and
AIM program compliance by providers who participate in Anthem’s Medi-Cal Network and
comply with any corrective actions related thereto;
	 
	 	(j)	 	Submit all encounter claims for Medicaid Covered Services rendered to Medicaid
Members in accordance with Anthem’s specifications for the submission of such encounter
data;
	 
	 	(k)	 	Provide a copy of a Medicaid Member’s medical record at no charge upon
reasonable request by the Medicaid Member;
	 
	 	(l)	 	Facilitate the transfer of the Medicaid Member’s medical record to another
provider at said Medicaid Member’s request;
	 
	 	(m)	 	Cooperate with and permit evaluations, through on-site inspection or other
means, of the quality, appropriateness, and timeliness of Medicaid Covered Services
rendered to Medicaid Members. Such evaluations may be conducted by Anthem, the
Department, MRMIB, the Department of Health and Human Services (“DHHS”), the Director
of the Department of Managed Health Care, or other duly

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	 	 	 	authorized State of California agency;
	 
	 	(n)	 	Cooperate with and permit inspections of any records pertinent to PBM’s
delivery of Medicaid Covered Services to Medicaid Members. Such inspections may be
conducted by Anthem, the Department, MRMIB, the Director of the Department of Managed
Health Care, or other duly authorized State of California agency;
	 
	 	(o)	 	Maintain an adequate record keeping system for recording services, charges,
date and other commonly accepted information elements for Medicaid Covered Services
rendered to Medicaid Members for a period of at least five (5) years from the close of
the Department’s fiscal year in which this Attachment is in effect, and such obligation
shall not be terminated upon a termination of this Attachment, whether by rescission or
otherwise;
	 
	 	(p)	 	Participate in any internal and external quality assurance, utilization review,
peer review, and grievance procedures established by Anthem for Medicaid Members;
	 
	 	(q)	 	If PBM is a laboratory provider, maintain a valid Clinical Laboratory
Improvement Amendments (“CLIA”) certificate for all PBM laboratory testing sites and
comply with CLIA regulations at 42 CFR Part 493 for all laboratory testing sites
performing Medicaid Covered Services pursuant to this Attachment;
	 
	 	(r)	 	Comply with the requirements of 42 CFR 489, Subpart I, related to maintaining
and distributing written policies and procedures respecting advance directives;
	 
	 	(s)	 	Prepare and submit information as requested by the Department, MRMIB, DHHS, and
the Director of the Department of Managed Health Care as may be necessary for Anthem to
comply with this Attachment and the California Knox Keene Act;
	 
	 	(t)	 	In the event of Anthem’s insolvency, continue to provide Medicaid Covered
Services to Medicaid Members until the end of the month in which insolvency has
occurred and, if applicable, to provide inpatient Medicaid Covered Services until the
date of discharge for any Medicaid Member institutionalized when insolvency occurs.

	4.	 	Termination of California Medi-Cal, Healthy Families and AIM Network Attachment.

	 	(a)	 	This Attachment shall automatically terminate upon the occurrence of any one of
the following:

	 	i.	 	Termination of PBM’s license;
	 
	 	ii.	 	Termination of PBM’s IHCP provider agreement;
	 
	 	iii.	 	Failure to comply with section 3(g) above; or
	 
	 	iv.	 	Termination/expiration of Anthem’s managed care
organization contracts with the Department and MRMIB; or

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	 	(b)	 	Either party hereto may terminate this Attachment without cause upon ninety
(90) calendar days’ prior written notice to the other party.
	 
	 	(c)	 	If either party fails to comply with or perform any term or condition of this
Attachment, the other party shall notify the defaulting party of its default in
writing, and the defaulting party shall have thirty (30) days to cure the default. If
the default is not cured within said thirty (30) day period, this Attachment is
automatically terminated, unless otherwise specified by the non-defaulting party.

	5.	 	This Attachment shall be automatically amended to conform to applicable changes to
State or Federal laws, rules, regulations or ordinances related to Medicaid Members or the
California Medicaid program without the necessity of executing written amendments.
	 
	6.	 	 PBM agrees that Anthem’s payment constitutes payment in full for any Medicaid Covered
Services rendered to Medicaid Members. PBM agrees it shall not seek payment from the
Medicaid Member, his/her representative, the State of California or MRMIB for any Medicaid
Covered Services rendered pursuant to this Attachment.
	 
	7.	 	Nothing herein shall be construed to prohibit PBM from contracting with other Medicaid
managed care organizations.
	 
	8.	 	 PBM shall be compensated pursuant to the amounts specified in this Agreement.
	 
	9.	 	Nothing herein will be construed to prohibit or restrict PBM from advising a Medicaid
Member about her/his health status, medical care, or treatment, regardless of whether
benefits for such care are available for the Medicaid Member, if PBM is acting within the
lawful scope of practice. However, this provision does not require PBM to provide Medicaid
Covered Services if PBM objects to such service on moral or religious grounds.
	 
	10.	 	PBM certifies that neither it nor its principals nor any of its subcontractors are
presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily
excluded from entering into this Attachment by any Federal agency or by any department,
agency or political subdivision of the State. For purposes of this Attachment, “principal”
means an officer, director, owner, partner, key employee, or other person with primary
management or supervisory responsibilities, or a person who has a critical influence or
substantive control over PBM’s operations.
	 
	11.	 	PBM agrees to comply with the following:

	 	(a)	 	Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352), as amended, and all
requirements imposed by or pursuant to the regulation of the Department of Health and
Human Services (45 CFR Part 80), to the end that, in accordance with Title VI of that
Act and the Regulation, no person in the United States shall on the ground of race,
color, or national origin, be excluded from participation in, be denied the benefits
of, or be otherwise subjected to discrimination under any program or activity for which
PBM receives Federal assistance.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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128

 

	 	(b)	 	Section 504 of the Rehabilitation Act of 1973 (Pub. L. 93-112), as amended, and
all requirements imposed by or pursuant to the Regulation of the Department of Health
and Human Services (45 CFR Part 84), to the end that, in accordance with Section 504 of
that Act and the Regulation, no otherwise qualified handicapped individual in the
United States shall, solely by reason of his/her handicap, be excluded from
participation in, be denied the benefits of, or be subjected to discrimination under
any program or activity for which PBM receives Federal assistance.
	 
	 	(c)	 	The Age Discrimination Act of 1975 (Pub. L 94-135), as amended, and all
requirements imposed by or pursuant to the Regulation of the Department of Health and
Human Services (45 CFR Part 91), to the end that, in accordance with the Act and the
Regulation, no person in the United States shall, on the basis of age, be denied the
benefits of, be excluded from participation in, or be subjected to discrimination under
any program or activity for which PBM receives Federal assistance.
	 
	 	(d)	 	The Americans with Disabilities Act of 1990 (Pub. L. 101-336), as amended, and
all requirements imposed by or pursuant to the Regulation of the Department of Justice
(28 CFR 35.101 et seq.), to the end that in accordance with the Act and Regulation, no
person in the United States with a disability, be excluded from participation in, be
denied the benefits of, or otherwise be subjected to discrimination under any program
or activity for which PBM receives Federal financial assistance.
	 
	 	(e)	 	Title IX of the Educational Amendments of 1972, as amended (30 U.S.C. sections
1681, 1783, and 1685-1686), and all requirements imposed by or pursuant to regulation,
to the end that, in accordance with the Amendments, no person in the United States
shall, on the basis of sex, be excluded from participation in, be denied the benefits
of, or otherwise be subjected to discrimination under any program or activity for which
PBM receives Federal financial assistance.
	 
	 	(f)	 	I.C. 22-9-1-10 and the Civil Rights Act of 1964, as amended, and any other
applicable State or Federal law, regulations and executive orders prohibiting
discrimination, in that PBM shall not discriminate against any employee or applicant
for employment in the performance of this Attachment. PBM shall not discriminate with
respect to the hire, tenure, terms, conditions or privileges of employment or any
matter directly or indirectly related to employment, because of race, color, religion,
sex, disability, national origin, ancestry or status as a veteran. Breach of this
provision shall be considered default; and
	 
	 	(g)	 	All requirements applicable to PBM under the Health Insurance Portability and
Accountability Act of 1996.

	12.	 	Anthem shall comply with applicable State of California prompt pay laws.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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129

 

	13.	 	Anthem shall provide notice to PBM if the State of California Department of Health Care
Services or the MRMIB updates language in this Attachment.
	 
	14.	 	Notice. PBM shall provide notice of any change in information or status that would
affect Medi-Cal participation or claims payment status (e.g., change of address, change of
ownership, provider status change, change of medical director, etc.) to the following
address:
	 
	 	 	SSB Dir. Of Compliance

5153 Camino Ruiz

Bldg B, 2nd Floor

Camarillo, CA 93012-8601

Mailpoint CACN02-02
	 
	 	 	with a copy to:
	 
	 	 	SSB Counsel

21555 Oxnard St.

Woodland Hills, CA 91367

Mailpoint CAAC01-011B
	 
	15.	 	Order of Precedence. All other provisions of the Agreement shall remain in full force
and effect. In the event of (a) a conflict between the provisions of this Attachment and
the provisions of the Agreement, or (b) any inconsistency or ambiguity in this Attachment,
such conflict, inconsistency or ambiguity shall be resolved by giving precedence in the
following order: (i) State of California or Federal law, rule, regulation or ordinance;
(ii) this Attachment for the purposes of delivering Medicaid Covered Services under the
Agreement to the applicable programs; and iii) the Agreement.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

130

 

EXHIBIT J-2

SSB-IN ATTACHMENT

The following terms and provisions are applicable to the provision of services by Express Scripts,
Inc. to Anthem Insurance Companies, Inc. (collectively “Anthem”), in support of Anthem’s provision
of services under the Indiana Hoosier Healthwise Medicaid program and the Healthy Indiana Plan.

	1.	 	This Attachment is limited to the terms and conditions governing the provision of and
payment for Covered Services provided to Indiana Hoosier Healthwise Medicaid enrollees who
are enrolled in Anthem’s managed care Medicaid program or enrollees who are enrolled in
Anthem’s Healthy Indiana Plan (hereinafter referred to as “Medicaid Members”).
	 
	2.	 	For purposes of this Agreement

	 	(a)	 	“Medicaid” means medical assistance provided under a state plan approved under
Title XIX of the Social Security Act.
	 
	 	(b)	 	“Medicaid Covered Services” means those Covered Services for which a Medicaid
Member is eligible.
	 
	 	(c)	 	“Healthy Indiana Plan” means the health care coverage plan provided established
under Indiana House Bill 1678 that extends health care coverage to certain low-income,
uninsured Indiana consumers without access to employer sponsored health insurance.

	3.	 	With respect to Medicaid Members, PBM agrees to:

	 	(a)	 	Indemnify and hold harmless the State of Indiana, its agencies (including,
without limitation, the Office of Medicaid Policy and Planning), officers, and
employees from all claims and suits, including court costs, attorney’s fees, and other
expenses, brought because of injuries or damages received or sustained by any person,
persons, or property that is caused by any act or omission of PBM;
	 
	 	(b)	 	Comply with the terms applicable to providers set forth in the applicable
managed care organization contracts, including incorporated documents, between Anthem
and the State of Indiana, which applicable terms are incorporated herein by reference.
WellPoint agrees to provide PBM with a description of the applicable terms;
	 
	 	(c)	 	Comply with all State of Indiana and Federal laws, rules, regulations and
ordinances applicable to Medicaid Members;
	 
	 	(d)	 	Cooperate and comply with the Agreement for purposes of payment dispute
resolution;

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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131

 

	 	(e)	 	Maintain a current Indiana Health Coverage Programs (“IHCP”) provider agreement
if applicable;
	 
	 	(f)	 	Be duly licensed and in good standing in accordance with the applicable state
licensing board of the State of Indiana if applicable;
	 
	 	(g)	 	Obtain and maintain all required permits, licenses and approvals and comply
with all applicable health, safety and environmental statutes, rules, regulations or
ordinances necessary for the performance of Medicaid Covered Services;
	 
	 	(h)	 	Submit all claims/invoices for Medicaid Covered Services rendered to Medicaid
Members in accordance with the Agreement;
	 
	 	(i)	 	Cooperate with any program designed to monitor Medicaid program compliance by
vendors who provide services to Medicaid Members and comply with any corrective actions
related thereto;
	 
	 	(j)	 	Submit all reports for Medicaid Covered Services rendered to Medicaid Members
in accordance with Anthem’s specifications for the submission of such data;
	 
	 	(k)	 	Provide a copy of a Medicaid Member’s medical record at no charge upon
reasonable request by the Medicaid Member if applicable;
	 
	 	(l)	 	Facilitate the transfer of the Medicaid Member’s medical record to another
provider at said Medicaid Member’s request if applicable;
	 
	 	(m)	 	Cooperate with and permit evaluations, through on-site inspection or other
means, of the quality, appropriateness, and timeliness of Medicaid Covered Services
rendered to Medicaid Members. Such evaluations may be conducted by Anthem, the Office
of Medicaid Policy and Planning, the Office of Children’s Health Insurance Program, the
Department of Health and Human Services, or other duly authorized State of Indiana
agency;
	 
	 	(n)	 	Cooperate with and permit inspections of any records pertinent to PBM’s
delivery of Medicaid Covered Services to Medicaid Members. Such inspections may be
conducted by Anthem, the Office of Medicaid Policy and Planning, the Office of
Children’s Health Insurance Program, or other duly authorized State of Indiana agency;
	 
	 	(o)	 	Maintain an adequate record keeping system for recording services, charges,
date and other commonly accepted information elements for Medicaid Covered Services
rendered to Medicaid Members;
	 
	 	(p)	 	Participate in any internal and external quality assurance, utilization review,
peer

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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132

 

	 	 	 	review, and grievance procedures established by Anthem for Medicaid Members;
	 
	 	(q)	 	Comply with the requirements of 42 CFR 489, Subpart I, related to maintaining
and distributing written policies and procedures respecting advance directives;
	 
	 	(r)	 	Prepare and submit reports as requested by the Office of Medicaid Policy and
Planning or the Office of Children’s Health Insurance Program (hereinafter “Offices”)
by the completion date established by either of the Offices. Such requests will be
limited to situations in which the desired data is considered essential and cannot be
reasonably obtained through standard Anthem reports;

	4.	 	Termination of Attachment.

	 	(a)	 	This Attachment shall automatically terminate upon the occurrence of any one of
the following:

	 	i.	 	Failure to comply with section 3(e) above;
	 
	 	ii.	 	Failure to comply with section 3(f) above;
	 
	 	iii.	 	Failure to comply with section 3(g) above;
	 
	 	iv.	 	Termination/expiration of Anthem’s managed care
organization contract with the State of Indiana in accordance with IC
12-15-30-5; or

	 	(b)	 	Except as otherwise provided herein, either party hereto may terminate this
Attachment without cause upon thirty (30) calendar days prior written notice to the
other party.
	 
	 	c.	 	If either party fails to comply with or perform any term or condition of this
Attachment, the other party shall notify the defaulting party of its default in
writing, and the defaulting party shall have thirty (30) days to cure the default. If
the default is not cured within said thirty (30) day period, this Attachment is
automatically terminated, unless otherwise specified by the non-defaulting party

	5.	 	This Attachment shall be automatically amended to conform to applicable changes to
State or Federal laws, rules, regulations or ordinances related to Medicaid Members or the
Indiana Medicaid program without the necessity of executing written amendments.
	 
	6.	 	PBM agrees that Anthem’s payment constitutes payment in full for any Medicaid Covered
Services rendered to Medicaid Members. PBM agrees it shall not seek payment from the
Medicaid Member, his/her representative or the State of Indiana for any Medicaid Covered
Services rendered pursuant to this Attachment.
	 
	7.	 	Nothing herein shall be construed to prohibit PBM from contracting with other Medicaid
managed care organizations.
	 
	8.	 	PBM shall be compensated pursuant to the amounts specified in the Agreement.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

133

 

	9.	 	Nothing herein will be construed to prohibit or restrict PBM from advising a Medicaid
Member about her/his health status, medical care, or treatment, regardless of whether
benefits for such care are available for the Medicaid Member, if PBM is acting within the
lawful scope of practice. However, this provision does not require PBM to provide services
if PBM objects to such service on moral or religious grounds.
	 
	10.	 	PBM certifies that neither it nor its principals nor any of its subcontractors are
presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily
excluded from entering into this Attachment by any Federal agency or by any department,
agency or political subdivision of the State. For purposes of this Attachment, “principal”
means an officer, director, owner, partner, key employee, or other person with primary
management or supervisory responsibilities, or a person who has a critical influence or
substantive control over PBM’s operations.
	 
	11.	 	PBM agrees to comply with the following:

	 	(a)	 	Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352), as amended, and all
requirements imposed by or pursuant to the regulation of the Department of Health and
Human Services (45 CFT Part 80), to the end that, in accordance with Title VI of that
Act and the Regulation, no person in the United States shall on the ground of race,
color, or national origin, be excluded from participation in, be denied the benefits
of, or be otherwise subjected to discrimination under any program or activity for which
PBM receives Federal assistance.
	 
	 	(b)	 	Section 504 of the Rehabilitation Act of 1973 (Pub. L. 93-112), as amended, and
all requirements imposed by or pursuant to the Regulation of the Department of Health
and Human Services (45 CFR Part 84), to the end that, in accordance with Section 504 of
that Act and the Regulation, no otherwise qualified handicapped individual in the
United States shall, solely by reason of his/her handicap, be excluded from
participation in, be denied the benefits of, or be subjected to discrimination under
any program or activity for which PBM receives Federal assistance.
	 
	 	(c)	 	The Age Discrimination Act of 1975 (Pub. L 94-135), as amended, and all
requirements imposed by or pursuant to the Regulation of the Department of Health and
Human Services (45 CFR Part 91), to the end that, in accordance with the Act and the
Regulation, no person in the United States shall, on the basis of age, be denied the
benefits of, be excluded from participation in, or be subjected to discrimination under
any program or activity for which PBM receives Federal assistance.
	 
	 	(d)	 	The Americans with Disabilities Act of 1990 (Pub. L. 101-336), as amended, and
all requirements imposed by or pursuant to the Regulation of the Department of Justice
(28 CFR 35.101 et seq.), to the end that in accordance with the Act and Regulation, no
person in the United States with a disability, be excluded from participation in, be
denied the benefits of, or otherwise be subjected to

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

134

 

	 	 	 	discrimination under any program or activity for which PBM receives Federal
financial assistance.
	 
	 	(e)	 	Title IX of the Educational Amendments of 1972, as amended (30 U.S.C. sections
1681, 1783, and 1685-1686), and all requirements imposed by or pursuant to regulation,
to the end that, in accordance with the Amendments, no person in the United States
shall, on the basis of sex, be excluded from participation in, be denied the benefits
of, or otherwise be subjected to discrimination under any program or activity for which
PBM receives Federal financial assistance.
	 
	 	(f)	 	I.C. 22-9-1-10 and the Civil Rights Act of 1964, as amended, and any other
applicable State or Federal law, regulations and executive orders prohibiting
discrimination, in that PBM shall not discriminate against any employee or applicant
for employment in the performance of this Attachment. PBM shall not discriminate with
respect to the hire, tenure, terms, conditions or privileges of employment or any
matter directly or indirectly related to employment, because of race, color, religion,
sex, disability, national origin, ancestry or status as a veteran. Breach of this
provision shall be considered default.
	 
	 	(g)	 	All requirements applicable to PBM under the Health Insurance Portability and
Accountability Act of 1996.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

135

 

EXHIBIT J-3

KANSAS HEALTHWAVE PROGRAMS ATTACHMENT

The following terms and provisions are applicable to the provision of services by Express Scripts,
Inc. to UniCare Health Plan of Kansas, Inc. (“UniCare”), in support of UniCare’s provision of
services under the Kansas Healthwave Medicaid program.

	1.	 	Terms Herein Control: It is expressly agreed that the terms of each and every
provision in this Attachment shall prevail and control over the terms of any other conflicting
provision in any other document relating to and a part of the Agreement.
	 
	2.	 	Agreement With Kansas Law: This Attachment shall be subject to, governed by, and
construed according to the laws of the State of Kansas.
	 
	3.	 	Disclaimer Of Liability: Neither the State of Kansas nor any agency thereof shall
hold harmless or indemnify any subcontractor beyond that liability incurred under the Kansas
Tort Claims Act (K.S.A. 75-6101 et seq.).
	 
	4.	 	Anti-Discrimination Clause: PBM agrees: (a) to comply with the Kansas Act Against
Discrimination (K.S.A. 44-1001 et seq.) and the Kansas Age Discrimination in
Employment Act (K.S.A. 44-1111 et seq.) and the applicable provisions of the
Americans With Disabilities Act (42 U.S.C. 12101 et seq.) (“ADA”) and to not
discriminate against any person because of race, religion, color, sex, disability, national
origin or ancestry, or age in the admission or access to, or treatment or employment in, its
programs or activities; (b) to include in all solicitations or advertisements for employees,
the phrase “equal opportunity employer”; (c) to comply with the reporting requirements set out
at K.S.A. 44-1031 and K.S.A. 44-1116; (d) to include those provisions in every subcontract or
purchase order so that they are binding upon such subcontractor or vendor; (e) that a failure
to comply with the reporting requirements of (c) above, or if PBM is found guilty of any
violation of such acts by the Kansas Human Rights Commission, such violation shall constitute
a breach of contract and this Agreement may be cancelled, terminated or suspended, in whole or
in part, by the contracting state agency or the Kansas Department of Administration; (f) if it
is determined that PBM has violated applicable provisions of the ADA, such violation shall
constitute a breach of contract and this Agreement may be cancelled, terminated or suspended,
in whole or in part, by WellPoint, the contracting state agency or the Kansas Department of
Administration.
	 
	 	 	Parties to this Agreement understand that the provisions of this paragraph number 4 (with the
exception of those provisions relating to the ADA) are not applicable to a subcontractor who
employs fewer than four employees during the term of such contract or whose contracts with the
contractor or contracting state agency cumulatively total $5,000 or less during the fiscal year
of such agency.
	 
	5.	 	Arbitration, Damages, Warranties: Notwithstanding any language to the contrary, no
interpretation shall be allowed to find the State or any agency thereof has agreed to binding

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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136

 

	 	 	arbitration, or the payment of damages or penalties upon the occurrence of a contingency.
Further, the State of Kansas shall not agree to pay attorney fees and late payment charges
beyond those available under the Kansas Prompt Payment Act (K.S.A. 75-6403), and no provision
will be given effect which attempts to exclude, modify, disclaim or otherwise attempt to limit
implied warranties of merchantability and fitness for a particular purpose.
	 
	6.	 	Representative’s Authority To Contract: By signing the Agreement to which the
Attachment is attached, the representative of PBM thereby represents that such person is duly
authorized by PBM to execute the Agreement on behalf of PBM and that PBM agrees to be bound by
the provisions thereof, including this Attachment.
	 
	7.	 	Responsibility For Taxes: The State of Kansas shall not be responsible for, nor
indemnify PBM for, any federal, state or local taxes which may be imposed or levied upon the
subject matter of this Attachment.
	 
	8.	 	Insurance: The State of Kansas shall not be required to purchase, any insurance
against loss or damage to any personal property to which this Attachment relates, nor shall
this Attachment require the State to establish a “self-insurance” fund to protect against any
such loss or damage. Subject to the provisions of the Kansas Tort Claims Act (K.S.A. 75-6101
et seq.), PBM shall bear the risk of any loss or damage to any personal
property in which PBM holds title.
	 
	9.	 	Information: No provision of this Attachment shall be construed as limiting the
Legislative Division of Post Audit from having access to information pursuant to K.S.A.
46-1101 et seq.
	 
	10.	 	The Eleventh Amendment: The Eleventh Amendment is an inherent and incumbent
protection with the State of Kansas and need not be reserved, but prudence requires the State
to reiterate that nothing related to this Attachment shall be deemed a waiver of the Eleventh
Amendment.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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KANSAS HEALTHWAVE TITLE XIX AND XXI ADDITIONAL PROVISIONS

This Attachment contains additional mandatory contract provisions with respect to the State of
Kansas Healthwave Title XIX and XXI programs and must be attached to or incorporated in all copies
of any contractual agreement for covered services provided to Kansas Healthwave Members
(“Members”). If it is attached to the vendor/contractor’s standard contract form, then those terms
and conditions are hereby amended and modified for the sole purpose of rendering services to such
Kansas Healthwave members to contain the following provisions:

	I.	 	Definitions

	 	A.	 	“HealthWave XIX” means the Medicaid Managed Care program established
under Title XIX of the federal Social Security Act and administered by the Kansas
Health Policy Authority (HPA).
	 
	 	B.	 	“HealthWave XXI” means the State Children’s Health Insurance Program
established under Title XXI of the federal Social Security Act and administered by the
HPA.
	 
	 	C.	 	“Imminent Harm” means circumstances involving (i) imminent harm to a
Member’s health; (ii) fraud or misfeasance; or (iii) action by a state medical or other
physician licensing board or other government agency that effectively impairs the
ability of PBM to provide Covered Services.
	 
	 	D.	 	“Medicaid” means, for purposes of this Agreement, the Kansas medical
assistance program operated under Title XIX of the federal Social Security Act and
related state and federal rules and regulations.
	 
	 	E.	 	“Medically Necessary” or “Medical Necessity” means that a
health intervention is an otherwise covered category of service, is not specifically
excluded from coverage, and is medically necessary, according to all of the following
criteria:

	 	a.	 	“Authority”. The health intervention is recommended by
the treating physician and is determined to be necessary by the secretary or
the secretary’s designee.
	 
	 	b.	 	“Purpose”. The health intervention has the purpose of
treating a medical condition.
	 
	 	c.	 	“Scope”. The health intervention provides the most
appropriate supply or level of service, considering potential benefits and
harms to the patient.
	 
	 	d.	 	“Evidence”. The health intervention is known to be
effective in improving health outcomes. For new interventions, effectiveness
shall be determined

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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138

 

	 	 	 	by scientific evidence as provided herein. For existing interventions,
effectiveness shall be determined as provided in paragraph (ix), below.
	 
	 	e.	 	“Value”. The health intervention is cost-effective for
this condition compared to alternative interventions, including no
intervention. “Cost-effective” shall not necessarily be construed to mean
lowest price. An intervention may be medically indicated and yet not be a
covered benefit or meet this regulation’s definition of medical necessity.
	 
	 	f.	 	Interventions that do not meet this regulation’s definition of
medical necessity may be covered at the choice of the secretary or the
secretary’s designee. An intervention shall be considered cost effective if
the benefits and harms relative to costs represent an economically efficient
use of resources for patients with this condition. In the application of this
criterion to an individual case, the characteristics of the individual patient
shall be determinative.
	 
	 	g.	 	The following definitions shall apply to these terms only as
they are used in this definition of “Medically Necessary” or “Medical
Necessity”;

	 	a.	 	“Effective” means that the intervention
can be reasonably expected to produce the intended results and to have
expected benefits that outweigh potential harmful effects.
	 
	 	b.	 	“Health intervention” means an item or
service delivered or undertaken primarily to treat a medical condition
or to maintain or restore functional ability. For this regulation’s
definition of medical necessity, a health intervention shall be
determined not only by the intervention itself, but also by the medical
condition and patient indications for which it is being applied.
	 
	 	c.	 	“Health outcomes” means treatment
results that affect health status as measured by the length or quality
of a person’s life.
	 
	 	d.	 	“Medical condition” means a disease,
illness, injury, genetic or congenital defect, pregnancy, or a
biological or psychological condition that lies outside the range of
normal, age-appropriate human variation.
	 
	 	e.	 	“New intervention” means an
intervention that is not yet in widespread use for the medical
condition and patient indications under consideration.
	 
	 	f.	 	“Scientific evidence” means controlled
clinical trials that either directly or indirectly demonstrate the
effect of the intervention on health outcomes. However, if controlled
clinical trials are not

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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139

 

	 	 	 	available, observational studies that demonstrate a causal relationship
between the intervention and health outcomes may be used. Partially
controlled observational studies and uncontrolled clinical series may
be considered to be suggestive, but shall not by themselves be
considered to demonstrate a causal relationship unless the magnitude of
the effect observed exceeds anything that could be explained either by
the natural history of the medical condition or potential experimental
biases.
	 
	 	g.	 	“State designee” means a person or
persons designated by the State to assist in the medical necessity
decision-making process.
	 
	 	h.	 	“Treat” means to prevent, diagnose,
detect, or palliate a medical condition.
	 
	 	i.	 	“Treating physician” means a physician
who has personally evaluated the patient.

	 	h.	 	Each new intervention for which clinical trials have not been
conducted because of epidemiological reasons, including rare or new diseases or
orphan populations, shall be evaluated on the basis of professional standards
of care or expert opinion as described below in paragraph (ix).
	 
	 	i.	 	The scientific evidence for each existing intervention shall be
considered first and, to the greatest extent possible, shall be the basis for
determinations of medical necessity. If no scientific evidence is available,
professional standards of care shall be considered. If professional standards
of care do not exist, or are outdated or contradictory, decisions about
existing interventions shall be based on expert opinion. Coverage of existing
interventions shall not be denied solely on the basis that there is an absence
of conclusive scientific evidence. Existing interventions may be deemed to
meet this regulation’s definition of medical necessity in the absence of
scientific evidence if there is a strong consensus of effectiveness and benefit
expressed through up-to-date and consistent professional standards of care or,
in the absence of those standards, convincing expert opinion.

	 	F.	 	“Medical necessity in psychiatric situations” means that there is
medical documentation that indicates either of the following:

	 	i.	 	The person could be harmful to himself or herself or others if
not under psychiatric treatment; or
	 
	 	ii.	 	the person is disoriented in time, place, or person.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

140

 

	II.	 	Other Provisions

	 	A.	 	PBM agrees to accept as payment in full for Medically Necessary Covered
Services to HealthWave XIX and HealthWave XXI Members the applicable reimbursement rate
or PBM’s actual billed charges, whichever is less. If PBM receives payment from a
Member which exceeds the reimbursement amount for the services set forth in the
applicable reimbursement schedule, then PBM shall promptly refund the amount thereof to
the Member.
	 
	 	B.	 	PBM hereby agrees that in no event, including, but not limited to non-payment
by UniCare, Unicare’s insolvency or breach of the Agreement or this Attachment, shall
PBM bill, charge, collect a deposit from, seek compensation, remuneration or
reimbursement from, or have any recourse against Members, the State of Kansas or any
other persons other than UniCare for reimbursement owed by Unicare pursuant to the
Agreement. PBM agrees that the only charges for which a Member may be liable and be
billed for by PBM shall be for (1) services not covered by HealthWave benefit programs;
(2) co-payments, coinsurance, and deductible amounts required by the HealthWave benefit
programs, if any; or (3) services prospectively denied as not being Medically
Necessary, provided that PBM has notified the Member of UniCare’s denial and has
obtained a written waiver from the Member. This section shall survive the termination
of this Attachment.
	 
	 	C.	 	PBM agrees to comply with the UniCare Provider Manual applicable to the
pharmacy benefits of the HealthWave XIX and HealthWave XXI programs and to cooperate in
the implementation of UniCare’s Utilization Review Program described in such Provider
Manual. PBM agrees to cooperate with Unicare’s administration of its quality
improvement program, internal quality of care review and appeals/grievance resolution
procedures, including its Member grievance process, and agrees to provide all pertinent
information and requested records.
	 
	 	D.	 	During the course of its contractual relationship with UniCare relating to
HealthWave services, and for six years after termination of the relationship, PBM shall
allow duly authorized state and federal officials access to PBM’s premises during
normal business hours and access to all books and records, including electronic
records, relating to PBM’s performance of such services, to audit or monitor PBM’s
performance of HealthWave services and to investigate possible fraud and abuse.
	 
	 	E.	 	PBM shall retain all records evidencing services to HealthWave XIX and
HealthWave XXI Members provided during its contractual relationship with UniCare for at
least six years after termination of such relationship with UniCare.
	 
	 	F.	 	Termination of this Attachment Immediately based on Imminent Harm. In
circumstances involving Imminent Harm, UniCare may terminate this Attachment

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	 	 	immediately, with no opportunity to cure, and may notify Members being treated by
PBM of the termination immediately.
	 
	 	G.	 	Nothing contained in this Attachment shall be construed as creating any
contractual responsibility between PBM and the State of Kansas.
	 
	 	H.	 	PBM must agree to abide by the applicable terms and conditions of the MCO
Agreement between UniCare Health Plans of Kansas, Inc. and the Kansas Health Policy
Authority for pharmacy benefit manager services and other pharmacy services (the “MCO
Contract”) as appropriate.
	 
	 	I.	 	PBM shall require pharmacies who provide services under this Attachment to have
a unique identifier in accordance with the system established under section 1173(b) of
the Balanced Budget Act, and to submit such identifier number to the State of Kansas on
the T-XXI Provider File (see the 837 Institutional Claim and Encounter Transactions,
the 837 Professional Services Claim and Encounter Transactions companion guides and the
NCPDP). These can be found under Publications, HIPAA Companion Guides, on a website
at: https://www.kmap-state-ks.us/.
	 
	 	J.	 	PBM hereby certifies that it is qualified to perform the services required in
accordance with all state licensing standards, all applicable accrediting standards,
and any other standards or criteria established by the State of Kansas to assure
quality of services. In addition, PBM must verify qualifications of all subcontractors
in accordance with all state licensing standards, all applicable accrediting standards,
and any other standards or criteria established by the State of Kansas to assure
quality of services. These must be submitted on an annual basis on July 1 of each
year.
	 
	 	K.	 	PBM shall assure that all subcontracts shall be in writing, shall comply with
the provisions of the MCO Agreement, and shall include any general requirements of the
MCO Agreement that are appropriate to the service or activity identified. The
subcontract shall specify the activities and report responsibilities delegated to the
subcontractor; and provide for revoking said delegation or imposing other sanctions if
the subcontractor’s performance is inadequate.
	 
	 	L.	 	Copies of all subcontracts and subcontract revisions shall be submitted to the
State of Kansas within thirty (30) days of subcontract execution or revision. When
subcontractors within a given service category contain identical provisions and rates,
a completed standard subcontract and list of service providers may be submitted in lieu
of copies of all sub-contracts.
	 
	 	M.	 	UniCare, PBM and its subcontractors must comply with all provisions and
applicable conditions of title VI of the Civil Rights Act of 1964, as amended; title

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	 	 	 	IX of the Education Amendments of 1972 (regarding education programs and
activities); the Age Discrimination Act of 1975, as amended; the Equal Pay Act of
1963; the Rehabilitation Act of 1973, as amended; the Americans with Disabilities
Act; and the Civil Rights Act of 1991.
	 
	 	N.	 	Ineligible entities: Neither PBM nor any of its subcontractors may be:

	 	i.	 	Entities convicted of a criminal offense related to
delivery of Title XVIII, T-XIX, or T-XXI services.
	 
	 	ii.	 	Entities convicted of payment abuse.
	 
	 	iii.	 	Entities convicted of fraud or other financial misconduct.
	 
	 	iv.	 	Entities convicted of obstructing an investigation.
	 
	 	v.	 	Entities convicted of offenses relating to controlled
substances.
	 
	 	vi.	 	Entities terminated from the T-XIX Program.
	 
	 	vii.	 	Entities terminated from the T-XXI Program.
	 
	 	viii.	 	Entities that meet the following criteria:

	 	•	 	An individual who is debarred, suspended, or
otherwise excluded from participating in procurement activities under
the Federal Acquisition Regulation or from participating in
non-procurement activities under regulations issued under Executive
Order No. 12549 or under guidelines implementing Executive Order No.
12549.
	 
	 	•	 	An individual who is an affiliate, as defined
in the Federal Acquisition Regulation, of a person described in
paragraph (a)(1). The relationship is described as follows:

• A director, officer, or partner of the MCO, PCCM, PIHP,
PAHP

• A person with beneficial ownership of five percent or more
of the MCO’s, PCCM’s, PIHP’s or PAHP’s equity.

• A person with an employment, consulting or other
arrangement with the MCO, PCCM, PIHP, or PAHP obligations
under its contract with the State.

	 	 	 	Please refer to the Federal Debarment List located at www.epls.arnet.gov for a
listing of federally debarred and suspended individuals.
	 
	 	O.	 	Terminated Providers: PBM shall terminate contracts with any Network
Pharmacy whose T-XIX HealthConnect Contract or T-XIX Provider Agreement has been
terminated by the State of Kansas. Such contract termination shall be effective thirty
(30) calendar days after receipt of notice of State termination of a HealthConnect
Contract or T-XIX provider agreement has been provided to UniCare.
	 
	 	P.	 	Moral or Religious Objections: If the PBM or a Network Pharmacy would
otherwise be required to provide, reimburse for, or provide coverage of, a counseling
or referral service, it is not required to do so if it objects to the service on moral
or religious grounds.

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	 	Q.	 	Information Requirements: If the PBM or a network pharmacy elects not
to provide, reimburse for, or provide coverage of, a counseling or referral service
because of an objection on moral or religious grounds, it must furnish information
about the services it does not cover as follows:

	 	i.	 	To the State of Kansas.
	 
	 	ii.	 	To UniCare; and
	 
	 	iii.	 	It must be consistent with the provisions of 42 CFR 438.10.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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EXHIBIT J-4

Massachusetts SSB Requirements Attachment

The following terms and provisions are applicable to the provision of services by Express Scripts,
Inc. to UniCare Health & Life Insurance Company (“UniCare”), in support of UniCare’s provision of
services under the MassAccess Program consisting of the Children’s Medical Security Plan and the
Healthy Start Program..

	1.	 	PBM (the “Contractor”) is bound by all applicable provisions of the contract between UniCare
Health & Life Insurance Company and the Massachusetts Executive Office of Health and Human
Services for the MassAccess Program consisting of the Children’s Medical Security Plan and the
Healthy Start Program (the “Contract”), including but not limited to, the standard
Commonwealth Terms and Conditions set forth below.

COMMONWEALTH TERMS AND CONDITIONS

This Commonwealth Terms and Conditions form is jointly issued by the Executive Office for
Administration and Finance (ANF), the Office of the Comptroller (CTR) and the Operational Services
Division (OSD) for use by all Commonwealth of Massachusetts (“State”) Departments and Contractors.
Any changes or electronic alterations by either the Department or the Contractor to the official
version of this form, as jointly published by ANF, CTR and OSD, shall be void. Upon execution of
these Commonwealth Terms and Conditions by the Contractor and filing as prescribed by the Office of
the Comptroller, these Commonwealth Terms and Conditions will be incorporated by reference into any
Contract for Commodities and Services executed by the Contractor and any State Department, in the
absence of a superseding law or regulation requiring a different Contract form. Performance shall
include services rendered, obligations due, costs incurred, commodities and deliverables provided
and accepted by the Department, programs provided or other commitments authorized under a Contract.
A deliverable shall include any tangible product to be delivered as an element of performance under
a Contract. The Commonwealth is entitled to ownership and possession of all deliverables purchased
or developed with State funds. Contract shall mean the Standard Contract Form issued jointly by
ANF, CTR and OSD.

1. Contract Effective Start Date. Notwithstanding verbal or other representations by the
parties, or an earlier start date indicated in a Contract, the effective start date of performance
under a Contract shall be the date a Contract has been executed by an authorized signatory of the
Contractor, the Department, a later date specified in the Contract or the date of any approvals
required by law or regulation, whichever is later.

2. Payments And Compensation. The Contractor shall only be compensated for performance
delivered and accepted by the Department in accordance with the specific terms and conditions of a
Contract. All Contract payments are subject to appropriation pursuant to M.G.L. C. 29, §26, or the
availability of sufficient non-appropriated funds for the purposes of a Contract, and shall be
subject to intercept pursuant to M.G.L. C. 7A, §3 and 815 CMR 9.00. Overpayments shall be
reimbursed by the Contractor or may be offset by the Department from future payments in

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accordance with state finance law. Acceptance by the Contractor of any payment or partial payment,
without any written objection by the Contractor, shall in each instance operate as a release and
discharge of the State from all claims, liabilities or other obligations relating to the
performance of a Contract.

3. Contractor Payment Mechanism. All Contractors will be paid using the Payment Voucher
System unless a different payment mechanism is required. The Contractor shall timely submit
invoices (Payment Vouchers — Form PV) and supporting documentation as prescribed in a Contract. The
Department shall review and return rejected invoices within fifteen (15) days of receipt with a
written explanation for rejection. Payments shall be made in accordance with the bill paying policy
issued by the Office of the Comptroller and 815 CMR 4.00, provided that payment periods listed in a
Contract of less than forty-five (45) days from the date of receipt of an invoice shall be
effective only to enable a Department to take advantage of early payment incentives and shall not
subject any payment made within the forty-five (45) day period to a penalty. The Contractor Payroll
System, shall be used only for “Individual Contractors” who have been determined to be “Contract
Employees” as a result of the Department’s completion of an Internal Revenue Service SS-8 form in
accordance with the Omnibus Budget Reconciliation Act (OBRA) 1990, and shall automatically process
all state and federal mandated payroll, tax and retirement deductions.

4. Contract Termination Or Suspension. A Contract shall terminate on the date specified in
a Contract, unless this date is properly amended in accordance with all applicable laws and
regulations prior to this date, or unless terminated or suspended under this Section upon prior
written notice to the Contractor. The Department may terminate a Contract without cause and without
penalty, or may terminate or suspend a Contract if the Contractor breaches any material term or
condition or fails to perform or fulfill any material obligation required by a Contract, or in the
event of an elimination of an appropriation or availability of sufficient funds for the purposes of
a Contract, or in the event of an unforeseen public emergency mandating immediate Department
action. Upon immediate notification to the other party, neither the Department nor the Contractor
shall be deemed to be in breach for failure or delay in performance due to Acts of God or other
causes factually beyond their control and without their fault or negligence. Subcontractor failure
to perform or price increases due to market fluctuations or product availability will not be deemed
factually beyond the Contractor’s control.

5. Written Notice. Any notice shall be deemed delivered and received when submitted in
writing in person or when delivered by any other appropriate method evidencing actual receipt by
the Department or the Contractor. Any written notice of termination or suspension delivered to the
Contractor shall state the effective date and period of the notice, the reasons for the termination
or suspension, if applicable, any alleged breach or failure to perform, a reasonable period to cure
any alleged breach or failure to perform, if applicable, and any instructions or restrictions
concerning allowable activities, costs or expenditures by the Contractor during the notice period.

6. Confidentiality. The Contractor shall comply with M.G.L. C. 66A if the Contractor
becomes a “holder” of “personal data”. The Contractor shall also protect the physical security and
restrict any access to personal or other Department data in the Contractor’s possession, or used by
the

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146

 

Contractor in the performance of a Contract, which shall include, but is not limited to the
Department’s public records, documents, files, software, equipment or systems.

7. Record-keeping And Retention, Inspection Of Records. The Contractor shall maintain
records, books, files and other data as specified in a Contract and in such detail as shall
properly substantiate claims for payment under a Contract, for a minimum retention period of seven
(7) years beginning on the first day after the final payment under a Contract, or such longer
period as is necessary for the resolution of any litigation, claim, negotiation, audit or other
inquiry involving a Contract. The Department shall have access, as well as any parties identified
under Executive Order 195, during the Contractor’s regular business hours and upon reasonable prior
notice, to such records, including on-site reviews and reproduction of such records at a reasonable
expense.

8. Assignment. The Contractor may not assign or delegate, in whole or in part, or otherwise
transfer any liability, responsibility, obligation, duty or interest under a Contract, with the
exception that the Contractor shall be authorized to assign present and prospective claims for
money due to the Contractor pursuant to a Contract in accordance with M.G.L. C. 106, §9-318. The
Contractor must provide sufficient notice of assignment and supporting documentation to enable the
Department to verify and implement the assignment. Payments to third party assignees will be
processed as if such payments were being made directly to the Contractor and these payments will be
subject to intercept, offset, counter claims or any other Department rights which are available to
the Department or the State against the Contractor.

9. Subcontracting By Contractor. Any subcontract entered into by the Contractor for the
purposes of fulfilling the obligations under a Contract must be in writing, authorized in advance
by the Department and shall be consistent with and subject to the provisions of these Commonwealth
Terms and Conditions and a Contract. Subcontracts will not relieve or discharge the Contractor from
any duty, obligation, responsibility or liability arising under a Contract. The Department is
entitled to copies of all subcontracts and shall not be bound by any provisions contained in a
subcontract to which it is not a party.

10. Affirmative Action, Non-Discrimination In Hiring And Employment. The Contractor shall
comply with all federal and state laws, rules and regulations promoting fair employment practices
or prohibiting employment discrimination and unfair labor practices and shall not discriminate in
the hiring of any applicant for employment nor shall any qualified employee be demoted, discharged
or otherwise subject to discrimination in the tenure, position, promotional opportunities, wages,
benefits or terms and conditions of their employment because of race, color, national origin,
ancestry, age, sex, religion, disability, handicap, sexual orientation or for exercising any rights
afforded by law. The Contractor commits to purchasing supplies and services from certified minority
or women-owned businesses, small businesses or businesses owned by socially or economically
disadvantaged persons or persons with disabilities.

11. Indemnification. Unless otherwise exempted by law, the Contractor shall indemnify and
hold harmless the State, including the Department, its agents, officers and employees against any
and all claims, liabilities and costs for any personal injury or property damages, patent or
copyright infringement or other damages that the State may sustain which arise out of or in

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connection with the Contractor’s performance of a Contract, including but not limited to the
negligence, reckless or intentional conduct of the Contractor, its agents, officers, employees or
subcontractors. The Contractor shall at no time be considered an agent or representative of the
Department or the State. After prompt notification of a claim by the State, the Contractor shall
have an opportunity to participate in the defense of such claim and any negotiated settlement
agreement or judgment. The State shall not be liable for any costs incurred by the Contractor
arising under this paragraph. Any indemnification of the Contractor shall be subject to
appropriation and applicable law.

12. Waivers. Forbearance or indulgence in any form or manner by a party shall not be
construed as a waiver, nor in any way limit the legal or equitable remedies available to that
party. No waiver by either party of any default or breach shall constitute a waiver of any
subsequent default or breach.

13. Risk Of Loss. The Contractor shall bear the risk of loss for any Contractor materials
used for a Contract and for all deliverables, Department personal or other data which is in the
possession of the Contractor or used by the Contractor in the performance of a Contract until
possession, ownership and full legal title to the deliverables are transferred to and accepted by
the Department.

14. Forum, Choice of Law And Mediation. Any actions arising out of a Contract shall be
governed by the laws of Massachusetts, and shall be brought and maintained in a State or federal
court in Massachusetts which shall have exclusive jurisdiction thereof. The Department, with the
approval of the Attorney General’s Office, and the Contractor may agree to voluntary mediation
through the Massachusetts Office of Dispute Resolution (MODR) of any Contract dispute and will
share the costs of such mediation. No legal or equitable rights of the parties shall be limited by
this Section.

15. Contract Boilerplate Interpretation, Severability, Conflicts With Law, Integration. Any
amendment or attachment to any Contract which contains conflicting language or has the affect of a
deleting, replacing or modifying any printed language of these Commonwealth Terms and Conditions,
as officially published by ANF, CTR and OSD, shall be interpreted as superseded by the official
printed language. If any provision of a Contract is found to be superseded by state or federal law
or regulation, in whole or in part, then both parties shall be relieved of all obligations under
that provision only to the extent necessary to comply with the superseding law, provided however,
that the remaining provisions of the Contract, or portions thereof, shall be enforced to the
fullest extent permitted by law. All amendments must be executed by the parties in accordance with
Section 1. of these Commonwealth Terms and Conditions and filed with the original record copy of a
Contract as prescribed by CTR. The printed language of the Standard Contract Form, as officially
published by ANF, CTR and OSD, which incorporates by reference these Commonwealth Terms and
Conditions, shall supersede any conflicting verbal or written agreements relating to the
performance of a Contract, or attached thereto, including contract forms, purchase orders or
invoices of the Contractor. The order of priority of documents to interpret a Contract shall be as
follows: the printed language of the Commonwealth Terms and Conditions, the Standard Contract Form,
the Department’s Request for Response (RFR) solicitation document and the Contractor’s Response to
the RFR solicitation, excluding any

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language stricken by a Department as unacceptable and including any negotiated terms and conditions
allowable pursuant to law or regulation.

Part B, Contract Performance and Business Specifications, sets forth specific requirements which
may be applicable to subcontractors. Subcontractors must abide by all requirements, including but
not limited to, the following:

Section 5.7.3 Specialized Network Services (including Pharmacy Networks), Section 5.13 Use of
Subcontracts (including requirement that subcontractor must permit the Massachusetts Department of
Public Health to examine the subcontractor’s records related to the provision of services under the
subcontract including subcontractor provider agreements).

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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EXHIBIT J-5

New York SSB Attachment

The following terms and provisions are applicable to the provision of services by Express Scripts,
Inc. to Empire HealthChoice HMO, Inc. (“Empire”), in support of Empire’s provision of services
under the Child Health Plus program. Notwithstanding any provision in the Agreement to the
contrary, under the contract between Empire and the State of New York for the Child Health Plus
program (the “CHP Contract”), PBM agrees as follows:

	a)	 	PBM agrees to be subject to the following:

	 	i)	 	The activities and report responsibilities delegated to PBM may be revoked in
whole or in part if PBM fails to satisfy standards set forth herein or take the
corrective action set forth herein;
	 
	 	ii)	 	The work performed by PBM must be in accordance with the terms of the CHP
Contract; and
	 
	 	iii)	 	PBM specifically agrees to be bound by the confidentiality provisions set forth
in the CHP Contract.

	b)	 	All obligations and duties imposed on PBM in the Agreement, including those on PBM’s
providers, are consistent with the CHP Contract and do not impair any rights accorded to the
State of New York or the federal Department of Health and Human Services.
	 
	c)	 	Nothing in the Agreement shall limit or terminate Empire’s duties and obligations under the
CHP Contract.
	 
	d)	 	Nothing contained in this Attachment shall create any contractual relationship between PBM,
including any of PBM’s contracted providers, and the State of New York.
	 
	e)	 	The Agreement shall fulfill the requirements of 42 CFR Part 438 that are appropriate to the
service or activity delegated under such Agreement.
	 
	f)	 	In the event that Empire fails to pay PBM in accordance with the Agreement, PBM shall not
seek payment from the State of New York, the enrollee or person’s acting on the enrollee’s
behalf. Further, PBM agrees to add a provision to any agreements it may have with any
provider which states that in the event that PBM fails to pay the provider in accordance with
the agreement, such provider shall not seek payment from the State of New York, the enrollee
or person’s acting on the enrollee’s behalf.
	 
	g)	 	PBM shall include in every provider contract it may enter into a procedure for the resolution
of disputes between PBM and its contracted providers.

Empire shall monitor PBM’s performance on an ongoing basis and subject it to formal review
according to time frames established by the State of New York consistent with State laws and

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regulations and the terms of the CHP Contract. When deficiencies or areas for improvement are
identified, Empire and PBM must take corrective action.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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EXHIBIT J-6

South Carolina Medicaid Managed Care Program Attachment

The following terms and provisions are applicable to the provision of services by Express Scripts,
Inc. to WellPoint Partnership Plan, LLC and UniCare Life & Health Insurance Company (“WellPoint”),
in support of WellPoint’s provision of services under the South Carolina Medicaid Managed Care
Program.

	I.	 	For Purposes of this Attachment:

	 	A.	 	“BlueChoice” means BlueChoice HealthPlan of South Carolina, Inc.
	 
	 	B.	 	“Case Management” means a process of arranging, negotiating and
coordinating medically appropriate care in a more economical, cost-effective and
coordinated manner during prolonged periods of intensive medical care, including the
use of benefit substitution, in accordance with the Evidence of Coverage, the
BlueChoice policies and procedures and Medicaid MCO Program guidelines.
	 
	 	C.	 	“Clean Claim” means claims for reimbursement that can be processed
without obtaining additional information from PBM or from a third party.
	 
	 	D.	 	“Core Benefits” means the Covered Services provided to Members under
the terms of the contract between BlueChoice and SCDHHS, in accordance with the Title
XIX South Carolina State Medicaid BlueChoice.
	 
	 	E.	 	“Emergency Medical Condition” means a medical condition manifesting
itself by acute symptoms of sufficient severity (including severe pain) such that a
prudent layperson, who possesses an average knowledge of health and medicine, could
reasonably expect the absence of immediate medical attention to result in:

	 	(1)	 	placing the health of the individual (or, with respect to a
pregnant woman, the health of the woman or her unborn child) in serious
jeopardy;
	 
	 	(2)	 	serious impairment to bodily functions,
	 
	 	(3)	 	or serious dysfunction of any bodily organ or part.

	 	F.	 	“Emergency Services” means inpatient and outpatient Core Benefit
services that are: (1) furnished by a provider that is qualified to furnish these
services under this title; and (2) needed to evaluate or stabilize an Emergency Medical
Condition.
	 
	 	G.	 	“Evidence of Coverage” means a statement of the essential features and
services of the health maintenance organization coverage that is given to the Member by
BlueChoice.

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	 	H.	 	“Health Professionals” means PBM’s professional staff providing health
care services to Members under this Attachment.
	 
	 	I.	 	“Medicaid” means, for purposes of this Attachment, the South Carolina
medical assistance program operated under Title XIX of the federal Social Security Act,
and related State and Federal rules and regulations.
	 
	 	J.	 	“Medicaid MCO Program” means the South Carolina Medicaid Managed Care
Program through which qualified MCOs provide services to eligible Medicaid recipients.
	 
	 	K.	 	“Medically Necessary” or “Medical Necessity” refer to those
medical services which are required to identify or treat the illness or injury which a
physician has diagnosed or reasonably suspects and must:

	 	(1)	 	be consistent with the diagnosis and treatment of the patient’s
condition;
	 
	 	(2)	 	be in accordance with standards of good medical practice as
determined by one or more of the physician’s peers, as designated by
BlueChoice;
	 
	 	(3)	 	be required for reasons other than the convenience of the
patients or the physician; and
	 
	 	(4)	 	be performed in the least costly setting required by the
patient’s condition.

	 	L.	 	“Member” means a Covered Individual who has entered into a contractual
arrangement with BlueChoice, or on whose behalf a contractual arrangement has been
entered into with BlueChoice, by virtue of BlueChoice’s participation in the Medicaid
MCO Program.
	 
	 	M.	 	“Participating Provider” means any licensed physician (including
individuals licensed to practice medicine and surgery osteopathy, chiropractic,
podiatry, optometry, or dentistry, pursuant to the applicable state licensing
provisions), ancillary service provider, hospital, agency, or other person that is
licensed or otherwise authorized in this state to furnish health care services and who
has entered into an agreement with BlueChoice to provide Core Benefits for
prospectively determined rates.
	 
	 	N.	 	“Provider” means any physician, ancillary service provider, hospital,
other facility or other practitioner who is licensed or otherwise authorized provide
health care services in South Carolina.
	 
	 	O.	 	“Provider Manual” means the operational manual that serves as a source
of information for Core Benefits, utilization review requirements and other policies,
procedures and other information that will assist in ensuring contractual and
regulatory compliance with the program.

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	 	P.	 	“BlueChoice Provider Network” means the network of Participating
Providers.
	 
	 	Q.	 	“SCDHHS” means the South Carolina Department of Health and Human
Services.
	 
	 	R.	 	“Utilization Review” means functions, including Case Management,
performed by BlueChoice, or an entity acting on behalf of BlueChoice that has been duly
authorized and/or licensed, as applicable, to review and determine whether Core
Benefits provided, or to be provided, were or are Medically Necessary.

	II.	 	WellPoint shall not restrict PBM acting within the scope of PBM’s license, from advising, or
advocating on behalf of, a Member regarding:

	 	A.	 	The Member’s health status, medical care or treatment options, including
self-administered treatment options, regardless of whether benefits for such care or
treatment are Core Benefits;
	 
	 	B.	 	Information the Member needs in order to decide among treatment options;
	 
	 	C.	 	The risks, benefits and consequences of treatment or non-treatment; or
	 
	 	D.	 	The Member’s right to participate in his or her health care.

	III.	 	PBM agrees that this Attachment incorporates all current federal and state laws, regulations
and guidelines applicable to the provision of Core Benefits under the Medicaid MCO Program.
PBM further agrees that any future amendments to such federal and state laws or regulations or
additional applicable laws and regulations that may be enacted during the term of this
Attachment are automatically incorporated into this Attachment as they become effective.
	 
	IV.	 	PBM represents and covenants that PBM does not presently have any interest and shall not
acquire any interest, direct or indirect, which would conflict in any manner or degree with
the performance of services under this Attachment or BlueChoice’s contract with SCDHHS related
to the Medicaid MCO Program.
	 
	V.	 	All of PBM’s duties and obligations to Covered Individuals set forth in the Agreement shall
also apply to Members. In addition, with respect to Members PBM agrees to the following
provisions:

	 	A.	 	PBM shall provide Core Benefits to Members when such services are ordered by a
licensed physician or other Participating Provider.
	 
	 	B.	 	PBM may not refuse to provide Medically Necessary or covered preventive
services to Members for non-medical reasons. PBM agrees that Members shall not be
subject to discrimination regardless of race, creed, color, religion,

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	 	 	physical/mental handicap, sexual orientation, marital status, national
origin/ancestry, health status, status as a Member, or type of coverage provided to
Member (i.e., Medicaid, commercial).
	 
	 	C.	 	PBM shall immediately notify WellPoint in writing by certified mail of the
following:

	 	(1)	 	Any legal, administrative, disciplinary, or other action
against PBM;
	 
	 	(2)	 	Any cause of action or suspension by a State or the Federal
Government from participation in the Medicare or Medicaid programs due to fraud
and abuse by PBM. Such actions include, but are not limited to, actions by the
applicable state regulatory board, professional associations or hospitals; or
	 
	 	(3)	 	Any claim made against PBM by another provider or patient which
may result in litigation related in any way to this Attachment or BlueChoice’s
contract with SCDHHS.

WellPoint may immediately terminate this Attachment upon notification or discovery
of any of the above which results in the probation, suspension, revocation or
restriction of PBM’s license, certification or accreditation or otherwise limits
PBM’s ability to render Core Benefits.

	 	D.	 	Quality Assurance.

	 	(1)	 	PBM agrees to comply with the SCDHHS Quality Assurance and
Utilization Review (“QA/UR”) Requirements contained in the SCDHHS MCO Policy
and Procedure Guide, and any future amendments to such requirements. PBM
further agrees to cooperate with WellPoint’s compliance with the SCDHHS QA/UR
Requirements. The SCDHHS QA/UR requirements, which are incorporated into this
Attachment, shall be included in the Provider Manual and updated as directed by
SCDHHS.
	 
	 	(2)	 	PBM agrees to participate and cooperate with any internal or
external quality assurance review, utilization review, peer review and
grievance procedures established by WellPoint, BlueChoice, SCDHHS or its
designee, whether announced or unannounced.

	 	a.	 	PBM shall monitor the quality of services
delivered under this Attachment and initiate corrective action where
necessary to improve quality of care, in accordance with that level of
care which is recognized as acceptable professional practice in PBM’s
geographic area and in accordance with standards established by SCDHHS
or its designee.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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155

 

	 	b.	 	If PBM demonstrates a consistent inability to
cooperate and participate in Utilization Review, Case Management, and
Quality Management programs, WellPoint may terminate this Attachment.

	 	E.	 	PBM has and shall maintain in good standing, and shall ensure that all of PBM’s
Health Professionals, if any, have and shall maintain in good standing, all licenses,
permits, registrations and/or certifications required by law. Evidence of maintaining
such licenses permits, registrations and/or certifications shall be provided to
WellPoint upon request.
	 
	 	F.	 	In accordance with the requirements of state and federal law, PBM shall:

	 	(1)	 	Comply with Title VI of the Civil Rights Act of 1964 (42 U.S.C.
2000d et. seq.) (2001, as amended) and its implementing regulation at 45 C.F.R.
Part 80 (2001, as amended), and PBM shall take adequate steps to ensure that
persons with limited English skills receive free of charge the language
assistance necessary to afford them meaningful and equal access to the benefits
and services provided under this Attachment.
	 
	 	(2)	 	Comply with all applicable state and federal laws, regulations
and guidelines applicable to the provision of services under the Medicaid MCO
Program, including, but not limited to, laws governing the confidentiality of
medical records (such as regulations implementing the administrative
simplification provisions of the Health Insurance Portability and
Accountability Act of 1996); laws addressing advanced directives; and state and
federal anti-discrimination laws (such as the Civil Rights Act of 1964 and the
Americans with Disabilities Act).

	 	G.	 	PBM shall comply with corrective action plans initiated by WellPoint, BlueChoice
and/or required by SCDHHS to ensure compliance with requirements of the Medicaid MCO
Program.
	 
	 	H.	 	PBM shall submit to WellPoint all reports and clinical information required by
BlueChoice’s contract with SCDHHS or otherwise reasonably required by WellPoint,
including, if applicable, reports relating to the Early and Periodic Screening,
Diagnosis and Treatment (“EPSDT”) program.
	 
	 	I.	 	If PBM performs laboratory services under this Attachment for Members, PBM agrees
that PBM must meet all applicable state and federal requirements.
	 
	 	J.	 	PBM shall not require preauthorization of any kind for the provision of Emergency
Services to Members.

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	VI.	 	COMPENSATION AND BILLING.

	 	A.	 	PBM agrees to accept as payment in full for Medically Necessary Core Benefits
to Medicaid MCO Program Members the applicable reimbursement schedule(s) set forth in
the Agreement, or PBM’s actual billed charges, whichever is less. If PBM receives
payment from a Member which exceeds the applicable reimbursement amount for the
services, then PBM shall promptly refund the amount thereof to the Member.
	 
	 	B.	 	Unless otherwise specified by in writing by the parties, WellPoint shall submit
payment to the name and address of PBM specified in the Agreement.
	 
	 	C.	 	PBM shall bill WellPoint within ninety-five (95) days of providing the Core
Benefits. PBM shall furnish, on request, all information reasonably required by
WellPoint to verify and substantiate the provision of Core Benefits to Members and the
charges for such services. WellPoint reserves the right to review all such information
submitted by PBM.
	 
	 	D.	 	PBM agrees to meet the following claim adjudication standards:

	 	(1)	 	90% of all Clean Claims will be processed and paid or processed
and denied within 30 days of receipt;
	 
	 	(2)	 	99% of all Clean Claims will be processed and paid or processed
and denied within 90 days of receipt.

The date of receipt shall be the date PBM receives the claim, as indicated by its
date stamp on the claim. The date of the payment shall be the date of the check or
other form of payment.

	 	E.	 	PBM shall agree to the following hold harmless and indemnification provisions:

	 	(1)	 	PBM shall look only to WellPoint for payment for Core Benefits
under this Attachment. In no event, including, but not limited to, non-payment
by WellPoint, WellPoint’s insolvency or breach of this Attachment, PBM shall
not solicit or accept any surety or guarantee of payment from a Member or a
Member’s parents, guardians, spouse or other person legally responsible for the
Member. PBM agrees that the only charges for which a Member may be liable and
be billed for by PBM shall be for (1) services not covered by the Medicaid MCO
Program or other Medicaid benefits; (2) co-payments, coinsurance, and
deductible amounts included in the Core Benefits, if any; or (3) services
prospectively denied as not being Medically Necessary, provided that PBM has
notified the Member of PBM’s denial and has obtained a written waiver from the
Member.

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	 	(2)	 	PBM shall hold SCDHHS harmless and indemnify SCDHHS from all
claims, losses or suits related to PBM’s participation in the Medicaid MCO
Program, including but not limited to, the following:

	 	(a)	 	Any claims for damages or losses to any person
or firm injured or damaged by erroneous or negligent acts, including
disregard of State or Federal Medicaid regulations or legal statutes,
by PBM, its Health Professionals or its other staff in the performance
of this Attachment;
	 
	 	(b)	 	Any claims for damages or losses resulting to
any person or firm injured or damaged by PBM, its Health Professionals
or its other staff because of translation, reproduction, delivery,
performance, use, or disposition of any data processed under this
Attachment in a manner not authorized by the Attachment or by Federal
or State regulations or statutes;
	 
	 	(c)	 	Any failure of PBM, its Health Professionals or
its other staff to observe the federal or state laws, including, but
not limited to, labor laws and minimum wage laws;
	 
	 	(d)	 	Any claims for damages, losses, or costs
associated with legal expenses, including, but not limited to, those
incurred by or on behalf of SCDHHS in connection with the defense of
claims for such injuries, losses, claims, or damages specified above in
subparagraphs (a)-(c);
	 
	 	(e)	 	Any injuries, deaths, losses, damages, claims,
suits, liabilities, judgments, costs and expenses which may in any
manner accrue against SCDHHS or their agents, officers or employees,
through the intentional conduct, negligence or omission of the PBM, its
Health Professionals or its other staff.

	 	(3)	 	This section shall survive the termination of this Attachment.

	VII.	 	PROVIDER MANUAL UTILIZATION REVIEW/CASE MANAGEMENT

	 	A.	 	PBM agrees to comply with the Provider Manual, including the SCDHHS QA/UR
Requirements included in the Provider Manual and incorporated into this Attachment.
PBM will cooperate in the implementation and administration of BlueChoice’s Utilization
Review program, quality improvement program, internal quality of care review and
appeals/grievance resolution procedures, including its Member grievance process, and
provision of all pertinent information and requested records, as each such matter is
further described in the Provider Manual.

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	 	B.	 	PBM agrees to comply with BlueChoice’s Utilization Review program, including
Case Management activities, which is set forth in the Provider Manual and which shall
seek to assure that Core Benefits provided to Members are Medically Necessary. The
Utilization Review program shall follow the procedures described in the Provider
Manual. BlueChoice may change Utilization Review and Case Management procedures by
delivering amendments to, or a replacement for, the utilization review procedures
contained in the Provider Manual at least thirty (30) days prior to implementation.

	VIII.	 	RECORDS MAINTENANCE, AVAILABILITY, INSPECTION AND AUDIT

	 	A.	 	PBM shall prepare and maintain all appropriate records in an adequate record
system for recording services, service providers, charges, dates and all other commonly
accepted information elements for services rendered to Members pursuant to this
Attachment (including but not limited to such records as are necessary for the
evaluation of the quality, appropriateness, and timeliness of services performed under
this Attachment). PBM’s Medical records are to be legible, documented accurately in a
timely manner and readily accessible. Upon request, a Member and his or her
representative shall be given access to copies of the Member’s medical records, to the
extent and in the manner provided by S.C. Code Ann. §44-115-10 et. seq., (Supp. 2000),
as amended and subject to reasonable charges.
	 
	 	B.	 	PBM agrees that WellPoint or its authorized representative may review, audit,
and duplicate data and other records maintained on Members, including but not limited
to medical records or other records relating to billing, payment and assignment, to the
extent permitted by law. WellPoint shall have access at reasonable times and upon
reasonable notice to the books, records and papers of PBM relating to the services PBM
provides to Members, to the cost thereof, and to payments PBM receives from Members or
others on their behalf. WellPoint shall be subject to all applicable laws and
regulations concerning the confidentiality of such data or records. PBM shall maintain
such records and provide such information to WellPoint as may be necessary to enable
WellPoint to comply with the requirements of any applicable law, regulatory body, or
accrediting agencies.
	 
	 	C.	 	PBM shall ensure that any and all Member records, including financial and
medical records, shall be retained for a period of three (3) years after the last
payment was made for services provided to a member and retained further if the records
are under review or audit until the review or audit is complete. This requirement
pertains to the retention of records for Medicaid purposes only and other state or
federal rules may require longer retention periods. Current State law (SC ST SEC
44-115-120) requires physicians to retain their records for at least ten (10) years for
adult patients and at least thirteen (13) years for minors. These minimum record
keeping periods begin to run from the last date of treatment. After these minimum
record keeping periods, state law allows for the

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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	 	 	 	destruction of records. Upon request of SCDHHS or its authorized representative,
PBM shall make said records available for fiscal audit, medical audit, medical
review, utilization review, and other periodic monitoring.
	 
	 	D.	 	PBM shall establish safeguards which restrict the use and disclosure of
information concerning Members to purposes directly connected with the performance of
this Attachment. PBM’s written safeguards shall:

	 	(1)	 	Be comparable to those imposed upon the SCDHHS by 42 CFR Part
431, Subpart F (2001, as amended) and S.C. Code R. 126-170 et seq. (Supp. 2000,
as amended).
	 
	 	(2)	 	Ensure that all material and information, in particular
information relating to Members, which is provided to or obtained by or through
the PBM’s performance under this Attachment, whether verbal, written,
electronic file, or otherwise, shall be reported as confidential information to
the extent confidential treatment is provided under state and federal laws;
	 
	 	(3)	 	Not use any information so obtained in any manner except as
necessary for the proper discharge of its obligations and securing of PBM’s
rights under this Attachment;
	 
	 	(4)	 	Identify and comply with any stricter state or federal
confidentiality standards which apply to specific types of information or
information obtained from outside sources;
	 
	 	(5)	 	Treat information as to personal facts and circumstances
concerning members or potential members obtained by the Attachment as
privileged communications to be held in confidence and generally require the
written consent of the Member before disclosure of information about the
Member, except when disclosed for purposes directly connected with this
Attachment and in a manner consistent with state and federal law;
	 
	 	(6)	 	Not prohibit the release of statistical or aggregate data which
cannot be traced back to particular individuals; and
	 
	 	(7)	 	Specify appropriate personnel actions to sanction violators.

	 	E.	 	SCDHHS, the United States Department of Health and Human Services (HHS), CMS,
Office of Inspector General Comptroller, State Auditor’s Office, the South Carolina
Attorney General’s Office and any other state or federal agencies or their designees
shall have the right to evaluate through inspection, or other means, whether announced
or unannounced, any records pertinent to this Attachment or BlueChoice’s agreement with
SCDHHS, including quality, appropriateness and timeliness of services. Such
evaluations shall be performed with the cooperation of BlueChoice. Upon request,
BlueChoice shall assist in such reviews.

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	 	F.	 	WellPoint and PBM recognize that in the event of termination of the contract between
BlueChoice and SCDHHS for any of the reasons described in the contract, BlueChoice
shall immediately make available to SCDHHS or its designated representative, in a
usable form, any and all records, whether medical or financial, related to WellPoint’s
and PBM’s activities undertaken pursuant to this Attachment.

	IX.	 	PBM, at its sole expense, agrees to maintain an amount of liability and malpractice insurance
professional liability insurance deemed adequate by WellPoint. PBM shall maintain such
insurance throughout the term of this Attachment. PBM shall provide WellPoint with evidence
of such coverage upon entering into this Attachment.
	 
	X.	 	WellPoint and PBM agree to meet and confer in good faith to resolve any problems or disputes
that may arise under this Attachment. PBM and WellPoint further agree that no dispute shall
disrupt or interfere with the provision of services to Members.
	 
	XI.	 	TERM AND TERMINATION

	 	A.	 	This Attachment shall become effective as of the Effective Date of the
Agreement and shall continue in effect until terminated pursuant to this Attachment.
This term, and the termination provisions in the following sections may be amended only
in accordance with the Agreement. Notwithstanding the foregoing, in the event that
SCDHHS does not award BlueChoice a contract to provide services to Medicaid MCO Program
recipients, this Attachment shall be null and void, unless the parties agree otherwise
in writing.
	 
	 	B.	 	PBM shall provide Core Benefits to Members through the last day that this
Attachment is in effect. All final Medicaid benefit determinations are within the sole
and exclusive authority of SCDHHS or its designee.

	XII.	 	In the event that, due to circumstances not reasonably within the control of WellPoint,
BlueChoice or SCDHHS, (i.e., a major disaster, epidemic, complete or substantial destruction
of facilities, war, riot or civil insurrection), neither WellPoint, BlueChoice, SCDHHS, nor
PBM will have any liability or obligation on account of reasonable delay in the provision or
the arrangement of Core Benefits; provided, however, that so long as BlueChoice’s certificate
of authority remains in full force and effect, BlueChoice shall be liable for the Core
Benefits required to be provided or arranged for in accordance with BlueChoice’s contract with
SCDHHS.
	 
	XIII.	 	GENERAL PROVISIONS

	 	A.	 	Assignment and Subcontracting. PBM shall not assign nor subcontract
the rights, duties or obligations of this Attachment, except through a written
amendment to this Attachment. Any attempted assignment or subcontract in violation of
this provision shall be void as to WellPoint.

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	 	B.	 	Non-Exclusivity. Nothing in this Attachment shall operate to prevent
PBM or WellPoint from entering into similar agreements with other parties.
	 
	 	C.	 	Entire Agreement. The Agreement and this Attachment, together with
exhibits, contains the entire agreement between WellPoint and PBM relating to the
rights granted and the obligations assumed by this Attachment. Any prior agreements,
promises, negotiations or representations, either oral or written, relating to the
subject matter of the Attachment not expressly set forth in this Attachment are of no
force or effect.
	 
	 	D.	 	Amendment. Except as required by Section III of this Attachment or as
otherwise required by SCDHHS, this Attachment may not be amended (whether through
alteration, variation, modification or waiver) unless such amendment is in writing,
signed by WellPoint and PBM and incorporated into this Attachment. In the event that
changes in the Attachment under Section III as a result of revisions and applicable
federal or state law materially affect the position of either party, WellPoint and PBM
agree to negotiate in good faith such further amendments as may be necessary to correct
any inequities.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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EXHIBIT J-7

Virginia SSB Requirements Attachment

The following terms and provisions are applicable to the provision of services by Express Scripts,
Inc. to HealthKeepers, Inc., Peninsula Health Care, Inc., and Priority Health Care, Inc., in
support of HMO’s provision of services under contracts between HMO and the Commonwealth of Virginia
Department of Medical Assistance Services.

Definitions:

	(1)	 	“DMAS” means the Virginia Department of Medical Assistance Services.
	 
	(2)	 	“Medicaid Member” means a Covered Person enrolled under any contract HMO may have
with DMAS during the term of this Attachment. Medicaid Members include Covered Persons
enrolled through Virginia’s Medallion II program, Family Access to Medical Insurance Security
(FAMIS) plan, or FAMIS MOMS program or their successor programs as well as Covered Persons
enrolled under any new programs for which HMO may contract with DMAS such as the Virginia
Acute and Long-Term Care program.

Medicaid Required Terms:

PBM agrees to abide by all applicable provisions of the contract(s) between HMO and DMAS (hereafter
collectively referred to as “HMO’s Medicaid Contract”). PBM’s compliance with the HMO’s Medicaid
Contract specifically includes, but is not limited to, the following requirements as they relate to
Medicaid Members and services provided to Medicaid Members:

	1.	 	No terms of this Agreement are valid which terminate legal liability of the HMO in HMO’s
Medicaid Contract.
	 
	2.	 	PBM agrees to participate in and contribute required data to the HMO’s quality improvement
and other assurance programs as required in HMO’s Medicaid Contract.
	 
	3.	 	PBM agrees to abide by the terms of HMO’s Medicaid Contract for the timely provision of
emergency and urgent care. Where applicable, PBM agrees to follow those procedures for
handling urgent and emergency care cases stipulated in any required hospital/emergency
department Memorandums of Understanding signed by the HMO in accordance with HMO’s Medicaid
Contract.
	 
	4.	 	PBM agrees to submit to the HMO utilization data in the format specified by the HMO, so the
HMO can meet DMAS specifications required by HMO’s Medicaid Contract.
	 
	5.	 	PBM agrees to comply with all non-discrimination requirements in the HMO’s Medicaid Contract.
	 
	6.	 	PBM agrees to comply with all record retention requirements and, where applicable, the

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	 	 	special reporting requirements on sterilizations and hysterectomies stipulated in HMO’s
Medicaid Contract.

	7.	 	PBM agrees to provide representatives of the HMO, as well as duly authorized agents or
representatives of DMAS, the U.S. Department of Health and Human Services, and the State
Medicaid Fraud Unit access to its premises and this Agreement and/or medical records in
accordance with HMO’s Medicaid Contract. PBM agrees otherwise to preserve the full
confidentiality of medical records in accordance with the HMO’s Medicaid Contract.
	 
	8.	 	PBM agrees to the requirements for maintenance and transfer of medical records stipulated in
HMO’s Medicaid Contract. PBM agrees to make medical records available to Medicaid Members and
their authorized representatives within ten (10) working days of the record request.
	 
	9.	 	PBM agrees to ensure confidentiality of family planning services in accordance with HMO’s
Medicaid Contract, except to the extent required by law, including, but not limited to, the
Virginia Freedom of Information Act.
	 
	10.	 	PBM agrees not to create barriers to access to care by imposing requirements on Medicaid
Members that are inconsistent with the provision of Medically Necessary and Covered Services.
	 
	11.	 	PBM agrees to clearly specify referral approval requirements to its employees and in any
sub-contracts with other providers. Additionally, PBM agrees to hold the recipient harmless
for any charges for any Covered Services. This includes those circumstances where PBM or
PBM’s subcontractor fails to obtain necessary referrals, preauthorizations, or fails to
perform other required administrative functions.
	 
	12.	 	PBM agrees not to bill a Medicaid Member for Medically Necessary services covered under the
HMO’s Medicaid Contract and provided during the Medicaid Member’s period of enrollment in the
HMO. This provision shall continue to be in effect even if the HMO becomes insolvent.
However, if a Medicaid Member agrees in advance of receiving the service and in writing to pay
for a service not covered by HMO’s Medicaid Contract, then PBM, or PBM’s subcontractor, can
bill.
	 
	13.	 	PBM must forward to the HMO medical records, within ten (10) working days of the HMO’s
written request.
	 
	14.	 	PBM shall promptly provide or arrange for the provision of all services required under this
Agreement. This provision shall continue to be in effect for subcontract periods for which
payment has been made even if PBM becomes insolvent until such time as Medicaid Members are
withdrawn from assignment to PBM.
	 
	15.	 	HMO agrees to pay PBM within thirty (30) days of receipt of a Claim for Covered Services
rendered to a Medicaid Member unless there is a signed agreement with PBM

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	 	 	that states another timeframe for payment that is acceptable to PBM.

	16.	 	Notwithstanding any other provision to the contrary, the obligations of the Commonwealth of
Virginia shall be limited to annual appropriations by its governing body for the purposes of
the Services Agreement.

While PBM must abide by all applicable provisions in the HMO’s Medicaid Contract, the following
requirements are specifically addressed to PBM in the HMO’s Medicaid Contract:

Article V, Paragraph A: PBM is prohibited from contracting with excluded providers and
other individuals. See Article II, K.6 for description of ineligible providers or administrative
entities.

Article XI, Paragraph J: PBM is required to provide workers’ compensation insurance for
all of PBM’s employees working in Virginia.

Attachment VII: PBM must submit to DMAS for review and approval, all mass-generated letters
intended for provider and/or Medicaid Member distribution.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
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EXHIBIT K

INFORMATION TECHNOLOGY AND SYSTEMS

WellPoint Information Management Data Requirements:

Inbound data requirements:

	 	Ø	 	Final disposition Claim transaction detail for all covered services to be
transmitted real or near-time. Data requirements, specifications and transmission
protocols to be defined during the Implementation phase in accordance with WellPoint
specifications. All transaction data is to include the member identifiers provided
within WellPoint eligibility files.
	 
	 	Ø	 	DEA identifiers of all subscribers along with associated AWP, discounted AWP, cost
share, DAW indicators or override rules applied, days supply, new or refill, medication
possession ratio (derived or provided by PBM). Preferred vs. non-preferred
designations.
	 
	 	Ø	 	Dispensing Pharmacy (retail, specialty or mail-order) profile files to be provided
based upon minimum information requirements defined by WellPoint.
	 
	 	Ø	 	Patient specific web utilization analytic details are to be provided in manner
acceptable to WellPoint. Final requirements will be determined based upon API
interface between PBM and WellPoint and overall Web strategy, which will be determined
as part of the implementation phase and ongoing operations.
	 
	 	Ø	 	Over the counter and any FSA aggregation data that is possible to be captured via
POS (non-rx services) in a manner mutually agreed upon, based on PBM capabilities. In
addition, PBM and WellPoint agree to develop approaches for capturing “non-covered”
retail Pharmacy transactions, in order to ensure WellPoint is able to capture maximum
information pertaining to member drug utilization.
	 
	 	Ø	 	Point of sale pharmacist data capture, such as DUR counseling codes, patient
allergies, issues, edits, etc. to be captured and transmitted to WellPoint based upon
mutually agreed upon protocols, based upon PBM capabilities.
	 
	 	Ø	 	Facility or retail location specific cost information to be provided when available.
In order to support WellPoint’s cost transparency initiatives, PBM and WellPoint agree
to develop and associated data requirements to enhance consumer access to cost and
quality information.
	 
	 	Ø	 	Eligibility updates and date spanned activity (probably covered in operations
requirements).

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EXHIBIT L

INFORMATION TECHNOLOGY SUPPORT SERVICES

PBM shall provide Information Technology Support Services to WellPoint, with respect to any PBM
system that WellPoint utilizes to service Covered Individuals, as set forth in the following
Service Level Agreement (“SLA”).

For purposes of this SLA the following definitions shall apply:

	 	 	 
	Term	 	Definition
	Business Contact
	 	Individual who is responsible for the business area
impacted by the incident
	 
	 	 
	Business Crisis
Management
	 	Formal infrastructure platform for providing command,
control and communication capabilities during adverse
conditions that is designed, to define roles and
responsibilities for identified leadership positions
before, during and after an emergency situation, to provide
a process for making timely decisions, and that has
WellPoint infrastructure independent tools to communicate
status.
	 
	 	 
	Business Recovery
	 	Business services restored to operational condition as
specified by current agreement or acceptable work-around is
in place
	 
	 	 
	Core Business or
Mission Critical
System
	 	Application, service or hardware that is required for
direct support to WellPoint’s business partners, customers,
primary business processes and business functions at the
enterprise or regional level.
	 
	 	 
	Disaster Recovery
	 	Process that ensures IT Service continuation throughout the
WellPoint enterprise, provides tools, analysis and
guidelines for development of plans to preserve and restore
the IT infrastructure and to reduce risk and insure key
business survivability.
	 
	 	 
	Distribution Lists
	 	Defined lists of groups and/or individuals who are notified
of Severity 1 or 2 incidents. Lists are maintained in
Outlook with the prefix dl-critical.
	 
	 	 
	Enterprise Problem
Management
	 	A framework designed to effectively and efficiently
investigate underlying causes of actual and potential
errors in service provision in order to minimize the impact
on customers and, in particular, remove the prospect of
occurrence or recurrence.
	 
	 	 
	Escalation
	 	Mechanism that assists timely resolution of an incident by
increasing the level of response and/or oversight for an
incident.
	 
	 	 
	Incident
	 	An event which is not part of the standard operation of a
service, and which causes, or may cause an interruption to,
or reduction in, the quality of service to the Business
Partner and negatively impacts their productivity.

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	Term	 	Definition
	IT Crisis Management
	 	Process for providing command, control and communication
capabilities during an IT Severity 1 incident. It defines
roles and responsibilities for leadership positions,
provides a process for making timely decisions, and links
with Business Crisis Management, as necessary.
	 
	 	 
	IT Crisis
Manager/Acting 

Crisis Manager
	 	Manager who has the authority to declare a crisis and to
manage the crisis until it is recovered, including leading
or participating in the Senior Management and Technical
Management Conference Calls. Escalates to Disaster Recovery
and Business Continuity and acts in supporting role.
	 
	 	 
	IT Leadership
	 	Director, Managers and other IT Stakeholders
	 
	 	 
	Officer
Communications
	 	Communications to Senior VP and above.
	 
	 	 
	Outage Start
	 	Initial known event creating the instability or error
condition. May be indicated by a user call, an automatic
event record, or indicated in system log files. The
earliest event is the official Outage Start.
	 
	 	 
	Recovery
	 	Process of restoring a service to normal operational levels.
	 
	 	 
	Recovery Time
	 	Time elapsed between Outage Start and Business Recovery.
	 
	 	 
	Root Cause Analysis
	 	Process by which the cause and effect relationships of an
event (usually with undesirable consequences) are analyzed.
The goal of conducting a root cause analysis is to find a
solution that ensures that the undesirable event does not
happen again.
	 
	 	 
	Senior Management
	 	Leaders from Business Areas, CIO and direct reports, as
needed depending on the nature of the outage.
	 
	 	 
	Senior Management
Conference Call
	 	Bridge call initiated by the PBM to inform and receive
direction and/or feedback from Senior Management regarding
the work to recover an incident, the communication to
affected users.
	 
	 	 
	Service Hours
	 	Normal operating hours, i.e., the time that users expect
the service to be provided.
	 
	 	 
	Shared
Infrastructure 

Device or Service
	 	Hardware, software, data communication facilities that
support multiple users.
	 
	 	 
	Technical
Conference Call
	 	Bridge call initiated by the PBM to allow multiple
individuals working to recover an incident to maintain
communication with one another and escalation to Crisis or
Disaster.
	 
	 	 
	Technical Support
	 	Individuals who work to recover an incident and/or to
provide a root cause analysis based on their expertise in
an area or areas related to the incident.
	 
	 	 
	User Impact
	 	The effect of the incident on the agreed upon service to
the business.

Service Availability

	 	•	 	PBM will maintain system response time at levels designed to meet operational
performance standards as defined in Exhibit D, Performance Guarantees and Penalties, under
System Availability (“Standard Service Levels”). Transaction response time that negatively
impacts overall operational performance will be analyzed through scheduled

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

168

 

	 	 	 	performance
monitoring and tracking. Enhancements will be scheduled as warranted by the severity of the
impact and complexity of the resolution. Mutual satisfaction with issue identification and
resolution processes will be the responsibility of assigned senior account managers from
both PBM and WellPoint.

	 	•	 	Emergency Maintenance: In the event of a production failure on any of PBM’s systems it
may be necessary to shut down one or more items within PBM’s System. This will happen on
an emergency basis only and WellPoint will be notified as soon as practical of one of these
events.

Infrastructure

	 	•	 	PBM will maintain services and systems to ensure system availability requirements for
the PBM Systems. This includes fault tolerant servers, switches and other network
equipment, uninterruptible power systems (UPS), failover telephone and Internet access
points.
	 
	 	•	 	PBM will maintain security controls to prevent malicious attacks on the PBM Systems.
This includes virus, malware (malicious software) and intrusion detection devices and/or
software.
	 
	 	•	 	PBM will proactively monitor systems and infrastructure to ensure availability.

System Outage Escalation and Response

	 	•	 	PBM System down issues will be worked on until the system is restored to acceptable
levels of operation as defined by this agreement.
	 
	 	•	 	Upon resolution of an unplanned outage, WellPoint will receive root cause analysis,
which includes processes that are implemented to avoid an outage occurring for the same
reason more than once.

Help Desk / Support

	 	•	 	PBM will maintain an IT point of contact for all applications covered under this
Agreement. Issues will be immediately addressed or routed based on PBM’s and WellPoint’s
internal escalation procedures (as defined in the Incident Management Severity Scheme set
forth below).
	 
	 	•	 	Support services available will include Help-Desk personnel, after-hours e-mail contact
(via PDA), or emergency cell-phone contact.

Excluded Items

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

169

 

	 	•	 	Force Majeure. For a period of up to thirty (30) days after a Force Majeure
Event as defined in the Agreement, neither Party shall be liable to the other Party for any
failure or delay in its performance caused by reasons beyond its reasonable control,
including, but not limited to, orders or other governmental directives, acts of God,
third-Party mechanical or other equipment breakdowns, fire, explosions, fiber optic cable
cuts,
interruption or failure of telecommunication or digital transmission links, Internet
failures or delays, or failure and delays due to storms or other similar events (each, a
“Force Majeure Event”). The non-performing party shall use its best efforts to
resume performance following such Force Majeure Event.
	 
	 	•	 	Measurements during the Scheduled Maintenance Window are excluded from the Service Level
Agreement.
	 
	 	•	 	Problems originating outside the PBM Network. The Standard Service Levels cover the
portion of the Service that is controlled by PBM.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

170

 

Execution Version

	 	 	 	 	 	 	 	 	 	 	 
	Incident Management Severity Scheme
	Sev.	 	Description	 	Criteria	 	Communications	 	Tech Support Response	 	Escalation and Analysis
	1

	 	Crisis
	 	Significant
disruption of a
shared
infrastructure
device or service
supporting a core
business system
with potential high
impact on business
units

Crisis Severity
must be declared by
an IT Crisis
Manager and
WellPoint is
notified.
	 	In addition to all Severity 2
communications, as
needed -

   §   
Engage
WellPoint
Business
         Continuity Manager
   §   
Officer
Communications
   §   
Senior
Management
         Conference
Call
   §   
Engage
Disaster
Recovery
         Manager, per
escalation          decision
	 	IT Crisis Manager
invokes IT Crisis
Management
procedures

Immediate response
to WellPoint is
expected in [*]

Expected recovery
time of[*],
	 	WellPoint

IT Senior Management,
IT Crisis Manager and
Business Continuity
Manager will have
responsibility for
engaging any necessary
Disaster Recovery and
Business Crisis
Management activities

Root Cause analysis is
mandatory

PBM
	 
	 	 	 	 	 	 	 	 	 	 
	2

	 	Critical
	 	Disruption or
noticeable
degradation in
performance of a
shared
infrastructure
device or service
(except within a
planned maintenance
window)

Over 2 users
experiencing same
problem within the
same shared
infrastructure
	 	Page to:

   §   WellPoint
Business
Contacts
   §   WellPoint
IT
Leadership

Technical
Conference call (if
needed)

Voice Mail to
distribution lists
Front-end IVR
Messaging
	 	Immediate
notification to Well
is expected in[*]
response

With user impact,
expected recovery
time of [*] and with
no user impact,
expected recovery
time [*]
	 	If technician does not
respond within [*],
escalate to secondary
contact; if no
response within next
[*], contact manager

After assessing user
impact as significant
or if more than 100
users are impacted,
PBM notifies the
WellPoint IT Crisis
Manager of a potential
IT crisis. The IT
Crisis

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	Incident Management Severity Scheme
	Sev.	 	Description	 	Criteria	 	Communications	 	Tech Support Response	 	Escalation and Analysis
	

3
	 	

Major	 	device or application

2 or fewer users
experiencing same
problem within the
same shared
infrastructure
device or
application

Single or multiple
users experiencing
service
interruption or
system degradation
that prevents users
from performing
their primary job
function

	 	

Notification is
sent to on-call
Technical Support
and assignment of
Incident record to
technical support
group for
resolution	 	

Expected call back
to user within [*]
of incident being
reported (or within
[*] of the start of
next business day
for calls received
outside of business
hours)

Expected recovery
time of [*]	 	Manager assesses the situation and decides to continue recovery as a Severity 2 or escalate to a Severity 1

Root Cause analysis is mandatory

Daily reports are
available to WellPoint
that reflect tickets
that are approaching
and have passed their
SLA

Escalations are made
at user’s request

Root Cause analysis is
optional

	4
	 	Minor	 	Single or multiple
users are
experiencing
service
interruption or
system degradation
that limits users
in performing their
job function, i.e.
non-primary job
function or primary
job function and	 	Notification is
sent to on-call
Technical Support
and assignment of
Incident record to
technical support
group for
resolution

Field Technicians
contact Customers
and resolve	 	Expected call back
to user within [*]
of incident being
reported (or within
[*] of the start of
the next business
day for calls
received outside of
business hours)	 	Daily reports are
available to WellPoint
that reflect tickets
that are approaching
and have passed their
SLA

Escalations are made
at user’s request
hours

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

172

 

	 	 	 	 	 	 	 	 	 	 	 
	Incident Management Severity Scheme
	Sev.	 	Description	 	Criteria	 	Communications	 	Tech Support Response	 	Escalation and Analysis
	 

	 	 	 	workaround exists
	 	Incidents
	 	Expected recovery
time of [*]
	 	Root Cause analysis is optional

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

173

 

Execution Version

Exhibit M

LIST OF DESIGNATED AFFILIATES

Anthem Blue Cross and Blue Shield Plan Administrator, LLC

Anthem Blue Cross Life and Health Insurance Company

Anthem Health Insurance Company of Nevada DBA Anthem Blue Cross and Blue Shield

Anthem Health Plans of Kentucky, Inc. DBA Anthem Blue Cross and Blue Shield

Anthem Health Plans of Maine, Inc. DBA Anthem Blue Cross and Blue Shield

Anthem Health Plans of New Hampshire, Inc. DBA Anthem Blue Cross and Blue Shield

Anthem Health Plans of Virginia, Inc. DBA Anthem Blue Cross and Blue Shield

Anthem Health Plans, Inc. DBA Anthem Blue Cross and Blue Shield

Anthem HMO of Nevada DBA Anthem Blue Cross and Blue Shield

Anthem Insurance Companies, Inc. DBA Anthem Blue Cross and Blue Shield

Anthem Life Insurance Company

Anthem Life & Disability Insurance Company DBA Anthem Life of New York

Blue Cross and Blue Shield of Georgia, Inc.

Blue Cross Blue Shield Healthcare Plan of Georgia, Inc.

Blue Cross Blue Shield of Wisconsin DBA Anthem Blue Cross and Blue Shield

Blue Cross of California DBA Anthem Blue Cross

Blue Cross of California Partnership Plan, Inc. DBA Anthem Blue Cross Partnership Plan

Claim Management Services, Inc. DBA Anthem Blue Cross and Blue Shield

Community Insurance Company DBA Anthem Blue Cross and Blue Shield

Compcare Health Services Insurance Corporation DBA Anthem Blue Cross and Blue Shield

Empire HealthChoice Assurance, Inc. DBA Empire BlueCross BlueShield

Empire HealthChoice HMO, Inc. DBA Empire BlueCross BlueShield HMO

Golden West Health Plan, Inc.

HealthKeepers, Inc.

HealthLink, Inc.

Healthy Alliance Life Insurance Company DBA Anthem Blue Cross and Blue Shield

HMO Colorado, Inc.

HMO Colorado, Inc. DBA HMO Nevada

HMO Missouri, Inc. DBA Anthem Blue Cross and Blue Shield

Matthew Thornton Health Plan, Inc. DBA Anthem Blue Cross and Blue Shield

Peninsula Health Care, Inc.

Priority Health Care, Inc.

RightCHOICE Managed Care, Inc. DBA Anthem Blue Cross and Blue Shield

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

 

Rocky Mountain Hospital and Medical Service, Inc. DBA Anthem Blue Cross and Blue Shield

UNICARE Health Insurance Company of Texas

UNICARE Health Insurance Company of the Midwest

UNICARE Health Plan of Kansas, Inc.

UNICARE Health Plan of West Virginia, Inc.

UNICARE Health Plans of Texas, Inc.

UNICARE Health Plans of the Midwest, Inc.

UniCare Life & Health Insurance Company

UNICARE of Texas Health Plans, Inc.

WellPoint Partnership Plan, LLC

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

175

 

Execution Version

Exhibit N

FINIANCIAL DISCLOSURE TO PBM CLIENTS

     This disclosure provides an overview of the principal revenue sources of Express Scripts, Inc.
(“ESI”) and does not supersede any of the specific financial terms and conditions between ESI and
an individual client. In addition to administrative and dispensing fees paid to ESI by our clients
for pharmaceutical benefit management (“PBM”) services, ESI derives revenue from other sources,
including arrangements with pharmaceutical manufacturers, wholesale distributors, and retail
pharmacies. Some of this revenue relates to utilization of prescription drugs by members of the
clients receiving PBM services. ESI may pass through certain manufacturer payments to its clients
or may retain those payments for itself, depending on the contract terms between ESI and the
client.

     Network Pharmacies – ESI contracts for its own account with retail pharmacies to
dispense prescription drugs to client members. Rates paid by ESI to these pharmacies may differ
among networks (e.g., Medicare, Worker’s Comp, open and limited), and among pharmacies within a
network. PBM agreements generally provide that a client pay ESI an ingredient cost, plus
dispensing fee, for drug claims at a uniform rate. If the rate paid by a client exceeds the rate
contracted with a particular pharmacy, ESI will realize a positive margin on the applicable claim.
The reverse also may be true, resulting in negative margin for ESI. ESI also enters into
pass-through arrangements where the client pays ESI what the pharmacy is paid. In addition, when
ESI receives payment from a client before payment to a pharmacy, ESI retains the benefit of the use
of the funds between these payments.

     Brand/Generic Classifications — Prescription drugs may be classified as either a
“brand” or “generic;” however, the reference to a drug by its chemical name does not necessarily
mean that the product is recognized as a generic for adjudication, pricing or copay purposes. ESI
distinguishes brands and generics through a proprietary algorithm (“BGA”) that uses certain
published elements provided by First DataBank (FDB) including price indicators, Generic Indicator,
Generic Manufacturer Indicator, Generic Name Drug Indicator, Innovator, Drug Class and ANDA. The
BGA uses these data elements in a hierarchical process to categorize the products as brand or
generic. The BGA also has processes to resolve discrepancies and prevent “flipping” between brand
and generic status due to price fluctuations and marketplace availability changes. The elements
listed above and sources are subject to change based on the availability of the specific fields.
Updated summaries of the BGA are available upon request.

     Maximum Allowable Cost/Maximum Reimbursement Amount (“MAC”) — As part of the
administration of the PBM services, ESI maintains a MAC List of drug products identified as
requiring pricing management due to the number of manufacturers, utilization and/or pricing
volatility. The criteria for inclusion on the MAC List are based on whether the drug has readily
available generic product(s), is generally equivalent to a brand drug, is cleared of any negative
clinical implications, and has a cost basis that will allow for pricing below brand rates. ESI
also maintains correlative MAC price lists based on current price reference data provided by FDB or
other nationally recognized pricing source, market pricing and availability information from

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

 

 

generic manufacturers and on-line research of national wholesale drug company files. Similar
to the BGA, the elements listed above and sources are subject to change based on the availability
of the specific fields. Updated summaries of the MAC methodology are available upon request.

     Manufacturer PBM Formulary Rebates and Associated Administrative Fees – ESI contracts
for its own account with manufacturers to obtain formulary rebates attributable to the utilization
of certain brand drugs and supplies by PBM client members (and possibly certain authorized generics
marketed under a brand manufacturer’s new drug application). Formulary rebate amounts vary based
on the volume of utilization as well as a client’s benefit design and formulary position applicable
to the drug or supplies, and in certain instances also may vary based on the product’s
market-share. ESI often pays an amount equal to all or a portion of the formulary rebates it
receives to a client based on the client’s PBM agreement terms. ESI retains the financial benefit
of the use of any funds held until payment of formulary rebate amounts is made to the client. In
addition, ESI provides administrative services to formulary rebate contracted manufacturers, which
includes access to drug utilization data, as allowed by law, for purposes of verifying and
evaluating the rebate payments and participation in ESI’s PBM rebate program. ESI receives
administrative fees from the participating manufacturers for the maintenance and operation of the
systems and other infrastructure necessary for managing and administering the PBM formulary rebate
process. These administrative fees are calculated based on [*]

     ESI Subsidiary Pharmacies – ESI has several licensed pharmacy subsidiaries, including
our specialty pharmacies. These entities may maintain product purchase discount arrangements
and/or fee-for-service arrangements with pharmaceutical manufacturers and wholesale distributors.
These subsidiary pharmacies contract for these arrangements on their own account in support of
their various pharmacy operations. Many of these subsidiary arrangements relate to services
provided outside of PBM arrangements, and are entered into irrespective of whether the particular
drug is on one of ESI’s national formularies. Discounts and fee-for-service payments received by
ESI’s subsidiary pharmacies are not part of the PBM formulary rebates or associated administrative
fees paid to ESI in connection with ESI’s PBM formulary rebate programs. In addition, these
subsidiary pharmacy arrangements are negotiated separately from ESI’s PBM formulary rebate
contracts. The following provides additional information regarding ESI subsidiary pharmacy
discount arrangements and fee-for-service arrangements:

     ESI Subsidiary Pharmacy Discount Arrangements – ESI subsidiary pharmacies
purchase prescription drug inventories, either from manufacturers or wholesalers, for
dispensing to patients. Often, purchase discounts off the acquisition cost of these
products are made available by manufacturers and wholesalers in the form of either
up-front discounts or retrospective discounts. These purchase discounts, obtained
through separate purchase contracts, are not formulary rebates paid in connection with
our PBM rebate programs since they are not based on any PBM client’s benefit design,
formulary or member utilization. Drug purchase discounts are based on a pharmacy’s
inventory needs and, at times, the performance of related patient care services and
other performance requirements. When a

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

177

 

subsidiary pharmacy dispenses a product from its inventory, the purchase price paid
for the dispensed product, including applicable dispensing fees, may be greater or less
than that pharmacy’s acquisition cost for the product net of purchase discounts. In
general, our pharmacies realize an overall positive margin between the net acquisition
cost and the amounts paid for the dispensed drugs.

     ESI Subsidiary Pharmacy Fee-For-Service Arrangements – ESI’s subsidiary
pharmacies also may receive fee-for-service payments from manufacturers, which may be in
lieu of or in addition to product purchase discounts, in conjunction with various
programs or services, such as: (i) patient assistance programs for indigent patients;
(ii) dispensing prescription medications to patients enrolled in clinical trials; (iii)
various therapy adherence and fertility programs, and (iv) various other specialty
pharmacy programs and services. As a condition to having access to certain specialty
products, and sometimes related to certain FDA requirements, a specialty pharmaceutical
manufacturer often will require a specialty pharmacy to report selected information to
the manufacturer regarding the pharmacy’s service levels and other dispensing-related
data with respect to patients who receive that manufacturer’s product. A portion of the
discounts or other fee-for-service payments made available to our specialty pharmacies
represents compensation for such reporting. In addition, specialty pharmacies may sell
non-patient identifiable claim information they receive in connection with the
performance of their pharmacy services to data aggregators or manufacturers on a
fee-for-service basis. All reporting activities are conducted in compliance with
applicable patient and pharmacy privacy laws. Note, however, that ESI does not sell
data resulting from its PBM services to healthcare data aggregators or similar entities
at this time. Should this change, ESI would do so only if expressly permitted under the
PBM agreements with its clients and applicable law.

     Other Manufacturer Arrangements – ESI also owns a wholesale distribution business, a
group purchasing organization, and various other businesses that provide additional services for
manufacturers. Compensation derived through these business arrangements is not part of the PBM
formulary rebates or associated administrative fees paid to ESI in connection with ESI’s PBM
formulary rebate programs. In addition, these business arrangements are negotiated separately
from ESI’s PBM formulary rebate contracts and are unrelated to the PBM drug formulary development
process. The following is an overview of these other businesses:

     Wholesale Distribution – ESI owns a wholesale distribution business. The
wholesale distributor purchases products from pharmaceutical manufacturers and
distributes products to physicians, physician clinics and other healthcare providers
(and sometimes secondary wholesalers). Often, purchase discounts (either up-front or
retrospective) off the acquisition cost of these products are made available to Priority
Healthcare by the pharmaceutical manufacturers. The purchase price paid by the
physician or similar client for product distributed by Priority Healthcare may be
greater or less than Priority Healthcare’s acquisition cost for the for the product from
the pharmaceutical manufacturer, with Priority Healthcare often recognizing a positive
margin on the sale transaction. In lieu of, or in addition to, these purchase
discounts, Priority Healthcare may enter into various fee-for-service arrangements

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

178

 

with pharmaceutical manufacturers related to its wholesale distribution services.

     Group Purchasing Organization – ESI owns a group purchasing organization,
servicing primarily physicians who enroll as members of Matrix to obtain preferential
product purchase rates made available to group purchasing organizations through
pharmaceutical manufacturers. Matrix receives group purchasing organization
administrative fees from manufacturers, and sometimes wholesale distributors, in
addition to securing member product purchase discounts from pharmaceutical
manufacturers. From time to time, Matrix may also enter into other ancillary
fee-for-service arrangements with manufacturers to perform other services.

     ESI also maintains other lines of business that provide the following services for
pharmaceutical manufacturers on a fee-for-service basis: (i) product reimbursement
support service programs and related hub services; (ii) patient assistance program
services; and (iii) drug and sample fulfillment and accountability, alternative
sampling, and direct mail and literature fulfillment services through Phoenix Marketing
Group, LLC. In addition, certain materials provided by ESI to patients and prescribers
may be provided or funded by pharmaceutical manufacturers, in compliance with applicable
laws.

     Services related to the Other Manufacturer Arrangements described above are provided to
manufacturers irrespective of whether a drug is on one of ESI’s national formularies.

October 2008

THIS EXHIBIT REPRESENTS ESI’S CURRENT FINANCIAL POLICIES. ESI MAY PERIODICALLY UPDATE ITS
FINANCIAL DISCLOSURES TO REFLECT CHANGES IN ITS BUSINESS PROCESSES; THE CURRENT FINANCIAL
DISCLOSURE IS AVAILABLE UPON REQUEST AND ACCESSIBLE ON EXPRESS-SCRIPTS.COM FOR CLIENTS AND
ADVISORS.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

179

 

EXHIBIT O

CERTAIN CONSIDERATION

[*]

5 pages
redacted in their entirety

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

180

 

EXHIBIT P

SUPPLEMENTAL COVENANT FOR KENTUCKY ACCESS AGREEMENT

The following covenant is made by PBM to support AHP’s provision of services under the Kentucky
Access Agreement, and it applies to the provision of and payment for Covered Services provided by
PBM to Kentucky residents who are enrolled in Kentucky Access:

	 	1.	 	PBM agrees that PBM shall be directly liable to the Department and hold harmless the
Department and/or Kentucky Access and their agents, representatives, officers, directors,
employees, insurers, successors, and assigns from and against any and all expenses, costs
(including attorneys’ fees), causes of action, liability, loss and/or damages suffered or
incurred by them or any of them, including extraordinary expenses incurred by the
Department and/or Kentucky Access not contemplated by this Agreement and the Kentucky
Access Agreement which results from or arises out of the following: (a) any dishonest,
fraudulent, criminal, or grossly negligent acts, any unauthorized acts, or any errors or
omissions which are committed by PBM or PBM’s employees or agents; (b) the publication,
translation, reproduction, delivery, performance, use or disposition of any data produced
by PBM in an unauthorized manner, provided that such action was not taken by PBM as a
result of the express written request of the Department; or (c) PBM’s failure to comply
with any applicable state or federal laws or regulations.
	 
	 	2.	 	For purposes of the foregoing covenant:

	 	a.	 	“AHP” means Anthem Health Plans of Kentucky, Inc.
	 
	 	b.	 	“Department” means the Kentucky Department of Insurance.
	 
	 	c.	 	“Kentucky Access” means the health insurance pool established in
accordance with Ky. Rev. Stat. Ann. § 304.17B-001 et seq. to provide health
coverage to certain Kentucky residents who are denied adequate health insurance or
are considered uninsurable in the private individual health insurance market.
	 
	 	d.	 	“Kentucky Access Agreement” means that certain Agreement made and
entered into on July 1, 2008, by and between AHP and the Department.
	 
	 	e.	 	All other capitalized terms have the meanings ascribed to them in the
Agreement to which this Exhibit is attached.

	 	[*]	 	Redacted text. Confidential treatment requested; omitted
text filed separately with the Securities and Exchange Commission. 

181exv10w1

	 	 	 	 	 

Exhibit 10.1

THE LUBRIZOL CORPORATION

ANNUAL INCENTIVE PAY PLAN

(As Amended February 22, 2010)

INTRODUCTION

     The Lubrizol Corporation (hereinafter referred to as the “Corporation”) hereby establishes,
effective as of January 1, 2008, The Lubrizol Corporation Annual Incentive Pay Plan (hereinafter
referred to as the “Plan”) in order to provide an award for employees which reflects the pursuit of
superior performance, increased customer satisfaction and enhancement of shareholder value. Awards
for participating employees under the Plan shall depend upon corporate performance measures as
determined by the Committee for the Plan Year.

     Except as otherwise provided, the Plan shall be administered by the Organization and
Compensation Committee (hereinafter referred to as the “Committee”) of the Board of Directors of
the Corporation. The Committee shall have conclusive authority to construe and interpret the Plan
and any agreements entered into under the Plan and to establish, amend, and rescind rules and
regulations for its administration. The Committee shall also have any additional authority as the
Board may from time to time determine to be necessary or desirable.

ARTICLE I

DEFINITIONS

     1.01 Definitions. The following terms shall have the indicated meanings for purposes
of the Plan:

	 	(a)	 	“Board” shall mean the Board of Directors of the Corporation.
	 
	 	(b)	 	“Chief Executive Officer” shall mean the chief executive officer of the
Corporation.
	 
	 	(c)	 	“Committee” shall mean the Organization and Compensation Committee of the
Board, or other designated committee of the Board, consisting of persons who are not
Employees or International Employees.
	 
	 	(d)	 	“Corporation” shall mean The Lubrizol Corporation, a corporation organized
under the laws of the State of Ohio.
	 
	 	(e)	 	“Director” shall mean a member of the Board.
	 
	 	(f)	 	‘“Employee” shall mean any person other than an Officer, who is employed for a
wage or salary by the Corporation or a domestic Subsidiary.
	 
	 	(g)	 	“International Employee” shall mean any person who is employed for a wage or salary by an
international Subsidiary of the Corporation.
	 
	 	(h)	 	“International Participant” shall mean any International Employee who has been
selected by the Committee pursuant to Article VI of the Plan, and who has not for any
reason becomes ineligible to participate in the Plan.

1

 

	 	(i)	 	“Individual Award” shall mean the amount paid (or to be paid) to a Participant
or International Participant, as the case may be, by the Corporation pursuant to the
Plan.
	 
	 	(j)	 	“Individual Target Award” shall have the definition, and shall be determined,
as set forth in Section 3.02 herein.
	 
	 	(k)	 	“Officer” shall mean an employee of the Corporation or a Subsidiary who is a
member of the Executive Council of the Corporation.
	 
	 	(l)	 	“Participant” shall mean all Officers, and any Employee who has been selected
by the Committee pursuant to Article II herein to participate in the Plan, and have not
for any reason become ineligible to participate in the Plan.
	 
	 	(m)	 	“Pay” shall be determined at the time of calculating the Individual Performance
Shares and shall be the Participant’s base pay.
	 
	 	(n)	 	“Plan” shall mean The Lubrizol Corporation Annual Incentive Pay Plan, effective
January 1, 2008.
	 
	 	(o)	 	“Plan Year” shall mean each twelve-month period commencing January 1 and ending
December 31.
	 
	 	(p)	 	“Subsidiary” shall mean any corporation, international or domestic, that is
wholly or partially (but not less than 50%) owned directly or indirectly by the
Corporation.

     1.02 Construction. Where necessary or appropriate to the meaning of a word, the
singular shall be deemed to include the plural, the plural to include the singular, the masculine
to include the feminine, and the feminine to include the masculine.

ARTICLE II

ELIGIBILITY AND PARTICIPATION

     2.01 Eligibility. All Employees and Officers shall be eligible to participate in the
Plan.

     2.02 Participation. All Officers shall participate in the Plan. In addition, the
Committee shall determine which Employees shall participate in the Plan for each Plan Year. The
Committee may also determine which Employees hired during the Plan Year shall participate in the
Plan for such Plan Year. The Committee’s selection of Participants shall be after considering
recommendations presented to it by the Chief Executive Officer.

ARTICLE III

INDIVIDUAL AWARDS

     3.01 In General. At the time the Committee selects Participants for any Plan Year,
the Committee shall, after consideration of the recommendations of the Chief Executive Officer,
establish, for each Plan Year, an Individual Target Award for each Participant. After the end of
the Plan Year Individual Awards are paid.

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     3.02 Calculation of Individual Award. The Individual Award shall be calculated in
the following manner:

	 	(a)	 	The Participant’s Individual Target Award is determined by multiplying the
Participant’s Pay by a designated target opportunity percentage, which shall take into
account the Participant’s position in the Corporation. Such designated target
opportunity percentage, as well as maximum and threshold opportunity percentages, shall
be determined by the Committee.
	 
	 	(b)	 	At the beginning of each Plan Year, the Committee approves annual corporate and
segment performance metric scorecards and specifies the scorecard(s) that apply to a
Participant. The Chief Executive Officer approves annual performance scorecards below
the segment level.
	 
	 	(c)	 	After the end of the Plan Year, the Committee certifies the amount of the
Individual Awards based on actual performance for the Plan Year under the annual
scorecard(s) that apply to the Participant and authorizes payment of that amount.

     Individual Target Awards may be either increased or decreased, at any time, or from time to
time, during a Plan Year, for any Participant at the sole discretion of the Committee in order to
reflect any change in the individual contribution under the formula set forth in this Section 3.02.

     3.03 Time and Method of Payment of Individual Awards. In the event the Committee
determines that a Participant is entitled to an Individual Award, the Corporation shall pay such
Individual Award to that Participant between January 1 and March 15 following the close of the Plan
Year. A Participant who separates from service or dies after the Plan Year but prior to the
payment of an Individual Award shall be eligible to receive any payment under this Plan. Effective
September 23, 2008, a Participant who separates from service prior to the end the Plan Year will
not be eligible for payment hereunder, unless otherwise specifically approved by the Committee,
upon the recommendation of the Chief Executive Officer.

     3.04 Conditions. Anything contained herein to the contrary notwithstanding, the
payment of Individual Awards to Participants with respect to any Plan Year is conditioned upon the
availability of adequate corporate profits for the Corporation’s fiscal year coinciding with any
Plan Year. The determination of whether adequate corporate profits exist shall be made by the
Board in its sole and unrestricted judgment and discretion and such determination shall be
conclusive and binding.

ARTICLE IV

AWARDS FOR INTERNATIONAL EMPLOYEES

     4.01 Participation. The Committee shall determine which International Employees shall
participate in the Plan for each Plan Year. The Committee’s selection of International
Participants shall be made after considering recommendations presented to it by the Chief Executive
Officer.

     4.02 Individual Awards. At the time the Individual Awards are determined for
Participants, the Committee shall, in its discretion, after consideration of the recommendations of
the Chief Executive Officer, establish for each Plan Year Individual Awards for each International
Participant.

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     4.03 Payment of Awards. Individual Awards to each International Participant shall be
paid by the international Subsidiary that is the employer of such International Participant at the
same time and under the same conditions as payment is made to Participants under Sections 3.03 and
3.04. All payments shall be converted from the U.S. dollar measurement under the Plan to the
currency of the country of such Subsidiary at the currency exchange rate in effect at the time the
Individual Award is determined. All applicable withholding taxes shall be withheld from the
distribution and remitted by the international subsidiary to the appropriate taxing authority.

ARTICLE V

CHANGE OF CONTROL

     5.01 Effect of Change in Control. In the event a Change in Control of the
Corporation (as defined in Section 5.02) occurs prior to final determination by the Committee of
the amounts of Individual Awards to be paid under the Plan with respect to any Plan Year, the
Committee shall calculate such Individual Awards as soon as practicable after such Change in
Control. Individual Awards shall be based upon accruals by the Corporation up to the time of such
Change in Control and Individual Awards shall be calculated in accordance with Sections 3.02 and
4.02 herein. Payment of such Individual Awards shall be made at the time specified in Section
3.03, except that if a Participant is separated from service by the Corporation for other than
Cause (defined in Section 5.03) or separates from service for Good Reason (defined in Section 5.04)
prior to the end of the Plan Year, the Participant will continue to be eligible for payment of the
Individual Award calculated in accordance with this Section 5.01 at the time of payment specified
in Section 3.03.

     5.02 For all purposes of the Plan, a “Change in Control of the Corporation” shall have
occurred if any of the following events shall occur:

	 	(a)	 	The date that any one person, or more than one person acting as a group,
acquires ownership of stock of the corporation that, together with the stock held by
such person or group, constitutes more than 50 percent of the total fair market value
or total voting power of the stock of the Corporation.
	 
	 	(b)	 	The date any person, or more than one person acting as a group, acquires (or
has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Corporation possessing
30% or more of the total voting power of the stock of the Corporation.
	 
	 	(c)	 	The date a majority of members of the Corporation’s Board of Directors is
replaced during any 12-month period by Directors whose appointment or election is not
endorsed by a majority of the members of the Corporation’s Board of Directors before
the date of the appointment or election.
	 
	 	(d)	 	The date that any one person, or more than one person acting as a group,
acquires (or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) assets from the Corporation that have a
total gross fair market value equal to or more than 40% of the total gross fair market
value of all of the assets of the Corporation immediately before the acquisition or
acquisitions.

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     Notwithstanding the foregoing, a Change of Control shall have only occurred in accordance with
the regulations promulgated under Section 409A of the Internal Revenue Code of 1986, as amended.

     5.03 For purposes of this Article V of the Plan, “Cause” means that, prior to any separation
from service, the Participant committed:

	 	(a)	 	an intentional act of fraud, embezzlement or theft in connection with his
duties or in the course of his employment with the Corporation;
	 
	 	(b)	 	intentional wrongful damage to property of the Corporation;
	 
	 	(c)	 	intentional wrongful disclosure of secret processes or confidential
information of the Corporation; or
	 
	 	(d)	 	intentional wrongful engagement in any Competitive Activity (as defined below);

and any such act materially is harmful to the Corporation. For purposes of this Agreement, no
act, or failure to act, on the part of the Participant will be deemed “intentional” if it was due
primarily to an error in judgment or negligence, but will be deemed “intentional” only if done, or
omitted to be done, by the Participant not in good faith and without reasonable belief that his
action or omission was in the best interest of the Corporation. Notwithstanding the foregoing,
the Participant will not be deemed to have been separated from service for “Cause” hereunder
unless and until there is delivered to the Participant a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the Board then in office at a meeting of the
Board called and held for such purpose (after reasonable notice to the Participant and an
opportunity for the Participant, together with his counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Participant had committed an act set forth above
in this 5.03 and specifying the particulars thereof in detail. Nothing herein will limit the
right of the Participant or his beneficiaries to contest the validity or propriety of any such
determination.

     For purposes of this Article V of the Plan, the term “Competitive Activity” means the
Participant’s participation, without the written consent of an officer of the Corporation, in the
management of any business enterprise if such enterprise engages in substantial and direct
competition with the Corporation and such enterprise’s sales of any product or service competitive
with any product or service of the Corporation amounted to 25% of such enterprise’s net sales for
its most recently completed fiscal year and if the Corporation’s net sales of said product or
service amounted to 25% of the Corporation’s net sales for its most recently completed fiscal year.
“Competitive Activity” does not include (i) the mere ownership of securities in any such
enterprise and exercise of rights appurtenant thereto or (ii) participation in management of any
such enterprise other than in connection with the competitive operations of such enterprise.

     5.04 For purposes of this Article V of the Plan, “Good Reason” means separation from service
by the Participant of his employment with the Corporation after the Change in Control of the
Corporation upon the occurrence of any of the following events:

	 	(a)	 	Failure to elect or reelect or otherwise to maintain the Participant in the
office or the position, or a substantially equivalent office or position, of or with
the Corporation, which the Participant held immediately prior to a Change in Control
of the Corporation.
	 
	 	(b)	 	A significant adverse change in the nature or scope of the authorities,
powers, functions, responsibilities or duties attached to the position with the
Corporation that the Participant held immediately prior to the Change in Control of
the Corporation, a reduction in the aggregate of the Participant’s base and incentive

5

 

	 	 	 	pay opportunities, any of which is not remedied within 10 calendar days after receipt
by the Corporation of written notice from the Participant of the change or reduction,
as the case may be;
	 
	 	(c)	 	A determination by the Participant made in good faith that as a result of a
Change in Control of the Corporation and a change in circumstances thereafter
significantly affecting his position, including without limitation a change in the
scope of the business or other activities for which he was responsible immediately
prior to a Change in Control of the Corporation, he has been rendered substantially
unable to carry out, has been substantially hindered in the performance of, or has
suffered a substantial reduction in, any of the authorities, powers, functions,
responsibilities or duties attached to the position held by the Participant
immediately prior to the Change in Control of the Corporation, which situation is not
remedied within 10 calendar days after written notice to the Corporation from the
Participant of such determination;
	 
	 	(d)	 	The liquidation, dissolution, merger, consolidation or reorganization of the
Corporation or transfer of all or a significant portion of its business and/or assets,
unless the successor or successors (by liquidation, merger, consolidation,
reorganization or otherwise) to which all or a significant portion of its business
and/or assets have been transferred (directly or by operation of law) assumes all the
duties and obligations of the Corporation under this Agreement;
	 
	 	(e)	 	The Corporation relocates its principal executive offices, or requires the
Participant to have his principal location of work changed, to any location which is
in excess of 25 miles from the location thereof immediately prior to the Change of
Control of the Corporation or to travel away from his office in the course of
discharging his responsibilities or duties hereunder significantly more
(in terms of either consecutive days or aggregate days in any calendar year) than
was required of him prior to the Change of Control of the Corporation without, in
either case, his prior written consent.

ARTICLE VI

ADMINISTRATION

     6.01 Plan Administrator. The Committee shall be the Plan administrator.

     6.02 Duties of Plan Administrator.

	 	(a)	 	The Committee shall administer the Plan in accordance with its terms and shall
have all powers necessary to carry out the provisions of the Plan including, but not
limited to, the following:

	 	(1)	 	Determination of Employees and International Employees who are
eligible for Plan participation; and
	 
	 	(2)	 	Determination of the Individual Awards to be paid to
Participants for each Plan Year.

	 	(b)	 	The Committee shall interpret the Plan and shall resolve all questions arising
in the administration, interpretation, and application of the Plan. Any such
determination of the Committee shall be conclusive and binding on all persons.

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	 	(c)	 	The Committee shall establish such procedures and keep such records or other
data as the Committee in its discretion determines necessary or proper for the
administration of the Plan.
	 
	 	(d)	 	The Committee may delegate administrative responsibilities to such person or
persons as the Committee deems necessary or desirable in connection with the
administration of the Plan.

     6.03 Claw-back and Forfeiture Policy. The Committee may cause to be forfeited any
outstanding Individual Award and may seek to recoup any economic gains from any Participant who
engages in conduct that was not in good faith and that disrupts, damages, impairs or interferes
with the business, reputation or employees of the Company or its Subsidiaries.

ARTICLE VII

MISCELLANEOUS

     7.01 Unfunded Plan. The Corporation shall be under no obligation to segregate or
reserve any funds or other assets for purposes relating to this Plan and no Participant or
International Participant shall have any rights whatsoever in or with respect to any funds or
assets of the Corporation.

     7.02 Non-Alienation. No anticipated payment of any Individual Award shall be subject
in any manner to alienation, sale, transfer, assignment, pledge, attachment, garnishment or
encumbrance of any kind.

     7.03 No Employment Rights. Nothing herein contained shall be construed as a
commitment or agreement upon the part of any Participant, International Participant, Employee or
International Employee hereunder to continue his employment with the Corporation or a Subsidiary,
and nothing herein contained shall be construed as a commitment on the part of the Corporation or
any Subsidiary to continue the employment or rate of compensation of any Participant or
International Participant hereunder or any Employee or International Employee for any period.

     7.04 Amendment of the Plan. The Corporation reserves the right, to be exercised by
instruction from the Committee, to modify or amend this Plan at any time.

     7.05 Duration and Termination of the Plan. The Corporation also reserves the right,
to be exercised by action of the Board, to discontinue or terminate the Plan; provided that, and
subject to all the provisions of this plan, any termination shall be effective only for all Plan
Years following December 31 of the Plan Year in which the decision to terminate occurs.

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