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Minutes

Committee Hearing, May 21, 1998

Philadelphia City Council Committee HearingsMay 21, 1998

People mentioned

Names our system found in this transcript. Automatically extracted, so it can include anyone named in the record, not only officials or parties.

Organizations mentioned

Councilman Nutter

Let me ask you this question in the same example: If there were no 25 copay and the independent pharmacist would just 252 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 get AWP minus 15 from Rite Aid plus $1.25.

Mr. Gurson

Plus $1.25, correct.

Councilman Nutter

So he or she would get $85 plus the $1.25, but it would come directly from you.

Mr. Gurson

Correct but --

Councilman Nutter

In this scenario, you actually only pay 80 plus $1.25 because they got 5 from the public employee when they walked in and got their prescription.

Mr. Gurson

Right. And the City paid us less than the $69 fee because, remember, at 2.50 --

Councilman Nutter

Right, I understand. It went from 69.30 to 65.

Mr. Gurson

To 65. The copay has a number of purposes, and one of them is cost-shifting from the plan to the participant.

Councilman Nutter

Well, you're right.

Councilman Cohen

But doesn't the fact that you've set that $1.25 for -- what do you call that fee?

Mr. Gurson

Dispensing fee.

Councilman Cohen

Dispensing fee. 253 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 That you have control over that, doesn't that mean that, very largely, the economic fate of the independent pharmacist is in your hands?

Mr. Gurson

Well, Councilman --

Councilman Cohen

What he said was he's being -- independent pharmacies are being squeezed.

Mr. Gurson

Well, what's -- what's -- what's -- what's -- I can't analyze for all the --

Councilman Cohen

What was the federal or State level that you were citing before? Is there a dispensing fee?

Mr. Gurson

Well, every state has a different dispensing fee.

Councilman Cohen

How about Pennsylvania?

Mr. Gurson

I don't know the rate at the moment. I think it's under challenge, as a matter of fact.

Councilman Cohen

Well, was it -- I never thought it was intended that Rite Aid, or whoever the contracting company with the City would be, would have the power by itself to set the dispensing fee because it just gives them 254 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 enormous weapon; whether they use it or not may be a different matter, but it gives them an enormous element of control.

Councilman Nutter

I may have missed the question or part of the answer.

Councilman Cohen

The dispensing fee.

Councilman Nutter

Who does have the authority over this dispensing fee?

Councilman Cohen

Rite Aid.

Mr. Gurson

We -- independents are, if you will, invited into the -- the network is open and independents are told that they can participate and this is the rate at which you will be reimbursed.

Councilman Nutter

That's your sole decision?

Mr. Gurson

That's our decision.

Councilman Nutter

Hmm. Just to make sure I ask all the questions that I wanted to ask, and I think I asked you this before, but I want to make sure. You were going to get me some information, your sales information and percentage breakout between your pharmacy revenues and what 255 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 we'll call everything else for your stores here in Philadelphia. I think I may have asked you that.

Mr. Gurson

It is approximately 50/50 at the moment, the difference between the pharmacy revenues and what we call an front end.

Councilman Cohen

But the --

Councilman Nutter

But you didn't know what the -- I think you didn't have the actual figure.

Mr. Gurson

Of dollar volume?

Councilman Nutter

Right, you didn't know what your revenues or sales were for 1997 for your stores, I think, in the first place.

Mr. Gurson

In Philadelphia?

Councilman Nutter

In Philadelphia.

Councilman Cohen

Could I create a little mischief on that?

Councilman Nutter

Sure.

Councilman Cohen

In the retail industry, Lord & Taylor, the department stores have a figure based upon what revenue is produced per square foot. And each segment of clothes, the petites, the other sizes and other things, you 256 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 know have a dollar-figure attached to them and that's how they their make decisions as to whether they're going to maintain a spot for these kinds of clothes. From what you've said now, this tiny area, the pharmacy -- I'm talking of Champlost -- must be an enormous producer of value for that little space because if it is one -- well, maybe it's 1/20th of the space in the Champlost store. I'm just estimating, it could maybe 1/30th, maybe it's 1/15th, I'm not sure, but it's a tiny area physically of the whole operation there. It must be a tremendous revenue producer by the standards used by the rest of the retail industry. Does the pharmaceuticals use that method of calculation? I understood it was generally in all the retail fields.

Mr. Gurson

Generally not.

Councilman Cohen

Generally not.

Mr. Gurson

One reason is because Lord & Taylor doesn't have professional pharmacist that they have to pay. We have to pay a professional pharmacist in that small part of the space.

Councilman Cohen

You mean the 257 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 expenses of operating that --

Councilman Cohen

Uh-huh, all right.

Councilman Nutter

Speaking of the pharmacist, given the fact that we have one of the premiere pharmacy and science schools in the City, if you could get me information on the 96 stores and some detailed data about the demographic makeup of your pharmacists by way of gender and race as well as store managers, the same information. But I'd also be intrigued to know how many of the pharmacists actually come out of the Philadelphia College of Pharmacy and Science. We have another one of these customer-service matters that you've come to know and enjoy during the course of this hearing. One of one of our staff members got a letter from Eagle Management recently saying that their request for prescription drug reimbursement had been rejected for the following rejection code reasons, numbers 9 and 10. 9 - the reference prescription number was previously paid by Eagle Managed Care; and 258 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 - the amount submitted reflects your copayment, which is not reimbursable through Eagle Managed Care. Now, I was kind of intrigued by this, given the fact that the prescription amount was $57.16. It could or could not be considered some kind of maintenance prescription. And we are left perplexed as to why, if a person's in our prescription drug program, why wouldn't you pay for the prescribed drug. I mean it's got a -- it's from a doctor, it's got a DEA number, it's got everything that seems to make it walk, talk, and sound like a prescription. Why wouldn't you pay for it?

Mr. Gurson

If you would share with me, again, the reason. I thought that the code that you read -- and I don't know it by a number -- said that we had already paid for the prescription, that the prescription had already been paid for.

Councilman Nutter

Well, from what I can tell from this paperwork, you may have paid for one a few months ago.

Mr. Gurson

I'd be happy to look into 259 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 it.

Councilman Nutter

Okay, all right. We'll make sure. Just for the record, as we talked about the technological advances of the Rite Aid Corporation, the receipt for this one also mentions that you can fill your prescription over the Internet.

Mr. Gurson

That is correct.

Councilman Nutter

And that's at www.riteaid.com.

Mr. Gurson

That is correct.

Councilman Nutter

Okay, very good, you are clearly marching into the 21st century. Miss Seyda, you seem like you might have some information that you might want to share with us?

Ms. Seyda

Yes, I do.

Mr. Gurson

Mr. Chairman, are we excused, or would you like us to stay?

Councilman Nutter

I think you're just about done, but you've invested so much time and effort into today, I'm sure you'd like to stay till the conclusion. 260 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586

Mr. Gurson

Absolutely.

Councilman Nutter

Thank you. And we have that customer-service matter that we need to get cleared up. I have all the paperwork up here.

Mr. Gurson

I'd be happy to look into it for you.

Councilman Nutter

Thank you. Miss Seyda.

Ms. Seyda

I would like to advise Council that we have resolved the issue with Miss Gallagher, and that her prescription -- her injectable treatment plan will be covered. We are still on an ongoing -- need a process in place on an ongoing basis, but her specific treatment plan has been approved.

Councilman Nutter

Thank you.

Councilman Cohen

And that means what? She's eligible, say, tomorrow to go and get the injectable treatment?

Ms. Seyda

Yes, that's correct.

Councilman Cohen

And has she paid out any money under this four- or five-month period, will that be reimbursable to her? If she's paid; I don't know whether she's paid. 261 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586

Ms. Seyda

And I don't know either.

Councilman Cohen

All right.

Ms. Seyda

If that's the case, we will certainly handle it.

Councilman Cohen

You'll do what?

Ms. Seyda

If she has, we will certainly handle it for her. I just don't know what the facts are.

Councilman Cohen

Okay, all right, we'll follow through.

Councilman Nutter

I seem to recall, Mr. Chairman, she may have indicated that she had not had a treatment since, I believe, February of 1998 for financial reasons. Obviously, I don't know how you --

Councilman Cohen

But she may have paid for it in January.

Councilman Nutter

Right. I don't know how you make up for that, I don't know, you know, but we would hope that you would --

Councilman Cohen

The City just has to hope that nobody sues, and the case doesn't go before Judge Shapiro in federal court.

Councilman Nutter

Right. 262 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586

Councilman Cohen

As I understand, we've not done too well on these disability cases in the federal courts.

Councilman Nutter

Miss Seyda, one, let me say thank you for working on that and getting a resolution to it. But to also remind you that there are, apparently, other employees who have this same situation, and you were relating to us the need for a larger policy decision or a possible change that you are in the process of working on.

Ms. Seyda

If I could clarify that. The policy decision has been made. What we are in the process of working out is what the medical review process will be for these cases.

Councilman Nutter

Do you expect within a day or so to notify other similarly-affected employees that there has been a policy change and notify them as to what mechanism or process they need to access in order to avail themselves of the same opportunity as Miss Gallagher?

Ms. Seyda

We are in -- as I indicated, we are in the process of working out 263 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 what that medical review process will be and who will do it. I expect to have that revolved very shortly, at which time we will notify any other employee that we are aware of.

Councilman Nutter

Right.

Ms. Seyda

What they need to do.

Councilman Nutter

Well, let me ask you this question? Do you know what that medical process was back in August of 1996 that allowed Miss Gallagher, at the time that our plan allowed this, to have a letter submitted from her doctor explaining why she needed to have this particular injectable drug that was apparently accepted at that time as the basis for approval? Do we need anything beyond that?

Ms. Seyda

I don't know the answer to that because I don't know -- I don't personally know how that was being handled in the past.

Councilman Nutter

Okay.

Ms. Seyda

I just simply don't know.

Councilman Nutter

Will you get to us information that kind of wraps up this whole situation and what has been done and what will be done going forward and what this medical review 264 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 plan or system will be?

Ms. Seyda

I'd be happy to.

Councilman Nutter

Thank you. Councilman, any other? (Chairmen Nutter and Cohen confer off the record.)

Councilman Cohen

Miss Seyda, we thank you and we thank the Rite Aid representatives. We know it's been difficult for you, but it's also difficult for us at this end. And we hear these complaints probably more. You hear them at one session here; we hear them on a continuing basis every time we're out in the field, which is very frequently.

Councilman Nutter

Well, that does remind me of one other thing. You heard the testimony, I believe, by Mr. Brog, which talked about the HMOs having some --

Mr. Gurson

Grievance procedure.

Councilman Nutter

Exactly. Which seemed to be more of an on-the-ground, in-the-locale kind of a --

Mr. Gurson

It's an apples-and-oranges situation. It's not relevant. The HMOs have 265 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 grievance procedures to determine whether a particular treatment is warranted in a given case. The City has a plan that says, These drugs are covered.

Councilman Nutter

Well, I understand that. We're not talking about drugs covered, drugs not covered. What we're talking about is resolution of problems, a central complaint system, and we how go about reviewing what happens in the protocols that go with it. Your response has been, We should call 1-800-Rite Aid. That's as it relates to you. I've also asked Miss Seyda, though, to develop a service-standard procedure and program for us. But I asked, I believe, you and Mr. Hushen to think about what else can be done for people right here and who they talk to. I mean, I have no sense of any kind of, I guess, confidence that beyond calling the 1-800 number that there is any further follow-up. I don't know that system, I don't understand how that system works and operates; whether you just call the 1-800 number, you have a conversation with someone, it kind of gets worked out, and then 266 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 it goes away. As opposed to a recall and report system. I mean, we heard some testimony that technically, apparently by way of the RFP, our consultant is supposed to do annual reviews of what goes on. Well, I've never seen anything about that, heard anything about that, never seen a report or anything else on that particular issue. So there is, in my view, and based on my experience, there's no on-the-ground regular monitoring or evaluation of what goes on. We pay a pay per-member per-month employee amount, you pay a dispensing fee, people pay a copay, and that's kind of it. We get what we get. And every open-enrollment period, we get information about what's going on. So I mean there's not a lot of real relationship in ongoing monitoring and evaluating from my standpoint. I don't see it, I don't know how it functions and operates.

Mr. Gurson

Well, we provide the City with reports on a periodic basis with respect to information that they ask for. There are 267 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 standardized reports. I'm sure the City can tell you better than I can because I just don't know of my own knowledge what those reports consist of and what their frequency is. What the Administration does with those reports, I can't tell you.

Councilman Nutter

Well, I understand that. Then what I'm going ask Miss Seyda is --

Councilman Cohen

Can we get copies of all reports?

Councilman Nutter

I want copies of all the past reports as well as, for the moment, some level of agreement that prior to any contract reauthorization, if you decide to proceed down the path, which I totally disagree with, which is this kind of every-year game that we play; or if we're going to into a multi-year contract phase, we would have those reports prior to any reauthorization, signing of contract, letters flying back and forth, people agreeing by way of individual letters that get signed, we really should see those reports before any of that kind of activity takes place.

Ms. Seyda

If you could clarify, you know, for me specifically the reports, the types 268 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 of reports that you're looking for.

Councilman Nutter

Mr. Gurson just said that Rite Aid Corporation provides various reports to the City on a regular or annual basis about, I guess, number of prescriptions filled, utilization rates, a whole --

Ms. Seyda

That's correct, that is correct.

Councilman Nutter

Whatever they are, I don't know.

Ms. Seyda

That is correct.

Councilman Nutter

I can't even ask what I want to ask about them because I don't even know what's in them. Whatever those reports are, I'd like copies of them going back to the beginning of the contract. But, further, prior to any reauthorization, whether it's the one-year contract scheme or if we go to a multi-year contract, we certainly need to have that information before any new contracts are signed.

Ms. Seyda

Think I understand what you're looking for.

Councilman Ortiz

(Inaudible, off 269 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 mike.)

Councilman Cohen

Well, I was going to say, City Council practice is that the Councilmember that introduced the resolution has a continuing responsibility and to be able to report back to the rest of the Council. Therefore, in this case, I think copies of all reports ought to go to Councilman Nutter. He was the sponsor of the resolution that brought about these hearings. And to make it simple, we think there ought to be a copy of anything that transpires. If there are going to be any more letter agreements or anything corresponding, we ought to get a copy of anything. And if you run into a problem with any of the supervisors you have, Miss Seyda, the Managing Director, the Chief of Staff, or the Mayor, we'd like to know so that we can resolve it. But it's our request that we be kept continually informed. And then in addition, I think what Councilman Nutter said is we want assurance that before there's any effort to exercise the option 270 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 of renewal that we be informed in plenty of time so that we can consider it and express our opinion. So that if we agree, fine, we say we agree, go ahead. And, you know, if we disagree, we'll have a chance to discuss that before the final decision is made by the Administration.

Councilman Nutter

Exactly. Lastly, Mr. Gurson, questions have been asked about the payments to the consultant. Your initial response to that was you weren't sure who was paying whom. You seemed over the rail when Mr. Brog was reading from the RFP.

Mr. Gurson

Yes, we are. As part of the contract, we are paying the consultant's fee as required by the RFP.

Councilman Nutter

Okay. And there seem to be two components to that. Could you go over that? Did you hear what was read into the record about that? There seemed to be a percentage based on the disbursements by the City. And then I was slightly distracted, but I thought I heard something about a per-prescription issue. Can you explain that? 271 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586

Mr. Gurson

I thought what I heard was that there were two alternatives. And on a capitated basis, the payment to the broker/ consultant would be 1 percent of the amount paid by the City. And on a fee-for-service basis, it would be paid on a per-prescription basis, a -- I think it was cents that was mentioned. 9

Councilman Cohen

Yes. 10

Mr. Gurson

It would be paid on a 11 per-prescription basis. Not both being paid. It 12 depends which way -- which plan the City is using. 13

Councilman Nutter

But we're using 14 both provisions. 15

Mr. Gurson

No, the City is only using 16 the capitated provision. 17

Councilman Nutter

You're using -- 18

Mr. Gurson

We are, that is correct. 19

Councilman Nutter

And so, lastly, 20 when the rate increases -- 21

Mr. Gurson

Right. 22

Councilman Nutter

-- per month per 23 employee and the total dollar-amount paid out by 24 the City to Rite Aid increases, does that mean 25 that there is an automatic increase as it relates 272 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 to the consultant as well? It's just 1 percent of whatever.

Mr. Gurson

It's just 1 percent of whatever. I think that's what RFP said, as I heard it read.

Councilman Cohen

And it's the $5 copay part of that revenue?

Mr. Gurson

No, it is not because to the extent that -- as I said before, copayments have a variety of functions. One is to make it more attractive for the customer to take generic medication so that the cost is less. And the other is to shift costs, just purely shift cost from the payor (the plan) to the participant. And that's what a copay does. But the 1 percent is not part of the City's payment. I mean, the copay is not included within the City's payment for calculating the amount.

Councilman Cohen

Referring to Councilman Nutter's earlier series of questions about having a local person that everybody could call, Rite Aid did have such a person in part. His name is Manny Stamatakis. He was the original 273 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 representative of Rite Aid. We understand he actually testified sitting where you two are, he and David L. Cohen testified together in support of the original contract. Now, he still may be a representative, but politically, he's moved into a different area. He's Chairman of the Delaware River Port Authority. But he was the person, when nothing else availed and I made complaints to David L. Cohen about the poor service, he said to me, "Well please call Manny Stamatakis." And like that, the problem was resolved. We have a problem here. A member of our staff came under the plan in October of last year and hasn't even been able to get from Eagle Management a -- what do you call it, a membership card? or whatever the card is that send out so he can show his pharmacist that he truly is covered. What could explain that?

Mr. Gurson

Well, it could be that the City has not freshened -- and I don't know that it's the case -- the eligibility data. We rely on the City to tell us the specific names of people 274 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 who are covered by the plan. Now, we --

Councilman Cohen

He's reported that, he says, at least five times. Now, could we find out if it's the City? And if it's the City, could you get on it? Stanley Shapiro, S-H-A-P-I-R-O, is the name. And "Stanley" is like "Stanley Hardware," only he's a lawyer. Could you find out where the fault is so he can get a card?

Ms. Seyda

I certainly recognize the name. I was not aware of the problem. We will follow up on that.

Mr. Gurson

And let me also point out that --

Councilman Cohen

You know, we feel silly raising it, but I know Manny Stamatakis were here, I'd call him on the phone, and he'd have the card within 48 hours, maybe hours. 21

Mr. Gurson

Mr. Chairman, I can only 22 point out that you don't have to have the card to 23 get your prescription filled. You can go in and 24 give your name. It may take longer, but you can go in and get your prescription filled without 275 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 card.

Councilman Cohen

Yeah, well, first they try on the computer to locate you, and then after about ten minutes, they tell you, Well, we can't locate you -- UNIDENTIFIED COUNCIL STAFF MEMBER: And, God forbid, you have a dependent who you need a prescription for.

Councilman Nutter

Any other questions for these witnesses?

Councilman Cohen

Well, why can't we have a name -- may I request that without going to official committee action, can't there be somebody who is someone we can tell people -- we know if we have problems -- the reason that we point out our problems is not that we don't know how to get them solved. I know could have called the head of Rite Aid, one of the Grassos, father or son, and gotten him, you know, within hours. 21 But if we have trouble in the normal 22 day-to-day, think of what happens to employees 23 that don't sit on City Council of don't, you know, 24 have enough technical knowledge to know how to pursue it. Why can't there be a person in 276 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Philadelphia? You've got a big organization. Now, why can't there be a person, a consumer advocate if you will, whatever other name you want to give, that we could tell all employees, If you have any question, call this number and they will be able to respond.

Mr. Gurson

I think that's something we could consider. At the moment, it's a telephone call. And it just so happens that the person who answers the telephone is not sitting in Philadelphia but is sitting elsewhere. They won't be -- we can't have a person in every store, a store manager.

Councilman Cohen

No, we're not asking for that, just one person in Philadelphia. Manny Stamatakis was actually outside the City. He was in a county.

Mr. Gurson

Well, I don't think Manny would like it if we suggested he's the person that every person should call.

Councilman Cohen

Well, I'll tell you, he was awfully good at what he was doing.

Councilman Nutter

Although he has enough phones. 277 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586

Councilman Cohen

Could we hear from you, sir, Mr. Gurson, on that.

Mr. Gurson

Yes, Mr. Chairman.

Councilman Cohen

And maybe you could tell the Philadelphia head and maybe he could have it in his office.

Mr. Gurson

But Mr. Hushen will tell you, in all seriousness, that we get calls at the customer service center. They are directed from the customer service center if the customer service person can't answer them. We get direct calls. We had an instance which Mr. Hushen was aware of where we had a person who had food stamps and was having trouble getting change made when they bought food items. And Mr. Hushen was called directly by the president of the company and asked to rectify the situation, and we rectified it. We can only deal with those things that we know about, and we try to do it quickly for everybody, including just ordinary people. They don't have to be Members of Council.

Councilman Cohen

All right. That's good to hear, but if you could ever move away from 278 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 that form which lists all the for reasons, and for reasons 2 and 7, you're not getting paid, and you could write a normal letter saying, We believe we have paid this prescription, you know, and that's why we're not paying it again. . .

Mr. Gurson

Only because it's late in the day, we would love to be able to do that, but I think the rate the City would pay us would have to go up because of the cost involved in doing things on an individual base like that, as crass as it is. I mean, you can't have -- it would take hundreds of people to stylize and respond to individual complaints. It can't be done economically for us, and therefore, for the City.

Councilman Nutter

But you're working on some kind of on-the-ground, in-Philadelphia complaint response program.

Councilman Cohen

That would go a long way.

Mr. Gurson

I understand.

Councilman Nutter

Okay, all right. Any other questions?

Councilman Cohen

Is the City 279 COMMERCE & ECONOMIC DEVELOPMENT - BILL NO. 970586 Solicitor going to. . .

Councilman Nutter

No, we have spared the solicitor today. They've provided some good background information.

Councilman Cohen

Okay, very good.

Councilman Nutter

But the Solicitor wanted a representative to be here to provide any information that we might require, but I think we're okay. Thank you very much for participating. This hearing is adjourned to the call of the Chairs, recessed. Thank you. (Adjourned at 4:08 p.m.) - - - 280 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Thursday, May 21, 1998, were reported and accurately by me, and that this is a correct transcript of same. RE: JOINT COUNCIL MEETINGS ON COMMERCE AND ECONOMIC DEVELOPMENT COMMITTEE, COMMITTEE ON LAW AND GOVERNMENT BILL NO. 970845 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter