City of Mesquite: DRAFT Blue Cross and Blue Shield of Texas administrative services agreement with Prime Therapeutics pharmacy benefit management, effective January 1, 2022 (unsigned council packet draft)
Gag clause flagged. 2 of 100 weight is excluded as unclear or redacted. Scoring notes
Clause-by-clause evidence
FID · Weight 7 of 100
Fiduciary duty and loyalty
Contradicts the model
From the published record
Claim Administrator is not the plan administrator of Employer’s employee benefit plan and is not a fiduciary of Employer, the plan administrator or of the Plan.
Why this verdict
All five seats voted bad and every seat cited Section 5.2 on page 11. I re-read pages 4, 11 and 43 to confirm. Page 11 states that the Claim Administrator is not the plan administrator and is not a fiduciary of the Employer, the plan administrator or the Plan, and Section 5.3 describes it as a contract claims administrator and service provider only, while Section 2.1 on page 4 makes the City solely responsible for the Plan. Page 43 adds that manufacturer contracting is done on Prime's or the Claim Administrator's own behalf and for its own benefit. The model term places loyalty and care duties on the PBM toward the plan and its members; this draft disclaims them in terms, so bad is unanimous. This is a draft, and the executed agreement may differ.
Compare with the model contract · § Section 2.4
The PBM owes duties of loyalty and care solely to the plan and its members, must disclose all direct and indirect compensation and every economic conflict, and must disgorge anything retained in breach without the plan proving damages.
Without a loyalty duty the PBM is free to put its own affiliates and revenue ahead of the plan when it exercises discretion over formularies, networks and pricing.
Independent council readings 5 published readings
Only readings under the score’s rubric version are shown here. Model confidence and agreement do not establish legal correctness.
Claude Fable 5.1Contradicts the model
Section 5.2 on page 11 states flatly that the Claim Administrator is not a fiduciary of the Employer, the plan administrator or the Plan, and Section 5.3 describes its role as a contract claims administrator and service provider only. Section 5.1 adds that it will not accept any allocation or delegation of responsibilities under the Plan. On the pharmacy side, Exhibit 7 Section 4 on page 43 says Prime and the Claim Administrator contract with manufacturers on their own behalf and for their own benefit and not on behalf of Employer, and Exhibit 6 item 15 on page 42 repeats that recovery work is not undertaken as a fiduciary. The model contract makes the PBM owe loyalty and care solely to the plan and disgorge anything retained in breach. This agreement does the opposite, so the verdict is bad.
Claim Administrator is not the plan administrator of Employer’s employee benefit plan and is not a fiduciary of Employer, the plan administrator or of the Plan.
Page 11 · Rubric v2
Gemini 3.8 FlashContradicts the model
The agreement explicitly disclaims fiduciary responsibility on Page 11, providing that the Claim Administrator is not a fiduciary of the Employer, the plan administrator, or the Plan, but only a service provider. On Page 4, Section 2.1 makes the Employer solely responsible for Plan operations and compliance, while on Page 42, the administrator disclaims fiduciary status regarding recovery litigation. This is the opposite of the model contract published by Mark Cuban and collaborators, which requires the PBM to owe fiduciary duties of loyalty and care solely to the plan and disgorge retained compensation.
Claim Administrator is not the plan administrator of Employer’s employee benefit plan and is not a fiduciary of Employer, the plan administrator or of the Plan.
Page 11 · Rubric v2
GPT 6 SolContradicts the model
Page 11 expressly disclaims fiduciary status and describes the claim administrator as a contract service provider. Page 43 adds that manufacturer contracting is on Prime's or the administrator's own behalf and for its own benefit. Pages 28 and 44 assign actual rebate and administrative fee interests away from the employer. The model term requires affirmative loyalty and care solely to the plan and members, conflict and compensation disclosure, and disgorgement without proof of damage. This draft takes the opposite position on fiduciary capacity and economic entitlement. Although page 4 keeps the administrator responsible for delegated services, that contractual responsibility is not an affirmative duty of loyalty to the city.
Claim Administrator is not the plan administrator of Employer’s employee benefit plan and is not a fiduciary of Employer, the plan administrator or of the Plan.
Page 11 · Rubric v2
Grok 4.7Contradicts the model
Page 11, Section 5.2, states that Claim Administrator is not the plan administrator of the Employer's employee benefit plan and is not a fiduciary of the Employer, the plan administrator, or the Plan. Section 5.3 on the same page says the parties intend Claim Administrator to be a service provider but not a fiduciary with respect to the plan. Page 9, Section 4.6, disclaims any fiduciary obligation for directions to provide first dollar coverage. Page 42, Exhibit 6, says Claim Administrator does not pursue recoveries as a fiduciary of the Plan or covered persons. Page 28 says rebate negotiation is conducted for Claim Administrator and not for the Employer or covered persons. Page 43 says Prime contracts for rebates on its own behalf and not on behalf of the Employer. The model contract requires duties of loyalty and care owed solely to the plan and its members, disclosure of every economic conflict, and disgorgement without proof of damages. This draft rejects that status and puts vendor economics first. The verdict is bad.
Claim Administrator is not the plan administrator of Employer’s employee benefit plan and is not a fiduciary of Employer, the plan administrator or of the Plan.
Page 11 · Rubric v2
Kimi K3Contradicts the model
The model term requires duties of loyalty and care owed solely to the plan and its members, full disclosure of direct and indirect compensation, and disgorgement of anything retained in breach. This draft does the opposite. Section 5.2 on page 11 states the Claim Administrator is not a fiduciary of the Employer, the plan administrator or the Plan, and section 5.3 on the same page frames it as a service provider only. Section 4.6 on page 9 disclaims any fiduciary obligation for benefit design directions, and Exhibit 6 item 15 on page 42 disclaims fiduciary status in recovery litigation. There is no loyalty duty, no duty of care, and no disgorgement remedy anywhere in the 55 pages. Combined with the express retention of rebates on page 28, the vendor is contractually free to put its own revenue first. This is the inverse of the model term.
Claim Administrator is not the plan administrator of Employer's employee benefit plan and is not a fiduciary of Employer, the plan administrator or of the Plan.
Page 11 · Rubric v2
Finding provenance
Finding ID
aa2ec7ee-98ba-44ac-bbf5-b23f589fe88d
Reviewed
Sep 30, 2026
Reviewer
owner
Recorded confidence
0.97
Model votes
Kimi K3: bad; Grok 4.7: bad; GPT 6 Sol: bad; Claude Fable 5.1: bad; Gemini 3.8 Flash: bad
Published reports 3 write-ups
Published Sep 30, 2026
Good news, bad news: the short version
Read this first
This is a draft. The document is the unsigned Blue Cross and Blue Shield of Texas form agreement attached to Mesquite's October 2021 council packet, effective January 1, 2022, with prescriptions run by Prime Therapeutics under Exhibit 7 (pages 1 and 43). The signed contract and the PBM Fee Schedule Addendum that carries the pricing were not posted, so the discount guarantees, administrative fee and Rebate Credit amounts are not read here and nothing below says anything about their size. The executed agreement may differ.
Good news
The conflicts are disclosed in writing. Blue Cross tells the City it owns a significant portion of Prime's equity (page 28), that Prime collects per claim fees from pharmacies and administrative fees from manufacturers (page 27), and that the maximum disclosed manufacturer administrative fee is five and a half percent of WAC (page 28).
The City can get a list of the providers and vendors Blue Cross owns, once a year on request (page 12).
The City may audit claim payment records during the term and for one hundred eighty days after (page 5), and may audit Prime's records on the same terms (page 45).
Network pharmacies may not switch a member to a higher cost drug unless the member or the physician asks (page 44), and the choice of provider belongs to the covered person (page 26).
The City selects a designated Drug List from the options offered (page 43).
Amendments generally require mutual written agreement (page 12), and either party may exit on ninety days notice once the fee period ends (page 11).
Bad news
The City has no right to the rebates. It and its Plan have no legal interest in any portion of the rebates, payments, discounts or allowances from Prime or manufacturers (page 28). It receives a Rebate Credit paid from Blue Cross's own assets regardless of what was collected (page 28), in an amount set in the missing addendum.
Manufacturer administrative fees belong to the vendor (page 44), group purchasing organization fees come off the top (page 28), and the Rebate definition excludes both (page 49).
Spread pricing is acknowledged as a term of the deal: Blue Cross and or Prime will keep all or a portion of the discounts negotiated with pharmacies (page 44), and Prime may keep part of the mail and specialty discounts (page 27) where the pharmacy may be a Prime affiliate (page 28).
Blue Cross is not a fiduciary of the City or the Plan (page 11).
MAC lists are proprietary and may be viewed only at Prime's headquarters, four times a year, on thirty days notice, after signing a non disclosure agreement (page 44).
Audits are capped at three hundred claims, contingency fee auditors are barred and errors may not be extrapolated (page 5).
Blue Cross or the Blue Cross Association may amend the agreement on sixty days notice (page 12).
Disputes go to confidential arbitration with no judge or jury, and Blue Cross picks the arbitrator for disputes of $10,000 or less (pages 10 and 11). There are no liquidated damages or automatic credits for the City anywhere in the text.
Leaving costs a Termination Administrative Charge (page 22), voids the pricing guarantees for the period (page 46) and ends the Rebate Credits (page 28).
No plan ownership of data; the vendor may use de identified data for its own industry activities (page 7).
The City may not disclose the agreement itself to any third party without Blue Cross's written consent (page 7). This clause sets the Red flag grade.
No most favored client clause, no market check, no lowest net cost standard, no claim level price ceiling and no cash price protection appear in the posted text.
The bottom line
The draft scores 15.8 out of 100 on 98 points of weight against the rubric derived from the model PBM contract published by Mark Cuban and collaborators, with the performance guarantee item unclear because it lives in the omitted addendum. What the council read is largely the vendor's standard form rather than terms Mesquite negotiated, which is exactly why the executed agreement and the fee schedule addendum should be obtained and read next. The model contract is a reference for the rubric, not an endorsement of this agreement or its vendor.
Request a signed agreement, later amendments, incorporated proposals or any missing exhibits as needed. A full-contract label does not confirm that the posted copy is signed.
The reference is the open source PBM contract published by Mark Cuban and collaborators, version 3.5. BetterBuy Rx did not write it and is not affiliated with or endorsed by its authors. Read the original model contract.