Common use of Experience Rebate Clause in Contracts

Experience Rebate. For the Initial Term, CONTRACTOR must pay to HHSC an experience rebate calculated in accordance with the tiered rebate method listed below based on the excess of allowable CHIP HMO revenues over allowable CHIP HMO expenses as measured by any positive amount on Line 7, Net Income Before Taxes, of "Part 1: CHIP Financial Summary, All Coverage Groups Combined" of the annual Financial-Statistical Report contained in Appendix D, as reviewed and confirmed by HHSC. GRADUATED REBATE METHOD -------------------------------------------------------------------------------- Experience Rebate CONTRACTOR Share HHSC Share as a Percentage of Revenues -------------------------------------------------------------------------------- 0% - 3% 100% 0% -------------------------------------------------------------------------------- Over 3% - 7% 75% 25% -------------------------------------------------------------------------------- Over 7% - 10% 50% 50% -------------------------------------------------------------------------------- Over 10% - 15% 25% 75% -------------------------------------------------------------------------------- Over 15% 0% 100% -------------------------------------------------------------------------------- The financial governance document for calculating the experience rebate is the governance document used in the Texas Medicaid STAR program on the Effective Date of this Agreement. Losses incurred for one contract year may be carried forward only to the next contract year. If CONTRACTOR operates in multiple CHIP Service Areas, losses in one CHIP Service Area cannot be used to offset net income before taxes in another CHIP Service Area. CONTRACTOR may subtract from an experience rebate that is owed to HHSC any expenses for population-based health initiatives that have been approved by HHSC. A population-based initiative is a project or program designed to improve some aspect of quality of care, quality of life, or health care knowledge for children and/or their adult caretakers, as a whole. There will be two settlements for payment(s) of the state share of the experience rebate. The first settlement shall equal 100% of the state share of the experience rebate as derived from Line 7, Net Income Before Taxes, of "Part 1: CHIP Financial Summary, All Groups Combined" of the annual CHIP Financial-Statistical (CFS) Report contained in Appendix D and shall be paid on the same day the first annual CFS Report is submitted to the Administrative Services Contractor or HHSC. The second settlement shall be an adjustment to the first settlement and shall be paid to HHSC on the same day that the second annual CFS Report is submitted to the Administrative Services Contractor or HHSC if the adjustment is a payment from CONTRACTOR to HHSC. HHSC or its agent may audit or review the CFS reports. If HHSC determines that corrections to the CFS reports are required based on an HHSC audit/review or other documentation acceptable to HHSC, to determine an adjustment to the amount of the second settlement, then final adjustment shall be made within two years from the date that CONTRACTOR submits the second annual CFS report. CONTRACTOR must pay the first and second settlements on the due dates for the first and second CFS reports respectively as identified in section 17.02. HHSC may adjust the experience rebate if HHSC determines that CONTRACTOR has paid affiliates amounts for goods or services that are higher than the fair market value of the goods and services in that CHIP Service Area. Fair market value may be based on the amount CONTRACTOR pays a non-affiliate(s) or the amount another health maintenance organization pays for the same or similar service in that CHIP Service Area. HHSC has final authority in auditing and determining the amount of the experience rebate.

Experience Rebate. For the Initial Term, CONTRACTOR must pay to HHSC an experience rebate calculated in accordance with the tiered rebate method listed below based on the excess of allowable CHIP HMO revenues over allowable CHIP HMO expenses as measured by any positive amount on Line 7, Net Income Before Taxes, of "Part 1: CHIP Financial Summary, All Coverage Groups Combined" of the annual Financial-Statistical Report contained in Appendix D, as reviewed and confirmed by HHSC. GRADUATED REBATE METHOD -------------------------------------------------------------------------------- Experience Rebate CONTRACTOR Share HHSC Share as a Percentage of Revenues -------------------------------------------------------------------------------- CONTRACTOR Share HHSC Share ---------------------- ---------------- ---------- 0% - 3% 100% 0% -------------------------------------------------------------------------------- Over 3% - 7% 75% 25% -------------------------------------------------------------------------------- Over 7% - 10% 50% 50% -------------------------------------------------------------------------------- Over 10% - 15% 25% 75% -------------------------------------------------------------------------------- Over 15% 0% 100% -------------------------------------------------------------------------------- The financial governance document for calculating the experience rebate is the governance document used in the Texas Medicaid STAR program on the Effective Date of this the Agreement. Losses incurred for one contract year may be carried forward only to the next contract year. If CONTRACTOR operates in multiple CHIP Service Areas, losses in one CHIP Service Area cannot be used to offset net income before taxes in another CHIP Service Area. CONTRACTOR may subtract from an experience rebate that is owed to HHSC any expenses for population-based health initiatives that have been approved by HHSC. A population-based initiative is a project or program designed to improve some aspect of quality of care, quality of life, or health care knowledge for children and/or their adult caretakers, as a whole. There will be two settlements for payment(s) of the state share of the experience rebate. The first settlement shall equal 100% of the state share of the experience rebate as derived from Line 7, Net Income Before Taxes, of "Part 1: CHIP Financial Summary, All Groups Combined" of the annual CHIP Financial-Financial- Statistical (CFS) Report contained in Appendix D and shall be paid on the same day the first annual CFS Report is submitted to the Administrative Services Contractor or HHSC. The second settlement shall be an adjustment to the first settlement and shall be paid to HHSC on the same day that the second annual CFS Report is submitted to the Administrative Services Contractor or HHSC if the adjustment is a payment from CONTRACTOR to HHSC. HHSC or its agent may audit or review the CFS reports. If HHSC determines that corrections to the CFS reports are required based on an HHSC audit/review or other documentation acceptable to HHSC, to determine an adjustment to the amount of the second settlement, then final adjustment shall be made within two years from the date that CONTRACTOR submits the second annual CFS report. CONTRACTOR must pay the first and second settlements on the due dates for the first and second CFS reports respectively as identified in section 17.02. HHSC may adjust the experience rebate if HHSC determines that CONTRACTOR has paid affiliates amounts for goods or services that are higher than the fair market value of the goods and services in that CHIP Service Area. Fair market value may be based on the amount CONTRACTOR pays a non-affiliate(s) or the amount another health maintenance organization pays for the same or similar service in that CHIP Service Area. HHSC has final authority in auditing and determining the amount of the experience rebate.