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Exhibit 10.16
QUALITY CARE SOLUTIONS, INC.
LICENSE AGREEMENT
This Agreement is made and entered into by and between Quality Care Solutions,
Inc, a Nevada corporation with its principal place of business at ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter referred to as "QCSI"), and
Synertech Health System Solutions, Inc., a Pennsylvania corporation with its
principal place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter referred to as "SYNERTECH").
WHEREAS, QCSI has developed and owns a suite of medical and dental insurance
related software products and services; and
WHEREAS, SYNERTECH provides administrative and information technology services
to medical and dental payor clients and desires to contract with QCSI to license
certain of QCSI's software products and receive related services; and
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
I. DEFINITIONS
1.1 ADVANCE PAYMENT has the meaning set forth in Exhibit A.
1.2 AFFILIATE means an entity that controls, is controlled by, or
is under common control with, the entity in question.
1.3 AGGREGATE MINIMUM LICENSE AND SUPPORT FEE means the total of
all Minimum Monthly Payments payable by SYNERTECH during the
first five (5) years of the term of this Agreement.
1.4 AGREEMENT means this agreement, including all Exhibits and
Schedules, and all amendments and modifications hereto and
thereto.
1.5 ANOMALY means the failure of a Product to perform in
accordance with the related Documentation.
1.6 aQDEN MEMBER means an individual who is provided health care
coverage by a Customer, which coverage is administered, in
whole or in part, by SYNERTECH or such Customer using the
aQDEN software product.
1.7 CARVE-OUT MEMBERS means those individuals who are provided
health care coverage by a Customer, with respect to which
coverage only a definitive ancillary, specialty or
administrative service (such as cardiology, radiology,
behavioral health, re-pricing) is administered, in whole or in
part, by SYNERTECH or such Customer using one or more of the
Products. "Carve-Out Members" will include all individuals
being provided such health care coverage by a Customer,
whether or not such individuals actually avail themselves of
such coverage.
1.8 COMBINATION MEMBER means an individual who is provided health
care coverage by a Customer, which coverage is administered,
in whole or in part, by SYNERTECH or such Customer using both
the QMACS and the aQDEN software products.
1.9 CUSTOMER or CUSTOMERS means any or all Turnkey Customers or
Service Bureau Customers.
1.10 CUSTOMER CONTRACT means either (1) an agreement between
SYNERTECH and a Customer pursuant to which SYNERTECH provides
application hosting, patch application and testing, claims
processing or other administrative support services to such
Customer using one or more Products, or (2) a Sub-License.
1.11 DERIVATIVE WORKS means any work based upon one or more
preexisting works of QCSI, such any other form in which a work
has been recast, transformed, modified or adapted, or any work
consisting of editorial revisions, annotations, elaborations,
or other modifications which, as a whole, represent an
"original work of authorship" as that phrase is defined by the
United States Copyright Act.
1.12 DOCUMENTATION means user guides, operating manuals and
specifications, whether in print or machine-readable media,
relating to the Software.
1.13 EFFECTIVE DATE means the date this Agreement is fully executed
by both parties.
1.14 ENHANCEMENTS has the meaning set forth in Section 3.2.
1.15 ESCROW AGENT has the meaning set forth in Section 3.5.
1.16 EXISTING CUSTOMER means (a) an entity that has an agreement
with SYNERTECH as of the Effective Date, and (b) any
organization, or customer of such organization, acquired by
SYNERTECH or any of its Affiliates on or after the Effective
Date. All Existing Customers as of the Effective Date are set
forth in Exhibit D, as may be amended from time to time in
accordance with clause (b) of the preceding sentence.
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1.17 INITIAL REFERENCE DATA has the meaning set forth in Section
3.4.
1.18 LICENSE AND SUPPORT FEE has the meaning set forth in Exhibit
A.
1.19 MEMBER or MEMBERS means any or all QMACS Members, aQDEN
Members, Combination Members, and Carve-Out Members whose
coverage is in effect at or during the time in question.
1.20 MINIMUM MONTHLY PAYMENT has the meaning set forth in Exhibit
A.
1.21 NEW SOFTWARE means new executable code, including beta
versions of New Software, which provides significantly new
functions or a family of functions which is functionally
unrelated to the functionality of Products.
1.22 PMPM FEE means a per member per month fee.
1.23 PRIOR RELATIONSHIP between QCSI and an entity exists if,
within the twelve (12) month period immediately prior to a
SYNERTECH Referral, QCSI has: (i) sent to such entity a
written response to a Request for Proposal or Request for
Information, or (ii) completed a demonstration of a Product to
such entity and a Prior Relationship between SYNERTECH and an
entity exists if, within the twelve (12) month period
immediately prior to a QCSI Referral, SYNERTECH has; (i) sent
to such entity a written response to a Request for Proposal or
Request for Information, or (ii) completed a demonstration of
a Product or of its service bureau services to such entity.
1.24 PRODUCTS means those computer software products known as (a)
QMACS, (b) aQDEN, and (c) web enabled components when released
and made generally available by QCSI (anticipated to be
Version 5 when generally available to QCSI clients). Each
"Product" is comprised of Software and Documentation including
ability to perform electronic data interchange. "Product"
includes any and all enhancements, bug fixes and updates
(excluding New Software) to the Software or the Documentation
that are released by QCSI during the term of this Agreement.
1.25 QMACS MEMBER means an individual who is provided health care
coverage by a Customer, which coverage is administered, in
whole or in part, by SYNERTECH or such Customer using the
QMACS software product.
1.26 REFERENCE SALE means a sale of a Product or other products or
services by QCSI, as evidenced by a written, executed
agreement between QCSI and a client, which sale results from a
SYNERTECH Referral or a sale of service bureau services by
Synertech, as evidenced by a written, executed agreement
between SYNERTECH and a client, which sale results from a QCSI
Referral.
1.27 SERVICE BUREAU CUSTOMER means an entity for which SYNERTECH
provides application hosting, patch application and testing,
claims processing or other administrative support services
using a Product and which is not granted a Sub-License to use
such Product by SYNERTECH.
1.28 SOFTWARE means the machine readable computer software
programs, which comprise the Products.
1.29 SUB-LICENSE means the license between SYNERTECH and a Customer
to use Products as defined herein and provided by Section 3.10
herein.
1.30 SUPPORT means the services to be provided by QCSI as described
and in the manner set forth in Exhibit E.
1.31 SYNERTECH REFERRAL has the meaning set forth in Section 3.12.
1.32 SYNERTECH STAFF has the meaning set forth in Section 3.8-1.
1.33 TERMINATION PAYMENT means an amount equal to the difference
between (i) the Aggregate Minimum License and Support Fee, and
(ii) the total of all License and Support Fees paid by
SYNERTECH as of the date in question.
1.34 TOTAL MEMBERS means the sum of all Members at or during the
time in question.
1.35 TURNKEY CUSTOMER means an entity to which SYNERTECH grants a
Sub-License and which operates, or has a subcontractor other
than SYNERTECH operate, such Product(s).
II. SOFTWARE LICENSE GRANT
2.1 Grant of License. QCSI hereby grants to SYNERTECH a perpetual,
non-exclusive, non-transferable license to use and grant
Sub-Licenses ("License"), subject to the terms, conditions,
limitations and restrictions as set forth herein. This License
grants SYNERTECH the right to:
2.1-1 Use the Products for Service Bureau Customers and
Existing Customers;
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2.1-2 Grant Sub-Licenses to Existing Customers and Service
Bureau Customers as provided under Sections 3.10 and
3.11;
2.1-3 Copy the Products for the use indicated in
Subsections 2.1-1 and 2.1-2 above; such copies shall
include QCSI's copyright notices; and
2.1-4 Provide Customers with access to view and/or update
data in the Products, providing such Customers agree,
in writing, to maintain the confidentiality of the
Product.
2.2 Fees. To maintain the License and receive Support hereunder,
SYNERTECH shall pay to QCSI the appropriate License and
Support Fees. Additional support services requested by
SYNERTECH will be charged by QCSI at its then prevailing
rates, subject to the provisions of Section 3.13.
2.3 Confidentiality.
2.3-1 QCSI Information. SYNERTECH acknowledges that (a) the
Products, (b) all training materials, (c) all plans,
prices, configurations, specifications, techniques,
algorithms, schemas, screen prints, modification,
extraction, extrapolations and processes contained in
either (a) or (b), are the property and trade secrets
of QCSI and are subject to copyright protections. Any
copyright notice appearing on such materials does not
imply unrestricted or public access. No duplication,
usage, disclosure, or publication of such materials,
in whole or in part, for any purpose is permitted,
except that which is expressly permitted by this
Agreement or other written permission of QCSI.
SYNERTECH shall include in all copies made by it,
notices of copyright and other proprietary rights
included by QCSI in or on the Products. SYNERTECH
agrees to safeguard all code against non-licensed
use, copying, transfer or inspection by any third
party. SYNERTECH shall require all entities (and
shall require all entities to require their persons)
to whom SYNERTECH has granted authority to save data
or who have access to any Product to execute a
confidentiality agreement. Such confidentiality
agreements will be provided to QCSI upon QCSI's prior
written request.
2.3-2 SYNERTECH Information. QCSI acknowledges that the
business, financial and medical information of
SYNERTECH, its Customers and the Members constitute
confidential information. QCSI agrees to safeguard
such information and prevent any disclosure or use of
such information for any purposes whatsoever.
2.4 Derivative Works. Any Derivative Work created by or on behalf
of QCSI and/or SYNERTECH shall be the property of QCSI. QCSI
recognizes that SYNERTECH may, from time to time without
QCSI's assistance wish to create reports, improvements,
additions, or enhancements, to the Products and agrees that
such work, which shall not be construed as Derivative Works,
shall be owned by SYNERTECH subject to QCSI's right to the
underlying Product.
2.5 Injunctive Relief. Each party agrees that a breach of Section
2.3 may cause irreparable harm to the non-breaching party and
that such non-breaching party shall be entitled to seek
injunctive relief in the event of such breach.
2.6 Loss or Damage to Product. In case of loss, damage, or
destruction of any Product, QCSI will replace it at the
written request of SYNERTECH. SYNERTECH shall pay QCSI's
reasonable reproduction and delivery expenses for such
replacement.
2.7 Support. QCSI shall provide Support to SYNERTECH in the time
and manner set forth in Exhibit E.
III. MISCELLANEOUS
3.1 Product Delivery. QCSI will deliver at least one
machine-readable copy of the Software. QCSI agrees to provide
one (1) hardcopy and one (1) electronic copy of the
Documentation to SYNERTECH as such Documentation is published
or updated.
3.2 Product Enhancements. QCSI shall develop and implement those
Product enhancements (the "Enhancements") set forth in Exhibit
C in accordance with the provisions thereof and of this
Section 3.2. Except as set forth in Exhibit C, each party
shall be responsible for its own costs and out of pocket
expenses incurred in the development of the Enhancements. In
the event any of the delivery dates set forth in Exhibit C are
not met, SYNERTECH shall have the right to terminate this
Agreement immediately and receive a full refund of all amounts
paid to QCSI hereunder.
3.3 Standard Reports. QCSI will deliver a set of standard reports
with the Products. SYNERTECH acknowledges that third-party
report writing software tools are required to create new
reports or modify QCSI's standard reports. The license fee,
support and training costs for any third-party report writing
tools are not included in the License and Support Fee and must
be acquired separately. SYNERTECH acknowledges that QCSI's
standard reports are templates and examples of reports QCSI
has developed for non-specific use. SYNERTECH acknowledges
that it is responsible for the design, development and
production of its own reports, documents, letters and
identification cards to be used in conjunction with the
Products.
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3.4 Reference Data. QCSI will provide to SYNERTECH such reference
data as may be required to configure and test the Products,
together with the data table structure and interface method to
facilitate loading, editing and maintenance of reference data
required to operate the Products ("Initial Reference Data").
Following delivery of the Initial Reference Data, SYNERTECH
will be solely responsible for procuring, updating and
maintaining of all reference data required to operate the
Products.
3.5 Source Code and PMPM Fees.
3.5.1 Escrow of Source Code. QCSI shall, at its expense,
maintain a copy of the most recent source code for
each Product with Ft. ▇▇▇▇ Escrow Services Inc. or a
trustee mutually acceptable to QCSI and SYNERTECH
("Escrow Agent"). QCSI shall, upon SYNERTECH's
request, provide SYNERTECH with a copy of the escrow
agreement. SYNERTECH shall have the right, at its
option to receive a copy of such source code from the
Escrow Agent under the following conditions:
3.5.1.1 QCSI Insolvency. QCSI ceases to do business
(in whole or in part), becomes or is
declared insolvent or bankrupt, or becomes
the subject of any proceedings relating to
its insolvency or liquidation (which, if
involuntary, are not dismissed within 120
days). SYNERTECH shall provide at least ten
(10) days prior written notice to QCSI and
Escrow Agent prior to receiving a copy of
such source code;
3.5.1.2 Competitiveness of Product. QCSI fails to
conclude at least two sales of the Product
to new customers during any twelve (12)
month period, SYNERTECH shall provide at
least ten (10) days prior written notice to
QCSI and Escrow Agent prior to receiving a
copy of such source code; or
3.5.1.3 Breach or Discontinuance of Support. QCSI
either (a) fails to correct a Code 1, Code 2
or Code 3 Anomaly, as such terms are defined
in Exhibit E, caused by or relating to the
Product within the corresponding time period
set forth in Exhibit E, or (b) ceases to
provide Support for any Product. SYNERTECH
shall provide at least three (3) days prior
written notice to QCSI and Escrow Agent
prior to receiving a copy of such source
code.
3.5.2 Adjustment of Fees. In the event SYNERTECH exercises
the option to obtain a copy of the source code for
the Products upon the occurrence of any of the events
set forth in Subsection 3.5.1, then, from and after
the date upon which SYNERTECH exercises such option,
there shall be a reduction of all PMPM Fees by 18%
and SYNERTECH shall have no further obligation to pay
a Minimum Monthly Payment.
3.6 Marketing. QCSI shall not reference SYNERTECH in advertising
and promotional materials concerning the sale and promotion of
the Products without the prior written permission in each such
instance. SYNERTECH shall not reference QCSI in advertising
and promotional materials concerning the sale and promotion of
the Products without the prior written permission in each such
instance. Notwithstanding the foregoing, QCSI may include
SYNERTECH in its customer or business partner lists and
SYNERTECH may include QCSI's name and the Product names in its
system or business partner lists. QCSI shall also obtain
SYNERTECH's prior written permission before use of any logo of
SYNERTECH. SYNERTECH agrees to act as a reference site for
QCSI, meaning SYNERTECH shall:
3.6-1 Host an annual minimum of four (4) prospective
clients of QCSI, upon the reasonable request of QCSI,
and demonstrate to such prospective clients of QCSI
the features and functions of the Products;
3.6-2 Reply to an annual maximum of twenty-four (24)
reference telephone calls to prospective clients of
QCSI;
3.6-3 Provide, in each case as described in Subsections
3.6-1 and 3.6-2, a positive reference of and for
QCSI, unless there are compelling reasons which
prevent a positive reference which have been
discussed in advance with QCSI and QCSI has been
provided adequate time to resolve;
3.6-4 Provide QCSI with positive quotes (verbal captions)
for marketing and sales material, press releases,
unless there are compelling reasons which prevent a
positive quote which have been discussed in advance
with QCSI and QCSI has been provided adequate time to
resolve; and
3.6-5 Work with QCSI to issue a joint press release as soon
as practicable following the execution of this
Agreement.
3.7 Beta-Site Partner. QCSI shall consider SYNERTECH a beta site
partner of QCSI, meaning QCSI shall:
3.7-1 Use best efforts to apprise SYNERTECH of planned
Product enhancements and new product offerings in
advance of any public announcement or communication
thereof,
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3.7-2 Offer to SYNERTECH the option, in each case, to test
enhancements and new products and to use such
enhancements and new products on a beta-site basis,
3.7-3 Allow SYNERTECH to provide input in advance of, and
feedback after reviewing, new enhancements and
product offerings; and
3.7-4 Allow a SYNERTECH designee to be a member of QCSI's
President's Advisory Board and invite a reasonable
number of SYNERTECH designees to attend all scheduled
Joint Application Development (JAD) sessions and all
annual client conferences.
3.8 Training.
3.8-1 Product Training. QCSI will provide detailed training
courses in both the technical and functional aspects
of the Products to approximately thirty (30)
employees or contractors of SYNERTECH or its
Affiliates ("SYNERTECH Staff"). Courses will be
performed at SYNERTECH's Harrisburg, Pennsylvania
facility, unless otherwise agreed to by the parties,
provided such facility satisfies QCSI's technical and
communication requirements. Upon payment of the sum
of Thirty-Two Thousand ($32,000) Dollars, SYNERTECH
shall be entitled to receive 640 instructor hours,
the dates, content, extent, and timing of which will
be agreed to by QCSI and SYNERTECH. SYNERTECH shall
reimburse QCSI for all reasonable travel and living
expenses incurred by QCSI personnel in providing such
training, all such reimbursements to be made in
accordance with a mutually agreeable travel policy.
Subsequent training will be available at QCSI's then
prevailing price, subject to the provisions of
Section 3.13.
3.8-2 Implementation Training. For a period of at least
five (5) months, commencing within ninety (90) days
following the Effective Date, QCSI shall provide
planning, configuration and implementation training
with respect to the Products to approximately ten
(10) SYNERTECH Staff. Such training shall be provided
at no additional cost to SYNERTECH, other than the
travel and living expenses incurred by SYNERTECH
Staff, and shall occur at either QCSI's facilities or
at the facilities of QCSI's customers. If such
training occurs at a QCSI customer facility and QCSI
is able to ▇▇▇▇ and receive reimbursement from such
customer for the time and travel and living expenses
of any SYNERTECH Staff, QCSI shall reimburse
SYNERTECH for the time spent by SYNERTECH Staff at
the hourly rate of $45.00, and for all travel and
living expenses incurred by SYNERTECH Staff.
3.9 Initial Installation of Software and Test Data. QCSI and
SYNERTECH shall jointly perform the initial installation of
the Software and QCSI's test data onto SYNERTECH's computer
equipment. Each party shall be responsible for its own costs
and out-of pocket expenses related to this installation.
3.10 Sub-Licensing. Subject to the terms and conditions of this
Agreement, SYNERTECH shall have the exclusive right to grant
Sub-Licenses and provide related services to (a) Existing
Customers, and (b) each Service Bureau Customer who has been a
Service Bureau Customer for a period of not less than
twenty-four (24) months and who subsequently wishes to become
a Turnkey Customer. Neither QCSI nor any of its Affiliates,
agents or distributors shall, directly or indirectly, market,
sell or license any of the Products or related Support or
services to any of the entities described in clauses (a) and
(b) hereof. The form of Sub-License agreement to be used by
SYNERTECH shall be mutually agreed upon by QCSI and SYNERTECH.
The prices at which SYNERTECH sublicenses the Products shall
be solely determined by SYNERTECH.
3.11 Transition. Upon execution of this Agreement, QCSI and
SYNERTECH shall jointly develop a written strategy for moving
SYNERTECH's Existing Customers to the Products. The strategy
shall include, but not be limited to, sales, communication,
technical, staffing, timing and functionality issues. Each
party shall be responsible for its costs and out-of-pocket
expenses incurred in the development of this strategy.
3.12 Referrals.
3.12-1 QCSI Referrals to SYNERTECH. If QCSI becomes aware
that a prospective client is interested in acquiring
services from SYNERTECH, QCSI agrees to (i) refer
such prospective client to SYNERTECH, and (ii) notify
SYNERTECH of such prospective client ("QCSI
Referral").
3.12-2 SYNERTECH Referrals to QCSI. If a prospective client
is interested in acquiring products from QCSI,
SYNERTECH agrees to (i) refer such prospective client
to QCSI, and (ii) notify QCSI of such prospective
client ("SYNERTECH Referral").
3.12-3 Reference Sale Fee - SYNERTECH Referral. In the event
a Synertech Referral results in a Reference Sale,
QCSI shall pay to SYNERTECH a Reference Sale Fee. A
Reference Sale must (a) be with an entity with whom
there is no Prior Relationship, (b) require that
there be written notification to QCSI by SYNERTECH of
the referral, and c) require that the agreement with
such entity be executed within eighteen (18) months
of such notification. QCSI shall notify SYNERTECH of
the Reference Sale within fifteen (15) days of its
execution. The Reference Sale Fee, in the event of a
SYNERTECH Referral shall be equal to ten percent
(10%) of all PMPM Fees received by QCSI during the
first twelve (12) month period that QCSI receives
PMPM Fees from such entity under the
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agreement between QCSI and such entity. The Reference
Sale Fee shall be paid to SYNERTECH on a monthly
basis within 10 days following the end of the
calendar month in which the PMPM Fees in question
were received.
3.12-4 Reference Sale Fee - QCSI Referral. In the event a
QCSI Referral results in a Reference Sale, SYNERTECH
shall pay to QCSI a Reference Sale Fee. A Reference
Sale must (a) be with an entity with whom there is no
Prior Relationship, (b) require that there be written
notification to SYNERTECH by QCSI of the referral,
and (c) require that the agreement with such entity
be executed within eighteen (18) months of such
notification. SYNERTECH shall notify QCSI of the
Reference Sale within fifteen (15) days of its
execution. The Reference Sale Fee, in the event of a
QCSI Referral, shall be equal to five percent (5%) of
all PMPM Fees received by SYNERTECH during the first
twelve (12) month period that SYNERTECH receives PMPM
Fees from such entity under the agreement between
SYNERTECH and such entity. The Reference Sale Fee
shall be paid to QCSI on a monthly basis within 10
days following the end of the calendar month in which
the PMPM Fees in question were received.
3.13 Favored Nations Pricing. Throughout the term of this Agreement,
QCSI agrees to offer to SYNERTECH its most competitive (lowest)
fees, rates and other charges as QCSI charges any organization
contracted with QCSI which provides service bureau or outsourcing
services, if those fees, rates and other charges are lower than
the fees, rates and charges provided herein.
IV. TERM AND TERMINATION
4.1 Term and Termination Without Cause. This Agreement shall
commence upon the Effective Date and shall continue unless
terminated (a) for cause by either party pursuant to Section
4.2, or (b) without cause by SYNERTECH upon one hundred twenty
(120) days prior notice. In the event SYNERTECH terminates
this Agreement without cause within the five (5) year period
following the Effective Date, SYNERTECH shall be liable to
QCSI for an amount equal to the Termination Payment as of the
effective date of termination of this Agreement. The
Termination Payment shall be made in monthly installments,
subject to adjustment as provided in Subsection 4.4-3.
4.2 Termination For Cause. Either party may terminate this
Agreement at any time upon notice to the other if: (i) the
other party breaches any of its obligations under this
Agreement and fails to remedy such breach within thirty (30)
days following written notice from the other party, (ii) the
other party ceases to do business (in whole or in part),
becomes or is declared insolvent or bankrupt, or is the
subject of any proceedings relating to its insolvency or
liquidation (which, if involuntary, are not dismissed within
120 days).
4.3 Breach by QCSI. In the event of a breach by QCSI which is not
cured within the applicable grace period, SYNERTECH may elect
not to terminate the Agreement in which case this Agreement
shall continue and all terms and conditions hereof shall
continue to apply, except that there shall be no further
License and Support Fees payable by SYNERTECH on and after the
expiration of the applicable grace period.
4.4 Obligations Upon Termination.
4.4-1 Cease Use. SYNERTECH will immediately cease all
display, advertising and use of all trademarks, trade
names and logos belonging or licensed to QCSI and
will not thereafter use, advertise or display any
name, ▇▇▇▇ or logo which is similar to any such
trademark, trade name or logo. Upon such termination,
SYNERTECH shall immediately cease to use any
marketing or other materials that identify it as a
representative of the Products.
4.4-2 Return Materials. SYNERTECH shall, at its expense,
promptly return to QCSI all copies of the Products
and any marketing or other materials relating to the
Products, whether in original or altered form or
copied in whole or in part and shall deliver to QCSI
within ten (10) days following the termination of
this Agreement a certificate signed by an officer of
SYNERTECH certifying the return of all such
materials.
4.4-3 Assignment of Customer Agreements. SYNERTECH shall
offer to assign to QCSI or its nominee any and all
Customer agreements and any other agreement between
SYNERTECH and a Customer with respect to the Products
and, to the extent that QCSI accepts such assignment,
SYNERTECH shall receive a credit against the
Termination Payment, if any, for all PMPM Fees
received by QCSI with respect to each accepted
Customer Contract; provided, however, that in no
event shall the amount of such credit exceed the
amount of the Termination Payment.
V. WARRANTIES AND INDEMNIFICATION
5.1 Initial Warranty. QCSI warrants that each Product will operate
substantially in accordance with the Documentation for a
period of ninety (90) days from the date of upon which
SYNERTECH commences processing services for a Customer using
such Product (the "Warranty Period"). In the event QCSI is
unable to repair or replace the defective Product, SYNERTECH
shall be entitled to a refund of all amounts paid for such
Product. Such remedy shall be available only if QCSI is
notified in writing within the Warranty Period and is afforded
a reasonable opportunity to cure such breach.
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5.2 Services Warranty. QCSI warrants that the training and other
services performed by QCSI hereunder (excluding Support) will
be performed in a good and workmanlike manner, consistent with
industry standards. SYNERTECH's sole and exclusive remedy for
a breach of the foregoing warranty shall be limited to having
the services re-performed at no additional cost to SYNERTECH.
5.3 Support Warranty. QCSI warrants that it shall remedy any
Product Anomaly reported during the term of this Agreement
within the time frames set forth in Exhibit E. This warranty
is contingent upon SYNERTECH's computing environment being
consistent with QCSI's recommended hardware and software
specifications and in good working order. It is further
contingent upon the Products being properly used and not
modified and/or serviced by an entity other than QCSI. QCSI
does not warrant that the Products will meet SYNERTECH's
requirements or will operate in the combinations which may be
selected for use by SYNERTECH, or that the operation of the
Products will be uninterrupted or error free. This warranty
does not extend to Products modified by SYNERTECH, for
Anomalies due to SYNERTECH's misuse of third-party products,
or to use of a version of the Product which is more than one
version past QCSI's latest released version.
5.4 Year 2000 Warranty. QCSI warrants that the Software is Year
2000 Compliant. As used in this Section 5.4, Year 2000
Compliant means that the Software (i) manages and manipulates
data involving dates, including single-century and
multi-century formulas, without generating incorrect values
involving such dates; (ii) provides that all date-related user
interface functionalities and data fields include indication
of the century and (iii) provides that all date-related data
interface functionalities include an indication of the
century. This warranty is contingent upon all hardware,
third-party software, and operating system used with the
Software accurately reflecting the change and not affecting
the Software.
5.5 Title. QCSI warrants that it owns the Software and has the
legal right to grant the Licenses, provide Support, and
perform the services set forth in this Agreement.
5.6 NO OTHER WARRANTIES. THE FOREGOING IS IN LIEU OF ALL OTHER
WARRANTIES EXPRESSED OR IMPLIED. QCSI HEREBY DISCLAIMS ALL
WARRANTIES NOT EXPRESSLY SET FORTH IN THIS AGREEMENT INCLUDING
BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE. SYNERTECH HEREBY
DISCLAIMS ANY RELIANCE ON ANY WARRANTY OR REPRESENTATION NOT
EXPRESSLY SET FORTH IN THIS AGREEMENT.
5.7 NO LIABILITY FOR CONSEQUENTIAL DAMAGES. EXCEPT FOR A BREACH OF
THE CONFIDENTIALITY PROVISIONS OF THIS AGREEMENT, IN NO EVENT
WILL EITHER PARTY BE LIABLE FOR ANY LOST PROFITS, LOST
SAVINGS, LOSS OF DATA, LOSS OF USE OF SOFTWARE, COSTS OF
RECREATING LOST DATA, OR ANY OTHER INDIRECT, SPECIAL OR OTHER
CONSEQUENTIAL DAMAGES, EVEN IF SUCH PARTY HAD BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
5.8 LIMITATIONS ON LIABILITY AND REMEDIES. EXCEPT FOR A BREACH OF
THE CONFIDENTIALITY PROVISIONS OF THIS AGREEMENT AND EXCEPT
WITH RESPECT TO QCSI'S OBLIGATIONS UNDER SECTION 5.9, NEITHER
PARTY SHALL BE LIABLE FOR DAMAGES FROM ANY CAUSE WHATSOEVER,
REGARDLESS OF THE FORM OF ACTION, INCLUDING CONTRACT, TORT,
COMPUTER MALPRACTICE, PRODUCTS LIABILITY, STRICT LIABILITY, OR
OTHERWISE SHALL BE LIMITED TO AN AMOUNT EQUAL TO THE TOTAL OF
ALL FEES PAID TO QCSI IN THE EIGHTEEN (18) MONTH PERIOD
PRECEEDING THE PARTY'S WRITTEN NOTIFICATION TO THE OTHER PARTY
OF ANY WRONGFUL ACTION.
5.9 Indemnification. QCSI shall indemnify and hold SYNERTECH and
its Customers harmless, at QCSI's expense, against any claim
that the Product infringes on a valid patent, copyright, trade
secret or other intellectual property right of a third party
in the United States. QCSI will also pay all costs, damages,
and attorney's fees that a court finally awards as a result of
such claim. QCSI's duties under this Section 5.9 are
conditioned upon the following:
5.9-1 SYNERTECH shall give QCSI prompt written notice of
any actual or threatened claim.
5.9-2 QCSI shall have control of the defense of any claim
and of all negotiations for the settlement or
compromise of such claim.
5.9-3 SYNERTECH shall cooperate with QCSI in the defense or
settlement of any claim at QCSI's expense.
5.9-4 The claim does not arise out of SYNERTECH's or a
Customer's modification of the Product or the use of
the Product in combination with anything not approved
by QCSI.
If a patent, trade secret or copyright infringement occurs, or
in QCSI's judgment is likely to occur, QCSI, shall, at its
option and expense, either procure the right for SYNERTECH to
continue using the Products, or replace or modify such
Products to be functionally equivalent so that they become
non-infringing. If neither of the foregoing alternatives is
reasonably available in QCSI's judgment, SYNERTECH shall
return all copies of
7
8
Product in question to QCSI upon QCSI's written request. QCSI
shall refund a pro-rata portion of all fees paid to QCSI for
the affected Product(s) based on a five-year useful life.
VI. GENERAL PROVISIONS
6.1 Applicable Law and Arbitration. This Agreement shall be
construed and interpreted in accordance with the laws of the
State of California. In the event that the parties are unable
to resolve within a reasonable time any controversy, dispute
or claim arising out of or in connection with this Agreement,
or its interpretation, performance or termination, binding
arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association ("AAA"). In the event of arbitration or
litigation, the prevailing party shall be entitled to recover
costs and expenses including reasonable attorney's fees. If
SYNERTECH is the filing party, any dispute shall be venued in
the County of Santa ▇▇▇▇▇ and any action filed shall be in the
Superior Court of the State of California, in and for the
County of Santa ▇▇▇▇▇. If QCSI is the filing party, any
dispute shall be venued in the County of Los Angeles and any
action filed shall be in the Superior Court of the State of
California, in and for the County of Los Angeles. Any action
or arbitration brought in any other venue shall be subject to
mandatory dismissal and the filing party to pay all costs and
expenses incurred in connection with any such wrongful filing.
6.2 Assignment. Neither party may assign or transfer this
Agreement, in whole or in part, except as expressly permitted
herein without the prior written approval of the other party,
which shall not be unreasonably withheld. Notwithstanding the
foregoing, either party may assign or transfer this Agreement
to an Affiliate.
6.3 Export Act. SYNERTECH shall not export any part of the
Products to any country in contravention of any law of the
United States, including the Export Administration Act of 1979
and regulations relating thereto.
6.4 Modification of the Agreement/Entire Agreement. This Agreement
supersedes all oral or written agreements, if any, between the
parties and constitutes the entire agreement between the
parties with respect to the matters contained herein. Any
modification, amendment, cancellation, or waiver of rights
under this Agreement shall be effective only if in writing
signed by a duly authorized representative of the party
against whom enforcement of the same is sought. No waiver of
any breach of this Agreement shall be construed as a waiver of
any subsequent breach. No delay in acting with regard to any
breach shall be construed as a waiver of the breach. No waiver
shall be effective unless in writing.
6.5 Reservation of Rights. All rights of QCSI not expressly
granted to SYNERTECH in writing are reserved.
6.6 Severability. In the event that any provision of this
Agreement shall become or be unenforceable, invalid, void or
voidable, the same shall be limited, construed or, if
necessary, limited to the extent necessary to remove such
defect and the remaining provisions shall continue to bind the
parties as though the unenforceable, invalid, void or voidable
part are not a part of the Agreement.
6.7 Force Majeure. Each party shall be excused for failures and
delays in performance of its respective obligations under this
Agreement caused by war, riots or insurrections, laws and
regulations, strikes, floods, fires, explosions, or other
catastrophes beyond the control and without the fault of such
party. This provision shall not, however, release such party
from using its best efforts to avoid or remove such cause, and
such party shall continue performance hereunder with the
utmost dispatch whenever such causes are removed. Upon
claiming any such excuse or delay for nonperformance, such
party shall give prompt notice thereof to the other party.
6.8 Recruitment of Personnel. During the term of this Agreement
and for a period of one (1) year thereafter, neither QCSI nor
SYNERTECH will hire, employ or contract with, directly or
indirectly, any key employee of the other party without the
prior written consent of such other party.
6.9 Use of Marks. In connection with SYNERTECH's promotion of its
services, SYNERTECH may reproduce QCSI's name, symbols,
trademarks, service marks and copyrights in accordance with
QCSI's policies regarding same. SYNERTECH shall use the
appropriate registered or common-law trademark symbols in
connection with such reproduction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date. QUALITY CARE SOLUTIONS, INC. SYNERTECH HEALTH SYSTEM SOLUTIONS,
INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Rock
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. Rock
Title: Chief Executive Officer Title: President & CEO
Date: July 30, 1999 Date: July 30, 1999
8
9
EXHIBIT A
FEES AND PAYMENTS
FEES
In consideration for the License and Support being provided hereunder, SYNERTECH
agrees to pay QCSI according to the following fee schedule and terms and
conditions herein. SYNERTECH agrees to permit QCSI electronic access to
SYNERTECH's database for billing purposes, if applicable.
License and Support Fee [Confidential treatment has been requested]
--------------------------------------------------------------------------------------------------------------------
PMPM FEE
--------------------------------------------------------------------------------------------------------------------
Total Members QMACS Members Combination Members aQDEN Members
Including Carve-Out Members
(By Month)
--------------------------------------------------------------------------------------------------------------------
Tier 1 <= [****] [****] [****] [****]
--------------------------------------------------------------------------------------------------------------------
Tier 2 > [****] <= [****] [****] [****]
1,000,000
--------------------------------------------------------------------------------------------------------------------
Tier 3 > [****] [****] [****] [****]
--------------------------------------------------------------------------------------------------------------------
On a monthly basis, SYNERTECH shall pay QCSI the applicable License and Support
Fee which shall be calculated by taking the total number of Members for the
month in question times the applicable PMPM Fee for each such Member. The PMPM
Fee for each Carve-Out Member shall be equal to ten percent (10%) of the
appropriate PMPM Fee set forth in the above table. The order in which QMACS,
Combination and aQDEN Members are considered is important in calculating the
monthly License and Support Fee. The order in which such Members shall be
considered shall be (1) QMACS Members; (2) Combination Members; and (3) aQDEN
Members. For purposes of clarification, an example of the calculation of the
monthly License and Support Fee is provided in Exhibit B, "Example Calculation."
Advance Payment [Confidential Treatment has been Requested]
SYNERTECH shall pay QCSI an advance payment of the License and Support Fees in
an amount equal to [****] ("Advance Payment"), which shall be payable in
accordance with Exhibit C. Effective January 1, 2001, Synertech shall offset any
and all monthly License and Support Fees payable to QCSI by a portion of the
Advance Payment, equal to, on a monthly basis, the lesser of (i) [****] or (ii)
[****] of the License and Support fees for the month, but not less than [****].
Minimum Monthly Payment [Confidential Treatment has been Requested]
Effective July 1, 2000 through June 30, 2005 in no event shall the monthly
License and Support Fee paid by SYNERTECH to QCSI be less than the following:
Month Minimum License and Support Fee
----- -------------------------------
July, 2000 [****]
August, 2000 [****]
September, 2000 [****]
October, 2000 [****]
November, 2000 [****]
December, 2000 through
June 2005 [****]
The PMPM fees set forth above shall be in effect through June 30, 2005.
Thereafter, the fees shall be adjusted as follows:
(1) For the period July 1, 2005 through June 30, 2006, the PMPM Fees set
forth in the above chart shall be adjusted by the cumulative increase
in the Consumer Price Index (All Urban Consumers)("CPI"), if any,
subject to a maximum increase of fifteen percent (15%).
**** - Confidential Treatment Requested
10
(2) For each subsequent twelve (12) month period, the PMPM Fees for each
period shall be equal to the PMPM Fees for the preceding twelve (12)
month period, as adjusted by the corresponding increase in the CPI, if
any, subject to a maximum annual increase of five percent (5%).
Implementation Fees [Confidential Treatment has been Requested]
At SYNERTECH's request, QCSI agrees to support SYNERTECH in the first two
Customer Software implementations performed by SYNERTECH. QCSI agrees to provide
up to [****] of support for each of the two implementations, at a discounted
rate of [****] per service unit. Service units are roughly equivalent to one
person-hour of work.
SYNERTECH shall pay QCSI for actual service units expended on the same basis
upon which its Customer pays SYNERTECH for such implementation, however QCSI
shall be paid no less frequently than monthly for service hours expended during
such month. For example, if SYNERTECH is paid fifty percent (50%) of estimated
implementation fee in advance, SYNERTECH will pay QCSI fifty percent (50%) of
QCSI's expected support fee in advance. SYNERTECH shall make such payments to
QCSI within fifteen (15) days of SYNERTECH's receipt of payment from its
Customer.
Any subsequent implementations or projects performed by QCSI at the request of
SYNERTECH and/or SYNERTECH Customers will be charged at QCSI's prevailing rate.
QCSI Support
QCSI will provide SYNERTECH with advance estimates of all work related to
support requested by SYNERTECH during subsequent implementations or other
support requested by SYNERTECH.
PAYMENT GUIDELINES
MEMBER REPORTING
SYNERTECH shall report to QCSI the total number and types of Members for each
calendar month by the twentieth of such month. The report shall indicate the
number of Members by Customer as of the fifteenth (15th) of such month. QCSI
shall, upon receipt of such report, generate an invoice for such calendar month.
QCSI shall have the right to validate and audit such Member reports upon its
request.
LATE PAYMENT AND INTEREST
The fees and expenses set forth in this Exhibit are to be paid within thirty
(30) days of receipt of invoice. Any payment, which is more than fifteen (15)
days past due, will accrue interest at the rate of twelve percent (12.00%) per
annum until paid in full. QCSI shall have the right to suspend all its
obligations under this Agreement in the event that any payment is more than
sixty (60) days past due. QCSI shall notify SYNERTECH in writing at least
fifteen (15) days before suspending its obligations for late or non-payment.
In the event that SYNERTECH determines in its reasonable judgment that a billing
error has occurred, SYNERTECH must notify QCSI in writing within thirty (30)
days of receipt of such erroneous invoice. SYNERTECH agrees to pay all
undisputed items on an invoice, which may have disputed items contained thereon.
QCSI agrees that no interest shall accrue for contested invoice items until
forty five (45) days following QCSI's response to SYNERTECH's notice of billing
error. The parties agree to negotiate and resolve in good faith any disputed
invoice items.
TRAVEL AND EXPENSE GUIDELINES
SYNERTECH will be responsible for QCSI's reasonable out-of-pocket and travel
expenses, incurred by QCSI as a result of its support of such implementations
and or other support provided by QCSI upon the request of SYNERTECH. SYNERTECH
agrees to reimburse or pay QCSI for reasonable travel, lodging, and meals, which
are incurred by QCSI at SYNERTECH or SYNERTECH's Customer's office. SYNERTECH
agrees to pay travel time, if requested by SYNERTECH that QCSI personnel travel
during normal business hours (Monday through Friday, 8:00am to 5:00pm,
prevailing Arizona time). SYNERTECH shall pay for such travel time at a reduced
rate of fifty (50%) percent of the hourly cost , subject to a maximum for four
(4) hours of travel time per day.
QCSI has the following guidelines regarding travel: QCSI books coach class seats
for air travel, using the best available pricing by carrier for reasonable time
departures and arrivals. QCSI books mid-range hotels within reasonable distance
to client site. QCSI books mid-size or full size cars as appropriate based on
the number of persons participating in a site visit. QCSI associates are prudent
and reasonable on meal expenditures. QCSI only charges clients at half time
rates for travel time. QCSI will agree to conform to IRS regulations.
**** - Confidential Treatment Requested
11
EXHIBIT B
EXAMPLE CALCULATION
NUMBER OF
QMACS MEMBERS ACTIVE MEMBERS
------------- --------------
1. Turnkey [****]
2. Service Bureau [****]
3. Carve-Out
- Total [****]
- 10% of Above [****] [****]
------
TOTAL QMACS Members [****]
COMBINATION MEMBERS
1. Turnkey [****]
2. Service Bureau [****]
-------
TOTAL Combination Members [****]
AQDEN MEMBERS
1. Turnkey [****]
2. Service Bureau [****]
-------
TOTAL aQDEN Members [****]
-------
GRAND TOTAL ACTIVE MEMBERS [****]
(Including Carve-Out Members)
Calculation of License and Support Fee
LICENSE AND
SUPPORT FEE
-----------
QMACS MEMBERS
Tier 1, 360,000 @ $0.12 [****]
COMBINATION MEMBERS
Tier 1, [****] [****]
Tier 2, [****] [****]
-------
[****]
aQDEN MEMBERS
Tier 2, [****] [****]
Tier 3, [****] [****]
-------
[****]
-----
TOTAL LICENSE AND SUPPORT FEE [****]
=======================
(before Advance Payment Reduction)
**** - Confidential Treatment Requested
12
EXHIBIT C
GENERAL FUNCTIONALITY REQUIREMENTS FOR SYNERTECH BUSINESS
I. QCSI shall provide SYNERTECH with the following functionality, and QCSI
and SYNERTECH shall mutually agree upon the methodology to achieve this
functionality. QCSI and SYNERTECH shall mutually develop detailed
specifications.
A. ACCOUNTS RECEIVABLE/PREMIUM BILLING - Process accounts
receivable payments/adjustments and carry balances forward.
Produce operational reporting and letter generation associated
with this function. Integrate this function with premium
billing.
- Invoices must automatically account for premium billing cash
receipts and account/group retroactive member, contract and
rate and manual receipts or invoice adjustments made since the
previous billing period. The invoice must detail all
transactions by date (i.e. payments by receipt date, previous
account balance, unallocated cash that is in the account,
current month ▇▇▇▇, total due, etc.).
- Manual invoice adjustments are required and must be controlled
through flexible user security privileges. These adjustments
must be systematically updated in the general ledger.
- Invoices must capture the general ledger account number for
the billing period.
- System controlled cutoff for membership processing is
necessary to ensure consistency and accuracy of premium
billing calculations and financial accounting.
- Process receivable allocations to invoice line-level detail.
- Integrated cash receipts functionality requires the ability to
record the receipt (detailed batch processing for lock boxes),
post the receipt to the general ledger (manually and
automatically), reverse a receipt (returned check) and
allocate receipts to the appropriate account/group/invoice
(following varied allocation rules). Application of cash
receipts must be reversable. Cash receipts processing must
include reconciliation and editing capabilities.
- Inbound electronic fund transfers (EFT) capability is
required.
- Automated ▇▇▇▇▇▇▇ process is required to generate initial and
follow-up letters according to time and aging parameters. This
process must also support recording of responses throughout
the process.
- Aging and audit trail reports are required for verification of
receipts processing and cash allocation.
- Integrated delinquent account processing must include the
ability to inquire and identify account status (i.e.
paid-in-full, delinquent) and systematically suspend/deny
claims/capitation processing and payments based on user
defined rules.
- Credit balances must be able to be generated from Billing and
then credit used to satisfy account balance from previous
invoices during allocation.
B. CLAIMS - Improve adjustment reporting and tracking capability
(associate adjustment to the original claim). Automate
multiple surgery logic for both professional and facility
claims. Integrate DRG logic.
- Add display and sort capabilities for identifier that links
adjustments to original claims for inquiry and reporting
purposes.
- Capture savings associated as a result of automated multiple
surgery logic.
- Integrated DRG logic must capture originally submitted DRG and
systematically determine a DRG based on grouper logic. Use
systematically determined DRG for adjudication purposes and
include the ability to override the system default.
C. BROKER APPLICATION - Manage broker and agency relationships.
Provide flexible methods for calculating commissions and
automate check disbursement. Produce reports, extracts and
statements associated with this function.
- Must be able to define relationships between groups,
contracts, agencies, brokers and sales representatives.
- Track and Pay commissions owed to agencies, brokers, and sales
representatives based on user defined calculation
methodologies. Rate methodologies must be able to use premium
receipts, premium bills, member counts, individual members
enrolled or any combination of these factors to calculate
commission payments and produce checks. These rates must also
be variable based on minimum and/or maximum amounts. The rates
must accommodate a percentage or flat dollar amount. Process
must allow for manual adjustments to the broker payment.
- User defined rules are necessary for setting dis-enrollment
parameters and minimum payment parameters which effect
commission calculations and payments.
- Broker payments must be available for accounts payable, check
generation and 1099 processing. Appropriate roll-up
capabilities are required for check generation at the agency
level.
D. CAPITATION - Enhance existing functionality by adding a
percentage of premium capitation process. Automate the
capitation reconciliation process for Medicare. Add logic for
incentive/penalty payments based on quality factors.
- Percent of premium calculation for shared risk arrangements
and provider reimbursement must:
A. Distribute premium at a member level using user
defined formulas
B. Establish budget pools/targets for medical expenses
C. Calculate and report all medical and program expenses
against the allocated premium revenue by member.
Provide the ability to roll the financials to a
higher level than provider.
13
D. Calculate capitation based on percentage of premium
for the member
E. Associate providers at a higher grouping for payment,
reporting and reconciliation
F. Record external expenses at the member level for
inclusion in calculations
- Enhance Medicare capitation reconciliation process by
automating the following functions: calculate inbound
capitation, record accounts receivable, record cash receipts,
reconcile cash receipts from HCFA and other payers to the
accounts receivable, and report discrepancies.
- Provider quality programs require ability to adjust capitation
payments by quality indicators. These indicator values are
used to determine calculation of bonuses or penalties based on
percentage of calculated capitation or flat rates.
E. COORDINATION OF BENEFITS (COB) - Enhance existing
functionality by adding the capability to exclude capitated
services from COB processing.
- Identify type of COB (i.e. Workers Compensation, Auto
Insurance, Other Carriers) and require associated payment
information.
- Provide capability to vary COB methodology (i.e. come out
whole, non-duplication, etc.) at the employer group level.
- Provide the flexibility to include or exclude capitated
services at the line level from COB calculation. This
flexibility must be set at the program level and overridden at
the employer group level.
- Apply COB savings from a savings bank (captured at the member
level) to reduce member liability.
F. GENERAL LEDGER - Support flexible chart of accounts that is
integrated with Accounts Payable/Accounts Receivable.
- Provide a user-defined, parameter driven chart of accounts for
all financial transactions (i.e. Accounts Payable/Accounts
Receivable for claims, capitation, brokers, premium billing,
etc.).
- Create file for interface to third party financial packages.
G. PROVIDER CREDENTIALING - Interface where feasable with
national data banks (National Practitioner Data Bank, the
Board Action Data Bank of the Federation of State Medical
Boards, and the Physician Masterfile of the American Medical
Association) for physician education, training, licensure and
insurance/malpractice information.
H. BENCHMARK - QCSI and Synertech mutually agree to perform a
benchmark of the QMACS Software to prove scalability required
for a large commercial payor, defined as greater than 500,00
members.
II. With the exception of Subsection I.H, "Benchmark" above, QCSI and
SYNERTECH agree to the following time frames related to the
Enhancements set forth in Section I of this Exhibit C.
A. Within thirty (30) days of the Effective Date, Synertech and
QCSI shall jointly develop and agree on the detail
specifications for each Enhancement. Such mutually agreed upon
specifications shall supersede the specifications set forth in
Section I of this Exhibit C.
B. Within ninety (90) days of agreement upon the specifications,
unless otherwise agreed to by the parties. QCSI shall program
the Enhancements, install such Enhancement in a test version
of the Software, and deliver such Software to Synertech.
C. Within forty-five (45) days of QCSI's delivery of the
Enhancements to SYNERTECH, SYNERTECH shall test the
Enhancements, and forward to QCSI, in writing, any
inconsistencies or errors between the Software and the
specifications.
D. Within thirty (30) days of receipt of SYNERTECH's final notice
of inconsistencies or errors in the Software, QCSI shall have
corrected all such inconsistencies and/or errors and notify
Synertech, in writing, of such corrections.
E. Within ten (10) days of receipt of QCSI's notification of the
correction of all inconsistencies and/or errors, Synertech
shall verify such corrections. Once all inconsistencies and
errors have been corrected by QCSI, Synertech shall notify
QCSI of its acceptance of the Enhancements. Failure of
SYNERTECH to notify QCSI of the existence of any
inconsistencies and/or errors within such ten (10) day period
shall constitute acceptance.
III. Synertech shall remit the Advance Payment to QCSI in the following
manner: [Confidential treatment has been requested]
A. [****] upon execution of this Agreement.
B. [****] upon delivery of the Enhancements to
Synertech, as set forth in Section II.B, above.
C. [****] upon acceptance of the Enhancements, as
set forth in Section II.E, above.
IV. In the event, QCSI fails to meet its obligations as set forth in this
Exhibit C, or in the event QCSI and Synertech are unable to reach
agreement on the specifications for such Enhancements as set forth in
Section II.A above, Synertech shall have the right, upon written
notification to QCSI, to immediately terminate this agreement. In the
event Synertech elects to terminate the Agreement in accordance with
the provisions of this Section IV, QCSI shall refund to Synertech any
amounts paid to QCSI as an Advance Payment within thirty (30) days of
receipt of such notice of termination from Synertech.
**** - Confidential Treatment Requested
14
EXHIBIT E
SUPPORT
I. SUPPORT PROVIDED BY QCSI
QCSI shall provide the following Support services to SYNERTECH
A. Corrections to all Anomalies reported to QCSI by SYNERTECH, in
accordance with the target resolution and escalation times indicated in
Section II of this Exhibit E.
B. Any and all enhancements, updates, and releases to the Products, to be
provided to SYNERTECH upon general release to QCSI's other clients.
C. Upgrades to the Products necessary to comply with current and future
federal regulations. SYNERTECH and QCSI shall use best efforts to
identify changes in federal regulations and notify the other party of
such changes, and QCSI shall (a) use best efforts to provide to
SYNERTECH upgrades to the Products to comply with such federal
regulations, or (b) provide a suitable workaround until the upgrade to
the Products is provided.
D. Telephone support for SYNERTECH to report to and communicate with QCSI
relative to Anomalies and the resolution thereof. Such QCSI telephone
support to be available seven (7) days per week, twenty four (24) hours
per day. SYNERTECH agrees to be the first line of support for its
Customers, meaning SYNERTECH shall direct its Customers to call
SYNERTECH with all potential Anomalies, SYNERTECH shall investigate such
potential Anomalies and attempt to resolve the cause for such call, and
SYNERTECH will report such Anomalies to QCSI if, and only if, an Anomaly
is determined to be caused by the Product(s) or SYNERTECH is unable to
resolve the cause for such call.
E. Five (5) hours of telephone support each month for non-Anomaly issues
reported by SYNERTECH.
II. TARGET RESOLUTION AND ESCALATION TIMES
Priority Condition Target Resolution * TS Level Escalation ** E Level Escalation
Code 1 All Users down; 24 hours Immediate 1 hour
server not
operational
Code 2 1. Can't run 48 hours Immediate 4 hours
payment or
print checks
2. Can't process
EDI eligibility
Code 3 All users unable to 3 days 8 hours 48 hours
use a single module
due to run time
error (RTE), crash,
hang, etc.
Code 4 Any malfunction not 5 days 2 days 3 days
listed above
Code 5 Request for services 5 days N/A N/A
Code 6 Question, 5 days N/A N/A
suggestion,
enhancement request
* TS LEVEL - Technical Services personnel become immediately involved.
** E LEVEL - A Rapid Response Team is immediately formed with members from the
Response Center, Technical Services, Engineering, and the Database group. This
Rapid Response Team is dedicated to your issue until it's resolved.
15
LICENSE AGREEMENT
QUALITY CARE SOLUTIONS, INC.
SYNERTECH HEALTH SYSTEM SOLUTIONS, INC.
THIS AMENDMENT ("Amendment #1"), effective August 1, 1999, is entered into by
and between Quality Care Solutions, Inc. ("QCSI") and Synertech Health System
Solutions, Inc. ("SYNERTECH").
WHEREAS, QCSI and SYNERTECH entered into a license agreement dated July
30, 1999 setting forth the terms and conditions under which QCSI provides a
license to certain Products to SYNERTECH, and provides other services directly
or indirectly related to such Products ("License Agreement").
WHEREAS, QCSI and SYNERTECH desire to modify and expand upon certain
terms and conditions of the License Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, QCSI and Synertech agree that the provisions of the License Agreement
shall be amended and revised as follows:
I. All capitalized terms in this Amendment #1 shall have the meanings set
forth in the License Agreement unless specifically indicated otherwise
herein.
II. Section 3.14 Sales Commissions Paid to QCSI. A new section, Section
3.14 "Sales Commissions Paid to QCSI" is hereby added to the License
Agreement.
3.14 Sales Commissions Paid to QCSI. [Confidential treatment has
been requested]
3.14-1 Sales Assistance. From time to time, SYNERTECH, in
its sole discretion, will request in writing, or by
electronic mail, sales assistance ("Sales
Assistance", as defined herein) from QCSI relative to
a specific Customer or prospective Customer ("Select
Account"). Sales Assistance is defined as the
presentation of a Product demonstration to a Select
Account, (in the presence of SYNERTECH) and
assistance to SYNERTECH in follow-up demonstrations,
correspondence and discussion(s) with such Select
Account.
3.14-2 Sales Commission. In the event that a Select Account,
for which QCSI provided Sales Assistance, signs an
agreement with SYNERTECH within twelve (12) months of
the last date that Sales Assistance was provided to a
Select Account for the provision of Products or
services, for which QCSI provided Sales Assistance,
SYNERTECH shall pay to QCSI a "Sales Commission", as
defined herein. The Sales Commission shall be equal
to [****] of the PMPM License and Maintenance Fees
received by SYNERTECH during the first twelve (12)
month period that SYNERTECH receives such PMPM fees
from such Select Account for the Products or services
for which Sales Assistance was provided. The PMPM
License and Maintenance Fees, upon which the
calculation of the Sales Commission is based, is
subject to a maximum of (i) [****] PMPM for the first
100,000 Members, and (ii) [****] PMPM for Members in
excess of [****], on a monthly basis. Should a
prospective Customer decide to enter into an
agreement with QCSI to acquire products from QCSI, no
Sales Commission shall be payable by SYNERTECH, and
the sale shall be considered a Reference Sale in
accordance with the provisions of Section 3.12 of the
License Agreement.
**** - Confidential Treatment Requested
16
3.14-3 Payment of Sales Commission. Sales Commissions shall
be paid to QCSI on a monthly basis within ten (10)
days following the end of the calendar month in which
the applicable PMPM Fees are received by SYNERTECH.
3.14-4 Travel Expenses. SYNERTECH shall reimburse QCSI for
reasonable travel expenses incurred by one QCSI sales
support person to travel, at SYNERTECH's written or
electronic mail request, to a Selected Account.
Additional QCSI support staff may requested by
SYNERTECH and/or the prospective Customer. If such a
request is made, QCSI will confirm with SYNERTECH its
desire to have the requested staff in attendance.
Reasonable travel expenses incurred by SYNERTECH
approved staff will be reimbursed by SYNERTECH.
Additional QCSI personnel may be provided at QCSI's
discretion and expense. All travel expenses shall be
reimbursed in accordance with Exhibit A of the
License Agreement, with the exception of travel time,
which shall not apply to Sales Assistance.
3.14-5 Absence of Other Fees. Unless otherwise agreed to in
writing prior to the performance of any Sales
Assistance, the Sales Commission, and related travel
expense as set forth in Section 3.14-4 above, are the
only fees payable by SYNERTECH to QCSI for Sales
Assistance.
3.14-6 Term of Section 3.14 Sales Commissions Paid by QCSI.
The provisions of this Section 3.14 shall be
effective August 1, 1999 and shall remain in effect
through January 31, 2000 ("Commission Period"),
except that Sales Commissions for Sales Assistance
provided during the Commission Period are payable to
QCSI if an agreement is executed by SYNERTECH within
twelve (12) months of the date that Sales Assistance
was last provided to a Select Account, as set forth
in Section 3.14-2 above.
3.14-7 Equipment rental/additional expenses. SYNERTECH shall
be responsible for ensuring that any equipment
necessary to demonstrate the product will be
available at the Select Account site. If equipment
rental is necessary, such equipment will be obtained
and paid by SYNERTECH. In some cases, additional
expenses may be necessary to complete the sale. QCSI
will obtain approval from SYNERTECH before incurring
such expense. SYNERTECH will be responsible for
reimbursement of such approved expenses or will
provide the necessary material to QCSI in order to
complete the requested task.
III. All other provisions of the License Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment #1 as of
the effective date set forth above.
QUALITY CARE SOLUTIONS, INC. SYNERTECH HEALTH SYSTEM SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________ ______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________ ______________________________
Title: President & CEO Title: V.P., Contracts Administration
_________________________ ______________________________
Date: November 11, 1999 Date: November 5, 1999
_________________________ ______________________________
17
EXHIBIT F
AMENDMENT TO
LICENSE AGREEMENT
QUALITY CARE SOLUTIONS, INC.
SYNERTECH HEALTH SYSTEM SOLUTIONS, INC.
RECITALS
Whereas, Quality Care Solutions, Inc. ("QCSI") and Synertech Health System
Solutions, Inc. ("Synertech") entered into a license agreement dated July 30,
1999 setting forth the terms and conditions under which QCSI provides a license
to certain Products to Synertech, and provides other services directly or
indirectly related to such Products ("License Agreement").
WHEREAS, the License Agreement grants Synertech the right to Sub-License the
Products to certain of its Customers; such Customers being defined in the
License Agreement.
WHEREAS, such License Agreement, by its terms, requires QCSI and Synertech to
mutually agree upon the form of Sublicense Agreement to be used by Synertech.
NOW THEREFORE, in consideration of the mutual covenants herein contained, QCSI
and Synertech agree that the provisions of the License Agreement shall be
amended and revised as follows:
I. The License Agreement shall be amended by incorporating this Exhibit F.
II. All capitalized terms in this Exhibit F shall have the meaning set
forth in the License Agreement unless specifically indicated otherwise
herein.
III. The parties agree that each Sublicense Agreement between Synertech
Health System Solutions, Inc. ("Sublicensor") and a customer
("Sublicensee") shall contain, at a minimum, the following terms and
conditions, together with such amendments, revisions or additions as
shall be negotiated by Synertech from time to time.
1. License Grant. Sublicensee is hereby granted the non-exclusive right
and license to use the software ("Sublicensed Software") set forth in
Exhibit ________of this Sublicense Agreement for Sublicensee's use, in
accordance with the terms hereof, under an agreement between
Sublicensor and Quality Care Solutions, Inc. ("Licensor"). All rights
not expressly granted by this Sublicense Agreement are reserved.
2. Copying. Sublicensee may not duplicate, use, disclose, or publish the
Sublicensed Software or the Information (as defined in Section 4), in
whole or in part, except as may be reasonably necessary to enable
Sublicensee to use the Sublicensed Software in accordance with the
terms of this Sublicense Agreement. Sublicensee agrees to reproduce
Licensor's copyright and proprietary notices on all copies or
transmissions of the Sublicensed Software and the Information and
shall not remove or obscure any copyright or other proprietary notices
from the Sublicensed Software or the Information.
3. Ownership. Sublicensee acknowledges that the Sublicensed Software is
owned by Licensor and is subject to federal and state copyright
protections. Sublicensee acknowledges and agrees that said protection
extends to the Sublicensed Software and all documentation related to
or created and produced by Licensor and its subsidiaries.
18
4. Information. Certain information of Licensor may be made available to
Sublicensee under this Sublicense Agreement, which is confidential and
which is the property and trade secret of Licensor. Such information
may include oral or written manuals or on-line documentation relating
to the Sublicensed Software (and all techniques, algorithms, data
models, stored procedures, schema's, and processes contained therein
or any modification, extraction, or extrapolation thereof) and the
business operations (e.g. methods, finances, customers and business
plans and strategies) of Licensor and its subsidiaries (collectively,
the "Information").
5. Nondisclosure. Sublicensee shall hold in confidence the Information,
using at least the same degree of care as Sublicensee exercises for
its own proprietary information of a similar nature. Sublicensee shall
not disclose the Sublicensed Software or the Information without
Licensor's or Sublicensor's prior written approval. Sublicensee may
disclose some or all of the Sublicensed Software and the Information
to such of Sublicensee's employees and consultants who have been
informed of Sublicensee's obligation to protect the intellectual
property rights of Licensor and who have a specific, legitimate need
to access such portions of the Sublicensed Software and the
Information for a legitimate business purpose. Sublicensee shall not
take any action to reverse engineer any Sublicensed Software or any
part thereof. If Sublicensee is ordered by a court or other
governmental body of competent jurisdiction to disclose the
Sublicensed Software or the Information, Sublicensee shall not be
liable for disclosures required by such order if Sublicensee
reasonably complies with the following requirements: (a) when
Sublicensee becomes aware of such an order or the possibility of such
an order, Sublicensee shall immediately notify Sublicensor and
Licensor by the most expedient means, (b) Sublicensee shall, at
Licensor's expense, join a motion by Licensor for an order protecting
the confidentiality of the Sublicensed Software or the Information,
including a motion for leave to intervene by Licensor, and if an
issued order calls for immediate disclosure, Sublicensee shall, at
Licensor's expense, immediately request a stay of such order to permit
Licensor to respond as set forth above. Sublicensee's confidentiality
obligations under this Sublicense Agreement shall continue for a
period of five (5) years after termination.
6. Term and Termination. This Sublicense Agreement shall only be
effective for and shall expire upon the term agreed to by Sublicensor
and Sublicensee. Within fifteen (15) days of termination of this
Sublicense Agreement for any reason, Sublicensee agrees to immediately
return or destroy all copies of all Sublicensed Software and the
Information and to provide written certification thereof to
Sublicensor.
IV. QCSI and Synertech mutually agree that the inclusion of the above six
(6) Articles in any Sublicense Agreement shall be enough to satisfy the
requirements of the License Agreement. For purposes of convenience,
Synertech may substitute or shorten the language above (for example,
"Sublicense Agreement" may be shortened to "Agreement"), but only in so
far as the substitution does not modify the spirit and intent of the
above six (6) Articles.
QUALITY CARE SOLUTIONS, INC. SYNERTECH HEALTH SYSTEM SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________ ______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________ ______________________________
Title: President & CEO Title: V.P., Contracts Administration
_________________________ ______________________________
Date: 12/7/99 Date: 12/1/1999
_________________________ ______________________________
19
EXHIBIT C
SECTION I
GENERAL FUNCTIONALITY REQUIREMENTS FOR SYNERTECH BUSINESS
I. QCSI shall provide SYNERTECH will the following functionality whose
requirements are defined below:
A. Accounts Receivable
I. ACUITY(TM) INTERFACE
Requirements:
Acuity(TM) Interface - QCSI shall develop the
appropriate interface(s) to the Acuity
Financials(TM), System Manager and Accounts
Receivable modules. Functionality of Acuity(TM) is
described below. Such interface(s) shall provide a
seamless interaction between the Acuity and QMACS and
aQDEN relative to the following functionality:
Overview:
QCSI to provide interfaces to Acuity(TM). Such
interfaces shall support the following Acuity
functionality:
- Invoices will automatically account for
premium billing cash receipts and
account/group/enrollment retroactive
adjustments made since the previous billing
period. The invoice must detail all
transactions by date (i.e. payments by
receipt date, previous account balance,
unallocated cash that is in the account,
current month ▇▇▇▇, total due, etc.).
- Manual invoice adjustments are required and
must be controlled through flexible user
security privileges. These adjustments must
be systematically updated in the general
ledger.
- Invoices must capture the general ledger
account number for the billing period.
- Process receivable allocations to invoice
line-level detail.
- Integrated cash receipts functionality
requires the ability to record the receipt
(detailed batch processing for lock boxes),
post the receipt to the general ledger
(manually and automatically), and allocate
receipts to the appropriate
account/group/invoice (following varied
allocation rules). Application of cash
receipts must be reversible. Cash receipts
processing must include reconciliation and
editing capabilities.
- Inbound electronic fund transfers (EFT)
capability to be provided by Acuity upon
Synertech's request to Acuity.
- Automated ▇▇▇▇▇▇▇ process is required to
generate initial and follow-up letters
according to time and aging parameters. This
process must also support recording of
responses throughout the process.
- Aging and audit trail reports are required
for verification of receipts processing and
cash allocation.
- Integrated delinquent account processing
must include the ability to inquire and
identify account status (i.e. paid-in-full,
delinquent) and systematically suspend/deny
claims/capitation processing and payments
based on user defined rules.
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- Credit balances must be able to be generated
from billing and then credit used to satisfy
account balance from previous invoices
during allocation.
Development Timeline:
120 days
B. General Ledger
I. CHART OF ACCOUNTS
Requirements:
Enhance existing functionality by mapping all
expenses to a user-defined general ledger account
number.
Overview:
Add columns to support mapping to unique general
ledger accounts, which are program/line of business
sensitive, for capitation, broker, claims (unique
accounts for prompt payment discounts, late payment
penalties, refunds, advances and withholds) and
premium billing.
Development Timeline:
90 days
C. Broker Commissions
I. BROKER COMMISSIONS
Requirements:
Provide defined methodologies for calculation and
payment of broker commissions using known QMACS data
fields which are or will be integrated into QMACS.
QCSI may provide functionality in a stand-alone
application/module, however in any case,
functionality will be developed upon completion of
Accounts Receivable interfaces defined above.
Additional broker commission functionality beyond
those described herein may be considered as an
enhancement by QCSI on a time and materials basis.
Overview:
Provide mechanisms to calculate and process payments
of broker commissions using the following
methodologies:
First a determination should be made as to the agency
and or broker to be paid based on their relationship
to a group on a given date. An individual broker, or
agent, may be independent or may belong to a group of
brokers, called an agency or brokerage. If a broker
is associated with an agency, the commission may be
an independent broker for another group at the same
time. In addition, a broker may belong to more than
one agency at the same time.
Once it is determined who is to be paid the
commission, the specific calculation for the payment
for that broker or agency would be one of the
following:
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- Step method tiered on premium billed amount
- Step method tiered on premium received
amount
- Step method tiered on member count
- Select method tiered on premium billed
amount
- Select method tiered on premium received
amount
- Select method tiered on member count
- Flat percentage on premium billed amount
- Flat percentage on premium received amount
STEP METHOD
This method uses established percentage rates based
on steps of amounts for either premium billed or
premium received. For example, using premium received
amount: receipts from $0.00 through $1,000 are paid a
commission of 8%, premium receipts from $1,001
through $2,000 are paid a commission of 9%, premium
receipts from $2, 001 through $2,500 are paid a
commission of 10% and so on. The percentages are
stepped through for each dollar amount. Each step is
included and added together for the total commission
to the broker. If the total receipts were $2,400, the
calculation would be $1,000 based on 8%, $1,000 based
on 9%, and $400 based on 10%, which would be equal to
$210.
Using member counts, the calculation used the number
of members in the step instead of receipts or premium
to determine the percentage, but still applies the
percentage to the total receipts. For example, if the
step is 0-200 members is 10%, 201-500 is 12%, and
501-700 is 13%, the total members are 300, the total
receipts is $1,000 then the amount paid would be 12%
of the $1,000 or $120.
SELECT METHOD
The total of the premium billed or the premium
received is used for the entire commission based on
the percentage established for that total. For
example, using the steps above, if the receipts total
$2,400, the entire commission would be based on a 10%
commission or would be equal to $240.
FLAT PERCENTAGE
This method applies a constant user-defined
percentage to either the total premium billed, or
total premium received.
Development Timeline:
90 days for functionality based on known data fields
in QMACS, 120 days for remainder of functionality
indicated in this Section C.
D. Claim Management
I. COB PROCESSING FOR CAPITATED SERVICES
Requirements:
- When a provider is capitated for a service (or
groups of services) some health plans do not
expect the provider to receive additional
reimbursement from COB for those services.
- In the event that a provider submits a claim that
contains both capitated and FFS services along
with a COB, the COB should only be applied to the
FFS lines.
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Overview:
- A new rule will be added that will identify
whether services that are capitated are to
be included in COB calculations.
- QCS_EDIT_COBCAP - COB Calculations apply to
capitated services.
- This will be an enable/disable edit.
- If the rule is set to ENABLE, then any COB
adjustments to be made to claim lines should
ONLY be made to lines that are to be paid
FFS. Lines flagged as capitated should not
have any COB applied to them. (Claims
containing capitated only services should
not suspend for reason 216).
- For example, assume that Standard COB Rule
is in effect. A three line claim is
submitted with a COB of $100. Line 2 is for
a capitated service. Line 1 has a contracted
amount of $100.00, line 2 has a contracted
amount of $50, and line three has a contract
amount of $50. If the COBCAP rule is
enabled, the claim will have $67 allocated
to line 1 and $33 allocated to line 3. If
COBCAP is disabled, $50 is allocated to line
1, $25 is allocated to line 2 and $25 is
allocated to line 3.
Development Timeline:
90 days
II. DRG GROUPER
Requirements:
QMACS shall interface to a component that will
compute the correct DRG for an UB-92 inpatient stay
claim. Such functionality shall be supplied as an
"enable/disable" edit at the program/line of business
level.
Overview:
- Medicare and many health plans reimburse
UB-92 claims based on the HCFA Diagnosis
Related Group (DRG) methodology.
- This methodology requires the diagnosis to
be supplied in ICD-9 format, the procedures
performed, the discharge status, the gender
and age of the patient.
- Using a set of algorithms and data
definitions supplied by HCFA, a DRG is
computed and used as the basis for
reimbursement, unless another method of
reimbursement has been negotiated with the
provider for a particular service or benefit
program. Since most inpatient facilities
"upcode" as much as possible, the claim
adjudication logic must compute the correct
DRG and insure that the billing entity
submitted the correct DRG.
- This enhancement will be implemented by
wrapping a component interface around a
commercially available pricing ActiveX
component.
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Development Timeline:
90 days.
III. MULTIPLE SURGERIES
Requirements:
QMACS needs to identify and process claims
appropriately when multiple procedures are performed
on the same date of service, whether such procedures
are billed together or separately and with or without
the appropriate modifier indicated by the provider of
service.
QMACS needs to be capable of paying modifier
discounts in tiers according to the contracted amount
(e.g. 2nd procedure at 50%, 3rd procedure at 25% and
so on) by program/line of business. Such
functionality may utilize the system global days
table which indicates which procedures qualify for
multiple surgery.
Overview:
- A new edit will be created to indicate that
multiple surgeries were detected and NOT
billed appropriately.
- QMACS will evaluate the current claim and
all historical claims for the member to find
claims for the same date of service with the
same provider.
- If multiple procedures are found and
modifier 51 is not used, fire the new edit.
- In addition to firing the new edit, QMACS
should apply the 51 modifier to all but the
most expensive procedure performed on the
same day.
- By default, modifier 51 should be added to
the least expensive procedure(s). The most
expensive procedure is considered primary.
However, in the event that a less-expensive
procedure has already been paid, the
remaining procedures should be changed to
reflect the 51 modifier.
Development Timeline:
90 days
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E. Capitation
I. PERCENT OF PREMIUM CAPITATION - ACTUARIAL ADJUSTMENT
TABLE
Requirements:
QMACS needs to compute base capitation as a
percentage of premium or as a flat dollar amount.
Base cap shall be computed as base premium times a
percentage to 4 decimal places. Age/gender
adjustments shall be applied to cap as desired.
Percent of premium shall ignore riders and shall be
computed from premium billing detail table. Base
premium per member will be subscriber premium divided
by total covered lives under the subscriber.
QCSI may consider additional functionality to adjust
capitation based upon medical conditions/case mix
index (including adjusting capitation payments based
upon quality factors).
Overview:
- In QMACS today, all capitation is adjusted
by a single table (capterm).
- A more flexible methodology would be a
combination of adjustments applied to the
basic capitation rate.
- Separating the actuarial adjustment for age
and gender will enable a cap table adjusted
by pcp zip code or benefit plan to be used
across multiple contracts, and then be
adjusted by age and gender.
- Another adjustment for quality may be
applied at the actual determined. This
adjustment will be based on a quality of
care factor assigned to the provider in the
credentialing module.
- Capitation logic would flow as follows:
- Compute cap rate for member from
base capitation table or premium
table.
- Adjust capitation by age and gender
actuarial table.
- Adjust capitation by condition
table (optional).
- Apply quality adjustment factor by
provider.
- Retroactivity calculations will consider all
variables included in the calculation of
capitation based on a percent of premium.
Development Timeline:
180 days
F. Benchmark
QCSI and Synertech shall mutually agree to perform a benchmark
of QMACS to prove scalability for a large commercial payer,
defined as greater than 500,000 members.
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G. Medicare + Choice
Requirements:
QCSI shall demonstrate to SYNERTECH that it currently
has or will provide the functionality required for a
Medicare + Choice product, including outbound HCFA
enrollment and HCFA reply processing, outbound HCFA
enrollment to ▇▇▇▇▇▇ and CompuServe, HCFA
institutionalized file extract, HCFA encounter file,
member recon processing, and capitation recon
processing.
Development Timeline:
90 days upon receipt of final member and recon
specifications to be provided by SYNERTECH.
APPROVED BY:
QCSI SYNERTECH
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------- ---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------- -----------------
Date: 10/4/99 Date: 10/4/99
------- -------
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