"ALL SECTIONS MARKED WITH TWO ASTERISKS ("**") REFLECT PORTIONS WHICH HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION BY PROSPECT MEDICAL HOLDINGS, INC. AS PART OF A REQUEST FOR
CONFIDENTIAL TREATMENT."
PACIFICARE OF CALIFORNIA
MEDICAL GROUP/IPA SERVICES AGREEMENT
(SPLIT CAPITATION)
THIS PACIFICARE MEDICAL GROUP/IPA SERVICES AGREEMENT (this "Agreement") is made
and entered into this First day of March, 1998, by and between PACIFICARE OF
CALIFORNIA, INC., a California corporation ("PacifiCare"), and SIERRA MEDICAL
GROUP ("Medical Group"), with reference to the following facts:
WHEREAS, PacifiCare operates various prepaid health plans for the provision of
Covered Services to persons enrolled as Members in such plans in a manner
consistent with the laws of the State of California and the United States; and
WHEREAS, Medical Group and its Participating Providers desire to participate in
PacifiCare's prepaid health service delivery system by providing or arranging
for Covered Services to Members on a prepaid basis in coordination with
PacifiCare and its Participating Providers under the terms specified in this
Agreement.
NOW, THEREFORE, it is agreed as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following terms shall have the definitions
contained in this Article 1:
1.1 ACCREDITATION ORGANIZATION is any organization, including, without
limitation, the National Committee for Quality Assurance (NCQA), engaged
in accrediting or certifying PacifiCare, any Managed Care Plans, or any
Participating Providers.
1.2 AGREEMENT is this Medical Group/IPA Services Agreement between PacifiCare
and Medical Group, and any amendments, exhibits and attachments hereto,
including Product Attachments.
1.3 BASE AGREEMENT is this Medical Group/IPA Services Agreement between
PacifiCare and Medical Group, and any amendments, exhibits and
attachments hereto, excluding Product Attachments.
1.4 CAPITATION PAYMENTS are monthly payments made to Medical Group on a
prepaid basis for Covered Services provided or arranged by Medical Group
under this Agreement.
1.5 COMMENCEMENT DATE is the commencement date of this Agreement as specified
in Section 6.1.
1.6 COPAYMENT is a fee that may be charged to Medical Group Members for
certain Medical Group Services and collected by Medical Group or its
Participating Providers at the time Medical Group Services are provided,
as set forth in the applicable Managed Care Plan.
1
1.7 COST OF CARE is the valuation of Covered Services and other health care
services provided or arranged by Medical Group, as described in Section
5.7.
1.8 COVERED SERVICES are those medically necessary health care services,
supplies and benefits which are required by a Member as determined by
Medical Group or PacifiCare in accordance with the Member's Managed Care
Plan and PacifiCare's Quality Improvement Program and Utilization
Management Program. For purposes of this Agreement, "medically necessary"
shall have the meaning set forth in the applicable Subscriber Agreement.
1.9 DIVISION OF FINANCIAL RESPONSIBILITY is the matrix for each Managed Care
Plan which specifies the financial responsibility of PacifiCare, Medical
Group and Hospital for Covered Services. The Division of Financial
Responsibility for each Managed Care Plan is set forth in Attachment A.
1.10 ELIGIBILITY LIST is the list of Members for whom Medical Group shall
provide or arrange Covered Services.
1.11 EMERGENCY SERVICES are Covered Services required by a Member as the
result of a medical condition manifesting itself by the sudden onset of
symptoms of sufficient severity, which may include severe pain, such that
a reasonable person would expect the absence of immediate medical
attention to result in: (1) placing the health of the Member in serious
jeopardy; (2) serious impairment to bodily functions; or (3) serious
dysfunction of any bodily part. The final determination of whether
Emergency Services were required shall be made by the PacifiCare medical
director or designee, subject to appeal under the applicable Member
appeals procedure.
1.12 GOVERNMENT AGENCY shall mean any local, state or federal government
agency or entity with regulatory or other authority over PacifiCare, this
Agreement or any Managed Care Plan.
1.13 HOSPITAL is the licensed acute care hospital (or hospitals), identified
in EXHIBIT 1 to this Agreement, which has (or have) entered into a
written agreement with PacifiCare to provide Hospital Services to Medical
Group Members assigned to Hospital in the Medical Group Service Area.
1.14 HOSPITAL SERVICES are Covered Services for Medical Group Members assigned
to Hospital which are the financial responsibility of Hospital, as
specified in the Division of Financial Responsibility for each Managed
Care Plan (as set forth in Attachment A).
1.15 MANAGED CARE PLAN is any one of the various health plans or products
sponsored or administered by PacifiCare or its subsidiaries or affiliates
including, without limitation, a commercial prepaid health plan
("PacifiCare Commercial Health Plan"), a commercial point-of-service plan
("PacifiCare Commercial POS Health Plan"), a Medicare-risk plan ("Secure
Horizons Health Plan") and a Medicare-risk point-of-service plan ("Secure
Horizons POS Health Plan"). Each Managed Care Plan is described in the
applicable Subscriber Agreement and Product Attachment. PacifiCare may
make available some, and not all, of the Managed Care Plans under this
Agreement.
1.16 MEDICAL GROUP SERVICE AREA is the geographic area as defined in EXHIBIT 1
to this Agreement.
2
1.17 MEDICAL GROUP FACILITY is each office of Medical Group and its
Participating Providers, identified in EXHIBIT 1 to this Agreement, where
Medical Group Services may be provided to Medical Group Members.
1.18 MEDICAL GROUP MEMBERS are the Members listed on the Eligibility List.
1.19 MEDICAL GROUP SERVICES are Covered Services for Medical Group Members
which are the financial responsibility of Medical Group, as specified in
the Division of Financial Responsibility for each Managed Care Plan (as
set forth in Attachment A).
1.20 MEMBER is an individual who is enrolled in a Managed Care Plan and meets
all the eligibility requirements for membership in the Managed Care Plan
and for whom the applicable Premium has been received by PacifiCare.
1.21 OUT-OF-AREA MEDICAL SERVICES are those Urgently Needed Services and
Emergency Services provided while a Member is outside the Medical Group
Service Area which would have been the financial responsibility of
Medical Group had the services been provided within the Medical Group
Service Area.
1.22 PARTICIPATING PROVIDERS are (i) physicians and health care professionals
who are shareholders, partners or employees of Medical Group and (ii)
physicians, medical groups, individual practice associations ("IPA"),
health care professionals, hospitals, facilities and other providers of
health care services or supplies that have entered into written contracts
with PacifiCare, Medical Group or Hospital to provide Covered Services to
Members pursuant to Managed Care Plans.
1.23 PREMIUM is the payment for Covered Services under each Managed Care Plan
as defined in the applicable Product Attachment.
1.24 PRIMARY CARE PHYSICIAN is any of Medical Group's Participating Providers
who meet PacifiCare's criteria for providing initial and primary care
Covered Services to Medical Group Members, for maintaining the continuity
of patient care, and for initiating and coordinating referrals for
Covered Services to Medical Group Members.
1.25 PRODUCT ATTACHMENTS are the attachments to the Base Agreement which set
forth the terms and conditions under which Medical Group shall provide or
arrange Covered Services to Medical Group Members pursuant to the Managed
Care Plans. All Product Attachments which are signed by both PacifiCare
and Medical Group shall become a part of this Agreement and are
incorporated herein.
1.26 PROVIDER MANUAL is the PacifiCare Provider Policies and Procedures Manual
and related written materials which shall be provided to Medical Group by
PacifiCare prior to or concurrent with the execution of this Agreement.
The Provider Manual is incorporated into this Agreement, and may be
updated from time to time by PacifiCare as provided in this Agreement.
3
1.27 QUALITY MANAGEMENT AND IMPROVEMENT ("QI") PROGRAM are those standards,
protocols, policies and procedures adopted by PacifiCare to monitor and
improve the quality of clinical care and quality of services provided to
Members. The QI Program is described in the Provider Manual, and may be
updated from time to time by PacifiCare as provided in this Agreement.
1.28 STATE AND FEDERAL LAW shall mean any and all laws and regulations of the
State of California or of the United States which are applicable to
PacifiCare, this Agreement, Managed Care Plans, and Medical Group and its
Participating Providers.
1.29 SUBSCRIBER AGREEMENT is the contract between PacifiCare and a Subscriber
or Subscriber Group which describes the costs, benefits or services,
procedures, conditions, limitations, exclusions, and other obligations to
which Members are entitled and subject to under a Managed Care Plan. A
copy of the current standard form Subscriber Agreement for each Managed
Care Plan shall be provided to Medical Group by PacifiCare concurrent
with the execution of each Product Attachment, and may be updated from
time to time by PacifiCare.
1.30 SUBSCRIBER OR SUBSCRIBER GROUP is the individual or employer,
organization, firm or other entity which contracts with PacifiCare under
a Subscriber Agreement to obtain the benefits of a Managed Care Plan.
1.31 URGENTLY NEEDED SERVICES are Covered Services under a Managed Care Plan
which are required without delay in order to prevent the serious
deterioration of a Member's health as a result of an unforeseen illness
or injury while the Member is temporarily outside the PacifiCare Service
Area (that is, the geographic area in which PacifiCare is licensed in the
State of California to offer each Managed Care Plan).
1.32 UTILIZATION MANAGEMENT ("UM") PROGRAM are those standards, protocols,
policies and procedures adopted by PacifiCare regarding the management,
review and approval of the provision of Covered Services to Members. The
UM Program is described in the Provider Manual, and may be updated from
time to time by PacifiCare as provided in this Agreement.
ARTICLE 2
DUTIES OF MEDICAL GROUP
2.1 PROVIDE OR ARRANGE COVERED SERVICES. Medical Group, through its
Participating Providers, shall provide or arrange Covered Services in the
Medical Group Service Area to Medical Group Members, in coordination with
PacifiCare and PacifiCare's Participating Providers and in accordance
with the terms and conditions set forth in this Agreement and the Managed
Care Plans. Medical Group shall be financially responsible for Medical
Group Services. The primary concern of Medical Group and its
Participating Providers under this Agreement shall be the quality of
Covered Services provided to or arranged for Medical Group Members.
Nothing stated in this Agreement shall be interpreted to diminish this
responsibility.
2.2 PROFESSIONAL STANDARDS. All Covered Services provided or arranged by
Medical Group shall be provided or arranged by duly licensed, certified
or otherwise authorized professional personnel and at physical facilities
in accordance with (i) the generally accepted medical and surgical
practices and standards prevailing in the applicable professional
community at the time of
4
treatment, (ii) the provisions of PacifiCare's QI Program and UM Program,
(iii) the requirements of State and Federal Law and (iv) the standards of
Accreditation Organizations.
2.2.1 LICENSURE OF MEDICAL GROUP. Medical Group is legally organized
and incorporated under the laws of the State of California.
Medical Group shall maintain in good standing at all times during
the term of this Agreement any and all licenses, certificates
and/or approvals required under State and Federal Law for the
performance by Medical Group of the duties required by this
Agreement.
2.2.2 LICENSURE/CERTIFICATION OF MEDICAL GROUP'S PARTICIPATING
PROVIDERS. Each of Medical Group's Participating Providers shall
maintain in good standing at all times during the term of this
Agreement the necessary licenses or certifications required by
State and Federal Law and by the Managed Care Plans to provide
Covered Services to Medical Group Members.
2.2.3 HOSPITAL PRIVILEGES FOR MEDICAL GROUP'S PARTICIPATING PROVIDERS.
Unless otherwise specified by Medical Group and approved by
PacifiCare for specific Participating Providers, Group shall make
best efforts to ensure that each of Medical Group's Participating
Providers who is a physician shall maintain in good standing at
all times during the term of this Agreement medical staff
membership and clinical privileges at Hospital necessary to
provide or arrange Covered Services to Medical Group Members.
2.3 MEDICAL GROUP'S PARTICIPATING PROVIDERS. Medical Group shall have a
sufficient number of Participating Providers throughout the Medical Group
Service Area to provide or arrange Covered Services and meet the needs of
PacifiCare and Medical Group Members as determined by PacifiCare's QI
Program and in accordance with State and Federal Law. Medical Group's
Participating Providers shall provide or arrange Covered Services,
including Emergency Services, to Medical Group Members twenty four (24)
hours a day, seven (7) days a week. Medical Group's Participating
Providers must meet PacifiCare's credentialing standards and must be
approved by PacifiCare before providing or arranging Covered Services to
Medical Group Members.
2.3.1 PARTICIPATING PROVIDER INFORMATION. Medical Group shall provide
PacifiCare with a complete list of its Participating Providers,
together with the provider specific information required by
PacifiCare for credentialing and for administration of the
Managed Care Plans, at the time this Agreement is signed.
2.3.2 NOTICE OF PARTICIPATING PROVIDER ADDITIONS. Medical Group shall
use its best efforts to provide at least sixty (60) calendar days
prior written notice to PacifiCare of the addition of any new
Participating Providers. Such notice shall include the provider
specific information required by PacifiCare. All new
Participating Providers must be approved by PacifiCare before
providing or arranging Covered Services to Medical Group Members.
PacifiCare shall use its best efforts to approve new
Participating Providers as quickly as possible after receiving
the written notice from Medical Group.
5
2.3.3 NOTICE OF PARTICIPATING PROVIDER TERMINATIONS. Medical Group
shall provide sixty (60) calendar days prior written notice to
PacifiCare of the termination of any of its Participating
Providers; provided, however, that if any Participating Providers
are terminated with less than sixty (60) calendar days notice,
then Medical Group shall provide written notice to PacifiCare
within five (5) business days of Medical Group becoming aware of
such termination. Notwithstanding the termination of any
Participating Providers, Medical Group shall remain responsible
for providing or arranging Covered Services through its remaining
Participating Providers and shall remain financially responsible
for Medical Group Services provided to Medical Group Members
under this Agreement.
2.3.4 RESTRICTION, SUSPENSION OR TERMINATION OF PARTICIPATING
PROVIDERS. Medical Group shall, as warranted, immediately
restrict, suspend or terminate its Participating Providers from
providing or arranging Covered Services to Medical Group Members
in the following circumstances: (i) the Participating Provider
ceases to meet the licensing/certification requirements or other
professional standards described in this Agreement; (ii)
PacifiCare or Medical Group reasonably determines that there are
serious deficiencies in the professional competence, conduct or
quality of care of the Participating Provider which affects or
could adversely affect the health or safety of Medical Group
Members; or (iii) PacifiCare reasonably demands that the
Participating Provider be restricted, suspended or terminated.
Medical Group shall immediately notify PacifiCare of any of its
Participating Providers who cease to meet the
licensing/certification requirements or other professional
standards described in this Agreement and Medical Group's actions
under this Section. If Medical Group fails to act as required by
this Section with respect to any of its Participating Providers,
PacifiCare shall have the right to immediately prohibit such
Participating Providers from continuing to provide Covered
Services to Medical Group Members.
2.3.5 CHANGES IN CAPACITY. Medical Group and its Participating
Providers will continue to accept Members enrolled by PacifiCare
for so long as Medical Group and its Participating Providers have
the capacity to provide and arrange Covered Services under this
Agreement and for so long as Medical Group continues to accept
new patients from any HMO or other prepaid health plan. Medical
Group shall provide at least ninety (90) calendar days prior
written notice to PacifiCare of any significant changes in the
capacity of Medical Group to provide or arrange Covered Services
that would prevent Medical Group from accepting additional
Members. A significant change in capacity includes, without
limitation, the following: (i) inability of Medical Group to
properly serve additional Members due to a lack of Primary Care
Physicians or other Participating Providers; (ii) inability of
any one of Medical Group's Primary Care Physicians or other
Participating Providers to serve additional Members; or (iii)
closure of any Medical Group Facility. PacifiCare may continue to
enroll Members with Medical Group until the expiration of the
notice period required under this Section, and in such event,
Medical Group and its Primary Care Physicians and other
Participating Providers shall continue to accept such Members.
PacifiCare shall discontinue the enrollment of Members with
Medical Group upon expiration of the notice period required under
this Section until such time, if any, that Medical Group
6
provides written notification to PacifiCare that it has the
capacity to accept new Members.
2.4 MEDICAL GROUP'S SUBCONTRACTS WITH PARTICIPATING PROVIDERS. Medical Group
shall demonstrate and certify to PacifiCare prior to the Commencement
Date and upon PacifiCare's written request at any time during the term of
this Agreement (in the format specified by PacifiCare) that its
subcontracts with Participating Providers comply with requirements of
this Agreement. Medical Group shall amend any and all of its existing
subcontracts with Participating Providers which do not comply with this
Agreement within ninety (90) calendar days following the execution of
this Agreement and shall provide PacifiCare with written certification
thereof.
2.4.1 COMPLIANCE WITH PROVISIONS OF AGREEMENT. Medical Group's
subcontracts with Participating Providers shall be in writing.
All such subcontracts shall be consistent with the terms and
conditions of this Agreement (including the Product Attachments)
and shall meet PacifiCare's requirements for Participating
Provider subcontracts. If this Agreement is amended or modified,
all such subcontracts shall be amended or modified within sixty
(60) calendar days to be consistent with such amendments or
modifications.
2.4.2 COMPLIANCE WITH STANDARDS OF ACCREDITATION ORGANIZATIONS AND
REQUIREMENTS OF STATE AND FEDERAL LAW. Medical Group's
subcontracts with Participating Providers shall comply with the
standards of Accreditation Organizations and requirements of
State and Federal Law. If there are changes in such standards
and/or requirements, Medical Group shall amend its subcontracts
with Participating Providers to comply with such changes within
thirty (30) calendar days following notice thereof from
PacifiCare.
2.4.3 ACCESS BY PACIFICARE, ACCREDITATION ORGANIZATIONS AND GOVERNMENT
AGENCIES TO SUBCONTRACTS AND BOOKS AND RECORDS OF PARTICIPATING
PROVIDERS. Medical Group shall make available for inspection,
examination and copying by PacifiCare, Accreditation
Organizations and Government Agencies during normal business
hours (i) its Participating Provider subcontracts and (ii) books
and records of its Participating Providers relating to Covered
Services provided to Medical Group Members. Unless shorter notice
is specified by a Government Agency, PacifiCare shall provide
Medical Group with two (2) business days prior written notice of
any inspection, examination and copying under this Section. Any
such inspection, examination and copying shall be conducted
consistent with State and Federal Law. Copies of subcontracts and
the books and records of Participating Providers shall be
maintained for at least five (5) years from the close of the
fiscal year in which the Covered Services were provided.
2.4.4 MEDICAL GROUP'S RESPONSIBILITY FOR PROVIDING OR ARRANGING COVERED
SERVICES. Notwithstanding the existence of Medical Group's
subcontracts with its Participating Providers, Medical Group
shall remain responsible for satisfying the obligations of
Medical Group set forth in this Agreement. If any of Medical
Group's subcontracts with Participating Providers are terminated,
Medical Group shall remain responsible for providing or arranging
Covered Services through its remaining Participating Providers
and shall remain financially responsible for Medical Group
Services provided to Medical Group Members under this Agreement.
7
2.5 ACCEPTANCE AND TRANSFER OF MEMBERS. Medical Group and its Participating
Providers may not impose any limitations on the acceptance of Members for
care or treatment that are not imposed on other patients. PacifiCare,
Medical Group and its Participating Providers shall not request, demand,
require or seek directly or indirectly the transfer, discharge or removal
of any Member for reasons of Member's need for, or utilization of,
Covered Services, except in accordance with the procedures established
for such action. Medical Group and its Participating Providers shall not
refuse or fail to provide or arrange Covered Services to any Member.
PacifiCare and Medical Group shall exercise reasonable efforts in
following the procedures for transfer, discharge or removal of Members as
set forth in the Provider Manual. Nevertheless, PacifiCare may require
transfer of Medical Group Members for any reason, and Medical Group may
request that PacifiCare transfer Medical Group Members to another of
PacifiCare's Participating Providers if Medical Group is unable to
provide Covered Services required by this Agreement for reasons related
to capacity of Medical Group and its Participating Providers. In
addition, Medical Group may request that PacifiCare transfer a Medical
Group Member to another of PacifiCare's Participating Providers in the
event of a material breakdown in the physician-patient relationship.
PacifiCare shall evaluate such requests considering the best interests of
the Member. In the event PacifiCare grants a request for transfer of a
Member by Medical Group, the transfer shall not be effective until the
end of the month following the month in which the Member receives notice
of transfer, unless the Member agrees to an earlier transfer and
PacifiCare has made arrangements with another of PacifiCare's
Participating Providers to accept the Member.
2.6 MEDICAL RECORDS. Medical Group and its Participating Providers shall
maintain all patient medical records relating to Covered Services
provided to Members, in such form and containing such information as
required by the QI Program, Accreditation Organizations and State and
Federal Law. Medical records shall be maintained in a manner that is
current, detailed, organized and permits effective patient care and
quality review by Medical Group and PacifiCare pursuant to the QI
Program. Medical records shall be maintained in a form and physical
location which is accessible to Medical Group's Participating Providers,
PacifiCare, Government Agencies and Accreditation Organizations. Upon
reasonable request and within the time frame requested, Medical Group and
its Participating Providers shall provide to PacifiCare, at Medical
Group's or Participating Provider's expense, copies of Member medical
records for purposes of conducting quality assurance, case management and
utilization reviews, credentialing and peer review, claims processing,
verification and payment, resolving Member grievances and appeals and
other activities reasonably necessary for the proper administration of
the Managed Care Plans consistent with State and Federal Law. If Medical
Group or its Participating Providers do not provide copies of Member
medical records to PacifiCare within the time frame requested, Medical
Group and its Participating Providers shall allow PacifiCare immediate
access to such medical records for onsite copying and shall reimburse
PacifiCare for the actual copying expense. Medical Group and its
Participating Providers shall maintain the confidentiality of all Member
medical records and treatment information in accordance with State
and Federal Law. Medical records shall be retained by Medical Group and
its Participating Providers for at least five (5) years following the
provision of Covered Services and as required by State and Federal Law.
The provisions of this Section shall survive termination of this
Agreement for the period of time required by State and Federal Law.
8
2.7 INSURANCE. Medical Group, at its sole cost and expense, shall maintain
throughout the term of this Agreement and for a period of four years
following termination of this Agreement, professional liability insurance
(i.e., medical malpractice insurance) and managed care errors and
omissions insurance in the minimum amount of one million dollars
($1,000,000) per occurrence and three million dollars ($3,000,000) annual
aggregate, the annual aggregate to apply separately for each physician
and health care practitioner who is insured under the policy (or
policies) purchased by Medical Group. If the policy (or policies) is
canceled or not renewed and coverage is provided on a claims-made basis,
Medical Group agrees to exercise any option contained in the policy (or
policies) to extend the reporting period to the maximum period permitted
under the policy (or policies); provided, however, that Medical Group
need not exercise such option if the superseding insurer will accept all
prior claims.
Medical Group, at its sole cost and expense, shall also maintain
throughout the term of this Agreement, workers' compensation insurance as
required by the State of California and general liability insurance,
including but not limited to premises, personal injury and contractual
liability insurance, in a minimum amount of one million dollars
($1,000,000) per occurrence, combined single limit, bodily injury and
property damage, to insure Medical Group and its employees, agents, and
representatives against claims for damages arising by reason of (i)
personal injuries or death occasioned in connection with the performance
of any Covered Services provided under this Agreement, (ii) the use of
any property and facilities of the Medical Group, and (iii) activities
performed in connection with this Agreement.
Medical Group's Participating Providers who are not insured under the
Medical Group's policy (or policies) shall maintain the same insurance
coverage required of Medical Group under this Section, unless otherwise
consented to by PacifiCare in writing.
All insurance required under this Agreement shall be provided by insurers
who meet PacifiCare's standards. A certificate of insurance shall be
issued to PacifiCare prior to the Commencement Date and upon the renewal
of the insurance coverage specified in this Section. The certificate
shall provide that PacifiCare shall receive thirty (30) days prior
written notice of cancellation or material reduction in the insurance
coverage specified in this Section. Notwithstanding any other provision
of this Agreement, failure to provide the certificate of insurance when
requested by PacifiCare shall be grounds for immediate termination of
this Agreement.
2.8 FINANCIAL STATEMENTS. Medical Group shall allow PacifiCare access, within
forty five (45) calendar days of the end of each calendar quarter, to
Medical Group's quarterly financial statements, which shall include a
balance sheet, statement of income and statement of cash flow (the
"Financial Statements") prepared in accordance with generally-accepted
accounting principles. Such quarterly Financial Statements shall be
certified by the chief financial officer of Medical Group as accurately
reflecting the financial condition of Medical Group for the period
indicated. In addition, Medical Group shall provide to PacifiCare, within
forty five (45) calendar days of the end of each fiscal year, or upon
completion of audit if later, copies of its audited annual Financial
Statements.
2.9 ADMINISTRATIVE REQUIREMENTS
9
2.9.1 ADMINISTRATIVE GUIDELINES. Medical Group agrees to perform its
duties under this Agreement in accordance with the administrative
guidelines, policies and procedures set forth in the Provider
Manual and State and Federal Law. Medical Group shall be
responsible for distributing copies of the Provider Manual, as
necessary, to its Participating Providers.
2.9.2 MEDICAL DIRECTOR, HEALTH PLAN COORDINATOR, QUALITY. IMPROVEMENT
COMMITTEE AND UTILIZATION MANAGEMENT COMMITTEE. Medical Group
shall designate one of its Participating Providers who is a
physician or osteopath to act as Medical Group's Medical Director
and shall designate an individual to act as the health plan
coordinator with PacifiCare. The duties of Medical Group's
Medical Director and health plan coordinator shall be set forth
in the Provider Manual. In addition, Medical Group shall
establish and maintain a quality improvement committee and a
utilization management committee to assist PacifiCare in
implementing the QI Program and UM Program with respect to
Medical Group Members.
2.9.3 PARTICIPATION IN PACIFICARE ORIENTATION AND TRAINING PROGRAMS.
Medical Group shall require its administrative personnel and its
Participating Providers to participate in PacifiCare's
orientation and training programs.
2.9.4 ENCOUNTER DATA. Medical Group shall maintain and provide to
PacifiCare, no later than the fifteenth (15th) day of each month,
(i) the utilization data pertaining to Covered Services which are
provided directly by Medical Group and its Participating
Providers and (ii) the utilization data pertaining to Covered
Services which are paid for by Medical Group during the preceding
month, including data not provided in the most recent submission,
as required by PacifiCare (the "Encounter Data"). Medical Group
shall submit Encounter Data in accordance with the procedures and
standards established by PacifiCare. Medical Group shall submit
Encounter Data in an electronic format acceptable to PacifiCare.
For each month in which Medical Group fails to submit Encounter
Data described above in this Section, PacifiCare shall deduct
[ ** ] of the Medical Group's Capitation Payment until such
data is submitted. PacifiCare shall provide 15 days written
notice of intent to implement [ ** ] deduction in Capitation
Payment
2.9.5 OTHER DATA AND INFORMATION. Medical Group shall maintain and
provide to PacifiCare, upon written request, any and all
information required by PacifiCare, State and Federal Law,
Government Agencies or Accreditation Organizations for the
administration of Managed Care Plans. Medical Group shall submit
such information and data to PacifiCare in the format and within
the time periods specified by PacifiCare.
2.10 MEDICAL GROUP'S FAILURE TO COMPLY WITH AGREEMENT, PROVIDER MANUAL OR
MANAGED CARE PLANS. If Medical Group fails to comply with any
provision(s) of this Agreement, the Provider Manual or the Managed Care
Plans, PacifiCare may provide written notice of such failure to Medical
Group, specifying a date at least forty five (45) days following the date
of the notice by
10
which Medical Group must be in compliance with such provision(s), as
reasonably determined by PacifiCare. If Medical Group fails to comply
with such provision(s) by the date specified in the notice, PacifiCare
shall have the right to cease marketing efforts on behalf of Medical
Group and/or discontinue enrollment of Members with Medical Group until
such time as Medical Group complies with such provision(s), as reasonably
determined by PacifiCare. In addition, PacifiCare shall have the right to
either (i) collect from Medical Group or (ii) offset against amounts due
Medical Group under this Agreement, any penalties or other monetary
amounts payable by PacifiCare to Government Agencies, Subscriber Groups,
Participating Providers or any other health care providers as a result of
Medical Group's failure to comply with any provision(s) of this
Agreement, the Provider Manual or Managed Care Plans. PacifiCare's rights
and remedies under this Section shall be in addition to all other rights
and remedies available to PacifiCare to enforce this Agreement, including
the right of termination.
2.11 RECIPROCITY ARRANGEMENTS. If any Member who is not a Medical Group Member
or if any individual who is enrolled in a benefit plan and program of any
PacifiCare affiliated entity ("PacifiCare Affiliate") receives services
or treatment from Medical Group or its Participating Providers, Medical
Group or the Participating Provider agrees to ▇▇▇▇ PacifiCare or the
PacifiCare Affiliate (or their respective designees), as applicable, at
billed charges and to accept the Cost of Care amount less any applicable
Copayments, coinsurance, and/or deductibles as payment in full for such
services or treatment. PacifiCare or the PacifiCare Affiliate will
process payment for such services or treatment in accordance with the
payment procedures for the applicable benefit plan or program.
If any Medical Group Member receives Covered Services from a PacifiCare
Participating Provider or PacifiCare Affiliate contracted provider,
PacifiCare shall, where contractually available, provide reciprocity to
Medical Group at PacifiCare rates for such Covered Services. Medical
Group shall comply with the procedures established by PacifiCare or the
PacifiCare Affiliate for reimbursement of such Covered Services.
Only medically appropriate Covered Services, as determined by PacifiCare,
shall be subject to the reciprocity arrangement specified in this
Section. Medical Group shall abide by all provisions of this Agreement
relating to non-billing of Members with respect to all services and
treatment subject to this reciprocity arrangement.
2.12 HOSPITAL ADMISSIONS. In recognition of the need for coordination of
Covered Services provided to Medical Group Members and to ensure
continuity and quality of care, Medical Group agrees to utilize Hospital
as the provider of Hospital Services for Medical Group Members, subject
to the following exceptions:
(i) Medical Group Members admitted for Emergency Services or Urgently
Needed Services;
(ii) Medical Group Members requiring Hospital Services not available
at Hospital; and
(iii) Medical Group Members directed to any other PacifiCare
Participating Provider in accordance with PacifiCare's
Utilization Management Program.
11
Notwithstanding the foregoing, Medical Group Member requests for
treatment at another PacifiCare Participating Provider may be granted due
to limited Hospital bed capacity or if such request is in the Member's
best interest, as determined by PacifiCare.
2.13 OUT-OF-AREA MEDICAL SERVICES. Medical Group shall manage and coordinate
Out-of-Area Medical Services. Medical Group shall cooperate fully with
PacifiCare in providing information that may be required for transferring
Members back into the Medical Group Service Area, including promptly
notifying PacifiCare of known or suspected Out-of-Area Medical Services,
and shall accept the prompt transfer of Members to the care of Medical
Group and its Participating Providers following the receipt of
Out-of-Area Medical Services.
ARTICLE 3
ADMINISTRATIVE DUTIES OF PACIFICARE
3.1 ADMINISTRATION AND PROVISION OF DATA. PacifiCare shall perform
administrative, accounting, enrollment, eligibility verification and
other functions necessary for the administration and operation of the
Managed Care Plans. PacifiCare shall provide Medical Group with
management information and data reasonably necessary to carry out the
terms and conditions of this Agreement and for the operation of the
Managed Care Plans.
3.2 MARKETING. PacifiCare shall make reasonable efforts to market the Managed
Care Plans. Medical Group agrees that PacifiCare may, in its discretion,
use Medical Group's name, address and telephone number as well as the
names, addresses and telephone numbers and specialties of its
Participating Providers in PacifiCare's marketing and informational
materials including, without limitation, PacifiCare's directory of
Participating Providers. Nothing in this Agreement shall be deemed to
require PacifiCare to conduct any specific marketing activities on behalf
of Medical Group and its Participating Providers or to identify Medical
Group or its Participating Providers in any specific PacifiCare marketing
or informational materials.
3.3 ENROLLMENT AND ASSIGNMENT OF MEMBERS. PacifiCare shall be responsible for
distributing the PacifiCare Enrollment Packet to all Members upon
enrollment and at open enrollment periods. PacifiCare shall provide
benefit information to Members concerning the type, scope and duration of
benefits to which Members are entitled under the Managed Care Plans.
Nothing in this Agreement shall be construed to require PacifiCare to
assign any minimum or maximum number of Members to Medical Group or to
utilize Medical Group for any Members in the Medical Group Service Area.
3.4 ELIGIBILITY INFORMATION. PacifiCare shall provide the Eligibility List to
Medical Group on or about the fifteenth (15th) day of each month.
3.5 BENEFIT DESIGN AND INTERPRETATION; COVERAGE DECISIONS. PacifiCare shall
be solely responsible for the benefit design of all Managed Care Plans,
including establishing benefits, Premiums and Copayments. PacifiCare
shall be solely responsible for interpreting the terms of and making
final coverage determinations under the Managed Care Plans.
3.6 CASE MANAGEMENT. PacifiCare shall manage and coordinate Covered Services
for Medical Group Members (including Emergency Services and Urgently
Needed Services) with complex
12
medical conditions to ensure that care is provided in a manner which encourages
quality, continuity of care and cost-effectiveness ("Case Management"). Medical
Group shall cooperate fully with PacifiCare in providing information that may be
required in determining the need for Case Management and in the transfer of
Medical Group Members to designated PacifiCare Participating Providers for cost
effective care.
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ARTICLE 4
MANAGED CARE PROGRAM SERVICES
4.1 MANAGED CARE PROGRAM SERVICES. PacifiCare shall be accountable for the
performance of the following services for all Managed Care Plans: (i)
quality management and improvement, (ii) utilization management, (iii)
credentialing, (iv) member rights and responsibilities, (v) preventive
health services, (vi) medical record review and (vii) payment and
processing of claims (collectively, "Managed Care Program Services").
Medical Group and its Participating Providers shall participate,
cooperate and comply with PacifiCare in the performance of all Managed
Care Program Services. Specific activities related to utilization
management, credentialing and claims processing may be delegated by
PacifiCare to Medical Group in accordance with the provisions of this
Article 4. Before the performance of any activities is delegated to
Medical Group, PacifiCare shall conduct a comprehensive audit of Medical
Group's ability and administrative capacity to perform such activities.
Medical Group shall provide all reasonable documentation requested by
PacifiCare and shall provide PacifiCare representatives with on-site
access to Medical Group's facilities and personnel for purposes of
conducting such audit.
4.1.1 QUALITY MANAGEMENT AND IMPROVEMENT. PacifiCare shall maintain an
ongoing Quality Management and Improvement Program ("QI Program")
to assess and improve the quality of clinical care and the
quality of service provided to Members under the Managed Care
Plans. The QI Program shall be maintained in accordance with the
requirements of State and Federal Law and the standards of
Accreditation Organizations. Medical Group and its Participating
Providers shall participate, cooperate and comply with the QI
Program.
Medical Group shall, at the written request of PacifiCare, make
available its Participating Providers who are physicians to serve
on PacifiCare's QI Committee. Medical Group shall establish and
maintain an independent quality improvement committee which shall
meet as frequently as necessary, but at least monthly. A member
of the PacifiCare medical services staff may participate in
Medical Group's quality improvement committee meetings. Medical
Group shall keep minutes of its quality improvement committee
meetings, a copy of which shall be made available to PacifiCare
upon ten (10) days written notice by PacifiCare to Medical Group.
If the functions of the quality improvement committee are
performed by the Medical Group's utilization review committee,
each committee must hold separately convened meetings and the
minutes of each meeting must be separately maintained.
Medical Group shall develop and provide to PacifiCare for its
review and approval written procedures for focused review or
remedial action whenever it is determined by PacifiCare's QI
Committee that inappropriate or substandard Covered Services have
been furnished or Covered Services that should have been
furnished have not been furnished. Upon request, PacifiCare shall
assist Medical Group in the formulation of such focused review
and remedial procedures.
4.1.2 UTILIZATION MANAGEMENT. PacifiCare shall maintain an ongoing
Utilization Management Program ("UM Program") to address
pre-authorization, concurrent and
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retrospective review of the quality, appropriateness, level of care and
utilization of all Covered Services provided or to be provided to
Members under the Managed Care Plans. The UM Program shall be
maintained in accordance with the requirements of State and Federal Law
and the standards of Accreditation Organizations. Medical Group and its
Participating Providers shall participate, cooperate and comply with
the UM Program.
Medical Group shall establish and maintain a utilization review
committee which shall meet as frequently as necessary, but at least
weekly. A member of the PacifiCare medical services staff may
participate in Medical Group's utilization review committee meetings.
Medical Group shall keep minutes of its utilization review committee
meetings, a copy of which shall be made available to PacifiCare upon
ten (10) days written notice by PacifiCare to Medical Group. Medical
Group's utilization review committee shall review elective referrals
and hospital and skilled nursing facility admissions on a prospective
basis, and Emergency Services and Urgently Needed Services requiring
hospital admissions on a retrospective basis. The committee shall also
be responsible for monitoring patterns of care, isolating inappropriate
utilization and performing other management and review duties as
specified in the UM Program.
4.1.3 CREDENTIALING. PacifiCare shall maintain standards, policies and
procedures for credentialing and recredentialing physicians, hospitals
and other health care professionals and facilities that provide Covered
Services to Members under the Managed Care Plans ("Credentialing
Program"). The Credentialing Program shall be maintained in accordance
with the requirements of State and Federal Law and the standards of
Accreditation Organizations. Medical Group and its Participating
Providers shall participate, cooperate and comply with PacifiCare's
Credentialing Program.
4.1.4 MEMBER RIGHTS AND RESPONSIBILITIES. PacifiCare shall inform Members of
their rights and responsibilities under each Managed Care Plan, provide
Members with membership cards and member handbooks, distribute periodic
communications to Members, process Member complaints and grievances and
respond to inquiries and requests from Members regarding Managed Care
Plans (collectively "Member Services"). Medical Group and its
Participating Providers shall participate, cooperate
and comply with PacifiCare's Member Services activities.
4.1.5 PREVENTIVE HEALTH SERVICES. PacifiCare shall develop preventive health
guidelines for the prevention and early detection of illness and
disease ("Preventive Health Guidelines') and shall encourage Members to
use preventive health services. The Preventive Health Guidelines shall
be maintained in accordance with the standards of Accreditation
Organizations and shall be distributed to Participating Providers.
Medical Group and its Participating Providers shall provide preventive
health services to Medical Group Members in accordance with the
Preventive Health Guidelines.
4.1.6 MEDICAL RECORD REVIEW. PacifiCare shall on an ongoing basis review
medical records maintained by Medical Group and its Participating
Providers to assess compliance with the requirements of State and
Federal Law and the standards of Accreditation
15
Organizations. Medical Group and its Participating Providers
shall maintain medical records in accordance with the provisions
of this Agreement regarding medical records and in accordance
with PacifiCare's guidelines regarding medical records.
4.1.7 CLAIMS PROCESSING. PacifiCare shall establish and maintain
standards, policies and procedures for the timely and accurate
processing and payment of claims for Covered Services provided to
Members ("Claims Processing Guidelines"). The Claims Processing
Guidelines shall be maintained in accordance with the
requirements of State and Federal Law and the Managed Care Plans.
Medical Group and its Participating Providers shall comply with
PacifiCare's Claims Processing Guidelines.
4.2 PERFORMANCE OF DELEGATED ACTIVITIES. As of the Commencement Date,
PacifiCare shall delegate to Medical Group, and Medical Group shall
perform, those activities which are specified in EXHIBIT 2 to this
Agreement relating to the following Managed Care Program Services which
are described above: (i) Utilization Management; (ii) Credentialing;
(iii) Claims Processing (collectively, the "Delegated Activities").
4.2.1 PACIFICARE POLICIES. For all Delegated Activities, PacifiCare
shall provide Medical Group with PacifiCare's standards and
requirements applicable to the Delegated Activities, as amended
from time to time (the "PacifiCare Policies") and shall notify
Medical Group of all substantive changes to the PacifiCare
Policies. Medical Group may utilize its own policies and
procedures for the Delegated Activities, provided that such
policies and procedures are consistent with the PacifiCare
Policies and are provided to PacifiCare for its review and
approval. If Medical Group's policies and procedures are
inconsistent with the PacifiCare Policies, the PacifiCare
Policies shall apply.
4.2.2 SUB-DELEGATION. Medical Group shall not further delegate the
performance of Delegated Activities to any of its Participating
Providers or any other organization or entity without the prior
written consent of PacifiCare. Medical Group acknowledges and
agrees that PacifiCare is accountable for all Delegated
Activities, and therefore, Medical Group and its Participating
Providers agree to participate, cooperate and comply with
PacifiCare with respect to all Delegated Activities.
4.2.3 MAINTENANCE OF INFORMATION AND RECORDS. Medical Group shall
maintain all information and records reviewed or created in
connection with performing the Delegated Activities in a form
acceptable to PacifiCare, provide PacifiCare with access to
such information and records, and permit PacifiCare to review
and copy such information and records, in accordance with the
requirements of State and Federal Law and standards of
Accreditation Organizations.
4.2.4 REPORTING OBLIGATIONS. Medical Group shall provide PacifiCare
with periodic written reports regarding all Delegated
Activities in the formats specified by PacifiCare for each of
the Delegated Activities.
4.2.5 MONITORING/AUDITS. PacifiCare shall oversee Medical Group's
performance of Delegated Activities through review of periodic
written reports provided by Medical
16
Group as described above and meetings with appropriate Medical
Group representatives and on-site audits and assessments of
Medical Group. Medical Group shall cooperate, participate and
comply with PacifiCare in such monitoring and oversight
activities. Such audits and assessments will be performed in
accordance with the requirements of State and Federal Law and
the standards of Accreditation Organizations. Without limiting
the foregoing, Medical Group agrees that arrangements with its
Participating Providers will permit Medical Group to disclose
to PacifiCare its Participating Provider credentialing files.
4.3 PAYMENT FOR PERFORMANCE OF DELEGATED ACTIVITIES. Payment for
performance of the Delegated Activities by Medical Group is included in
Capitation Payments made to Medical Group under this Agreement. The
following percentage points have been allocated to the performance of
Delegated Activities:
Delegated Activity Percentage points
------------------ -----------------
Utilization Management [ ** ]
Credentialing [ ** ]
Claims Processing [ ** ]
For each month in which the performance of any Delegated Activity is
revoked by PacifiCare as provided in this Article 4, the Capitation
Payment shall be reduced by the percentage points specified above for
such Delegated Activity. PacifiCare may modify the payment for
Delegated Activities effective at the beginning of any calendar year by
providing Medical Group with sixty (60) calendar days prior written
notice.
4.4 REVOCATION OF DELEGATED ACTIVITIES. PacifiCare may revoke any or all
Delegated Activities if PacifiCare determines that they are not being
performed in accordance with the standards and requirements established
by PacifiCare or if Medical Group's performance of Delegated Activities
is inconsistent with, or in violation of, State and Federal Law or
threatens PacifiCare's accreditation by any Accreditation Organization.
PacifiCare shall provide Medical Group at least thirty (30) calendar
days prior written notice specifying the Delegated Activities which
PacifiCare intends to revoke, unless PacifiCare determines that Medical
Group's continued performance of Delegated Activities presents a risk
of harm to PacifiCare Members, in which case the Delegated Activities
shall be revoked immediately. If Medical Group does not conform to the
applicable standards and requirements within such notice period,
PacifiCare shall send a second written notice to Medical Group
confirming the revocation of the Delegated Activities, the effective
date of such revocation and the period of time such revocation shall
remain in effect (the "Revocation Period"). During the Revocation
Period, Medical Group shall take corrective action to conform with
applicable standards and requirements established by PacifiCare. At the
end of the Revocation Period, PacifiCare shall evaluate Medical Group's
corrective action, determine whether Medical Group is able to resume
performance of the Delegated Activities, and provide written notice to
Medical Group of such determination.
The written notices from PacifiCare to Medical Group under this Section
shall specify (i) the adjustments to Capitation Payments as a result of
the revocation of any Delegated Activities in
17
accordance with the allocations set forth in this Article 4, and (ii)
in the event that claims processing is revoked, the adjustments to
Capitation Payments for claims payment as set forth in Section 5.2. If
only a portion of a specific Delegated Activity is revoked (e.g.,
Medical Group continues to perform some, but not all, of a specific
Delegated Activity), PacifiCare shall have the right to adjust the
allocations set forth in this Article 4 to reflect the portion of the
specific Delegated Activity which continues to be performed by Medical
Group. Notwithstanding any other provision of the Agreement, the
written notices from PacifiCare to Medical Group under this Section
shall be deemed valid and enforceable modifications to the Agreement,
whether or not signed by Medical Group.
Upon revocation of any of the Delegated Activities, PacifiCare will
resume responsibility for performing such activities, and Medical Group
and its Participating Providers shall continue to cooperate,
participate and comply with PacifiCare with respect to the performance
of such activities.
Notwithstanding PacifiCare's right to revoke Delegated Activities,
Medical Group's failure to perform the Delegated Activities shall be a
breach of the Agreement. In such event, PacifiCare may exercise all of
its rights and remedies to enforce the Agreement, including the right
of termination.
ARTICLE 5
COMPENSATION
5.1 CAPITATION PAYMENTS. PacifiCare shall make monthly Capitation Payments
to Medical Group as payment for providing and arranging Covered
Services to Medical Group Members for each Managed Care Plan, as
specified in this Agreement and the applicable Product Attachment.
5.1.1 DUE DATE. Each Capitation Payment shall be due and payable on
the tenth (10th) day of the month for the current month's
Covered Services. In the event the tenth (10th) day of the
month is not a business day, the Capitation Payment shall be
due and payable on the next business day following the tenth
(10th) day of the month.
5.1.2 DOCUMENTATION. PacifiCare shall provide Medical Group
appropriate documentation in support of each Capitation
Payment.
5.1.3 RETROACTIVE ADJUSTMENTS. Capitation Payments shall be subject
to retroactive adjustments either upward or downward due to
retroactive changes in the Premium for each Managed Care Plan
as specified in the applicable Product Attachment and
retroactive changes in the number of Medical Group Members for
each Managed Care Plan. Retroactive adjustments to Capitation
Payments for Medical Group Members enrolled in Managed Care
Plans which are government funded (including, without
limitation, Medicare, Medicaid, public employees) shall be made
within thirty (30) days after the adjustment is determined.
Retroactive adjustments to Capitation Payments for Medical
Group Members enrolled in Managed Care Plans which are not
government funded shall be made within one hundred eighty (180)
days after the end of the month for which the Capitation
Payment applies.
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5.2 ADJUSTMENT FOR CLAIMS PROCESSING. If PacifiCare does not delegate
performance of claims processing to Medical Group or if the delegation
of claims processing is revoked by PacifiCare, PacifiCare shall deduct
from monthly Capitation Payments an amount reasonably estimated by
PacifiCare to be necessary for PacifiCare to process and pay claims for
Medical Group Services which are not provided directly by Medical Group
and its employed Participating Providers. Initially, this amount shall
be [ ** ] of Medical Group's monthly Capitation Payment. This amount
shall be increased or decreased each month to more accurately reflect
Medical Group's actual and expected claims experience and any changes
in Covered Services which are provided or arranged by Medical Group and
its Participating Providers, with adjustments for claims incurred but
not received.
5.3 ADJUSTMENT FOR REVOCATION OF DELEGATED ACTIVITIES. PacifiCare shall
deduct the amounts specified in Article 4, above, for any Delegated
Activity which is revoked by PacifiCare in accordance with the
provisions of Article 4.
5.4 INCENTIVE PROGRAMS. Incentive programs are designed to ensure that
PacifiCare, Medical Group and, for some programs, Hospital work
collaboratively to deliver Covered Services in an effective and
efficient manner by ensuring appropriate utilization of Covered
Services. Incentive programs for each Managed Care Plan are set forth
in the applicable Product Attachment.
5.4.1 INCENTIVE PROGRAM WITHHOLD. PacifiCare shall establish a single
withhold from Medical Group's monthly Capitation Payment for
purposes of offsetting potential deficits for the combined
incentive programs, excluding the Commercial Hospital Incentive
Program and the Secure Horizons Hospital Incentive Program for
which separate withholds may be established. The monthly
incentive withhold shall initially be [ ** ] of Premium for
each Managed Care Plan. PacifiCare, in its sole discretion,
shall prospectively adjust the withhold based on Medical Group's
experience under the combined incentive programs at the time of
the program settlements described below.
5.4.2 INCENTIVE PROGRAM SETTLEMENTS. PacifiCare shall conduct
combined settlements for all of the incentive programs for
Managed Care Plans applicable to Medical Group. Surpluses and
deficits under each of the incentive programs shall be
aggregated and offset against one another. PacifiCare will
conduct an estimated calculation after six (6) months (the
"Interim Calculation") and a final calculation annually (the
"Final Calculation") based on the calendar year. The incentive
program withhold described above shall be refunded to the
Medical Group at the time of the incentive program settlements,
except that Medical Group's share of any incentive program
deficits shall be deducted from such refund. Payments under the
combined incentive programs will be due from the owing party
within one hundred and twenty (120) days following the end of
the six (6) months for the Interim Calculation and within one
hundred and eighty (180) days following the end of the calendar
year for the Final Calculation. For the Interim Calculation,
the payment due will be limited to [ ** ] of the calculated
amount due to account for incurred but not received claims. To
the extent a Medical Group deficit has been carried forward from
a prior settlement period, this deficit shall be offset against
amounts due to Medical Group hereunder.
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5.4.3 INCENTIVE PROGRAM COMPLIANCE WITH STATE AND FEDERAL LAW.
PacifiCare and Medical Group acknowledge and agree that the
payments which may be made directly or indirectly under the
incentive programs described in this Agreement are not made as
an inducement to reduce or limit Covered Services to any
specific Member. Medical Group acknowledges and agrees that any
payments which may be made directly or indirectly under
physician incentive programs Medical Group may utilize with
respect to its Participating Providers shall not be made as an
inducement to reduce or limit Covered Services to any specific
Member. Medical Group further acknowledges and agrees that the
incentive programs described in this Agreement shall be subject
to modification by PacifiCare during the term of this Agreement
in order to comply with changes in State and Federal Law, and
Medical Group further agrees to modify any physician incentive
programs utilized with respect to its Participating Providers
to comply with such changes.
5.4.4 LIMITATION ON MEDICAL GROUP'S RISK. In the event Medical Group
incurs an obligation under the overall incentive program
settlement described above, Medical Group shall not be
responsible for reimbursing PacifiCare nor shall PacifiCare
offset the Medical Group's obligation against Medical Group's
Capitation Payments due under this Agreement. PacifiCare shall
carry forward any Medical Group obligations as the result of an
incentive program obligation and the amount carried forward
shall be offset against amounts otherwise due to Medical Group
under future settlements for the combined incentive programs.
5.5 INDIVIDUAL STOP-LOSS PROGRAM. PacifiCare shall provide Individual
Stop-Loss ("ISL") protection in order to limit Medical Group's
financial risk for Medical Group Services. The ISL Program is designed
to limit Medical Group's financial responsibility for Medical Group
Services to a specified dollar amount per Medical Group Member per
calendar year (the "ISL Deductible"), while encouraging Medical Group's
continuing involvement with Medical Group Member's care by sharing a
portion of the financial responsibility for Medical Group Services which
exceed the ISL Deductible ("ISL Coinsurance"). PacifiCare shall charge a
premium (the "ISL Premium") as consideration for the ISL Program. The
ISL Deductible, ISL Coinsurance and ISL Premium for Medical Group are
specified in each Product Attachment. Notwithstanding any other
provision of this Agreement, PacifiCare may amend the ISL Deductible,
ISL Coinsurance and ISL Premium on an annual basis effective at the
beginning of any calendar year by providing sixty (60) calendar days
prior written notice to Medical Group. For Medical Group Services which
exceed the ISL Deductible, PacifiCare will pay Cost of Care, less the
Medical Group's ISL Coinsurance amount, subject to the Medical Group's
compliance with the procedures set forth in the Provider Manual and the
provisions set forth below.
5.5.1 SUBMISSION OF ISL CLAIMS. Medical Group shall submit all claims
under the ISL Program in accordance with the procedures set
forth in the Provider Manual. PacifiCare shall pay claims under
the ISL Program only if such claims are submitted within one
(1) year following the date the claim is incurred.
20
5.5.2 NOTIFICATION OF ISL CLAIMS. Medical Group shall provide written
notification to PacifiCare when Medical Group Services for any
Medical Group Member(s) equal fifty percent (50%) of the ISL
Deductible. Such written notification shall be provided to
PacifiCare no later than the fifteenth (15th) day of the month
following the month in which such threshold is reached. Medical
Group acknowledges and agrees that if Medical Group fails to
provide the written notice required by this Section within the
time frame specified in this Section, Medical Group shall be
financially responsible for [ ** ] of all Medical Group
Services provided to the Medical Group Member(s) in excess of
the ISL Deductible, which amount shall be in addition to the
ISL Coinsurance.
5.5.3 OPT-OUT FROM ISL PROGRAM. Subject to PacifiCare's approval,
Medical Group may elect to opt out of the ISL Program,
effective upon the Commencement Date or at the beginning of any
calendar year. In such event, Medical Group shall be required
to obtain stop-loss coverage from a third-party insurance
carrier acceptable to PacifiCare and in the amounts required by
PacifiCare and State and Federal Law. In order to opt-out of
PacifiCare's ISL Program, Medical Group must provide written
notice to PacifiCare at least thirty (30) days prior to the
beginning of the calendar year. Such notice shall specify the
name of the third-party insurance ▇▇▇▇▇▇, and proposed
effective date, coverage levels and charges. If PacifiCare does
not object to such coverage in writing within fifteen (15) days
of the date of the notice, Medical Group shall be required to
purchase such coverage as of the effective date specified in
the notice.
5.6 PAYMENTS FOLLOWING TERMINATION OF AGREEMENT. Following termination of
this Agreement, PacifiCare shall make Capitation Payments to Medical
Group as compensation for providing and arranging Covered Services to
remaining Medical Group Members until transferred to PacifiCare
Participating Providers.
5.7 COST OF CARE. Certain provisions of this Agreement require that Medical
Group provide or arrange health care services which are not covered by
Capitation Payments at Cost of Care and certain provisions of this
Agreement require that Covered Services be valued at Cost of Care. For
purposes of this Agreement, "Cost of Care" shall mean the amount
determined to be payable for such health care services or Covered
Services by PacifiCare as follows: (i) for professional services which
are paid under the Medicare Fee Schedule, the Cost of Care shall be the
lesser of billed charges or amount payable under the Medicare Fee
Schedule; (ii) for all other health care services (other than inpatient
and outpatient Hospital Services) which are paid by Medicare, the Cost
of Care shall be the lesser of billed charges or amount payable by
Medicare; (iii) for any other Covered Services or health care services
covered under a Managed Care Plan which do not fall within any of the
above specified categories, other than inpatient and outpatient Hospital
Services, the Cost of Care shall be the lesser of billed charges or the
amount determined under PacifiCare's allowable fee schedule.
5.8 COLLECTION OF COPAYMENTS. Medical Group and its Participating Providers
shall be responsible for the collection of Copayments upon rendering
Medical Group Services to Medical Group Members in accordance with the
applicable Subscriber Agreement. Any Copayments which
21
are stated as a percentage shall be calculated using the Cost of Care
for such Medical Group Services.
5.9 COLLECTION OF CHARGES FROM THIRD PARTIES. If a Medical Group Member is
entitled to payment from a third party (excluding a workers'
compensation carrier or primary insurance carrier under applicable
coordination of benefits rules), PacifiCare hereby assigns to Medical
Group for collection, any claims or demands against such third parties
for amounts due for Medical Group Services, subject to the following
conditions: (i) To the extent liens are utilized, Medical Group shall
utilize lien forms which are provided by PacifiCare or approved in
advance by PacifiCare; (ii) Medical Group shall notify PacifiCare each
time it pursues and each time it obtains a signed lien from a Medical
Group Member; (iii) Medical Group shall not commence any legal action
as it relates to this Agreement against a third party without obtaining
the prior written consent of PacifiCare; (iv) Medical Group shall make
no demand upon PacifiCare for reimbursement under the ISL Program until
all third party claims have been pursued and it is determined that full
payment cannot be obtained within twelve (12) months from the date of
the provision of Medical Group Services; (v) PacifiCare may immediately
rescind the assignment of any or all claims and demands against third
parties by providing written notice of rescission to Medical Group; and
(vi) in the event Medical Group receives payment from a third party
after receipt of an ISL payment from PacifiCare, Medical Group shall
reimburse PacifiCare to the extent that the combined amounts received
from all parties exceeds [ ** ] of Medical Group's usual and customary
fee-for-service rates.
5.10 COORDINATION OF BENEFITS. Medical Group shall cooperate with and
support, as mutually agreed upon by the parties, PacifiCare's
coordination of benefits rights.
5.10.1 PLAN IS PRIMARY. If a Medical Group Member possesses health
benefits coverage through another policy which is secondary to
PacifiCare under applicable coordination of benefits rules,
including the Medicare secondary payor program, Medical Group
shall accept payment from PacifiCare for Covered Services as
provided herein as full payment for such Covered Services,
except for applicable Copayments. Medical Group Member shall
have no obligation for any fees, regardless of whether
secondary insurance is available.
5.10.2 PLAN IS SECONDARY. If a Medical Group Member possesses health
benefits coverage through another policy which is primary to
PacifiCare under applicable coordination of benefits rules,
including the Medicare secondary payor program, or if Medical
Group Member is entitled to payment under a workers'
compensation policy or automobile insurance policy, Medical
Group may pursue payment from the primary payor or workers'
compensation carrier consistent with applicable law and
regulations and Medical Group's contract, if any, with the
primary payor. In such event, PacifiCare's responsibility
shall equal the amount of out-of-pocket expenses (i.e.,
Copayments, coinsurance, and deductibles) that Medical Group
Member would incur in) the absence of PacifiCare's secondary
coverage, minus the ISL Deductible and ISL Coinsurance.
5.11 OFFSETTING. Except as may otherwise be specifically provided in this
Agreement, PacifiCare shall have the right to offset any and all
amounts owed by Medical Group to PacifiCare against
22
amounts, including Capitation Payments, owed by PacifiCare to Medical
Group. This right to offset shall include, without limitation,
PacifiCare's right to offset the following amounts owed to PacifiCare
by Medical Group: (i) amounts owed by Medical Group due to overpayments
or payments made in error by PacifiCare; (ii) amounts owed by Medical
Group as a result of claims for Medical Group Services that PacifiCare
may pay on behalf of Medical Group; (iii) amounts owed by Medical Group
for Covered Services provided outside the Medical Group Service Area;
and (iv) amounts owed by Medical Group as a result of the outcome of
the Member appeals and grievance procedure.
5.12 ADEQUACY OF COMPENSATION. Medical Group agrees to accept payment as
provided herein as payment in full for providing and arranging the
Covered Services required under this Agreement, whether that amount is
paid in whole or in part by Member, PacifiCare or any Subscriber,
including other health care plans that pay before PacifiCare as
required by applicable state or federal coordination of benefits
provisions. This Section does not prohibit Medical Group from
collecting applicable Copayments, coinsurance, or deductibles
consistent with the Managed Care Plans.
ARTICLE 6
TERM AND TERMINATION
6.1 TERM. The term of this Agreement shall commence on MARCH 01, 1998 (the
"Commencement Date") and end on DECEMBER 31. 1998. Thereafter, the term
of this Agreement shall be automatically extended for one (1) year on
each JANUARY. 01, ("Anniversary Date"), unless either party provides
the other with written notice of such party's intention not to extend
the term at least one hundred twenty (120) calendar days prior to the
Anniversary Date or until this Agreement is appropriately terminated by
either party as provided herein.
6.2 TERMINATION OF AGREEMENT WITH CAUSE. Either PacifiCare or Medical Group
may terminate this Agreement for cause as set forth below, subject to
the notice requirement and cure period set forth below.
6.2.1 CAUSE FOR TERMINATION OF AGREEMENT BY MEDICAL GROUP. The
following shall constitute cause for termination of this
Agreement by Medical Group:
(i) NON-PAYMENT. Failure by PacifiCare to pay Capitation
Payments due Medical Group hereunder within thirty (30)
days of the Capitation Payment due date or failure by
PacifiCare to make any other payments due Medical Group
hereunder within forty-five (45) days of any such
payment's due date.
(ii) BREACH OF MATERIAL TERM AND FAILURE TO CURE.
PacifiCare's breach of any material term, covenant, or
condition and subsequent failure to cure such breach as
provided below.
6.2.2 CAUSE FOR TERMINATION OF AGREEMENT BY PACIFICARE. The
following shall constitute cause for termination of this
Agreement by PacifiCare:
23
(i) FINANCIAL FAILURE OF MEDICAL GROUP. PacifiCare's
reasonable determination of Medical Group's anticipated
inability to provide or arrange for Covered Services as
a result of the likelihood of Medical Group's lack of
financial resources, other than due to PacifiCare's
non-payment of amounts due Medical Group hereunder.
Medical Group shall have the opportunity to dispute
such determination by PacifiCare by providing
reasonable evidence and assurances of financial
stability and capacity to perform under this Agreement.
(ii) FAILURE TO PROVIDE QUALITY SERVICES. Medical Group's
failure to arrange or provide Covered Services in
accordance with the standards set forth in this
Agreement and PacifiCare's QI Program and UM Program.
Notwithstanding the foregoing, PacifiCare reserves the
right to immediately withdraw from Medical Group or any
of its Participating Providers any or all Members in
the event the health or safety of Members is endangered
by the actions of Medical Group or any of its
Participating Providers or as a result of continuation
of this Agreement.
(iii) BREACH OF MATERIAL TERM AND FAILURE TO CURE. Medical
Group's breach of any material term, covenant or
condition of this Agreement and subsequent failure to
cure such breach as provided below.
6.2.3 NOTICE OF TERMINATION AND EFFECTIVE DATE OF TERMINATION. The
party asserting cause for termination of this Agreement (the
"terminating party") shall provide written notice of
termination to the other party. The notice of termination
shall specify the breach or deficiency underlying the cause
for termination. The party receiving the written notice of
termination shall have thirty (30) calendar days from the
receipt of such notice to cure the breach or deficiency to the
satisfaction of the terminating party (the "Cure Period"). If
such party fails to cure the breach or deficiency to the
satisfaction of the terminating party within the Cure Period
or if the breach or deficiency is not curable, the terminating
party shall provide written notice of failure to cure the
breach or deficiency to the other party following expiration
of the Cure Period. This Agreement shall terminate upon
receipt of the written notice of failure to cure or at such
other date as may be specified in such notice. During the Cure
Period, PacifiCare may cease marketing efforts for Medical
Group, discontinue enrollment of Members with Medical Group
and begin transferring Medical Group Members to other
PacifiCare Participating Providers.
6.3 AUTOMATIC TERMINATION UPON REVOCATION OF LICENSE OR CERTIFICATE. This
Agreement shall automatically terminate upon the revocation, suspension
or restriction of any license, certificate or other authority required
to be maintained by Medical Group or PacifiCare in order to perform the
services required under this Agreement or upon the Medical Group's or
PacifiCare's failure to obtain such license, certificate or authority.
6.4 TERMINATION FOR TRANSFER TO A SUCCESSOR ENTITY. As set forth in Section
7.12, PacifiCare shall have the right to terminate Medical Group on
ninety (90) days prior written notice to Medical Group if PacifiCare
reasonably determines that any successor entity or management company,
as defined in Section 7.12, cannot satisfactorily perform the
obligations of Medical Group
24
under this Agreement or that PacifiCare prefers not to do business with
the successor entity or management company.
6.5 TRANSFER OF MEDICAL RECORDS. Following termination of this Agreement,
at PacifiCare's request, Medical Group and its Participating Providers
shall copy all requested Medical Group Member patient medical files in
the possession of Medical Group or its Participating Providers and
forward such files to another provider of Covered Services designated
by PacifiCare, provided such copying and forwarding is not otherwise
objected to by such Members. The copies of such medical files may be in
summary form. The cost of copying the patient medical files shall be
borne by Medical Group. Medical Group shall cooperate with PacifiCare
in maintaining the confidentiality of such Member medical records at
all times.
6.6 REPAYMENT UPON TERMINATION. Within one hundred eighty (180) calendar
days of the effective date of termination of this Agreement, an
accounting shall be made by PacifiCare of the monies due and owing
either party and payment shall be forthcoming by the appropriate party
to settle such balance within thirty (30) calendar days of such
accounting. Either party may request an independent audit of such
PacifiCare accounting by a mutually acceptable independent certified
public accountant and such audit shall be equally paid for by both
parties. The parties agree to abide by the findings of such
independent audit. Appropriate payment, if any, by the appropriate
party shall be made within thirty (30) calendar days of such
independent audit.
6.7 TERMINATION NOT AN EXCLUSIVE REMEDY. Any termination by either party
pursuant to this Article is not meant as an exclusive remedy and such
terminating party may seek whatever action in law or equity as may be
necessary to enforce its rights under this Agreement.
ARTICLE 7
GENERAL PROVISIONS
7.1 INDEPENDENT CONTRACTOR RELATIONSHIP. The relationship between
PacifiCare and Medical Group is an independent contractor relationship.
Neither Medical Group nor its Participating Providers, employees or
agents are employees or agents of PacifiCare and neither PacifiCare nor
its employees or agents are members, partners, employees or agents of
Medical Group. None of the provisions of this Agreement shall be
construed to create a relationship of agency, representation, joint
venture, ownership, control of employment between the parties other
than that of independent parties contracting solely for the purpose of
effectuating this Agreement. Nothing contained in this Agreement shall
cause either party to be liable or responsible for any debt, liability
or obligation of the other party or any third party unless such
liability or responsibility is expressly assumed by the party sought to
be charged therewith.
7.2 RESPONSIBILITY FOR OWN ACTS. Each party shall be responsible for its
own acts or omissions and for any and all claims, liabilities,
injuries, suits, demands and expenses of all kinds which may result or
arise out of any alleged malfeasance or neglect caused or alleged to
have been caused by that party or its employees or representatives in
the performance or omission of any act or responsibility of that party
under this Agreement. In the event that a claim is made against both
parties, it is the intent of both parties to cooperate in the defense
of said claim and to cause their insurers to do likewise. However both
parties shall have the right to take any and all actions they believe
necessary to protect their interest.
25
7.3 PHYSICIAN-PATIENT RELATIONSHIP. PacifiCare and Medical Group
acknowledge and agree that Medical Group or each of Medical Group's
Participating Providers shall maintain the physician-patient
relationship with each Medical Group Member. Nothing contained in this
Agreement is intended to interfere with such physician-patient
relationship. Nothing in this Agreement shall be interpreted to
discourage or prohibit Medical Group and its Participating Providers
from discussing treatment options or providing other medical advice or
treatment deemed appropriate by Medical Group or its Participating
Providers. Medical Group or its Participating Providers shall have the
sole responsibility for the medical care and treatment of Medical
Group Members.
7.4 MEMBER APPEALS AND GRIEVANCES. PacifiCare shall be responsible for
resolving Medical Group Member claims for benefits under the Managed
Care Plans and all other claims against PacifiCare. PacifiCare shall
resolve such claims utilizing the Member Appeals and Grievance
Procedures set forth in the Subscriber Agreement and the Provider
Manual. Medical Group shall assist PacifiCare in the handling of Member
complaints, grievances and appeals, consistent with the Member Appeals
and Grievance Procedures. In the event an oral or written complaint,
grievance or appeal is presented to Medical Group or any of its
Participating Providers relating to benefits or coverage under a
Managed Care Plan and is not resolved within two (2) business days,
Medical Group or its Participating Provider will immediately deliver
such complaint, grievance or appeal to PacifiCare for handling pursuant
to the Member Appeals and Grievance Procedures. At the end of each
month, Medical Group shall submit a report to PacifiCare of all Medical
Group Member complaints and grievances which were received and resolved
by Medical Group and its Participating Providers within two (2) business
days during the previous month. The monthly report shall include the
Medical Group Member's name and PacifiCare identification number, date
of complaint, nature of complaint, and the resolution of complaint.
Medical Group and its Participating Providers shall comply with all
final determinations made by PacifiCare through the Member Appeals and
Grievance Procedures. Medical Group Member claims against Medical
Group or its Participating Providers, other than claims for benefits
under the Managed Care Plans, are not subject to the Member Appeals
and Grievance Procedures and are not governed by this Agreement.
7.5 DISPUTES BETWEEN MEDICAL GROUP OR ITS PARTICIPATING PROVIDERS AND
MEMBER. Any controversies or claims between Medical Group or its
Participating Providers and a Member arising out of the performance of
this Agreement by Medical Group or the Medical Group's Participating
Provider, other than claims for benefits under Managed Care Plans, are
not governed by this Agreement. Medical Group or its Participating
Provider and the Member may seek any appropriate legal action to
resolve such controversy or claim deemed necessary.
7.6 DISPUTES BETWEEN PACIFICARE AND MEDICAL GROUP
26
7.6.1 DISPUTE RESOLUTION PROCEDURE. PacifiCare has established a
Provider Dispute Resolution Procedure, set forth in the
Provider Manual, to provide a mechanism by which PacifiCare's
Participating Providers, including Medical Group and any of
its Participating Providers, may submit to PacifiCare certain
disputes arising out of the performance of this Agreement or
relating to the decisions made by PacifiCare under this
Agreement for resolution on an informal basis. Any dispute
submitted pursuant to the Provider Dispute Resolution
Procedure should be addressed to the appropriate PacifiCare
person(s) or department(s) at the address and/or telephone
number identified in the Provider Manual. Any provider dispute
which is not resolved informally through the Provider Dispute
Resolution Procedure may be submitted for arbitration as
provided in Section 7.6.2 below.
7.6.2 ARBITRATION. Any controversy, dispute or claim arising out of
the interpretation, performance or breach of this Agreement
which is nor resolved pursuant to the Provider Dispute
Resolution Procedure specified above shall be resolved by
binding arbitration at the request of either party, in
accordance with the Commercial Rules of the American
Arbitration Association. Such arbitration shall occur in Los
Angeles, California, unless the parties mutually agree to have
such proceeding in some other locale. The arbitrators shall
apply California substantive law and federal substantive law
where state law is preempted. Civil discovery for use in such
arbitration may be conducted in accordance with the provisions
of California law, and the arbitrator(s) selected shall have
the power to enforce the rights, remedies, duties, liabilities
and obligations of discovery by the imposition of the same
terms, conditions and penalties as can be imposed in like
circumstances in a civil action by a court of competent
jurisdiction of the State of California. The provisions of
California law concerning the right to discovery and the use
of depositions in arbitration are incorporated herein by
reference and made applicable to this Agreement.
The arbitrators shall have the power to grant all legal and
equitable remedies and award compensatory damages provided by
California law, except that punitive damages shall not be
awarded. The arbitrators shall prepare in writing and provide
to the parties an award including factual findings and the
legal reasons on which the award is based. The arbitrators
shall not have the power to commit errors of law or legal
reasoning.
Notwithstanding the above, in the event either Medical Group
or PacifiCare wishes to obtain injunctive relief or a
temporary restraining order, such party may initiate an action
for such relief in a court of general jurisdiction in the
State of California. The decision of the court with respect to
the requested injunctive relief or temporary restraining order
shall be subject to appeal only as allowed under California
law. However, the courts shall not have the authority to
review or grant any request or demand for damages.
7.7 NOTICE. All notices required or permitted by this Agreement shall be in
writing and may be delivered in person or may be sent by registered or
certified mail or US Postal Service Express Mail, with postage prepaid,
or by Federal Express or other overnight courier that guarantees next
day delivery, or by facsimile transmission, and shall be deemed
sufficiently given if served
27
in the manner specified in this Section. The addresses below shall be
the particular party's address for delivery or mailing of notice
purposes:
If to PacifiCare:
PacifiCare of California
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
If to Medical Group:
Sierra Medical Group
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Administrator
The parties may change the names and addresses noted above through
written notice in compliance with this Section. Any notice sent by
registered or certified mail, return receipt requested, shall be deemed
given on the date of delivery shown on the receipt card, or if no
delivery date is shown, the postmark date. Notices delivered by US
Postal Service Express mail, Federal Express or overnight courier that
guarantees next day delivery shall be deemed given twenty-four (24)
hours after delivery of the notice to the United States Postal Service,
Federal Express or overnight courier. If any notice is transmitted by
facsimile transmission or similar means, the notice shall be deemed
served or delivered upon telephone confirmation of receipt of the
transmission, provided a copy is also delivered via delivery or mail.
7.8 ASSIGNMENT. This Agreement and the rights, interests and benefits
hereunder shall not be assigned, transferred or pledged in any way by
Medical Group or PacifiCare and shall not be subject to execution,
attachment or similar process. However, PacifiCare may assign this
Agreement and its rights, interests and benefits hereunder to any
entity which is a corporate affiliate of PacifiCare.
7.9 AMENDMENTS
7.9.1 AMENDMENTS TO MANAGED CARE PLANS. PacifiCare may amend or
change any or all provisions of the Managed Care Plans by
providing thirty (30) calendar days prior written notice to
Medical Group. Such amendment shall be binding upon Medical
Group at the end of the thirty (30) calendar day period.
7.9.2 AMENDMENTS TO PROVIDER MANUAL. PacifiCare may amend the
Provider Manual by providing thirty (30) calendar days prior
written notice to Medical Group. Such amendments shall be
binding upon Medical Group at the end of the thirty (30)
calendar day period, except as provided in Section 7.9.5 of
this Agreement.
7.9.3 AMENDMENTS TO AGREEMENT TO COMPLY WITH STATE AND FEDERAL LAW.
PacifiCare may amend this Agreement by providing thirty (30)
calendar days prior written notice to Medical Group in order
to maintain compliance with State and Federal Law. Such
28
amendment shall be binding upon Medical Group at the end of
the thirty (30) calendar day period, except as provided in
Section 7.9.5 of this Agreement.
7.9.4 AMENDMENTS OR MODIFICATIONS TO AGREEMENT. Except as otherwise
provided in this Section 7.9, all amendments or modifications
to this Agreement shall be effective only upon mutual written
agreement of the parties.
7.9.5 MATERIAL AMENDMENTS. In the event PacifiCare provides notice
of amendment to the Agreement or the Provider Manual, Medical
Group shall be bound by such amendment unless (i) Medical
Group provides PacifiCare with notice of objection within the
thirty (30) calendar day notice period, and (ii) such change
affects a material duty or responsibility of Medical Group,
and (iii) the change has a material adverse economic effect
upon Medical Group as reasonably demonstrated by Medical Group
to PacifiCare. In such event, Medical Group and PacifiCare
shall seek to agree to an amendment to this Agreement which
satisfactorily addresses the effect on Medical Group's
material duty or responsibility and reimburses the material
economic detriment caused to Medical Group. In such event, the
amendment shall not be effective until the parties amend the
Agreement through a written amendment signed by both parties.
7.10 CONFIDENTIAL AND PROPRIETARY INFORMATION
7.10.1 INFORMATION CONFIDENTIAL AND PROPRIETARY TO PACIFICARE.
Medical Group and its Participating Providers shall maintain
confidential all information designated in this Section. The
information which Medical Group and its Participating
Providers shall maintain confidential (the "Confidential
Information") consists of: (i) the Eligibility List and any
other information containing the names, addresses and
telephone numbers of Members which has been compiled by
PacifiCare; (ii) lists or documents compiled by PacifiCare
which include the names, addresses and telephone numbers of
employers, employees of such employers responsible for health
benefits and the officers and directors of such employers;
(iii) PacifiCare's Provider Manual and any of PacifiCare's
member, employer and administrative service manuals and all
forms related thereto; (iv) the financial arrangements between
PacifiCare and any of PacifiCare's Participating Providers;
(v) PacifiCare underwriting and rating information and any
other information utilized by PacifiCare for determining
eligibility or rates for the Managed Care Plans; and (vi) any
other information compiled or created by PacifiCare which is
proprietary to PacifiCare and which PacifiCare identifies in
writing to Medical Group.
7.10.2 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Medical Group and
its Participating Providers shall not disclose or use the
Confidential Information for their own benefit or gain either
during the term of this Agreement or after the date of
termination of this Agreement. Medical Group and its
Participating Providers may use the Confidential Information
to the extent necessary to perform their duties under this
Agreement or upon express prior written permission of
PacifiCare. Upon the effective date of termination of this
Agreement, Medical Group and its Participating Providers shall
29
provide and return to PacifiCare the Confidential Information
in their possession in the manner specified by PacifiCare.
7.10.3 INFORMATION CONFIDENTIAL AND PROPRIETARY TO MEDICAL GROUP.
Medical Group shall provide PacifiCare with a written
description of all information proprietary to Medical Group
which is confidential and contains trade secrets of Medical
Group (the "Medical Group Information"). PacifiCare shall
maintain and shall cooperate with Medical Group to maintain
the confidentiality of Medical Group Information. PacifiCare
shall not disclose or use any Medical Group Information for
its own benefit either during the term of this Agreement or
after the effective date of termination of this Agreement.
Upon termination of this Agreement, PacifiCare shall provide
and return to Medical Group all Medical Group Information in
its possession in the manner to be specified by Medical Group.
7.10.4 PACIFICARE NAMES, LOGOS AND SERVICE MARKS. Medical Group shall
obtain the written consent of PacifiCare prior to using
PacifiCare's name, product names, logos and service marks in
any of Medical Group's promotional, marketing or advertising
materials or for any other reason.
7.11 SOLICITATION OF PACIFICARE MEMBERS OR SUBSCRIBER GROUPS. Medical Group
and its Participating Providers shall not engage in the practice of
solicitation of Members, Subscribers and Subscriber Groups without
PacifiCare's prior written consent. Solicitation shall mean conduct by
an officer, agent, employee of Medical Group or its Participating
Providers or their respective assignees or successors during the term
of this Agreement and continuing for a period of one (1) year after the
effective date of termination of this Agreement which may be reasonably
interpreted as designed to persuade Members, Subscribers or Subscriber
Groups to disenroll from any Managed Care Plan or discontinue their
relationship with PacifiCare. Notwithstanding any other provision of
this Agreement, Medical Group agrees that PacifiCare shall, in addition
to any other remedies provided for under this Agreement, have the right
to seek a judicial temporary restraining order, preliminary injunction,
or other equitable relief against Medical Group and its Participating
Providers to enforce its rights under this Section. Nothing in this
Agreement shall be interpreted to discourage or prohibit Medical Group
and its Participating Providers from discussing a Member's health care,
including, without limitation, communications regarding treatment
options, alternative plans or other coverage arrangements, unless such
communications are for the primary purpose of securing financial gain.
7.12 NOTIFICATION AND APPROVAL OF SALE OR CHANGE IN MANAGEMENT OF MEDICAL
GROUP. Medical Group agrees that it shall provide prior written notice
to PacifiCare of its intent to either (i) sell, transfer or convey its
business or any substantial portion of its business assets to another
entity ("successor entity") or (ii) enter into a management contract
with a physician practice management company ("management company")
which does not manage Medical Group as of the Commencement Date. Such
prior written notice shall be given at least ninety (90) days prior to
Medical Group selling its business or entering into such contract. As
set forth in Section 6.4, PacifiCare shall have the fight to terminate
this Agreement upon ninety (90) days written notice to Medical Group if
PacifiCare reasonably determines that any successor entity or any
management company cannot satisfactorily perform the obligations of
Medical Group under this Agreement or that PacifiCare prefers not to do
business with the successor entity or
30
management company. Medical Group warrants and assures that this
Agreement, if not otherwise terminated by PacifiCare, will be assumed
by all successor entities and that all successor entities and
management companies will be bound by the terms and conditions of this
Agreement.
7.13 CONFIDENTIALITY OF THIS AGREEMENT. To the extent reasonably possible,
each party agrees to maintain this Agreement as a confidential document
and not to disclose the Agreement or any of its terms without the
approval of the other party.
7.14 INVALIDITY OF SECTIONS OF AGREEMENT. The unenforceability or invalidity
of any paragraph or subparagraph of any section or subsection of this
Agreement shall not affect the enforceability and validity of the
balance of this Agreement.
7.15 CAPTIONS. Captions in this Agreement are descriptive only and do not
affect the intent or interpretation of the Agreement.
7.16 WAIVER OF BREACH. The waiver by either party to this Agreement of a
breach or violation of any provision of this Agreement shall not
operate as or be construed to be a waiver of any subsequent breach or
violation thereof.
7.17 MEDICAL GROUP'S AUTHORIZED REPRESENTATIVE. Unless otherwise indicated
in writing to PacifiCare, Medical Group warrants and authorizes its
administrator to act as its fully authorized representative to
represent Medical Group in this Agreement and to receive any and
all communications and notices hereunder.
7.18 NO THIRD PARTY BENEFICIARIES. This Agreement shall not create any
rights in any third parties who have not entered into this Agreement,
nor shall this Agreement entitle any such third party to enforce any
rights or obligations that may be possessed by such third party.
7.19 ENTIRE AGREEMENT. This Agreement, including all exhibits, attachments
and amendments hereto, contains all the terms and conditions agreed
upon by the parties regarding the subject matter of this Agreement. Any
prior agreements, promises, negotiations or representations of or
between the parties, either oral or written, relating to the subject
matter of this Agreement, which are not expressly set forth in this
Agreement are null and void and of no further force or effect.
7.20 INCORPORATION OF EXHIBITS, ATTACHMENTS AND PROVIDER MANUAL. The exhibits
and attachments to this Agreement and the Provider Manual are an
integral part of this Agreement and are incorporated in full herein by
this reference.
ARTICLE 8
GOVERNING LAW AND REGULATORY REQUIREMENTS
8.1 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be construed, interpreted, and enforced in
accordance with, and governed by, the laws of the State of California
and the United States of America, including, without limitation, the
▇▇▇▇-▇▇▇▇▇ Health Care Service Plan Act of 1975, as amended, and the
regulations adopted
31
thereunder by the California Department of Corporations, the federal
Health Maintenance Organization Act of 1973, as amended, and the
regulations adopted thereunder by the United States Department of
Health and Human Services. Any provisions required to be in this
Agreement by State and Federal Law or by Government Agencies shall bind
PacifiCare and Medical Group whether or not expressly provided in this
Agreement.
8.2 NO BILLING OF MEMBERS (MEMBER HOLD HARMLESS PROVISION). With the
exception of Copayments and charges for non-covered services delivered
on a fee-for-service basis to Members, Medical Group shall in no event,
including, without limitation, non-payment by PacifiCare, insolvency of
PacifiCare, or breach of the Agreement, ▇▇▇▇, charge, collect a deposit
from, or attempt to ▇▇▇▇, charge, collect or receive any form of
payment from any Member for Covered Services provided or arranged
pursuant to this Agreement.
Medical Group and its Participating Providers shall not maintain any
action at law or equity against a Member to collect sums owed by
PacifiCare to Medical Group. Upon notice of any such action, PacifiCare
may terminate this Agreement as provided above and take all other
appropriate action consistent with the terms of this Agreement to
eliminate such charges, including, without limitation, requiring
Medical Group and its Participating Providers to return all sums
collected as surcharges from Members or their representatives. For
purposes of this Agreement, "Surcharges" are additional fees for
Covered Services which are not disclosed to Members in the Subscriber
Agreement, are not allowable Copayments and are not authorized by this
Agreement. Nothing in this Agreement shall be construed to prevent
Medical Group from providing non-Covered Services on a usual and
customary fee-for-service basis to Members.
Medical Group's obligations under this Section shall survive the
termination of this Agreement with respect to Covered Services provided
or arranged during or after the term of this Agreement, regardless of
the cause giving rise to such termination.
8.3 CONTINUING CARE OBLIGATIONS OF MEDICAL GROUP. In the event of
termination of this Agreement for any reason, Medical Group and its
Participating Providers shall continue to provide or arrange Covered
Services to Members, including any Members who become eligible during
the termination notice period, beginning on the effective date of
termination and continuing until the termination or next renewal date
of the Member's Subscriber Agreement, unless PacifiCare arranges for
the transfer of the Member to another PacifiCare Participating Provider
and provides written notice to Medical Group of such transfer prior to
the termination or next renewal date of the Subscriber Agreement.
Notwithstanding the foregoing, Medical Group and its Participating
Providers will continue to provide or arrange Covered Services to any
Members who cannot be transferred within the time period specified
above in accordance with PacifiCare's legal and contractual
obligations to (i) provide Covered Services under the Managed Care
Plans and Subscriber Agreements, (ii) provide notice of termination
to Members and (iii) ensure continuity of care for its Members.
Notwithstanding the above or any other provisions to the contrary,
Medical Group agrees that in the event PacifiCare ceases operations for
any reason, including insolvency, Medical Group shall provide or
arrange Covered Services and shall not ▇▇▇▇, charge, collect or receive
any form of payment from any Member for Covered Services provided after
PacifiCare ceases
32
operations. This continuation of Covered Services obligation shall be
for the period for which Premium has been paid, but shall not exceed a
period of thirty (30) calendar days, except for those Members who are
hospitalized on an inpatient basis as provided below.
In the event PacifiCare ceases operations or Medical Group terminates
this Agreement on the basis of PacifiCare's failure to make timely
Capitation Payments, Medical Group shall continue to arrange for
Covered Services to those Members who are hospitalized on an inpatient
basis at the time PacifiCare ceases operations or Medical Group
terminates this Agreement until such Members are discharged from the
hospital. Medical Group may file a claim with PacifiCare for such
services as previously specified in this Section.
Medical Group agrees that the provisions of this Section and the
obligations of Medical Group and its Participating Providers herein
shall survive termination of this Agreement regardless of the cause
giving rise to such termination, and shall be construed to be for the
benefit of Members.
8.4 INSPECTION AND AUDIT OF RECORDS AND FACILITIES. Upon written notice,
Medical Group and its Participating Providers shall allow access during
normal business hours to PacifiCare, Accreditation Organizations and
Governmental Agencies to periodically audit or inspect the facilities,
offices, equipment, books, documents and records of Medical Group and
its Participating Providers relating to the performance of this
Agreement and the Covered Services provided to Members, including,
without limitation, all phases of professional and ancillary medical
care provided or arranged for Members by Medical Group and its
Participating Providers, Member medical records and financial records
pertaining to the cost of operations and income received by Medical
Group for Covered Services rendered to Members. Medical Group and its
Participating Providers shall comply with any requirements or
directives issued by PacifiCare, Accreditation Organizations and
Government Agencies as a result of such evaluation, inspection or audit
of Medical Group and its Participating Providers. Medical Group and its
Participating Providers shall retain the books and records described in
this Section for at least five (5) years. The provisions of this
Section shall survive termination of this Agreement for the period of
time required by State and Federal Law.
8.5 NONDISCRIMINATION. Medical Group assures that Covered Services shall be
provided to Members in the same manner as such services are provided to
other patients of Medical Group and its Participating Providers, except
as required pursuant to this Agreement. Medical Group and its
Participating Providers shall not unlawfully discriminate against any
Member on the basis of source of payment or in any manner in regards to
access to, and the provision of, Covered Services. Medical Group and
its Participating Providers shall not unlawfully discriminate against
any Member, employee or applicant for employment on the basis of race,
religion, color, national origin, ancestry, physical handicap, medical
condition, marital status, age or sex.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in Los
Angeles, California.
33
PACIFICARE OF CALIFORNIA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Title: V.P. Health Services
------------------------
Date: 1/27/98
-------------------------
MEDICAL GROUP
By: /s/ Karunyan ▇▇▇▇▇▇▇▇▇▇▇▇
---------------------------
Title:
------------------------
Date:
-------------------------
34
PACIFICARE OF CALIFORNIA
MEDICAL GROUP/IPA SERVICES AGREEMENT
(SPLIT CAPITATION)
EXHIBIT 1
MEDICAL GROUP FACILITIES AND HOSPITAL(S)
(This EXHIBIT 1 is an integral part of this Agreement)
MEDICAL GROUP FACILITIES:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HOSPITALS:
Antelope Valley Hospital Medical Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MEDICAL GROUP SERVICE AREA:
The geographic area within a thirty (30) mile radius of each of the
above listed Medical Group Facilities. Such radius shall be determined
by PacifiCare, based upon the shortest route using public streets and
highways.
35
PACIFICARE OF CALIFORNIA
MEDICAL GROUP/IPA SERVICES AGREEMENT
(SPLIT CAPITATION)
EXHIBIT 2
DELEGATED ACTIVITIES
(This EXHIBIT 2 is an integral part of this Agreement)
This EXHIBIT 2 specifies those activities related to the UM Program,
Credentialing and Claims Processing which PacifiCare has delegated to Medical
Group and which Medical Group shall perform on behalf of PacifiCare.
SUMMARY OF CREDENTIALING, RECREDENTIALING AND PEER REVIEW STANDARDS AND
REQUIREMENTS
The PacifiCare credentialing and recredentialing process is designed to provide
ongoing verification of the credentials of Participating Providers and their
ability to render specific patient care and treatment to Members within limits
defined by licensure, education, experience, health status and judgment, thereby
ensuring the competency of the physicians and other health care practitioners
providing services within PacifiCare's health delivery system. The following
outline is a summary of PacifiCare's credentialing, recredentialing and peer
review standards and requirements. Detailed standards and requirements are set
forth in the Provider Manual.
I. PACIFICARE CREDENTIALING PROGRAM
A. PACIFICARE CREDENTIALING APPLICATION
All individual Participating Providers ("Practitioners") must complete
and submit PacifiCare's approved credentialing application to be
considered for participation in PacifiCare's health delivery system.
The credentialing application includes a release and authorization to
review confidential credentialing information and an attestation
regarding the correctness and completeness of the information
submitted.
B. PACIFICARE CREDENTIALING STANDARDS
PacifiCare has established credentialing standards sufficient to meet
or exceed credentialing standards of Accreditation Organizations, and
all Participating Providers must be credentialed according to these
standards. PacifiCare's credentialing standards generally require the
following of Practitioners, as defined by Accreditation Organizations:
1. Obtaining and verifying for each Practitioner the following
information from primary sources:
(a) a current valid license to practice medicine or osteopathy;
36
(b) clinical privileges in good standing at the hospital
designated by the practitioner as the primary admitting
facility;
(c) a valid DEA or CDS certificate, as applicable;
(d) graduation from medical school and completion of a
residency, or board certification, as applicable;
(e) work history;
(f) current adequate malpractice insurance as described in
this Agreement and the Provider Manual; and
(g) professional liability claims history.
2. Obtaining from each Practitioner a statement or attestation
regarding physical and mental health status and lack of
present illegal drug use, history of loss or limitation of
medical license and/or felony convictions and history or loss
or limitation of hospital clinical privileges or disciplinary
activity;
3. Requesting information concerning each Practitioner from the
National Practitioner Data Bank and the California Medical
Board and reviewing for previous sanction activity by Medicare
and Medicaid.
4. Reporting Practitioners to the California Medical Board as
required by State law and to the National Practitioner Data
Bank as required by the federal Health Care Quality
Improvement Act.
C. APPROVAL AND TERMINATION OF PARTICIPATING PROVIDERS.
Medical Group acknowledges and agrees: (i) that only Participating
Providers who meet PacifiCare's credentialing standards shall be
approved by PacifiCare to provide Covered Services to Members; and
(ii) that PacifiCare retains the right, in its sole discretion, to
approve or disapprove any Participating Provider to provide Covered
Services to Members and to suspend or terminate any Participating
Provider from continuing to provide Covered Services to Members at
any time. Participating Providers who are disapproved by PacifiCare
shall not provide Covered Services to PacifiCare Members.
1. NOTICE OF INITIAL CREDENTIALING
Medical Group shall provide PacifiCare with written notice of
each new Participating Provider credentialed by Medical Group
at least thirty (30) days prior to the Participating Provider
providing Covered Services to Members. New Participating
Providers shall be deemed approved by PacifiCare at the end of
such thirty (30) day period unless Medical Group is notified
otherwise in writing.
2. NOTICE OF RECREDENTIALING
Medical Group shall provide PacifiCare with written notice of
Medical Group's determination within thirty (30) days
following the recredentialing of each
37
Participating Provider. Recredentialing of Participating
Providers shall be deemed approved by PacifiCare unless
Medical Group is notified otherwise in writing.
3. NOTICE OF TERMINATION OR SUSPENSION OF PARTICIPATING PROVIDERS.
Medical Group shall take immediate action to terminate, suspend
or otherwise prohibit a Participating Provider from providing
Covered Services to Members in the following circumstances: (i)
Participating Provider ceases to meet PacifiCare's credentialing
standards or is disapproved by PacifiCare as provided in this
Agreement; (ii) PacifiCare's or Medical Group's determination of
serious deficiencies in the quality of care, professional
competence or professional conduct of Participating Provider
which affects or could adversely affect the health or welfare of
Members; or (iii) upon receipt of written notice from PacifiCare
demanding such action. Medical Group shall immediately and
concurrently notify PacifiCare of Medical Group's actions
hereunder.
D. APPROVAL OF MEDICAL GROUP FACILITIES.
Medical Group acknowledges and agrees that: (i) PacifiCare's
Credentialing Program includes standards for review and approval of
the facilities and/or medical offices of Medical Group and
Participating Providers where Covered Services shall be provided to
Members; and (ii) PacifiCare retains the ultimate right, in its sole
discretion, to approve or disapprove any Medical Group or
Participating Provider facility or medical office.
Medical Group agrees to inspect and audit the facilities or medical
offices of its Participating Providers on a regular basis and to allow
PacifiCare to participate in such inspections or audits upon request.
Medical Group further agrees to permit and cooperate with PacifiCare,
Accreditation Organizations and Governmental Agencies in periodic
inspections and audits of Medical Group's or Participating Provider's
facilities or medical offices as necessary for Accreditation
Organizations' accreditation and compliance with State and Federal
Law.
II. PACIFICARE RECREDENTIALING PROGRAM
A. PACIFICARE RECREDENTIALING APPLICATION
All Practitioners must complete and submit PacifiCare's approved
recredentialing application to be considered for continued
participation in PacifiCare's health delivery system. The
recredentialing application includes an attestation regarding the
correctness and completeness of the information submitted.
B. PACIFICARE RECREDENTIALING STANDARDS
PacifiCare's recredentialing standards require the recredentialing of
Practitioners at least once every two (2) years. Generally,
PacifiCare's recredentialing standards require the following:
38
1. Reverifying from primary sources the information described in
Section I.B.1 above, updated to insure current accuracy.
2. Obtaining a current statement or attestation by each Practitioner
regarding physical and mental health status and lack of present
illegal drug use.
3. Requesting information from the National Practitioner Data Bank
and the California Medical Board and reviewing for previous
sanction activity by Medicare and Medicaid.
4. Conducting an appraisal of Practitioner's performance over the
previous two (2) years, including reviewing data from quality
management and utilization management reports, Member complaints,
Member satisfaction surveys, practice pattern analyses and
patient outcome studies.
5. Conducting on-site visits and audits of offices and of medical
record-keeping practices.
III. PACIFICARE PEER REVIEW PROCESS
PacifiCare conducts ongoing peer review of Practitioners in conjunction
with the PacifiCare Quality Management Program and through the PacifiCare
Quality Management Committee. PacifiCare's peer review standards and
procedures generally require the following:
A. Ongoing monitoring and evaluating of Practitioners and their
performance of Covered Services under this Agreement to ensure
continued compliance with applicable professional standards and
PacifiCare's credentialing standards.
B. Suspending or terminating Practitioners who no longer meet one or more
of PacifiCare's credentialing criteria or for reasons related to
deficiencies in quality of care, professional competence or conduct
which could adversely affect the health and welfare of Members.
C. Reporting to the California Medical Board and the National
Practitioner Data Bank the suspension or termination of a Practitioner
for reasons related to quality of care, professional competence or
conduct, to the extent required by applicable law.
D. Providing a fair process by which a Practitioner may appeal suspension
or termination for reasons related to quality of care, professional
competence or conduct, to the extent required by applicable law.
SUMMARY OF UTILIZATION MANAGEMENT PROGRAM STANDARDS AND REQUIREMENTS
PacifiCare both conducts and delegates to its contracting Medical Group's the
responsibility for conducting utilization management and review activities.
Those Medical Groups which have been determined by PacifiCare pursuant to its
delegation assessment audit processes to be capable of
39
assuming responsibility for performing utilization management and review
activities according to PacifiCare's UM Program are required to comply with the
requirements set forth herein. The following outline is a summary of
PacifiCare's utilization management program standards and requirements. Detailed
standards and requirements are set forth in the Provider Manual.
I. MEDICAL GROUP WRITTEN UM PROGRAM.
A documented description of Medical Group's UM Program which, at minimum,
satisfies the standards and procedures required by PacifiCare's UM
Program shall be provided by Medical Group to PacifiCare, for its review
and approval, on or before the Commencement Date and at anytime
thereafter upon PacifiCare's request or whenever a material modification
to such documented UM Program is made by Medical Group. All delegated
utilization management and review activities shall be performed by
Medical Group in strict compliance with Medical Group's written UM
Program as approved by PacifiCare.
II. MEDICAL GROUP UTILIZATION MANAGEMENT COMMITTEE
Medical Group shall maintain a Utilization Management Committee which
shall meet as frequently as necessary but at least weekly to conduct and
oversee utilization management activities.
III. PACIFICARE STANDARDS FOR UTILIZATION REVIEW
Medical Group represents and warrants that Medical Group's UM Program
shall be administered in accordance with PacifiCare's UM Program
standards and procedures established in accordance with utilization
management standards of Accreditation Organizations and shall include,
but is not limited to, the following:
A. Medical Group will maintain a written UM Program description that sets
forth delegated utilization management and review activities, in form
and content acceptable to PacifiCare. Such UM Program description
shall include, at a minimum, policies and procedures to evaluate
medical necessity and criteria used, information sources, and the
processes used to review and approve the provision of medical services
to Members. The written UM Program must include a mechanism for
reviewing and updating the UM Program description on a periodic basis,
but no less than once annually, subject to PacifiCare's review and
approval.
B. Qualified medical professionals must supervise utilization review
decisions relating to preauthorization and concurrent review. A
physician must conduct a medical appropriateness review on any
pre-authorization or concurrent review denial; Medical Group will use
physician consultants from appropriate specialty areas of medicine and
surgery who are certified by the applicable American Board of Medical
Specialties for pre-authorization and concurrent review activities.
C. Medical Group will adopt and implement a set of written utilization
review decision protocols that are based on reasonable medical
evidence. Criteria to determine appropriateness of Covered Services
must be clearly documented and available, upon
40
request, to Participating Providers. Medical Group will employ a
mechanism for ascertaining the consistency of application of this
criteria by reviewers and will implement a procedure for updating this
review criteria on a periodic basis, but no less than once annually,
subject to PacifiCare's review and approval.
D. Medical Group will use best efforts, when conducting pre-authorization
and concurrent review, to obtain all necessary information, including
pertinent clinical information and a consultation with the treating
physician, as appropriate.
E. All UM Program decisions must be made in a timely manner, depending on
the urgency of the situation.
F. Reasons for preauthorization or concurrent denials must be clearly
documented and available to Members and PacifiCare. All notifications
to Members of denials must be in a format and content approved by
PacifiCare and must include appeal process information.
G. Medical Group will develop and implement, through the use of
appropriate professionals, policies and procedures to evaluate the
appropriate use of new medical technologies and new applications of
established technologies, including medical procedures, drugs and
devices. Criteria evaluated by Medical Group will include the review
of information from appropriate government regulatory bodies and
published scientific evidence.
H. Medical Group must employ mechanisms to evaluate the effects of the UM
Program, using Member satisfaction data, Participating Provider data
and/or other appropriate means. Medical Group will also cooperate and
comply with PacifiCare's mechanisms to evaluate the effectiveness of
Medical Group's UM Program.
IV. SUBMISSION OF DATA AND REPORTING OBLIGATIONS
A. AUTHORIZATIONS
Medical Group must transmit all authorizations for Medically Necessary
Covered Services for Members to PacifiCare in accordance with the
requirements specified in the Provider Manual.
B. UTILIZATION DATA
Medical Group must submit to PacifiCare utilization data pertaining to
all Covered Services provided or arranged by Medical Group and
Participating Providers to Members as described in this Agreement and
the Provider Manual. Such utilization data includes all
Member-specific encounter data reasonably required by PacifiCare to
conduct utilization review and to comply with all reporting
requirements of Governmental Agencies.
41
C. REPORTING OF EMERGENCY ROOM AND HOSPITAL ADMISSIONS
Medical Group's utilization management personnel must report each
working day, via telephone or facsimile transmission, all emergency
room encounters and hospital admissions to PacifiCare's UM Department.
SUMMARY OF CLAIMS PROCESSING PROGRAM STANDARDS AND REQUIREMENTS
PacifiCare both performs and delegates to its contracting Medical Group the
responsibility for processing claims. Those Medical Groups which have been
determined by PacifiCare pursuant to its claim processing audit to be capable of
assuming responsibility for performing claims processing activities according to
PacifiCare's Claim Processing Program are required to comply with the
requirements set forth herein.
I. CLAIMS PROCESSING WRITTEN PROGRAM
A documented description of Medical Group's Claim Processing Program
which, at a minimum, satisfies the standards and procedures required by
PacifiCare's Claim Processing Program shall be provided by Medical Group
to PacifiCare, for PacifiCare's review and approval, on or before the
Effective date of this Agreement and at anytime thereafter upon
PacifiCare's request or whenever a material modification to such
documented Claims Processing Program is made by Medical Group. All
delegated claims processing activities shall be performed by Medical
Group in strict compliance with Medical Group's written Claims
Processing Program as approved by PacifiCare.
II. PACIFICARE STANDARDS FOR CLAIMS PROCESSING
Medical Group represents and warrants that Medical Group's Claim
Processing Program shall be administered in accordance with PacifiCare's
Claims Processing Program standards and procedures established in
accordance with State and Federal law standards and shall include, but is
not limited to, the following:
A. All claims shall be processed within the earlier of the following time
periods: (i) the time specified in the applicable agreement between
Medical Group and its Participating Provider; (ii) forty five (45)
working days of Medical Group's or any of its Participating Providers
receipt of an uncontested claims for services provided to Commercial
Medical Group Members; or (iii) the time period required by State and
Federal Law for payment of claims.
B. Medical Group shall notify Member of any contested claim(s) within the
time periods identified above which states the portion of the claim
that is contested and the specific reasons for contesting the claim.
C. Medical Group shall have sufficient administrative capacity to carry
out the requirements of this delegated function
42
D. Medical Group shall have written procedures available to staff for
review, including work flow charts and inventory data.
E. Medical Group shall have an appropriate medical review process in
place to review claims when necessary. Medical Group must
participate, cooperate, and comply with PacifiCare for accessing
medical records.
III. PACIFICARE STANDARDS FOR CLAIMS PROCESSING REPORTING
Medical Group shall provide PacifiCare periodic reports, questionnaire
responses or other information required by PacifiCare or by State and
Federal Agencies with respect to claims processing.
A. The minimum requirements of the Medical Group's claims processing
system claims tracking and data collection and reporting as
specified in the Provider Manual.
B. The minimum requirements of the Medical Group's claims processing
system management reports and auditing tools as specified in the
Provider Manual.
IV. CLAIMS DENIALS AND APPEALS
All claim denials with supporting documentation shall be provided to
PacifiCare within five (5) working days of the issuance of the denial.
Medical Group must notify the Member and the billing provider of any
denials and must provide to the Member a statement of the right to appeal
on approved by PacifiCare. PacifiCare shall be responsible for receiving
and managing all appeals of Members.
PACIFICARE OF CALIFORNIA MEDICAL GROUP
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ Karunyan Arulantham
--------------------------- ---------------------------
Title: V P, Health Services Title:
------------------------ ------------------------
Date: 1/27/98 Date:
------------------------- -------------------------
43
PACIFICARE OF CALIFORNIA
MEDICAL GROUP/IPA SERVICES AGREEMENT
(SPLIT CAPITATION)
EXHIBIT 3
PRODUCT ATTACHMENTS
VERIFICATION OF RECEIPT OF PROVIDER MANUAL
AND FORM SUBSCRIBER AGREEMENTS
(This EXHIBIT 3 is an integral part of this Agreement)
MEDICAL GROUP NAME: SIERRA MEDICAL GROUP
VERIFICATION OF RECEIPT OF PROVIDER MANUAL AND SUBSCRIBER AGREEMENTS:
A copy of the PacifiCare Provider Policies and Procedures Manual and standard
form Subscriber Agreements for each of the Managed Care Plans specified below
has been provided to Medical Group by PacifiCare prior to the execution of this
Agreement:
By:
-----------------------
Title:
--------------------
Date:
---------------------
PRODUCT ATTACHMENTS:
The following attachments, when initialed by PacifiCare and Medical Group, are
an integral part of this Agreement:
PacifiCare Medical Group
A - PacifiCare Commercial Health Plan CS KA
------ ------
B - PacifiCare Commercial POS Health Plan CS KA
------ ------
C - Secure Horizons Health Plan CS KA
------ ------
D - Secure Horizons POS Health Plan CS KA
------ ------
44
PRODUCT ATTACHMENT A
PACIFICARE COMMERCIAL HEALTH PLAN
This Product Attachment A, along with the Base Agreement, sets forth the
specific terms and conditions which are applicable to the PacifiCare Commercial
Health Plan, as defined below.
ARTICLE 1
DEFINITIONS
The following terms shall have the meaning attributed below for purposes of the
PacifiCare Commercial Health Plan, as described in this Product Attachment A.
Capitalized terms not otherwise defined herein shall have the meaning assigned
to them in the Base Agreement.
1.1 COMMERCIAL PLAN PREMIUM is the premium received by PacifiCare each month
for PacifiCare Commercial Plan Members, excluding amounts to pay broker and
agent commissions/compensation, Premium taxes and premiums for Supplemental
Benefits.
1.2 OPM AGREEMENT is the agreement between PacifiCare and the Federal Office of
Personnel Management for the provision of Covered Services to persons
enrolled in the PacifiCare Commercial Plan through their participation in
the health benefits programs for federal employees and their dependents.
1.3 PACIFICARE COMMERCIAL PLAN is any and all of the various Managed Care Plans
sold by PacifiCare to individuals (excluding individuals eligible for the
PacifiCare Medicaid Plan and the Secure Horizons Health Plan) and employer
groups, associations with employer group participation and unions which
purchase benefits for their employees and their dependents.
1.4 COMMERCIAL PLAN MEMBERS are Medical Group Members enrolled in the
PacifiCare Commercial Plan.
1.5 SUPPLEMENTAL BENEFITS are benefits offered under the PacifiCare Commercial
Plan which require separate premium, in addition to the Commercial Plan
Premium, as consideration for the additional benefits.
ARTICLE 2
DUTIES OF MEDICAL GROUP
2.1 PROVISION OF COVERED SERVICES. Medical Group and its Participating
Providers shall provide Covered Services to Commercial Plan Members
pursuant to the terms of the Base Agreement and this Product Attachment A.
2.2 COMPLIANCE WITH OPM AGREEMENT. Medical Group shall comply with all
requirements in the OPM Agreement which are applicable to Medical Group as
a subcontractor of PacifiCare as a result of this Agreement. Without
limiting the foregoing, Medical Group shall ensure that all provisions of
the OPM Agreement which are applicable to Medical Group's Participating
providers are included in Medical Group's subcontracts with its
Participating Providers. A copy
45
of the OPM Agreement shall be provided to Medical Group concurrent with the
execution of this Agreement.
2.3 COMPLIANCE WITH SUBSCRIBER AGREEMENTS FOR PACIFICARE COMMERCIAL PLAN.
Medical Group and its Participating Providers shall comply with all
requirements in Subscriber Agreements for the PacifiCare Commercial Plan
which are applicable to Medical Group. PacifiCare shall make good faith
efforts to notify Medical Group of any such requirements that are not
otherwise reflected in this Agreement.
ARTICLE 3
COMPENSATION
3.1 CAPITATION PAYMENTS FOR COMMERCIAL PLAN MEMBERS. Capitation Payments for
Commercial Plan Members shall be [ ** ] of the Commercial Plan Premium
per Commercial Plan Member per month, subject to the adjustments set forth
in Article 5 of the Base Agreement and the adjustments set forth below in
this Section.
3.1.1 PREMIUM ADJUSTMENTS. The Commercial Plan Premium and benefits may
be amended for each Subscriber Agreement upon the annual renewal
date of each Subscriber Agreement at the sole discretion of
PacifiCare.
3.1.2 ADJUSTMENT FOR ISL PREMIUM. In calculating Capitation Payments due
to Medical Group, PacifiCare shall deduct the ISL Premium amount
set forth herein from the amounts otherwise due to Medical Group,
unless PacifiCare has approved of Medical Group's opting out of
PacifiCare's ISL Program.
3.1.3 ADJUSTMENT FOR EXPERIENCE-RATED MANAGED CARE PLANS. Capitation
Payments for Experience Rated Plans shall be calculated utilizing
the following definitions and methodology:
(i) An "Experience-Rated Plan" is a non-federally-qualified plan
in which the Subscriber Group's premium is partially
deferred or adjusted to reflect the actual medical costs
incurred by Commercial Plan Members.
(ii) The "Net Actuarial Experience Rate" shall mean a rate
calculated by the same method used to determine premium for
federally-qualified plans, except that trended claims and
utilization data may be considered to determine expected
medical costs and PacifiCare's administrative retention may
be adjusted to reflect actuarial risk taken by the
Subscriber Group instead of PacifiCare.
(iii) For Experience-Rated Plans, Capitation Payments shall be
calculated as a percent of the Net Actuarial Experience Rate
rather than based on a percent of the Commercial Plan
Premium. The Net Actuarial Experience Rate, like the
Commercial Plan Premium, shall exclude broker and agent
commissions, premium taxes and premiums for Supplemental
Benefits.
46
3.2 INDIVIDUAL STOP LOSS PROGRAM. The ISL Deductible and ISL Premium for the
PacifiCare Commercial Plan initially will be:
(i) ISL DEDUCTIBLE - Non-Applicable
(ii) ISL PREMIUM - Non-Applicable
3.3 COMMERCIAL HOSPITAL INCENTIVE PROGRAM. Medical Group and Hospital shall
establish and maintain an annual Commercial Hospital Incentive Program for
the PacifiCare Commercial Plan (the "CHIP"). The CHIP shall be designed to
provide an incentive for efficient and effective use of Hospital Services,
and shall be consistent with this Agreement and with State and Federal Law.
A copy of the CHIP shall be attached to this Product Attachment A and
incorporated herein. Medical Group shall provide PacifiCare with a copy of
any and all revisions to the CHIP, which shall be deemed incorporated into
this Agreement, and a copy of any and all reports and payment schedules
prepared by Medical Group or Hospital relating to the CHIP. PacifiCare
reserves the right to require that the CHIP be modified from time to time
to comply with this Agreement and State and Federal Law.
3.4 COMMERCIAL PLAN PHARMACY INCENTIVE PROGRAM. PacifiCare shall establish and
administer an annual Pharmacy Incentive Program for the PacifiCare
Commercial Plan (the "PIP"). The PIP is designed to provide an incentive
for efficient and effective use of Outpatient Pharmacy Supplemental
Benefits for Commercial Plan Members. The PIP shall be calculated as
follows:
3.4.1 OUTPATIENT PHARMACY SUPPLEMENTAL BENEFITS shall be the benefits
made available by PacifiCare under the PacifiCare Supplemental
Pharmacy Benefit, as defined in the applicable Subscriber
Agreement.
3.4.2 PIP BUDGET shall equal [ ** ] of the premium received by
PacifiCare for Outpatient Pharmacy Supplemental Benefits for
Commercial Plan Members. The PIP Budget shall be retained by
PacifiCare for purposes of administering the PIP.
3.4.3 PIP EXPENSE shall equal the actual or valued expenses incurred for
the provision of Outpatient Pharmacy Supplemental Benefits during
the applicable period, less amounts received from pharmacy rebates
and third parties as the result of coordination of benefits and
third party recoveries.
3.4.4 PIP SURPLUS. In the event the PIP Expense is less than the PIP
Budget, [ ** ] of the surplus shall be allocated to Medical Group.
3.4.5 PIP DEFICIT. In the event that the PIP Expense is greater than the
PIP Budget, [ ** ] of the deficit shall be allocated to Medical
Group.
47
ARTICLE 4
DIVISION OF FINANCIAL RESPONSIBILITY
(PacifiCare Commercial & Secure Horizons Plan)
The following matrix outlines the division of financial responsibility between
PacifiCare, Medical Group and Hospital, the intent being to clarify Covered
Services categories in order to provide for accurate administration. The matrix
serves as a model under which broad Covered Service categories suggest the
appropriate financial responsibility for Covered Services not specifically
listed. The applicable Subscriber Agreement should be consulted for an accurate
and complete description of Covered Services and the Provider Manual for
administrative clarification.
48
-----------------------------------------------------------------------------------------------------------------------
SERVICE DESCRIPTION MED GRP HOSP PACIFICARE
-----------------------------------------------------------------------------------------------------------------------
Allergy - Serum *
Allergy - Testing & Tx
Ambulance (Air and Ground)
Amniocentesis / Genetic Testing
Anesthesiology - IP & OP
Biofeedback (Medically Necessary) - OP
Blood & Plasma - Admin/Processing
Chemical Dependency (Detox) - Facility
Chemical Dependency (Detox) - Professional
Chemical Dependency (Rehab) - IP &
OP - Prof & Fac (Commercial) *
Chemical Dependency (Rehab) - IP & OP - Facility (Secure Horizons)
Chemical Dependency (Rehab) - IP & OP - Professional (Secure Horizons)
Chemotherapy Drugs - IP & OP - Inject/Oral
Chemotherapy - IP & OP - Professional
Chiropractic - Medical
Chiropractic - Supplemental *
Circumcision
Contact Lenses - Cataract/Intraocular [ ** ](1)
Diagnostic Imaging and Tests - Op - Facility
Diagnostic Imaging and Tests - OP - Professional
DME - IP
DME - OP
Emergency Room - Facility
Emergency Room - Professional
Endoscopic Studies - OP - Facility
Endoscopic Studies - IP & OP - Professional
Family Planning - Abortions - Facility
Family Planning - Abortions - Professional
Family Planning - Contraceptive Devices - Prescription *
Family Planning - Contraceptive Devices - Non Prescription
(eg. Norplant/IUD) *
Family Planning - Contraceptive Devices - Insertion
Family Planning - GIFT/ZIFT/IVF - Prof & Fac *
Family Planning - Infertility procedures - Facility
Family Planning - Infertility testing - Professional
Family Planning - Sterilization - Facility
Family Planning - Sterilization - Professional
Fetal monitoring - OP - Prof & Fac
Health Education
Health Eval/Physical
Hearing Aids/Molds *
Hearing screening (Audio Logic Evaluation)
Hemodialysis / Dialysis - IP - Facility
Hemodialysis / Dialysis - IP & OP - Professional
Hemodialysis / Dialysis - OP - Facility
Home Health Care
Home Infusion Therapy
Hospice Services (Commercial)
Hospice Services (Secure Horizons) **
(1) All references to division of responsibility have been deleted.
49
-----------------------------------------------------------------------------------------------------------------------
SERVICE DESCRIPTION MED GRP HOSP PACIFICARE
-----------------------------------------------------------------------------------------------------------------------
Hospital Based Physicians Interpretative Service Incl. Radiology
and Pathology
Hospitalization IP Services - Facility
Immunizations & Inoculations (Medically Necessary)
Injectables - Administered in Physician Office
Injectables- Self Administered *
Laboratory/Pathology - IP - Facility
Laboratory/Pathology - IP & OP - Professional
Laboratory/Pathology - OP - Facility
Lithotripsy - IP & OP - Facility
Lithotripsy - IP & OP - Professional
Med/Surg Supplies (casts, splints, bandages) - Office
Medication - Prescription *
Mental Health - Crisis Intervention
Mental Health - IP & OP - Prof & Fac (Commercial) *
Mental Health - IP & OP - Facility (Secure Horizons)
Mental Health - IP & OP - Professional (Secure Horizons)
Observation Room
Oral Surgery / Dental Services - Accident & Injury Only - Facility
Oral Surgery / Dental Services - Accident & Injury Only - Professional
Ostomy / Colostomy Supplies (See OP DME)
Out of Area - Facility
Out of Area - Professional
Outpatient Surgery - Facility
Outpatient Surgery - Professional [ ** ](1)
Physician Services (All Professional Services)
Prosthetics / Orthotics (See OP DME)
Prosthetics - Surgical Implants
Radiation therapy - IP & OP - Facility
Radiation therapy - IP & OP - Professional
Radiology - IP - Facility
Radiology - IP & OP - Professional
Radiology - OP - Facility
Reconstructive Surgery - IP & OP - Facility
Reconstructive Surgery - IP & OP - Professional
Rehabilitation - Cardiac/OT/PT/RT/ST - IP - Facility
Rehabilitation - Cardiac/OT/PT/RT/ST - IP - Professional
Rehabilitation - Cardiac/OT/PT/RT/ST - OP - Prof & Fac
Skilled Nursing Facility
Sleep Studies - OP - Prof & Fac
TMJ - Evaluation (excludes dental exams/treatment)
Transfusions - IP & OP - Facility
Transplants - Facility
Transplants - Professional
Urgent Care
Vision (Eye Exam, Refraction and Medical Treatment)
Vision Care - Contact Lenses/Frames (non-cataract) (Commercial) *
Vision Care - Contact Lenses/Frames (non-cataract) (Secure Horizons)
* If member has benefit
** Opt-out to Medicare benefit for Hospice
(1) All references to division of responsibility have been deleted.
50
IN WITNESS WHEREOF, the parties hereto have executed this Product Attachment A.
PACIFICARE OF CALIFORNIA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Title: VP, Health Services
------------------------
Date: 1/27/98
-------------------------
MEDICAL GROUP
By: /s/ Karunyan ▇▇▇▇▇▇▇▇▇▇▇▇
---------------------------
Title:
------------------------
Date:
-------------------------
51
PRODUCT ATTACHMENT B
PACIFICARE COMMERCIAL POINT-OF-SERVICE PLAN
This Product Attachment B, along with Product Attachment A and the Base
Agreement, sets forth the terms and conditions which are applicable to the
PacifiCare Commercial Point-of-Service Plan, as defined below.
ARTICLE 1
DEFINITIONS
The following terms shall have the meaning attributed below for purposes of the
PacifiCare Commercial Point-of-Service Plan, as described in this Product
Attachment B. Capitalized terms not otherwise defined herein shall have the
meaning assigned to them in the Base Agreement.
1.1 IN-NETWORK SERVICES are Covered Services which are (a) provided or arranged
by Medical Group pursuant to the PacifiCare Commercial Plan; (b) received
from a non-contracting Provider following an authorization from Medical
Group; (c) Emergency Services and (d) Urgently Needed Services.
1.2 OUT-OF-NETWORK SERVICES are Covered Services, excluding Emergency Services
and Urgently Needed Services, which are received without the prior
authorization of Medical Group.
1.3 PACIFICARE COMMERCIAL POINT-OF-SERVICE ("POS") PLAN is any PacifiCare
Commercial Plan, as defined in Product Attachment A, under which Members
are entitled to coverage for both In-Network Services and Out-of-Network
Services.
1.4 COMMERCIAL POS PLAN MEMBERS are Medical Group Members enrolled in the
PacifiCare Commercial POS Plan.
1.5 POS PLAN PREMIUM is the sum of the In-Network Premium and the
Out-of-Network Premium, as defined below:
1.5.1 IN-NETWORK PREMIUM is the Commercial Plan Premium, as defined in
Product Attachment A, billed or accounted for by PacifiCare for
coverage of In-Network Services under the PacifiCare Commercial
POS Plan.
1.5.2 OUT-OF-NETWORK PREMIUM is the Commercial Plan Premium, as defined
in Product Attachment A, billed or accounted for by PacifiCare
(or an insurance company or self-insured employer which has
assumed the risk for the Out-of-Network Services), for coverage
of Out-of-Network Services under the PacifiCare Commercial POS
Plan.
52
ARTICLE 2
DUTIES OF MEDICAL GROUP
2.1 COVERED SERVICES. Medical Group and its Participating Providers shall
provide or arrange Covered Services to Commercial POS Plan Members under
same terms and conditions as Commercial Plan Members.
2.2 RECIPROCITY: REIMBURSEMENT FOR OUT-OF-NETWORK SERVICES. If any of Medical
Group's Participating Providers provides Out-of-Network Services to a
Commercial POS Plan Member, such Medical Group Participating Provider shall
▇▇▇▇ PacifiCare or the payor responsible for payment for Out-of-Network
Services for such services and agrees to accept full payment at the Cost of
Care. Neither Medical Group nor its Participating Providers shall encourage
Members to receive Covered Services from non-Participating Providers.
Medical Group shall include the requirements of this Section in all
subcontracts with its Participating Providers.
ARTICLE 3
COMPENSATION
3.1 CAPITATION PAYMENTS FOR COMMERCIAL POS PLAN MEMBERS. For Commercial POS
Plan Members, PacifiCare will pay Medical Group [ ** ] of the Capitation
Payment for Commercial Plan Members, subject to the adjustments set forth
in Article 5 of the Base Agreement and Section 3.1 of Product Attachment A.
Capitation Payments for Commercial POS Plan Members will be based on a
percentage of the In-Network Premium only. The payment described in this
Section is payment in full for In-Network Services, except for Copayments,
coordination of benefits, third party recoveries and payments under the
PacifiCare POS Control Program set forth below.
3.2 COMMERCIAL POS CONTROL PROGRAM. PacifiCare shall establish and administer
an annual Control Program for the PacifiCare Commercial Point-of-Service
Plan ("Commercial POS Control Program"). The Commercial POS Control Program
is designed to provide an incentive to control Out-of-Network Services, and
shall be calculated in accordance with the following provisions.
3.2.1 DEFINITIONS. The following terms shall have the meaning
attributed below for purposes of the Commercial POS Control
Program.
(i) POS PLAN BUDGET shall equal [ ** ] of In-Network Premium
plus [ ** ] of Out-of-Network Premium.
(ii) OUT-OF-NETWORK COSTS shall mean the following:
claims paid for Out-of-Network Services incurred during
the current period, calculated at the actual amount paid;
PLUS
claims paid for Out-of-Network Services incurred but not
included in prior period Commercial POS Control Program
calculations, calculated at the actual amount paid; MINUS
53
third party liability and coordination of benefit
recoveries for Out-of-Network Services that are received
during the period of calculation.
(iii) BUDGET SURPLUS. The amount, if any, by which the POS Plan
Budget exceeds the Out-of-Network Costs for any calendar
year.
(iv) BUDGET DEFICIT. The amount, if any, by which the
Out-of-Network Costs exceeds the POS Plan Budget for any
calendar year.
(v) CAPITATION RESTORATION AMOUNT. The difference between (a)
the actual capitation paid to Medical Group or Hospital
for Commercial POS Plan Members for the relevant contract
year and (b) the amount Medical Group or Hospital would
have received if Medical Group's Capitation Payments for
Commercial POS Plan Members had been determined by
multiplying the percentage set forth in Section 3.1 of
Product Attachment A by the In-Network Premium. The
Capitation Restoration Amount shall be calculated
separately for Medical Group and Hospital.
3.2.2 DOCUMENTATION. PacifiCare shall provide Medical Group with a list
of Out-of-Network claim payments in support of computation and
accuracy of Out-of-Network Costs, third party liability and
coordination of benefit recoveries, assumptions and data
supporting the POS Plan Budget, the Budget Surplus, and the
Budget Deficit and the Capitation Restoration Amount.
3.2.3 BUDGET SURPLUS RECONCILIATION. Medical Group and Hospital shall
each receive [ ** ] of the Budget Surplus, until such time as
either Hospital or Medical Group has received the applicable
Capitation Restoration Amount. Additional Budget Surplus amounts
shall be paid to the party whose capitation has yet to be
restored until that party has received the applicable Capitation
Restoration Amount. If the Budget Surplus exceeds the Capitation
Restoration Amount for both Hospital and Medical Group, then
PacifiCare, Hospital and Medical Group shall each be entitled to
[ ** ] of the remaining Budget Surplus.
3.2.4 BUDGET DEFICIT RECONCILIATION. In the event of a Budget Deficit,
neither Medical Group nor Hospital shall be responsible for
making any payments under the PacifiCare POS Control Program.
However, [ ** ] of the Budget Deficit amount shall be
considered a Medical Group obligation for purposes of offsetting
surpluses under other incentive programs under the Agreement.
3.3 ADJUSTMENT OF RATES. Capitation Payments for Commercial POS Plan Members
and the POS Plan Budget may be prospectively adjusted on an annual basis to
reflect actual experience under the PacifiCare Commercial POS Plan;
provided, however, that in no event shall the amount of any increase or
decrease to such Capitation Payments be greater than [ ** ] in any given
year.
54
IN WITNESS WHEREOF, the parties hereto have executed this Product Attachment B.
PACIFICARE OF CALIFORNIA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Title: VP, Health Services
------------------------
Date: 1/27/98
-------------------------
MEDICAL GROUP
By: /s/ Karunyan ▇▇▇▇▇▇▇▇▇▇▇▇
---------------------------
Title:
------------------------
Date:
-------------------------
55
PRODUCT ATTACHMENT C
SECURE HORIZONS HEALTH PLAN
This Product Attachment C, along with the Base Agreement, sets forth the terms
and conditions which are applicable to the Secure Horizons Health Plan, as
defined below.
ARTICLE 1
DEFINITIONS
The following terms shall have the meaning attributed below for purposes of the
Secure Horizons Health Plan, as described in this Product Attachment C.
Capitalized terms not otherwise defined herein shall have the meaning assigned
to them in the Base Agreement.
1.1 HCFA is the Health Care Financing Administration, an administrative
agency of the United States Government, responsible for administering the
Medicare program.
1.2 HCFA AGREEMENT is the Medicare-risk contract between PacifiCare and HCFA.
1.3 MEDICARE is the Hospital Insurance Plan (Part A) and the Supplementary
Medical Insurance Plan (Part B) provided under Title XVIII of the Social
Security Act, as amended.
1.4 MONTHLY HCFA PAYMENT is the revenue received by PacifiCare each month
from HCFA, as determined by HCFA, for providing Covered Services to
Secure Horizons Members.
1.5 SECURE HORIZONS HEALTH PLAN is the prepaid health plan operated by
PacifiCare pursuant to the HCFA Agreement which provides Covered Services
to individuals (including retirees) eligible to receive Medicare
benefits.
1.6 SECURE HORIZONS MEMBERS are Medical Group Members enrolled in the Secure
Horizons Health Plan.
1.7 SECURE HORIZONS REVENUE is the Monthly HCFA Payment for Medical Group
Members enrolled in the Secure Horizons Health Plan, less amounts used to
fund the Market Specific Benefit Program (as defined below).
ARTICLE 2
DUTIES OF MEDICAL GROUP
2.1 COMPLIANCE WITH HCFA AGREEMENT AND FEDERAL MEDICARE LAW. Medical Group
shall comply with all requirements in the HCFA Agreement which are
applicable to Medical Group as a subcontractor of PacifiCare as a result
of this Agreement. Without limiting the foregoing, Medical Group shall
ensure that all provisions of the HCFA Agreement which are applicable to
Medical Group's Participating Providers as a subcontractor of PacifiCare
are included in Medical Group's subcontracts with its Participating
Providers. A copy of the HCFA Agreement shall be made available to Medical
Group concurrent with the execution of this Agreement. Medical
56
Group and its Participating Providers shall comply with Title XVIII of
the Social Security Act and the regulations adopted thereunder by HCFA
for the Medicare program.
2.2 MEDICARE PARTICIPATION STANDARDS. Medical Group shall require that all of
its Participating Providers who provide services to Secure Horizons
Members meet the standards for participation and all applicable
requirements for providers of health care services under the Medicare
program. In addition, Medical Group shall require that all facilities and
offices utilized by Medical Group and its Participating Providers to
provide or arrange Covered Services to Secure Horizons Members shall
comply with facility standards established by HCFA.
2.3 CONFIDENTIALITY OF MEDICAL RECORDS. Medical Group shall establish and
maintain procedures and controls so that no information contained in its
records or obtained from HCFA or from others in carrying out the terms of
this Agreement shall be used by or disclosed by it, its agents, officers,
or employees except as provided in Section 1106 of the Social Security
Act, as amended, and regulations prescribed thereunder.
2.4 SITE EVALUATIONS: RIGHT TO INSPECT. Medical Group shall permit the United
States Department of Health and Human Services or its designated
representatives, to conduct periodic site evaluations of Medical Group's
facilities, offices, equipment, medical records of Secure Horizons
Members, and all phases of professional and ancillary medical care
provided to Secure Horizons Members by Medical Group and its
Participating Providers. Such site evaluation may include inspection and
audit of books, documents, papers and records relating to any aspect of
Covered Services provided to Secure Horizons Members and determinations
of amounts payable under this Agreement, as required by law. The right of
the United States Department of Health and Human Services to inspect,
evaluate and audit shall extend through three (3) years from the date of
the final settlement between PacifiCare and an agency thereof. Medical
Group and its Participating Providers shall comply with any requirements
or directives issued by Government Agencies as a result of such site
evaluation, inspection and/or audit.
2.5 SUBMISSION OF DATA. Medical Group shall cooperate with PacifiCare in
submitting to the Secretary of Health and Human Services statistical data
pertaining to Covered Services provided by Medical Group, enrollment and
disenrollment data and any other reports the Secretary may reasonably
require to carry out its functions under the Medicare program.
2.6 ADVANCE DIRECTIVES. Medical Group shall document all Secure Horizons
Member patient records with respect to the existence of an Advance
Directive in compliance with the Patient Self-Determination Act (Section
4751 of the Omnibus Reconciliation Act of 1990), as amended, and other
appropriate laws. For purposes of this Agreement, an Advance Directive is
a Member's written instructions, recognized under State law, relating to
the provision of health care when the Member is not competent to make
health care decisions as determined under State law. Examples of Advance
Directives are living ▇▇▇▇▇ and durable powers of attorney for health
care.
2.7 NON-DISCRIMINATION. Medical Group understands that HCFA requires
compliance with the provisions of this Section as a condition for
participation in the Secure Horizons Health Plan. Medical Group and its
Participating Providers shall not unlawfully discriminate against any of
their employees or applicants for employment or against any Members on the
basis of race, color, creed, national origin, ancestry, religion, sex,
marital status, age (except as provided by
57
law), or physical or mental handicap. Medical Group and its Participating
Providers shall ensure that the evaluation and treatment of their
employees and applicants for employment and of Members are free of such
discrimination. Medical Group and its Participating Providers shall
comply with Title VI of the Civil Rights Act of 1964, as amended
(42 U.S.C. Section 2000d et. seq.), Section 504 of the Rehabilitation
Act of 1973, as amended (29 U.S.C. Section 794) and the regulations
thereunder, Title IX of the Education Amendments of 1972, as amended
(20 U.S.C. Section 1681 et. seq.), the Age Discrimination Act of 1975,
as amended (42 U.S.C. Section 6101 et. seq.), Section 654 of the Omnibus
Budget Reconciliation Act of 1981, as amended (42 U.S.C. Section 9849),
the Americans With Disabilities Act (PL. 101-365) and all implementing
regulations, guidelines and standards as are now or may be lawfully
adopted under the above statutes.
2.8 TERMINATION OF HCFA AGREEMENT. In the event the HCFA Agreement is
terminated or not renewed, the provisions of this Agreement relating to
the Secure Horizons Health Plan shall automatically terminate unless
otherwise agreed by HCFA and PacifiCare.
ARTICLE 3
COMPENSATION
3.1 CAPITATION PAYMENTS FOR SECURE HORIZONS MEMBERS. Capitation Payments for
Secure Horizons Members shall be [ ** ] of the Secure Horizons Revenue
per Secure Horizons Member per month, subject to the adjustments set forth
in Article 5 of the Base Agreement.
3.1.1 ADJUSTMENT FOR ISL PREMIUM. In calculating Capitation Payments
due to Medical Group, PacifiCare shall deduct the ISL Premium
amount set forth herein from the amounts otherwise due to Medical
Group, unless PacifiCare has approved of Medical Group's opting
out of PacifiCare's ISL Program.
3.2 INDIVIDUAL STOP LOSS PROYAM. The ISL Deductible and ISL Premium for the
Secure Horizons Health Plan initially will be:
(i) ISL DEDUCTIBLE - NOT APPLICABLE dollars per Secure Horizons
Member per calendar year.
(ii) ISL PREMIUM - NOT APPLICABLE percent of Secure Horizons Revenue.
3.3 MARKET-SPECIFIC BENEFIT PROGRAM. PacifiCare may establish, at its sole
discretion, an annual Market-Specific Benefit Program (the "MSBP"). The
MSBP is designed to provide an incentive to control costs for certain
additional benefits (the "MSBP Benefits") offered to Secure Horizons
Members, as defined in the applicable Subscriber Agreement, for the
purpose of enhancing the marketability of the Secure Horizons Health
Plan. The MSBP may include the following additional benefits and may
be amended from time to time by PacifiCare to reflect changes in the
benefits:
Dental Benefits
58
Immunosuppressive Drugs
Outpatient Pharmacy Benefits
Respite Care
PacifiCare shall retain [ ** ] of the Monthly HCFA Payment (the "MSBP
Budget") for purposes of funding and administering the MSBP. The MSBP
shall be calculated as follows:
3.4.1 MSBP BENEFITS shall be the additional benefits listed above in
this Section and made available under the Secure Horizons Health
Plan as defined in the applicable Subscriber Agreement.
3.4.2 MSBP EXPENSE shall equal the actual or valued expenses incurred
for the provision of MSBP Benefits during the applicable period,
less amounts received from pharmacy rebates (in the case of
Outpatient Pharmacy Benefits) and third parties as the result of
coordination of benefits and third party recoveries.
3.4.3 MSBP SURPLUS. In the event the MSBP Expense is less than the MSBP
Budget, [ ** ] of the surplus shall be allocated to the Medical
Group, but not more than [ ** ] of the MSBP Budget for the
calendar year.
3.4.4 MSBP DEFICIT. In the event the MSBP Expense is greater than the
MSBP Budget, [ ** ] of the deficit shall be allocated to the
Medical Group, but not more than [ ** ] of the MSBP Budget for
the calendar year.
3.4.5 SETTLEMENTS. The calculations in this Section and settlements
shall be performed in accordance with the procedures specified in
Article 5 of the Base Agreement.
3.5 COLLECTION OF CHARGES FROM THIRD PARTIES WHEN MEDICARE IS NOT THE
PRIMARY, PAYOR. Medical Group shall accept Capitation Payments from
PacifiCare as payment in full for Covered Services provided to Secure
Horizons Members; provided, however, when Medicare is not the primary
payor for Covered Services, such as when the Secure Horizons Member is
entitled to payment from another third party or for payment for a workers'
compensation claim, or from other primary insurance coverage maintained
by Secure Horizons Member, Medical Group shall make no demand upon
PacifiCare for reimbursement under the Individual Stop Loss Program until
all primary sources of payment have been pursued and it is determined that
full payment cannot be obtained within ten (10) months from the date of
the provision of Covered Services.
ARTICLE 4
DIVISION OF FINANCIAL RESPONSIBILITY
(Secure Horizons)
The following matrix outlines the division of financial responsibility between
PacifiCare, Medical Group and Hospital, the intent being to clarify Covered
Services categories in order to provide for accurate administration. The matrix
serves as a model under which broad Covered Service categories suggest the
appropriate financial responsibility for Covered Services not specifically
listed. The
59
Secure Horizons Member's Subscriber Agreement should be consulted for an
accurate and complete description of Covered Services.
The Division of Financial Responsibility for the PacifiCare Commercial Health
Plan set forth in Product Attachment A shall also apply to the Secure Horizons
Health Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Product Attachment C.
PACIFICARE OF CALIFORNIA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Title: VP, Health Services
------------------------
Date: 1/27/98
-------------------------
MEDICAL GROUP
By: Karunyan ▇▇▇▇▇▇▇▇▇▇▇▇
---------------------------
Title:
------------------------
Date:
-------------------------
60
PRODUCT ATTACHMENT D
SECURE HORIZONS POINT-OF-SERVICE PLAN
This Product Attachment D, along with Product Attachment C and the Base
Agreement, sets forth the terms and conditions which are applicable to the
Secure Horizons Point-of-Service Plan, as defined below.
ARTICLE 1
DEFINITIONS
The following terms shall have the meaning attributed below for purposes of the
Secure Horizons Point-of-Service Plan, as described in this Product Attachment
D. Capitalized terms not otherwise defined herein shall have the meaning
assigned to them in the Base Agreement.
1.1 SECURE HORIZONS POINT-OF-SERVICE ("POS") PLAN are various Secure Horizons
Plans, as defined in Product Attachment C, under which Members are
entitled to coverage for both In-Network Services and Out-of-Network
Services.
1.2 IN-NETWORK SERVICES are Covered Services which are (a) provided or
arranged by Medical Group pursuant to the Secure Horizons Health Plan;
(b) received from a non-Participating Provider following an authorization
from Medical Group; (c) Emergency Services; and (d) Urgently Needed
Services.
1.3 OUT-OF-NETWORK SERVICES are the Covered Services, excluding Emergency
Services and Urgently Needed Services, which are received without the
prior authorization of Medical Group.
1.4 SECURE HORIZONS POS MEMBERS are Medical Group Members enrolled in the
Secure Horizons POS Plan.
1.5 SECURE HORIZONS POS MEMBER PREMIUM is a monthly charge to Secure Horizons
POS Members for the Secure Horizons POS Plan.
ARTICLE 2
DUTIES OF MEDICAL GROUP
2.1 COVERED SERVICES. Medical Group shall provide or arrange Covered Services
to Secure Horizons POS Members under same terms and conditions applicable
to Secure Horizons Members.
2.2 RECIPROCITY; REIMBURSEMENT FOR OUT-OF-NETWORK SERVICES. If any of Medical
Group's Participating Providers provides Out-of-Network Services to a
Secure Horizons POS Member, such Participating Provider shall ▇▇▇▇
PacifiCare or the payor responsible for payment for Out-of-Network
Services for such services and agrees to accept full reimbursement at
the Cost of Care. Neither Medical Group nor its Participating Providers
shall encourage Members to receive Covered Services from
non-Participating Providers. Medical Group shall include the requirements
of this Section in all subcontracts with Medical Group's Participating
Providers.
61
ARTICLE 3
COMPENSATION
3.1 CAPITATION PAYMENTS FOR SECURE HORIZONS POS MEMBERS. For Secure Horizons
POS Members, PacifiCare will pay Medical Group [ ** ] of the Capitation
Payment for Secure Horizons Members, as set forth in Product Attachment C
subject to the adjustments set forth in Article 5 of the Base Agreement.
Medical Group's Capitation Payment for Secure Horizons POS Members will
be based on a percentage of the Secure Horizons Revenue. The payment
described in this Section is payment in full for In-Network Services,
except for Copayments, coordination of benefits, third party recoveries
and payments under the Secure Horizons POS Control Program set forth
below.
3.2 SECURE HORIZONS POS CONTROL PROGRAM. PacifiCare shall establish and
administer an annual Control Program for the Secure Horizons POS Plan
(the "Secure Horizons POS Control Program"). The Secure Horizons POS
Control Program is designed to provide an incentive to control
Out-of-Network Services, and shall be calculated in accordance with the
following provisions.
3.2.1 DEFINITIONS. The following terms shall have the meaning
attributed below for purposes of the Secure Horizons POS Control
Program.
(i) SECURE HORIZONS POS BUDGET shall equal [ ** ] of the
Capitation Payment for Secure Horizons Members, as set
forth in Product Attachment C, subject to the adjustments
set forth in Sections 5.1.3 and 5.4 of the Base Agreement.
(ii) OUT-OF-NETWORK COSTS shall mean the following:
claims paid for Out-of-Network Services incurred during
the current period, calculated at the actual amount paid;
PLUS
claims paid for Out-of-Network Services incurred but not
included in prior period Secure Horizons POS Control
Program calculations, calculated at the actual amount
paid; MINUS
third party liability and coordination of benefit
recoveries for Out-of-Network Services that are received
during the period of calculation.
(iii) BUDGET SURPLUS. The amount, if any, by which the Secure
Horizons POS Plan Budget exceeds the Out-of-Network Costs
for any calendar year.
(iv) BUDGET DEFICIT. The amount, if any, by which the
Out-of-Network Costs exceeds the Secure Horizons POS Plan
Budget for any calendar year.
3.2.2 DOCUMENTATION. PacifiCare shall provide Medical Group with a list
of Out-of-Network claim payments in support of the computation
and accuracy of Out-of-Network Costs, third party liability and
coordination of benefit recoveries, assumptions and data
62
supporting the Secure Horizons POS Budget, the Budget Surplus and
the Budget Deficit.
3.2.3 BUDGET SURPLUS RECONCILIATION. In the event of a Budget Surplus,
Medical Group and Hospital shall share the surplus as follows:
(i) Medical Group's distribution shall equal a percentage in
which the numerator is the Capitation Payments the Medical
Group would have received if the Secure Horizons POS
Members were enrolled in the Secure Horizons Plan (the
"Medical Group Secure Horizons Plan Capitation") and the
denominator is the sum of the Medical Group Secure
Horizons Plan Capitation and the Capitation Payments
Hospital would have received if the Secure Horizons POS
Plan Members were enrolled in the Secure Horizons Plan
(the "Hospital Secure Horizons Plan Capitation").
(ii) The Hospital's distribution shall equal a percentage in
which the numerator is the Hospital Secure Horizons Plan
Capitation and the denominator is the sum of the Medical
Group Secure Horizons Plan Capitation and the Hospital
Secure Horizons Plan Capitation.
3.2.4 BUDGET DEFICIT RECONCILIATION. In the event of a Budget Deficit,
neither Medical Group nor Hospital shall be responsible for
making any payments under the PacifiCare POS Control Program.
However [ ** ] of the Budget Deficit amount shall be considered
a Medical Group obligation for purposes of offsetting surpluses
under other incentive programs under the Agreement.
3.3 ADJUSTMENT OF RATES. Capitation Payments for Secure Horizons POS Members
and the Secure Horizons POS Budget may be prospectively adjusted to
reflect actual experience under the Secure Horizons POS Plan; provided,
however, that in no event shall the amount of any increase or decrease to
such Capitation Payments be greater than [ ** ] points in any given
year.
63
IN WITNESS WHEREOF, the parties hereto have executed this Product Attachment D.
PACIFICARE OF CALIFORNIA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Title: VP, Health Services
------------------------
Date: 1/27/98
-------------------------
MEDICAL GROUP
By: /s/ Karunyan ▇▇▇▇▇▇▇▇▇▇▇▇
---------------------------
Title:
------------------------
Date:
-------------------------
64