MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT ("Agreement") entered into as of
February 24, 1998, between PA HRM and Oxford.
RECITALS
WHEREAS, Oxford is a health maintenance organization ("HMO") duly
licensed by the Commonwealth of Pennsylvania pursuant to the Health Maintenance
Organization Act to operate an HMO and to offer certain health insurance
products to covered members in a mandatory medical assistance managed care
program called the "HealthChoices Program" for Medical Assistance recipients in
the Oxford Service Area.
WHEREAS, Oxford is charged with specific oversight responsibilities in
areas including, but not limited to, provider credentialing, utilization
management, quality assurance, member services, and other administrative
responsibilities as an HMO under Pennsylvania Department of Insurance
regulations;
WHEREAS, as an HMO, Oxford arranges for certain medical services to
Covered Members who reside in and around the Oxford Service Area through
physician clinics, independent physicians, physician group practices, hospitals
and other ancillary providers, and assumes certain risk and financial
liabilities for providing such services to Covered Members;
WHEREAS, PA HRM provides management services related to the
administration of health benefit plans and the management of health care
delivery including, but not limited to, total medical cost risk assumption,
claim administration, utilization management, and other related administrative
services;
WHEREAS, Oxford desires to engage PA HRM to provide certain claims
administration, utilization management, quality assurance, network management,
member services, and other related health care cost management services with
respect to Covered Members, and to assume and share certain medical claim cost
risk and financial liabilities in the Oxford Service Area; and
WHEREAS, PA HRM is willing to accept such engagement in accordance with
the terms and conditions set forth below, and the requisite approval of the
Pennsylvania regulatory authorities.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
TERMS AND CONDITIONS
1 INCORPORATION OF HEALTHCHOICES PHYSICAL HEALTH AGREEMENT
1.1 Operative Documents. The HealthChoices Physical Health Agreement
between the Commonwealth of Pennsylvania and Oxford Health Plans (PA), Inc.,
dated January ___, 1997, including any amendments (the "HCPH Agreement") is
specifically incorporated herein and is made a part of this Agreement. With
regard to the governance of such documents, it is hereby acknowledged and agreed
by the parties hereto that:
1.1(a) In the event that any of the terms of this Agreement conflict
with, are inconsistent with, or are in addition to, the terms
of the HCPH Agreement, the terms of this Agreement shall be
construed in such a manner as to allow this Agreement and the
HCPH Agreement to be read together and to be enforceable as
executed.
2 DEFINITIONS
The following terms shall have the meanings indicated:
2.0 "Affiliate" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or association, or other similar
organization (hereinafter "Person"), controlling, controlled by or under common
control with PA HRM or Oxford or their parent(s), whether such common control be
direct or indirect. Without limitation, all officers or Persons, holding five
percent (5%) or more of the outstanding ownership interests of PA HRM or Oxford
or their parent(s), directors and subsidiaries of PA HRM or Oxford or parent(s)
shall be deemed to be affiliates for purposes of this Agreement. For purposes of
this definition, "control" means the possession, directly or indirectly, of the
power (whether or not exercised) to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, other ownership interests, or by contract or otherwise, including,
but not limited to, the power to elect a majority of the directors of a
corporation or trustees of a trust, as the case may be.
2.1 "Applicable Law(s)" means any statute, law, ordinance, regulation,
order, rule, judgment, decree, injunction, or ruling of any federal, state,
local or other governmental agency, body or court, or of any other type of
regulatory body that is applicable to the obligations or duties of a party under
this Agreement.
2.2 "Authorization(s)" is the means by which an Oxford Primary Care
Physician refers Covered Members to Oxford Par Providers, including, but not
limited to, Specialist Physicians, hospitals, and other ancillary providers for
Covered Services.
2.3 "Best Efforts" means an undertaking by a party to perform or
satisfy an obligation or duty or otherwise act in a manner reasonably calculated
to obtain the intended result by action or expenditure not disproportionate in
the circumstances, which means, among other things, that such party shall not be
required to: (i) expend substantial funds other than for payment of the
reasonable and customary costs and expenses of employees, counsel, consultants,
representatives, or agents of such party, and regulatory, license, or other
similar fees and proper taxes in connection with the performance or satisfaction
of such obligation or duty or other action; or (ii) institute litigation or
arbitration as a part of its Best Efforts.
2.4 "Coverage Certificate(s)" means any of the coverage certificates,
benefit plan descriptions, or other similar documents issued by Oxford in
connection with the HC Program.
2.5 "Covered Member" means any person who is properly enrolled with
Oxford or who is otherwise entitled to receive Covered Services under a Coverage
Certificate.
2.6 "Covered Service(s)" means the Medically Necessary hospital,
physician, and ancillary services and other benefits such as preventive services
to which Covered Members are entitled under the Coverage Certificates.
2.7 "Credentialing and Credentialing Criteria" means both the process
by which Provider credentials and qualifications are reviewed by Oxford, or its
designee, including recredentialing, and the specific credentialing standards
and guidelines established by Oxford from time-to-time and generally applicable
to Oxford Par Providers.
2.8 "Effective Date" means the later of the date which falls [six (6)
weeks after the first] Monday following the execution of this Agreement, or
April 1, 1998.
2.9 "DOH" means the Pennsylvania Department of Health.
2.10 "DOI" means the Pennsylvania Department of Insurance.
2.11 "DPW" means the Pennsylvania Department of Public Welfare.
2.12 "HC Program" means the HealthChoices Program implemented by Oxford
for Medical Assistance recipients in the Oxford Service Area.
2.13 "Oxford Non Par Provider" means a hospital, physician or ancillary
provider who or which does not have an agreement with Oxford pertaining to
payment for Covered Services rendered to a Covered Member.
2.14 "Oxford Par Provider" means an approved hospital, physician or
ancillary provider who or which has an agreement with Oxford pertaining to
payment for Covered Services rendered to a Covered Member.
2.15 "Oxford Par Provider Agreement" means a contract between an Oxford
Par Provider and Oxford pursuant to which the Provider provides Covered Services
to Covered Members.
2.16 "Oxford Plan(s)" mean those health benefit plans offered or
administered by Oxford under the HC Program from time to time during the term of
this Agreement.
2.17 "Oxford Service Area" means the service area in which Oxford is
licensed by the Commonwealth of Pennsylvania to offer and administer Oxford
Plans. As of the Effective Date, the Oxford Service Area consists of the
following Pennsylvania counties: Bucks, ▇▇▇▇▇▇▇, Delaware, ▇▇▇▇▇▇▇▇▇▇ and
Philadelphia.
2.18 "Oxford Member" means a Covered Member who has selected an Oxford
Par Provider as his or her Primary Care Physician.
2.19 "Oxford Network" means the network of Oxford Par Providers
established heretofore.
2.21 "HCFA" means the Health Care Financing Administration.
2.22 "HEDIS", means the current Health Plan Data Information Set as
published by NCQA, as amended from time to time.
2.23 "Medical Director" means a licensed physician appointed by Oxford
as its Medical Director and, where designated by Oxford or the Medical Director,
an Associate Medical Director or Assistant Medical Director.
2.24 "Medically Necessary" or "Medical Necessity" means with respect to
health care services and supplies, those services or supplies provided by a
hospital, skilled nursing facility, physician, or other ancillary provider, that
are required to identify or treat a Covered Member's illness or injury, and
which are generally consistent with standards used by the Medical Director or
utilization review committee of Oxford and which are:
2.24(a) Appropriate for the symptoms and diagnosis or treatment of the
Covered Member's condition, illness, disease, or injury; and
2.24(b) Provided for the diagnosis, or the direct care and treatment
of the Covered Member's condition, illness, disease or injury;
and
2.24(c) In accordance with current standards of medical practice as
recognized and accepted by the medical community; and
2.24(d) Not primarily for the convenience of the Covered Member, or
the Covered Member's provider; and
2.24(e) The most appropriate source or level of service that can be
safely provided to the Covered Member. When applied to
hospitalization, this further means that the Covered Member
requires acute care as a bed patient due to the nature of the
services rendered or the Covered Member's condition, and the
Covered Member cannot receive safe or adequate care as an
outpatient.
In the event that the Oxford Plans are changed generally to include a definition
of Medically Necessary different from this definition, this definition shall be
deemed to have been automatically modified to be such definition of Medical
Necessity so included in such Oxford Plans; provided that any such change shall
be subject to Section 5.1 below.
2.25 "NCQA" means the National Committee on Quality Assurance.
2.26 "Oxford" means OXFORD HEALTH PLANS (PA), INC., a Pennsylvania
business corporation having offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ Square West, Philadelphia, Pennsylvania, and its parent
corporation, OXFORD HEALTH PLANS, INC., a Delaware business corporation having
offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, and any other
affiliates.
2.27 "PA HRM" means PENNSYLVANIA HRM, INC., a Pennsylvania business
corporation having offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ including, but not limited to, its related organizations, Health Risk
Management, Inc., its parent corporation, and HRM Claim Management, Inc. and the
Institute for HealthCare Quality, Inc., both of which are wholly-owned
subsidiaries of Health Risk Management, Inc. Health Risk Management, Inc., HRM
Claim Management, Inc., and the Institute For Healthcare Quality, Inc. are all
Minnesota business corporations. Unless otherwise indicated, Pennsylvania HRM,
Inc. and its related organizations are collectively referred to hereinafter as
"PA HRM".
2.28 "Primary Care Physician" means a physician who supervises,
coordinates and provides initial care and basic medical services as a general or
family care practitioner, or in some cases, as an internist or a pediatrician to
Covered Members, initiates their referrals for specialist care and maintains
continuity of patient care.
2.29 "Provider" means a physician or physician group, hospital, health
professional, vendor or facility who or which delivers health care services.
2.30 "Specialist Physician" means a physician who provides medical care
in any generally accepted medical specialty or sub-specialty.
2.31 "Regulatory Approval" means any approval or consent by, filing
with, or notice to any federal, state, local or other governmental agency or
body, or any other type of regulatory body (including without limitation the
DOH, DOI and DPW) required with respect to the specified matter by any statute,
law, ordinance, regulation, order or rule of any such regulatory body.
2.32 "State" means the Commonwealth of Pennsylvania.
2.33 "Term" means the term of this Agreement which shall begin on the
Effective Date and continue for a period of five (5) years or until terminated
pursuant to Section 8.2 of this Agreement.
2.34 "Transition Plan" means the plan described in Section 3.10.
3 RESPONSIBILITIES OF OXFORD
3.1 Contractual Relationships. Oxford, as the licensed HMO and as the
party which entered into the HCPH Agreement with the Commonwealth of
Pennsylvania, shall have the primary responsibility to maintain its HMO license
and the HCPH Agreement with the State and its political subdivisions. Moreover,
Oxford shall have the primary responsibility to maintain in good standing its
current license and relationships with the DPW, DOI and DOH.
3.2 Responsibilities As HMO. During the Term, Oxford, as an HMO, shall
be responsible for and perform the following services relating to the HC
Program.
3.2(a) Marketing. Oxford shall remain responsible for developing and
organizing all marketing efforts, as permitted by the DPW's
policies and regulations in the Oxford Service Area in a
manner which is generally consistent with the policies and
regulations of the DPW and is consistent with the way in which
Oxford markets Oxford Plans generally. PA HRM shall reimburse
Oxford for the costs of any marketing under this Agreement
requested by PA HRM.
3.2(b) Oxford Marketing Materials. Oxford shall ensure that Oxford
Par Providers agree to use only marketing or non-medical
informational materials which Oxford provides for purposes of
Covered Member interaction. PA HRM shall reimburse Oxford for
the costs of any marketing under this Agreement requested by
PA HRM.
3.2(c) Collection of Premiums. Oxford shall be responsible to see
that all premiums from DPW with respect to Oxford Plans and
riders, if applicable, are handled in accordance with the
banking arrangement established by mutual agreement in the
Transition Plan.
3.2(d) Member Eligibility Verification: Eligibility List.
3.2(d)(i) Oxford shall have the primary responsibility for
the performance of all enrollment and eligibility
functions including providing to or for the
benefit of each Covered Member, Oxford enrollment
forms, identification cards and plan booklets.
The identification card shall be presented by the
Covered Member for the purpose of assisting
Oxford Par Providers in verifying Covered Member
eligibility. In addition, Oxford shall maintain
other verification procedures by which PA HRM may
confirm the eligibility of Covered Members.
3.2(d)(ii) Oxford shall provide PA HRM with a record of
Oxford Covered Members who are enrolled for
Covered Services ("Eligibility List") promptly
upon Oxford's receipt of such information from
DPW. The Eligibility List shall be adjusted by
Oxford to reflect retroactive additions and
deletions in accordance with the policy
established by the DPW. Oxford represents that
the Eligibility List provided to PA HRM is an
accurate reflection of the eligibility status of
Covered Members based on information then
available to Oxford. Both parties agree that the
data is first provided to Oxford by the State,
and that Oxford shall not be responsible or
liable for delays by the State, or for inaccurate
data provided by the State.
3.2(d)(iii) Any Covered Member who selects a Primary Care
Physician located outside of the Oxford Service
Area shall automatically be transferred out of
membership to the extent permitted by DPW rules.
Oxford shall notify PA HRM as soon as possible
after Oxford learns of any such selection. Such
transfer shall be effective on the date of the
Covered Member's selection. This section shall
not apply to Covered Members who seek emergency
treatment outside the Oxford Service Area, or
those Covered Members who are properly referred
to Specialist Physicians outside the Oxford
Service Area.
3.2(e) Oxford Plan Administration.
3.2(e)(i) Oxford shall be responsible for certain
administrative responsibilities of all Oxford
Plans including such functions as: maintaining
all required regulatory accountability, grievance
procedures, customer relations and run-out claims
administration services for all claims relating
to services incurred prior to the Effective Date,
data entry/electronic transfer as agreed by the
parties, development and distribution of Coverage
Certificates, enrollment forms, identification
cards and other Covered Member materials,
development and distribution of Provider manuals
(subject to PA HRM's prior review and opportunity
to suggest comments thereon insofar as they
relate to the Oxford Plans), and the production
of an Oxford Par Provider directory (which shall
be subject to PA HRM's reasonable prior review
and opportunity to suggest changes therein with
respect to the listing of Oxford Providers).
3.2(e)(ii) Oxford shall provide to PA HRM copies of all
Coverage Certificates, coverage guidelines and
procedures, Provider manuals, Oxford Par Provider
directories, Oxford Plans promotional materials,
and any other documents and materials of a
similar nature as PA HRM may reasonably request
in connection with the performance of its duties
hereunder.
3.2(f) Regulatory Filings and Compliance. Oxford shall have the
primary right and responsibility to perform all regulatory
compliance and oversight services, including all filings and
documents necessary to obtain the permits, consents, approvals
and authorizations of those third parties, administrative
agencies and governmental instrumentalities as are necessary.
The parties agree that Oxford shall obtain all necessary
consents, approvals and authorizations ("Required Approvals"),
including, without limitation, obtaining from the DOH, DPW and
DOI any necessary approvals of this Agreement and the Oxford
Par Provider Agreements This Agreement is expressly contingent
upon and shall not be effective unless and until the parties
receive all Required Approvals. Oxford and PA HRM recognize
that time is of the essence and they shall use Best Efforts in
making required regulatory filings and responding to agency
requests for information; provided, however, that each party
hereby acknowledges and agrees that the time frames in which
agencies issue the Required Approvals are not within Oxford's
or PA HRM's control. Oxford and PA HRM have heretofore
cooperated with the other to the extent reasonably necessary
to obtain the Required Approvals and each agrees they will
continue to furnish all information reasonably necessary in
the future in connection with any statement, application or
filing to any administrative agency or governmental
instrumentality in connection with this Agreement or the
transactions contemplated herein.
3.2(g) Patient Consents. Oxford shall use its Best Efforts on behalf
of PA HRM to obtain, in connection with the enrollment and
continuing participation of Covered Members in an Oxford Plan
or otherwise, such written consents, releases, and
authorizations from all Oxford Members as shall be legally
sufficient to enable Oxford to obtain such information as
necessary for Oxford to perform the services under this
Agreement, and to share such information with PA HRM as
provided herein. Both parties shall treat such information
confidentially consistent with applicable laws and
regulations.
3.2(h) Reports. Oxford shall maintain primary responsibility for the
filing of such reports as may be required of Oxford by any
regulatory or accreditation agency having jurisdiction,
including DOH, DPW and DOI.
3.2(i) Statutory Reserve Requirements. Oxford shall have sole
responsibility for compliance with all State and DOI financial
reserve requirements applicable to Oxford and for maintaining
such reserves as are required and necessary to maintain its
HMO license in good standing.
3.2(j) Insolvency Guaranty. Oxford shall have sole responsibility for
providing the DOI with its corporate guaranty of the solvency
of PA HRM throughout the Term of this Agreement. Oxford's
insolvency guaranty shall be in substantially the form of that
guaranty attached hereto as Exhibit 1. Oxford shall advise PA
HRM of any changes in the insolvency guaranty that are made,
for whatever reason, during the Term of this Agreement.
3.3 Management of Provider Network. Oxford shall maintain
responsibility for any revisions to the Oxford Par Provider Agreement and shall
entertain, in good faith, reasonable recommendations made by PA HRM relating to
proposed revisions.
3.4 Network Development and other Network Services.
3.4(a) Oxford shall use its Best Efforts to see that the Oxford
Network shall continue to consist of those Oxford Par
Providers whose Oxford Par Provider Agreements are identified
on that list attached hereto as Exhibit 3.
3.4(b) A Provider who enters into an Oxford Par Provider Agreement
after the Effective Date shall not become or be deemed to be
an Oxford Par Provider until such Provider has satisfied the
Oxford Credentialing process.
3.4(c) Oxford and PA HRM acknowledge and agree that Oxford has
established, operates and maintains a health service delivery
system, quality assurance system, provider relations system,
member grievance system and other systems meeting DOH
standards, and is directly accountable to the DOH for
compliance with the standards and for the provision of
high-quality effective care to Covered Members. Nothing in
this Agreement shall be construed to in any way limit Oxford's
authority or responsibility to timely meet standards or take
prompt corrective action to address a quality of care problem,
resolve a Covered Member grievance or to comply with a
regulatory requirement of the DOH.
3.5 Credentialing of Oxford Par Providers.
3.5(a) Oxford shall continue to be responsible for all Credentialing
of Oxford Par Providers. PA HRM shall accept all Oxford Par
Providers who, in the reasonable judgment of Oxford, meet all
of Oxford's applicable Credentialing Criteria. Oxford shall
continue to list all Oxford Par Providers in Oxford's Par
Provider directories.
3.5(b) Oxford and PA HRM acknowledge and agree that only those
Providers who meet Oxford's Credentialing standards may become
Oxford Par Providers and that ultimate authority to accept
such Providers for participation or to terminate participation
is retained by Oxford. Oxford agrees that PA HRM may select
from among the Providers in the Provider Network only those
Providers with whom PA HRM wishes to work. PA HRM shall not be
obligated to use all Providers under contract to Oxford, but
PA HRM may not terminate a Provider's Agreement without
Oxford's consent. Oxford agrees that, in its role as the HMO,
Oxford will consider recommendations made to it by PA HRM to:
(i) accept a Provider for participation or, (ii) terminate a
Par Provider from participation, but only to the extent that
such recommendation made by PA HRM in that regard would not or
could not, in Oxford's reasonable judgment, constitute or lead
to a violation or breach of any Applicable Law (including any
DOH, DPW or DOI regulation) or any accreditation standard. PA
HRM shall not act in any manner to violate the terms of any
Oxford Par Provider Agreement. Notwithstanding any other
provisions herein to the contrary, Oxford and PA HRM agree
that Oxford's pharmacy benefit management agreement with PCS
shall be terminated on the Effective Date, subject to all
necessary Regulatory Approvals from the State.
3.6 Medical Records.
3.6(a) Oxford shall continue to require that its Par Providers
maintain clear and complete medical records that reflect all
health care services rendered to each Oxford Covered Member,
in accordance with all applicable statutory and regulatory
requirements. Oxford Par Providers shall maintain the
confidentiality of information contained in such medical
records in compliance with all applicable federal and state
laws and regulations regarding the confidentiality of patient
records.
3.6(b) To the extent authorized by Oxford Covered Members and
permitted by Applicable Law, Oxford shall make available to PA
HRM each Oxford Member's medical record information and shall
promptly provide copies of any documents contained therein, if
requested, for the purpose of determining eligibility,
liability, or appropriate care issues or reviewing payments
received by Oxford Par Providers from Covered Members or
others on their behalf. Oxford agrees to allow inspection of
Oxford Covered Members' records to the extent that such
inspection may be required by properly authorized governmental
agencies or accrediting agencies.
3.6(c) Oxford agrees to provide PA HRM and the DOH with access to
medical and other records concerning the provision of services
to Covered Members by and through Oxford and Oxford Par
Providers.
3.6(d) Oxford Par Providers shall maintain medical and other records
for such time periods as required by law or by Oxford's or PA
HRM's risk management policies, whichever is longer.
3.6(e) Oxford and PA HRM agree that any delegation of authority or
responsibility for Provider relations, quality assessment,
utilization review and other functions by Oxford to PA HRM,
shall ultimately be subject to performance monitoring by
Oxford and the DOH and is subject to independent validation by
Oxford, the DOH or an independent quality review/assessment
organization approved by the DOH.
3.7 Member Complaint and Grievance System. Oxford shall develop,
implement and maintain oversight for a complaint and grievance system which
provides for informal settlement of Covered Members' complaints and grievances
at the lowest administrative level, and a formal process for appeal ("Covered
Member Complaint and Grievance System"). The development and implementation of
the Covered Member Complaint and Grievance System shall be in complete
accordance with the requirements of Oxford's HCPH Agreement.
3.8 Provider Appeal Procedures. Oxford shall develop, implement and
maintain oversight for a Provider complaint and appeals system which provides
for informal settlement of Providers' complaints at the lowest level, and a
formal process for appeal ("Provider Complaint and Appeal System"). The
development and implementation of the Provider Complaint and Appeal System shall
be in complete accordance with the requirements of Oxford's HCPH.
3.9 Member Grievances. Oxford shall use its Best Efforts to ensure that
Oxford Par Providers cooperate and abide by the Oxford Covered Member Complaint
and Grievance System in resolving any Oxford Covered Member grievances related
to the provision of services provided pursuant to this Agreement. Oxford shall
notify PA HRM of all Oxford Covered Member complaints brought to the attention
of Oxford and/or Oxford Par Providers. Oxford shall notify PA HRM promptly of
any action taken or proposed with respect to the resolution of such complaints
and the avoidance of similar complaints in the future.
3.10 Transition Plan. Oxford shall cooperate with PA HRM on the
adoption and implementation of a Transition Plan between the execution of this
Agreement and the Effective Date. Both parties shall use their Best Efforts in
meeting all of the objectives and time frames required or contemplated by the
Transition Plan. The Transition Plan shall be in substantially the form of that
attached hereto as Exhibit 4 and made a part hereof. As a condition precedent to
the adoption of the Transition Plan, Oxford shall provide to PA HRM all material
information it has in its possession about the HC Program, including data tapes
of the Oxford claims systems and other systems in a mutually acceptable format.
3.11 Sybase Training. Oxford shall provide PA HRM personnel with
reasonable and necessary training on Oxford's Sybase enrollment system as part
of the Transition Plan.
3.12 Acquisition. Oxford shall acquire no more than an aggregate of
four (4) percent of the outstanding common shares of stock of Health Risk
Management, Inc. ("HRM") without the prior approval of PA HRM's board of
directors.
4 RESPONSIBILITIES OF PA HRM
Beginning on the Effective Date and continuing throughout the Term, PA
HRM shall be responsible for and shall perform those network management, claim
administration, member services, and medical management services relating to the
Oxford Par Providers and Oxford Covered Members as described in this Section 4,
and shall provide all systems necessary for such performance.
4.1 Delivery of Covered Services.
4.1(a) Beginning on the Effective Date, PA HRM shall assume the full
risk and financial responsibility for the medical claim costs
associated with the provision of all Covered Services pursuant
to this Agreement.
4.1(b) Oxford Par Providers shall continue to be expected to provide
Covered Services as and when required in accordance with
general Oxford policies and procedures regarding the provision
of Covered Services generally. Oxford Par Providers shall
continue to be compensated for the provision of such services
in accordance with their Oxford Par Provider Agreement. Oxford
shall not have financial responsibility for the cost of any
medical services from and after the Effective Date subject to
Section 5.
4.1(c) With respect to the provision of Covered Services pursuant to
this Agreement, PA HRM shall, and shall cause each Oxford Par
Provider to:
4.1(c)(i)Adhere to mutually agreed-upon policies and
procedures regarding coverage, referrals and
preauthorization, use Oxford's referral and other
forms, and obtain preauthorization of those Covered
Services for which Oxford as preauthorization
requirements, unless otherwise specifically approved
in writing by Oxford, and to use only selected Oxford
ancillary providers, such as radiology, pharmacy or
specialized laboratory services unless, with respect
to a referral for specific services to a specific
Covered Member, written approval to do otherwise is
first obtained from Oxford. Notwithstanding this
paragraph and any other provision of this Agreement
to the contrary, Oxford and PA HRM agree that
Oxford's pharmacy benefit management program
agreement with PCS shall be terminated on the
Effective Date, and PA HRM shall have the authority
to enter into a similar agreement with ValueRX for
replacement services, subject to all necessary
Regulatory Approvals from the State.
4.1(c)(ii) Ensure that the provision of Covered Services is
not delayed, reduced, denied or otherwise
hindered because of the financial or contractual
relationship between PA HRM and Oxford or between
Oxford or PA HRM and an Oxford Par Provider.
4.2 Medical Management; Additional Network Management Services.
4.2(a) PA HRM shall be responsible for the development and
implementation of a medical management program for review of
Oxford Covered Services utilizing, at a minimum, the standards
of Oxford who shall have oversight responsibility. Standard
Oxford medical management services to be performed by PA HRM
shall include but are not limited to: Utilization Management,
including:
Prospective Review
Concurrent Review
Discharge Planning
Retrospective Review
Development and Establishment of Clinical Protocols
Outcomes Management
Quality Assurance Services, including:
Development and Monitoring of Quality Management Standards
4.2(b) In connection with Oxford's quality management programs, PA
HRM shall conduct among other activities, surveys of Oxford
Members, as contemplated by the HCPH Agreement. PA HRM's
utilization management and quality management personnel may
visit Oxford Members admitted to or receiving services from
Oxford Par Providers and Oxford Non Par Providers and to the
extent consented to by the Oxford Member and permitted by
Applicable Laws, may inspect and copy, for quality assurance
purposes, health records (including medical records) of Oxford
Members maintained by Oxford Par Providers.
4.2(c) In performing its medical management responsibilities, PA HRM
shall comply with all standards and requirements of the DOH,
NCQA (as applicable to the HCPH Agreement or required under
other Oxford programs by the State), and other applicable
regulatory or accreditation agencies, as amended from time to
time, including but not limited to the confidentiality of
medical records. PA HRM also shall be responsible for the
development and implementation of a network management program
for review and management of the Oxford Provider Network
utilizing, at a minimum, the standards of Oxford, who shall
have oversight responsibility. Network management services to
be performed by PA HRM shall include but not be limited to:
Establishment of Provider Reimbursement Methodologies
Network Performance Review and Management
Network Development and Maintenance
Provider Relations
Provider Relations and Staff Training
4.2(d) Development of Performance Criteria. The most current version
of HEDIS, or other measurement acceptable to the DPW, shall,
where required by the HCPH Agreement, be utilized by Oxford
and PA HRM as the minimum performance criteria for the
services contemplated in this Agreement. PA HRM shall use its
Best Efforts to implement and adhere to such performance
criteria to the fullest extent reasonable and within PA HRM's
control. The parties shall use standard Member surveys, on a
basis not more frequently than quarterly, for the purpose of
determining Member satisfaction with the PA HRM services. The
parties shall consult from time to time as necessary in order
to resolve any issues arising in connection with performance
criteria and/or Member satisfaction. PA HRM agrees to meet all
HEDIS reporting requirements, if applicable to Medicaid
programs or required under other Oxford programs by the State.
4.2(e) Provider Relations. PA HRM shall assure that provider
relations are managed to assure competent operation of the HC
Program. PA HRM may select from among the Providers in the
Provider Network only those Providers with whom PA HRM wishes
to work. PA HRM shall not be obligated to use all Providers
under contract to Oxford, but PA HRM may not terminate a
Provider's Agreement without Oxford's consent. PA HRM shall
not act in any manner to violate the terms of any Oxford Par
Provider Agreement. PA HRM shall be authorized to enter into a
pharmacy benefit management program agreement with ValueRX on
or after the Effective Date to replace the existing agreement
with PCS, subject to all required Regulatory Approvals from
the State.
4.3 Member Hold Harmless. PA HRM and Oxford agree that in no event,
including without limitation, Oxford's insolvency, PA HRM's insolvency, or
breach of this Agreement, shall PA HRM or Oxford ▇▇▇▇, charge, collect a deposit
from, seek compensation from, or otherwise have any recourse against a Covered
Member for Covered Services. This Section 4.3 shall not prohibit collection of
Covered Member deductibles or copayments (if permitted under the HC Program) or
coordination of benefits, subrogation payments for services other than Covered
Services, or other payments by other insurers or plans. PA HRM further agrees
that: (i) this provision shall survive the termination of this Agreement
regardless of the cause and shall be construed to be for the benefit of Covered
Members; and (ii) this provision supersedes any oral or written agreement now
existing or hereafter entered into between Oxford and Oxford Par Providers,
Covered Members, or persons acting on their behalf. Any modification, additions,
or deletions to the provisions of this Section shall become effective on a date
no earlier than the later of: (i) 15 days after the DOI, DPW and the DOH have
received written notice of such proposed changes; or (ii) the first date on
which PA HRM and Oxford have obtained all requisite Regulatory Approvals for
such change. The provisions of this Section shall be binding on all Oxford Par
Providers, PA HRM and Oxford.
Each Oxford Par Provider Agreement shall contain a "hold harmless"
provision, consistent with the provisions of this Section, to the effect that in
no event, including without limitation, the insolvency of Oxford or PA HRM,
shall Oxford or PA HRM or any Oxford Par Provider ▇▇▇▇, charge, collect a
deposit from, or otherwise have any recourse against any Covered Member for
payment of Covered Services. The foregoing shall not preclude the collection by
Oxford Par Providers of deductibles and copayments or payments for services
other than Covered Services from Covered Members as permitted under the
applicable Oxford Plan and applicable HC Program provisions.
4.4 Insurance.
4.4(a) Stop Loss Insurance. PA HRM shall purchase and maintain in
force during the term of this Agreement insurance to cover PA
HRM's medical cost aggregate exposure above a level
established by the parties from time to time (see Exhibit 2,
II, (b)) on a Covered Member per month basis as a percentage
of total DPW compensation for the period beginning as of the
Effective Date and ending December 31, 1998, and for each
calendar year thereafter during the term of this Agreement.
This stop loss insurance shall cover PA HRM and Oxford from
risk of excess medical costs and will also protect Oxford from
losses flowing through PA HRM to Oxford. PA HRM shall notify
Oxford immediately if said coverage has terminated or will
terminate. Failure to maintain said coverage constitutes a
material breach of this Agreement. Such coverage shall be with
a carrier acceptable to Oxford. PA HRM shall provide evidence
acceptable to Oxford that such coverage will be in force on
the Effective Date.
4.4(b) Professional Liability Insurance. PA HRM will maintain a
minimum of $10 million of insurance coverage during the term
of this Agreement to cover general and utilization management
and claim administration; professional liability and errors
and omissions risks. Such coverage shall be with a carrier
acceptable to Oxford. PA HRM shall provide evidence acceptable
to Oxford that such coverage will be in force on the Effective
Date.
4.5 Data Collection and Reporting.
4.5(a) PA HRM shall comply with data reporting requirements,
including encounter, utilization (including maternity
services) and reimbursement methodology required by the DOH.
PA HRM shall generate, in a format suitable for submission to
appropriate regulatory authorities, all reports necessary to
administer and operate the HPCH Agreement.
4.5(b) PA HRM agrees to collect and provide Oxford with utilization,
financial and other data for the purposes of comparative
performance analysis of Oxford and PA HRM effectiveness.
4.6 Processing and Payment of Certain Claims; Reports. PA HRM shall
process all Covered Member claims and pay approved claims in accordance with PA
HRM claims processing and payment procedures (including PA HRM's share under
Sections 5.15, 5.16, 5.17 and 5.18), which procedures shall be subject to Oxford
approval and shall comply with all requirements of the HCPH Agreement. PA HRM
shall administer and pay all capitated contracts, including but not limited to
vision, dental, pharmacy and DME. PA HRM shall produce on behalf of Oxford
utilization and cost reports necessary for Oxford to perform services under this
Agreement pertaining to Covered Members.
4.7 Deposit and Disbursement of Funds. PA HRM, shall open and maintain
separate bank accounts to administer the funds under this Agreement and shall
deposit in such bank accounts all DPW receipts and monies as are required under
this Agreement. PA HRM shall pay all expenses and bank charges related to said
accounts and shall be entitled to all investment income therefrom.
4.8 Collection of Coordination of Benefit Amounts. After the Effective
Date, PA HRM shall use its Best Efforts to collect on behalf of Oxford amounts
due Oxford under coordination of benefits ("COB") or subrogation provisions in
Oxford Plans or otherwise, including, but not limited to, workers' compensation,
SSI and Medicare.
4.9 Access; Maintenance of Records. PA HRM shall maintain on behalf of
Oxford all necessary and appropriate records relating to this Agreement
(including, without limitation, monthly claims reports and other records
relating to claims for Covered Services and other benefits under Oxford Plans)
and, subject to Applicable Law (including anti-trust restrictions), Oxford shall
have the right to inspect, audit, and duplicate those records upon reasonable
notice during regular working hours.
4.10 Accounting Records. PA HRM, in accordance with the policies,
procedures and guidelines established by Oxford, shall direct and maintain on
behalf of Oxford suitable accounting records for Oxford and shall cause to be
prepared for Oxford financial statements as follows:
4.10(a) 10 days after the close of each month, a balance sheet and a
related statement of revenue and expenses showing the results
of PA HRM operations for the preceding month and of the fiscal
year to date;
4.10(b) 90 days after the close of the fiscal year, a balance sheet
and related statement of revenue and expenses showing the
results of PA HRM's operations during that fiscal year,
audited by a mutually acceptable independent certified public
accounting firm.
4.11 Management Information. PA HRM, upon consultation with and at the
reasonable direction of Oxford, shall prepare on behalf of Oxford timely
management information reports sufficient to support the operations of Oxford
and to carry out the terms of this Agreement. PA HRM at the reasonable direction
of Oxford, shall design, institute, supervise, and from time to time revise and
amend such management and information reports as it prepares. PA HRM shall
immediately notify Oxford of any regulatory issues or deficiencies of which it
becomes aware.
4.12 Contractual Undertakings. PA HRM, in accordance with the
reasonable policies, procedures and guidelines established by Oxford, shall
negotiate and enter into such agreements as it may deem necessary or advisable
for the furnishing of office space, personnel, utilities, services, concessions
and supplies for the maintenance and operation of PA HRM, including the
rendering of the services contemplated by this Agreement.
Oxford shall not be liable for any such undertaking.
4.13 Premium Allocation. Each month during the Term, PA HRM shall
perform any required ▇▇▇▇▇▇▇▇, and allocate all collected premiums between the
parties in a manner to be agreed upon and specified in the Transition Plan.
4.14 Member Services. PA HRM shall assume full responsibility for the
member services that are required under the HC Program and Oxford standards and
policies.
4.15 Appeals and Grievances. PA HRM shall cooperate with and assist
Oxford in processing and resolving all member appeals pursuant to Oxford's
Member Complaint and Grievance System and assume responsibility for the Member
Complaint and Grievance System as permitted by Pennsylvania Code.
4.16 Systems Maintenance and Training. PA HRM shall provide all systems
necessary for the delivery of services pursuant to this Agreement, and shall
also provide Oxford with any necessary training on PA HRM's enrollment system
during the conversion from Oxford's Sybase system.
5 MUTUAL RESPONSIBILITIES OF THE PARTIES
During the Term, Oxford and PA HRM shall be mutually responsible and
perform those services described in this Section 5.
5.1 Changes and Revisions to Benefit Plan. Initially, the Oxford
Covered Services shall consist of those Covered Services described in the Oxford
Plans. PA HRM and Oxford may change Oxford's Covered Services during the Term to
maintain compliance with Applicable Law or to satisfy Oxford's and PA HRM's
mutual objectives, as reasonably necessary due to changes in market conditions
or DPW directives. In the event of any such material change which is not
appropriately reflected in the premiums related thereto, PA HRM and Oxford will
seek to negotiate an adjustment to the payments made pursuant to Exhibit 2.
To the extent practicable, Oxford shall provide at least 30 days
advance written notice to PA HRM of any proposed material changes in Oxford
Covered Services or in the copayments or conditions of coverage applicable
thereto (but in the case of changes resulting from regulatory filings by Oxford
with the DOH, the DPW or the DOI, not later than the date such filing is made).
Such changes shall be reflected in the premium rates filed with the DPW for
approval in accordance with Sections 5.2 & 5.14 below. In the event of such
change in Oxford Covered Services, if either party deems the change to require a
modification in the allocation of premiums established pursuant to Section 6
hereof, the party requesting such change shall notify the other party in writing
of such request as soon as practicable but in no event later than 30 days after
the notice of the proposed change. If no agreement is reached within 60 days
after notice of the change, the issue shall be submitted to dispute resolution
in accordance with Section 9 below.
5.2 Premiums. Oxford and PA HRM shall exercise joint responsibility for
the bidding, negotiation and establishment of premium rates with the DPW and
shall jointly file such premium rates and forms with the DOI and attend to any
matters relating thereto or bearing thereon.
5.3 Regulatory Compliance. Oxford and PA HRM shall be jointly
responsible for general, ongoing regulatory compliance with the rules and
regulations of the DOI, DPW and DOH, and for compliance with the requirements of
the Pennsylvania Secretary of State as such requirements may relate to this
Agreement.
5.4 Regulatory Reporting Requirements. Oxford and PA HRM shall be
jointly responsible for compliance with all regulatory reporting requirements,
including, but not limited to, those of DOI, DPW and DOH.
5.5 Network Development and Provider Contracting. Beginning on the
Effective Date, Oxford and PA HRM shall be jointly responsible for the continued
development and maintenance of the Oxford Network as an appropriate Provider
network to timely and efficiently provide Oxford Covered Services to Oxford
Covered Members. Oxford and PA HRM shall also be jointly responsible for all
provider contracting. Oxford and PA HRM shall use their Best Efforts to
appropriately size the Oxford Provider Network as required to maintain Oxford's
financial integrity and to provide quality, accessible care to Oxford Covered
Members. Oxford and PA HRM shall, at a minimum, maintain the Oxford Network in
accordance with joint minimum staffing and composition requirements and the
regulatory requirements of the DOH, DPW and the DOI, and HCFA requirements for
Medicaid Programs.
5.6 Provider Contracts. New Oxford Par Provider Agreements entered into
with Providers by Oxford and PA HRM shall be in the appropriate (based upon the
Provider type) form with only such changes as are approved in advance by PA HRM
and Oxford.
5.7 Annual Budget and Business Plan. Oxford and PA HRM shall have joint
responsibility for the preparation (and regulatory filing, if required) of an
annual budget for the operation of the Oxford HealthChoices Program. The parties
shall also cooperate in the creation and/or revision of a business plan relating
to Oxford's HealthChoices Program.
5.8 Expansion of Oxford's Service Area. Oxford and PA HRM shall review
any proposal by either party to extend the Oxford HMO license into new service
areas in Pennsylvania. Where PA HRM requests Oxford to extend the existing
Oxford service area and Oxford concurs (which shall not be unreasonably
withheld), Oxford will use its Best Effort to do so and PA HRM will reimburse
Oxford for all reasonable costs associated with such effort, whether or not such
effort is ultimately successful.
5.9 Parties Not Engaged in Practice. Neither PA HRM nor Oxford engages
in the performance of medical or hospital services or other types of health care
and nothing in this Agreement shall be construed to imply that PA HRM or Oxford
have been retained to diagnose or treat Covered Members or are otherwise engaged
in the practice of medicine or other professions related thereto. All matters
related to such fields shall be the exclusive province of Oxford Par Providers
and Oxford Non Par Providers and their respective staffs, agents, and employees.
The parties acknowledge and agree that the utilization management services to be
provided by PA HRM are not intended to interfere with the physician-patient
relationship between Oxford's Par Providers and the Covered Members whom they
treat. Recommendations made by PA HRM are not controlling or binding upon Oxford
or its Par Providers in reaching decisions concerning the existence or extent of
benefit coverage available to Covered Members. Decisions to provide treatment
that has not been recommended by PA HRM remain with the attending physician and
the Covered Member, and the decision to pay for such treatment remains with
Oxford.
5.10 Employees; Space; Physical Assets.
5.10(a) Oxford and PA HRM each assume sole responsibility for the
hiring, training, and evaluation of, and all other personnel
matters (including assignment, removal, reassignment) with
respect to, their respective employees including, but not
limited to, those employees who are assigned to work in
conjunction with the other party's employees/agents.
5.10(b) PA HRM shall have no obligation to assume the current Oxford
Medicaid staff, space or physical assets. However, PA HRM does
intend to evaluate the staff of Oxford and its space and
physical assets at the outset of this Agreement and reserves
the right, subject to Oxford approval, to hire any staff,
sublease any space, and purchase any assets that PA HRM deems
appropriate to conduct the services covered by this Agreement.
Any staff, space or assets not acquired by PA HRM remain the
liability of Oxford. In the course of PA HRM's evaluation and
staffing, qualified Oxford employees, as reasonably determined
by PA HRM, shall be given access to similar positions created
as a result of this Agreement.
5.10(c) During the Term and for one year thereafter, PA HRM and Oxford
shall not directly or indirectly employ, or offer or promise
to offer or otherwise solicit for employment, or induce the
termination of employment of, employees or former employees of
the other party hereto or employees or former employees of any
Affiliate of such party without such party's prior written
consent. This provision shall not apply to PA HRM's retention
of some or all of Oxford's Philadelphia staff at the outset of
this Agreement, as provided for in Section 5.10(b) above.
5.11 Confidentiality and Non-Disclosure. The terms of this Agreement,
including in particular the provisions hereof regarding compensation, as well as
discounts, financial arrangements, and other non-public information and data
relating to this Agreement and the transactions contemplated herein are
confidential and shall not be disclosed by either party except as required in
the performance of this Agreement or as required by law.
5.12 Compliance with Applicable Law. Both Oxford and PA HRM shall
comply with all Applicable Law in the performance of their obligations
hereunder. No regulatory order or requirement of the DOI, DOH, or DPW is subject
to arbitration between the parties.
5.13 SERB Program Management. Oxford and PA HRM shall have joint
responsibility for the management of the Socially and Economically Restricted
Businesses ("SERB") Program established by Oxford and both parties shall work
together to satisfy any regulatory compliance requirements or issues.
5.14 Cooperation; Representatives of the Parties. The parties
acknowledge that the successful implementation of this Agreement and the
successful consummation of the transactions contemplated herein are dependent on
close cooperation between the personnel of both parties. PA HRM and Oxford shall
each appoint a representative to serve as liaison to the other party. PA HRM and
Oxford shall not interfere with each other's performance of their respective
obligations under this Agreement and shall take all reasonable actions requested
by the other party in connection with the transactions contemplated herein.
5.15 Maternity Care. Consistent with the payment scheme set forth in
Section 8 of Oxford's HCPH Agreement, if a birth or other second or third
trimester pregnancy outcome, other than an elective abortion, occurs before the
Effective Date, Oxford shall remain responsible for, and pay, the medical claim
cost incurred by a Covered Member for inpatient hospital expenses for maternity
care, notwithstanding the fact that the maternity care, including the inpatient
hospital stay, began prior to the Effective Date of this Agreement but extended
beyond the Effective Date. Pursuant to Section 8 of the HCPH Agreement and this
Agreement, Oxford shall be entitled to the one-time maternity care payment made
by the DPW for each such maternity case.
Likewise, if the birth or other second or third trimester pregnancy
outcome, other than an elective abortion, occurs on or after the Effective Date,
PA HRM shall be entitled to the one-time maternity care payment made by the DPW
pursuant to Section 8 of the HCPH Agreement for such a maternity case, and PA
HRM shall be responsible for, and pay, the medical claim costs incurred by a
Covered Member for inpatient hospital expenses for maternity care,
notwithstanding the fact that the maternity care, including the inpatient
hospital stay, began prior to the Effective Date and extended beyond the
Effective Date.
5.16 Hospital Stays Beginning Before and Ending After the Effective
Date. With respect to non-maternity inpatient hospital stays, Oxford shall
remain responsible for, and pay the medical claim costs associated with any and
all expenses for services which a Covered Member received during that segment of
an inpatient hospital stay which precedes the Effective Date, even though such
stay extends beyond the Effective Date.
With respect to non-maternity inpatient hospital stays, PA HRM shall be
responsible for, and pay, the medical claim costs associated with any and all
expenses for services which a Covered Member receives during that inpatient
hospital stay from and after the Effective Date of this Agreement, even though
the hospital stay may have begun prior to the Effective Date.
5.17 Hospital Services Scheduled After the Effective Date. Oxford shall
remain responsible for the payment of any and all Covered Services approved by
Oxford prior to the Effective Date but scheduled for delivery after the
Effective Date, unless such services are reviewed and re-approved by PA HRM
prior to the Effective Date, in which case PA HRM shall be responsible for, and
pay, the medical claim costs associated with any and all expenses for such
re-approved Covered Services from and after the Effective Date. Four (4) weeks
prior to the Effective Date, PA HRM shall assign a reviewer(s) to Oxford to
approve or to re-approve Medical Necessity determinations on cases where
services are scheduled to be delivered after the Effective Date. If PA HRM and
Oxford agree on the Medical Necessity determinations for such cases, Oxford
shall be relieved of its payment obligations under this paragraph on and after
the Effective Date for medical costs relating to such pre-approved cases. Any
services Oxford has authorized that extend into the service period for which PA
HRM will be responsible will be identified by Oxford on a patient list delivered
during the four (4) week period prior to the Effective Date. This is expected to
involve such things as prior authorized pregnancies, multiple therapy sessions,
transplants to be occurring in the future, etc. The parties will agree to
resolve any differences between them regarding Medical Necessity issues.
5.18 All Other Covered Services. With respect to all other Covered
Services not specifically addressed in Sections 5.15, 5.16 and 5.17 above, the
parties agree that the Effective Date shall control. Oxford shall be responsible
for the payment of all claim costs for any and all expenses relating to Covered
Services delivered prior to the Effective Date.
PA HRM shall be responsible for the payment of all claim costs for any
and all expenses relating to Covered Services delivered during the term of this
Agreement beginning on the Effective Date.
6 FINANCIAL TERMS AND COMPENSATION
6.1 COMPENSATION:
Oxford's and PA HRM's compensation for services after the Effective
Date shall be as set forth on Exhibit 2, which is attached hereto and
incorporated herein by reference.
7 EXCLUSIVITY
Oxford engages PA HRM exclusively to provide management services for
the HC Program within the Commonwealth of Pennsylvania. During the Term, Oxford
shall not contract with any third party to provide management services within
Pennsylvania under any of the Oxford Plans without the approval of PA HRM. PA
HRM agrees not to contract with the DPW as an HMO during the first two years of
this Agreement; provided, however, that PA HRM may contract with DPW during that
two-year period for the delivery of services related to non-HMO businesses. Any
contract between PA HRM and DPW shall not be grounds for termination of this
Agreement. During the term of this Agreement, PA HRM agrees not to become
licensed as a Medicare or commercial HMO in the original, (five county) Oxford
Service Area.
8 TERM OF AGREEMENT
8.1 Five (5) years, commencing on the Effective Date. Beginning April
1, 2003, the Agreement will automatically renew for successive twelve (12) month
terms, commencing April 1 each calendar year, unless either party gives written
notice to the other of its intent to terminate no later than one hundred eighty
(180) days prior to the end of the initial term or any renewal term.
The parties will mutually agree to proceed each year with the Medicaid
business in Pennsylvania. If they agree not to participate, this Agreement will
remain in force with no activity.
8.2 Termination.
This Agreement shall be terminated upon the occurrence of any of the
following events:
(a) Expiration of the initial term or any renewal term following
the proper notice.
(b) Material adverse change caused by DPW in the contract between
Oxford and DPW, which significantly impairs a party's ability
to perform its responsibilities under this Agreement between
Oxford and PA HRM, or termination of the DPW contract with
Oxford. Examples of "material adverse change" are significant
decreases in premium (e.g., carve out) or significant increase
in covered services.
(c) A material breach of a material term of this Agreement between
PA HRM and Oxford or of the contract between Oxford and DPW,
including, but not limited to, termination of that contract
due to Oxford's loss of its Pennsylvania HMO license, or due
to a material breach caused by PA HRM or Oxford.
(d) In the event that three percent (3%) of the annual aggregate
DPW premium falls below Two Million Five Hundred Thousand
Dollars ($2,500,000) in any year during the term of this
Agreement.
(e) The inability of PA HRM to maintain the levels of any of the
insurance or reinsurance coverages required by this Agreement.
(f) Material adverse change in the financial condition of either
Oxford or PA HRM. Each party shall notify the other
immediately if it appears that it is, or is likely to become,
insolvent. Insolvency shall not be eligible for cure, as
described below.
(g) The assignment of this Agreement by PA HRM without the
required prior written consent to such assignment by Oxford or
its successors or assigns.
(h) Nothing in this Agreement shall prohibit Oxford from
terminating all HMO business in Pennsylvania. In the event
that Oxford, or its successors or assigns, decides to
terminate all of its HMO business in Pennsylvania without
selling, assigning or otherwise transferring the same to a
third party as permitted under Section 10.1(c) of this
Agreement, PA HRM shall have an option to purchase all of the
issued and outstanding shares of stock of Oxford Health Plans
(PA), Inc. at its then current fair market value upon such
terms and conditions as the parties shall then agree upon,
provided that PA HRM is not then in default under Sections
8.2(a) through 8.2(g) above. PA HRM's exercise of its purchase
option under this Section 8.2(h) shall be subject to all
appropriate Regulatory Approvals. If PA HRM chooses not to
exercise this option, Oxford, or its successors or assigns,
may proceed to terminate the HMO business in Pennsylvania, in
which case this Agreement will terminate.
In the event that either party wishes to terminate this Agreement
pursuant to Section 8.2, the parties agree that the following procedures will be
followed. The party seeking to terminate must provide written notice of the
claimed event of default with sufficient factual detail to permit the other
party to clearly identify and investigate the claimed event of default. If the
recipient of the notice does not respond within thirty(30) days of the date of
notice with a written explanation of cure or a written rebuttal of the claimed
event of default, this Agreement will terminate sixty(60) days from the date of
the original notice. If such a written explanation of cure or written rebuttal
has been provided within the specified period, but such event of default has not
been cured within sixty (60) days of the original notice, or, if the breaching
party fails to diligently proceed to cure such event of default within a
reasonable period of such notice, this Agreement will terminate sixty (60) days
from the date of the original notice. Disputes as to the existence of an event
of default or the sufficiency of cure shall be submitted for independent third
party mediation pursuant to Section 9 below.
If either party terminates this Agreement pursuant to this Section 8.2,
PA HRM shall, upon such termination, provide administrative services to Oxford
to administer the services under this Agreement for a period, determined by
Oxford, but not to exceed one hundred fifty (150) days, at the rate of $20.00
per Covered Member per month.
8.3 Post-Termination Treatment Obligation. Notwithstanding any other
provision of this Agreement, upon termination of this Agreement, Oxford shall,
and shall cause Oxford Par Providers to: (i) continue to provide Covered
Services for the duration of the period for which a premium has been paid to
Oxford by, or on behalf of, Covered Members; and (ii) cause continued provision
of services to Covered Members as Medically Necessary, and, subject to Sections
5.15, 5.16, 5.17 and 5.18. Oxford shall pay for such continued treatment at its
then standard payment rates or according to other terms mutually agreed to by
the parties.
8.4 Indemnification. Each party shall indemnify, defend, and hold the
other party harmless from and against and in respect of any and all third party
claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies, including interest, penalties and reasonable
attorneys' fees, that the party to be indemnified shall incur or suffer, which
arise, result from, or relate to any negligent acts or omissions or intentional
or unlawful misconduct by the indemnifying party, or any of its agents,
employees or subcontractors, in the performance of any of its responsibilities,
warranties, covenants, or agreements in this Agreement, or in any schedule,
certificate, exhibit or other instruments furnished or to be furnished under
this Agreement. Oxford shall further indemnify, defend and hold PA HRM harmless
from and against any liability or claim arising from the operation of the HC
Program prior to the Effective Date.
9 DISPUTE RESOLUTION
9.1 Disputes Relating to Regulatory Compliance.
9.1(a) In the event that a dispute or disagreement should arise
between Oxford and PA HRM regarding any of the network
management, provider management or medical management services
being performed by PA HRM pursuant to this Agreement which, in
Oxford's judgment, raises compliance issues for Oxford under
any Applicable Law or accreditation criteria (such as NCQA
standards), Oxford shall notify PA HRM of its concerns, and PA
HRM shall have 30 days, or such less time as may then be
required by a particular regulatory or accrediting agency, or
other governmental body with appropriate authority, to address
and resolve the concern(s), to the satisfaction of Oxford or
the applicable regulatory or accrediting agency, as the case
may be, or Oxford shall have the authority to address and
resolve such concern(s) in the name of PA HRM in a manner that
satisfies the regulatory or accreditation concerns.
9.2 Disputes Not Relating to Regulatory Compliance
9.2(a) Mediation/Arbitration. The parties shall in good faith attempt
to resolve any controversy, dispute or disagreement arising
out of or relating to this Agreement, or the breach thereof,
by negotiation. If any such controversy, dispute or
disagreement is not resolved by negotiation within ten (10)
days of arising, then that controversy, dispute or
disagreement shall be submitted to mediation which shall be
conducted in Philadelphia, Pennsylvania in accordance with the
rules and procedures for mediation adopted by Endispute or
other mediation mutually agreed to by the parties. If the
controversy, dispute or disagreement is not resolved by
mediation within thirty (30) days of submission to mediation,
the parties may mutually agree to submit the controversy,
dispute or disagreement to arbitration in accordance with the
rules and procedure for arbitration adopted by Endispute. Any
arbitration award will be final and binding upon the parties,
and a judgment enforcing such award may be entered in any
court of competent jurisdiction. If the controversy, dispute,
or disagreement is not resolved by mediation and the parties
do not agree to submit the matter to arbitration, then the
parties shall be entitled to pursue their respective legal and
equitable remedies in a court having appropriate jurisdiction.
In no event will either party to this Agreement be liable to
the other party for special, indirect, incidental,
consequential, exemplary or punitive damages which the other
party may incur or experience on account of any breach of this
Agreement. This provision shall not be interpreted as
prohibiting indemnification for such damages incurred by a
third party.
9.2(b) Expenses of Mediation/Arbitration. Except as otherwise may be
provided in this Agreement, the expenses of mediation and
arbitration, if agreed to, will be borne equally by the
parties, provided that each party will bear the cost of its
own experts, evidence and attorneys' fees, except that, in the
discretion of the arbitrator, any award in arbitration may
include attorneys' fees if the arbitrator expressly determines
that the party against whom such an award is entered has
caused the dispute to be submitted to arbitration in bad faith
or as a dilatory tactic. No mediation or arbitration will be
commenced after the date when institution of legal or
equitable proceedings based upon the same subject matter would
be barred by the applicable statute of limitations. Each party
will bear its own expenses incurred in pursuing its legal and
equitable remedies.
10 MISCELLANEOUS
10.1 Entire Agreement; Amendment; Assignment.
10.1(a) This Agreement, including all Exhibits and Schedules hereto,
contains the entire agreement between the parties relating to
the subject matter herein and all prior proposals, discussions
and writings by and between the parties and relating to the
subject matter herein are superseded hereby.
10.1(b) None of the terms of this Agreement may be amended unless such
amendment is in writing and signed by all parties hereto, and
recites specifically that it is an amendment to the terms of
this Agreement. Notwithstanding the foregoing, Exhibits and
Schedules hereto may be amended from time to time by either
handwritten amendments directly thereon or preparing amended
and restated Exhibits or Schedules; provided, however, that no
such amendment shall be effective unless and until such
handwritten change or restated Exhibit or Schedule has been
initialed in writing by an authorized representative of PA HRM
and Oxford and a true copy delivered to each of PA HRM and
Oxford.
10.1(c) In the event there is a merger, consolidation or change of
control of Oxford, this Agreement shall be assigned to
Oxford's successor and this Agreement shall continue to be
binding upon and inure to the benefit of PA HRM and Oxford and
Oxford's successors and assigns. In addition to the above, in
the event Oxford decides to sell or effectively transfer its
Pennsylvania HMO business to a third party, which is not an
Affiliate, PA HRM shall be given a reasonable opportunity to
make a proposal for the purchase of the Pennsylvania HMO or
its business, notwithstanding PA HRM's rights in connection
with any assignment under this Section 10.1(c), provided that
PA HRM is not then in default under Sections 8.2(a) through
8.2(g) of this Agreement. Any such purchase shall be subject
to all appropriate Regulatory Approvals. This obligation shall
be binding upon Oxford's successors and assigns, as set forth
above.
10.1(d) In the event there is a merger, consolidation or change of
control of PA HRM or its parent corporation, Health Risk
Management, Inc., this Agreement may be assigned by PA HRM
only with the prior written consent of Oxford or its
successor, which consent shall not be unreasonably withheld.
If Oxford or its successor consents to such an assignment,
this Agreement shall continue to be binding upon and inure to
the benefit of PA HRM's successor and Oxford or its successor.
If Oxford's consent is not obtained for such an assignment,
Oxford shall have the option to terminate this Agreement under
Section 8.
10.1(e) No other assignment of this Agreement is permitted without the
prior written consent of the non-assigning party. Such consent
shall not be unreasonably withheld.
10.2 Waiver. No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instruments given in connection with or pursuant to this Agreement shall impair
any such right, power or privilege or be construed as a waiver of any event of
default hereunder or any acquiescence therein. No single or partial exercise of
any such right, power or privilege shall preclude the further exercise of such
right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
10.3 Severability. In the event that either: (i) a court of competent
jurisdiction holds that a particular provision or requirement of this Agreement
is in violation of any Applicable Law; or (ii) the parties are definitively
advised by the DOH, the DPW, the DOI or other government agency which has
jurisdiction that a feature or provision of this Agreement violates laws or
regulations over which such department or agency has jurisdiction, then each
such provision, feature or requirement shall be fully severable and: (i) this
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part hereof; (ii) the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the severable provision; and (iii) the parties shall in good faith
negotiate and substitute a provision similar in terms to such severable
provision as may be possible and still be legal, valid and enforceable.
10.4 Governing Law. This Agreement is deemed to have been entered into
in the Commonwealth of Pennsylvania and its interpretation, its construction,
and the remedies for its enforcement or breach are to be applied pursuant to and
in accordance with the laws of the Commonwealth of Pennsylvania (excluding the
choice of law rules thereof).
10.5 Headings. Article, section and subsection headings contained in
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
10.6 Notices. All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be hand
delivered (including delivery by courier or overnight delivery service), mailed
by first-class, registered or certified mail, return receipt requested, postage
prepaid, telegram, telex, or facsimile transmission, addressed as follows:
If to PA HRM: Pennsylvania HRM, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
Attn.: Chief Financial Officer
If to Oxford: Oxford Health Plans (PA), Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request, or communication which shall be mailed,
delivered or transmitted in the manner described above shall be deemed
sufficiently given, served, sent or received for all purposes at such time as it
is delivered to the addressee with the return receipt, the delivery receipt, the
affidavit of messenger or (with respect to a telex) the answer back being deemed
conclusive, but not exclusive, evidence of such delivery or at such time as
delivery is refused by the addressee upon presentation.
10.7 Force Majeure. Neither party shall be held responsible for any
delay or failure in performance under this Agreement arising out of any cause
beyond its control or without its fault or negligence. Such causes may include,
but are not limited to damage or destruction of its equipment, software or data,
interruption of communication or computer service, fires, floods, strikes,
embargoes, shortages of supplies or raw materials or components or finished
goods, acts of God, labor problems, power outages and blackouts, or national
disasters.
10.8 Additional Action and Documents. Each of the parties hereto hereby
agrees to take or cause to be taken such further actions, to execute, deliver
and file or cause to be executed, delivered and filed such further documents and
instruments as may be necessary or as may be reasonably requested in order to
fully effectuate the purposes, terms and conditions of this Agreement.
10.9 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and, subject to Section 10.1 (c)-(e) above,
their successors and assigns.
10.10 Survival. Termination of this Agreement shall not terminate those
obligations and rights of the parties that have arisen from performance during
the Term, or that by their express terms are intended to survive, and such
rights, obligations and provisions shall survive the termination of this
Agreement.
10.11 Construction. Each party hereto hereby acknowledges that it was
represented by counsel and participated equally in the drafting and negotiation
of this Agreement and that, accordingly, no court construing this Agreement
shall construe it more stringently against one party than against the other.
10.12 Cooperation; Approvals. The parties shall cooperate with each
other and their respective affiliates to effectuate the purposes, terms, and
conditions of this Agreement. Whenever this Agreement contemplates or requires
the consent or approval of a party hereto, such consent or approval shall not be
unreasonably withheld or delayed.
10.13 Execution in Counterparts. To facilitate execution, this
Agreement may be executed in as many counterparts as may be required. All
counterparts shall collectively constitute a single agreement. It shall not be
necessary in making proof of this Agreement to produce or account for more than
a number of counterparts containing the respective signatures of, or on behalf
of, all of the parties hereto.
10.14 Facsimile Signatures. Original signatures of the parties hereto
on copies of this Agreement, transmitted by facsimile, shall be deemed originals
for all purposes hereunder, and such copies shall be binding on the parties
hereto.
10.15 Corporate Authority. The parties represent that the individuals
signing this Agreement on behalf of the parties have all requisite corporate
authority to execute this Agreement and to bind the respective parties.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed in its name and on its behalf, on the date first
indicated above.
Oxford Health Plans (PA), Inc. Oxford Health Plans, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Pennsylvania CEO Title: CEO
Date: February 24, 1998 Date: February 24, 1998
Pennsylvania HRM, Inc. Health Risk Management, Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D. By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
▇▇▇▇ ▇. Mc Ilroy, M.D. ▇▇▇▇ ▇. Mc Ilroy, M.D.
Title: President/Secretary Title: Chairman/CEO
Date: February 24, 1998 Date: February 24, 1998
The following exhibits to the Management Services Agreement are not being
filed herewith but will be provided to the Commission upon request:
Exhibit 1 - Guaranty
Exhibit 2 - Financial Terms & Compensation
Exhibit 3 - List of Oxford Par Provider Agreements
Exhibit 4 - Transition Plan