"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."
IPA MEDICARE SHARED RISK SERVICES AGREEMENT
BETWEEN
PACIFiCARE OF CALIFORNIA
AND
PROSPECT MEDICAL GROUP, INC.
PACIFICARE
IPA MEDICARE SHARED RISK SERVICES AGREEMENT
THIS IPA MEDICARE SHARED RISK SERVICES AGREEMENT is made and entered
into this first day of July 1, 1996, by and between PACIFICARE, INC.
("PacifiCare"), a California corporation, and Prospect Medical Group, Inc.
("IPA"), with reference to the following facts:
A. PacifiCare operates a prepaid medical service plan which
arranges for certain Health Care Services to be provided to persons eligible to
receive benefits who are enrolled as Subscribers in the Secure Horizons Medical
and Hospital Plan in a manner consistent with the laws of the United States and
the State of California.
B. PacifiCare desires to provide a quality direct service prepaid
health delivery system which maximizes the utilization of innovative methods to
promote the efficient, economical delivery of health care, and to develop and
implement programs of health education and health maintenance for its
Subscribers.
C. PacifiCare has a contract with the Health Care Financing
Administration ("HCFA") of the United States Government to provide Medicare
benefits to eligible persons.
D. IPA has as its primary objective the delivery of health
services through agreements and active participation with individual physicians,
medical groups and/or clinics and their physicians, and other related health
professionals and technicians, all of which are licensed in the State of
California.
E. IPA and its Member Physicians desire to participate in
PacifiCare's prepaid health service delivery system by providing or arranging
Health Care Services in coordination with PacifiCare, its Subscribers and
Hospitals on a prepaid basis.
F. PacifiCare and IPA, on behalf of IPA and its Member Physicians,
deem it in their best interests to enter into a renewable Agreement, whereby IPA
agrees to provide or arrange for ("provide") Health Care Services to PacifiCare
Subscribers enrolled in the Secure Horizons Medical and Hospital Plan.
NOW, THEREFORE, it is as agreed as follows:
1. DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
definitions contained in this Section 1:
1.01 AGREEMENT - is this PacifiCare IPA Medicare Shared Risk Services
Agreement, dated as stated above, and all attachments, addendums and amendments
hereto.
1.02 CAPITATION PAYMENTS - are payments made to IPA by PacifiCare on a
prepaid basis for the Medical Services to be provided under this Agreement.
1.03 CATASTROPHIC CASE - is any single medical condition, including
complications arising from such medical condition, where the total cost of
Health Care Services to treat such condition is expected to exceed [ ** ]
per condition, regardless of payment source.
1.04 CONFORMANCE REQUEST - is a written request made by PacifiCare to
IPA to correct the performance of an IPA Member Physician or Specialist
Physician to conform to the provisions of this Agreement.
1.05 COPAYMENTS - are charges pursuant to the Secure Horizons Medical
and Hospital Plan which may be charged to the Subscriber by IPA at the time of
the provision of Medical Services which are in addition to the Capitation
Payments made to IPA by PacifiCare.
1.06 COST OF CARE - is the value of Medical Services as defined in this
Agreement and as calculated pursuant to the formula set forth in Attachment A4,
incorporated in full herein by reference.
1.07 ELIGIBILITY LIST - is a list of Subscribers to whom IPA shall
provide Medical Services.
1.08 EMERGENCY SERVICES - are those Health Care Services that are
provided for the treatment of acute injury or illness requiring immediate
medical attention and which threaten life or limb, or which involve
uncontrollable bleeding, or loss of consciousness, or which cannot be delayed
without possible serious effects on the health of the Subscriber.
1.09 HCFA - is the Health Care Financing Administration, an
administrative agency of the United States Government.
1.10 HEALTH CARE SERVICES - are all authorized services to which
Subscribers are entitled under the Secure Horizons Medical and Hospital Plan,
including Medical Services, Hospital Services and Emergency Services.
1.11 HOSPITAL - is an acute care facility (or facilities), located in
the IPA Service Area, licensed as an acute care hospital under the laws of the
State of California and which has entered into a written agreement with
PacifiCare to provide Hospital Services to Subscribers.
2
1.12 HOSPITAL DAY - is any period up to twenty-four (24) hours
commencing at 12:00 a.m. or 12 p.m., whichever is used by Hospital, during which
a Subscriber is eligible to receive Hospital Services and actually receives
Hospital Services from Hospital.
1.13 HOSPITAL SERVICES - are the Health Care Services described in
Attachment A1, incorporated in full herein by reference, which Hospital and
other providers shall provide to Subscribers pursuant to the Secure Horizons
Medical and Hospital Plan.
1.14 IPA - is the medical group or independent practice association
identified in the first paragraph of this Agreement and its Member Physicians,
all of whom are licensed to practice medicine or osteopathy in the State of
California at the IPA Facilities.
1.15 IPA FACILITIES - are those facilities whose locations are listed
in Attachment F, attached hereto and incorporated in full herein by reference,
where Medical Services shall be available to Subscribers pursuant to this
Agreement.
1.16 IPA SERVICE AREA - is the geographical area within a thirty (30)
mile radius of each IPA Facility. The thirty (30) mile radius commences with the
address of an IPA Facility and extends for thirty (30) miles over the shortest
route using public streets and highways.
1.17 MEDICAL SERVICES - are all authorized Health Care Services to
which Subscribers are entitled under the Secure Horizons Medical and Hospital
Plan, some of which are summarized in Attachment A2, incorporated in full herein
by reference.
1.18 MEDICALLY NECESSARY SERVICES - are Health Care Services which are
required by Subscriber as determined by IPA in accordance with accepted medical
and surgical practices and standards in the community and the professional
standards recommended by PacifiCare's Quality Assurance Committee and
Utilization Review Committee.
1.19 MEMBER PHYSICIANS - are physicians, surgeons and osteopaths,
licensed to practice medicine in the State of California, who have an ownership
interest in, are employed by, or contract with, IPA.
1.20 MONTHLY HCFA PAYMENT - is the revenue received by PacifiCare each
month from HCFA, as determined by HCFA, for the Health Care Services each
Subscriber is to be provided minus any Benefit Withhold.
1.21 OUTSIDE PROVIDERS - are licensed physicians, surgeons, osteopaths,
paramedical personnel, hospitals and other health care
3
facilities which provide or arrange Health Care Services to Subscribers eligible
to receive benefits under the Secure Horizons Medical and Hospital Plan but
which do not have written agreements with IPA and which are not Specialist
Physicians.
1.22 PARTICIPATING MEDICAL GROUP - includes IPA and its Member
Physicians and is any group of duly-licensed doctors of medicine or osteopathy
which has entered into a written agreement with PacifiCare to provide Medical
Services to Subscribers in conjunction with the Secure Horizons Medical and
Hospital Plan.
1.23 PRO PROGRAM - is the provider utilization review program developed
by HCFA for providers of Medical Services.
1.24 QUALITY ASSURANCE COMMITTEES - are committees separately
established by IPA and PacifiCare which shall separately establish, maintain and
perform quality assurance review of Health Care Services provided to Subscribers
as reasonably required by PacifiCare, the State of California, the Department of
Corporations or Health and Human Services, HCFA, the Office of Qualification and
Compliance, or any other governmental agencies with regulatory or enforcement
jurisdiction over PacifiCare or this Agreement.
1.25 RETIREE SUBSCRIBER - is a Subscriber enrolled in the Secure
Horizons Retiree Health Plan, who meets all the eligibility requirements for
membership in such plan and for whom all applicable premiums have been paid and
received by PacifiCare.
1.26 RISK REIMBURSEMENT PLAN - is PacifiCare's Medicare Medical and
Hospital Services Plan under which PacifiCare contracts with Medicare to be
reimbursed on a per capita basis for each class of Medicare beneficiary enrolled
in the plan.
1.27 SECURE HORIZONS MEDICAL AND HOSPITAL PLAN - is the prepaid health
services plan offered by PacifiCare as described in the Secure Horizons medical
and Hospital Subscriber Agreement, and attachments, addendums and amendments
thereto, a copy of which is attached hereto as Attachment B and incorporated in
full herein by reference. For purposes of this Agreement, the Secure Horizons
Medical and Hospital Plan shall include the Secure Horizons Retiree Health Plan.
1.28 SECURE HORIZONS RETIREE HEALTH PLAN - is the health benefits plan
available for Retiree Subscribers. The benefits of the Secure Horizons Retiree
Health Plan are attached hereto as Attachment B and incorporated herein by
reference.
1.29 SPECIALIST PHYSICIANS - are physicians who have written agreements
with IPA to provide Medical Services to Subscribers on a referral basis and who
do provide such Medical Services at offices or facilities which are not IPA
Facilities.
4
1.30 SUBSCRIBER - is an individual who is enrolled in the Secure
Horizons Medical and Hospital Plan, who meets all the eligibility requirements
for membership in such plan and for whom all applicable Member Premiums have
been paid and received by PacifiCare. For purposes of this Agreement,
Subscribers shall include Retiree Subscribers.
1.31 SUBSCRIBER PREMIUMS - are charges pursuant to the Secure Horizons
Medical and Hospital Plan which, if applicable, are required to be paid by
Subscribers to PacifiCare on a monthly basis in order for Subscribers to receive
Health Care Services.
1.32 SURCHARGES - are additional fees not disclosed to the Subscriber
for Health Care Services and which are not allowable Copayment charges.
1.33 URGENTLY NEEDED SERVICES - are Health Care Services which are
required without delay, in order to prevent serious deterioration of Subscribers
health as the result of an unforeseen illness or injury while the Subscriber is
temporarily absent from the IPA Service Area.
1.34 UTILIZATION REVIEW COMMITTEE - is an IPA committee of at least
three (3) Member Physicians which is established and maintained, in accordance
with the provisions of Section 3.13 herein, to develop a utilization control
program outlining procedures for the efficient use of resources, consistent with
state and federal law, for the rendition of Health Care Services. The
Utilization Review Committee shall review elective Referrals and hospital
admissions on a concurrent and prospective basis and Emergency Services,
Urgently Needed Services and hospital admissions on a retrospective basis.
1.35 BENEFIT WITHHOLD - is the portion of the HCFA revenue received and
retained by PacifiCare each month as outlined in Attachment C, which is
earmarked for provision of benefits to Subscribers which are offered in addition
to Health Care Services.
1.36 PACIFICARE GROUP COMMERCIAL PLAN - is the PacifiCare Health Plan
sold to employer groups, associations with employer group participation and
unions.
1.37 PACIFICARE INDIVIDUAL PLAN - is the PacifiCare Health Plan sold to
individuals.
1.38 PACIFICARE LIMITED NETWORK COMMERCIAL PLAN - is a PacifiCare
Group Commercial Plan under development which will rely primarily upon
Participating Medical Groups designated as Strategic Allies for the delivery of
Medical Services to Subscribers.
1.39 PACIFICARE WORKERS' COMPENSATION PLAN - is the PacifiCare plan
which arranges health care services on a non-
5
capitated basis to covered employees who incur a work-related injury or illness
utilizing managed care principles. For purposes of this Agreement, the
PacifiCare Workers' Compensation Plan does not include PacifiCare's capitated
workers' compensation plan known as COMPREMIER.
1.40 PROSPECT MEDICAL GROUP, INC. NETWORKS - are those networks of
Member Physicians listed in Attachment F.
1.41 SECURE HORIZONS HEALTH PLAN - is the Medicare-risk plan sold by
PacifiCare to Medicare-eligible individuals.
1.42 STRATEGIC ALLIANCE EFFECTIVE DATE - July 1, 1996
1.43 ST. JUDE NETWORK - defined as consisting of North Orange County
St. Jude Medical Group IPA, St. Jude Heritage Medical Group and St. Jude Medical
Center.
2. RELATIONSHIP OF PARTIES
2.01 IPA PARTICIPATION - The execution of this Agreement shall qualify
IPA to participate in the providing and arranging of Health Care Services to
Subscribers pursuant to the terms of the Secure Horizons Medical and Hospital
Plan, as amended from time to time. Subject to Section 12.11 herein, PacifiCare
shall notify IPA of any material amendments to the Secure Horizons Medical and
Hospital Plan, which amendments shall become effective upon thirty (30) days
written notice by PacifiCare to IPA, and IPA has not objected to PacifiCare in
writing within the thirty (30) day period to be bound by such amendments. IPA
approval of such amendments shall not be unreasonably withheld. If IPA does
provide PacifiCare reasonable written objection to be bound by such amendments
within the thirty (30) day period, such amendments to the Secure Horizons
Medical and Hospital Plan shall have no force or effect on IPA.
2.02 LIABILITY FOR OBLIGATION - Notwithstanding any other section or
provision of this Agreement, nothing contained herein 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. Each party shall be solely
responsible for and shall indemnify and hold the other party harmless against
any obligation for the payment of wages, salaries or other compensation
(including all state, federal and local taxes and mandatory employee benefits),
insurance and voluntary employment-related or other contractual or fringe
benefits as may be due or payable by the party to or on behalf of such party's
employees, agents and representatives.
2.03 INDEPENDENT CONTRACTOR - The relationship between PacifiCare and
IPA is an independent contractor relationship. Neither IPA nor members,
partners, employees or agents of IPA are
6
employees or agents of PacifiCare and neither PacifiCare nor any employee or
agent of PacifiCare is a member, partner, employee or agent of IPA. As such, all
medical decisions are rendered solely by IPA and not by PacifiCare. IPA is
solely responsible for all Medical Services arranged by IPA and provided to
Subscribers. 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.
2.04 DUTY TO DEFEND AND INDEMNIFY - To the extent not covered by
insurance maintained by PacifiCare, whether because of liability in excess of
the policy limits or because of the occurrence of a non-insured event, IPA shall
defend, indemnify and hold harmless PacifiCare from and against any claim, loss,
damage, cost, expense or liability arising out of or related to the performance
or nonperformance by IPA, its Specialist Physicians or employees of any Health
Care Services to be performed or arranged by IPA under this Agreement. It is
understood and agreed by PacifiCare that the foregoing indemnification
obligation is in no way whatsoever intended to reduce or eliminate any insurance
coverage maintained by IPA and that PacifiCare shall be entitled to
indemnification from IPA only for claims, losses, damages, costs, expenses or
liabilities in excess of the applicable insurance policy limits or arising from
uninsured events or occurrences.
To the extent not covered by insurance maintained by IPA, whether
because of liability in excess of the policy limits or because of the occurrence
of a non-insured event, PacifiCare shall defend, indemnify and hold harmless IPA
from and against any claims, loss damage, cost, expense or liability arising out
of or related to the performance or nonperformance of PacifiCare, its employees
or agents of any service to be performed or provided by PacifiCare under this
Agreement. It is understood and agreed by IPA that the foregoing indemnification
obligation is in no way whatsoever intended to reduce or eliminate any insurance
coverage maintained by PacifiCare and that IPA shall be entitled to
indemnification from PacifiCare only for claims, losses, damages, costs,
expenses or liabilities in excess of the applicable insurance policy limits or
arising from uninsured events or occurrences.
3. DUTIES OF IPA
3.01 IPA RESPONSIBILITIES - IPA agrees to arrange for or provide Health
Care Services twenty-four (24) hours a day in coordination with PacifiCare and
with Hospital and other providers, as necessary, for each Subscriber who has
designated IPA as his or her Participating Medical Group. IPA shall be
financially responsible for all Medical Services specified in Attachment A2,
incorporated in full herein by reference, provided to Subscribers
7
for whom IPA is to receive a monthly Capitation Payment from PacifiCare based
upon the PacifiCare provided Eligibility List. IPA shall be responsible for
determining whether Subscribers are eligible for Health Care Services on the
basis of the most current Eligibility List supplied to IPA by PacifiCare.
Updated eligibility information shall be available from PacifiCare as needed on
the basis of the most current information supplied PacifiCare by HCFA.
3.02 STANDARDS - All Medical Services arranged for or provided by IPA
and its Member Physicians shall be provided by professional personnel and at
physical facilities according to generally accepted standards of medical
practice and management in the community. IPA further agrees to provide or
arrange for Referrals to Specialist Physicians and facilities as are necessary,
appropriate, and in accordance with generally accepted standards of medical
practice in the community in compliance with the standards developed by
PacifiCare's Quality Assurance Committee. If IPA contracts with Specialist
Physicians to provide Medical Services under this Agreement, IPA shall require
such Specialist Physicians to provide IPA with the credentialing information set
forth herein. IPA shall obtain and maintain information concerning each Member
Physician's and Specialist Physician's education, training, references,
malpractice liability insurance, hospital staff status, hospital clinical
privileges, and hospital staff reappointment dates. Such information shall be
kept in a form prescribed by or acceptable to PacifiCare. Upon request, the
credentialing information shall be made available to PacifiCare for review or
copying.
IPA acknowledges and agrees that it shall report Member Physicians or
Specialist Physicians as required by the California Business and Professions
Code Section 805 ("Section 805"). IPA further agrees to maintain and demonstrate
to PacifiCare upon request compliance with the following:
3.02.01 IPA shall ensure that its Member Physicians and
Specialist Physicians are licensed by the State of California and have
current Drug Enforcement Agency ("DEA") registration. IPA shall immediately
notify PacifiCare in writing of any of the following actions taken by or
against a Member Physician or Specialist Physician: (i) the surrendering,
revocation, or suspension of a license; (ii) the surrendering, revocation, or
suspension of current DEA registration; (iii) any filing pursuant to Section
805; (iv) any filing pursuant to the National Practitioner Data Bank; (v) the
filing of any malpractice claim of more than [ ** ]; and (vi) a change in
hospital staff status or hospital clinical privileges, including any
restrictions or limitations.
If IPA fails to obtain and maintain the information set
forth in Paragraph 3.02 or fails to immediately notify PacifiCare
8
as set forth in this Paragraph 3.02.01, IPA shall indemnify and hold harmless
PacifiCare from and against any claim, loss, damage, cost, expense or liability
arising out of or related to such nonperformance by IPA, its Member Physicians,
Specialist Physicians or employees.
3.02.02 In the event that it is determined by PacifiCare
that IPA does not obtain and maintain the information set forth in paragraph
3.02, IPA agrees to assist PacifiCare in obtaining credentialing information
concerning each Member Physician's and Specialist Physician's education,
training, references, malpractice liability insurance, hospital staff status,
hospital clinical privileges, and hospital staff reappointment dates. IPA shall
obtain from each Member Physician and Specialist Physician a signed waiver,
acceptable to PacifiCare, allowing PacifiCare access to such credentialing
information at any acute care hospital or health care facility. If IPA is unable
to obtain a signed waiver from a Member Physician or Specialist Physician, IPA
shall obtain the credentialing information directly from the acute care hospital
or health care facility and make such information available to PacifiCare upon
request for review and copying.
3.02.03 IPA agrees to provide access to continuing
education programs for its Member Physicians and Specialist Physicians in
accordance with the standards established by the California Medical Association
for continuing education. The content and delivery of such continuing education
programs shall be in the discretion and judgement of IPA, in order to maintain
high standards for the delivery of Medical Services pursuant to this Agreement.
IPA further agrees to gather, correlate, and distribute to its Member Physicians
and Specialist Physicians, information regarding professional medical activities
and developments which IPA believes may be of assistance in providing Medical
Services pursuant to this Agreement.
3.02.04 IPA agrees to provide reasonable evidence that all
nurses and other ancillary and paramedical personnel who are employed by and
contract with IPA or Specialist Physicians are properly licensed by the State of
California.
3.03 INSURANCE - IPA shall maintain professional liability insurance
and general liability insurance in the minimum amounts of one million dollars
($1,000,000) per person, three million dollars ($3,000,000) per occurrence
coverage, and three million dollars ($3,000,000) combined single limits
coverage, for its agents and employees, as applicable. In the event IPA procures
a claims made policy as distinguished from an occurrence policy, IPA shall
procure and maintain prior to termination of such insurance continuing "tail"
coverage, unless successor policy coverage provides such "tail" protection. IPA
shall provide PacifiCare with evidence of such insurance coverage upon
PacifiCare's request. IPA shall immediately notify PacifiCare of any material
changes in
9
insurance coverage and shall provide a certificate of such insurance coverage to
PacifiCare upon PacifiCare's reasonable request. In the event IPA contracts with
independent contractor physicians to provide Medical Services under this
Agreement, IPA will require such independent contractor physicians and their
agents to maintain professional liability insurance and general liability
insurance in the minimum amounts as is usual and customary in the community.
3.04 REFERRALS - IPA shall refer Subscribers in need of specialty care
services only with the approval of the IPA Utilization Review Committee.
However, in the event that Emergency Services are required, IPA shall comply
with Section 3.05 below.
3.05 HOSPITAL ADMISSIONS - Whenever IPA determines that a Subscriber
on IPA's eligibility list requires Hospital Services which are not Emergency
Services, IPA shall arrange for such Hospital admissions and outpatient
surgeries through the IPA's Utilization Review Committee and its developed
utilization review program. IPA and its Member Physicians shall not serve as
admitting physicians for any Subscriber without such prior approval except in
the event that Emergency Services are required. If IPA or a Member Physician
admits a Subscriber to a Hospital for Emergency Services, IPA shall notify
PacifiCare of such admission within the time frames as required in the
PacifiCare Provider Policies and Procedures Manual, attached hereto as
Attachment D and incorporated in full herein by reference. Admissions for
Emergency Services or Urgently Needed Services shall be made to hospitals
contracting with PacifiCare, if possible.
3.06 ELIGIBILITY LIST - IPA shall accept as patients those Subscribers
who are on IPA's eligibility list provided by PacifiCare to IPA. Member
Physicians and IPA shall be entitled to rely on the most current provider list
until a new list has been provided to IPA. IPA understands that in order to
update the eligibility list, PacifiCare is dependent on the receipt of
information from HCFA.
3.07 COLLECTION OF CHARGES FROM SUBSCRIBERS - IPA shall collect
applicable Copayments from Subscribers upon the rendition of Medical Services to
Subscribers pursuant to the Secure Horizons Medical and Hospital Plan. With the
exception of Copayments and charges for non-covered services delivered on a
fee-for-service basis to Subscribers, IPA shall in no event, including, without
limitation, to non-payment by PacifiCare, insolvency of PacifiCare, or breach of
the Agreement, ▇▇▇▇, charge, collect and deposit, or attempt to ▇▇▇▇, charge,
collect or receive any form of payment, from any Subscriber for Medical Services
provided pursuant to this Agreement and for which Subscriber is entitled under
the Secure Horizons Medical and Hospital Plan in effect for such Subscriber.
10
IPA shall not maintain any action at law or equity against a
Subscriber to collect sums owed by PacifiCare to IPA. Upon notice of any such
charge, PacifiCare may terminate this Agreement consistent with the provisions
contained in Section 7.01.02 and take all other appropriate action consistent
with the terms of this Agreement to eliminate such charges, including, without
limitation, requiring IPA and Specialist Physicians to return all sums collected
as Surcharges from Subscribers or their representatives. Nothing in this
Agreement, however, shall be construed to prevent IPA from providing non-covered
Medical Services on a usual and customary fee-for-service basis to Subscribers.
IPA's obligations regarding the collection of charges from Subscribers
shall survive the termination of this Agreement with respect to Medical Services
provided during the term of the Agreement without regard to the cause of
termination of this Agreement.
3.08 COLLECTION OF CHARGES FROM THIRD PARTIES WHEN MEDICARE NOT THE
PRIMARY PAYOR - IPA and Member Physicians accept payment from PacifiCare (plus
applicable Copayments) for Medical Services as provided herein as full payment
for such Medical Services from PacifiCare except as provided herein; provided
however, when Medicare is not the primary payor for Medical Services, such as
when the Subscriber is entitled to payment from another third party or for
payment for a Workers' Compensation claim, or from other primary insurance
coverage maintained by Subscriber, IPA and Member Physicians shall make no
demand upon PacifiCare for reimbursement under the Individual Subscriber Stop
Loss Program as specified in Attachment A3 hereto until all primary sources of
payment have been pursued and it is determined that full payment cannot be
obtained within the (10) months from the date of the provision of Medical
Services.
For purposes of accomplishing the intent of this Section 3.08,
PacifiCare hereby assigns to IPA for collection, any claims or demands against
third parties for amounts due for Medical Services provided by IPA pursuant to
this Agreement, subject to the following conditions:
3.08.01 IPA shall utilize lien forms which are provided
by PacifiCare in the PacifiCare Policies and Procedures Manual or which have
been approved in advance by PacifiCare. IPA shall notify PacifiCare each time it
pursues and each time it obtains a signed lien from a Subscriber.
3.08.02 IPA shall not commence any legal or equitable
action against a third party without obtaining the prior written consent of
PacifiCare. It is agreed that collection or demand letters consistent with the
PacifiCare Provider Policies and Procedures Manual shall not constitute the
commencement of legal or
11
equitable action. Under no circumstances shall IPA commence any legal action
against a Subscriber.
3.08.03 IPA shall defend, indemnify and hold PacifiCare
harmless for all actions by IPA which relate to collections of an account
pursuant to this Section 3.08.
3.08.04 IPA shall perform such collection activities
consistent with the procedures set forth in the PacifiCare Provider Policies and
Procedures Manual.
3.08.05 PacifiCare may immediately rescind such
assignment on a claim-by-claim basis for any reason by providing written notice
of recision to IPA.
In the event IPA receives payment from a third party
after receipt of payment from PacifiCare, IPA shall reimburse PacifiCare to
the extent that the combined amounts received from all payors exceeds [ ** ]
of IPA's usual and customary fee-for-service charges.
3.09 DUTIES OF IPA UPON TERMINATION DURING PHASE-OUT PERIOD-Should
this Agreement be terminated by IPA pursuant to Section 7.01.01(a) or Section
7.01.01(b), IPA shall be released of its obligation to continue to provide or
arrange for Health Care Services to Subscribers during the phase-out period as
stated in this Section 3.09. If this Agreement is terminated for any other
reason by either party or if this Agreement terminates at the end of the Initial
Term or any renewal term, IPA shall not be released of its obligation to
continue to provide or arrange for Health Care Services to Subscribers during
the phase-out period, which phase-out period shall end on the earlier of:
3.09.01 Three (3) months from the effective date of
termination of this Agreement, or
3.09.02 The date PacifiCare has secured the transfer of
Subscribers to another medical group, individual practice association, or
physician for further treatment, and has notified IPA of such transfer in
writing.
Compensation during the phase-out period shall be at the
Capitation Rates set forth in Attachment C hereto.
3.10 CONTINUING CARE RESPONSIBILITIES - IPA and Member Physicians
shall provide or arrange for Health Care Services to Subscribers for the term of
this Agreement in accordance with Section 3.01 hereof. In the event of
termination of this Agreement and the expiration of IPA's duty to provide or
arrange for Health Care Services during the phase-out period pursuant to Section
3.09, if applicable, IPA and Member Physicians shall continue to provide or
arrange for Health Care Services to Subscribers until the
12
effective date of transfer of such Subscribers to another Participating
Medical Group for further treatment and written notice of such transfer has
been provided by PacifiCare to IPA. If a Subscriber's care cannot be
transferred for the reason of hospitalization of Subscriber, continuity of
care, or other legally required medical treatment reasons, IPA shall continue
to provide or arrange for Health Care Services for such Subscriber until
PacifiCare, through consultation with the Subscriber's attending
participating physician, has made provision for the transfer of such
Subscriber to another participating provider for further Health Care Services
and has notified IPA of such transfer in writing. The payment provisions for
any continued Medical Services after expiration of the phase-out period shall
be the lesser of [ ** ] of the usual and customary fees of the Member
Physician or Specialist Physician or the Cost of Care as set forth in
Attachment A4.
Notwithstanding the above or any other provisions of this Agreement to
the contrary, IPA agrees that in the event PacifiCare ceases operations for any
reason, including insolvency, IPA shall provide Medical Services and shall not
▇▇▇▇, charge, collect or receive any form of payment from any Subscriber or have
any recourse against a Subscriber for Medical Services provided after PacifiCare
ceases operation. This continuation of Medical Services obligation shall be for
the period for which Subscriber Premiums have been paid, but shall not exceed a
period of thirty (30) days, except for those Subscribers who are hospitalized on
an inpatient basis as provided below.
In the event PacifiCare ceases operations or IPA terminates this
Agreement on the basis of PacifiCare's failure to make timely Capitation
Payments, IPA shall continue to arrange for Health Care Services to those
Subscribers who are hospitalized on an inpatient basis at the time PacifiCare
ceases operations or IPA terminates the Agreement until such Subscribers are
discharged from the hospital. IPA may file a claim with PacifiCare for such
Health Care Services at [ ** ] of IPA's usual and customary fee for service
charges then in effect.
IPA agrees that the provisions of this Section 3.10 and IPA's
obligations herein shall survive the termination of this Agreement without
regard to the cause of termination of the Agreement, and shall be construed to
be for the benefit of the Subscribers.
3.11 STAFF PRIVILEGES - IPA agrees to have its Member Physicians seek
and obtain (and provide evidence of) staff privileges or other appropriate
access to Hospital.
3.12 ADMINISTRATIVE GUIDELINES - IPA agrees to perform its duties
under this Agreement in a manner consistent with the reasonable administrative
guidelines provided by PacifiCare, in its Provider Policies and Procedures
Manual, attached hereto as
13
Attachment D and incorporated in full herein by reference. Subject to Section
12.12 herein, PacifiCare shall notify IPA of any material amendments to the
administrative guidelines, which amendments shall become effective upon thirty
(30) days written notice by PacifiCare to IPA if IPA has not objected to
PacifiCare in writing within the thirty (30) day period to be bound by such
amendments. IPA approval of such amendments shall not be unreasonably withheld.
If IPA does provide PacifiCare reasonable written objection to be bound by such
amendments within the thirty (30) day period, such amendments to the PacifiCare
Health Plan shall have no force or effect on IPA.
3.13 UTILIZATION REVIEW - IPA agrees to participate with PacifiCare in
an ongoing utilization review program to promote efficient use of resources. The
IPA's Utilization Review Committee shall meet as frequently as necessary but at
least weekly. The Utilization Review Committee shall keep minutes of the
committee meetings, a copy of which shall be made available to PacifiCare upon
ten (10) days written notice by PacifiCare to IPA. IPA and PacifiCare shall
jointly implement a utilization review system whereby IPA shall notify
PacifiCare of any hospital or skilled nursing facility admissions. A member of
the PacifiCare medical services staff may participate in IPA's Utilization
Review Committee meetings.
3.14 QUALITY OF HEALTH CARE - IPA agrees to assure quality of Medical
Services by:
3.14.01 Assigning PacifiCare Subscribers only to Member
Physicians, Specialist Physicians or Outside Providers meeting quality health
care standards;
3.14.02 Inspecting the premises and facilities of its
Member Physicians on a regular basis and allowing PacifiCare to participate in
such inspections upon ten (10) days written notice.
3.15 QUALITY ASSURANCE AND REMEDIAL PROCEDURES - IPA shall cooperate
with PacifiCare in the operation of PacifiCare's quality assurance program and
IPA shall perform quality assurance review of Health Care Services as brought
before IPA internally or from PacifiCare's Quality Assurance Committee, the
Department of Corporations, the Department of Health and Human Services, HCFA
and any other governmental agencies with regulatory or enforcement jurisdiction
over this Agreement. IPA shall establish and maintain a Quality Assurance
Committee which shall meet at least monthly. A member of the PacifiCare medical
services staff may participate in IPA's Quality Assurance Committee meetings.
The IPA Quality Assurance Committee shall keep minutes of the committee
meetings, a copy of which shall be made available to PacifiCare upon ten (10)
days written notice by PacifiCare to IPA. The task of the Quality Assurance
Committee may be assumed by the Utilization Review Committee described in
Section 3.13; however, in such event, the
14
Utilization Review and Quality Assurance Committees must hold separately
convened meetings and the minutes of each meeting must be separately maintained.
IPA shall, at the written request of PacifiCare, make available one
(1) Member Physician from IPA to attend the PacifiCare Quality Assurance
Committee meetings. The intent of this Section is to have at least one Member
Physician from IPA serve for six (6) months on the PacifiCare Quality Assurance
Committee during a three (3) year period. IPA shall develop written procedures
for remedial action whenever it is determined by PacifiCare's Quality Assurance
Committee that inappropriate or substandard Health Care Services have been
furnished or Health Care Services that should have been furnished have not been
furnished. Upon request, PacifiCare shall assist IPA in the formulation of such
remedial procedures.
3.16 COMPLIANCE WITH CIVIL RIGHTS LAWS - IPA shall comply with Title
VI of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of
1973 and the Age Discrimination Act of 1975.
3.17 RECIPROCITY AGREEMENTS - IPA agrees to develop agreements among
PacifiCare's Participating Medical Groups to assure reciprocity of health care
among the Participating Medical Groups for PacifiCare Subscribers. IPA shall
accept non-emergency or specialty Referrals from such other Participating
Medical Groups and such other Participating Medical Groups shall be required to
accept non-emergency or specialty Referrals from IPA. Payment for the foregoing
Referrals shall be no greater than the Cost of Care Rates described in
Attachment A4.
3.18 INDIVIDUAL STOP-LOSS PROGRAM - The purpose of PacifiCare's
Individual Stop-Loss Program ("ISL") is to limit IPA's costs per Subscriber per
Year to a specified amount (the deductible) in return for a payment of an ISL
Premium. IPA shall purchase Individual Stop Loss Protection coverage from an
outside carrier and/or maintain adequate reserves to ensure coverage of
Catastrophic Cases in lieu of participating in PacifiCare's Individual Stop Loss
Program. Such Individual Stop Loss Protection and/or reserves shall be subject
to PacifiCare's review. Upon PacifiCare's request, IPA shall provide PacifiCare
with evidence of Individual Stop Loss Protection and/or reserves adequate to
cover Catastrophic Cases. In the event IPA fails to make arrangements which meet
the satisfaction of PacifiCare, PacifiCare may, by providing thirty (30) days
notice to IPA, require IPA to purchase Individual Stop Loss Protection coverage
through PacifiCare at the rates charged by PacifiCare for other Participating
IPAs. Notwithstanding Section 12.12, PacifiCare may amend the ISL Premium and
ISL Deductible on the Individual Stop Loss Program coverage offered to
Participating IPAs on an annual basis effective each January 1 by providing
sixty (60) days prior written notice to IPA.
15
Individual Stop Loss claims for ISL purchased through PacifiCare's Individual
Stop Loss program shall be calculated at the Cost of Care values as set forth in
Attachment A4, of this Agreement.
3.19 OTHER CONTRACTUAL COMMITMENTS - IPA represents and assures
PacifiCare that contractual commitments with other HMOs, competitive medical
plans and health related entities do not restrict or impair IPA from performing
its duties under this Agreement.
3.20 DISSEMINATION OF INFORMATION - IPA agrees that PacifiCare may use
IPA's name, address, telephone number, and a listing of IPA's Member Physicians
in any informational material routinely distributed to Subscribers and for other
purposes related to the administration of the Secure Horizons Medical and
Hospital Plan as an indication of IPA's willingness to provide or arrange Health
Care Services to Subscribers.
Prior to listing or otherwise referencing PacifiCare in any
promotional or advertising brochures, media announcements or other advertising
or marketing material, IPA shall first obtain the prior consent of PacifiCare,
such consent not to be unreasonably withheld.
3.21 WRITTEN AGREEMENTS - IPA shall secure written agreements,
consistent with the terms of this Agreement and in compliance with all state and
federal law, with all Member Physicians and Specialist Physicians regularly
utilized as a part of IPA's referral system.
3.22 MEDICAL CARE CRITERIA - IPA shall utilize the criteria for
medical care that is established or approved by PacifiCare's Quality Assurance
Committee as a standard reference in determining appropriate lengths of stay for
hospitalized Subscribers or appropriate utilization patterns for referral to
specialty services.
3.23 NONDISCRIMINATION - IPA represents and assures that Health Care
Services are provided or arranged for Subscribers in the same manner as such
services are provided to IPA's other patients, except as required pursuant to
this Agreement. Subscribers shall not be subject to any discrimination
whatsoever by IPA in regards to access to Health Care Services.
3.24 ACCOUNTS PAYABLE SYSTEM - IPA agrees to operate its accounts
payable system in a manner which assures that providers of authorized Medical
Services who are Member Physicians and non-Member Physicians receive payment for
Medical Services rendered to Subscribers within the timeframe specified by
Federal regulation. For a claim which is contested or is not "clean", either
payment must be made to the Member Physician or non-Member Physician, or an
initial determination notice must be sent to the Subscriber within
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sixty (60) calendar days of IPA's receipt of such claim from Member Physicians
and non-Member Physicians. Any denied claim which is afterwards determined by
HCFA as payable and which falls under IPA financial responsibility, must be paid
by IPA upon notice and/or receipt of claim. In the event IPA fails to meet the
payment timelines discussed in this Section 3.24, in addition to exercising any
other remedies it may have under this Agreement, PacifiCare may take actions to
assist IPA in operating its accounts payable system including, but not limited
to, paying IPA's Member Physicians and Non-Member Physicians and charging the
claim amount paid against IPA capitation in addition to an administrative fee
for performing such services. PacifiCare shall notify IPA prior to taking any
action to charge claim amount against IPA capitation and IPA will have 30 days
upon notification to reimburse PacifiCare for valid and undisputed claims paid
on behalf of IPA. If the claim amount for a valid and undisputed claim is not
reimbursed at the end of the thirty (30) day notice period, PacifiCare may
charge the claim amount paid against the IPA capitation as discussed in this
section 3.24. Should IPA dispute such claim or claim amount, the resolution of
such dispute shall be subject to Section 12.16.
3.25 CATASTROPHIC CASE MANAGEMENT - IPA agrees that PacifiCare's
medical director may be involved in the management and coordination of
Catastrophic Cases. IPA will fully assist PacifiCare in providing information
that may be required in determining the need for a transfer of a Subscriber into
PacifiCare's regional centers for the care of Catastrophic Cases including, but
not limited to, prompt notification of known or suspected Catastrophic Cases.
Detailed procedures for Catastrophic Case management will be mutually agreed
upon by the parties based upon IPA's and PacifiCare's determination of the
Subscriber's transferability. Except in unusual circumstances, regional centers
for care of Catastrophic Cases shall be sought within the IPA Service Area and
surrounding area.
3.26 CAPACITY REPORTING - IPA will provide to PacifiCare, at the
earliest possible time, notice of any significant changes in the capacity of IPA
to provide or arrange for the Medical Services contemplated by this Agreement
(e.g., addition or deletion of Member Physicians or Specialist Physicians),
including a ninety (90) day written notice in the event IPA is unable to
properly service additional Subscribers. IPA shall still be obligated to provide
or arrange for Health Care Services to Subscribers who are with employer groups
whom PacifiCare had agreed to enroll prior to ninety (90) days from the
effective date of the written notice. PacifiCare shall provide IPA, upon IPA's
request, current marketing information within a reasonable period for purposes
of determining IPA capacity.
3.27 REPRESENTATION OF IPA MEMBER PHYSICIANS - IPA agrees to represent
its Member Physicians in matters pertaining to the provision of Medical Services
under this Agreement, and that it has
17
obtained written consent to such representation from its Member Physicians.
3.28 PERFORMANCE OF MEMBER PHYSICIANS - IPA agrees: (i) to develop
methods for discussion of performance with its Member Physicians, (ii) to assure
correction of performance of its Member Physicians consistent with the
provisions of this Agreement and state and federal law applicable to the Secure
Horizons Medical and Hospital Plan, and (iii) to resolve Conformance Requests.
3.29 WITHDRAWAL OF AN IPA FACILITY - In the event IPA seeks to
withdraw one or more of the IPA Facilities listed in Attachment F from providing
or arranging for Medical Services to Subscribers under this Agreement, IPA must
notify PacifiCare of such withdrawal in writing at least one hundred and eighty
(180) days prior to the effective withdrawal date; after the effective date of
withdrawal, IPA shall still be responsible to provide or arrange for Health Care
Services to the affected Subscribers at the other IPA Facilities.
3.30 WITHDRAWAL OF A MEMBER PHYSICIAN/SPECIALIST PHYSICIAN - In the
event IPA seeks to withdraw one or more Member Physicians or Specialist
Physicians from providing or arranging Health Care Services to Subscribers under
this Agreement, IPA must notify PacifiCare of such withdrawal in writing at
least sixty (60) days prior to the effective withdrawal date. After the
effective date of such withdrawal, IPA shall still be responsible to provide or
arrange Medical Services to the affected Subscribers with the other Member
Physicians (Specialist Physicians).
4. DUTIES OF PACIFICARE
4.01 ADMINISTRATION - PacifiCare agrees to perform all necessary
administrative, accounting, enrollment and other functions consistent with the
administration of the Secure Horizons Medical and Hospital Plan and this
Agreement.
4.02 BENEFIT INFORMATION - PacifiCare agrees to apprise all
Subscribers concerning the type, scope and duration of benefits and services to
which such person is entitled under the Secure Horizons Medical and Hospital
Plan.
4.03 ASSIST IPA - PacifiCare agrees to assist and cooperate with IPA
in the development and initial implementation of procedures necessary to carry
out the intent of this Agreement.
4.04 ADMINISTRATION OF PAYMENTS - PacifiCare agrees to transmit
Capitation Payments and other payments to IPA in accordance with the terms and
procedures set forth in this Agreement.
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4.05 STATISTICAL INFORMATION AND PROVISION OF DATA - PacifiCare agrees
to provide IPA with management information and data reasonably necessary to
carry out the terms and conditions of this Agreement and for the operation of
the Secure Horizons Medical and Hospital Plan, including semi-monthly
Eligibility Lists and monthly capitation worksheets. Furthermore, PacifiCare
shall provide, upon request, quarterly reports reflecting the utilization of
Health Care Services rendered by IPA.
4.06 SERVICES RENDERED TO INELIGIBLE SUBSCRIBERS - PacifiCare
agrees to reimburse IPA for those Medical Services set forth in Attachment A2
provided to an ineligible Subscriber if the Subscriber was listed as eligible
on the most current eligibility list provided to IPA by PacifiCare. If
PacifiCare is in receipt of a billing to such ineligible Subscriber from IPA
and proof of having sent the Subscriber or the Subscriber's legal guardian
two (2) bills no less than thirty (30) days apart, PacifiCare will reimburse
IPA [ ** ] of IPA's ordinary and customary fee-for-service rates then in
effect for those Medical Services rendered but no greater than [ ** ] of
the still uncollected balance. If subsequent to payment by PacifiCare, IPA
receives any payment from another source for the services, then IPA shall
reimburse PacifiCare up to the amount previously received from PacifiCare. If
a Subscriber becomes ineligible for benefits under the Secure Horizons
Medical and Hospital Plan after IPA or Member Physicians have begun treatment
of the Subscriber (provided the Subscriber is not hospitalized at the time of
becoming ineligible), IPA shall be entitled to make all subsequent charges
for its services directly to the Subscriber. If the Subscriber is
hospitalized at the time of becoming ineligible, IPA shall be entitled to
make charges directly to the Subscriber for future medical services, only for
services provided after the Subscriber is discharged from such hospital
treatment.
4.07 DISSEMINATION OF INFORMATION - Except as provided above in
Section 3.20, prior to listing or otherwise referencing IPA in any promotional
or advertising brochures, media announcements or other advertising or marketing
material, PacifiCare shall first obtain the prior consent of IPA, such consent
not to be unreasonably withheld.
5. COMPENSATION
5.01 CAPITATION PAYMENTS - PacifiCare shall make monthly Capitation
Payments to IPA as outlined in Attachment C, attached hereto and incorporated in
full herein by reference, due and payable on the tenth (10th) day of the month
for the current month's Medical Services.
5.02 ADDITIONAL PAYMENTS - Pacificare and IPA agree to provide
payments to each other in accordance with the terms of the
19
following programs, if applicable: Hospital Incentive Program, Individual
Stop-Loss Program, Benefit Withhold Incentive Program and Mammography
Reimbursement Program as specified in Attachments A, A3, E and C
respectively, incorporated in full herein by reference.
To the extent that each party owes an amount to the other party in the
risk programs noted above, IPA agrees that PacifiCare shall combine the results
of all applicable risk programs such that one aggregate payment is payable to or
receivable from IPA. A fully detailed accounting of the results of each program
shall accompany the aggregate payment or notice of amount due.
5.03 ADEQUACY OF COMPENSATION - Except as otherwise provided herein,
IPA shall accept the payments specified in this Agreement as payment in full for
all Medical Services provided Subscribers during each month for which such
payments are to be received by IPA from PacifiCare. In the event PacifiCare
fails to make any payments to IPA as provided herein, whether from PacifiCare's
insolvency or otherwise, Subscribers shall not be liable to IPA or its Member
Physicians under any circumstances for Medical Services. Surcharges for Medical
Services provided or arranged by IPA or Member Physicians are prohibited; upon
notice of the existence of any Surcharge, PacifiCare will take appropriate
action consistent with the terms of this Agreement to eliminate such Surcharges.
5.04 REINSURANCE - The purpose of the reinsurance program described
herein is to limit IPA's risk for Hospital Services under the Hospital
Control Program to a specified amount per Subscriber per Year (the
"Reinsurance Deductible") in return for a payment of a Reinsurance Premium.
For the 1996 calendar year, the Reinsurance Deductible shall be [ ** ] per
Subscriber per Year and the Reinsurance Premium shall equal [ ** ] of the
Monthly HCFA Payment per Subscriber per month. Notwithstanding Section 12.12,
PacifiCare may amend the Reinsurance Premium and Reinsurance Deductible on an
annual basis effective each January 1 by providing sixty (60) days prior
written notice to IPA.
Reinsurance claims shall be calculated at the Cost of Care values as set forth
in Attachment A5, Sections c.1, c.2, and c.3 of this Agreement.
5.05 MOST FAVORED PLAN - IPA represents that, during the term of this
Agreement, the compensation rates payable under this Agreement are and shall
continue to be equal to or less than the rates charged under other IPA
agreements for the provision of services to enrollees of health care service
plans ("Competing Plan Agreements"), when such rates are adjusted to reflect
different risk levels and programs under the Competing Plan Agreements (the
"Adjusted Rates"). If at any time IPA agrees or has agreed to accept lower
Adjusted Rates under a Competing Plan Agreement than
20
the rates set forth in this Agreement, or any amendment hereto, IPA shall
immediately notify PacifiCare in writing of such agreement and the applicable
lower Adjusted Rates. Within thirty (30) days thereafter, PacifiCare and IPA
shall meet to discuss implementation of new compensation rates under this
Agreement which shall be equal to or less than the Adjusted Rates accepted under
the Competing Plan Agreement. If the parties fail to agree to implementation
procedures for the new rates within thirty (30) days of the effective date of
the Competing Plan Agreement, the compensation rates under this Agreement will
be lowered upon notice to IPA from PacifiCare to equal the lower Adjusted Rate.
The new compensation rates shall be effective the date the lower Adjusted Rates
become effective under the Competing Plan Agreement. IPA's failure to notify
PacifiCare of the acceptance of lower Adjusted Rates from a Competing Plan shall
be grounds for termination of this Agreement by PacifiCare pursuant to Section
7.01.02(d)."
Notwithstanding the above, this Section 5.05 shall have no effect for any period
of time in which the total number of Members enrolled in the IPA Service Area in
the Secure Horizons Health Plan (including Members assigned to IPA and
Participating Medical Groups other than IPA) exceeds forty percent (40%) of the
total number of Medicare eligible persons in the IPA Service Area. The number of
PacifiCare Members shall be determined by PacifiCare utilizing current
enrollment data. The number of Medicare eligible persons in the IPA Service Area
shall be calculated by either party utilizing independent data acceptable to
both parties. Either party may dispute the other's calculation of the number of
Medicare eligible persons or IPA may dispute PacifiCare's determination of the
number of PacifiCare Members by providing written notice to the appropriate
party. Upon the receipt of such notice, the parties shall select a third party
acceptable to both PacifiCare and the IPA who shall be charged with the
responsibility of determining the number of Medicare eligible persons and/or the
number of PacifiCare Members, as applicable.
Procedures for determining what constitutes Adjusted Rates and procedures for
auditing the provisions of this Section 5.05 shall be mutually agreed upon by
PacifiCare and IPA, through consultation with a mutually agreed to independent
third party. Such procedures will include audit by a mutually agreed to
independent third party auditor.
6. TERM OF AGREEMENT
6.01 TERM - The term of this Agreement shall be for fifty-four (54)
months and the commencement date shall be July 1, 1996. A "Year" under this
Agreement shall begin on January 1 and end on December 31. The term of this
Agreement shall be automatically extended for one (1) year on each successive
January 1 unless either party provides the other with written notice of such
party's
21
intention not to extend the term no less than one hundred eighty (180) days
prior to the January 1 renewal date or until this Agreement is appropriately
terminated by either party as provided in Section 7 herein. The parties
understand that on each successive January 1, a term of sixty (60) months will
be in effect unless the Agreement has been terminated pursuant to Section 7 or
unless notice of non-renewal has been provided as set forth in this Section
6.01. Upon renewal of the Initial Term and any subsequent term, the applicable
rates of compensation specified in this Agreement shall apply unless otherwise
agreed upon by the parties in writing.
7. TERMINATION
7.01 TERMINATION OF AGREEMENT WITH MATERIAL CAUSE - Either party, as
appropriate, may terminate this Agreement for material cause as set forth in
Sections 7.01.01 or 7.01.02 hereof subject to the notice and cure periods set
out in Section 7.02 hereof, if applicable. In the event either party seeks to so
terminate this Agreement, the terminating party shall give written notice of
termination stating the actions of the other party constituting material cause
for termination.
7.01.01 CAUSE FOR TERMINATION OF AGREEMENT BY IPA - The
following shall constitute cause for termination of this Agreement by IPA:
a. NON-PAYMENT - Failure by PacifiCare to pay
Capitation Payments due to IPA hereunder within twenty (20) days of the
Capitation Payment due date or failure by PacifiCare to make any other payments
due to IPA hereunder within forty-five (45) days of any such payment's due date.
b. REVOCATION OF CERTIFICATION OR LICENSE -
Revocation by the State of California or the United States Government of any
certification or license of PacifiCare necessary for the performance of this
Agreement.
c. BREACH OF MATERIAL TERM AND FAILURE TO CURE -
PacifiCare's breach of any material term, covenant, or condition and subsequent
failure to cure said breach as provided in Section 7.02 hereof. The written
notice of termination shall contain specific reference as to the breaches which
have caused such failure.
7.01.02 CAUSE FOR TERMINATION OF AGREEMENT BY PACIFICARE -
The following shall constitute cause for termination of this Agreement by
PacifiCare:
a. FINANCIAL FAILURE OF IPA - PacifiCare's
reasonable determination of IPA's anticipated inability to provide or arrange
for Health Care Services as described herein due to the
22
likelihood of IPA's lack of financial resources, other than due to PacifiCare's
non-payment of amounts due IPA hereunder. IPA 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.
b. FAILURE TO PROVIDE QUALITY MEDICAL SERVICES -
Failure to maintain the standards set forth in Section 3.02 of this Agreement
and such failure is not corrected consistent with the provisions of Section
7.02. The written notice of termination shall contain specific reference to the
breaches which have caused such failure. PacifiCare reserves the right to
withdraw from IPA all or part of its Subscribers if the Medical Services are not
being properly provided or arranged for pursuant to this Agreement and such
deficiencies are not corrected consistent with the provisions of Section 7.02 of
this Agreement.
c. FAILURE TO PROVIDE SERVICES - Failure to
provide or arrange Health Care Services to Subscribers as provided herein. The
written notice of termination shall contain specific reference as to the
breaches which have caused such failure.
d. BREACH OF MATERIAL TERM AND FAILURE TO CURE -
IPA's breach of any material term, covenant or condition of the Agreement and
subsequent failure to cure said breach as provided in Section 7.02 of this
Agreement. The written notice of termination shall contain specific reference to
the breaches which have caused such failure.
7.02 CURING PERIOD AND TERMINATION DATE - The party receiving the
written notice of termination shall have thirty (30) days from the receipt of
said notice to cure or otherwise eliminate the circumstances constituting cause
for termination. If said party fails to cure or eliminate the circumstances
constituting cause for termination within a thirty (30) day period, this
Agreement shall terminate at the end of the thirty (30) day period.
7.03 REPAYMENT UPON TERMINATION - Within one hundred and eighty (180)
days of the effective date of termination of this Agreement as provided herein,
an accounting shall be made by PacifiCare of monies due and owing either party
and payment shall be forthcoming by the appropriate party to settle such balance
within thirty (30) 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 and appropriate payment by the appropriate party, if any, shall be made
within thirty (30) days of such independent audit.
7.04 TERMINATION NOT AN EXCLUSIVE REMEDY - Any termination by either
party pursuant to this Section 7 is not meant as an
23
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.
8. RECORDS, DATA COLLECTION, CITATIONS AND RIGHT TO INSPECT RECORDS
8.01 RECORDS - IPA shall maintain and provide such records and
information as reasonably necessary for PacifiCare to properly administer the
Secure Horizons Medical and Hospital Plan and consistent with state and federal
law. The duties imposed by this Section 8.01 shall not terminate upon
termination of this Agreement, whether by rescission or otherwise, and shall be
in effect until the completion of the phase-out period pursuant to Section 3.09.
The cost for preparation and submission of this data shall be borne solely by
IPA.
IPA shall maintain records and provide such information to PacifiCare
or the California Commissioner of Corporations as may be necessary for the
compliance by PacifiCare with the provisions of state and federal law and
regulations promulgated thereto, and such records shall be retained by IPA for
at least two (2) years following the provision of Medical Services. This
obligation is not terminated upon termination of this Agreement, whether by
rescission or otherwise.
8.02 CONFIDENTIALITY OF RECORDS - IPA shall safeguard the
confidentiality of Subscriber health records and treatment in accordance with
all state and federal laws, including, without limitation, the Privacy Act, as
implemented by 45 Code of Federal Regulations 5(b) and the regulations
promulgated thereunder.
8.03 DATA COLLECTION - IPA shall maintain and provide to PacifiCare,
on a timely basis, the utilization data more particularly described in the
PacifiCare Provider Policy and Procedures Manual for the effective management
of PacifiCare's health care delivery system. PacifiCare shall impose a
penalty for failure to submit such data, which was reasonable within the
control of IPA to submit , with ninety (90) days of the date of services by
permanently withholding [ ** ] of IPA's monthly Capitation for each month
for which IPA fails to submit such data.
8.04 RIGHT TO INSPECT - IPA shall provide access at reasonable times
upon demand by PacifiCare, or any governmental regulatory agency responsible for
the administration of health care service plans, to inspect facilities,
equipment, books and records relating to the performance of this Agreement,
including, without limitation, Subscriber patient records, financial records
pertaining to the cost of operations and income received by IPA for
24
Medical Services rendered to Subscribers. Unless otherwise required by law,
PacifiCare shall provide IPA with a seventy-two (72) hour prior written notice
of any such inspection.
8.05 CITATIONS - IPA shall notify PacifiCare in writing of each and
every report of any governmental or quasi-governmental agency with jurisdiction
over IPA which contains any citation of IPA for failure to meet any governmental
or quasi-governmental standard on or after the Commencement Date of this
Agreement.
8.06 FINANCIAL STATEMENTS - IPA shall provide to PacifiCare within
forty five (45) days of the end of each calendar quarter copies of its quarterly
financial statements, which shall include a balance sheet, statement of income
and a statement of cash flow (the "financial statements") prepared in accordance
with generally-accepted accounting principles. Such quarterly statements shall
be certified by the chief financial officer of IPA as accurately reflecting the
financial condition of IPA for the period indicated. In addition, IPA shall
provide to PacifiCare, within forty five (45) days of the end of each calendar
year, copies of its audited annual financial statements.
8.07 TRANSFER OF MEDICAL RECORDS UPON TERMINATION - Upon the effective
date of termination of this Agreement and, if applicable, upon the expiration of
the phase-out period set forth in Section 3.09, at PacifiCare's request, IPA
shall copy all active PacifiCare Subscriber patient medical files in IPA's
possession and forward such files to another provider of Medical Services
designated by PacifiCare, provided such copying and forwarding is not otherwise
objected to by Subscribers. The copies of such medical files may be in summary
form. The cost of copying the patient medical files shall be borne by IPA. IPA
shall cooperate with PacifiCare in maintaining the confidentiality of such
confidential and proprietary information and trade secrets at all times.
9. EXCLUSIVITY
9.01 UTILIZATION OF IPA BY PACIFICARE - Nothing in this Agreement shall
be construed to require PacifiCare to assign any minimum or maximum number of
Subscribers to IPA, nor to require PacifiCare to utilize the Medical Services of
IPA for any or all Subscribers in the IPA Service Area.
9.02 IPA COVENANTS NOT TO COMPETE - In recognition of PacifiCare's
desire to enhance the quality of care provided to its Subscribers by ensuring
continuity of care, better control and standardization in procedures and
full-time availability of services, IPA agrees that it shall not enter into any
agreements, other than those currently in effect, to provide or arrange Health
Care Services to Medicare beneficiaries who are Subscribers or enrollees of a
health maintenance organization, competitive medical plan or other similar
entity that contracts with HCFA on a risk
25
basis. IPA recognized that the consideration for this covenant not to compete is
PacifiCare's financial commitment to the development of its Secure Horizons
Medical and Hospital Plan and this Agreement, and PacifiCare's commitment to
arrange for cost-effective Health Care Services to its Subscribers while
maintaining continuity and quality of care.
9.02.01 MATERIALITY OF COVENANT NOT TO COMPETE - IPA
agrees that its obligations under this Section 9.02 are material terms for
purposes of the termination provision of this Agreement.
9.02.02 VALUE OF COVENANT NOT TO COMPETE - In recognition
of IPA's covenant not to compete, PacifiCare agrees to increase the monthly
capitation payment as noted in Attachment C.
9.03 STRATEGIC ALLY - PacifiCare has designated IPA as a Strategic
Ally. Such designation means that PacifiCare and IPA will work cooperatively
toward mutual goals of membership growth, member satisfaction, administrative
efficiency and clinical process improvement. In addition, PacifiCare and IPA
agree to the additional covenants and commitments set forth below which shall
remain in effect during the period of IPA's status as a Strategic Ally.
9.03.01 PACIFICARE'S STRATEGIC ALLIANCE OBLIGATIONS - To
support IPA as a Strategic Ally, PacifiCare agrees as follows:
a. CLINICAL RESEARCH SUPPORT. PacifiCare will support
IPA through the provision of clinical research support, including
development and reporting of outcomes studies and provider profile
comparison data.
b. STRATEGIC PLANNING. PacifiCare shall support joint
strategic planning with IPA as mutually agreed upon between PacifiCare
and IPA to identify and develop plans for achievement of IPA's business
development goals.
c. SYSTEM INTEGRATION. PacifiCare will support
evaluation and implementation of technical and information system
integration to ensure compatibility between PacifiCare and IPA
information systems as mutually agreed by PacifiCare and IPA.
d. INVOLVEMENT IN MARKETING. PacifiCare will involve
IPA in planning and implementation of PacifiCare's marketing efforts in
the IPA Service Area as mutually agreed by PacifiCare and IPA.
e. RIGHT OF FIRST REFUSAL - PacifiCare agrees to
provide IPA with a right of first refusal in the development
26
of PacifiCare's network of Participating Medical Groups under the terms
set forth below:
i. For the PacifiCare Group Commercial Plan and the
Secure Horizons Health Plan, PacifiCare shall not contract with any
additional Participating Medical Groups in the IPA Service Area other
than those under contract with PacifiCare as of the Strategic Alliance
Effective Date, subject to the limitations in subsections (iii) and
(iv) below.
ii. For the PacifiCare Individual Commercial Plan, the
PacifiCare Workers' Compensation Plan, and the PacifiCare Limited
Network Commercial Plan, PacifiCare shall not contract with other
Participating Medical Groups in the IPA Service Area, except for other
Participating Medical Groups also identified as Strategic Allies by
PacifiCare as of the Strategic Alliance Effective Date, or at any time
thereafter, and subject to the limitations in subsections iii) and (iv)
below.
iii. In the event PacifiCare determines that it needs
to expand its Participating Medical Group network for any PacifiCare
Health Plan product in the IPA Service Area to meet enrollment demands
or competitive pressures, PacifiCare shall notify IPA in writing of the
need for additional capacity and the terms for providing such capacity.
IPA shall have sixty (60) days from receipt of PacifiCare's notice to
develop a mutually agreed upon plan to provide such additional capacity
within a mutually agreed upon period of time. If IPA is unable to
develop a mutually agreed upon plan to realize the needed capacity
within the sixty (60) day notice period, or if IPA does not meet the
mutually agreed upon time lines for development, PacifiCare shall be
released of its obligations as described in this Section 9.03.01(e) and
the subsections hereto.
iv. PacifiCare shall not be restricted from
maintaining contracts with Participating Medical Groups under contract
with PacifiCare as of the Strategic Alliance Effective Date ("Existing
PMGs") and Existing PMGs also identified as Strategic Allies by
PacifiCare shall not be restricted from adding additional facilities or
expanding their coverage area under their PacifiCare services
agreements. Notwithstanding the above, IPA shall be restricted from
adding additional Prospect Medical Group, Inc. Networks other than
those which are stated in Attachment F.
9.03.02 MAINTENANCE OF STRATEGIC ALLY STATUS. In order to
maintain Strategic Ally status, IPA must comply with the following:
27
a. IPA will maintain agreements with PacifiCare for the provision
of services to Subscribers enrolled in the PacifiCare Group Commercial Plan and
the Secure Horizons Health Plan and will continue to accept additional
Subscribers under both of these plans.
b. IPA will agree to participate in additional plans and products
offered by PacifiCare, including, without limitation, the PacifiCare Limited
Network Commercial Plan, the PacifiCare Workers' Compensation Plan, PacifiCare
point-of-service plans, and PacifiCare preferred provider organization plans.
c. IPA will maintain compliance with the terms of the Agreement,
including without limitation, Section 8 regarding Records, Data Collection,
Citations and Right to Inspect Records.
d. IPA will, no later than July 1, 1996, begin transmitting to and
accepting electronic communications from PacifiCare of Capitation Payment checks
and reports, Eligibility Lists and encounter data and reports.
e. IPA will achieve a member satisfaction level of at least
[ ** ] for both IPA and, on average, for Member Physicians as measured by
PacifiCare's Member Satisfaction Tracking System report for calendar year
1996. Thereafter, IPA will work cooperatively with PacifiCare to achieve an
improvement in member satisfaction levels under PacifiCare's Member
Satisfaction Tracking System for both the IPA and, on average, for Member
Physicians at a rate of [ ** ] per year for the period 1996 through 1998.
The PacifiCare Member Satisfaction Tracking System will be made available to
Provider for on-site review upon the request of Provider. The PacifiCare
Member Satisfaction Tracking System shall be considered proprietary
information and shall be maintained confidential by IPA under the terms
specified in Section 12.04.
f. IPA will work cooperatively and diligently with PacifiCare to
identify areas of redundant administration and to eliminate such redundancies.
g. IPA will ensure that all of IPA's Primary Care Physicians
participate as members, partners or shareholders of IPA to the exclusion of all
other organized physician groups.
h. IPA will ensure that an adequate number of Primary Care
Physicians are open, available and accessible for the acceptance of new
Subscribers in order to meet PacifiCare's marketing and regulatory compliance
needs in the IPA Service Area.
28
9.03.03 TERMINATION OF STRATEGIC ALLY STATUS. In the event
that either PacifiCare or IPA ceases to meet any of the obligations specified
in Section 5.05 or Section 9.03 and PacifiCare or IPA fails to come into
compliance with such requirements within the notice period specified below,
the Strategic Ally status shall terminate at the end of the notice period.
The notice period shall be 30 days from the receipt of written notice by
either party. In addition, Strategic Ally status shall be terminated
immediately in the event that PacifiCare acquires, is acquired by, or merges
with another health care service plan and this provision would place the new
or surviving entity in breach of any other contract or in violation of any
state or federal law. PacifiCare may also terminate IPA's Strategic Ally
status upon thirty (30) days notice to IPA if IPA merges with or into another
entity, regardless of whether IPA is the surviving entity, or in the event of
a change in ownership of more than [ ** ] of the shares of IPA. Upon the
termination of Strategic Ally status, PacifiCare's obligations as set forth
in Section 9.03.01 above shall immediately terminate. Termination of
Strategic Ally status shall be the sole remedy of PacifiCare and IPA in the
event of breach by IPA or PacifiCare of the obligations set forth in this
Section 9.03.
9.03.04 ADDITION OF NEW IPA FACILITIES. IPA Facilities added
outside the IPA Service Area after the Strategic Alliance Effective Date shall
not be granted Strategic Ally status except as specifically agreed in writing by
PacifiCare and IPA.
9.03.05 IPA EXCLUSIVITY - As a condition to maintaining
Strategic Ally status and in recognition of PacifiCare's desire to enhance the
quality of care provided to its Subscribers by ensuring continuity of care,
better control and standardization in procedures and full-time availability of
services, IPA agrees that it shall not enter into any new agreements, other than
those currently in force with an entity of the St. Jude Network, to provide or
arrange Medical Services to Medicare beneficiaries who are subscribers or
enrollees of a health maintenance organization, competitive medical plan or
other similar entity that contracts with HCFA on a risk basis ("Competitor Plan
Enrollees").
10. GOVERNING LAW AND DISPUTE RESOLUTION
10.01 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 and all regulations promulgated pursuant thereto.
Any provisions required to be in this Agreement by any of the above
Acts and regulations shall bind PacifiCare and IPA whether or not expressly
provided in this Agreement.
29
10.02 DISPUTES BETWEEN IPA AND SUBSCRIBER NOT GOVERNED BY AGREEMENT -
Any controversies or claims between IPA and Subscriber arising out of IPA's
performance of this Agreement are not governed by this Agreement. IPA and
Subscriber may seek any appropriate legal action to resolve such controversy or
claim deemed necessary.
In the event of a dispute between IPA and a Subscriber and upon mutual
agreement between IPA and such Subscriber, PacifiCare agrees to make available
the Subscriber Grievance Resolution Process described in the Secure Horizons
Medical and Hospital Plan Agreement for resolution of such dispute. In such
instance, the decision of the PacifiCare Subscriber Satisfaction Committee and
Board of Directors shall not be binding upon the parties except upon agreement
between IPA and the Subscriber. Nor shall such grievance be subject to binding
arbitration except upon agreement between the parties. Should IPA and Subscriber
fail to resolve the grievance, IPA and Subscriber may seek any appropriate legal
action deemed necessary by such party.
10.03 PAYMENT DISPUTES INVOLVING IPA - In the event IPA fails to make a
payment to a Specialist Physician within sixty (60) days of the submission of
the ▇▇▇▇ by Specialist Physician to IPA and the validity and the amount of the
submitted ▇▇▇▇ are undisputed, PacifiCare may, in its sole and absolute
discretion, elect to pay the Specialist Physician on behalf of IPA and deduct
such payment from IPA's next monthly Capitation Payment.
Should a dispute concerning a claim for payment for Medical Services
rendered to Subscribers arise between IPA and a Specialist Physician who is a
Participating Medical Provider, IPA or the Specialist Physician may submit a
written complaint to PacifiCare. The complaint shall describe the disputed
claims and the basis for the amounts claimed and include the applicable written
agreement between IPA and the Specialist Physician. PacifiCare shall
investigate the complaint and make a determination of whether or not the claim
is valid and should be paid. In the event PacifiCare determines that IPA owes
any amount to Specialist Physician, IPA shall make such payment within thirty
(30) days of PacifiCare's termination. If IPA fails to pay the amount due within
this thirty (30) day period, PacifiCare may deduct the amount owed from IPA's
next monthly capitation payment. This amount will temporarily be placed in an
account (the "Claims Dispute Account") which shall be established by PacifiCare.
If IPA or Specialist Physician wishes to contest PacifiCare's determination,
either may do so by initiating an action for binding arbitration and notifying
PacifiCare of such initiation within thirty (30) days of PacifiCare's
determination. If IPA or Specialist Physician fails to request arbitration
within thirty (30) days or if the arbitration affirms PacifiCare's decision that
amounts are owing from IPA to Specialist Physician, PacifiCare shall release
from the Claims Dispute Account the amount owing to Specialist. If the
arbitration results in a decision that no money or a lesser amount
30
than was determined by PacifiCare is owing to Specialist Physician, PacifiCare
shall release to IPA the amounts which were erroneously withheld from IPA's
Capitation Payment.
In the event this Agreement has been terminated prior to PacifiCare's
investigation and written determination and PacifiCare's investigation results
in a determination that IPA owes money to Specialist Physician, PacifiCare may,
in its sole and absolute discretion, elect to pay Specialist Physician on behalf
of IPA and seek reimbursement from IPA.
11. NOTICE
11.01 NOTICE - Any notice required to be given hereunder shall be in
writing and either delivered personally or sent by registered or certified mail,
return receipt requested, to either PacifiCare or IPA at the addresses listed
below, or at such other addresses as either PacifiCare or IPA may hereafter
designate to the other:
TO: PacifiCare, Inc.
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
TO IPA: Prospect Medical Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Administrator
All notices shall be deemed given on the date of delivery if delivered
personally or on the day three (3) business days after such notice is deposited
in the United States mails, addressed and sent as provided above.
12. MISCELLANEOUS
12.01 PROTECTION OF SUBSCRIBER - IPA may not impose any limitations on
the acceptance of Subscribers for care or treatment that it does not impose on
other patients of the IPA. Neither PacifiCare, IPA nor Hospital may request,
demand, require or seek directly or indirectly the transfer, discharge, or
removal of any Subscriber for reasons of Subscriber's need for, or utilization
of, Medically Necessary Health Care Services, except in accordance with the
procedures established for such action. IPA shall not refuse or fail to provide
Medically Necessary Medical Services to any Subscriber. Procedures for
removal, discharge or transfer of Subscribers shall be mutually agreed upon
between IPA and PacifiCare consistent with the Secure Horizons Medical and
Hospital Plan.
31
12.02 OTHER AGREEMENTS - Nothing in this Agreement shall prevent
PacifiCare and IPA from contracting with each other for provision of services
not covered by this Agreement.
12.03 REFUSAL BY PHYSICIAN - If IPA or any of its Member Physicians
refuses Medical Services to a Subscriber assigned to IPA for any reason
whatsoever, it shall remain the responsibility of IPA to assure that such
Subscriber receives Medical Services consistent with the terms of this
Agreement.
12.04 CONFIDENTIAL AND PROPRIETARY INFORMATION
12.04.01 INFORMATION CONFIDENTIAL AND PROPRIETARY
TO PACIFICARE - IPA acknowledges that all PacifiCare Subscribers participating
in a Secure Horizons Medical and Hospital Plan individually or through an
employer group and receiving Health Care Services shall be Subscribers of
PacifiCare. Subscriber and employer group information shall include, without
limitation, the names, addresses and telephone number of all Subscribers;
member, employer and administrative service manuals and all forms related
thereto; and records, files (other than patient medical files) and lists
contained in IPA and PacifiCare files.
IPA acknowledges that all such information is
confidential and proprietary to PacifiCare and that such Subscriber and employer
group information contains valuable trade secrets of PacifiCare.
All PacifiCare Subscriber agreements and the
information contained therein regarding PacifiCare, IPA, employer groups,
Subscribers or the financial arrangements between a hospital, IPA and PacifiCare
is confidential and proprietary to PacifiCare.
IPA shall maintain all Subscriber information and
other PacifiCare trade secret information confidential. IPA shall not disclose
or use any confidential and proprietary information for its own benefit or gain
either during the term of this Agreement or after the date of termination of
this Agreement; provided, however, that IPA may use the name, address and
telephone number or other medical information of a PacifiCare Subscriber if
Medically Necessary for the proper treatment of such Subscriber or upon express
prior written permission of PacifiCare or the Subscriber.
12.04.02 INFORMATION CONFIDENTIAL AND PROPRIETARY
TO IPA - IPA shall provide PacifiCare with a written description of all
information proprietary to IPA which is confidential and contains trade secrets
of IPA ("IPA Information"). PacifiCare shall maintain IPA Information
confidential. PacifiCare shall not disclose or use any IPA Information for its
own benefit either
32
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 IPA all IPA Information in its possession in a manner to be specified
by IPA. PacifiCare shall cooperate with IPA in maintaining the confidentiality
of IPA Information at all times.
12.04.03 SOLICITATION OF PACIFICARE SUBSCRIBERS OR
EMPLOYER GROUPS - IPA shall not directly or indirectly engage in the practice of
solicitation or the patronage of PacifiCare's Subscribers or employer groups
without PacifiCare's prior written consent. Solicitation shall mean conduct by
an officer, agent, employee or Member Physician of IPA or its assignee or
successor during the Initial Term or any subsequent 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
PacifiCare Subscribers to discontinue their Subscriber agreements with
PacifiCare or to continue to receive health care from IPA on a fee-for-service
basis or to encourage PacifiCare Subscribers to participate in the prepaid
health service plan offered by IPA, or any other prepaid health service plan
(the "Solicitation"). The breach of this Section 12.04.03 during any term of
this Agreement shall be grounds for termination of this Agreement pursuant to
Section 7.01.02 of this Agreement.
12.05 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.
12.06 ASSIGNMENT - This Agreement and the rights, interests, and
benefits hereunder shall not be assigned, transferred, pledged, or hypothecated
in any way by IPA or PacifiCare and shall not be subject to execution,
attachment or similar process, nor shall the duties imposed herein be
subcontracted or delegated without the written consent of the other party.
Notwithstanding, PacifiCare may assign, transfer, pledge or hypothecate this
Agreement and its rights, interests and benefits hereunder to any entity which
has at least majority control of PacifiCare or to any entity of which PacifiCare
has at least majority control.
12.07 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.
12.08 WITHDRAWAL OF SUBSCRIBERS BY PACIFICARE - PacifiCare reserves the
right to withdraw from IPA all or part of the Subscribers from IPA whose Health
Care Services are not being properly provided pursuant to this Agreement.
PacifiCare shall provide written notice to IPA of such withdrawal and the
reasons
33
therefore. PacifiCare shall then allow IPA thirty (30) days from the date of
such notice to correct deficiencies. If such deficiencies are not corrected to
PacifiCare's satisfaction within said period, PacifiCare may withdraw its
Subscribers as provided in this Section 12.08 and remove IPA's name from
PacifiCare's marketing materials.
12.09 TRANSFER OF SUBSCRIBERS - PacifiCare and IPA shall exercise
reasonable efforts in discouraging Subscriber transfers except at re-enrollment
periods, or when a Subscriber can show just cause for such transfer and
PacifiCare agrees to such transfer. Nevertheless, PacifiCare may require
transfer of Subscribers assigned to IPA for any reason; or, IPA may request
transfer of Subscribers assigned to it by PacifiCare to other IPAs for cause or
if the capacity of IPA is overburdened so that the provision of Medical Services
as required by this Agreement is affected; all such transfers shall be
consistent with the PacifiCare Provider Policies and Procedures Manual.
12.10 CAPTIONS - Captions in this Agreement are descriptive only and do
not affect the intent or interpretation of the Agreement.
12.11 AMENDMENT - This Agreement may be amended or modified only by
mutual written consent of the parties. Notwithstanding the foregoing sentence,
PacifiCare may amend this Agreement upon thirty (30) days written notice to IPA
in order to maintain compliance with applicable federal and state laws;
provided, however, any such amendment which affects a material duty or
responsibility of IPA and has a material adverse economic effect upon IPA as
reasonably demonstrated by IPA to PacifiCare, shall be subject to the provisions
of Section 12.12 below.
12.12 MODIFICATIONS OF THIS AGREEMENT AND/OR PACIFICARE PROVIDER
POLICIES AND PROCEDURES MANUAL AND/OR PACIFICARE HEALTH PLAN - Anything to the
contrary herein notwithstanding, in the event of any material modification of
this Agreement and/or the PacifiCare Provider Policies and Procedures Manual
and/or the Secure Horizons Medical and Hospital Plan that (i) affects a material
duty or responsibility of IPA, and (ii) causes a material adverse economic
effect to IPA, IPA and PacifiCare shall seek to agree to an amendment to this
Agreement which satisfactorily addresses the effect on IPA's material duty or
responsibility and reimburses the material economic detriment caused to IPA. In
the event such an agreement cannot be reached within sixty (60) days after the
date PacifiCare gives IPA written notice of such modification, such modification
shall not be effective.
12.13 TERMS; SECTIONS - Unless otherwise indicated, all terms in any
appropriate attachments, addendums and amendments hereto shall have the same
meaning attributed to such terms in the body of
34
this Agreement and references to section numbers are to the appropriate sections
of this Agreement.
12.14 IPA'S AUTHORIZED REPRESENTATIVE - Unless otherwise indicated in
writing to PacifiCare, IPA warrants and authorizes its administrator to act as
its fully authorized representative to represent IPA and Member Physicians in
this Agreement and to receive any and all communications and notices hereunder.
12.15 ATTORNEYS' FEES AND COSTS - If any action at law or suit in
equity is brought to enforce or interpret the provisions of this Agreement or to
collect any monies due hereunder, the prevailing party shall be entitled to
reasonable attorneys' fees and reasonable costs, together with interest thereon
at the highest rate provided by law, in addition to any and all other relief to
which it may otherwise be entitled.
12.16 ARBITRATION - Any controversy, dispute or claim between
PacifiCare and IPA arising out of the interpretation, performance or breach of
this Agreement shall be resolved by binding arbitration at the request of either
party, in accordance with the rules of the American Arbitration Association. 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 California Code of Civil Procedure and the
California Evidence Code, and the arbitrator 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 superior court of the State of
California. The provisions of California Code of Civil Procedure Sections 1283
and 1283.05 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, but shall
not have the power to award punitive damages. The arbitrators shall prepare in
writing and provide to the parties an award including factual findings and the
legal reasons on which the decision is based. The arbitrators shall not have the
power to commit errors of law or legal reasoning, and the award may be vacated
or corrected pursuant to California Code of Civil Procedure Sections 1286.2 or
1286.6 for any such error. The cost of arbitration shall be shared equally by
both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
______________________________________, California, on ___________, 1996.
35
PACIFICARE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Title: ▇▇▇▇▇ ▇▇▇▇, Vice
President/General Manager
Date:
------------------------------
IPA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Title: CFO
Date: 6-11-96
------------------------------
36
PACIFICARE
SCHEDULE OF ATTACHMENTS
A. A1. Hospital Services
A2. Medical Services
A3. Individual Stop-Loss Program
A4. Cost of Care
A5. Hospital Incentive Program
B. Secure Horizons Medical and Hospital Subscriber Agreement
C. Compensation
D. PacifiCare Provider Policies and Procedures Manual
F. IPA Facilities
G. Division of Financial Responsibility
37
ATTACHMENT A1
HOSPITAL SERVICES
Hospital Services are authorized by IPA, are initially paid by PacifiCare and,
except as otherwise indicated, are the financial responsibility of PacifiCare
and IPA. A summary of Hospital Services includes the following:
1. INPATIENT HOSPITAL CARE - Medically Necessary inpatient
hospital care, as defined by Medicare, but limited to a total
of one hundred fifty (150) days per Subscriber per Year.
Unlimited days of inpatient hospital care shall be provided to
Subscribers, but PacifiCare shall be financially responsible
for days in excess of one hundred fifty (150) days.
Subscriber shall be assigned semi-private units, unless
medical necessity dictates private accommodations. Where the
Subscriber requests private accommodations, not required for
medical purposes, the incremental difference in fee-for-
service rates shall be the responsibility of the Subscriber.
A summary of inpatient care includes:
a. Medical/Surgical Care, Intensive Care, Cardiac Care and other
special care units (including Hospital Services associated with
non-experimental transplants as defined by Medicare);
b. Inpatient psychiatric;
c. Nursing Services, meals, drugs, medications (excluding take-home
medications), blood transfusions;
d. Medical and Surgical supplies and appliances;
e. Inpatient rehabilitation services, such as: inpatient physical,
occupational and speech therapy;
f. Inpatient alcohol and drug treatment and rehabilitation.
2. SKILLED NURSING - Medically Necessary Skilled Nursing Facility
care, as defined by Medicare. Patients shall be assigned
semi-private units, unless medical necessity dictates private
accommodations. Where the Subscriber requests private
accommodations, not required for medical purposes, the
incremental difference in the fee-for-service rates shall be
the responsibility of the Subscriber. Skilled nursing
facilities must be Medicare licensed and approved.
3. TRANSPORTATION EXPENSES - Medicare approved ambulance services
provided within the IPA Service Area for Subscribers. When a
transfer of Subscriber from one facility to another is
authorized by IPA or PacifiCare, the cost of such transfer
shall be a Hospital service. The method of transfer shall be
determined by IPA, but IPA shall coordinate all Subscriber
transfers to or from Hospital with designated Hospital
38
personnel. Also included are paramedic services in emergency cases
in the IPA Service Area.
4. HOME HEALTH CARE - As determined to be Medically Necessary, as defined
by Medicare and provided in lieu of hospitalization, as mutually
agreed to by IPA, Hospital and PacifiCare, including any required DME
and IV Therapy Services.
5. HOSPICE CARE - Should be coordinated with Medicare for special
reimbursement provisions.
6. OUTPATIENT SURGERY - Facility and supply charges for
outpatient surgery done either at Hospital or a free-standing
surgery center.
7. END STAGE RENAL DISEASE - Facility charges for inpatient and
outpatient dialysis services for Subscribers who are medically
determined to have End Stage Renal Disease after enrollment in
one of PacifiCare's health plans.
8. OTHER HOSPITAL SERVICES
a. Devices surgically implanted during a hospital confinement or
during an outpatient surgery performed at the Hospital outpatient
surgery center or a free-standing ASC.
b. Treatment programs for outpatient substance abuse as defined by
Medicare.
c. Appealed Services - Hospital Services denied by IPA and
PacifiCare which are found on appeal or arbitration through the
Subscriber grievance resolution process to be Hospital Services
which the Subscriber was entitled to have furnished under the
PacifiCare Secure Horizons health care delivery system.
d. Chemotherapy Drugs (inpatient and outpatient).
e. Self injectable medications
9. HOSPITAL SERVICES EXCLUDE THE FOLLOWING:
a. Durable Medical Equipment, except as provided in paragraphs 5 and
8(a) above.
b. Medical Services in the IPA Service Area as defined by Attachment
A2 hereto.
c. Outpatient prescription drugs, including immunosuppressive drugs.
d. All out-of-IPA Service Area expenses, except those elective
referrals as authorized by IPA. PacifiCare, in conjunction with
IPA, shall make all decisions regarding the duration of a
Subscriber's care at the out-of-IPA Service Area facility and
transfer of the Subscriber to an IPA Service Area facility.
e. Vision materials (lenses and frames) except for those surgically
implanted during cataract surgery.
39
f. Anesthesiology services (inpatient and outpatient).
g. Experimental procedures, including any type of procedure not
generally recognized as of value by the medical community and its
societies, as determined by PacifiCare and IPA, in conformance
with state and federal law.
h. Cosmetic Surgery, except when performed to correct or repair the
physical functioning of a body part as a result of a functional
disorder or accidental injury.
i. Inpatient hospital care in excess of one hundred fifty (150) days
per Subscriber per Year, except as provided in Paragraph 1 of
this Attachment A1.
j. Skilled nursing care in excess of one hundred (100) days per
Subscriber per Year, except as provided in Paragraph 2 of this
Attachment A1.
k. Respite Care
40
ATTACHMENT A2
MEDICAL SERVICES
I. Medical Services provided in the IPA Service Area are the
financial responsibility of IPA. A summary of Medical
Services includes the following:
1. PHYSICIAN SERVICES - Subscribers shall be entitled to Medically
Necessary covered inpatient and outpatient physician services
included in the PacifiCare's Secure Horizons Medical and Hospital
Plan. A summary of physician services includes the following:
a. IPA Service Area inpatient services (including
anesthesiology services and physician services associated
with non-experimental transplants, as defined by Medicare)
and outpatient physician care.
b. Professional component of inpatient mental health.
c. Outside referrals to consultants including Emergency Room
consultants (not including emergency room charges) .
d. Out-of-IPA Service Area physician services when such Medical
Services are rendered on an elective basis and upon approval
of IPA.
2. OUTPATIENT SERVICES - Such services include, among others:
a. Outpatient pathology and radiology, including MRI and CT
Scans.
b. Outpatient mental health (professional services only) .
c. Short term, Medically Necessary rehabilitation (speech,
physical and occupational) therapy.
d. Health education and social services.
e. Immunizations when determined Medically Necessary by an IPA
Member Physician as recommended by the California Department
of Health Services Adult Immunization Recommendations.
f. Periodic health evaluations.
g. Hearing screening, including audiogram.
h. Allergy testing and treatment, including allergy serum.
i. Home health care, except when provided in lieu of
hospitalization.
j. Lenses and frames required after cataract surgery, except
lenses surgically implanted during an outpatient surgery
performed at Hospital or at a free-standing surgery center.
k. Anesthesiology services.
l. Mammography screening, as defined by state and federal law.
41
3. DURABLE MEDICAL EQUIPMENT, PROSTHETIC DEVICES AND MEDICAL
SUPPLIES
a. Durable Medical Equipment ("DME") as defined by Medicare.
IPA agrees to provide such devices and aids on an outpatient
basis, determined Medically Necessary.
b. Prosthetic devices, as defined by Medicare, except devices
surgically implanted during a Hospital confinement or
outpatient surgery performed at Hospital or free-standing
surgery center.
c. Medical Supplies - Supplies used in connection with
treatment or to aid in the recovery of a medical condition
when considered a covered expense by Medicare.
4. OTHER SERVICES - Medical Services denied by the Participating
Medical Group and PacifiCare which are found on appeal or
arbitration through the Subscriber grievance resolution process
to be Medical Services which Subscriber was entitled to have
furnished through the Secure Horizons Medical and Hospital Plan.
5. HOSPITAL BASED PHYSICIAN SERVICE - All hospital based physician
services where the physician provides the professional component
of an inpatient hospital based service, the hospital outpatient
surgery center service, or a free-standing surgery center
service. The charges of an anesthesiologist and an emergency room
physician and the professional charges for inpatient and
outpatient dialysis are included as a Medical Service.
6. EMERGENCY SERVICES IN THE IPA SERVICE AREA - IPA Service Area
Emergency Services include emergency room charges and associated
emergency room physician and ancillary charges, inpatient medical
and other Medical Services which may not be delayed until
facilities or physicians of the Hospital or IPA (or alternatives
authorized by IPA) can be used without possible serious effects
to the health of the Subscriber. Such services must be Medically
Necessary Emergency Services.
II. Medical Services exclude the following:
a. Outpatient mental health visits in excess of twenty (20)
visits per Subscriber Year.
b. Outpatient prescription drugs, including immunosuppressive
drugs.
c. Chemotherapy drugs.
d. Out-of-IPA Service Area expenses, except pursuant to
paragraph I(1) (d) above. PacifiCare, in consultation with
IPA, shall make all decisions regarding the
42
duration of a Subscriber's care at the out-of-IPA Service
Area facility and transfer of the Subscriber to an IPA
Service Area facility consistent with state and federal law.
e. Vision materials (lenses and frames), except following
cataract surgery.
f. Immunizations for foreign travel and unexpected mass
immunizations.
g. Experimental procedures, including any type of procedure not
generally recognized as of value by the medical community
and its societies, as determined by PacifiCare in accordance
with state and federal law and in connection with IPA.
h. Cosmetic Surgery, except when performed to correct or repair
the physical functioning of a body part as a result of a
functional disorder or an accidental injury.
i. Respite Care
43
ATTACHMENT A3
INDIVIDUAL STOP-LOSS PROGRAM
(THIS PROGRAM NOT APPLICABLE)
44
ATTACHMENT A4
COST OF CARE
For purposes of this Agreement, the Cost of Care for Medical Services provided
or arranged by IPA to Subscribers shall equal:
a) For services provided to Subscribers by Member Physicians who practice
at IPA Facilities, [ ** ] the Medicare Locality Fee Schedule for
Participating Providers as published by the Part B carrier.
b) For services provided to Subscribers by Specialist Physicians or
Outside Providers, [ ** ] of the fees actually paid by IPA.
General guidelines and special situations:
1. Services provided by IPA which are not a benefit, as specified in the
Subscriber's Secure Horizons Medical and Hospital Agreement, will not
be considered a part of Cost of Care.
2. The Cost of Care of Anesthesia Professional Services rendered by IPA
shall be set at [ ** ] of usual and customary charges. The Cost of
Care for Anesthesia Professional Services rendered through an outside
referral or reciprocity referral shall be set at the [ ** ] of usual
and customary charges, whichever is lower.
3. Any Medical Services provided where payment is considered collectible
through the coordination of benefits, third-party liability, Worker's
Compensation, or any other source including Copayments, shall not be
included in the Cost of Care. If, at a later date, these claims are
not collectible, or only partially collectible, then these services
will be included in the relevant programs, based on the Cost of Care
calculation cited above.
45
ATTACHMENT A5
UTILIZATION CONTROL PROGRAM
As an incentive for the cost effective provision of Hospital Services,
In-Area Emergency Services and other selected services, PacifiCare and IPA shall
establish a Utilization Control Program. The Utilization Control Program shall
utilize a Withhold Amount, as defined below, and shall be calculated by
comparing the Budget to the Expenses, as such terms are defined below.
A. WITHHOLD AMOUNT - PacifiCare shall withhold from IPA's monthly
Capitation Payment an amount equal to [ ** ] of the Monthly HCFA Payment to
apply to IPA's share of Budget Deficits, if any. PacifiCare may prospectively
adjust the Withhold Amount on a quarterly basis based upon the results of the
Utilization Control Program calculation. If the Agreement is terminated or
non-renewed pursuant to Section 6 or Section 7 of the Agreement, PacifiCare
may choose to adjust the Withhold Amount at the time that the notice of
termination or non-renewal is served.
B. BUDGET - The Budget shall equal the sum of 1. and 2. below:
1. For Hospital Services, [ ** ] of the Monthly HCFA Payment for those
Subscribers designating IPA as their Participating Medical Group ("IPA
Subscribers"), MINUS [ ** ] of the Monthly HCFA Payment in
consideration of the Reinsurance Program as set forth in subsection
(c) (4) herein.
2. For outpatient prescription drugs and other Benefit Withhold Services,
[ ** ] of the monthly revenue received from HCFA for Subscribers who
have designated IPA as their Participating Medical Group, plus
[ ** ] per member per month rebate for drugs ("Drug Rebate") ordered
through Prescription Solutions during any calendar year.
Notwithstanding Section 12.12, PacifiCare may amend the Drug Rebate on
an annual basis effective each January 1 by providing sixty (60) days
prior written notice to IPA.
C. EXPENSES - Expenses shall be valued as the total of the following:
1. INPATIENT EXPENSE AT HOSPITAL - Inpatient costs for Hospital Services
rendered at Hospital, valued at the amount paid to Hospital by
PacifiCare; plus,
46
2. NON-INPATIENT EXPENSES AT HOSPITAL - Other Hospital Services provided
by Hospital other than inpatient services, valued at the amount paid
to Hospital by PacifiCare; plus,
3. HOSPITAL SERVICES NOT PROVIDED AT HOSPITAL - The actual amount paid by
PacifiCare for Hospital Services not provided by Hospital; MINUS
4. REINSURANCE LIMIT - Any amount of Hospital Services Expense, as
defined in subsection (c) (1) through (3) above, in excess of the
Reinsurance Deductible specified in Paragraph 5.04 of this Agreement;
MINUS,
5. COORDINATION OF BENEFITS - Any amount received by PacifiCare from
third parties as the result of coordination of benefits and third
party recoveries for Hospital Services; plus,
6. Outpatient prescription drugs; plus
7. Acute hospital days greater than 150 per year; plus
8. Respite Care; plus,
9. Immunosuppressive drugs; plus,
10. Mammography (see Section E of Attachment C)
D. PAYMENTS TO IPA UNDER UTILIZATION CONTROL PROGRAM
1. BUDGET EXCEEDS EXPENSES - In the event the annual Budget exceeds
annual Expenses, PacifiCare shall pay IPA the Withhold Amount, if any,
plus an amount equal to [ ** ] of the amount by which the annual
Budget exceeds annual Expenses, up to a limit of [ ** ] of the
annual Budget.
2. EXPENSES EXCEED BUDGET - In the event that annual Expenses exceed
annual Budget, PacifiCare shall pay IPA the Withhold Amount, if any,
minus an amount equal to [ ** ] of the amount by which Expenses
exceed the Budget, up to a limit of [ ** ] of the annual Budget.
To the extent that the portion of the calculated deficit for which IPA
is responsible exceeds the Withhold Amount, IPA shall not be entitled
to any of the Withhold Amount. After the Withhold Amount has been
exceeded, any remaining portion of the deficit for which IPA is
responsible shall be carried forward into the succeeding term. An
amount equal to this remaining portion of the deficit will be withheld
from IPA's monthly Capitation Payment, using a mutually agreed upon
payment schedule, not to exceed one (1) Year.
47
Should this Agreement terminate leaving no successive term to carry
forward an existing deficit amount, such deficit amount shall be due
and payable by IPA to PacifiCare within one hundred fifty (150) days
of the effective date of termination of this Agreement.
E. SETTLEMENT OF UTILIZATION CONTROL PROGRAM PAYMENTS
PacifiCare shall make interim Utilization Control Program calculations and
payments, if any, on a quarterly basis within sixty (60) days after the end
of each calendar quarter from the Effective Date. Quarterly payments will
be made to IPA based on the calculations specified in subsection (D) above.
The Expense figure used in quarterly incentive program calculations shall
also include an "Incurred But Not Reported" factor in order to account for
outstanding Medical Services claims. PacifiCare shall make an annual
Utilization Control Program payment to IPA within one hundred and fifty
(150) days of the end of each Year.
48
ATTACHMENT B
SECURE HORIZONS MEDICAL AND HOSPITAL SUBSCRIBER AGREEMENT
Provided to IPA by PacifiCare concurrent with the execution of this Agreement.
IPA
Received this day of , 19 ,
-------------------- ---------- --
By:
----------------------------------
Title:
-------------------------------
49
ATTACHMENT C
COMPENSATION
A. BENEFIT WITHHOLD
PacifiCare shall retain [ ** ] of the revenue received each month
from HCFA to fund the following Subscriber benefits. These benefits are
outlined more specifically in the Secure Horizons Medical and Hospital
Subscriber Agreement.
1) Outpatient prescription drugs
2) Acute hospital days greater than 150 per year
3) Respite Care
4) Immunosuppressive Drugs
5) Mammography (see Section E below)
IPA shall be given the opportunity to share in any savings which may
be present in the Utilization Control Program as described in Attachment A5.
In addition, for the Secure Horizons preventative dental benefit, PacifiCare
shall retain an additional [ ** ] of the revenue received each month from
HCFA to fund the preventative dental benefit.
B. MONTHLY HCFA PAYMENT
PacifiCare shall pay IPA [ ** ] of the Monthly HCFA Payment, LESS
the applicable ISL Premium identified in Attachment A3 as payment for
Individual Stop Loss coverage. The percent of monthly HCFA Payment stated
above includes [ ** ] which is the value of IPA's covenant not to compete
as outlined in Section 9 of this Agreement. Should IPA breach the covenant
not to compete, PacifiCare shall reduce the percent of monthly HCFA Payment
by this [ ** ] commencing the month in which the breach occurs. It is
understood that any existing Medicare Risk arrangements that the IPA
currently has in effect does not constitute a breach for this purpose. The
payment per Subscriber per month by PacifiCare to IPA shall be increased or
decreased to reflect increases or decreases made by HCFA in the Monthly HCFA
Payment. PacifiCare shall make monthly retroactive adjustments to reflect
adjustments made by HCFA, if any.
PacifiCare shall provide IPA appropriate documentation in support of the actual
Capitation Payment made. Should IPA desire additional billing information,
PacifiCare shall make available for inspection other mutually agreed upon
documents, upon thirty (30) days prior written notice from IPA. IPA shall have
the right to reasonably audit PacifiCare's books and records directly relating
only to IPA's Capitation Payment determinations upon thirty (30) days prior
written notice at IPA's sole expense.
50
C. RETIREE SUBSCRIBER COMPENSATION
IPA shall receive an additional per month payment from PacifiCare for
certain Retiree Subscribers whose benefit plans permit a lesser Copayment.
This additional amount shall be determined by PacifiCare based on the number of
Retiree Subscribers enrolled each month in each of the Copayment categories set
forth below.
Copayment Paid Monthly Payment
By Retiree Subscriber Per Retiree Subscriber
--------------------- ----------------------
$ 0 [ ** ]
$ 1 [ ** ]
$ 2 [ ** ]
$ 3 [ ** ]
$ 4 [ ** ]
$ 5 [ ** ]
E. MAMMOGRAPHY
IPA shall receive [ ** ] for each screening and diagnostic
mammography study performed above the 1987 PacifiCare-wide baseline, specific
to the Secure Horizons program, for such studies. (This baseline equals 267
studies per 1,000 adult females.) The amount due to IPA shall be calculated
based upon utilization data submitted by IPA and shall be paid within one
hundred and fifty (150) days of the end of the current calendar year.
51
ATTACHMENT D
PACIFICARE PROVIDER POLICIES AND PROCEDURES MANUAL
Provided to IPA by PacifiCare concurrent with the execution of this Agreement.
IPA
Received this day of , 19 ,
-------------------- ---------- --
By:
----------------------------------
Title:
-------------------------------
52
ATTACHMENT F
IPA FACILITIES
(PROSPECT MEDICAL GROUP, INC. NETWORKS)
See attached list of the IPA Facilities for each of the Prospect Medical Group,
Inc. Networks listed below.
1. ▇▇▇▇▇▇ MEDICAL GROUP
CITIES IN SERVICE AREA:
Cerritos
Buena Park
Anaheim
2. NUESTRA FAMILIA MEDICAL GROUP
CITIES IN SERVICE AREA:
Huntington Park
Gardena
▇▇▇▇ Gardens
Los Angeles
Norwalk
Temple City
▇▇▇▇
3. SEOUL MEDICAL GROUP
CITIES IN SERVICE AREA:
Los Angeles
Van Nuys
Huntington Park
Lawndale
La Palma
Garden Grove
Santa ▇▇▇
▇▇▇▇▇▇▇▇
Bellflower
La Mirada
Anaheim
Hawaiian Gardens
Artesia
Torrance
Long Beach
53
4. PROSPECT MEDICAL GROUP CENTRAL:
CITIES IN SERVICE AREA:
Fountain Valley
Garden Grove
Huntington Beach
Long Beach
Orange
Santa ▇▇▇
▇▇▇▇▇▇
5. PROSPECT MEDICAL GROUP SOUTH:
CITIES IN SERVICE AREA:
Costa Mesa
Irvine
54
ATTACHMENT G
DIVISION OF FINANCIAL RESPONSIBILITY
The attached template outlines the division of financial responsibility between
IPA, the Hospital Incentive Program (HIP), and PacifiCare (PC), the intent being
to clarify Medical Service and Hospital Service categories in order to provide
for accurate administration. As it is impossible to include every service
available, the template serves as a model under which broad Medical Service and
Hospital Service categories suggest the appropriate financial responsibility for
services or items not specifically listed.
55
DIVISION OF FINANCIAL RESPONSIBILITY
CALIFORNIA
Secure Horizons Shared Risk Agreement
(IPA Capitated, Hospital Incentive Program w/PacifiCare)
IPA Prospect Medical Group, Inc.
Responsible Party
-------------------------------------------------------
List of Benefits - (In area)
----------------------------
AIDS - Professional Component
- Facility Component
Allergy
- Testing
- Serum
Ambulance, Air or Ground - In Area
- Out of Area
Amniocentesis
Anesthetics, Administration of
(Anesthesiology)
Artificial Insemination
Artificial Limbs (DME)
Biofeedback
Blood & Blood Products (Including
Professional Component)
- From Blood Bank [ ** ](1)
- Autologous Blood Donation
Chemical Dependency Rehabilitation
- Inpatient Facility Component
- Inpatient Professional Component
- Outpatient Professional Component
- Outpatient Facility Component
Chemotherapy
- Drugs
- Professional Component
Chiropractic (Medicare Approved Only)
Colostomy Supplies
- Outpatient
- Inpatient
Contact Lenses
- Intraocular lens (surgically
implanted)
- Incident to Cataract Surgery
(not surgically implanted)
Cosmetic Surgery (Medically Necessary)
- Facility Component
- Professional Component
Dental Services (for repair of
accident/injury only)
- Facility Component
- Professional Component
Detox
- Facility Component
- Professional Component
Durable Medical Equipment (DME)
(Medicare Approved Only)
- Surgically Implanted
- Inpatient or S.N.F.
- Outpatient
- Hearing Aids
(1) All references to division of responsibility have been deleted.
56
DIVISION OF FINANCIAL RESPONSIBILITY
CALIFORNIA
Secure Horizons Shared Risk Agreement
(IPA Capitated, Hospital Incentive Program w/PacifiCare)
IPA Prospect Medical Group, Inc.
Responsible Party
-------------------------------------------------------
List of Benefits - (In area)
----------------------------
Emergency Admissions
- In Area: - Facility Component
- - Professional Component
- Out of Area: - Facility Component
- Professional Component
Emergency Room Facility Component
- In Area
- Out of Area
Emergency Room Physicians - In Area
- Initial Treatment and Hospital
Based MDs (interpretation)
- Consults
- Out of Area
Employment Physical
Endoscopic Studies
- With Biopsy [ ** ](1)
- Without Biopsy
Experimental Procedures
Family Planning (Medicare Approved Only)
(e.g.: Amniocentesis)
- Professional Component
- Facility Component
Fetal Monitoring
- Outpatient (diagnostic)
- Inpatient
Genetic Testing
Health Education
Health Evaluation (Physical)
Hearing Aids
Hearing Screening
Hemodialysis
- Inpatient
- Outpatient
Home Health Care
(includes IV or injectables)
Hospice Services (Special Medicare
Reimbursement Program)
- Inpatient
- Professional Component
Hospital Based Physicians (Inpatient)
- Anesthesiology
- Audiology
- Cardiology
- Emergency Room
- Diagnostic Services
- Neonatology
- Neurology
- Nephrology
(1) All references to division of responsibility have been deleted.
57
DIVISION OF FINANCIAL RESPONSIBILITY
CALIFORNIA
Secure Horizons Shared Risk Agreement
(IPA Capitated, Hospital Incentive Program w/PacifiCare)
IPA Prospect Medical Group, Inc.
Responsible Party
-------------------------------------------------------
List of Benefits - (In area)
----------------------------
Hospital Based Physicians (continued)
- Pathology
- Physical Medicine
- Pulmonary
- Radiology
- Radiation Oncology
- Surgeon
Hospitalization, Inpatient Services,
Supplies, Testing
- In Area
- Out of Area
Immunization and Inoculations
- As Medically Indicated
Medicare Approved
- For Work/Travel
Infertility (Diagnosis and Treatment)
- Professional Component
- Facility Component
Injections and Injected Substances
(outpatient)
Insulin & Syringes
Laboratory Services
- Outpatient [ ** ](1)
- Inpatient
Lithotripsy
- Professional Component
- Facility Component
Mammography
Marriage Counseling
Medication
- Inpatient
- Outpatient Covered Injectables
- Outpatient Non-injectables
Mental Health
- Inpatient Facility Component
- Inpatient Professional Component
- Outpatient Professional Component
Nuclear Medicine Diagnostics
Nuclear Medicine Treatment/Therapy
- Facility Component (inpatient)
- Facility Component (outpatient)
- Professional Component
Nutritional/Dietetic Counseling
Office Visit Supplies, Splints,
Bandages, etc.
Organ Transplants (non-experimental)
- Facility component
- Professional component
(1) All references to division of responsibility have been deleted.
58
DIVISION OF FINANCIAL RESPONSIBILITY
CALIFORNIA
Secure Horizons Shared Risk Agreement
(IPA Capitated, Hospital Incentive Program w/PacifiCare)
IPA Prospect Medical Group, Inc.
Responsible Party
-------------------------------------------------------
List of Benefits - (In area)
----------------------------
O.P. Surgery
- Facility Component
- Professional Component
(Facility Based Mds)
- Professional Component - other
- Anesthesiology
Outpatient Surgery/Facility/Based
Physicians
- Anesthesiology
- Audiology
- Cardiology
- Emergency Room
- Diagnostic Services
- Neonatology
- Neurology
- Nephrology
- Pathology
- Physical Medicine
- Pulmonary
- Radiology
- Radiation Oncology [ ** ](1)
- Surgeon
Outpatient Diagnostic Services
(including, but not limited to,
those listed below)
- Angiograms
- Cat Scan
- 2 D Echo
- EEG
- EKG
- EMG
- ENG
- MRI
- Treadmills
- Ultrasound
Physical Therapy
- Inpatient
- Outpatient
Physician Visits
- To Hospital
- To S.N.F.
- To Patients Home
Physician Office Visits/Consultations
Podiatry Services (requires P.M.G.
referral)
Pregnancy
- Professional Component
- Facility Component
Prosthetic Devices
- Inpatient
- Outpatient
(1) All references to division of responsibility have been deleted.
59
DIVISION OF FINANCIAL RESPONSIBILITY
CALIFORNIA
Secure Horizons Shared Risk Agreement
(IPA Capitated, Hospital Incentive Program w/PacifiCare)
IPA Prospect Medical Group, Inc.
Responsible Party
-------------------------------------------------------
List of Benefits - (In area)
----------------------------
Radiology Services
- Outpatient
- Inpatient
- O.P. Surgery
Reconstructive Surgery
- Facility Component
- Professional Component
- Prosthetics
Refractions
Rehabilitation (Short Term) (e.g.: P.T.,
O.T., Speech, Cardiac Therapy)
- Inpatient Facility Component
- Inpatient Professional Component
- Outpatient Facility Component
- Outpatient Professional Component [ ** ](1)
Skilled Nursing Facility
Social Services - Medical
Specialist Consultations
Surgical Supplies
- Inpatient
- Outpatient Facility
- Outpatient
TMJ
- Dental Treatment
- Diagnosis and Medically Necessary
Correction
- Inpatient Facility Component
Transfusions
- From Blood Bank
- Autologous Blood Donation
Tissue Plasminogen Activator (TPA)
Vision Screening
Vision Care
- Implanted Lenses (cataract surgery)
- Lenses and Frames incident to
cataract surgery
- Non-cataract Related Lenses and
Frames
- Medically necessary care
- Refractions
(1) All references to division of responsibility have been deleted.
60