Exhibit 10.1
Form No. DMB 234 (Rev. 1/96)
AUTHORITY: Act 431 of 1984
COMPLETION: Required
PENALTY: Contract will not be executed unless form is filed
STATE OF MICHIGAN
DEPARTMENT OF MANAGEMENT AND BUDGET
PURCHASING OPERATIONS
P.O. BOX 30026, LANSING, MI 48909
OR
530 W. ALLEGAN, LANSING, MI 48933
CONTRACT NO.  071B9200147
between
THE STATE OF MICHIGAN
and

     
NAME & ADDRESS OF CONTRACTOR
  TELEPHONE (615) 376-1377
 
  Larry Pomeroy  
Prison Health Services, Inc.
  CONTRACTOR NUMBER/MAIL CODE
105 Westpark Drive, Suite 200
  (2) 23-2108853 (004)  
Brentwood, TN 37027
  BUYER/CA (517) 373-8530
LHPomeroy@asgr.com
  Rebecca Nevai

Contract Compliance Inspector: Lia Gulick (517)241-9902
Prisoner Health Care Services — On-site and Offsite — Statewide

             
CONTRACT PERIOD:
  From: February 10, 2009   To: March 31, 2012      
TERMS
  SHIPMENT                 See Contract Section 1.061
              N/A    
F.O.B.
  SHIPPED FROM        
N/A
                  N/A      
MINIMUM DELIVERY REQUIREMENTS
           
N/A
             
MISCELLANEOUS INFORMATION:
           
 
            Current Authorized Spend Limit:   $325,594,397.00

 

      FOR THE CONTRACTOR:   FOR THE STATE:       Prison Health Services, Inc.  
/s/ Elise A. Lancaster       Firm Name   Signature /s/ Lawrence H. Pomeroy  
Elise A. Lancaster, Director       Authorized Agent Signature   Name/Title
Lawrence H. Pomeroy   Purchasing Operations       Authorized Agent (Print or
Type)   Division February 10, 2009   February 10, 2009       Date   Date

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(CIRCUMSPICE LOGO) [g17601g1760101.gif]
STATE OF MICHIGAN
Department of Management and Budget
Purchasing Operations
Contract Number # 071B9200147
Prisoner Health Care Services
Buyer Name: Rebecca Nevai
Telephone Number: 517-373-8530
E-Mail Address: nevair@michigan.gov

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TABLE OF CONTENTS   CONTRACT NO. 071B9200147 (LOGO) [g17601g1760102.gif]

Table of Contents

         
DEFINITIONS
    7    
Article 1 — Statement of Work (SOW)
    10  
1.010 Project Identification
    10  
1.011 Project Request
    10  
1.012 Background
    10  
1.020 Scope of Work and Deliverables
    11  
1.021 In Scope
    11  
1.022 Work and Deliverable
    14  
1.030 Roles and Responsibilities
    34  
1.031 Contractor Staff, Roles, and Responsibilities
    34  
1.040 Project Plan
    36  
1.041 Project Plan Management
    36  
1.042 Reports
    36  
1.050 Acceptance
    37  
1.051 Criteria
    37  
1.052 Final Acceptance — DELETED — NOT APPLICABLE
    37  
1.060 Proposal Pricing
    38  
1.061 Proposal Pricing
    38  
1.062 Price Term
    38  
1.063 Tax Excluded from Price
    38  
1.070 Additional Requirements
    39  
1.071 Additional Terms and Conditions specific to this Contract
    39    
Article 2, Terms and Conditions
    40  
2.000 Contract Structure and Term
    40  
2.001 Contract Term
    40  
2.002 Options to Renew
    40  
2.003 Legal Effect
    40  
2.004 Attachments & Exhibits
    40  
2.005 Ordering
    40  
2.006 Order of Precedence
    40  
2.007 Headings
    40  
2.008 Form, Function & Utility
    41  
2.009 Reformation and Severability
    41  
2.010 Consents and Approvals
    41  
2.011 No Waiver of Default
    41  
2.012 Survival
    41  
2.020 Contract Administration
    41  
2.021 Issuing Office
    41  
2.022 Contract Compliance Inspector (CCI)
    41  
2.023 Project Manager
    42  
2.024 Change Requests
    42  
2.025 Notices
    42  
2.026 Binding Commitments
    43  
2.027 Relationship of the Parties
    43  
2.028 Covenant of Good Faith
    43  
2.029 Assignments
    43  
2.030 General Provisions
    43  
2.031 Media Releases
    43  
2.032 Contract Distribution
    43  
2.033 Permits
    43  
2.034 Website Incorporation
    44  
2.035 Future Bidding Preclusion
    44  
2.036 Freedom of Information
    44  
2.037 Disaster Recovery
    44  

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TABLE OF CONTENTS   CONTRACT N0. 071B9200147(LOGO) [g17601g1760102.gif]

         
2.040 Financial Provisions
    44  
2.041 Fixed Prices for Services/Deliverables
    44  
2.042 Adjustments for Reductions in Scope of Services/Deliverables
    44  
2.043 Services/Deliverables Covered
    44  
2.044 Invoicing and Payment — In General
    44  
2.045 Pro-ration
    45  
2.046 Antitrust Assignment
    45  
2.047 Final Payment
    45  
2.048 Electronic Payment Requirement
    45  
2.050 Taxes
    45  
2.051 Employment Taxes
    45  
2.052 Sales and Use Taxes
    45  
2.060 Contract Management
    46  
2.061 Contractor Personnel Qualifications
    46  
2.062 Contractor Key Personnel
    46  
2.063 Re-assignment of Personnel at the State’s Request
    46  
2.064 Contractor Personnel Location
    46  
2.065 Contractor Identification
    46  
2.066 Cooperation with Third Parties
    48  
2.067 Contractor Return of State Equipment/Resources
    48  
2.068 Contract Management Responsibilities
    48  
2.070 Subcontracting by Contractor
    48  
2.071 Contractor Full Responsibility
    48  
2.072 State Consent to Delegation
    48  
2.073 Subcontractor Bound to Contract
    48  
2.074 Flow Down
    49  
2.075 Competitive Selection
    49  
2.080 State Responsibilities
    49  
2.081 Equipment
    49  
2.082 Facilities
    49  
2.090 Security
    49  
2.091 Background Checks
    49  
2.092 Security Breach Notification
    49  
2.100 Confidentiality
    50  
2.101 Confidentiality
    50  
2.102 Protection and Destruction of Confidential Information
    50  
2.103 Exclusions
    50  
2.104 No Implied Rights
    50  
2.105 Respective Obligations
    50  
2.110 Records and Inspections
    51  
2.111 Inspection of Work Performed
    51  
2.112 Examination of Records
    51  
2.113 Retention of Records
    51  
2.114 Audit Resolution
    51  
2.115 Errors
    51  
2.120 Warranties
    51  
2.121 Warranties and Representations
    51  
2.122 Warranty of Merchantability
    53  
2.123 Warranty of Fitness for a Particular Purpose
    53  
2.124 Warranty of Title
    53  
2.125 Equipment Warranty
    53  
2.126 Equipment to be New
    53  
2.127 Prohibited Products
    54  
2.128 Consequences For Breach
    54  
2.130 Insurance
    54  
2.131 Liability Insurance
    54  
2.132 Subcontractor Insurance Coverage
    55  
2.133 Certificates of Insurance and Other Requirements
    56  

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2.140 Indemnification
    56  
2.141 General Indemnification
    56  
2.142 Code Indemnification
    56  
2.143 Employee Indemnification
    56  
2.144 Patent/Copyright Infringement Indemnification
    56  
2.145 Continuation of Indemnification Obligations
    57  
2.146 Indemnification Procedures
    57  
2.150 Termination/Cancellation
    58  
2.151 Notice and Right to Cure
    58  
2.152 Termination for Cause
    58  
2.153 Termination for Convenience
    58  
2.154 Termination for Non-Appropriation
    58  
2.155 Termination for Criminal Conviction
    59  
2.156 Termination for Approvals Rescinded
    59  
2.157 Rights and Obligations upon Termination
    59  
2.158 Reservation of Rights
    59  
2.160 Deleted — Not Applicable
    59  
2.170 Transition Responsibilities
    60  
2.171 Contractor Transition Responsibilities
    60  
2.172 Contractor Personnel Transition
    60  
2.173 Contractor Information Transition
    60  
2.174 Contractor Software Transition
    60  
2.175 Transition Payments
    60  
2.176 State Transition Responsibilities
    60  
2.180 Stop Work
    60  
2.181 Stop Work Orders
    60  
2.182 Cancellation or Expiration of Stop Work Order
    61  
2.183 Allowance of Contractor Costs
    61  
2.190 Dispute Resolution
    61  
2.191 In General
    61  
2.192 Informal Dispute Resolution
    61  
2.193 Injunctive Relief
    62  
2.194 Continued Performance
    62  
2.200 Federal and State Contract Requirements
    62  
2.201 Nondiscrimination
    62  
2.202 Unfair Labor Practices
    62  
2.203 Workplace Safety and Discriminatory Harassment
    62  
2.210 Governing Law
    62  
2.211 Governing Law
    62  
2.212 Compliance with Laws
    62  
2.213 Jurisdiction
    62  
2.220 Limitation of Liability
    63  
2.221 Limitation of Liability
    63  
2.230 Disclosure Responsibilities
    63  
2.231 Disclosure of Litigation
    63  
2.232 Call Center Disclosure
    63  
2.233 Bankruptcy
    64  
2.240 Performance
    64  
2.241 Time of Performance
    64  
2.243 Liquidated Damages
    65  
2.244 Excusable Failure
    65  

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2.250 Approval of Deliverables
    66  
2.251 Delivery Responsibilities
    66  
2.252 Delivery of Deliverables
    66  
2.253 Testing
    66  
2.254 Approval of Deliverables, In General
    67  
2.255 Process For Approval of Written Deliverables
    67  
2.256 Process for Approval of Services
    68  
2.257 Process for Approval of Physical Deliverables
    68  
2.258 Final Acceptance
    68  
2.260 Ownership
    68  
2.261 Ownership of Work Product by State
    68  
2.262 Vesting of Rights
    68  
2.263 Rights in Data
    68  
2.264 Ownership of Materials
    69  
2.270 State Standards
    69  
2.271 Existing Technology Standards
    69  
2.272 Acceptable Use Policy
    69  
2.280 Extended Purchasing
    69  
2.281 MIDEAL — DELETED — NOT APPLICABLE
    69  
2.290 Environmental Provision
    69  
2.291 Environmental Provision
    69  

CONTRACT ATTACHMENTS
Attachment A            Pricing Sheet
Attachment B            Service Level Agreements
CONTRACT APPENDICES
Appendix A            Contractor Organizational Chart
Appendix B            Required Reports
Appendix C            Contractor Quality Assurance Plan
Appendix D            Utilization Management Program and Pre-authorization
Review Process
Appendix E            Claims Processing Process
Appendix F            Risk Share Reconciliation Methodology
Appendix G            Aetna Performance Guarantees

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DEFINITIONS   CONTRACT N0. 071B9200147(LOGO) [g17601g1760102.gif]

DEFINITIONS
“24x7x365” means 24 hours a day, seven days a week, and 365 days a year
(including the 366th day in a leap year).
“Actual Costs” means allowable expenses incurred by Contractor in the
performance of services under this contract and its management fee for the
provision of such services, all of which are more fully described in Appendix F.
“Additional Service” means any Services/Deliverables within the scope of the
Contract, but not specifically provided under any Statement of Work, that once
added will result in the need to provide the Contractor with additional
consideration.
“Audit Period” has the meaning given in Section 2.112.
“Business Day,” whether capitalized or not, shall mean any day other than a
Saturday, Sunday or State-recognized legal holiday (as identified in the
Collective Bargaining Agreement for State employees) from 8:00am EST through
5:00pm EST unless otherwise stated.
“Blanket Purchase Order” is an alternate term for Contract and is used in the
State’s computer system.
“Business Critical” means any function identified in any Statement of Work as
Business Critical.
“Chronic Failure” is defined in any applicable Service Level Agreements.
“Days” means calendar days unless otherwise specified.
“Deleted — Not Applicable” means that section is not applicable or included in
this Contract. This is used as a placeholder to maintain consistent numbering.
“Deliverable” means physical goods and/or commodities as required or identified
by a Statement of Work.
“DMB” means the Michigan Department of Management and Budget.
“Durable Medical Equipment (DME)” DME is patient specific medical equipment that
is intended to be used on a continual basis throughout incarceration and
including parole or discharge (usually by the patient, or by the caregiver for
the patient).
“Environmentally preferable products” means a product or service that has a
lesser or reduced effect on human health and the environment when compared with
competing products or services that serve the same purpose. Such products or
services may include, but are not limited to, those which contain recycled
content, minimize waste, conserve energy or water, and reduce the amount of
toxics either disposed of or consumed.
“Excusable Failure” has the meaning given in Section 2.244.
“Hazardous material” means any material defined as hazardous under the latest
version of federal Emergency Planning and Community Right-to-Know Act of 1986
(including revisions adopted during the term of the Contract).
“Incident” means any interruption in Services.
“ITB” is a generic term used to describe an Invitation to Bid. The ITB serves as
the document for transmitting the RFP to potential bidders.
“Key Personnel” means any Personnel designated in Section 1.031 as Key
Personnel.
“Medical Practitioner (MP)” is responsible for the on-site primary medical care
to prisoners. The medical practitioner can be any of the following: family
practice physician, emergency medicine physician, general practice physician, or
an internal medicine physician. With written approval from the MDOC Chief
Medical Officer, a medical practitioner may also include other physician
specialists, nurse practitioner, or physician assistant.
“New Work” means any Services/Deliverables outside the scope of the Contract and
not specifically provided under any Statement of Work, that once added will
result in the need to provide the Contractor with additional consideration.

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DEFINITIONS   CONTRACT N0. 071B9200147(LOGO) [g17601g1760102.gif]

“Ozone-depleting substance” means any substance the Environmental Protection
Agency designates in 40 CFR part 82 as: (1) Class I, including, but not limited
to, chlorofluorocarbons, halons, carbon tetrachloride, and methyl chloroform; or
(2) Class II, including, but not limited to, hydrochlorofluorocarbons.
“Panic Values” means a lab value that is clearly abnormal that is directly
related to the seriousness of the patient’s illness.
“Post-Consumer Waste” means any product generated by a business or consumer
which has served its intended end use, and which has been separated or diverted
from solid waste for the purpose of recycling into a usable commodity or
product, and which does not include post-industrial waste.
“Post-Industrial Waste” means industrial by-products which would otherwise go to
disposal and wastes generated after completion of a manufacturing process, but
does not include internally generated scrap commonly returned to industrial or
manufacturing processes.
“PPPM” means per prisoner per month
“Recycling” means the series of activities by which materials that are no longer
useful to the generator are collected, sorted, processed, and converted into raw
materials and used in the production of new products. This definition excludes
the use of these materials as a fuel substitute or for energy production.
“Reuse” means using a product or component of municipal solid waste in its
original form more than once.
“RFP” means a Request for Proposal designed to solicit proposals for services.
“Risk Share Cap” or “Risk Share Maximum Cap” means the maximum PPPM amount that
MDOC will be responsible to pay to Contractor for services under this contract.
“Risk Share Target” means the PPPM amount, as set forth in Attachment A, that
will serve as the attachment point for the sharing of savings / costs between
the MDOC and the Contractor.
“Services” means any function performed for the benefit of the State.
“Specialty Network” means a network of hospitals and ancillary care clinics that
will provide medical services to prisoners.
“Specialty Provider” is a group of physicians that provide specialized services
to prisoners via on-site, off-site, and telemedicine.
“Source reduction” means any practice that reduces the amount of any hazardous
substance, pollutant, or contaminant entering any waste stream or otherwise
released into the environment prior to recycling, energy recovery, treatment, or
disposal.
“State Location” means any physical location where the State performs work.
State Location may include state-owned, leased, or rented space.
“Sub-contractor”, For the purposes of this Contract, a subcontractor is any
entity providing services other than the prime contractor’s employees: including
but not limited to, independent contractors, vendor partners, specialty
providers, hospitals, provider network, claims processing provider, or
laboratory or courier services; regardless of how the prime contractor and
entity term their relationship.
“Unauthorized Removal” means the Contractor’s removal of Key Personnel without
the prior written consent of the State.
“Waste prevention” means source reduction and reuse, but not recycling.

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DEFINITIONS   CONTRACT N0. 071B9200147(LOGO) [g17601g1760102.gif]

“Waste reduction”, or “pollution prevention” means the practice of minimizing
the generation of waste at the source and, when wastes cannot be prevented,
utilizing environmentally sound on-site or off-site reuse and recycling. The
term includes equipment or technology modifications, process or procedure
modifications, product reformulation or redesign, and raw material
substitutions. Waste treatment, control, management, and disposal are not
considered pollution prevention, per the definitions under Part 143, Waste
Minimization, of the Natural Resources and Environmental Protection Act (NREPA),
1994 PA 451, as amended.
“Work in Progress” means a Deliverable that has been partially prepared, but has
not been presented to the State for Approval.
“Work Product” refers to any data compilations, reports, and other media,
materials, or other objects or works of authorship created or produced by the
Contractor as a result of an in furtherance of performing the services required
by this Contract.

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TERMS AND CONDITIONS   CONTRACT N0. 071B9200147(LOGO) [g17601g1760102.gif]

Article 1 — Statement of Work (SOW)
1.010 Project Identification
1.011 Project Request
This Contract is for the Michigan Department of Corrections (MDOC), to provide
prisoner health care services, which includes all MDOC correctional facilities,
camps, Special Alternative Incarceration (SAI), and Re-entry Centers. Prisoners
on tether and Region Correction Centers are not part of this Contract. Federal
prisoners housed in Michigan correctional facilities are included in this
Contract.
The Contractor must work in partnership with the State and the State’s other
contractors to provide medically necessary prisoner health care while
continually improving quality of care, accessibility, timeliness, and cost
effectiveness.
1.012 Background
A. General

  1.   MDOC arranges for and administers medically necessary health care to an
average of 50,000 prisoners (including prisoners from other jurisdictions
including but not limited to federal prisoners) annually at correctional
facilities, camps, and Re-Entry centers (current facilities listed at
www.MICHIGAN.GOV/CORRECTIONS). The MDOC operates Duane L Waters Health Center
(DWH) in Jackson, MI which has 112 in patient beds, and houses Levels I-V
prisoners whose medical needs cannot be met at other correctional facilities
within the state. DWH provides acute, medical, long term care, and surgical
procedures that are non-invasive or use conscious sedation. DWH also has the
responsibility for C-Unit, which involves a program to care for 64 extended-care
patients who do not require hospitalization at DWH, but whose needs could not be
met in general population. DWH currently has a procedure suite with two
procedure rooms, on-site emergency room staffed 24 hours, 7 days a week with
MDOC RNs, EMTs and Parademics and specialty clinics.     2.   The prisoners from
other jurisdictions are included in the MDOC population count, and the
Contractor must be responsible to provide the same services to, and will receive
the same PPPM payments for these prisoners.     3.   The MDOC will be going
tobacco free in February of 2009.

B. Health Care Standards

  1.   Health care services are provided to prisoners using a standard of
medically necessary care imposed by court decisions, legislation, accepted
correctional and health care standards, and MDOC policies and procedures. MDOC
is working toward accreditation from the National Commission on Correctional
Health Care (NCCHC) utilizing the NCCHC standards of care and NCQA standards as
the MDOC’s acceptable standards for providing health care services to MDOC
prisoners. See www.ncchc.org and www.ncqa.org for more information.     2.   As
of 1-23-09, all facilities except for the Michigan Reformatory and the Huron
Valley Complex, including Camp White Lake and Camp Valley are ACA accredited.
MDOC will be actively seeking accreditation for the Michigan Reformatory and the
Huron Valley complex facilities.     3.   The MDOC has not yet made a formal
decision regarding when to apply for NCCHC accreditation.     4.   The MDOC will
be financially responsible for fees associated with the actual NCCHC
accreditation. The Contractor will be financially responsible for meeting the
NCCHC clinical standards.

C. Consent Decree

  1.   As of 2-3-09, MDOC is under federal (Hadix) consent decree at Egeler
Reception and Guidance Center, dialysis unit at Ryan Correctional Facility,
Duane Waters Health Center and C-Unit. The MDOC has been and continues
addressing and resolving the issues necessary to close the consent decree.
Federal court-appointed experts monitor MDOC’s compliance with the consent
decree.

D. Audit/Review Findings

  1.   In December 2007 the National Commission on Correctional Healthcare
(NCCHC) issued an independent report titled A Comprehensive Assessment of the
Michigan Department of Corrections Health Care System. The report cited 54
recommendations for improving the delivery of health care services to prisoners.

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TERMS AND CONDITIONS   CONTRACT N0. 071B9200147(LOGO) [g17601g1760102.gif]

E. Electronic Medical Record

  1.   The MDOC has recently entered into a contract with NextGen to convert
MDOC’s current EMR from Serapis to NextGen version 5.2. By May 1, 2009, it is
anticipated that the conversion/upgrade to NextGen 5.2 will be completed at all
facilities. Each facility must convert over as NextGen becomes available, and
current EMR Serapis will be used until that time.     2.   In the event the
NextGen 5.2 System is not fully operational by May 1, 2009, the parties must
review and agree upon the impact on services and deliverables under the contract
and must enter into a Contract Change Notice as appropriate.

F. Data Warehouse

  1.   Once the data warehouse is operational, the Contractor will transmit
HIPAA compliant transaction data in the form of an 837 to MDOC via their data
warehouse no less than monthly, including all data from the beginning of the
Contract. By April 1, 2009, MDOC will be able to validate the 837 transfer
capability of the Contractor. MDOC may not have an operating data warehouse for
an estimated six months.

G. Third Party Reviewer

  1.   The MDOC will be contracting with a third party reviewer who will assist
MDOC in assessments of services provided under this Contract, including but not
limited to trends and utilization management, as well as assisting in the review
and enforcement of the Service Level Agreements, and in the Risk Share
reconciliations. The Contractor agrees to provide all requested information to
the third party reviewer, copying the MDOC Contract Compliance Inspector (CCI).
The Contractor does not have any financial responsibility for the payment of the
third party reviewer.

1.020 Scope of Work and Deliverables
1.021 In Scope
A. General
The Contractor must be responsible for the completion of all work set out in the
Contract. The State may employ all reasonable means to ensure that the work is
progressing and being performed in compliance with the Contract.
MDOC seeks to engage in a contract that provides high quality medically
necessary care to the prisoner population, ensuring continuity of health care in
a cost effective manner. This includes, but is not limited to:

  1.   Diagnosis and treatment of chronic conditions to reduce unplanned
episodes of care and specifically reduce unplanned emergency services.     2.  
Operation of a health care delivery system that enables MDOC to control and
predict the cost of prisoner health care.     3.   Provision of specialty care
delivery at correctional facilities that maximizes the use of telemedicine.    
4.   Reduction of preventable hospitalizations of prisoners.     5.   Maximum
use of electronic systems including HIPAA compliant electronic claims payment
and encounter reporting, electronic medical records utilization and
telemedicine.     6.   Provide medically necessary care to prisoners meeting the
MDOC goals of reducing costs, improving prisoner access to care, documenting
evidence-based quality of care, maintaining security issues to the community and
continuously improving quality utilizing NCCHC and NCQA standards of care in
service delivery.     7.   Develop and maintain a system to provide on-site
primary care. Therefore, the Contractor is expected to employ or contract with
Medical Practitioners (MPs) who possess a medical degree from an accredited
school of medicine with full-licensure experience in the practice of medicine or
osteopathic medicine and surgery.     8.   Developing and maintaining a hospital
and ancillary care network (on-site and off-site), Specialty network and on-site
and off-site services include, but are not limited to; prosthetics and
orthotics, optometry, physical and occupational therapy, on-site and off-site
specialty consultants and services. On-site dialysis services are currently
provided at Ryan Correctional Facility in Detroit, MI, for males and Scott
Correctional Facility for females, changing to Huron Valley in 2009. Specialty
Services available at Duane Waters Health Center (DWH) are only available to
prisoners that are within a 60 mile radius of DWH unless written approval is
received from MDOC.

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TERMS AND CONDITIONS   CONTRACT N0. 071B9200147(LOGO) [g17601g1760102.gif]

  9.   Developing a system for review, pre-authorization processing of requests
for service, utilization management, and claims processing. Utilization
Management will involve the use of NCCHC and NCQA standards of care to determine
acceptable diagnostic and treatment pathways for major categories of medical
conditions with the approval of MDOC.     10.   The Contractor is required to
provide services that include, but are not limited to the services, as stated in
the 1.022 Work and Deliverable section.     11.   The Contractor will provide
necessary medically necessary services within a timely manner as identified in
the Contract and SLA’s. The Contractor will need to determine and supply the
number of on-site and off-site providers that are needed to fulfill the
obligation.     12.   Items supplied by the MDOC:

  a.   The State will provide office space, a computer, printer, copier, fax and
general office and medical supplies at the correctional facilities for the
on-site medical practitioners, consistent with community physicians offices.
Sharing of copiers and printers is required within the health care clinics.    
b.   Each facility has work space for the on-site MP. Some facilities have more
space than others. As the Contractor determines the appropriate staffing needs,
the MDOC will work with them to ensure space is available. At some facilities,
where multiple providers are assigned, it may mean that additional shifts are
necessary. As of 2-3-09, there are two facilities (JCS-Cotton and JCF-Cooper
Street) where the MDOC has requested MPs to work in multiple shifts due to the
workload and the number of exam rooms available to MPs.     c.   X-ray
capabilities vary by facility.     d.   Telephone line costs inside the MDOC
Correctional Facilities are the responsibility of the MDOC, with the exception
of personal and non-MDOC business phone calls made by the Contractor staff.    
e.   Laboratory and phlebotomy supplies for general medical supplies are
provided at the MDOC expense, with the exception of dialysis supplies, which are
the Contractor’s responsibility in the scope of this contract. See Section 1.022
V for reference to dialysis supplies.     f.   MDOC has civil servant staff
dictation services available for use by only providers at DWH, at no cost to the
Contractor.

  13.   Internet access is not available inside an MDOC Correctional Facility

B. MDOC Security Measures

  1.   The Contractor, their staff, sub-contractors, provider network and vendor
partners must follow MDOC security procedures which may require the use of armed
custody officers. All services (primary and specialty) provided inside MDOC
facilities including DWH require compliance with the following procedures:

  a.   Obtainment of a successful Law Enforcement Information Network (LEIN)
security clearance in advance of their visit for personnel who will be working
on site at correctional facilities.     b.   Required entry into correctional
facilities.     c.   Direct contact with prisoners.     d.   Possible contact
with parolees.     e.   Development of a program that subjects all Contractor
employees, sub- contractors, and independent contractors filling full or
part-time primary care positions to pre-employment and for cause alcohol and
drug testing. Drugs tested must include all controlled substances as identified
in Article 7 of the Michigan Public Health Code, 1978 Public Act 368, as
amended, being MCL 333.7101 et seq.

  2.   The Contractor must ensure the security and safety of these activities.
This must include, but is not limited to, performance of security background
checks (in addition to those performed by the MDOC) on all personnel assigned to
work inside State of Michigan facilities, declaration of the process and
components of background checks, name of the company that performs the security
checks, use of uniforms and ID badges, etc. If security background checks are
performed on staff, the Contractor must indicate the name of the company that
performs the check as well as provide a document stating that each employee has
satisfactorily completed a security check and is suitable for assignment to
State facilities. Upon request by the State, the Contractor must provide the
results of all security background checks. Contractor security background check
of personnel must include, but is not limited to, credential verification,
licensure verification, Medical School, Board Certification, practice history,
CME credits, past insurance verification, claims history and the National Data
Bank Report. The Contractor is financially responsible for any costs associated
with background checks they perform.

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  3.   The Contractor, their staff, sub-contractors, provider network and vendor
partners must comply with the security access requirements of each individual
State correctional facility. The State will issue State ID badges to the
Contractor’s personnel working on-site at correctional facilities.

  4.   The State will also perform security background checks that may include
but is not limited to a LEIN criminal background check. The LEIN background
check process normally takes three to five days to complete for new on-site
staff. The Contractor will be required to provide to the State a list of all
Contractor staff, sub-contractors, and/or provider network staff that will work
on-site services at State of Michigan correctional facilities, including name
and date of birth. Social security number or driver license number may also be
required.

C. Mental Health Services
MDOC has contracted with the Michigan Department of Community Health (DCH) to
provide the following mental health services:

  1.   Inpatient Services

  a.   Acute Care for seriously mentally ill prisoners with acute symptoms of
psychosis or high suicide risk.     b.   Rehabilitation Treatment Services
(Sub-Acute Care)

  2.   Crisis Stabilization Program     3.   Residential Treatment Program    
4.   Outpatient Mental Health Services

NOTE: Laboratory Services related to Mental Health Services are in the scope of
this contract.
D. Staffing

  1.   MDOC utilizes civil servants for all health care positions with the
exception of Medical Practitioners, On-site or Off-site Specialty Care
Providers, and staffing for the on-site dialysis units.     2.   Some civil
servant health care staff are covered by collective bargaining units.     3.  
MDOC will provide dietitians and social workers when medically necessary.     4.
  MDOC will be sharing on-site civil servant support staff with the Contractor,
for such positions as medical assistants, medical record examiner, general
office assistant, and secretary. The Contractor will use MDOC current and
expanding civil servant categories.

  a.   MDOC and the Contractor will jointly train the civil servants that are
providing these essential support functions to ensure the civil servants
understand the needs of the Contractor staff, and that the Contractor’s
expectations will be consistently met.     b.   MDOC agrees to develop a
dedicated communication path for the Contractor staff at each facility, with the
on-site MDOC Health Unit Manager (HUM). During the beginning of the Contract,
the Contractor may request regular meetings at their desired frequency, and as
the contract proceeds, may meet with the HUM on a less frequent regular basis,
or as needed, as the Contractor deems warranted. The Contractor and the HUM will
review contractor and civil servant performance, communication paths, and any
needs for re-training or performance coaching at their facility; as well as
collaborating in the development of civil servant performance criteria, with a
corrective action plan when outcomes are not consistently met.     c.   MDOC
will ensure that all support staff duties for the Contractor are covered by the
MDOC civil servants, and will make adjustments to the actual position
descriptions as needed.

E. Out of Scope
The following items are currently the responsibility of the MDOC and are not
currently part of this Contract:

  1.   Removal of chemical, biological, or hazardous waste.     2.   Transfer of
prisoners is at the discretion of MDOC. Transfers for medical reasons will be
approved by the MDOC Regional Medical Officer (RMO).     3.   Mental Health
Services, currently contracted through DCH.     4.   Lost, stolen, or damaged
patient specific medical equipment or goods are not the responsibility of the
Contractor.     5.   Pharmaceutical Acquisition and Delivery

  a.   Pharmaceuticals, pharmaceutical costs and pharmaceutical delivery are
currently out of the scope of this Contract, except for dialysis related
pharmaceuticals. The State has existing contract(s). The current contract(s)
will be made available to the Contractor.     b.   The MDOC Pharmaceutical
Formulary will be maintained and approved by the MDOC. The Contractor will have
input on the formulary through discussions with the MDOC Chief Medical Officer,
and representation on the Medical Services Advisory Committee (MSAC).

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  6.   Maintenance and support of the data warehouse that collects, analyzes,
integrates, and reports data.     7.   Provision and maintenance and support of
an electronic medical record system is out of scope, however the Contractor
must, utilizing MDOC civil servant support staff, be responsible for ensuring
data is input into this system. NOTE: Any costs associated with remote access to
the EMR will be the responsibility of the Contractor.     8.   Non-emergent
transportation.     9.   All security costs for emergency and non-emergency
transportation.     10.   MDCH is responsible for providing mental health
competency assessments.     11.   MDOC will be responsible for any MDOC approved
infrastructure and security equipment associated with the construction of secure
units at local hospitals.     12.   Substance abuse and detoxification programs.
    13.   The cost of eye glasses is the responsibility of MDOC.

F. State Roles and Responsibilities
The following roles and responsibilities have been identified as currently those
of the MDOC or MDCH:

  1.   Notify the Contractor of changes in the services defined as medically
necessary. MDOC does not have a formal list of services deemed medically
necessary, however, MDOC reviews all doctor recommendations for medical
necessity. Soft tissue transplants may be deemed medically necessary, but solid
organ transplants and sex change operations are not currently approved. MDOC
will continue to review medically necessary services jointly with the
Contractor.     2.   Maintain a Medical Services Advisory Committee (MSAC) to
collaborate with the Contractor on quality improvements.     3.   MDOC staff is
responsible for the onsite lab draws. MDOC is financially responsible for the
staff cost and the lab supplies.     4.   Collaborate with the Contractor on
quality improvement activities, and other activities which impact the health
care provided to prisoners.     5.   Participate with Contractor in the design,
data collection, and evaluation of system-wide programs to improve access,
quality and performance.     6.   Provide MDOC training on MDOC policy and the
EMR to the contracted on-site staff for the new employee training. The
Contractor is responsible for ensuring arrangements are made with the MDOC
trainers in advance and to ensure the on-site staff attends and completes the
training.     7.   MDOC will provide security staff at their cost.     8.  
Current State of Michigan Civil Servant employed by the MDOC will be retained in
their current positions and will be supervised by MDOC Management. Registered
Nurses, Licensed Practical Nurses, and Medical Records are located at all
ambulatory clinics and DWH. Pharmacist Assistants will be located at most
ambulatory clinics that will coordinate receiving of Pharmaceuticals for the
MDOC.     9.   Current MDOC Employee Discipline Policy 02.03.100 and Corrective
Action for Performance Problems Policy 02.03.130 are available from the MDOC
CCI, for the Contractor.     10.   The MDOC civil servant staff are responsible
for the scheduling of routine and urgent on-site provider appointments and
off-site specialty appointments, in coordination with the Contractor.     11.  
The MDOC will provide necessary security and MDOC civil servant staff to assure
Contractor has maximum availability for the use of infirmary beds.

1.022 Work and Deliverable
Contractor must provide Deliverables/Services and staff, and otherwise do all
things necessary for or incidental to the performance of work, as set forth
below:
A. Delivery Model

  1.   The Contractor is solely responsible for arranging and administering
on-site medically necessary services to prisoners. Services must be arranged and
administered by a Medical Practitioner with full licensure. A Medical
Practitioner may be any of the following: family practice physician, emergency
medicine physician, general practice physician, or an internal medicine
physician. When appropriate for a facility and approved in writing by the MDOC
Chief Medical Officer (CMO), other physician specialists, nurse practitioner, or
physician assistants may be utilized with supervision by a licensed physician.
The CMO will only need to provide written approval for lower level
practitioners. The delivery system must include a sufficient number of medical
practitioners with the training, experience, and specialization to furnish
services (preventive, chronic and acute care) to all prisoners, using NCCHC and
NCQA standards of care. In addition, MPs are required to immediately respond to
medical emergencies while on-site. Also see Attachment B Service Level
Agreements (SLAs).

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  2.   The Contractor must create and maintain their documented delivery model
of on-site primary care, including compliance with NCCHC and NCQA standards of
care, to be submitted to the MDOC CCI.     3.   The Contractor must designate a
Medical Practitioner as the lead healthcare provider at each correctional
facility with full credentials and licensing within their field, as well as
training, experience, and specialization to furnish services. The Contractor may
also utilize Nurse Practitioners/Physicians Assistants with supervision by a
licensed physician. The Contractor must provide a full-time healthcare
recruiter, located in Michigan, to ensure coverage of all MP positions. In
addition, the Contractor will supply regional managers to monitor staffing,
performance levels, and specialty clinic coverage.     4.   The Contractor must
maintain a health care delivery system of sufficient size and resources, to be
developed and maintained, to provide quality care that accommodates the needs of
the prisoners within each facility.     5.   The Contractor is expected to
continually incorporate best practice management of chronic and acute care
conditions into the primary care setting. These methodologies include but are
not limited to:

  a.   Contractor’s Disease Management Manual     b.   A multi-tiered review and
approval process of off-site service requests.     c.   Expanding Telemedicine
Usage     d.   Regional Medical Directors performing periodic peer reviews.    
e.   Continuous Quality Improvement     f.   Infection Control Program     g.  
Training and Education for related MDOC and Contractor Staff     h.  
Utilization Management Program     i.   Health Information Exchange Program    
j.   Predictive Modeling Tools

  6.   The Contractor will focus on providing as many services on-site as
reasonably possible. The Contractor will also focus on continued improvements in
the provision of on-site services and management of off-site services.

B. Preventive, Chronic, and Acute Care

  1.   The Contractor will be responsible for providing on-site primary health
care services to MDOC prisoners including; preventive, chronic and acute care
using HEDIS measurement criteria. Please see current MDOC policies and
procedures for a description of On-site Primary Care Services/Criteria. Please
also see Attachment B Service Level Agreements (SLAs) for MDOC expectations for
preventive, chronic, and acute care. Visit www.ncqa.org for more information
about HEDIS measurement criteria.     2.   The Contractor must provide Medical
Practitioner (MP) on-site preventive and primary health care services in
accordance with the National Commission on Correctional Health Care Standards
for health services in prisons (current edition) MDOC policies, procedures,
standards of care, ACA medical services standards, and prevailing community
standards. In addition to the above, the Contractor’s MP staff will provide
clinical oversight and support to the MDOC nursing staff clinic operations. As
part of the medical encounter, the Medical Practitioner will:

  a.   Develop a relationship with the patient.     b.   Gather data (medical
history, systems inquiry and physical examination, combined with laboratory and
imaging studies),     c.   Analyze and synthesize that data.     d.   Then the
provider will:

  i.   Develop a treatment plan in conjunction with all disciplines (further
testing, therapy, watchful observation, referral, follow up     ii.   Treat the
patient accordingly     iii.   Assess the progress of treatment and alter/manage
the plan as necessary.

  3.   At a minimum, the following chronic clinics will be provided by
Contractor:

  a.   Asthma     b.   Diabetes     c.   Hyperlipidemia     d.   HIV Disease    
e.   Coronary Artery Disease     f.   Hypertension     g.   Siezure Disorder

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  h.   Latent TB Infection & TB     i.   Warafin Therapy     j.   The Contractor
will add any clinics requested or required my MDOC.

  4.   Documentation in the MDOC electronic medical record must be completed by
the end of the business day on the day of the encounter.

C. Facility Staffing

  1.   On-site MPs may be any of the following: family practice physician,
emergency medicine physician, general practice physician, or an internal
medicine physician. When appropriate for a facility and approved in writing by
the MDOC Chief Medical Officer (CMO), other physician specialists, nurse
practitioner, or physician assistants may be utilized with supervision by a
licensed physician. There must be coverage for at least one full time medical
practitioner for each correctional facility. Coverage for the camps and re-entry
centers may not require full time Medical Practitioner staffing.     2.   The
Contractor must designate a Medical Practitioner as the lead healthcare provider
at each correctional facility with full credentials and licensing within their
field, as well as training, experience, and specialization to furnish services.
The Contractor may also utilize Nurse Practitioners/Physicians Assistants with
supervision by a licensed physician. The Contractor must provide a full-time
healthcare recruiter, located in Michigan, to ensure coverage of all MP
positions. In addition, the Contractor will supply regional managers to monitor
staffing, performance levels, and specialty clinic coverage     3.   Following
the allowable contract start up grace period in Article 2, if SLAs are not met,
the Contractor will provide a written plan of corrective action in accordance
with Attachment B which must include an agreed upon cure period.. If after the
cure period the SLA is still not met, the MDOC may hire additional providers to
achieve compliance with the SLAs. The Contractor will be responsible for all
costs incurred by the MDOC to fill the vacancy (including salary and recruiting
costs) until such time that the Contractor is able to fill the position on a
permanent basis. This includes the cost of the MP and all administrative costs.
MDOC will deduct these costs from Contractor monthly invoices.     4.   Must
recruit, train, fully staff, and supervise sufficient on-site MPs for all MDOC
correctional facilities including staffing the Duane L. Waters Health Center
(DWH) inpatient, outpatient and emergency room. MPs will be required to use the
MDOC automated time keeping system.     5.   Copies of Contractor, staff,
independent contractor, sub-contractor or vendor partner provider network
liability insurance must be provided to the State upon request.     6.   The
MDOC currently has two physician civil servant positions. Once is located at
Ryan and the other at Huron Valley. MDOC will continue to maintain those two
civil servant positions at the respective facilities. In the event that either
of the civil servant physician positions become vacant, the MDOC may move the
civil servant position to another facility due to operational need. Currently,
there are not any plans for changing the locations of the positions. If the MDOC
moves one of the civil servant positions to another institution, the Contractor
would be required to backfill at the facility with the vacancy. There is not an
expectation that this would be an additional position but rather a relocation of
a position to another facility.     7.   MP must provide supervision,
consultation and work review for each mid-level MP. Telemedicine may be utilized
for the MP supervision if available at the facility as a short term solution
(less than 90 days) with prior written approval from the MDOC CCI in the
following situations: when a physician vacancy or absence does not allow for the
on-site direct supervision, unanticipated absences for illness or injury, or
inclement weather. Inclement weather must be defined as the closure of the
public school nearest the facility due to weather conditions. Camps and
facilities that do not have telemedicine require a mechanism of on-site
supervision for mid level MPs. Supervision must be eight hours per week for full
time mid-level MPs. The Contractor will further supervise through chart review
and countersignature of mid-level orders, as well as conducting patient care
conferences between the physician and the mid-level to assure compliance to all
treatment guidelines.     8.   Medical Practitioner (MP) responsibilities are
not limited to but will include:

  a.   Provision of the required coverage hours in the MDOC facility and
on-call.     b.   Medical Practitioner Sick Call     c.   Actively participates
in and ensures compliance with the Contractor’s utilization management program.
    d.   Oversees and monitors the care provided to hospitalized patients and
reports daily to the Contractor’s RMD. Contractor will provide weekly updates to
the MDOC CMO.     e.   Reviews requests for specialty consultations prior to
forwarding to the Regional Medical Director.     f.   Ensures re-credentialing
for clinicians is done at least every three years.

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  g.   Monitors compliance with physician extender supervision rules and
regulations specific to state requirements.     h.   Performs site-specific
clinical review based on needs assessments identified by monitoring clinical
programs.     i.   Performs and monitors peer review activities in accordance
with the Contractor’s policy addressing peer review.     j.   Assists in the
ongoing monitoring of systems, processes and outcomes related to the chronic
care program.     k.   Ensures that the operation of the on-site infirmary (if
applicable) is in compliance with Contractor standards and that the scope of
care provided is appropriate for the staffing and resources available.     l.  
Assists in monitoring the sick call process to ensure timely patient access to
medically necessary services.     m.   Ensures that established suicide
prevention programs are implemented to identify, refer and treat patients who
are at risk for suicide.     n.   Ensures that intoxication and withdrawal
guidelines are implemented to identify and treat prisoners who are intoxicated
or undergoing withdrawal.     o.   Ensures that the site implements and
maintains the PHS QI program.

D. Licensing

  1.   The MPs must hold current unrestricted licenses in the State of Michigan
appropriate to their scope of practice. MPs must have and maintain the following
licenses throughout the contract period:

  a.   Physicians — (1) State of Michigan license to practice as Medical Doctor
or practice Osteopathic Medicine, (2) DEA license, (3) Drug Control license for
each location he/she will be assigned from State of Michigan, and (4) Pharmacy
CS-3.     b.   Nurse practitioners — (1) State of Michigan, RN license,
(2) Nurse Practitioner License, and (3) DEA license.     c.   Physicians
Assistant — (1) State of Michigan Physicians Assistant, and (3) DEA license.    
d.   Physicians/Hospitalists at DWH must also have Advanced Cardiac Life Support
(ACLS) certification.     e.   Copies of Contractor, staff, independent
contractor, sub-contractor or vendor partner provider network liability
insurance must be provided to the State, upon request.     f.   The Contractor
must ensure that all providers rendering services to prisoners are licensed by
the State of Michigan and are qualified to perform their services throughout the
duration of the Contract. Copies of the current licenses will be forwarded to
the MDOC CCI.     g.   The Contractor must have written credentialing and three
year re-credentialing policies and procedures.

  2.   The Contractor will be responsible to ensure that applicable providers
have a DEA license to dispense pharmaceuticals from the Prescribing Box.     3.
  The Contractor’s health care practitioners credentialing process includes:

  a.   The Contractor Credentialing Program completes primary source
verification of each practitioner’s medical education, licensure, DEA
certification, malpractice history, and liability insurance coverage. Health
care practitioners are re-credentialed every three years to ensure that
qualifications are current and the privileges extended to the health care
practitioner are appropriate.     b.   Re-credentialing — Accepted applicants
are required to report any adverse event or disciplinary action that might
affect their ability to practice medicine. Every three years, the process,
called re-credentialing, is repeated to ensure continued compliance with
Contractor’s standards.

  4.   The Contractor’s credentialing program must meet the standards
established by the NCQA, URAC, and also meets NCCHC P-C-01 Standard on
credentialing and must ensure that health care practitioners providing on-site
service have the credentials required to practice within their field. All Health
care practitioners (employees and independent contractors) who provide on-site
services where required to complete the credentialing program, prior to
rendering services on-site.     5.   The Contractor will re-credential health
care practitioners (employees and independent contractors) every three years.
The re-credentialing process will ensure that:

  a.   The Contractor’s Regional Designee (RD) will ensure the provider’s
credentials are current, active and unexpired at all times. The Contractor’s
Regional Medical Director (RMD) will be notified of any concerns or changes.

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  b.   Peer reviews are due one year after the date of hire and yearly
thereafter. These will be performed by the RMD or designee and forwarded to the
Contractor’s Credentials Coordinator. At the time of the re-credentialing, a
Peer Review Summary form will be completed by the RMD and forwarded with the
packet.     c.   At least 30 days prior to the third anniversary of the hire
date, the RD will forward a completed Re-credentialing Packet to the Credentials
Coordinator. The Packet will contain the following:

  •   Re-credentialing questionnaire     •   Narrative section     •   Release
of Liability Form     •   Medical Practitioner Request for Privileges (Adult and
Juvenile)     •   Re-credentialing Peer Review Summary     •   Checklist of
Necessary Items for Re-credentialing

  d.   The Credentials Coordinator will review the packet, obtain any missing
documentation, and present the file to the Credentials Committee for approval or
other action.     e.   The RD, RMD and the provider will be notified of the
Credentials Committee action, with the MDOC CCI to be copied.     f.   The Aetna
provider network credentialing / re-credentialing policies and procedures are
consistent with NCQA and URAC, as well as state and federal requirements. The
following items are considered in the credentialing process:

  i)   Licensure and/or certification verified through state licensing boards in
geographical areas where network providers will care for our members     ii)  
Board certifications (when applicable)     iii)   Loss of/limitation of hospital
admitting privileges (when applicable)     iv)   Current professional liability
coverage

  §   Drug Enforcement Agency (DEA) and state controlled-drug substance
registration, when applicable, through verification by the U.S. Department of
Commerce National Technical Information Service (when applicable)     §  
Disciplinary history or adverse actions related to licensure and DEA
registration, which we query through state licensing boards and the National
Practitioner Databank (NPDB)     §   Malpractice insurance claim history to
examine any possible trends and to look for evidence that might suggest any
probable substandard professional performance in the future     §   Mental and
physical health to determine if the provider’s history might suggest any
probable substandard professional performance in the future     §  
Participation in government programs such as Medicare, Medicaid     §  
Professional education and training through verification by the American Medical
Association (AMA) Masterfile, American Osteopathic Association (AOA) and
specialty board or specific residency/training program (highest level of
education, depending on provider type)     §   Work history

  v)   The Aetna Regional Credentialing and Performance committee (CPC) reviews
the credentialing file. This peer review process includes the determination of
professional competence and conduct. Between credentialing/re-credentialing
cycles, the CPC may review a provider if adverse actions have been reported.    
vi)   Providers are re-credentialed using the Aetna standard credentialing
process every two or three years depending upon individual state requirements.
During re-credentialing, the regional CPC reviews performance data for
participating PCPs, Ob/Gyns and other high-volume specialists.     vii)  
Additionally, state board sanctions lists, Office of Personnel Management
reports that list providers debarred from participating plans, and lists from
the OIG are reviewed within 30 days of their publication to identify any
providers in our networks.

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E. Training
   Mandatory Training prior to working on-site for MPs/Specialists:

  1.   The Contractor will be responsible for providing the following training
to all staff/sub contractors. Each correctional facility has a training room
that is used for providing mandatory training to MDOC staff and facility
contractors. Coordination for use of the training room will need to be made
through the facility Human Resources Developer. Contractor Training and
Orientation must include, but is not limited to:

  a.   Security Orientation     b.   Utilization Management     c.   Off-site
Services     d.   Pharmaceutical Utilization, MDOC Formulary, and Off-Formulary
Process     e.   Credentialing     f.   Scope of Services, and Service Level
Agreements     g.   Supervisory Agreements     h.   Management and
Administration of Health Care     i.   Quality Improvement Program     j.  
Training and Education     k.   Productivity Standards

  2.   Training must be scheduled in multiple sessions to prevent coverage
shortages at facilities. This does not preclude the Contractor from having an
annual statewide provider conference.     3.   MDOC will approve all training in
advance.     4.   MDOC will provide MDOC specific training modules.     5.  
MDOC requires five business days advance written notice to the MDOC CCI of all
training, and reserves the right to attend any training session.     6.  
Training files must be maintained on each MP/Specialist. Training records must
be sent to MDOC training division when training is complete.     7.   The
Contractor is responsible for arranging the following new on-site MPs and
specialists training with the MDOC facility training staff. The Contractor is
also responsible for ensuring their employee attends and completes the mandatory
training. This training includes:

  a.   40 hour new employee training for on-site MP utilizing MDOC approved
training modules, prior to the MP being allowed into a MDOC correctional
facility.     b.   20 hours of new employee training for specialists that work
inside the facility independently of nursing support, prior to the specialist
being allowed into a correctional facility.     c.   8 hours National
Corrections Training Program on HIV

  8.   Mandatory On-going Training for MPs/Specialists

  a.   Training on updated and new policies within 30 days of the effective date
of the new policy, as needed.     b.   Written sign off to attest on site
MPs/Specialists received information on policy and procedure changes.     c.  
16 hours of annual update training detailed by MDOC in multiple sessions.     d.
  40 hours of CPE clinical related training, annually (the required 40 hours of
CPE annual clinical training are required to fulfill certified CME requirements)
    e.   Updates on HIV training, as necessary.     f.   The Contractor has
established a Category 2 Continuing Medical Education (CME) Program for licensed
health care providers. The Category 1 CME Reimbursement Program provides
reimbursement (up to $1,500) for expenses associated with provider’s
participation in educational programs and specific professional expenses that
are incurred throughout the year. The Contractor’s CME Program is consistent
with Internal Revenue Service rules and regulations regarding reimbursement of
business related expenses.     g.   The Contractor ensures that licensed
employees are credentialed (when applicable), certified in CPR/AED, have access
to Continuing Education Units (CEU) and Category 2 CME’s. The Contractor
maintains a Continuing Education Program to update provider’s skills, present
new medical findings, and assist with re-licensure requirements.

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F. Physician Prescribing Box

  1.   MPs must be required to maintain and utilize a Michigan Drug Control
License for a prescribing box at each correctional facility to reduce
unnecessary runs to the local pharmacy. Prescribing boxes are not required at
camps, SAI, and Re-Entry Centers. It is expected that the MP will delegate the
authority to use the box to other qualified medical personnel, such as MDOC
nursing staff, at their discretion, consistent with the laws of Michigan.     2.
  The prescribing boxes are provided by the MDOC. The Contractor will be
responsible for ensuring the providers have a DEA license to dispense the
pharmaceuticals.     3.   If for any reason there is a temporary MP vacancy at a
facility, the Contractor must immediately designate another MP to be responsible
to ensure the prescribing box is accessible and delegate the authority to use
the prescribing box to other qualified medical personnel, such as MDOC nursing
staff, at their discretion, consistent with the laws of Michigan. The Contractor
will provide a designated “back up” MP for each facility in anticipation and
preparation for filling a temporary vacancy or absence.

G. Coverage Hours/On Call Coverage

  1.   Coverage Hours
The Contractor must provide the following on-site MP coverage at each MDOC
correctional facility and Duane Waters Health Center:

  a.   Appropriate staffing to support availability to see prisoners for eight
hours per day, between the hours of 6:00 a.m. to 9:00 p.m., Monday through
Saturday, excluding State holidays. The Contractor must stagger MP hours as
needed to provide the necessary Monday through Saturday coverage. The Contractor
must be responsible for ensuring appropriate staffing to meet the needs of the
facility, including segregation rounds for facilities with segregation units.  
  b.   The Contractor must ensure dialysis medical coverage is staffed from 6:00
am to 11:00 p.m. six days a week. The Contractor must provide coverage by
contracted medical staff. The MDOC will re-evaluate the needed hours as
additional chairs have been added, although MDOC anticipates continuing the
coverage hours stated in the contract. The Contractor must ensure the required
dialysis coverage is provided.     c.   Weekly MP staffing schedules by
facility, including dialysis and DWH, must be approved by the MDOC Contract
Compliance Inspector (CCI) two weeks in advance. Short notice schedule changes
present additional challenges for the scheduling staff, custody, and the
prisoner, and should be limited to emergencies only. The MDOC understands that
last minute emergencies occur and will work with the Contractor to ensure
facilities are properly notified. The Contractor will develop staffing schedules
in a monthly format for each week within the month detailed by position and
shift for each site. The next month’s proposed staffing schedule will be
submitted to the CCI at least two weeks prior to the beginning of the service
month. In addition, weekly updates/changes to the monthly staffing schedule will
be provided to the CCI in compliance with the two week time frame     d.   MP
staffing for the emergency room at DWH.     e.   MPs must immediately respond to
on-site medical emergencies if requested by health care or correctional custody
staff.     f.   The DWH ER room requires 24x7x365 coverage. Contractor staffing
at DWH must provide coverage seven days per week. The DWH ER will provide access
to a physician to answer questions to MDOC staff state-wide during nights,
weekends, and holidays.

  2.   On Call Coverage

  a.   MDOC staff requires access to a MP for questions related to urgency of
care during evening, nights, weekends and holidays at facilities where on call
services are not provided.     b.   The Contractor must also provide on call MP
services for sites without on call capabilities in case they need to utilize
those services.     c.   On call services will be required for Coldwater,
Saginaw, Muskegon, Ionia, St. Louis, Huron Valley, Jackson, and Kinross.
Additional sites may be added by mutual agreement of MDOC and the Contractor
allowing 60 days for implementation     d.   Telephone response to on call
contacts must be returned within 30 minutes of the request. If required to
respond to the facility the MP must be on-site within one hour.     e.   The
documentation must be entered into the EMR as verbal orders by the nurse on-site
and signed off and approved by the MP on their next regularly scheduled work
day.     f.   MP hours will be staggered to provide the necessary Monday through
Saturday coverage.     g.   The required number of hours per day will be
coordinated through the on-site facility support and security staff.

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  h.   The Contractor will ensure coverage for dialysis services.     i.   The
Contractor will provide monthly proposed on call staffing matrices to the MDOC
CCI that include DWH and dialysis services.

H. Short Term Provider Coverage

  1.   The Contractor must provide a minimum of 24 hours weekly for vacancies
and short term coverage (including sick and vacation time). Short term coverage
must not exceed 90 days per provider, per contract year.     2.   The Contractor
will assure that all services are provided through careful and consistent
management of staffing required to provide services under the contract.
Appropriate levels of backfill hours have been budgeted for each staffing
position to ensure coverage and budget resources to cover for paid leave (e.g.
holiday, vacation, sick, etc.) as well as unplanned absences.

I. Productivity/Monitoring
MDOC health care staff schedules the routine, transfer, and follow up visits for
the MP. Urgent and emergent requests are either added to the schedule or
verbally communicated to the MP by health care staff. See MDOC’s current
policies and procedures.

  1.   Routine sick calls must be seen within five business days of the verbal
or written request from the prisoner or an MDOC employee.     2.   Urgent care
needs must be seen within two business days of the verbal or written request
from an MDOC employee.     3.   Emergent care must be seen within one hour of
notification of a need to be seen by verbal request either by an MDOC employee
or the prisoner.     4.   Chronic care requests must be seen within five
business days from the requested follow-up date.     5.   Non-urgent specialty
consults that are not seen by the off-site specialist within 120% of the
timeframe identified by the MP must be immediately (no later than one business
day) re-evaluated by the MP.     6.   All urgent specialty consults not seen by
the off-site specialist within five business days must be re-evaluated by the MP
within one business day.     7.   MPs are responsible to assess the prisoner’s
ability to consent to medical services. If the prisoner is able to consent but
refuses medical services, the MP must document the refusal. If the prisoner is
unable to consent to medical services they must begin the guardianship
paperwork. See www.MICHIGAN.GOV/CORRECTIONS or the MDOC CCI current MDOC
Policies and Procedures.     8.   All of the above reviews and services will
need to be documented in the EMR within one business day of the encounter.    
9.   The Contractor must establish criteria for monitoring appointment
scheduling for routine and urgent care and for monitoring waiting times for
individual prisoners at each facility.     10.   The Contractor and MDOC must
jointly develop procedures for and perform a quarterly review of productivity
standards by practitioner, taking into account varying issues that may have an
impact, such as periodic bed counts, limits to prisoner movement, facility
lockdowns, inability to mix security levels, and canceled appointments due to
unexpected movement due to court cases. By utilizing provider productivity
reports, the Contractor and MDOC must analyze and determine overall productivity
to identify any variances, and implement corrective measures. Utilizing
Encounter Forms, the Contractor working with and utilizing MDOC civil servant
staff will prepare a series of productivity reports to document all direct and
indirect patient encounters; tracking provider, patient, purpose of encounter,
diagnosis code and length of encounter. The Contractor managers analyze these
reports to determine overall productivity and to identify any variances. All
variances are reviewed to determine if they are the result of productivity or
operational issues. In both cases, corrective measures are implemented by the
parties.. Copies of the productivity reports and any related corrective actions
must be submitted to the MDOC CCI.     11.   Until such time as NextGen 5.2
becomes fully operational, the Contractor and MDOC will develop and implement a
manual system to produce necessary productivity reports. The MDOC civil servant
staff are responsible for the scheduling of routine and urgent on-site provider
appointments and off-site specialty appointments, in coordination with the
Contractor. The Contractor must monitor wait times. In performance of their
respective functions, both parties may utilize the Aetna Appointment Scheduling
Center which provides accelerated scheduling of specialists and hospital
procedures via a 3-tiered approach, with dedicated staff, hours of operation
mirroring the clinic(s). The Contractor staff will be afforded access to the
Aetna specialty network of providers and facilities via an 800 phone number,
internet or fax.

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  12.   The EPM section of the EMR will allow review and monitoring of the
MP/specialist schedules.

J. Segregation Requirements

  1.   MP rounds are required in segregation units every two weeks. Prisoners
housed in segregation units more than 30 days, regardless of medical status,
must be evaluated monthly by a MP.     2.   The Contractor must meet MDOC
standards on specified segregation rounds and documentation time frames. Those
services will include acute sick call services, chronic care services and
education. Those services will be delivered as appropriate within the segregated
units.     3.   Documentation of rounds and evaluation must be entered in MDOC’s
Electronic Medical Record (EMR) by the close of business on the same day as the
encounter.     4.   The face to face evaluations need to be documented in the
EMR according to the requirements of the Contract. The normal rounding
requirement will be documented by signing the Health Care Segregation Rounding
form.

K. MP Intake Screening

  1.   The MP prisoner intake screening must occur within five calendar days
after prisoner intake screening by MDOC nursing staff at the MDOC male and
female intake facilities.     2.   MPs must conduct the prisoner intake
screenings per current MDOC Policies and Procedures 03.04.100.     3.   MPs
must, per MDOC’s current Acuity Level Determination Process, assign prisoner
acuity level at time of the intake screening. The acuity level must be
documented in the EMR on the same day as the day of the intake screening.     4.
  Prisoners with current medications must have their medications renewed by MPs
on the day they arrive at a correctional facility reception center. MDOC nursing
staff will notify MP of the need to renew medications prior to 5:00 p.m. on the
date of arrival. Prisoners arriving at intake with current medications must have
the medication renewed by the MP before 7:00 p.m. on the same day the prisoner
arrives at intake.     5.   Sexually Transmitted Disease clinical evaluation
must be conducted in accordance to MDOC Operating Procedure 03.04.110D.     6.  
All of the above services must be documented in the EMR within one business day
of the encounter.

L. Performance Improvement Plan (Mentoring/Progressive Discipline)

  1.   The Contractor must have written policies and procedures in place for MP
performance improvement. These policies include a mentoring program, progressive
discipline and/or a performance improvement plan and peer review process. The
Contractor must also have a standardized peer review program to facilitate the
evaluation of physicians who provide service. The peer review must be designed
to evaluate both the appropriateness of care provided by the physician and
compliance with the requirements of their position description.

  2.   The Provider Mentoring Program must include the following escalating
steps:

  a.   Informal counseling of MP     b.   Documented MP re-education and or
continuing education     c.   Peer review of the MPs services for 30 days     d.
  Oversight of the MP for 30 days by Contractor’s Regional Medical Director or
designee responsible for supervision on the MPs     e.   Termination of MP

  3.   MPs are entered into the mentoring program by either the MDOC or the
Contractor. When the same MP has a re-occurrence of the same or similar issue,
they will be re-entered into the mentoring program at the next escalating step.
    4.   Within five days of entering the mentoring program, the Contractor will
assess the possible deficiencies and provide a written MP Mentoring Plan to the
MDOC. The Mentoring Plan must include:

  a.   Identify of the deficiencies or areas for improvement for the MP.     b.
  The level of on-site supervision required, with a frequency at least weekly.  
  c.   Specify whether the MP has received re-education, informal counseling, or
a MP mentoring plan previously and provide the issue and resolution.     d.  
Specify the related MP mentoring program step to be completed.     e.   Close
the individual MP Mentoring Plan only after the Contractor adds documentation of
completed steps and resolution, upon mutual agreement with the MDOC.     f.  
Complete all weekly MP supervision reviews on-site, and not via telemedicine
during the time an MP is in the Mentoring Program.

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  5.   MDOC has established a complaint process to address civil servant staff
and contractor performance concerns. The process includes attempts to resolve
issues at the facility level with escalation to the region and finally to the
Central Office and with the Contractor’s management team. MDOC policies also
address concerns about civil servant staff performance. Employee Discipline
Policy 02.03.100 and Corrective Action for Performance Problems Policy
02.03.130. Current MDOC Policies and Procedures are available from the MDOC CCI.

M. Coordination of Care for Mental Health Services with the Michigan Department
of Community Health
Some prisoners may need mental health services provided by the Department of
Community Health (DCH). The Contractor is not responsible for the direct
delivery of specified mental health services, however, they must establish and
maintain written standard operating procedures describing their working
relationship and communication pathways with DCH. The Contractor will be
responsible for the following:

  1.   The target population is addressed in MDOC Policy Directive 04.06.180,
04.06.182, 04.06.183, and 04.16.115. Current DCH and MDOC policies and
procedures may be requested from the MDOC CCI.     2.   The MP must examine and
medically clear the prisoner of any medical conditions prior to transfer to DCH
mental health inpatient units, crisis stabilization program (CSP), or
residential treatment program (RTP). and indicate that the medical condition can
be treated by MDOC Ambulatory Care. The MP must rule out health care reasons for
a prisoner’s problems with mental status i.e., diabetes, seizures, heat
exhaustion prior to completion of the referral forms to DCH.     3.   All health
care is provided by MPs, including those within the mental health services unit.
Services to be provided on-site at the Huron Valley in-patient units include:

  a.   Completion of health physical with 24 hours of admission to any inpatient
services     b.   Prescribing of non-psychiatric medications and ordering
medical labs     c.   Arrangement of off site medical care     d.   Performance
of medical rounds     e.   Receipt and review of written medical requests from
prisoners     f.   Determination of prisoner’s ability to consent to medical
services     g.   Consideration and pursuit of guardianship when prisoner
refuses medical services     h.   Response to grievances and appeals for
non-mental health treatment issues     i.   Compliance with related policies.
Current DCH and MDOC program information, policies and procedures may be
requested from the MDOC CCI.     j.   Compliance with MDOC operating procedures
in the event a MP disagrees with a mental health provider’s decision not to
admit a prisoner into treatment. See MDOC Procedure 04.06.180C for information
on referrals to mental health.     k.   Laboratory Services related to mental
health services are in the Contractor’s scope of this Contract.

  4.   The Contractor’s on-site staff will coordinate with MDOC civil servant
staff in communicating and coordinating with facility Mental Health Services.  
  5.   Documentation in the MDOC EMR for all services must be completed by the
close of business on the day of the encounter.

N. Electronic Medical Record (EMR)
The MDOC has recently entered into a contract with NextGen to convert MDOC’s
current MDOC’s EMR from Serapis to NextGen version 5.2. By May 1, 2009 it is
anticipated that the conversion/upgrade to NextGen 5.2 will be completed at all
facilities. Each facility must convert over as NextGen becomes available, and
current EMR Serapis will be used until that time.

  1.   The Contractor, working with and utilizing MDOC civil servant staff, is
responsible for ensuring the entry of all health data from their on-site MP to
be entered in MDOC’s EMR by the end of business on the day of the encounter.
This includes entry for encounters, diagnostic testing, and lab results ordered
by the MP.

  2.   The Contractor is responsible for the entry of all health data from their
network of specialists and/or consultants to be entered into the MDOC’s EMR by
the end of the next business day following the day of contact for out-patient
service providers.

  3.   For in-patient services data must be entered into the MDOC EMR within 14
calendar days after in-patient discharge.

  4.   The NextGen EMR has the capability of allowing scanned documents to be
entered into the EMR, but will not have voice recognition capability.

  5.   MPs not meeting a minimum threshold of 80% compliance for 30 consecutive
days will be referred to the Provider Mentoring Program in Section 1.022 L.

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TERMS AND CONDITIONS   CONTRACT N0. 071B9200147(LOGO) [g17601g1760102.gif]

  6.   The Contractor may elect to use a transcription service approved by the
MDOC and DIT to document in the EMR. Any and all costs associated with this
service will be the responsibility of the Contractor including the remote access
fee. Access to the EMR would be via secure ID which has a one time fee and a
monthly fee. Currently the fee is $50 for the token and $20 per month. Rates are
subject to change and actual costs will be paid by the Contractor. (There is an
MDOC civil servant dictation service available to the DWH providers only, at no
cost to the Contractor.)

  7.   If the Contractor requests remote access for any staff all costs
including monthly fees will be the responsibility of the Contractor.

  8.   The MDOC currently has purchased 180 (concurrent) MP EMR licenses for
medical practitioner/vendor use. Contractor requests for additional licenses
will be approved at the discretion of the MDOC with proper justification.
Justification needs to include the purpose and the benefit of the request. For
requests not approved by the MDOC the Contractor would be responsible to pay
MDOC for the license and maintenance costs. Licenses must be purchased in
increments of five. The current license cost from NextGen is $10,000 with an
annual maintenance cost of $2,000. Rates are subject to change, and actual costs
will be paid by the Contractor, if licenses are requested.

  9.   When prisoners arrive at an intake center, the prisoner medical record is
initiated, or re-initiated. The MDOC nurses begin the documentation for the
paper and electronic files. Some of the intake documentation is maintained in
the paper file, along with some other information.     10.   A paper medical
file is still maintained for each prisoner, including such items as labs and
x-ray records, in addition to the EMR records. There are parts of the medical
record that are still paper for the dialysis patients. There are some forms and
information coming from community hospitals.     11.   The historical paper
medical records will not be incorporated into the electronic record, but will be
maintained in the clinical offices.

O. Telemedicine Utilization

  1.   The Contractor is responsible to maximize the usage of telemedicine. MDOC
expects the delivery of services via telemedicine whenever possible in order to
minimize both direct medical and related transportation and security costs to
the State. Telemedicine will be available at all MDOC Correctional Facilities
and three Camps (White Lake, Cusino, and Lehman). The cost of the on-site
telemedicine equipment is paid by the MDOC. Telemedicine is currently in all
correctional facilities.

  2.   The Contractor will provide quarterly reports to MDOC that will compare
telemedicine capabilities and actual usage, identifying areas where telemedicine
could be expanded. MDOC and the Contractor will work together to increase
telemedicine usage in both on-site and off-site networks.

  3.   Telemedicine specialties may include but are not limited to:

  a.   Cardiology     b.   Endocrinology     c.   Ear, Nose, and Throat     d.  
Emergency Room     e.   Intestinal     f.   Hematology     g.   Internal
medicine     h.   Neurology     i.   Neurosurgery     j.   Orthopedics     k.  
Pulmonary     l.   Renal     m.   Surgery     n.   Urology     o.   Infectious
disease

  4.   MDOC facility telemedicine equipment is Polycom HDX8000 Series equipment.
All telemedicine equipment is mobile. Information about the Polycom equipment is
available at www.polycom.com. The MDOC equipment includes:

  a.   HDX8002Xl Based Styleview telehealth cart which includes an Eagle Eye
camera, 23” LCD display, no power system, and a utility shelf     b.   Ear,
nose, and throat (ENT) Scope     c.   Genera Examination Camera

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  d.   Camera and Illumination National Television System Committee (NTSC)    
e.   Otoscope     f.   30mm coupler

  5.   The Contractor must ensure their specialty networks and hospitals have
compatible telemedicine capabilities. The cost of the telemedicine equipment
outside of the MDOC correctional facilities will be borne by the Contractor
and/or their provider network. Remote access is available via a secure ID token.
    6.   The Contractor will establish a schedule of telemedicine clinics within
geographic regions. The Contractor will hold an initial series of educational
conferences/conference calls with the provider network and fully describe the
internal telemedicine capabilities at each facility. The Contractor will also
work proactively with the provider network to determine which specialists are
willing to work with existing or new installations of telemedicine equipment in
order to provide clinic services. This education will be ongoing throughout the
term of the contract to continually develop and expand the telemedicine network.
    7.   Equipment needed to link into the MDOC telemedicine equipment includes;

  a.   Video conferencing unit. Software applications that run through a
computer and web cam will not work with the system. See www.polycom.com for
desktop solutions.     b.   IP connection with a minimum line speed of 384kbps.

  8.   The State’s third party reviewer will review the Contractor’s performance
and utilization of telemedicine on an on-going basis making recommendations for
opportunities for increased telemedicine usage.     9.   Telemedicine scheduling
will be a done by MDOC staff for on-site MP requests for telemedicine visits.
Telemedicine appointments will be included on the MPs daily schedule.     10.  
MDOC staff will work in conjunction with the specialty services scheduler to
arrange for specialty telemedicine visits. MDOC staff will ensure prisoners
arrive at the telemedicine visit on time via a prisoner call out for services.  
  11.   The Contractor is responsible for ensuring documentation of all
telemedicine encounters (either on-site or specialty) in the MDOC EMR by the
close of business on the day of the encounter. The documentation must note that
the encounter was via telemedicine.     12.   As of 2-3-09, the MDOC has both
ISDN and IP connectivity between sites, but is in the process of migrating from
ISDN to IP only. IP and ISDN video calls from outside the State network will be
handled by MDOC’s bridge and firewall. The Contractor must be responsible for
the connectivity costs.     13.   Off network ISDN calls are managed through the
bridge. Off network IP calls can be passed through the State firewall and
ReadiManager as long as the video call is not being initiated from a desk top or
lap top computer. MDOC’s video network is currently based on a Polycom platform
utilizing standards based video technology.

P. Quality Assurance Plan

  1.   The Contractor must maintain and continuously update a written Quality
Assurance (QA) Plan which assures that prisoners receive medically necessary
care under this contract in accordance with NCCHC and NCQA standards of care.
The Contractor will review, potentially revise, and receive final approval on
their plan from MDOC Quality Administrator. The Quality Assurance plan must be
submitted to the MDOC Quality Administrator for approval within 60 days of
contract signing.

  2.   The QA Plan must describe in detail the methods that will be used to
monitor system performance, including a detailing of performance measures and
the processes which they measure. The QA Plan must include benchmarking and
reporting of Michigan’s prisoner health care system against key national general
population health indicators and against performance of prisoner health care
systems in other states. The QA Plan must describe a system capable of
identifying opportunities to improve the provision of health care services and
to improve outcomes for Michigan prisoners. The QA Plan must include, at a
minimum:

  a.   Performance goals and objectives     b.   Lines of authority and
accountability     c.   Data responsibilities     d.   Evaluation tools     e.  
Performance improvement activities     f.   Incorporation of the findings of
MDOC site reviews, external quality reviews, statewide focused studies,
recommendations from the Medical Services Advisory Committee (MSAC), and audit
findings

  3.   The Contractor must conduct an annual effectiveness review of the
program. This review must include analysis of whether there have been
improvements in the quality of health care services.

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  4.   The Contractor must participate in state-wide continuous improvement
projects that cover clinical and non-clinical areas. The MDOC Quality
Administrator will work with the Contractor to mutually select priority areas
for improvement projects.     5.   One or more representatives from the
Contractor will work with the MDOC Quality Administrator and the MDOC Health
Care Quality Improvement Team to review the prisoner health care system
performance data and make recommendations for change on an on-going basis.    
6.   The Contractor must maintain the personnel resources to provide consultant
services by a physician for analysis and consultation with the MDOC Chief
Medical Officer on oral and injectable medication prescribing practices and
treatment alternatives. The Contractor’s Medical Director would be an acceptable
consultant for the CMO to utilize.     7.   The Contractor will provide a
Quality Improvement Director that will review data and make recommendations
through routinely scheduled meetings.     8.   See Appendix C for the
Contractor’s Quality Assurance Plan. The Contractor must review the Plan on a
regular basis, and submit revisions to the CCI, to be accepted through issuance
of an official contract change notice.

  Q.  Pharmaceutical Utilization
The MDOC has current pharmaceutical contracts for the acquisition and delivery
of pharmaceuticals to correctional facilities. The Contractor will be required
to:

  1.   Order pharmaceuticals from the MDOC pharmacy contract utilizing the MDOC
NextGen EMR. The following exception applies to dialysis related
pharmaceuticals. The Contractor is not required to get these injectables from
the State contract(s) if they can obtain them at a lower cost than the State
contract(s). The Contractor will submit alternative purchase plans to the CCI
for approval prior to purchase.     2.   Ensure MPs prescribe and administer
medications as medically necessary within their course of treatment of a
prisoner in compliance with the current MDOC Formulary.     3.   Ensure
prescribing practices and pharmaceutical utilization meet the MDOC’s
expectations that at least 85% of orders be generic.     4.   Utilizing reports
provided by the MDOC pharmacy provider, Contractor will provide utilization
reports to MDOC that review of MP prescribing practices and utilization
patterns.     5.   Comply with the MDOC Formulary, and Off-Formulary prescribing
process is required.     6.   Establish an off-formulary approval process and a
feedback mechanism to the MDOC CMO in the event a non-formulary medication is
ordered without the appropriate use of a non-formulary request form. This feed
back system must be such that the continuity of prisoner care is not compromised
or unduly disturbed with respect to expediting the medication order. The MDOC
CMO or designee approves the non-formulary medications. In no event, should the
process prohibit the continuation of a critical non-formulary medication to a
prisoner.     7.   Participate in the MDOC Pharmacy and Therapeutics Committee,
and review with the MDOC CMO the approved formulary ensuring the formulary will
foster a safe, appropriate, and effective drug therapy. It will accomplish the
following:

  a.   Promote cost containment/effectiveness without increased risk of adverse
consequences or therapeutic misadventures.     b.   Promote rational and
objective drug therapy.     c.   Promote appropriate generic drug utilization
and use of bioequivalent drugs.     d.   On-going review and utilization of the
current MDOC Formulary.

  R.  Durable Medical Equipment
The Contractor is responsible for ordering and purchasing durable medical
equipment (DME) and supplies that are specifically designed for an individual,
based on medical need. The Contractor is responsible to provide patient-specific
prosthetics and orthotics that cannot be re-used by other prisoners. In
addition, the Contractor is also responsible for the following:

  1.   Repair and replace due to wear from normal usage, or if the prisoner’s
medical condition changes such that a different item is need to address the
prisoner’s medical need.     2.   Provide specialty and/or technical support
necessary to properly provide and maintain the items.     3.   Establish a
procedure for ordering and delivery of prosthetics and orthotics within 10 days
of the visit identifying the need for the equipment.

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  4.   MDOC maintains an ample supply of non-patient specific canes, crutches,
walkers, splints, wheelchairs, and braces for use by prisoners at each facility.
These are available for use at no cost to the Contractor. Any medically
necessary patient specific wheelchairs are the Contractor’s responsibility in
the scope of the Contract.     5.   Ensure documentation of the DME be completed
in the EMR by the close of business on the day of the encounter.     6.   Ensure
multiple sites are available throughout the state to custom fit prosthetics and
orthotics to reduce transportation costs, with at least one being in each MDOC
region. See www.MICHIGAN.GOV/CORRECTIONS for MDOC regions.     7.  
Patient-specific DME remains with the prisoner upon parole or discharge.

  S. Data Management

  1.   The Contractor is responsible for submitting an electronic HIPAA
compliant encounter submission (837) monthly to the data warehouse, upon it
becoming operational. The 837 may also be required to be submitted to MDOC,
and/or an independent third party reviewer.     2.   The Michigan Department of
Community Health (DCH) web site has all of the HIPAA manuals and companion
guides for the 837. Go to www.michigan.gov/dch, and then click on “Providers,”
then click on “HIPPA,” then click on “Encounter Data Submission.” The specific
data fields will be updated for the MDOC encounter data submissions.     3.  
The MDOC requires submission of HIPAA compliant encounter data using the
transaction format specified as the National Electronics Data Interchange
Transaction Set Health Care Encounter/Claim, ASC X12N837 Version 4010A1.
Depending on the type of service provided, encounter transactions may need to be
submitted using either the Institutional (X096), Dental (X097) or Professional
(X098) Industry Identifier of the 837 Encounter Transaction     4.   The State
owns all data statistics, claims and encounter data, and reserves the right to
request any and all of the data at any time. The State also reserves the right
to require the Contractor to transfer the data to a third party upon MDOC
request, at no additional cost to MDOC.     5.   The Contractor will formally
submit data on a monthly basis and will provide access through Level D
reporting, which is an ad hoc query tool which includes a click-and drop query
writing application for virtually complete access and selection of claims data.
This functionality is included in our proposal at no additional cost.     6.  
The Contractor will provide all of their proposed software or on-line tools at
no additional cost, including software upgrades, patches, and training for MDOC
staff: The MDOC will have unlimited licenses to use all levels of Aetna
reporting. There will be no restrictions on the number of users who may access
the system, beyond any internal limitation MDOC may choose to place.     7.  
The Contractor can install a private circuit that terminates at the State
VendorNet router and firewall. This will allow MDOC sites to traverse the
State’s network and go out through the VendorNet router to the Contractor’s site
to access the vendor’s application and to obtain Contractor provided 837
reports. The MDOC’s intent is for the Contractor to send a data file with their
837 data separately to the data warehouse. The 837 file from the Contractor will
include more information than that which will be entered into NextGen as a
result of a site visit. The additional information on the file from the
Contractor to MDOC’s data warehouse will include things like amounts paid, etc.
Comparing the 837 file of off-site claims paid by Contractor, with the NextGen
generated 837 for off-site visits entered into the NextGen EMR, will be one of
the ways that MDOC double check to ensure that data is valid and that the
Contractor is in fact documenting all of the visits in NextGen that are needed.
Next Gen will capture the necessary data to provide an 837 report for on-site
services.

  T. Network of On-site and Off-site Specialists/Consultants
The Contractor must provide a network of on-site and off-site specialists and/or
consultants necessary to meet the service needs of MDOC prisoners, and utilize
telemedicine when appropriate. This network must be developed in such a way to
reduce MDOC costs, improve access, document evidence-based quality of care,
maintain security issues to the community, and continuously improve quality of
care. The network must include qualified providers in sufficient numbers and
locations to provide required access to services.

  1.   The DWH on-site specialists are only available for facilities within 60
miles of Jackson, unless the services are being provided via telemedicine, or
with written approval from MDOC CCI where specialty services are not available
to the broader community in various geographic areas. The currently available
on-site specialty services at DWH are available from the MDOC CCI. Telemedicine
is generally available for these specialties.     2.   The provider network
rendering services must be based on executed contracts.

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  3.   The Contractor must ensure compliance with NCCHC and NCQA standards of
care for the delivery of health care services to prisoners.     4.   Copies of
Contractor, staff, independent contractor, sub-contractor or vendor partner
provider network liability insurance must be provided to the State upon request.
    5.   Working with and utilizing MDOC civil servant staff, the Contractor is
responsible for scheduling on-site specialty clinics at DWH and coordinating
with MDOC staff for the scheduling of off-site specialty appointments.     6.  
The Contractor will begin recruitment efforts of alternative specialist
resources when wait times exceed 30 days for specialty services, unless the
situation is resolved via other means.     7.   Notification to MDOC’s CCI
within seven calendar days of any changes in the composition of the provider
network. If, at any time, a specialty is not readily available through either a
local provider or telemedicine, the Contractor’s State Medical Director will
notify the MDOC Medical Director within one week for off-site providers.     8.
  A corrective action plan must be provided to the MDOC CCI within three
business days for changes in the provider network composition that MDOC
determines negatively affect prisoners access to medically necessary services.  
  9.   Ensure continuity of treatment in the event a provider’s participation
terminates during the course of a prisoner’s treatment by that provider.     10.
  The MDOC CCI may request specialty provider participation in quality
improvement and utilization review activities.     11.   The Contractor must
disclose to MDOC information on provider incentive plans when compensation
arrangements exist where payment for designated health services furnished to a
prisoner on the basis of a physician referral would otherwise be denied.     12.
  Off-site specialty services must be provided in accordance with MDOC security
procedures, which may require the use of armed custody officers. MDOC security
policies and procedures will be made available to the Contractor.     13.   See
Appendix C for the Contractor’s Quality Assurance Plan. The Contractor must
review the Plan on a regular basis, and submit revisions to the CCI, to be
accepted through issuance of an official contract change notice.     14.   See
Appendix G for Aetna’s related Performance Guarantee.

  U.  Timeliness of Care for Off-site Consultations/Services
The Contractor is responsible for ensuring prisoners have access to medically
necessary services in a timely manner. MDOC defines “access to medically
necessary services in a timely manner” by the following standards:

  1.   The initial specialist consult is to occur within the timeframe specified
by the MP.     2.   Urgent specialty consults are to be seen within five
business days unless the MP indicates a shorter timeframe. If community
standards and access to care is greater than five business days, these will be
addressed on a case by case basis, with the Contractor providing prompt written
notification to the CCI.     3.   All follow-up consultations need to be
completed within the time specified by the MP.     4.   Documentation of the
initial and follow-up specialty consults must be in the MDOC EMR within five
business days of completion of the routine consults. The documentation into the
EMR is the responsibility of the Contractor.     5.   Documentation of urgent
consults must be entered into the EMR by the close of business on the same day
as the consult occurred. The documentation into the EMR is the responsibility of
the Contractor.     6.   MDOC will provide the Contractor with weekly waiting
list information by facility.

  V.  Dialysis Services

  1.   The on-site dialysis unit is located at Ryan Correctional Facility in
Detroit, MI, for males, and at Scott Correctional Facility for females. There
are currently 16 dialysis chairs at Ryan, and one at Scott. All male prisoners
requiring dialysis are transferred to Ryan Correctional Facility unless they are
in an in-patient setting, and the females are transferred to the Scott
Correctional Facility. The MDOC anticipates that in May of 2009, the women’s
facility, including dialysis unit, will be moved to the Huron Valley     2.  
The Contractor must provide the staff necessary to ensure the prisoners receive
timely access to care, including dialysis services. The Contractor will need to
determine the number of staff needed for all current dialysis units, including
Huron Valley.

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  3.   The Contractor must provide dialysis related services including but not
limited to:

  a.   Provide nephrologists and support services delivered at the MDOC dialysis
unit. Service delivery must include nephrology nursing staff, solutions,
equipment, dialysis chairs, supplies used on the unit, and pharmaceuticals
injected at the time of dialysis treatment. MDOC pays for utilities at the Ryan
facility (heat, electricity, sewer, and tap water).     b.   Provide a mechanism
for inpatient management of dialysis prisoners.     c.   Provide on-site primary
care of dialysis patients.     d.   Maintain documentation of prisoner treatment
records including, but not limited to nephrology treatment notes, orders for
laboratory and medications in the MDOC EMR on a weekly basis. A computer and
work area will be provided by MDOC for on-site nephrologists.     e.   Dialysis
laboratory and phlebotomy supplies.     f.   Copies of Contractor, staff,
independent contractor, sub-contractor or vendor partner provider network
liability insurance must be provided to the State upon request.     g.   The
contractor is responsible to supply dialysis related pharmaceuticals, and their
cost.     h.   Documentation for primary care will be in the EMR on the day of
the encounter.

  4.   The MDOC will provide and be financially responsible for pharmaceuticals
used for non-dialysis purposes while a prisoner is being dialyzed.     5.   The
Contractor is responsible for providing any medically necessary off-site
dialysis services, and is financially responsible for off-site services, no
matter what the cause.

  W.  Physical, Occupational, and Speech Therapy Service

  1.   The Contractor will provide two FTEs at DWH to perform the majority of
physical therapy (PT), occupational therapy (OT), and speech therapy (ST). The
remaining services will be provided off-site through the Aetna provider network,
at all times ensuring service in each of the MDOC regions.     2.   Contractor
must provide delivery of necessary physical, occupational, and speech therapy
services throughout the state. Services are not required at each facility but
need to be geographically linked to MDOC facilities with no less than three
locations, with one being in each MDOC region. See www.MICHIGAN.GOV/CORRECTIONS
for the region breakdown. The Contractor must provide written notice regarding
any changes to the service locations to the MDOC CCI 30 business days in advance
of the change.     3.   Therapy services must be documented in the MDOC EMR
within five business days of the date of service.

  X.  Hospice

  1.   The Contractor is expected to coordinate community hospice services
on-site to prisoners within each of the correctional facilities and at DWH,
utilizing local hospice organizations for each facility; or, alternatively,
utilize its end of life program called CHOICES.     2.   The Contractor must
have established procedures, developed in collaboration with MDOC, to determine
when community based hospice, versus the CHOICES program is utilized. The
current version of these procedures must be submitted to the MDOC CCI.     3.  
The MP will be required to interact with the hospice worker and/or CHOICES on an
on-going basis.     4.   Working with and utilizing MDOC civil servants, the
Contractor is responsible for documenting the hospice and/or CHOICES visit in
the MDOC EMR by the close of business on the day of the encounter.

  Y.  Optometry

  1.   Optometry services are to be provided on-site. MDOC facilities that do
not have on-site optometry equipment will utilize the optometry services at the
next closest MDOC correctional facility. See MDOC Policy 04.06.165 Optometry
Services.     2.   At facilities that have on-site optometry equipment, MDOC
provides an exam room, and optometry equipment consistent with a community
optometry office. The Contractor is responsible for performing eye exams.
Services must be provided by a Michigan licensed optometrist.     3.   The
Contractor may utilize telemedicine for routine monitoring of glaucoma, visual
field testing, migraine management and other ocular conditions.     4.   Working
with and utilizing MDOC civil servants, the Contractor must ensure that
optometry services, including telemedicine encounters, are documented in the
MDOC EMR Optometry Template by the close of business on the day of the
encounter. Because services are rendered on-site, the optometrist may complete
the entry.

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  Z.   Emergency Medical Transport Services

  1.   The Contractor must provide emergency ambulance services to prisoners
from each MDOC correctional facility.     2.   Contracting for these services
must be done in such a way as to assure that response time and level of
transport services is comparable to community standards National Council on
Quality Assurance (NCQA) and when possible within 30 miles of the MDOC
correctional facility. For rural areas, if the Contractor is unable to provide
service within 30 miles they may request a written exemption from the MDOC CCI.
    3.   The MDOC owns an ambulance and an indoor mini-ambulance, operating to
support the Jackson area facilities. The operating costs associated with the
ambulances are the responsibility of MDOC. The indoor ambulance operates at DWH.
The other ambulance is used to transport prisoners primarily within the Jackson
area. Occasionally, it may be used to transport a prisoner within a 100 mile
radius for the purpose of transport between correctional facilities, to and from
a hospital, or assisted living center. The ambulance is dispatched at the
request of the MPs or MDOC staff.     4.   MDOC security policies and procedures
will be available to the Contractor.     5.   The Contractor must have
contracted all negotiated ambulance services 30 days prior to the Services Go
Live date, submitting all contract information to the MDOC CCI. Any changes in
ambulance service will be reported to the MDOC CCI within one week.

  AA.  Community Based Hospital and Urgent Care Centers

  1.   The Contractor must ensure hospital services and/or urgent care is
available at the closest location to the correctional facility and whenever
possible within 30 minutes or 30 miles travel. Exceptions to this standard may
be granted if the Contractor documents that no other hospital/urgent care center
provider is accessible within the 30 minutes or 30 miles travel time, and the
MDOC CCI pre-approval is granted in writing.     2.   Community hospitals
utilized must be licensed by the State of Michigan and accredited by the Joint
Commission on Accreditation of Health Organizations (JCAHO). If a hospital is
not accredited, it must be in good standing with Medicare.     3.   Emergency
room services are available 24 hours a day, seven days a week.     4.  
In-patient care must be provided in accordance with MDOC security procedures,
which may require the use of armed custody officers. MDOC security policies and
procedures will be available to the Contractor.     5.   A current master list
of hospitals and urgent care centers utilized for each correction facility must
be submitted to the MDOC CCI. Any changes in hospital and urgent care center
services will be reported to the MDOC CCI within one week.

  BB.  Secure Unit

  1.   The Contractor must work with the MDOC to establish and maintain secure
unit beds at licensed and accredited community hospitals.     2.   The MDOC
currently utilizes a secure unit at Allegiance Hospital in Jackson. The
Contractor will ensure a contract is negotiated with the existing secure unit at
Allegiance Hospital in Jackson. The MDOC would like to expand the number of
secure units available throughout the state. Areas of interest include, but are
not limited to; the Upper Peninsula, Detroit, Ionia, Coldwater, Ypsilanti,
Muskegon, Grand Rapids and St. Louis.     3.   MDOC provides the security staff
personnel for the secure unit, and pays the cost of the staff, including any
additional secure units.     4.   The MDOC will work with the Contractor and the
hospital(s) to design the secure unit. The MDOC will approve the plans for the
secure unit. Infrastructure changes and security equipment will be paid for by
the MDOC. The hospital cannot remove any infrastructure paid for by the MDOC
without written approval from the MDOC CCI.     5.   The negotiated secure unit
rate must be disclosed and agreed upon in writing by the MDOC prior to the start
of construction.     6.   The units must have written procedures in place to
address the following:

  a.   An outpatient holding area adjacent to the secure unit such that security
staff may be shared with the secure unit.     b.   Secure Unit Inpatient
Hospital Services.     c.   Secure Unit Inpatient Physician/Specialty Services.
    d.   Secure Unit Outpatient Hospital Services.     e.   Secure Unit
Outpatient Physician/Specialty Services.     f.   Secure Unit Hospital Intensive
Care Services.     g.   Secure Unit Hospital Emergency Room Hospital Care.    
h.   Secure Unit Hospital Emergency Room Physician Services.     i.   All Secure
Unit Hospital necessary ancillary/support services.

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TERMS AND CONDITIONS   CONTRACT NO. 071B9200147 (LOGO) [g17601g1760102.gif]

  7.   To facilitate the provision of prisoner health care, the MDOC Regional
Health Administrator (RHA)/designee must function as the MDOC Secure Unit
Coordinator to oversee the prisoner health care operations within the Secure
Unit and to facilitate communications.     8.   The Contractor must ensure that
the hospital Secure Unit conforms to MDOC security standards. MDOC security
policies and procedures will be available to the Contractor and the secure unit
hospital(s).     9.   Secure unit staff must meet with representatives of the
Contractor and the MDOC bi-monthly or as needed (at the discretion of the MDOC
Regional Health Administrator (RHA) or their designee) to discuss utilization
and quality management of the unit and to work toward resolving any problems
with communication, admission, discharge, escort, or transportation.     10.  
See Appendix G for Aetna’s related Performance Guarantee.

  CC.  Diagnostic Testing Centers

  1.   The Contractor must develop and maintain a network of participating
hospitals and/or diagnostic centers to meet the needs of MDOC prisoners for
specialized diagnostic testing services.     2.   The Contractor must provide
ancillary/support services for all medically necessary diagnostic
evaluation/testing required to provide medically necessary care to prisoners.
MDOC staff will provide the on-site nursing services (i.e. lab draws and x-ray
imaging etc.). All components of off-site diagnostic testing are the
responsibility of the Contractor. ( i.e. interpretation, processing, etc).    
3.   Testing Centers are not required to be located at each facility but need to
be geographically linked to MDOC facilities with no less than three locations,
with one being in each MDOC region. See www.MICHIGAN.GOV/CORRECTIONS for the
MDOC region breakdown. The Contractor must provide written notice regarding any
changes to the service locations to the MDOC CCI 30 business days in advance of
the change.     4.   Diagnostic Testing Services must include, but are not
limited to:

  a.   Community purchased imaging services     b.   Electromyography
(EMG) services     c.   Audiology services     d.   Respiratory therapy services
    e.   Electrocardiogram (EKG) interpretation services     f.   Pulmonary
function testing interpretation services     g.   Cardiac stress testing.

  5.   Testing which leads to a diagnosis of life, limb, vision threatening, or
other serious medical condition must be communicated by phone to the appropriate
facility medical staff immediately upon discovery (on the same day as the
results are available).     6.   The Contractor must develop and maintain a
network of participating specialists to interpret outpatient diagnostic testing
performed at MDOC facilities.     7.   The Contractor must provide a courier
service for the transport of x-ray images, samples and diagnostic data, serving
all MDOC facilities state-wide. NOTE: MDOC is working to change current x-ray
equipment to include computerized imaging that will allow for images to be
burned to CDs and also be transmitted via email for expedited interpretation.
The MDOC is considering this equipment for the St. Louis, Kinross, Coldwater,
Huron Valley, Jackson, and Ionia facilities. It is not known at this time if the
computerized imaging will be in place at the start of this Contract     8.   A
mutually agreed upon pickup and delivery schedule will be arranged with the
Contractor, that will convey facility needs, as not every site may require daily
visits. Once the schedule is final, schedule changes must be requested in
writing to the MDOC CCI in advance of any change.     9.   A toll free number
must be provided for the facilities to contact the courier service, including to
arrange a pick up outside of the normal courier schedule in the event an
emergent service is needed.     10.   The MDOC has x-ray capabilities at several
locations. MDOC civil servants perform all on-site x-rays.     11.   Working
with and utilizing MDOC civil servant staff, the Contractor is responsible to
ensure next business day test results entry into the EMR within one day of the
receipt of results.     12.   Laboratory Services related to Mental Health
Services are in the scope of this contract.

  DD.  Outpatient Laboratory Diagnostic Testing
The Contractor is responsible to provide a source for outpatient laboratory
diagnostic testing for orders placed by the MP. On-site lab draws are performed
by MDOC civil servant staff. The laboratory diagnostic testing services include:

  1.   A mutually agreed upon pickup and delivery schedule will be arranged with
the Contractor, that will convey facility needs, as not every site may require
daily visits. Once the schedule is final, schedule changes must be requested in
writing to the MDOC CCI in advance of any change.

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  2.   A toll free number must be provided for the facilities to contact the
courier service to arrange a pick up, including to arrange a pick up outside of
the normal courier schedule in the event an emergent service is needed.     3.  
Testing which leads to a diagnosis of life, limb, vision threatening, or other
serious medical condition must be communicated by phone to the facility nurses
station immediately (on the same day as the results are available) upon
discovery.     4.   Provision of next business day results on all laboratory
testing done on a daily basis, via the electronic submission into the EMR on the
day the results are available.     5.   Provision of consulting pathology
services as needed for clinical and anatomic laboratory services.     6.   A
required phone call from the laboratory to the correctional facility nurse
station housing the prisoner if the lab results represent “panic values” within
two (2) hours of the laboratory identifying the abnormal result. Outside of
normal health care working hours at the facility “panic values” must be provided
to the MP who is available for emergencies and the RN at the clinic.     7.  
Stat Laboratory Testing as ordered by the MP must be picked up within one
(1) hour of the request and results must be delivered within two hours of pickup
or make arrangements with local hospital laboratories to perform emergency
laboratory studies. MDOC CCI will provide current Stat Lab List to the
Contractor.     8.   Special laboratory testing results being reported within
the next business day, upon completion of the test and must be submitted
electronically in the EMR on the day the results are available.     9.  
Maintenance of a log of prisoners with critical values that include the prisoner
name and number, date and time of the value, the MDOC staff person the value was
communicated to and the name of the laboratory employee reporting the value. The
log must be submitted monthly to the Health Unit Manager (HUM) via email or fax.
    10.   Maintenance of a log of specimens received and monthly report of the
number of specimens by type. i.e. blood, urine, etc. The log must be submitted
monthly to the MDOC HUM via email or fax. The logs must be submitted to each
facility.     11.   Automated lab ordering and reporting through the MDOC
NextGen EMR.     12.   Laboratory testing results must be submitted
electronically into the EMR by either the laboratory or the Contractor, working
with and utilizing MDOC civil servants, on the day the results are available.  
  13.   Laboratory providers must submit laboratory value claims tape to the
Contractor for the facility for which the laboratory test was ordered.     14.  
Laboratory Services related to Mental Health Services are in the scope of this
Contract.     15.   The Contractor must maintain a Lab Formulary that ensures
provision of necessary lab work via the most effective and cost efficient means.
The Contractor will utilize the Lab Formulary to better control lab costs, and
will conduct routine diagnostic tests within MDOC facilities to the extent
possible, given the availability of equipment. The Contractor must submit the
current copy of the Lab Formulary to the MDOC CCI.

  EE. Utilization Management
The Contractor is responsible to assess, perform and provide utilization
management for all services. Utilization management services must include, but
are not limited to:

  1.   Use of NCCHC and NCQA standards of care in the delivery of health care
services to prisoners     2.   Develop diagnostic and treatment pathways for
major categories of medical condition, with the MDOC Chief Medical Officer
(CMO). Pathway changes must be jointly written and will be granted final
approval by the MDOC CMO.     3.   Have written policies with review of medical
decision criteria and procedures that conform to managed health care industry
standards and processes.     4.   Establish timeframes for standard and
expedited authorization decisions.     5.   Review utilization patterns of
on-site MPs. The topics to review include but are not limited to:

  a.   Medication prescribing practices     b.   Provider referral patterns    
c.   Hospital utilization     d.   Inpatient case management and discharge
planning     e.   Laboratory and Diagnostic Testing

  6.   Establish a formal utilization review committee that includes the Medical
Director, MDOC Quality Assurance, and the MDOC Chief Medical Officer.     7.  
Ensure sufficient resources to regularly review the effectiveness of the
utilization review process and to make changes to the process as needed.

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  8.   Ensure that compensation to the individuals or any applicable
sub-contractor that conduct utilization management activities is not structured
so as to provide incentives for the individual or sub-contractor to deny, limit,
or discontinue medically necessary services to any prisoner.     9.   Conduct an
annual review and reporting of utilization review activities and
outcomes/interventions from the review.     10.   Integrate Contractor
utilization management activities with the MDOC Quality Assurance Program.    
11.   See Appendix D for the Contractor’s Utilization Management Program. The
Contractor must review the Plan on a regular basis, and submit revisions to the
CCI, to be accepted through issuance of an official contract change notice.

  FF. Pre-authorization Review Process
The Contractor’s authorization policy must establish timeframes for standard and
expedited authorization decisions for both primary and specialty care. These
timeframes may not exceed 14 calendar days from date of receipt for standard
authorization decisions and three business days from date of receipt for
expedited authorization decisions. These timeframes may be extended up to 14
additional calendar days for standard and up to three calendar days for urgent
if requested and approved by the MDOC.

  1.   The authorization review types include:

  a.   Pre-authorization for non-urgent and urgent/expedited services     b.  
Concurrent/urgent for situations whereby a prisoner is receiving specialty
services and concurrently requires urgent referral to a secondary service.    
c.   Authorization continuance for situations whereby a prisoner is receiving
specialty physician services and requires authorization of additional specialty
care visits and/or follow-up services.

  2.   Establish and use a written Prior Approval Policy and procedure for
utilization management purposes. Such policies and procedures may not be used to
avoid providing medically necessary services within the coverage established
under the Contract. The prior approval policy and revisions must be pre-approved
by MDOC CMO.     3.   The Prior Approval Policy must ensure that the review
criteria for authorization decisions are applied consistently and require that
the reviewer consult with the requesting MP or specialty provider when
appropriate.     4.   The policy must also require that utilization management
decisions be made by a health care professional who has appropriate clinical
expertise and licensure regarding the service under review.     5.   For
purposes of this section, an electronic prior approval policy and procedure
mechanism that captures, stores and makes available for subsequent retrieval,
and data analysis meets the requirements for a “written” system.     6.   See
Appendix D for the Contractor’s Pre-authorization Review Process. The Contractor
must review the Process on a regular basis, and submit revisions to the CCI, to
be accepted through issuance of an official contract change notice.

  GG. Claims Processing

  1.   The Contractor must maintain a pre-payment claims review system for
authorized services that assures compliance with nationally recognized billing
standards (State of Michigan prompt payment laws and the Center for Medicare and
Medicaid rules). The Contractor must adhere to these laws, all changes to the
standards used for billing will require prior approval from MDOC CCI.     2.  
The Contractor must be capable of receiving electronic (837) and paper claims
according to Michigan Uniform Billing requirements. The Contractor must also be
capable of providing 837 level encounter data to MDOC for all services provided
or purchased by the Contractor within or outside of the provider network.     3.
  Off-shore processing is not allowed for claims processing, The Contractor must
disclose the current location (city, state) of all claims processing, and
immediately disclose in writing to the MDOC CCI any changes in location
throughout the Contract period. If claims processing is switched to off-shore
during the contract period, it may be viewed as a breach of contract, and the
contract may be canceled.

  a.   The Contractor will provide claims processing through sub-contractor
Aetna, at their New Albany, OH service center at the start of the contract. Some
functions may transition to Michigan location(s) over the contract period.

  4.   See Appendix E for the Contractor’s Claims Processing Process. The
Contractor must review the Process on a regular basis, and submit revisions to
the CCI, to be accepted through issuance of an official contract change notice.

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TERMS AND CONDITIONS   CONTRACT NO. 071B9200147 (LOGO) [g17601g1760102.gif]

     1.030 Roles and Responsibilities
1.031 Contractor Staff, Roles, and Responsibilities
     A. General Requirements

  1.   The Contractor will utilize a multi-tiered administrative and clinical
management approach to this Contract.     2.   Contractor must create and
maintain a customized, project-specific organizational chart with reporting
structures, names, and positions, including proposed provider network and
sub-contractors. Advance written notice of any changes are required, and are
recognized after official contract change notice updating Appendix A.     3.  
Contractor must provide up to date job descriptions for relevant positions to
the CCI.     4.   The Contractor has responsibility for the actions of the MPs
and nephrologists however, the MDOC Chief Medical Officer (CMO) and/or Regional
Medical Officers (RMO) will have clinical guidance and the ability to remove or
restrict practices of the MPs at MDOC facilities. The Contractor must file
current staffing matrices, by facility, regional office, and statewide, to the
CCI.     5.   The Contractor must be organized in a manner that facilitates
efficient and economic delivery of services, employ managers with sufficient
experience and expertise in health care management, and employ or contract with
skilled clinicians for medical management activities.     6.   The Contractor
must not employ persons who are currently suspended or terminated from its
provider network or in the conduct of the Contractor’s affairs. Must not employ,
or hold any contracts or arrangements with, any individuals who have been
suspended, debarred, or otherwise excluded from federal programs such as
Medicaid. This prohibition includes all individuals responsible for the conduct
of the Contractor’s’ affairs, or their immediate families, or any legal entity
in which they or their families have a financial interest of five percent or
more of the equity of the entity.     7.   The Contractor must maintain and
continuously execute a credentialing program that requires its professional
staff to maintain current licensure, certification, or registration as required
by state and federal law. Health care practitioners (employee and subcontractor)
who provide on-site services at the MDOC facilities will be required to complete
the credentialing process. Network providers will be required to complete their
applicable credentialing process     8.   Key Personnel         The Contractor
will develop and maintain a staffing plan that is relevant for the services
being provided. Below is a listing of the positions that are required (either
through direct employment or sub-contracts), dedicated full-time to this
Contract:

  a.   Medical Director         The Contractor’s Medical Director must be a
Michigan-licensed physician (MD or DO) and must be actively involved in all
major clinical program components of the Contractor’s plan including review of
medical care provided, medical professional aspects of provider contracts, and
other areas of responsibility as may be designated by the Contractor. The
Medical Director must ensure medical decisions, including after hours
consultation are addressed within five business days. The Medical Director must
be responsible for managing the Contractor’s Quality Assurance and Performance
Improvement Program. The Medical Director must ensure compliance with state and
local reporting laws on communicable diseases. The Medical Director must serve
on the Medical Services Advisory Committee (MSAC). This job function must be
located in Michigan and is designated Key Personnel. This position must be
staffed at the start of the transition period.         The Contractor’s State
Medical Director will be responsible for the management of all on-site clinical
care, peer review and related protocol development and implementation. The
Contractor’s State Medical Director will be on-site as needed for provider
training, utilization management, peer review and other issues necessary to
assure the delivery of appropriate medical care.         The Contractor’s
designated State Medical Director is pending MDOC approval, and the personnel
will be accepted via official contract change notice.     b.   Provider Services
Director         The Contractor must provide an individual responsible for
coordinating communications between the Contractor’s and its subcontractors and
other providers. Contractor staff must provide resolution services to specialty
providers within five business days. This job function must be located in
Michigan and is designated as Key Personnel and must be staffed at the start of
the transition period.

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      The Contractor’s Provider Services Director responsibilities will include
management of the relationships with hospitals, physicians and providers who are
a part of Aetna’s Michigan network. The Contractor’s Provider Services Director
is also responsible to manage a team who will work together to meet and exceed
the network’s financial targets and service measures.         The Contractor’s
designated Provider Services Director is pending MDOC approval, and the
personnel will be accepted via official contract change notice.     c.   Quality
Improvement and Utilization Director         The Contractor must provide a
Quality Improvement and Utilization Director who is a Michigan licensed
physician, or Michigan licensed registered nurse, or another licensed clinician
as approved by MDOC based on the plan’s ability to demonstrate that the
clinician possesses the training and education necessary to meet the
requirements for quality improvement/utilization review activities required in
the contract. The Contractor may provide a Quality Improvement Director and
Utilization Director as separate positions. The Utilization Director will be a
member of the Pain Management Committee. These job functions must be located in
Michigan and are designated as Key Personnel and must be staffed at the start of
the transition period.         The Contractor’s designated Quality Improvement
and Utilization Director is pending MDOC approval, and the personnel will be
accepted via official contract change notice.     d.   Project Manager        
This job function must be located in Michigan and is designated as Key Personnel
and must be staffed at the start of the transition period.         The
Contractor’s Project Manager will be responsible for the management and overall
direction of healthcare delivery services and management accountability provided
to the MDOC. He will also be responsible for the integration of corporate
support functions for site-level applicability and, as the MDOC’s liason, he
will work closely with the MDOC and the facility administrations to ensure the
healthcare program meets the goals and expectations of the MDOC.         The
Contractor’s designated Project Manager is pending MDOC approval, and the
personnel will be accepted via official contract change notice.     e.   The
Contractor must follow the procedures listed in Section 2.062 to remove or
change Key Personnel. Penalties will be charged to the Contractor if the
procedures are not followed.     f.   All Key Personnel must be in place and
hold all applicable credentials in good standing three weeks in advance of
Contract Start Date-Actual Services Rendered, unless otherwise stated.

  9.   Sub-Contracts         The Contractor must establish written contracts
with sub-contractors, specialty network, nephrologists, dialysis support staff,
and on-site MPs within 30 days of Contract “Start Up Transition Phase” start
date. The MDOC CCI must be given a list of any sub-contracts not finalized
35 days from contract “Start Up Transition Phase” start date. The State may
rescind the contract if the written contracts are not in place 35 days after the
contract “Start Up Transition Phase” start date.     10.   Meetings         The
Contractor’s Regional Vice President and State Medical Director or designees
must participate in the following monthly meetings. The meetings will be held in
Lansing and participation may be via video conferencing. This meeting list is
not all inclusive but a listing of the current meetings.

  a.   Joint Contractor and MDOC meeting     b.   Quality Assurance     c.  
Pain Management Committee     d.   Nursing Advisory Committee

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  e.   Medical Services Advisory Committee     f.   Infectious Disease Control
Committee     g.   Morbidity/Mortality Review Committee

     1.040 Project Plan
1.041 Project Plan Management

  A.   START UP PLAN

  1.   The Contractor has provided a high level start up plan to the MDOC CCI
for the Start Up Transition Period. Within 10 calendar days of the Contract
award, the Contractor must submit a revised, expanded, detailed narrative of
their Start Up Transition Plan to the MDOC CCI. The Contractor must continue to
revise the Start Up Plan and submit to the MDOC CCI on no less than a monthly
basis until all items have been successfully implemented, per the MDOC CCI’s
input on progression of, or acceptance of each item.     2.   The Contractor’s
Start Up Plan must ensure they work in partnership with the MDOC, all
sub-contractors, all specialty service providers, and current MDOC health care
providers to deliver uninterrupted clinical and administrative services that
ensure the continuity of care to the prison population, including infrastructure
of systems, staffing and providers. The Contractor must be responsible for a
customized plan of action to ensure a seamless transition in all aspects of
contracted services. To accomplish this, the Contractor activities must include,
but are not limited to, the following:

  a.   Conduct regular, scheduled communication with key MDOC and subcontractor
personnel and specialty service providers     b.   Deployment of contract and
transition management teams     c.   Recruitment initiatives designed to retain
incumbent personnel (when applicable)     d.   Implementation of comprehensive
orientation and in-service training programs     e.   Completion of inventories
on equipment, supplies, and medications     f.   Finalizing network development
activities     g.   Implementation of the Contractor’s Implementation and
Checklist (in addition to the MDOC Start Up Plan activities) and Transition
Tasks     h.   Post Implementation Review     i.   Jointly review and finalize
civil servant job descriptions providing support to Contractor.     j.   Jointly
review all contract attachments and appendices, and adjust if needed.

  B.   Post-Implementation Review – The Contractor will conduct a
post-implementation survey process to provide an internal evaluation and
assessment of the program implementation approximately 90 days after the
Services “Go Live” start date. The post-implementation survey will include items
relative to all important start up activities and compliance with key contract
provisions, and mutually agreed by the MDOC CCI and the Contractor. The
Contractor’s survey team will visit each geographic region and review
accomplishments, opportunities for improvement and compliance with the start up
/ transition checklist and key contract provisions. Survey results will be
submitted to the MDOC CCI.

1.042 Reports

  A.   Reports will be submitted in a non-pdf electronic format, such as Excel,
via email to the MDOC CCI referenced in Section 2.022. The Contractor may also
use Aetna’s Integrated Informatics software, including universal claims files,
and e.PSM on-line reporting interface, including Levels A through D, at the
discretion of the MDOC CCI. Access and use of Contractor / Atena’s software is
provided at no additional charge, and must provide equivalent of all reports
required in Appendix B.     B.   See Appendix B for a list of required reports.
The State reserves the right to amend the list of required reports throughout
the Contract period.     C.   Reports must be provided at no cost to the State.
    D.   Failure to submit reports within the time frames identified in
Appendix B may be considered a breach of contract, and may result in the
cancellation of the Contract.     E.   Provide all data and/or reports requested
by the State’s third party reviewer, the and/or the State. The Contractor must
ensure that contracts with sub-contractors and/or provider network preserves the
State’s right to access of all related data, and must ensure that the State
and/or its contractors has access to data in order to complete their reviews.

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  F.   The Contractor must obtain the State’s written approval prior to
publishing or making formal public presentations of statistical or analytical
material based on its prisoners.

     1.050 Acceptance
1.051 Criteria
The following criteria will be used by the State to determine Acceptance of the
Services or Deliverables provided under this SOW:

  A.   Acceptance Criteria for Start Up Project Plan Milestones.         The
MDOC will consider the Start Up Project Plan milestones accomplished upon MDOC
acceptance and written approval of each individual milestone. The Contractor
must submit to the MDOC CCI their revised, detailed Start Up Project Plan,
including timing of milestones, no later than 10 days after the “Start Up /
Transition” contract start date. The MDOC CCI will have 10 days to review and
may make changes and recommendations to the Plan, including timing of
milestones. The Contractor will then have one week to finalize the Plan. The
final Plan must be approved by the MDOC CCI within 30 days prior to the
“Services Rendered” contract start date. The Start Up Project Plan Milestones
include the following. The Contractor will submit detailed, final versions of
the following, for MDOC approval.

  1.   Medical Practitioners – the Contractor will have accomplished this
milestone when they provide the medical practitioner mix and level for each
correctional facility including appropriate coverage for camps, SAI, and
Re-Entry centers.     2.   Specialty Provider Network – the Contractor will have
accomplished this milestone when they have identified the specialty networks
including, specialists/consultants, hospitals and urgent care centers, and
therapy services for each correctional facility, camp, SAI, and Re-Entry center
by written contract or Letter of Intent.     3.   Disclosure of locations for
DME, Claims processing, Lab, and Diagnostic Testing- the Contractor will have
accomplished this milestone when they have identified the location of the
regional sites for DME, Lab, and Diagnostic Testing and the location for claims
processing.     4.   Pickup and delivery schedules for Lab and Diagnostic
Tests-the Contractor will have accomplished this milestone when the pickup and
delivery schedules are finalized by location and the toll free number is
provided.     5.   Monitoring of wait times to see MPs and specialists — the
Contractor will have accomplished this milestone when they provide their plan
for monitoring wait times.     6.   Performance Improvement Plan — the
Contractor will have accomplished this milestone when they provide their
performance improvement plan.     7.   Quality Assurance — the Contractor will
have accomplished this milestone when they provide their written quality
assurance plan.     8.   Pre-authorization Process — the Contractor will have
accomplished this milestone when they have provided the pre-authorization
process for MP referrals to the specialty networks.     9.   Encounter Data
Submission — the Contractor will have accomplished this milestone when they have
successfully transmitted test 837 data to the MDOC passing the MDOC acceptance.
    10.   Risk Share Reconciliation Methodology – The Contractor and MDOC will
completely itemize, and mutually agree upon all costs and methodologies used in
calculating the risk sharing, below, at, and above the target, and to the cap.
The documented Risk Share Methodology must include all costs, criteria,
measurement tools and methodology used to calculate annual contract costs, and
determine risk share target and cap costs/ prior to the Services Go Live
Contract start date. Completed documentation will be submitted to MDOC’s third
party reviewer to utilize in their work. See Appendix F for the Risk Share
Reconciliation Methodology. The Contractor must review the document on a regular
basis, and submit revisions to the CCI, to be accepted through issuance of an
official contract change notice.

  B.   Acceptance Criteria for Contract Services

  1.   On-going contract services are subject to the acceptance criteria in
various sections of the contract document:

  a.   Service Level Agreements in Attachment B     b.   Key Personnel in
Section 1.031 A and 2.062     c.   Timely and Correct Reports in Section 1.032
and Appendix B

1.052 Final Acceptance – DELETED – NOT APPLICABLE

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     1.060 Proposal Pricing
1.061 Proposal Pricing

  A.   Compensation

  1.   Compensation is based on Per Prisoner Per Month (PPPM) and risk sharing
as stated in Attachment A. PPPM base monthly payment will be pre-paid on the
first business day of each month, for that month, using the previous month’s
census report. The prisoner arrival and departure adjustments will occur at the
end of the month. At the end of the month, MDOC will true up the census, and any
over or under payment in that month’s prepaid amount will be added or subtracted
to the following month’s prepaid PPPM base monthly payment. For the last month
of the contract, any credit will be rendered to MDOC by check, within 30 days.  
  2.   Example of PPPM calculation:

Risk Share PPPM rate $175
Population estimate used in the billing in Number One above — 50,000
Beginning of the month pre-payment calculation and monthly base pre-payment
$175 * 50,000 = $8,750,000
In the current month there was a net decrease in population of 1,000. The
true-up and adjusted payment at the end of that month would be:

Adjusted payment calculation
$176.25 * 49,000 = $8,636,250
Beginning of the month pre-payment $8,750,000, less
Adjusted payment for that month     $8,636,250
True-up Credit of $113,750 to be applied to the following month’s pre-payment.

  3.   The PPPM and possible risk sharing payments in Attachment A will be the
State’s only payments to the Contractor. The submission of a HIPAA compliant 837
encounter transactions (i.e. CPT, ICD-9-CM and HCPC) will be required.     4.  
The Contractor does not offer prompt payment discounts.

  B.   Service Level Agreements

  1.   Contract Service Level Agreements (SLA) and their related possible
credits must be evaluated and assessed as stated in Appendix B. The State
reserves the right to request that any SLA credits be rendered by check, or
applied to future invoice(s) as a credit.

  C.   This is a Risk Sharing Contract. Risk Share Targets, Risk Share Maximum
Caps, and the risk sharing rates are in Attachment A. Risk Share Reconciliation
Methodology will be based on the process in Appendix F.     D.   General
Compensation Factors

  1.   Any other costs of doing business not addressed by this Contract are
considered an incidental expense applicable to the Contractor and must be
absorbed by the Contractor.     2.   The Contractor must meet the HIPAA and MDOC
guidelines and requirements for electronic billing capacity and must require its
providers to meet the same standard as a condition of payment.     3.   The
Contractor MPs, specialists, etc. may not bill prisoners for the difference
between the provider’s charge and the Contractor payment for covered services.
The MPs, specialists, etc. will not seek nor accept additional or supplemental
payment from the prisoner, his/her family, or representative, in addition to the
amount paid by the Contractor.

1.062 Price Term
Firm Fixed Price – Prices quoted in Attachment A are the maximum for the base
contract period stated in Section 2.001, subject to risk sharing and population
adjustment tables, also in Attachment A.
1.063 Tax Excluded from Price
(a) Sales Tax: For purchases made directly by the State, the State is exempt
from State and Local Sales Tax. Prices must not include the taxes. Exemption
Certificates for State Sales Tax will be furnished upon request.

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TERMS AND CONDITIONS   CONTRACT NO. 071B9200147 (LOGO) [g17601g1760102.gif]

(b) Federal Excise Tax: The State may be exempt from Federal Excise Tax, or the
taxes may be reimbursable, if articles purchased under any resulting Contract
are used for the State’s exclusive use. Certificates showing exclusive use for
the purposes of substantiating a tax-free, or tax-reimbursable sale will be sent
upon request. If a sale is tax exempt or tax reimbursable under the Internal
Revenue Code, prices must not include the Federal Excise Tax.
1.064 Holdback – DELETED – NOT APPLICABLE
1.070 Additional Requirements
1.071  Additional Terms and Conditions specific to this Contract

  A.   The State reserves the right to also purchase services specified in this
Contract from third parties with no prior notice. The State does not have
specific plans to purchase from third parties, but reserves the right, per risk
mitigation strategies, to ensure quality and continuity of medically necessary
care.     B.   The Contractor must comply with all federal, state and local
laws, regulations, Michigan Professional Services Corporation Act, and relevant
Michigan Attorney General Opinions, NCQA and NCCHC standards, as well as DCH and
MDOC Policy Directives, Director’s Office Memorandums, and Operating Procedures.
Current versions all DCH and MDOC documents above can be requested from the CCI.
    C.   The Contractor must have a program that subjects all employees,
independent contractors, vendor partners, and sub-contractors filling full or
part-time positions to pre-employment and for cause alcohol and drug testing.
Drug testing must screen for all controlled substances as identified in
Article 7 of the Michigan Public Health Code, 1978 Public Act 368, as amended,
being MCL 333.7101 et seq.     D.   The Contractor must execute any necessary
Business Associate Agreements and flow down this requirement to all related
independent contractors, sub-contractors, and vendor partners.     E.   Any
additional Contractor computers networked to the State systems, to comply with
security policies, must be purchased or leased from the State, and assume all
hosting and licensing costs. Costs will be billed back to the Contractor.

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TERMS AND CONDITIONS   CONTRACT NO. 071B9200147 (LOGO) [g17601g1760102.gif]

Article 2, Terms and Conditions
     2.000 Contract Structure and Term
2.001 Contract Term
This Contract is for a period of three years, and 7 weeks, beginning
February 10, 2009 through March 31, 2012. All outstanding Purchase Orders must
also expire upon the termination (cancellation for any of the reasons listed in
Section 2.150) of the Contract, unless otherwise extended under the Contract.
Absent an early termination for any reason, Purchase Orders issued but not
expired, by the end of the Contract’s stated term, will remain in effect for the
balance of the fiscal year for which they were issued.
2.002 Options to Renew
This Contract may be renewed in writing by mutual agreement of the parties not
less than 30 days before its expiration. The Contract may be renewed for up to
four (4) additional one (1) year periods.
2.003 Legal Effect
Contractor shall show acceptance of this Contract by signing two copies of the
Contract and returning them to the Contract Administrator. The Contractor shall
not proceed with the performance of the work to be done under the Contract,
including the purchase of necessary materials, until both parties have signed
the Contract to show acceptance of its terms, and the Contractor receives a
contract release/purchase order that authorizes and defines specific performance
requirements.
Except as otherwise agreed in writing by the parties, the State assumes no
liability for costs incurred by Contractor or payment under this Contract, until
Contractor is notified in writing that this Contract (or Change Order) has been
approved by the State Administrative Board (if required), approved and signed by
all the parties, and a Purchase Order against the Contract has been issued.
2.004 Attachments & Exhibits
All Attachments and Exhibits affixed to any and all Statement(s) of Work, or
appended to or referencing this Contract, are incorporated in their entirety and
form part of this Contract.
2.005 Ordering
The State will issue a written Purchase Order, Blanket Purchase Order, Direct
Voucher or Procurement Card Order, which must be approved by the Contract
Administrator or the Contract Administrator’s designee, to order any
Services/Deliverables under this Contract. All orders are subject to the terms
and conditions of this Contract. No additional terms and conditions contained on
either a Purchase Order or Blanket Purchase Order apply unless they are also
specifically contained in that Purchase Order’s or Blanket Purchase Order’s
accompanying Statement of Work. Exact quantities to be purchased are unknown,
however, the Contractor will be required to furnish all such materials and
services as may be ordered during the Contract period. Quantities specified, if
any, are estimates based on prior purchases, and the State is not obligated to
purchase in these or any other quantities.
2.006 Order of Precedence
(a) The Contract, including any Statements of Work and Exhibits, to the extent
not contrary to the Contract, each of which is incorporated for all purposes,
constitutes the entire agreement between the parties with respect to the subject
matter and supersedes all prior agreements, whether written or oral, with
respect to the subject matter and as additional terms and conditions on the
purchase order must apply as limited by Section 2.005.
(b) In the event of any inconsistency between the terms of the Contract and a
Statement of Work, the terms of the Statement of Work will take precedence (as
to that Statement of Work only); provided, however, that a Statement of Work may
not modify or amend the terms of the Contract, which may be modified or amended
only by a formal Contract amendment.
2.007 Headings
Captions and headings used in the Contract are for information and organization
purposes. Captions and headings, including inaccurate references, do not, in any
way, define or limit the requirements or terms and conditions of the Contract.

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2.008 Form, Function & Utility
If the Contract is for use of more than one State agency and if the
Deliverable/Service does not the meet the form, function, and utility required
by that State agency, that agency may, subject to State purchasing policies,
procure the Deliverable/Service from another source.
2.009 Reformation and Severability
Each provision of the Contract is severable from all other provisions of the
Contract and, if one or more of the provisions of the Contract is declared
invalid, the remaining provisions of the Contract remain in full force and
effect.
2.010 Consents and Approvals
Except as expressly provided otherwise in the Contract, if either party requires
the consent or approval of the other party for the taking of any action under
the Contract, the consent or approval must be in writing and must not be
unreasonably withheld or delayed.
2.011 No Waiver of Default
If a party fails to insist upon strict adherence to any term of the Contract
then the party has not waived the right to later insist upon strict adherence to
that term, or any other term, of the Contract.
2.012 Survival
Any provisions of the Contract that impose continuing obligations on the
parties, including without limitation the parties’ respective warranty,
indemnity and confidentiality obligations, survive the expiration or termination
of the Contract for any reason. Specific references to survival in the Contract
are solely for identification purposes and not meant to limit or prevent the
survival of any other section.
     2.020 Contract Administration
2.021 Issuing Office
This Contract is issued by the Department of Management and Budget, Purchasing
Operations and the Department of Corrections (collectively, including all other
relevant State of Michigan departments and agencies, the “State”). Purchasing
Operations is the sole point of contact in the State with regard to all
procurement and contractual matters relating to the Contract. Purchasing
Operations is the only State office authorized to change, modify, amend, alter
or clarify the prices, specifications, terms and conditions of this Contract.
The Contractor Administrator within Purchasing Operations for this Contract is:
Rebecca Nevai, Buyer Specialist
Purchasing Operations
Department of Management and Budget
Mason Bldg, 2nd Floor
PO Box 30026
Lansing, MI 48909
Email: nevair@michigan.gov
Phone: 517-373-8530
2.022 Contract Compliance Inspector (CCI)
After DMB-Purchasing Operations receives the properly executed Contract, it is
anticipated that the Director of Purchasing Operations, in consultation with the
Department of Corrections will direct the person named below, or any other
person so designated, to monitor and coordinate the activities for the Contract
on a day-to-day basis during its term. However, monitoring of this Contract
implies no authority to change, modify, clarify, amend, or otherwise alter the
prices, terms, conditions and specifications of the Contract as that authority
is retained by DMB Purchasing Operations. The Contract Compliance Inspector for
this Contract is:
Lia Gulick, Financial Services Administrator
Bureau of Fiscal Management
Michigan Department of Corrections
Grandview Plaza
P.O. Box 30003
Lansing, MI 48909
517-241-9902 Email: gulickll@michigan.gov

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2.023 Project Manager
The following individual will oversee the project:
Duncan P. Howard, Administrator of Operations
Bureau of Health Care Services
Michigan Department of Corrections
Grandview Plaza
P.O. Box 30003
Lansing, MI 48909
517-373-3437
Howardd3@michigan.gov
2.024 Change Requests
During the course of ordinary business, it may become necessary for the State to
discontinue certain business practices or create Additional
Services/Deliverables.  The State reserves the right, by giving Contractor
written notice of a change request within a reasonable time, to request any
changes to the requirements and specifications of the Contract and the work to
be performed by the Contractor under the Contract.  In such an event, the
Contractor must provide a detailed outline of all work to be done, including
tasks necessary to accomplish the services/deliverables, timeframes, listing of
key personnel assigned, estimated hours for each individual per task, and a
complete and detailed proposal to implement the change.
The State may accept a Contractor’s proposal for change, reject it, or reach
another agreement with Contractor.  Should the parties agree on carrying out a
change, a written Contract Change Notice must be prepared and issued under this
Contract, describing the change and its effects on the Services and any affected
components of this Contract (a “Contract Change Notice”). No proposed Change may
be performed until the proposed Change has been specified in a duly executed
Contract Change Notice issued by the Department of Management and Budget,
Purchasing Operations.  If the Contractor fails to notify the State before
beginning to work on the requested activities, then the Contractor waives any
right to assert any claim for additional compensation or time for performing the
requested activities. 
If the State requests or directs the Contractor to perform any activities that
Contractor believes constitute a change to the Statement of Work, the Contractor
must notify the State that it believes the requested activities are a change
before beginning to work on the requested activities.  If the Contractor fails
to notify the State before beginning to work on the requested activities, then
the Contractor waives any right to assert any claim for additional compensation
or time for performing the requested activities. If the Contractor commences
performing work outside the scope of this Contract and then ceases performing
that work, the Contractor must, at the request of the State, retract any
out-of-scope work that would adversely affect the Contract.
2.025 Notices
Any notice given to a party under the Contract must be deemed effective, if
addressed to the party as addressed below, upon: (i) delivery, if hand
delivered; (ii) receipt of a confirmed transmission by facsimile if a copy of
the notice is sent by another means specified in this Section; (iii) the third
Business Day after being sent by U.S. mail, postage pre-paid, return receipt
requested; or (iv) the next Business Day after being sent by a nationally
recognized overnight express courier with a reliable tracking system.
State:
State of Michigan
Purchasing Operations
Attention: Rebecca Nevai
PO Box 30026
530 West Allegan
Lansing, Michigan 48909

         
 
  Contractor:    
 
  Prison Health Services, Inc.   cc: Prison Health Services, Inc.
 
  105 Westpark Drive, Suite 200   105 Westpark Drive, Suite 200
 
  Brentwood, TN 37027   Brentwood, TN 37027
 
  Phone 800-729-0069   Phone: 800-729-0069
 
  Attn: Lawrence Pomeroy, President, State Corrections   Attn: Scott King,
General Counsel

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Either party may change its address where notices are to be sent by giving
notice according to this Section.
2.026 Binding Commitments
Representatives of Contractor must have the authority to make binding
commitments on Contractor’s behalf within the bounds set forth in this Contract.
Contractor may change the representatives from time to time upon written notice.
2.027 Relationship of the Parties
The relationship between the State and Contractor is that of client and
independent contractor. No agent, employee, or servant of Contractor or any of
its Subcontractors must be or must be deemed to be an employee, agent or servant
of the State for any reason. Contractor will be solely and entirely responsible
for its acts and the acts of its agents, employees, servants and Subcontractors
during the performance of the Contract.
2.028 Covenant of Good Faith
Each party must act reasonably and in good faith. Unless stated otherwise in the
Contract, the parties will not unreasonably delay, condition or withhold the
giving of any consent, decision or approval that is either requested or
reasonably required of them in order for the other party to perform its
responsibilities under the Contract.
2.029 Assignments
(a) Neither party may assign the Contract, or assign or delegate any of its
duties or obligations under the Contract, to any other party (whether by
operation of law or otherwise), without the prior written consent of the other
party; provided, however, that the State may assign the Contract to any other
State agency, department, division or department without the prior consent of
Contractor and Contractor may assign the Contract to an affiliate so long as the
affiliate is adequately capitalized and can provide adequate assurances that the
affiliate can perform the Contract. The State may withhold consent from proposed
assignments, subcontracts, or novations when the transfer of responsibility
would operate to decrease the State’s likelihood of receiving performance on the
Contract or the State’s ability to recover damages.
(b) Contractor may not, without the prior written approval of the State, assign
its right to receive payments due under the Contract. If the State permits an
assignment, the Contractor is not relieved of its responsibility to perform any
of its contractual duties, and the requirement under the Contract that all
payments must be made to one entity continues.
(c) If the Contractor intends to assign the contract or any of the Contractor’s
rights or duties under the Contract, the Contractor must notify the State in
writing at least 90 days before the assignment. The Contractor also must provide
the State with adequate information about the assignee within a reasonable
amount of time before the assignment for the State to determine whether to
approve the assignment.
     2.030 General Provisions
2.031 Media Releases
News releases (including promotional literature and commercial advertisements)
pertaining to the RFP and Contract or project to which it relates shall not be
made without prior written State approval, and then only in accordance with the
explicit written instructions from the State. No results of the activities
associated with the RFP and Contract are to be released without prior written
approval of the State and then only to persons designated.
The only exception shall be where federal law requires a press release as the
only method of compliance, and, in addition, the State has not provided a
response to the Contractor’s request after two business days. The Contractor
must submit the proposed news release in writing at least two business days
prior to the date of disclosure, for State comment, revision, and approval.
2.032 Contract Distribution
Purchasing Operations retains the sole right of Contract distribution to all
State agencies and local units of government unless other arrangements are
authorized by Purchasing Operations.
2.033 Permits
Contractor must obtain and pay any associated costs for all required
governmental permits, licenses and approvals for the delivery, installation and
performance of the Services. The State must pay for all costs and expenses
incurred in obtaining and maintaining any necessary easements or right of way.

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2.034 Website Incorporation
The State is not bound by any content on the Contractor’s website, even if the
Contractor’s documentation specifically referenced that content and attempts to
incorporate it into any other communication, unless the State has actual
knowledge of the content and has expressly agreed to be bound by it in a writing
that has been manually signed by an authorized representative of the State.
2.035 Future Bidding Preclusion
Contractor acknowledges that, to the extent this Contract involves the creation,
research, investigation or generation of a future RFP, it may be precluded from
bidding on the subsequent RFP. The State reserves the right to disqualify any
bidder if the State determines that the bidder has used its position (whether as
an incumbent Contractor, or as a Contractor hired to assist with the RFP
development, or as a Vendor offering free assistance) to gain a competitive
advantage on the RFP.
2.036 Freedom of Information
All information in any proposal submitted to the State by Contractor and this
Contract is subject to the provisions of the Michigan Freedom of Information
Act, 1976 Public Act No. 442, as amended, MCL 15.231, et seq (the “FOIA”).
2.037 Disaster Recovery
Contractor and the State recognize that the State provides essential services in
times of natural or man-made disasters. Therefore, except as so mandated by
Federal disaster response requirements, Contractor personnel dedicated to
providing Services/Deliverables under this Contract will provide the State with
priority service for repair and work around in the event of a natural or
man-made disaster.
     2.040 Financial Provisions
2.041 Fixed Prices for Services/Deliverables
Each Statement of Work or Purchase Order issued under this Contract shall
specify (or indicate by reference to the appropriate Contract Exhibit) the firm,
fixed prices for all Services/Deliverables, and the associated payment
milestones and payment amounts. The State may make progress payments to the
Contractor when requested as work progresses, but not more frequently than
monthly, in amounts approved by the Contract Administrator, after negotiation.
Contractor must show verification of measurable progress at the time of
requesting progress payments.
2.042 Adjustments for Reductions in Scope of Services/Deliverables
If the scope of the Services/Deliverables under any Statement of Work issued
under this Contract is subsequently reduced by the State, the parties shall
negotiate an equitable reduction in Contractor’s charges under such Statement of
Work commensurate with the reduction in scope.
2.043 Services/Deliverables Covered
For all Services/Deliverables to be provided by Contractor (and its
Subcontractors, if any) under this Contract, the State shall not be obligated to
pay any amounts in addition to the charges specified in this Contract.
2.044 Invoicing and Payment – In General
(a) Each Contractor invoice will show details as to charges by
Service/Deliverable component and location at a level of detail reasonably
necessary to satisfy the State’s accounting and charge-back requirements.
Invoices for Services performed on a time and materials basis will show, for
each individual, the number of hours of Services performed during the billing
period, the billable skill/labor category for such person and the applicable
hourly billing rate. Prompt payment by the State is contingent on the
Contractor’s invoices showing the amount owed by the State minus any holdback
amount to be retained by the State in accordance with Section 1.064.
(b) Correct invoices will be due and payable by the State, in accordance with
the State’s standard payment procedure as specified in 1984 Public Act No. 279,
MCL 17.51 et seq., provided the State determines that the invoice was properly
rendered.
(c) Contract Payment Schedule

  1.   Deleted – Not Applicable

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  2.   Approval and payment of requests.

  a)   The Contractor shall not be entitled to payment of a request for
performance-based payment prior to successful accomplishment of the event or
performance criterion for which payment is requested. The Contract Administrator
shall determine whether the event or performance criterion for which payment is
requested has been successfully accomplished in accordance with the terms of the
Contract. The Contract Administrator may, at any time, require the Contractor to
substantiate the successful performance of any event or performance criterion,
which has been or is represented as being payable.     b)   A payment under this
performance-based payment clause is a contract financing payment under the Quick
Payment Terms in Section 1.061 of this Contract.     c)   The approval by the
Contract Administrator of a request for performance-based payment does not
constitute an acceptance by the State and does not excuse the Contractor from
performance of obligations under this Contract.

2.045 Pro-ration
To the extent there are any Services that are to be paid for on a monthly basis,
the cost of such Services shall be pro-rated for any partial month.
2.046 Antitrust Assignment
The Contractor assigns to the State any claim for overcharges resulting from
antitrust violations to the extent that those violations concern materials or
services supplied by third parties to the Contractor, toward fulfillment of this
Contract.
2.047 Final Payment
The making of final payment by the State to Contractor does not constitute a
waiver by either party of any rights or other claims as to the other party’s
continuing obligations under the Contract, nor will it constitute a waiver of
any claims by one party against the other arising from unsettled claims or
failure by a party to comply with this Contract, including claims for Services
and Deliverables not reasonably known until after acceptance to be defective or
substandard. Contractor’s acceptance of final payment by the State under this
Contract shall constitute a waiver of all claims by Contractor against the State
for payment under this Contract, other than those claims previously filed in
writing on a timely basis and still unsettled.
2.048 Electronic Payment Requirement
Electronic transfer of funds is required for payments on State Contracts.
Contractors are required to register with the State electronically at
http://www.cpexpress.state.mi.us. As stated in Public Act 431 of 1984, all
contracts that the State enters into for the purchase of goods and services
shall provide that payment will be made by electronic fund transfer (EFT).
     2.050 Taxes
2.051 Employment Taxes
Contractors are expected to collect and pay all applicable federal, state, and
local employment taxes, including the taxes.
2.052 Sales and Use Taxes
Contractors are required to be registered and to remit sales and use taxes on
taxable sales of tangible personal property or services delivered into the
State. Contractors that lack sufficient presence in Michigan to be required to
register and pay tax must do so as a volunteer. This requirement extends to:
(1) all members of any controlled group as defined in § 1563(a) of the Internal
Revenue Code and applicable regulations of which the company is a member, and
(2) all organizations under common control as defined in § 414(c) of the
Internal Revenue Code and applicable regulations of which the company is a
member that make sales at retail for delivery into the State are registered with
the State for the collection and remittance of sales and use taxes. In applying
treasury regulations defining “two or more trades or businesses under common
control” the term “organization” means sole proprietorship, a partnership (as
defined in § 701(a)(2) of the Internal Revenue Code), a trust, an estate, a
corporation, or a limited liability company.

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     2.060 Contract Management
2.061 Contractor Personnel Qualifications
All persons assigned by Contractor to the performance of Services under this
Contract must be employees of Contractor or its majority-owned (directly or
indirectly, at any tier) subsidiaries (or a State-approved Subcontractor) and
must be fully qualified to perform the work assigned to them. Contractor must
include a similar provision in any subcontract entered into with a
Subcontractor. For the purposes of this Contract, independent contractors
engaged by Contractor solely in a staff augmentation role must be treated by the
State as if they were employees of Contractor for this Contract only; however,
the State understands that the relationship between Contractor and Subcontractor
is an independent contractor relationship.
2.062 Contractor Key Personnel
(a) The Contractor must provide the Contract Compliance Inspector with the names
of the Key Personnel.
(b) Key Personnel must be dedicated as defined in the Statement of Work to the
Project for its duration in the applicable Statement of Work with respect to
other individuals designated as Key Personnel for that Statement of Work.
(c) The State will have the right to recommend and approve in writing the
initial assignment, as well as any proposed reassignment or replacement, of any
Key Personnel. Before assigning an individual to any Key Personnel position,
Contractor will notify the State of the proposed assignment, will introduce the
individual to the appropriate State representatives, and will provide the State
with a resume and any other information about the individual reasonably
requested by the State. The State reserves the right to interview the individual
before granting written approval. In the event the State finds a proposed
individual unacceptable, the State will provide a written explanation including
reasonable detail outlining the reasons for the rejection.
(d) Contractor must not remove any Key Personnel from their assigned roles on
the Contract without the prior written consent of the State. The Contractor’s
removal of Key Personnel without the prior written consent of the State is an
unauthorized removal (“Unauthorized Removal”). Unauthorized Removals does not
include replacing Key Personnel for reasons beyond the reasonable control of
Contractor, including illness, disability, leave of absence, personal emergency
circumstances, resignation or for cause termination of the Key Personnel’s
employment. Unauthorized Removals does not include replacing Key Personnel
because of promotions or other job movements allowed by Contractor personnel
policies or Collective Bargaining Agreement(s) as long as the State receives
prior written notice before shadowing occurs and Contractor provides 30 days of
shadowing unless parties agree to a different time period. The Contractor with
the State must review any Key Personnel replacements, and appropriate transition
planning will be established. Any Unauthorized Removal may be considered by the
State to be a material breach of the Contract, in respect of which the State may
elect to exercise its termination and cancellation rights.
(e) The Contractor must notify the Contract Compliance Inspector and the
Contract Administrator at least 10 business days before redeploying non-Key
Personnel, who are dedicated to primarily to the Project, to other projects. If
the State does not object to the redeployment by its scheduled date, the
Contractor may then redeploy the non-Key Personnel.
2.063 Re-assignment of Personnel at the State’s Request
The State reserves the right to require the removal from the Project of
Contractor personnel found, in the judgment of the State, to be unacceptable.
The State’s request must be written with reasonable detail outlining the reasons
for the removal request. Additionally, the State’s request must be based on
legitimate, good-faith reasons. Replacement personnel for the removed person
must be fully qualified for the position. If the State exercises this right, and
the Contractor cannot immediately replace the removed personnel, the State
agrees to an equitable adjustment in schedule or other terms that may be
affected by the State’s required removal. If any incident with removed personnel
results in delay not reasonably anticipatable under the circumstances and which
is attributable to the State, the applicable SLAs for the affected Service will
not be counted for a time as agreed to by the parties.
2.064 Contractor Personnel Location
All staff assigned by Contractor to work on the Contract will perform their
duties either primarily at Contractor’s offices and facilities or at State
facilities. Without limiting the generality of the foregoing, Key Personnel
will, at a minimum, spend at least the amount of time on-site at State
facilities as indicated in the applicable Statement of Work. Subject to
availability, selected Contractor personnel may be assigned office space to be
shared with State personnel.
2.065 Contractor Identification

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Contractor employees must be clearly identifiable while on State property by
wearing a State-issued badge, as required. Contractor employees are required to
clearly identify themselves and the company they work for whenever making
contact with State personnel by telephone or other means.

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2.066 Cooperation with Third Parties
Contractor agrees to cause its personnel and the personnel of any Subcontractors
to cooperate with the State and its agents and other contractors including the
State’s Quality Assurance personnel. As reasonably requested by the State in
writing, the Contractor will provide to the State’s agents and other contractors
reasonable access to Contractor’s Project personnel, systems and facilities to
the extent the access relates to activities specifically associated with this
Contract and will not interfere or jeopardize the safety or operation of the
systems or facilities. The State acknowledges that Contractor’s time schedule
for the Contract is very specific and agrees not to unnecessarily or
unreasonably interfere with, delay or otherwise impeded Contractor’s performance
under this Contract with the requests for access.
2.067 Contractor Return of State Equipment/Resources
The Contractor must return to the State any State-furnished equipment,
facilities and other resources when no longer required for the Contract in the
same condition as when provided by the State, reasonable wear and tear excepted.
2.068 Contract Management Responsibilities
The Contractor will be required to assume responsibility for all contractual
activities, whether or not that Contractor performs them. Further, the State
will consider the Contractor to be the sole point of contact with regard to
contractual matters, including payment of any and all charges resulting from the
anticipated Contract. If any part of the work is to be subcontracted, the
Contract must include a list of Subcontractors, including firm name and address,
contact person and a complete description of work to be subcontracted. The State
reserves the right to approve Subcontractors and to require the Contractor to
replace Subcontractors found to be unacceptable. The Contractor is totally
responsible for adherence by the Subcontractor to all provisions of the
Contract. Any change in Subcontractors must be approved by the State, in
writing, prior to such change.
     2.070 Subcontracting by Contractor
2.071 Contractor Full Responsibility
Contractor shall have full responsibility for the successful performance and
completion of all of the Services and Deliverables. The State will consider
Contractor to be the sole point of contact with regard to all contractual
matters under this Contract, including payment of any and all charges for
Services and Deliverables.
2.072 State Consent to Delegation
Contractor shall not delegate any duties under this Contract to a Subcontractor
unless the Department of Management and Budget, Purchasing Operations has given
written consent to such delegation. The State shall have the right of prior
written approval of all Subcontractors and to require Contractor to replace any
Subcontractors found, in the reasonable judgment of the State, to be
unacceptable. The State’s request shall be written with reasonable detail
outlining the reasons for the removal request. Additionally, the State’s request
shall be based on legitimate, good-faith reasons. Replacement Subcontractor(s)
for the removed Subcontractor shall be fully qualified for the position. If the
State exercises this right, and the Contractor cannot immediately replace the
removed Subcontractor, the State will agree to an equitable adjustment in
schedule or other terms that may be affected by the State’s required removal. If
any such incident with a removed Subcontractor results in delay not reasonable
anticipatable under the circumstances and which is attributable to the State,
the applicable SLA for the affected Work will not be counted for a time agreed
upon by the parties.
2.073 Subcontractor Bound to Contract
In any subcontracts entered into by Contractor for the performance of the
Services, Contractor shall require the Subcontractor, to the extent of the
Services to be performed by the Subcontractor, to be bound to Contractor by the
terms of this Contract and to assume toward Contractor all of the obligations
and responsibilities that Contractor, by this Contract, assumes toward the
State. The State reserves the right to receive copies of and review all
subcontracts, although Contractor may delete or mask any proprietary
information, including pricing, contained in such contracts before providing
them to the State. The management of any Subcontractor will be the
responsibility of Contractor, and Contractor shall remain responsible for the
performance of its Subcontractors to the same extent as if Contractor had not
subcontracted such performance. Contractor shall make all payments to
Subcontractors or suppliers of Contractor. Except as otherwise agreed in writing
by the State and Contractor, the State will not be obligated to direct payments
for the Services other than to Contractor. The State’s written approval of any
Subcontractor engaged by Contractor to perform any obligation under this
Contract shall not relieve Contractor of any obligations or performance required
under this Contract.

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2.074 Flow Down
Except where specifically approved in writing by the State on a case-by-case
basis, Contractor shall flow down the obligations in Sections 1.071, 2.031,
2.060, 2.100, 2.110, 2.120, 2.130, 2.200 in all of its agreements with any
Subcontractors.
2.075 Competitive Selection
The Contractor shall select subcontractors (including suppliers) on a
competitive basis to the maximum practical extent consistent with the objectives
and requirements of the Contract.
     2.080 State Responsibilities
2.081 Equipment
The State will provide only the equipment and resources identified in the
Statements of Work and other Contract Exhibits.
2.082 Facilities
The State must designate space as long as it is available and as provided in the
Statement of Work, to house the Contractor’s personnel whom the parties agree
will perform the Services/Deliverables at State facilities (collectively, the
“State Facilities”). The Contractor must have reasonable access to, and, unless
agreed otherwise by the parties in writing, must observe and comply with all
rules and regulations relating to each of the State Facilities (including hours
of operation) used by the Contractor in the course of providing the Services.
Contractor agrees that it will not, without the prior written consent of the
State, use any State Facilities or access any State information systems provided
for the Contractor’s use, or to which the Contractor otherwise gains access in
the course of performing the Services, for any purpose other than providing the
Services to the State.
     2.090 Security
2.091 Background Checks
On a case-by-case basis, the State may investigate the Contractor’s personnel
before they may have access to State facilities and systems. The scope of the
background check is at the discretion of the State and the results will be used
to determine Contractor personnel eligibility for working within State
facilities and systems. The investigations will include Michigan State Police
Background checks (ICHAT) and may include the National Crime Information Center
(NCIC) Finger Prints. Proposed Contractor personnel may be required to complete
and submit an RI-8 Fingerprint Card for the NCIC Finger Print Check. Any request
for background checks will be initiated by the State and will be reasonably
related to the type of work requested.
All Contractor personnel will also be expected to comply with the State’s
security and acceptable use policies for State IT equipment and resources. See
http://www.michigan.gov/dit. Furthermore, Contractor personnel will be expected
to agree to the State’s security and acceptable use policies before the
Contractor personnel will be accepted as a resource to perform work for the
State. It is expected the Contractor will present these documents to the
prospective employee before the Contractor presents the individual to the State
as a proposed resource. Contractor staff will be expected to comply with all
Physical Security procedures in place within the facilities where they are
working.
2.092 Security Breach Notification
If the Contractor breaches this Section, the Contractor must (i) promptly cure
any deficiencies and (ii) comply with any applicable federal and state laws and
regulations pertaining to unauthorized disclosures. Contractor and the State
will cooperate to mitigate, to the extent practicable, the effects of any
breach, intrusion, or unauthorized use or disclosure. Contractor must report to
the State in writing any use or disclosure of Confidential Information, whether
suspected or actual, other than as provided for by the Contract within 10 days
of becoming aware of the use or disclosure or the shorter time period as is
reasonable under the circumstances.
2.093 PCI Data Security Requirements – DELETED – NOT APPLICABLE

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     2.100 Confidentiality
2.101 Confidentiality
Contractor and the State each acknowledge that the other possesses and will
continue to possess confidential information that has been developed or received
by it. As used in this Section, “Confidential Information” of Contractor must
mean all non-public proprietary information of Contractor (other than
Confidential Information of the State as defined below) which is marked
confidential, restricted, proprietary or with a similar designation.
“Confidential Information” of the State must mean any information which is
retained in confidence by the State (or otherwise required to be held in
confidence by the State under applicable federal, state and local laws and
regulations) or which, in the case of tangible materials provided to Contractor
by the State under its performance under this Contract, is marked as
confidential, proprietary or with a similar designation by the State.
“Confidential Information” excludes any information (including this Contract)
that is publicly available under the Michigan FOIA.
2.102 Protection and Destruction of Confidential Information
The State and Contractor will each use at least the same degree of care to
prevent disclosing to third parties the Confidential Information of the other as
it employs to avoid unauthorized disclosure, publication or dissemination of its
own confidential information of like character, but in no event less than
reasonable care. Neither Contractor nor the State will (i) make any use of the
Confidential Information of the other except as contemplated by this Contract,
(ii) acquire any right in or assert any lien against the Confidential
Information of the other, or (iii) if requested to do so, refuse for any reason
to promptly return the other party’s Confidential Information to the other
party. Each party will limit disclosure of the other party’s Confidential
Information to employees and Subcontractors who must have access to fulfill the
purposes of this Contract. Disclosure to, and use by, a Subcontractor is
permissible where (A) use of a Subcontractor is authorized under this Contract,
(B) the disclosure is necessary or otherwise naturally occurs in connection with
work that is within the Subcontractor’s scope of responsibility, and
(C) Contractor obligates the Subcontractor in a written Contract to maintain the
State’s Confidential Information in confidence. At the State’s request, any
employee of Contractor and of any Subcontractor having access or continued
access to the State’s Confidential Information may be required to execute an
acknowledgment that the employee has been advised of Contractor’s and the
Subcontractor’s obligations under this Section and of the employee’s obligation
to Contractor or Subcontractor, as the case may be, to protect the Confidential
Information from unauthorized use or disclosure.
Promptly upon termination or cancellation of the Contract for any reason,
Contractor must certify to the State that Contractor has destroyed all State
Confidential Information.
2.103 Exclusions
Notwithstanding the foregoing, the provisions of Section 2.100 will not apply to
any particular information which the State or Contractor can demonstrate
(i) was, at the time of disclosure to it, in the public domain; (ii) after
disclosure to it, is published or otherwise becomes part of the public domain
through no fault of the receiving party; (iii) was in the possession of the
receiving party at the time of disclosure to it without an obligation of
confidentiality; (iv) was received after disclosure to it from a third party who
had a lawful right to disclose the information to it without any obligation to
restrict its further disclosure; or (v) was independently developed by the
receiving party without reference to Confidential Information of the furnishing
party. Further, the provisions of Section 2.100 will not apply to any particular
Confidential Information to the extent the receiving party is required by law to
disclose the Confidential Information, provided that the receiving party
(i) promptly provides the furnishing party with notice of the legal request, and
(ii) assists the furnishing party in resisting or limiting the scope of the
disclosure as reasonably requested by the furnishing party.
2.104 No Implied Rights
Nothing contained in this Section must be construed as obligating a party to
disclose any particular Confidential Information to the other party, or as
granting to or conferring on a party, expressly or impliedly, any right or
license to the Confidential Information of the other party.
2.105 Respective Obligations
The parties’ respective obligations under this Section must survive the
termination or expiration of this Contract for any reason.

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TERMS AND CONDITIONS
  CONTRACT NO. 071B9200147   (MAP) [g17601g1760102.gif]

2.110 Records and Inspections
2.111 Inspection of Work Performed
The State’s authorized representatives must at all reasonable times and with
10 days prior written request, have the right to enter Contractor’s premises, or
any other places, where the Services are being performed, and must have access,
upon reasonable request, to interim drafts of Deliverables or work-in-progress.
Upon 10 Days prior written notice and at all reasonable times, the State’s
representatives must be allowed to inspect, monitor, or otherwise evaluate the
work being performed and to the extent that the access will not reasonably
interfere or jeopardize the safety or operation of the systems or facilities.
Contractor must provide all reasonable facilities and assistance for the State’s
representatives.
2.112 Examination of Records
For seven years after the Contractor provides any work under this Contract (the
“Audit Period”), the State may examine and copy any of Contractor’s books,
records, documents and papers pertinent to establishing Contractor’s compliance
with the Contract and with applicable laws and rules. The State must notify the
Contractor 20 days before examining the Contractor’s books and records. The
State does not have the right to review any information deemed confidential by
the Contractor to the extent access would require the confidential information
to become publicly available. This provision also applies to the books, records,
accounts, documents and papers, in print or electronic form, of any parent,
affiliated or subsidiary organization of Contractor, or any Subcontractor of
Contractor performing services in connection with the Contract.
2.113 Retention of Records
Contractor must maintain at least until the end of the Audit Period all
pertinent financial and accounting records (including time sheets and payroll
records, and information pertaining to the Contract and to the Services,
equipment, and commodities provided under the Contract) pertaining to the
Contract according to generally accepted accounting principles and other
procedures specified in this Section. Financial and accounting records must be
made available, upon request, to the State at any time during the Audit Period.
If an audit, litigation, or other action involving Contractor’s records is
initiated before the end of the Audit Period, the records must be retained until
all issues arising out of the audit, litigation, or other action are resolved or
until the end of the Audit Period, whichever is later.
2.114 Audit Resolution
If necessary, the Contractor and the State will meet to review each audit report
promptly after issuance. The Contractor will respond to each audit report in
writing within 30 days from receipt of the report, unless a shorter response
time is specified in the report. The Contractor and the State must develop,
agree upon and monitor an action plan to promptly address and resolve any
deficiencies, concerns, and/or recommendations in the audit report.
2.115 Errors
(a) If the audit demonstrates any errors in the documents provided to the State,
then the amount in error must be reflected as a credit or debit on the next
invoice and in subsequent invoices until the amount is paid or refunded in full.
However, a credit or debit may not be carried for more than four invoices. If a
balance remains after four invoices, then the remaining amount will be due as a
payment or refund within 45 days of the last quarterly invoice that the balance
appeared on or termination of the Contract, whichever is earlier.
(b) In addition to other available remedies, the difference between the payment
received and the correct payment amount is greater than 10%, then the Contractor
must pay all of the reasonable costs of the audit.
2.120 Warranties
2.121 Warranties and Representations
The Contractor represents and warrants:
(a) All services shall be rendered per all federal, state, and local laws and
regulations, NCQA and NCCHC standards, as well as DCH and MDOC Policy
Directives, Director’s Office Memorandums, and Operating Procedures. Please
contact the MDOC CCI for current DCH and MDOC policies, procedures, directives
and memorandums.
(b) It is capable in all respects of fulfilling and must fulfill all of its
obligations under this Contract. The performance of all obligations under this
Contract must be provided in a timely, professional, and workman-like manner and
must meet the performance and operational standards required under this
Contract.

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(c) The Contract Appendices, Attachments and Exhibits identify the equipment and
software and services necessary for the Deliverable(s) to perform and Services
to operate in compliance with the Contract’s requirements and other standards of
performance.
(d) It is the lawful owner or licensee of any Deliverable licensed or sold to
the State by Contractor or developed by Contractor under this Contract, and
Contractor has all of the rights necessary to convey to the State the ownership
rights or licensed use, as applicable, of any and all Deliverables. None of the
Deliverables provided by Contractor to the State under this Contract, nor their
use by the State, will infringe the patent, copyright, trade secret, or other
proprietary rights of any third party.
(e) If, under this Contract, Contractor procures any equipment, software or
other Deliverable for the State (including equipment, software and other
Deliverables manufactured, re-marketed or otherwise sold by Contractor under
Contractor’s name), then in addition to Contractor’s other responsibilities with
respect to the items in this Contract, Contractor must assign or otherwise
transfer to the State or its designees, or afford the State the benefits of, any
manufacturer’s warranty for the Deliverable.
(f) The contract signatory has the power and authority, including any necessary
corporate authorizations, necessary to enter into this Contract, on behalf of
Contractor.
(g) It is qualified and registered to transact business in all locations where
required.
(h) Neither the Contractor nor any Affiliates, nor any employee of either, has,
must have, or must acquire, any contractual, financial, business, or other
interest, direct or indirect, that would conflict in any manner or degree with
Contractor’s performance of its duties and responsibilities to the State under
this Contract or otherwise create an appearance of impropriety with respect to
the award or performance of this Agreement. Contractor must notify the State
about the nature of the conflict or appearance of impropriety within two days of
learning about it.
(i) Neither Contractor nor any Affiliates, nor any employee of either has
accepted or must accept anything of value based on an understanding that the
actions of the Contractor or Affiliates or employee on behalf of the State would
be influenced. Contractor must not attempt to influence any State employee by
the direct or indirect offer of anything of value.
(j) Neither Contractor nor any Affiliates, nor any employee of either has paid
or agreed to pay any person, other than bona fide employees and consultants
working solely for Contractor or the Affiliate, any fee, commission, percentage,
brokerage fee, gift, or any other consideration, contingent upon or resulting
from the award or making of this Contract.
(k) The prices proposed by Contractor were arrived at independently, without
consultation, communication, or agreement with any other bidder for the purpose
of restricting competition; the prices quoted were not knowingly disclosed by
Contractor to any other bidder; and no attempt was made by Contractor to induce
any other person to submit or not submit a proposal for the purpose of
restricting competition.
(l) All financial statements, reports, and other information furnished by
Contractor to the State as part of its response to the RFP or otherwise in
connection with the award of this Contract fairly and accurately represent the
business, properties, financial condition, and results of operations of
Contractor as of the respective dates, or for the respective periods, covered by
the financial statements, reports, other information. Since the respective dates
or periods covered by the financial statements, reports, or other information,
there have been no material adverse change in the business, properties,
financial condition, or results of operations of Contractor.
(m) All written information furnished to the State by or for the Contractor in
connection with this Contract, including its bid, is true, accurate, and
complete, and contains no untrue statement of material fact or omits any
material fact necessary to make the information not misleading.
(n) It is not in material default or breach of any other contract or agreement
that it may have with the State or any of its departments, commissions, boards,
or agencies. Contractor further represents and warrants that it has not been a
party to any contract with the State or any of its departments that was
terminated by the State or the department within the previous five years for the
reason that Contractor failed to perform or otherwise breached an obligation of
the Contract.

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(o) If any of the certifications, representations, or disclosures made in the
Contractor’s original bid response change after contract award, the Contractor
is required to report those changes immediately to the Department of Management
and Budget, Purchasing Operations.
2.122 Warranty of Merchantability
Goods provided by Contractor under this agreement shall be merchantable. All
goods provided under this Contract shall be of good quality within the
description given by the State, shall be fit for their ordinary purpose, shall
be adequately contained and packaged within the description given by the State,
shall conform to the agreed upon specifications, and shall conform to the
affirmations of fact made by the Contractor or on the container or label.
2.123 Warranty of Fitness for a Particular Purpose
When the Contractor has reason to know or knows any particular purpose for which
the goods are required, and the State is relying on the Contractor’s skill or
judgment to select or furnish suitable goods, there is a warranty that the goods
are fit for such purpose.
2.124 Warranty of Title
Contractor shall, in providing goods to the State, convey good title in those
goods, whose transfer is right and lawful. All goods provided by Contractor
shall be delivered free from any security interest, lien, or encumbrance of
which the State, at the time of contracting, has no knowledge. Goods provided by
Contractor, under this Contract, shall be delivered free of any rightful claim
of any third person by of infringement or the like.
2.125 Equipment Warranty
To the extent Contractor is responsible under this Contract for maintaining
equipment/system(s), Contractor represents and warrants that it will maintain
the equipment/system(s) in good operating condition and will undertake all
repairs and preventive maintenance according to the applicable manufacturer’s
recommendations for the period specified in this Contract.
The Contractor represents and warrants that the equipment/system(s) are in good
operating condition and operate and perform to the requirements and other
standards of performance contained in this Contract, when installed, at the time
of Final Acceptance by the State, and for a period of one year commencing upon
the first day following Final Acceptance.
Within 10 business days of notification from the State, the Contractor must
adjust, repair or replace all equipment that is defective or not performing in
compliance with the Contract. The Contractor must assume all costs for replacing
parts or units and their installation including transportation and delivery
fees, if any.
The Contractor must provide a toll-free telephone number to allow the State to
report equipment failures and problems to be remedied by the Contractor.
The Contractor agrees that all warranty service it provides under this Contract
must be performed by Original Equipment Manufacturer (OEM) trained, certified
and authorized technicians.
The Contractor is the sole point of contact for warranty service. The Contractor
warrants that it will pass through to the State any warranties obtained or
available from the original equipment manufacturer, including any replacement,
upgraded, or additional equipment warranties.
All warranty work must be performed on the State of Michigan worksite(s).
2.126 Equipment to be New
If applicable, all equipment provided under this Contract by Contractor shall be
new where Contractor has knowledge regarding whether the equipment is new or
assembled from new or serviceable used parts that are like new in performance or
has the option of selecting one or the other. Equipment that is assembled from
new or serviceable used parts that are like new in performance is acceptable
where Contractor does not have knowledge or the ability to select one or other,
unless specifically agreed otherwise in writing by the State.

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2.127 Prohibited Products
The State will not accept salvage, distressed, outdated or discontinued
merchandise. Shipping of such merchandise to any State agency, as a result of an
order placed against the Contract, shall be considered default by the Contractor
of the terms and conditions of the Contract and may result in cancellation of
the Contract by the State. The brand and product number offered for all items
shall remain consistent for the term of the Contract, unless Purchasing
Operations has approved a change order pursuant to Section 2.024.
2.128 Consequences For Breach

In addition to any remedies available in law, if the Contractor breaches any of
the warranties contained in this section, the breach may be considered as a
default in the performance of a material obligation of this Contract.
2.130 Insurance
2.131 Liability Insurance
The Contractor must provide proof of the minimum levels of insurance coverage as
indicated below. The insurance must protect the State from claims which may
arise out of or result from the Contractor’s performance of services under the
terms of this Contract, whether the services are performed by the Contractor, or
by any subcontractor, or by anyone directly or indirectly employed by any of
them, or by anyone for whose acts they may be liable.
The Contractor waives all rights against the State of Michigan, its departments,
divisions, agencies, offices, commissions, officers, employees and agents for
recovery of damages to the extent these damages are covered by the insurance
policies the Contractor is required to maintain under this Contract.
All insurance coverage’s provided relative to this Contract/Purchase Order are
PRIMARY and NON-CONTRIBUTING to any comparable liability insurance (including
self-insurances) carried by the State.
The insurance must be written for not less than any minimum coverage specified
in this Contract or required by law, whichever is greater.
The insurers selected by Contractor must have an A.M. Best rating of A or
better, or as otherwise approved in writing by the State, or if the ratings are
no longer available, with a comparable rating from a recognized insurance rating
agency. All policies of insurance required in this Contract must be issued by
companies that have been approved to do business in the State.
See www.michigan.gov/dleg.
Where specific limits are shown, they are the minimum acceptable limits. If
Contractor’s policy contains higher limits, the State must be entitled to
coverage to the extent of the higher limits.
The Contractor is required to pay for and provide the type and amount of
insurance checked þ below:
þ      1.      Commercial General Liability with the following minimum coverage:
$2,000,000 General Aggregate Limit other than Products/Completed Operations
$2,000,000 Products/Completed Operations Aggregate Limit
$1,000,000 Personal & Advertising Injury Limit
$1,000,000 Each Occurrence Limit
The Contractor must list the State of Michigan, its departments, divisions,
agencies, offices, commissions, officers, employees and agents as ADDITIONAL
INSUREDS on the Commercial General Liability certificate. The Contractor also
agrees to provide evidence that insurance policies contain a waiver of
subrogation by the insurance company.
þ      2.      If a motor vehicle is used to provide services or products under
this Contract, the Contractor must have vehicle liability insurance on any auto
including owned, hired and non-owned vehicles used in Contractor’s business for
bodily injury and property damage as required by law.
The Contractor must list the State of Michigan, its departments, divisions,
agencies, offices, commissions, officers, employees and agents as ADDITIONAL
INSUREDS on the vehicle liability certificate. The Contractor also agrees to
provide evidence that insurance policies contain a waiver of subrogation by the
insurance company.

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þ      3.      Workers’ compensation coverage must be provided according to
applicable laws governing the employees and employers work activities in the
state of the Contractor’s domicile. If the applicable coverage is provided by a
self-insurer, proof must be provided of approved self-insured authority by the
jurisdiction of domicile. For employees working outside of the state of
qualification, Contractor must provide appropriate certificates of insurance
proving mandated coverage levels for the jurisdictions where the employees’
activities occur.
Any certificates of insurance received must also provide a list of states where
the coverage is applicable.
The Contractor also agrees to provide evidence that insurance policies contain a
waiver of subrogation by the insurance company. This provision must not be
applicable where prohibited or limited by the laws of the jurisdiction in which
the work is to be performed.
þ      4.      Employers liability insurance with the following minimum limits:
$100,000 each accident
$100,000 each employee by disease
$500,000 aggregate disease
þ      5.      Employee Fidelity, including Computer Crimes, insurance naming
the State as a loss payee, providing coverage for direct loss to the State and
any legal liability of the State arising out of or related to fraudulent or
dishonest acts committed by the employees of Contractor or its Subcontractors,
acting alone or in collusion with others, in a minimum amount of one million
dollars ($1,000,000.00) with a maximum deductible of fifty thousand dollars
($50,000.00).
þ      6.      Umbrella or Excess Liability Insurance in a minimum amount of ten
million dollars ($10,000,000.00), which must apply, at a minimum, to the
insurance required in Subsection 1 (Commercial General Liability) above.
þ      7.      Professional Liability (Errors and Omissions) Insurance with the
following minimum coverage: one million dollars ($1,000,000.00) each occurrence
and three million dollars ($3,000,000.00) annual aggregate.
¨      8.      Fire and Personal Property Insurance covering against any loss or
damage to the office space used by Contractor for any reason under this
Contract, and the equipment, software and other contents of the office space,
including without limitation, those contents used by Contractor to provide the
Services to the State, up to its replacement value, where the office space and
its contents are under the care, custody and control of Contractor. The policy
must cover all risks of direct physical loss or damage, including without
limitation, flood and earthquake coverage and coverage for computer hardware and
software. The State must be endorsed on the policy as a loss payee as its
interests appear.
2.132 Subcontractor Insurance Coverage
Except where the State has approved in writing a Contractor subcontract with
other insurance provisions, Contractor must require all of its Subcontractors
under this Contract to purchase and maintain the insurance coverage as described
in this Section for the Contractor in connection with the performance of work by
those Subcontractors. Alternatively, Contractor may include any Subcontractors
under Contractor’s insurance on the coverage required in this Section.
Subcontractor(s) must fully comply with the insurance coverage required in this
Section. Failure of Subcontractor(s) to comply with insurance requirements does
not limit Contractor’s liability or responsibility.
As of 1-23-09, the State accepts the following insurance levels for Aetna:

         
General Aggregate
  $ 2,000,000.00  
Products-Comp/OP AGG
  $ 2,000,000.00  
Personal & Adv. Injury
  $ 2,000,000.00  
Each Occurrence
  $ 2,000,000.00  
Fire Damage (Any one fire)
  $ 1,000,000.00  
Med Exp (Any one person)
  $ 5,000.00  
Worker’s Comp Each Accident
  $ 100,000.00  
Worker’s Comp Disease Policy Limit
  $ 100,000.00  
Worker’s Comp Disease Each Employee
  $ 100,000.00  

As of 1-23-09, the State accepts the following insurance levels for network
providers:
All network providers will follow Aetna policy regarding requirements for
liability limits in the State of Michigan. To be a participating provider their
professional liability must meet minimum requirements and be an active policy.
Minimum requirements for physicians are $100,000/$300,000.

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2.133 Certificates of Insurance and Other Requirements
Contractor must furnish to DMB-Purchasing Operations, certificate(s) of
insurance verifying insurance coverage or providing satisfactory evidence of
self-insurance as required in this Section (the “Certificates”). The Certificate
must be on the standard “accord” form or equivalent. THE CONTRACT OR PURCHASE
ORDER NO. MUST BE SHOWN ON THE CERTIFICATE OF INSURANCE TO ASSURE CORRECT
FILING. All Certificate(s) are to be prepared and submitted by the Insurance
Provider. All Certificate(s) must contain a provision indicating that coverages
afforded under the policies WILL NOT BE CANCELLED, MATERIALLY CHANGED, OR NOT
RENEWED without 30 days prior written notice, except for 10 days for non-payment
of premium, having been given to the Director of Purchasing Operations,
Department of Management and Budget. The notice must include the Contract or
Purchase Order number affected. Before the Contract is signed, and not less than
20 days before the insurance expiration date every year thereafter, the
Contractor must provide evidence that the State and its agents, officers and
employees are listed as additional insureds under each commercial general
liability and commercial automobile liability policy. In the event the State
approves the representation of the State by the insurer’s attorney, the attorney
may be required to be designated as a Special Assistant Attorney General by the
Attorney General of the State of Michigan.
The Contractor must maintain all required insurance coverage throughout the term
of the Contract and any extensions and, in the case of claims-made Commercial
General Liability policies, must secure tail coverage for at least three years
following the expiration or termination for any reason of this Contract. The
minimum limits of coverage specified above are not intended, and must not be
construed, to limit any liability or indemnity of Contractor under this Contract
to any indemnified party or other persons. Contractor is responsible for all
deductibles with regard to the insurance. If the Contractor fails to pay any
premium for required insurance as specified in this Contract, or if any insurer
cancels or significantly reduces any required insurance as specified in this
Contract without the State’s written consent, then the State may, after the
State has given the Contractor at least 30 days written notice, pay the premium
or procure similar insurance coverage from another company or companies. The
State may deduct any part of the cost from any payment due the Contractor, or
the Contractor must pay that cost upon demand by the State.
2.140 Indemnification
2.141 General Indemnification
To the extent permitted by law, the Contractor must indemnify, defend and hold
harmless the State from liability, including all claims and losses, and all
related costs and expenses (including reasonable attorneys’ fees and costs of
investigation, litigation, settlement, judgments, interest and penalties),
accruing or resulting to any person, firm or corporation that may be injured or
damaged by the Contractor in the performance of this Contract and that are
attributable to the negligence or tortious acts of the Contractor or any of its
Subcontractors, or by anyone else for whose acts any of them may be liable.
2.142 Code Indemnification
To the extent permitted by law, the Contractor shall indemnify, defend and hold
harmless the State from any claim, loss, or expense arising from Contractor’s
breach of the No Surreptitious Code Warranty.
2.143 Employee Indemnification
In any claims against the State of Michigan, its departments, divisions,
agencies, sections, commissions, officers, employees and agents, by any employee
of the Contractor or any of its Subcontractors, the indemnification obligation
under the Contract must not be limited in any way by the amount or type of
damages, compensation or benefits payable by or for the Contractor or any of its
Subcontractors under worker’s disability compensation acts, disability benefit
acts or other employee benefit acts. This indemnification clause is intended to
be comprehensive. Any overlap in provisions, or the fact that greater
specificity is provided as to some categories of risk, is not intended to limit
the scope of indemnification under any other provisions.
2.144 Patent/Copyright Infringement Indemnification
To the extent permitted by law, the Contractor must indemnify, defend and hold
harmless the State from and against all losses, liabilities, damages (including
taxes), and all related costs and expenses (including reasonable attorneys’ fees
and costs of investigation, litigation, settlement, judgments, interest and
penalties) incurred in connection with any action or proceeding threatened or
brought against the State to the extent that the action or proceeding is based
on a claim that any piece of equipment, software, commodity or service supplied
by the Contractor or its subcontractors, or the operation of the equipment,
software, commodity or service, or the use or reproduction of any documentation
provided with the equipment, software, commodity or service infringes any United
States patent, copyright, trademark or trade secret of any person or entity,
which is enforceable under the laws of the United States.

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In addition, should the equipment, software, commodity, or service, or its
operation, become or in the State’s or Contractor’s opinion be likely to become
the subject of a claim of infringement, the Contractor must at the Contractor’s
sole expense (i) procure for the State the right to continue using the
equipment, software, commodity or service or, if the option is not reasonably
available to the Contractor, (ii) replace or modify to the State’s satisfaction
the same with equipment, software, commodity or service of equivalent function
and performance so that it becomes non-infringing, or, if the option is not
reasonably available to Contractor, (iii) accept its return by the State with
appropriate credits to the State against the Contractor’s charges and reimburse
the State for any losses or costs incurred as a consequence of the State ceasing
its use and returning it.
Notwithstanding the foregoing, the Contractor has no obligation to indemnify or
defend the State for, or to pay any costs, damages or attorneys’ fees related
to, any claim based upon (i) equipment developed based on written specifications
of the State; (ii) use of the equipment in a configuration other than
implemented or approved in writing by the Contractor, including, but not limited
to, any modification of the equipment by the State; or (iii) the combination,
operation, or use of the equipment with equipment or software not supplied by
the Contractor under this Contract.
2.145 Continuation of Indemnification Obligations
The Contractor’s duty to indemnify under this Section continues in full force
and effect, notwithstanding the expiration or early cancellation of the
Contract, with respect to any claims based on facts or conditions that occurred
before expiration or cancellation.
2.146 Indemnification Procedures
The procedures set forth below must apply to all indemnity obligations under
this Contract.
(a) After the State receives notice of the action or proceeding involving a
claim for which it will seek indemnification, the State must promptly notify
Contractor of the claim in writing and take or assist Contractor in taking, as
the case may be, any reasonable action to avoid the imposition of a default
judgment against Contractor. No failure to notify the Contractor relieves the
Contractor of its indemnification obligations except to the extent that the
Contractor can prove damages attributable to the failure. Within 10 days
following receipt of written notice from the State relating to any claim, the
Contractor must notify the State in writing whether Contractor agrees to assume
control of the defense and settlement of that claim (a “Notice of Election”).
After notifying Contractor of a claim and before the State receiving
Contractor’s Notice of Election, the State is entitled to defend against the
claim, at the Contractor’s expense, and the Contractor will be responsible for
any reasonable costs incurred by the State in defending against the claim during
that period.
(b) If Contractor delivers a Notice of Election relating to any claim: (i) the
State is entitled to participate in the defense of the claim and to employ
counsel at its own expense to assist in the handling of the claim and to monitor
and advise the State about the status and progress of the defense; (ii) the
Contractor must, at the request of the State, demonstrate to the reasonable
satisfaction of the State, the Contractor’s financial ability to carry out its
defense and indemnity obligations under this Contract; (iii) the Contractor must
periodically advise the State about the status and progress of the defense and
must obtain the prior written approval of the State before entering into any
settlement of the claim or ceasing to defend against the claim and (iv) to the
extent that any principles of Michigan governmental or public law may be
involved or challenged, the State has the right, at its own expense, to control
the defense of that portion of the claim involving the principles of Michigan
governmental or public law. But the State may retain control of the defense and
settlement of a claim by notifying the Contractor in writing within 10 days
after the State’s receipt of Contractor’s information requested by the State
under clause (ii) of this paragraph if the State determines that the Contractor
has failed to demonstrate to the reasonable satisfaction of the State the
Contractor’s financial ability to carry out its defense and indemnity
obligations under this Section. Any litigation activity on behalf of the State,
or any of its subdivisions under this Section, must be coordinated with the
Department of Attorney General. In the event the insurer’s attorney represents
the State under this Section, the insurer’s attorney may be required to be
designated as a Special Assistant Attorney General by the Attorney General of
the State of Michigan.
(c) If Contractor does not deliver a Notice of Election relating to any claim of
which it is notified by the State as provided above, the State may defend the
claim in the manner as it may deem appropriate, at the cost and expense of
Contractor. If it is determined that the claim was one against which Contractor
was required to indemnify the State, upon request of the State, Contractor must
promptly reimburse the State for all the reasonable costs and expenses.

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2.150 Termination/Cancellation
2.151 Notice and Right to Cure
If the Contractor breaches the Contract, and the State in its sole discretion
determines that the breach is curable, then the State will provide the
Contractor with written notice of the breach and a time period (not less than
30 days) to cure the Breach. The notice of breach and opportunity to cure is
inapplicable for successive or repeated breaches or if the State determines in
its sole discretion that the breach poses a serious and imminent threat to the
health or safety of any person or the imminent loss, damage, or destruction of
any real or tangible personal property.
2.152 Termination for Cause
(a) The State may terminate this Contract, for cause, by notifying the
Contractor in writing, if the Contractor (i) breaches any of its material duties
or obligations under this Contract (including a Chronic Failure to meet any
particular SLA), or (ii) fails to cure a breach within the time period specified
in the written notice of breach provided by the State
(b) If this Contract is terminated for cause, the Contractor must pay all costs
incurred by the State in terminating this Contract, including but not limited
to, State administrative costs, reasonable attorneys’ fees and court costs, and
any reasonable additional costs the State may incur to procure the
Services/Deliverables required by this Contract from other sources.
Re-procurement costs are not consequential, indirect or incidental damages, and
cannot be excluded by any other terms otherwise included in this Contract,
provided the costs are not in excess of 50% more than the prices for the
Service/Deliverables provided under this Contract.
(c) If the State chooses to partially terminate this Contract for cause, charges
payable under this Contract will be equitably adjusted to reflect those
Services/Deliverables that are terminated and the State must pay for all
Services/Deliverables for which Final Acceptance has been granted provided up to
the termination date. Services and related provisions of this Contract that are
terminated for cause must cease on the effective date of the termination.
(d) If the State terminates this Contract for cause under this Section, and it
is determined, for any reason, that Contractor was not in breach of contract
under the provisions of this section, that termination for cause must be deemed
to have been a termination for convenience, effective as of the same date, and
the rights and obligations of the parties must be limited to that otherwise
provided in this Contract for a termination for convenience.
2.153 Termination for Convenience
The State may terminate this Contract for its convenience, in whole or part, if
the State determines that a termination is in the State’s best interest. Reasons
for the termination must be left to the sole discretion of the State and may
include, but not necessarily be limited to (a) the State no longer needs the
Services or products specified in the Contract, (b) relocation of office,
program changes, changes in laws, rules, or regulations make implementation of
the Services no longer practical or feasible, (c) unacceptable prices for
Additional Services or New Work requested by the State, or (d) falsification or
misrepresentation, by inclusion or non-inclusion, of information material to a
response to any RFP issued by the State. The State may terminate this Contract
for its convenience, in whole or in part, by giving Contractor written notice at
least 30 days before the date of termination. If the State chooses to terminate
this Contract in part, the charges payable under this Contract must be equitably
adjusted to reflect those Services/Deliverables that are terminated. Services
and related provisions of this Contract that are terminated for cause must cease
on the effective date of the termination.
2.154 Termination for Non-Appropriation
(a) Contractor acknowledges that, if this Contract extends for several fiscal
years, continuation of this Contract is subject to appropriation or availability
of funds for this Contract. If funds to enable the State to effect continued
payment under this Contract are not appropriated or otherwise made available,
the State must terminate this Contract and all affected Statements of Work, in
whole or in part, at the end of the last period for which funds have been
appropriated or otherwise made available by giving written notice of termination
to Contractor. The State must give Contractor at least 30 days advance written
notice of termination for non-appropriation or unavailability (or the time as is
available if the State receives notice of the final decision less than 30 days
before the funding cutoff).
(b) If funding for the Contract is reduced by law, or funds to pay Contractor
for the agreed-to level of the Services or production of Deliverables to be
provided by Contractor are not appropriated or otherwise unavailable, the State
may, upon 30 days written notice to Contractor, reduce the level of the Services
or the change the production of Deliverables in the manner and for the periods
of time as the State may elect. The charges payable under this Contract will be
equitably adjusted to reflect any equipment, services or commodities not
provided by reason of the reduction.

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(c) If the State terminates this Contract, eliminates certain Deliverables, or
reduces the level of Services to be provided by Contractor under this Section,
the State must pay Contractor for all Work-in-Process performed through the
effective date of the termination or reduction in level, as the case may be and
as determined by the State, to the extent funds are available. This Section will
not preclude Contractor from reducing or stopping Services/Deliverables or
raising against the State in a court of competent jurisdiction, any claim for a
shortfall in payment for Services performed or Deliverables finally accepted
before the effective date of termination.
2.155 Termination for Criminal Conviction
The State may terminate this Contract immediately and without further liability
or penalty in the event Contractor, an officer of Contractor, or an owner of a
25% or greater share of Contractor is convicted of a criminal offense related to
a State, public or private Contract or subcontract.
2.156 Termination for Approvals Rescinded
The State may terminate this Contract if any final administrative or judicial
decision or adjudication disapproves a previously approved request for purchase
of personal services under Constitution 1963, Article 11, § 5, and Civil Service
Rule 7-1. In that case, the State will pay the Contractor for only the work
completed to that point under the Contract. Termination may be in whole or in
part and may be immediate as of the date of the written notice to Contractor or
may be effective as of the date stated in the written notice.
2.157 Rights and Obligations upon Termination
(a) If the State terminates this Contract for any reason, the Contractor must
(a) stop all work as specified in the notice of termination, (b) take any action
that may be necessary, or that the State may direct, for preservation and
protection of Deliverables or other property derived or resulting from this
Contract that may be in Contractor’s possession, (c) return all materials and
property provided directly or indirectly to Contractor by any entity, agent or
employee of the State, (d) transfer title in, and deliver to, the State, unless
otherwise directed, all Deliverables intended to be transferred to the State at
the termination of the Contract and which are resulting from the Contract (which
must be provided to the State on an “As-Is” basis except to the extent the
amounts paid by the State in respect of the items included compensation to
Contractor for the provision of warranty services in respect of the materials),
and (e) take any action to mitigate and limit any potential damages, or requests
for Contractor adjustment or termination settlement costs, to the maximum
practical extent, including terminating or limiting as otherwise applicable
those subcontracts and outstanding orders for material and supplies resulting
from the terminated Contract.
(b) If the State terminates this Contract before its expiration for its own
convenience, the State must pay Contractor for all charges due for Services
provided before the date of termination and, if applicable, as a separate item
of payment under this Contract, for Work In Process, on a percentage of
completion basis at the level of completion determined by the State. All
completed or partially completed Deliverables prepared by Contractor under this
Contract, at the option of the State, becomes the State’s property, and
Contractor is entitled to receive equitable fair compensation for the
Deliverables. Regardless of the basis for the termination, the State is not
obligated to pay, or otherwise compensate, Contractor for any lost expected
future profits, costs or expenses incurred with respect to Services not actually
performed for the State.
(c) Upon a good faith termination, the State may assume, at its option, any
subcontracts and agreements for services and deliverables provided under this
Contract, and may further pursue completion of the Services/Deliverables under
this Contract by replacement contract or otherwise as the State may in its sole
judgment deem expedient.
2.158 Reservation of Rights
Any termination of this Contract or any Statement of Work issued under it by a
party must be with full reservation of, and without prejudice to, any rights or
remedies otherwise available to the party with respect to any claims arising
before or as a result of the termination.
2.160 Deleted — Not Applicable

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2.170 Transition Responsibilities
2.171 Contractor Transition Responsibilities
If the State terminates this Contract, for convenience or cause, or if the
Contract is otherwise dissolved, voided, rescinded, nullified, expires or
rendered unenforceable, the Contractor agrees to comply with direction provided
by the State to assist in the orderly transition of equipment, services,
software, leases, etc. to the State or a third party designated by the State. If
this Contract expires or terminates, the Contractor agrees to make all
reasonable efforts to effect an orderly transition of services within a
reasonable period of time that in no event will exceed 185 days. These efforts
must include, but are not limited to, those listed in Sections 2.171, 2.172,
2.173, 2.174, and 2.175.
2.172 Contractor Personnel Transition
The Contractor must work with the State, or a specified third party, to develop
a transition plan setting forth the specific tasks and schedule to be
accomplished by the parties, to effect an orderly transition. The Contractor
must allow as many personnel as practicable to remain on the job to help the
State, or a specified third party, maintain the continuity and consistency of
the services required by this Contract. In addition, during or following the
transition period, in the event the State requires the Services of the
Contractor’s subcontractors or vendors, as necessary to meet its needs,
Contractor agrees to reasonably, and with good-faith, work with the State to use
the Services of Contractor’s subcontractors or vendors. Contractor will notify
all of Contractor’s subcontractors of procedures to be followed during
transition.
2.173 Contractor Information Transition
The Contractor agrees to provide reasonable detailed specifications for all
Services/Deliverables needed by the State, or specified third party, to properly
provide the Services/Deliverables required under this Contract. The Contractor
will provide the State with asset management data generated from the inception
of this Contract through the date on which this Contractor is terminated in a
comma-delineated format unless otherwise requested by the State. The Contractor
will deliver to the State any remaining owed reports and documentation still in
Contractor’s possession subject to appropriate payment by the State.
2.174 Contractor Software Transition
The Contractor must reasonably assist the State in the acquisition of any
Contractor software required to perform the Services/use the Deliverables under
this Contract. This must include any documentation being used by the Contractor
to perform the Services under this Contract. If the State transfers any software
licenses to the Contractor, those licenses must, upon expiration of the
Contract, transfer back to the State at their current revision level. Upon
notification by the State, Contractor may be required to freeze all non-critical
changes to Deliverables/Services.
2.175 Transition Payments
If the transition results from a termination for any reason, reimbursement must
be governed by the termination provisions of this Contract. If the transition
results from expiration, the Contractor will be reimbursed for all reasonable
transition costs (i.e. costs incurred within the agreed period after contract
expiration that result from transition operations) at the rates agreed upon by
the State. The Contractor will prepare an accurate accounting from which the
State and Contractor may reconcile all outstanding accounts.
2.176 State Transition Responsibilities
In the event that this Contract is terminated, dissolved, voided, rescinded,
nullified, or otherwise rendered unenforceable, the State agrees to perform the
following obligations, and any others upon which the State and the Contractor
agree:
(a) Reconciling all accounts between the State and the Contractor;
(b) Completing any pending post-project reviews.
2.180 Stop Work
2.181 Stop Work Orders
The State may, at any time, by written stop work order to Contractor, require
that Contractor stop all, or any part, of the work called for by the Contract
for a period of up to 90 calendar days after the stop work order is delivered to
Contractor, and for any further period to which the parties may agree. The stop
work order must be identified as a stop work order and must indicate that it is
issued under this Section 2.180. Upon receipt of the stop work order, Contractor
must immediately comply with its terms and take all reasonable steps to minimize
incurring costs allocable to the work covered by the stop work order during the
period of work stoppage. Within the period of the stop work order, the State
must either: (a) cancel the stop work order; or (b) terminate the work covered
by the stop work order as provided in Section 2.150.

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2.182 Cancellation or Expiration of Stop Work Order
The Contractor must resume work if the State cancels a Stop Work Order or if it
expires. The parties will agree upon an equitable adjustment in the delivery
schedule, the Contract price, or both, and the Contract must be modified, in
writing, accordingly, if: (a) the stop work order results in an increase in the
time required for, or in Contractor’s costs properly allocable to, the
performance of any part of the Contract; and (b) Contractor asserts its right to
an equitable adjustment within 30 calendar days after the end of the period of
work stoppage; provided that, if the State decides the facts justify the action,
the State may receive and act upon a Contractor proposal submitted at any time
before final payment under the Contract. Any adjustment will conform to the
requirements of Section 2.024.
2.183 Allowance of Contractor Costs
If the stop work order is not canceled and the work covered by the stop work
order is terminated for reasons other than material breach, the termination must
be deemed to be a termination for convenience under Section 2.150, and the State
will pay reasonable costs resulting from the stop work order in arriving at the
termination settlement. For the avoidance of doubt, the State is not be liable
to Contractor for loss of profits because of a stop work order issued under this
Section 2.180.
2.190 Dispute Resolution
2.191 In General
Any claim, counterclaim, or dispute between the State and Contractor arising out
of or relating to the Contract or any Statement of Work must be resolved as
follows. For all Contractor claims seeking an increase in the amounts payable to
Contractor under the Contract, or the time for Contractor’s performance,
Contractor must submit a letter, together with all data supporting the claims,
executed by Contractor’s Contract Administrator or the Contract Administrator’s
designee certifying that (a) the claim is made in good faith, (b) the amount
claimed accurately reflects the adjustments in the amounts payable to Contractor
or the time for Contractor’s performance for which Contractor believes the State
is liable and covers all costs of every type to which Contractor is entitled
from the occurrence of the claimed event, and (c) the claim and the supporting
data are current and complete to Contractor’s best knowledge and belief.
2.192 Informal Dispute Resolution
(a) All disputes between the parties must be resolved under the Contract
Management procedures in this Contract. If the parties are unable to resolve any
disputes after compliance with the processes, the parties must meet with the
Director of Purchasing Operations, DMB, or designee, for the purpose of
attempting to resolve the dispute without the need for formal legal proceedings,
as follows:
(i) The representatives of Contractor and the State must meet as often as the
parties reasonably deem necessary to gather and furnish to each other all
information with respect to the matter in issue which the parties believe to be
appropriate and germane in connection with its resolution. The representatives
must discuss the problem and negotiate in good faith in an effort to resolve the
dispute without the necessity of any formal proceeding.
(ii) During the course of negotiations, all reasonable requests made by one
party to another for non-privileged information reasonably related to the
Contract will be honored in order that each of the parties may be fully advised
of the other’s position.
(iii) The specific format for the discussions will be left to the discretion of
the designated State and Contractor representatives, but may include the
preparation of agreed upon statements of fact or written statements of position.
(iv) Following the completion of this process within 60 calendar days, the
Director of Purchasing Operations, DMB, or designee, must issue a written
opinion regarding the issue(s) in dispute within 30 calendar days. The opinion
regarding the dispute must be considered the State’s final action and the
exhaustion of administrative remedies.
(b) This Section will not be construed to prevent either party from instituting,
and a party is authorized to institute, formal proceedings earlier to avoid the
expiration of any applicable limitations period, to preserve a superior position
with respect to other creditors, or under Section 2.193.
(c) The State will not mediate disputes between the Contractor and any other
entity, except state agencies, concerning responsibility for performance of work
under the Contract.

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2.193 Injunctive Relief
The only circumstance in which disputes between the State and Contractor will
not be subject to the provisions of Section 2.192 is where a party makes a good
faith determination that a breach of the terms of the Contract by the other
party is the that the damages to the party resulting from the breach will be so
immediate, so large or severe and so incapable of adequate redress after the
fact that a temporary restraining order or other immediate injunctive relief is
the only adequate remedy.
2.194 Continued Performance
Each party agrees to continue performing its obligations under the Contract
while a dispute is being resolved except to the extent the issue in dispute
precludes performance (dispute over payment must not be deemed to preclude
performance) and without limiting either party’s right to terminate the Contract
as provided in Section 2.150, as the case may be.
2.200 Federal and State Contract Requirements
2.201 Nondiscrimination
In the performance of the Contract, Contractor agrees not to discriminate
against any employee or applicant for employment, with respect to his or her
hire, tenure, terms, conditions or privileges of employment, or any matter
directly or indirectly related to employment, because of race, color, religion,
national origin, ancestry, age, sex, height, weight, marital status, physical or
mental disability. Contractor further agrees that every subcontract entered into
for the performance of this Contract or any purchase order resulting from this
Contract will contain a provision requiring non-discrimination in employment, as
specified here, binding upon each Subcontractor. This covenant is required under
the Elliot Larsen Civil Rights Act, 1976 PA 453, MCL 37.2101, et seq., and the
Persons with Disabilities Civil Rights Act, 1976 PA 220, MCL 37.1101, et seq.,
and any breach of this provision may be regarded as a material breach of the
Contract.
2.202 Unfair Labor Practices
Under 1980 PA 278, MCL 423.321, et seq., the State must not award a Contract or
subcontract to an employer whose name appears in the current register of
employers failing to correct an unfair labor practice compiled under Section 2
of the Act. This information is compiled by the United States National Labor
Relations Board. A Contractor of the State, in relation to the Contract, must
not enter into a contract with a Subcontractor, manufacturer, or supplier whose
name appears in this register. Under Section 4 of 1980 PA 278, MCL 423.324, the
State may void any Contract if, after award of the Contract, the name of
Contractor as an employer or the name of the Subcontractor, manufacturer or
supplier of Contractor appears in the register.
2.203 Workplace Safety and Discriminatory Harassment
In performing Services for the State, the Contractor must comply with the
Department of Civil Services Rule 2-20 regarding Workplace Safety and Rule 1-8.3
regarding Discriminatory Harassment. In addition, the Contractor must comply
with Civil Service regulations and any applicable agency rules provided to the
Contractor. For Civil Service Rules, see
http://www.mi.gov/mdcs/0,1607,7-147-6877—,00.html.
2.210 Governing Law
2.211 Governing Law
The Contract must in all respects be governed by, and construed according to,
the substantive laws of the State of Michigan without regard to any Michigan
choice of law rules that would apply the substantive law of any other
jurisdiction to the extent not inconsistent with, or pre-empted by federal law.
2.212 Compliance with Laws
Contractor shall comply with all applicable state, federal and local laws and
ordinances in providing the Services/Deliverables.
2.213 Jurisdiction
Any dispute arising from the Contract must be resolved in the State of Michigan.
With respect to any claim between the parties, Contractor consents to venue in
Ingham County, Michigan, and irrevocably waives any objections it may have to
the jurisdiction on the grounds of lack of personal jurisdiction of the court or
the laying of venue of the court or on the basis of forum non conveniens or
otherwise. Contractor agrees to appoint agents in the State of Michigan to
receive service of process.

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2.220 Limitation of Liability
2.221 Limitation of Liability
Neither the Contractor nor the State is liable to each other, regardless of the
form of action, for consequential, incidental, indirect, or special damages.
This limitation of liability does not apply to claims for infringement of United
States patent, copyright, trademark or trade secrets; to claims for personal
injury or damage to property caused by the gross negligence or willful
misconduct of the Contractor; to claims covered by other specific provisions of
this Contract calling for liquidated damages; or to court costs or attorney’s
fees awarded by a court in addition to damages after litigation based on this
Contract.
2.230 Disclosure Responsibilities
2.231 Disclosure of Litigation
(a) Disclosure. Contractor must disclose any material criminal litigation,
investigations or proceedings involving the Contractor (and each Subcontractor)
or any of its officers or directors or any litigation, investigations or
proceedings under the Sarbanes-Oxley Act. In addition, each Contractor (and each
Subcontractor) must notify the State of any material civil litigation,
arbitration or proceeding which arises during the term of the Contract and
extensions, to which Contractor (or, to the extent Contractor is aware, any
Subcontractor) is a party, and which involves: (i) disputes that might
reasonably be expected to adversely affect the viability or financial stability
of Contractor or any Subcontractor; or (ii) a claim or written allegation of
fraud against Contractor or, to the extent Contractor is aware, any
Subcontractor by a governmental or public entity arising out of their business
dealings with governmental or public entities. The Contractor must disclose in
writing to the Contract Administrator any litigation, investigation, arbitration
or other proceeding (collectively, “Proceeding”) within 30 days of its
occurrence. Details of settlements which are prevented from disclosure by the
terms of the settlement may be annotated. Information provided to the State from
Contractor’s publicly filed documents referencing its material litigation will
be deemed to satisfy the requirements of this Section.
(b) Assurances. If any Proceeding disclosed to the State under this Section, or
of which the State otherwise becomes aware, during the term of this Contract
would cause a reasonable party to be concerned about:
(i) the ability of Contractor (or a Subcontractor) to continue to perform this
Contract according to its terms and conditions, or
(ii) whether Contractor (or a Subcontractor) in performing Services for the
State is engaged in conduct which is similar in nature to conduct alleged in the
Proceeding, which conduct would constitute a breach of this Contract or a
violation of Michigan law, regulations or public policy, then the Contractor
must provide the State all reasonable assurances requested by the State to
demonstrate that:
(a) Contractor and its Subcontractors will be able to continue to perform this
Contract and any Statements of Work according to its terms and conditions, and
(b) Contractor and its Subcontractors have not and will not engage in conduct in
performing the Services which is similar in nature to the conduct alleged in the
Proceeding.
(c) Contractor must make the following notifications in writing:
(1) Within 30 days of Contractor becoming aware that a change in its ownership
or officers has occurred, or is certain to occur, or a change that could result
in changes in the valuation of its capitalized assets in the accounting records,
Contractor must notify DMB Purchasing Operations.
(2) Contractor must also notify DMB Purchasing Operations within 30 days
whenever changes to asset valuations or any other cost changes have occurred or
are certain to occur as a result of a change in ownership or officers.
(3) Contractor must also notify DMB Purchasing Operations within 30 days
whenever changes to company affiliations occur.
2.232 Call Center Disclosure
Contractor and/or all Subcontractors involved in the performance of this
Contract providing call or contact center services to the State must disclose
the location of its call or contact center services to inbound callers. Failure
to disclose this information is a material breach of this Contract.

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2.233 Bankruptcy
The State may, without prejudice to any other right or remedy, terminate this
Contract, in whole or in part, and, at its option, may take possession of the
“Work in Process” and finish the Works in Process by whatever appropriate method
the State may deem expedient if:
     (a) the Contractor files for protection under the bankruptcy laws;
     (b) an involuntary petition is filed against the Contractor and not removed
within 30 days;
     (c) the Contractor becomes insolvent or if a receiver is appointed due to
the Contractor’s insolvency;
     (d) the Contractor makes a general assignment for the benefit of creditors;
or
          (e) the Contractor or its affiliates are unable to provide reasonable
assurances that the Contractor or its affiliates can deliver the services under
this Contract.
Contractor will fix appropriate notices or labels on the Work in Process to
indicate ownership by the State. To the extent reasonably possible, materials
and Work in Process must be stored separately from other stock and marked
conspicuously with labels indicating ownership by the State.
2.240 Performance
2.241 Time of Performance
(a) Contractor must use commercially reasonable efforts to provide the resources
necessary to complete all Services and Deliverables according to the time
schedules contained in the Statements of Work and other Exhibits governing the
work, and with professional quality.
(b) Without limiting the generality of Section 2.241(a), Contractor must notify
the State in a timely manner upon becoming aware of any circumstances that may
reasonably be expected to jeopardize the timely and successful completion of any
Deliverables/Services on the scheduled due dates in the latest State-approved
delivery schedule and must inform the State of the projected actual delivery
date.
(c) If the Contractor believes that a delay in performance by the State has
caused or will cause the Contractor to be unable to perform its obligations
according to specified Contract time periods, the Contractor must notify the
State in a timely manner and must use commercially reasonable efforts to perform
its obligations according to the Contract time periods notwithstanding the
State’s failure. Contractor will not be in default for a delay in performance to
the extent the delay is caused by the State.
2.242 Service Level Agreements (SLAs)
(a) SLAs will be completed with the following operational considerations:
(i) SLAs will not be calculated for individual Incidents where any event of
Excusable Failure has been determined; Incident means any interruption in
Services.
(ii) SLAs will not be calculated for individual Incidents where loss of service
is planned and where the State has received prior notification or coordination.
(iii) SLAs will not apply if the applicable Incident could have been prevented
through planning proposed by Contractor and not implemented at the request of
the State. To invoke this consideration, complete documentation relevant to the
denied planning proposal must be presented to substantiate the proposal.
(iv) Time period measurements will be based on the time Incidents are received
by the Contractor and the time that the State receives notification of
resolution based on 24x7x365 time period, except that the time period
measurement will be suspended based on the following:
1. Time period(s) will not apply where Contractor does not have access to a
physical State Location and where access to the State Location is necessary for
problem identification and resolution.
2. Time period(s) will not apply where Contractor needs to obtain timely and
accurate information or appropriate feedback and is unable to obtain timely and
accurate information or appropriate feedback from the State.
(b) Chronic Failure for any Service(s) will be defined as three unscheduled
outage(s) or interruption(s) on any individual Service for the same reason or
cause or if the same reason or cause was reasonably discoverable in the first
instance over a rolling 30 day period. Chronic Failure will result in the
State’s option to terminate the effected individual Service(s) and procure them
from a different vendor for the chronic location(s) with Contractor to pay the
difference in charges for up to three additional months. The termination of the
Service will not affect any tiered pricing levels.

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(c) Root Cause Analysis will be performed on any Business Critical outage(s) or
outage(s) on Services when requested by the Contract Administrator. Contractor
will provide its analysis within two weeks of outage(s) and provide a
recommendation for resolution.
(d) All decimals must be rounded to two decimal places with five and greater
rounding up and four and less rounding down unless otherwise specified.
(e) SLAs will not be in effect during the Start Up Transition period. The SLAs
will also not be in effect during a grace period of the first 180 days after the
Services Rendered start date of Contract Year One.
(f) The maximum level of SLA credits that can be assessed per contract year is
limited as follows:

                 
 
  i)   Contract Year One   $ 500,000.00  
 
  ii)   Contract Year Two   $ 750,000.00  
 
  iii)   Contract Year Three   $ 1,000,000.00       iv)   Maximum limit on SLA
credits for subsequent option years will be negotiated as part of that contract
option year.

2.243 Liquidated Damages
It is acknowledged that an Unauthorized Removal will interfere with the timely
and proper completion of the Contract, to the loss and damage of the State, and
that it would be impracticable and extremely difficult to fix the actual damage
sustained by the State as a result of any Unauthorized Removal. Therefore,
Contractor and the State agree that in the case of any Unauthorized Removal in
respect of which the State does not elect to exercise its rights under
Section 2.152, the State may assess liquidated damages against Contractor as
specified below.
For the Unauthorized Removal of any Key Personnel designated in the applicable
Statement of Work, the liquidated damages amount is $25,000.00 per individual if
the Contractor identifies a replacement approved by the State under
Section 2.060 and assigns the replacement to the Project to shadow the Key
Personnel who is leaving for a period of at least 30 days before the Key
Personnel’s removal.
If Contractor fails to assign a replacement to shadow the removed Key Personnel
for at least 30 days, in addition to the $25,000.00 liquidated damages for an
Unauthorized Removal, Contractor must pay the amount of $833.33 per day for each
day of the 30 day shadow period that the replacement Key Personnel does not
shadow the removed Key Personnel, up to $25,000.00 maximum per individual. The
total liquidated damages that may be assessed per Unauthorized Removal and
failure to provide 30 days of shadowing must not exceed $50,000.00 per
individual.
2.244 Excusable Failure
Neither party will be liable for any default, damage or delay in the performance
of its obligations under the Contract to the extent the default, damage or delay
is caused by government regulations or requirements (executive, legislative,
judicial, military or otherwise), power failure, electrical surges or current
fluctuations, lightning, earthquake, war, water or other forces of nature or
acts of God, delays or failures of transportation, equipment shortages,
suppliers’ failures, or acts or omissions of common carriers, fire; riots, civil
disorders; strikes or other labor disputes, embargoes; injunctions (provided the
injunction was not issued as a result of any fault or negligence of the party
seeking to have its default or delay excused); or any other cause beyond the
reasonable control of a party; provided the non-performing party and its
Subcontractors are without fault in causing the default or delay, and the
default or delay could not have been prevented by reasonable precautions and
cannot reasonably be circumvented by the non-performing party through the use of
alternate sources, workaround plans or other means, including disaster recovery
plans.
If a party does not perform its contractual obligations for any of the reasons
listed above, the non-performing party will be excused from any further
performance of its affected obligation(s) for as long as the circumstances
prevail. But the party must use commercially reasonable efforts to recommence
performance whenever and to whatever extent possible without delay. A party must
promptly notify the other party in writing immediately after the excusable
failure occurs, and also when it abates or ends.

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If any of the above-enumerated circumstances substantially prevent, hinder, or
delay the Contractor’s performance of the Services/provision of Deliverables for
more than 10 Business Days, and the State determines that performance is not
likely to be resumed within a period of time that is satisfactory to the State
in its reasonable discretion, then at the State’s option: (a) the State may
procure the affected Services/Deliverables from an alternate source, and the
State is not be liable for payment for the unperformed Services/ Deliverables
not provided under the Contract for so long as the delay in performance
continues; (b) the State may terminate any portion of the Contract so affected
and the charges payable will be equitably adjusted to reflect those
Services/Deliverables terminated; or (c) the State may terminate the affected
Statement of Work without liability to Contractor as of a date specified by the
State in a written notice of termination to the Contractor, except to the extent
that the State must pay for Services/Deliverables provided through the date of
termination.
The Contractor will not have the right to any additional payments from the State
as a result of any Excusable Failure occurrence or to payments for Services not
rendered/Deliverables not provided as a result of the Excusable Failure
condition. Defaults or delays in performance by Contractor which are caused by
acts or omissions of its Subcontractors will not relieve Contractor of its
obligations under the Contract except to the extent that a Subcontractor is
itself subject to an Excusable Failure condition described above and Contractor
cannot reasonably circumvent the effect of the Subcontractor’s default or delay
in performance through the use of alternate sources, workaround plans or other
means.
2.250 Approval of Deliverables
2.251 Delivery Responsibilities
Unless otherwise specified by the State within an individual order, the
following must be applicable to all orders issued under this Contract.
(a) Shipment responsibilities — Services performed/Deliverables provided under
this Contract must be delivered “F.O.B. Destination, within Government
Premises.” The Contractor must have complete responsibility for providing all
Services/Deliverables to all site(s) unless otherwise stated. Actual delivery
dates will be specified on the individual purchase order.
(b) Delivery locations — Services will be performed/Deliverables will be
provided at every State of Michigan location within Michigan unless otherwise
stated in the SOW. Specific locations will be provided by the State or upon
issuance of individual purchase orders.
(c) Damage Disputes — At the time of delivery to State Locations, the State must
examine all packages. The quantity of packages delivered must be recorded and
any obvious visible or suspected damage must be noted at time of delivery using
the shipper’s delivery document(s) and appropriate procedures to record the
damage. Where there is no obvious or suspected damage, all deliveries to a State
Location must be opened by the State and the contents inspected for possible
internal damage not visible externally within 14 days of receipt. Any damage
must be reported to the Contractor within five days of inspection
2.252 Delivery of Deliverables
Where applicable, the Statements of Work/POs contain lists of the Deliverables
to be prepared and delivered by Contractor including, for each Deliverable, the
scheduled delivery date and a designation of whether the Deliverable is a
document (“Written Deliverable”), a good (“Physical Deliverable”) or a Service.
All Deliverables must be completed and delivered for State review and written
approval and, where applicable, installed according to the State-approved
delivery schedule and any other applicable terms and conditions of the Contract.
2.253 Testing
(a) Before delivering any of the above-mentioned Statement of Work Physical
Deliverables or Services to the State, Contractor will first perform all
required quality assurance activities to verify that the Physical Deliverable or
Service is complete and conforms with its specifications listed in the
applicable Statement of Work or Purchase Order. Before delivering a Physical
Deliverable or Service to the State, Contractor must certify to the State that
(1) it has performed the quality assurance activities, (2) it has performed any
applicable testing, (3) it has corrected all material deficiencies discovered
during the quality assurance activities and testing, (4) the Deliverable or
Service is in a suitable state of readiness for the State’s review and approval,
and (5) the Deliverable/Service has all Critical Security patches/updates
applied.

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(b) If a Deliverable includes installation at a State Location, then Contractor
must (1) perform any applicable testing, (2) correct all material deficiencies
discovered during the quality assurance activities and testing, and (3) inform
the State that the Deliverable is in a suitable state of readiness for the
State’s review and approval. To the extent that testing occurs at State
Locations, the State is entitled to observe or otherwise participate in testing.
2.254 Approval of Deliverables, In General
(a) All Deliverables (Physical Deliverables and Written Deliverables) and
Services require formal written approval by the State, according to the
following procedures. Formal approval by the State requires the State to confirm
in writing that the Deliverable meets its specifications. Formal approval may
include the successful completion of Testing as applicable in Section 2.253, to
be led by the State with the support and assistance of Contractor. The approval
process will be facilitated by ongoing consultation between the parties,
inspection of interim and intermediate Deliverables and collaboration on key
decisions.
(b) The State’s obligation to comply with any State Review Period is conditioned
on the timely delivery of Deliverables/Services being reviewed.
(c) Before commencement of its review or testing of a Deliverable/Service, the
State may inspect the Deliverable/Service to confirm that all components of the
Deliverable/Service have been delivered without material deficiencies. If the
State determines that the Deliverable/Service has material deficiencies, the
State may refuse delivery of the Deliverable/Service without performing any
further inspection or testing of the Deliverable/Service. Otherwise, the review
period will be deemed to have started on the day the State receives the
Deliverable or the Service begins, and the State and Contractor agree that the
Deliverable/Service is ready for use and, where applicable, certification by
Contractor according to Section 2.253.
(d) The State will approve in writing a Deliverable/Service after confirming
that it conforms to and performs according to its specifications without
material deficiency. The State may, but is not be required to, conditionally
approve in writing a Deliverable/Service that contains material deficiencies if
the State elects to permit Contractor to rectify them post-approval. In any
case, Contractor will be responsible for working diligently to correct within a
reasonable time at Contractor’s expense all deficiencies in the
Deliverable/Service that remain outstanding at the time of State approval.
(e) If, after three opportunities (the original and two repeat efforts), the
Contractor is unable to correct all deficiencies preventing Final Acceptance of
a Deliverable/Service, the State may: (i) demand that the Contractor cure the
failure and give the Contractor additional time to cure the failure at the sole
expense of the Contractor; or (ii) keep the Contract in force and do, either
itself or through other parties, whatever the Contractor has failed to do, and
recover the difference between the cost to cure the deficiency and the contract
price plus an additional sum equal to 10% of the cost to cure the deficiency to
cover the State’s general expenses provided the State can furnish proof of the
general expenses; or (iii) terminate the particular Statement of Work for
default, either in whole or in part by notice to Contractor provided Contractor
is unable to cure the breach. Notwithstanding the foregoing, the State cannot
use, as a basis for exercising its termination rights under this Section,
deficiencies discovered in a repeat State Review Period that could reasonably
have been discovered during a prior State Review Period.
(f) The State, at any time and in its reasonable discretion, may halt the
testing or approval process if the process reveals deficiencies in or problems
with a Deliverable/Service in a sufficient quantity or of a sufficient severity
that renders continuing the process unproductive or unworkable. If that happens,
the State may stop using the Service or return the applicable Deliverable to
Contractor for correction and re-delivery before resuming the testing or
approval process.
2.255 Process For Approval of Written Deliverables
The State Review Period for Written Deliverables will be the number of days set
forth in the applicable Statement of Work following delivery of the final
version of the Deliverable (and if the Statement of Work does not state the
State Review Period, it is by default five Business Days for Written
Deliverables of 100 pages or less and 10 Business Days for Written Deliverables
of more than 100 pages). The duration of the State Review Periods will be
doubled if the State has not had an opportunity to review an interim draft of
the Written Deliverable before its submission to the State. The State agrees to
notify Contractor in writing by the end of the State Review Period either
stating that the Deliverable is approved in the form delivered by Contractor or
describing any deficiencies that must be corrected before approval of the
Deliverable (or at the State’s election, after approval of the Deliverable). If
the State notifies the Contractor about deficiencies, the Contractor will
correct the described deficiencies and within 30 Business Days resubmit the
Deliverable in a form that shows all revisions made to the original version
delivered to the State.

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Contractor’s correction efforts will be made at no additional charge. Upon
receipt of a corrected Deliverable from Contractor, the State will have a
reasonable additional period of time, not to exceed the length of the original
State Review Period, to review the corrected Deliverable to confirm that the
identified deficiencies have been corrected.
2.256 Process for Approval of Services
The State Review Period for approval of Services is governed by the applicable
Statement of Work (and if the Statement of Work does not state the State Review
Period, it is by default 30 Business Days for Services). The State agrees to
notify the Contractor in writing by the end of the State Review Period either
stating that the Service is approved in the form delivered by the Contractor or
describing any deficiencies that must be corrected before approval of the
Services (or at the State’s election, after approval of the Service). If the
State delivers to the Contractor a notice of deficiencies, the Contractor will
correct the described deficiencies and within 30 Business Days resubmit the
Service in a form that shows all revisions made to the original version
delivered to the State. The Contractor’s correction efforts will be made at no
additional charge. Upon implementation of a corrected Service from Contractor,
the State will have a reasonable additional period of time, not to exceed the
length of the original State Review Period, to review the corrected Service for
conformity and that the identified deficiencies have been corrected.
2.257 Process for Approval of Physical Deliverables
The State Review Period for approval of Physical Deliverables is governed by the
applicable Statement of Work (and if the Statement of Work does not state the
State Review Period, it is by default 30 continuous Business Days for a Physical
Deliverable). The State agrees to notify the Contractor in writing by the end of
the State Review Period either stating that the Deliverable is approved in the
form delivered by the Contractor or describing any deficiencies that must be
corrected before approval of the Deliverable (or at the State’s election, after
approval of the Deliverable). If the State delivers to the Contractor a notice
of deficiencies, the Contractor will correct the described deficiencies and
within 30 Business Days resubmit the Deliverable in a form that shows all
revisions made to the original version delivered to the State. The Contractor’s
correction efforts will be made at no additional charge. Upon receipt of a
corrected Deliverable from the Contractor, the State will have a reasonable
additional period of time, not to exceed the length of the original State Review
Period, to review the corrected Deliverable to confirm that the identified
deficiencies have been corrected.
2.258 Final Acceptance
Unless otherwise stated in the Article 1, Statement of Work or Purchase Order,
“Final Acceptance” of each Deliverable must occur when each Deliverable/Service
has been approved by the State following the State Review Periods identified in
Sections 2.251-2.257. Payment will be made for Deliverables installed and
accepted. Upon acceptance of a Service, the State will pay for all Services
provided during the State Review Period that conformed to the acceptance
criteria.
2.260 Ownership
2.261 Ownership of Work Product by State
The State owns all Deliverables as they are works made for hire by the
Contractor for the State. The State owns all United States and international
copyrights, trademarks, patents or other proprietary rights in the Deliverables.
2.262 Vesting of Rights
With the sole exception of any preexisting licensed works identified in the SOW,
the Contractor assigns, and upon creation of each Deliverable automatically
assigns, to the State, ownership of all United States and international
copyrights, trademarks, patents, or other proprietary rights in each and every
Deliverable, whether or not registered by the Contractor, insofar as any the
Deliverable, by operation of law, may not be considered work made for hire by
the Contractor for the State. From time to time upon the State’s request, the
Contractor must confirm the assignment by execution and delivery of the
assignments, confirmations of assignment, or other written instruments as the
State may request. The State may obtain and hold in its own name all copyright,
trademark, and patent registrations and other evidence of rights that may be
available for Deliverables.
2.263 Rights in Data
(a) The State is the owner of all data made available by the State to the
Contractor or its agents, Subcontractors or representatives under the Contract.
The Contractor will not use the State’s data for any purpose other than
providing the Services, nor will any part of the State’s data be disclosed,
sold, assigned, leased or otherwise disposed of to the general public or to
specific third parties or commercially exploited by or on behalf of the
Contractor. No employees of the Contractor, other than those on a strictly
need-to-know basis, have access to the State’s data. Contractor will not possess
or assert any lien or other right against the State’s data.

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Without limiting the generality of this Section, the Contractor must only use
personally identifiable information as strictly necessary to provide the
Services and must disclose the information only to its employees who have a
strict need-to-know the information. The Contractor must comply at all times
with all laws and regulations applicable to the personally identifiable
information.
(b) The State is the owner of all State-specific data under the Contract. The
State may use the data provided by the Contractor for any purpose. The State
will not possess or assert any lien or other right against the Contractor’s
data. Without limiting the generality of this Section, the State may use
personally identifiable information only as strictly necessary to utilize the
Services and must disclose the information only to its employees who have a
strict need to know the information, except as provided by law. The State must
comply at all times with all laws and regulations applicable to the personally
identifiable information. Other material developed and provided to the State
remains the State’s sole and exclusive property.
2.264 Ownership of Materials
The State and the Contractor will continue to own their respective proprietary
technologies developed before entering into the Contract. Any hardware bought
through the Contractor by the State, and paid for by the State, will be owned by
the State. Any software licensed through the Contractor and sold to the State,
will be licensed directly to the State.
2.270 State Standards
2.271 Existing Technology Standards
The Contractor will adhere to all existing standards as described within the
comprehensive listing of the State’s existing technology standards at
http://www.michigan.gov/dit.
2.272 Acceptable Use Policy
To the extent that Contractor has access to the State computer system,
Contractor must comply with the State’s Acceptable Use Policy, see
http://www.michigan.gov/ditservice. All Contractor employees must be required,
in writing, to agree to the State’s Acceptable Use Policy before accessing the
State system. The State reserves the right to terminate Contractor’s access to
the State system if a violation occurs.
2.273 Systems Changes
Contractor is not responsible for and not authorized to make changes to any
State systems without written authorization from the Project Manager. Any
changes Contractor makes to State systems with the State’s approval must be done
according to applicable State procedures, including security, access and
configuration management procedures.
2.280 Extended Purchasing
2.281 MIDEAL — DELETED — NOT APPLICABLE
2.282 State Employee Purchases — DELETED — NOT APPLICABLE
2.290 Environmental Provision
2.291 Environmental Provision
Energy Efficiency Purchasing Policy — The State seeks wherever possible to
purchase energy efficient products. This includes giving preference to U.S.
Environmental Protection Agency (EPA) certified ‘Energy Star’ products for any
category of products for which EPA has established Energy Star certification.
For other purchases, the State may include energy efficiency as one of the
priority factors to consider when choosing among comparable products.
Environmental Purchasing Policy — The State of Michigan is committed to
encouraging the use of products and services that impact the environment less
than competing products. The State is accomplishing this by including
environmental considerations in purchasing decisions, while remaining fiscally
responsible, to promote practices that improve worker health, conserve natural
resources, and prevent pollution. Environmental components that are to be
considered include: recycled content and recyclability; energy efficiency; and
the presence of undesirable materials in the products, especially those toxic
chemicals which are persistent and bioaccumulative.

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The Contractor should be able to supply products containing recycled and
environmentally preferable materials that meet performance requirements and is
encouraged to offer such products throughout the duration of this Contract.
Information on any relevant third party certification (such as Green Seal,
Energy Star, etc.) should also be provided.
Hazardous Materials:
For the purposes of this Section, “Hazardous Materials” is a generic term used
to describe asbestos, ACBMs, PCBs, petroleum products, construction materials
including paint thinners, solvents, gasoline, oil, and any other material the
manufacture, use, treatment, storage, transportation or disposal of which is
regulated by the federal, state or local laws governing the protection of the
public health, natural resources or the environment. This includes, but is not
limited to, materials the as batteries and circuit packs, and other materials
that are regulated as (1) “Hazardous Materials” under the Hazardous Materials
Transportation Act, (2) “chemical hazards” under the Occupational Safety and
Health Administration standards, (3) “chemical substances or mixtures” under the
Toxic Substances Control Act, (4) “pesticides” under the Federal Insecticide
Fungicide and Rodenticide Act, and (5) “hazardous wastes” as defined or listed
under the Resource Conservation and Recovery Act.
(a) The Contractor must use, handle, store, dispose of, process, transport and
transfer any material considered a Hazardous Material according to all federal,
State and local laws. The State must provide a safe and suitable environment for
performance of Contractor’s Work. Before the commencement of Work, the State
must advise the Contractor of the presence at the work site of any Hazardous
Material to the extent that the State is aware of the Hazardous Material. If the
Contractor encounters material re3asonably believed to be a Hazardous Material
and which may present a substantial danger, the Contractor must immediately stop
all affected Work, notify the State in writing about the conditions encountered,
and take appropriate health and safety precautions.
(b) Upon receipt of a written notice, the State will investigate the conditions.
If (a) the material is a Hazardous Material that may present a substantial
danger, and (b) the Hazardous Material was not brought to the site by the
Contractor, or does not result in whole or in part from any violation by the
Contractor of any laws covering the use, handling, storage, disposal of,
processing, transport and transfer of Hazardous Materials, the State must order
a suspension of Work in writing. The State must proceed to have the Hazardous
Material removed or rendered harmless. In the alternative, the State must
terminate the affected Work for the State’s convenience.
(c) Once the Hazardous Material has been removed or rendered harmless by the
State, the Contractor must resume Work as directed in writing by the State. Any
determination by the Michigan Department of Community Health or the Michigan
Department of Environmental Quality that the Hazardous Material has either been
removed or rendered harmless is binding upon the State and Contractor for the
purposes of resuming the Work. If any incident with Hazardous Material results
in delay not reasonable anticipatable under the circumstances and which is
attributable to the State, the applicable SLAs for the affected Work will not be
counted in Section 2.242 for a time as mutually agreed by the parties.
(d) If the Hazardous Material was brought to the site by the Contractor, or
results in whole or in part from any violation by the Contractor of any laws
covering the use, handling, storage, disposal of, processing, transport and
transfer of Hazardous Material, or from any other act or omission within the
control of the Contractor, the Contractor must bear its proportionate share of
the delay and costs involved in cleaning up the site and removing and rendering
harmless the Hazardous Material according to Applicable Laws to the condition
approved by applicable regulatory agency(ies).
Michigan has a Consumer Products Rule pertaining to labeling of certain products
containing volatile organic compounds. For specific details visit
http://www.michigan.gov/deq/0,1607,7-135-3310-4108-173523—,00.html
Refrigeration and Air Conditioning:
The Contractor shall comply with the applicable requirements of Sections 608 and
609 of the Clean Air Act (42 U.S.C. 7671g and 7671h) as each or both apply to
this Contract.
Environmental Performance:
Waste Reduction Program — Contractor shall establish a program to promote
cost-effective waste reduction in all operations and facilities covered by this
Contract. The Contractor’s programs shall comply with applicable Federal, State,
and local requirements, specifically including Section 6002 of the Resource
Conservation and Recovery Act (42 U.S.C. 6962, et seq.).

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Attachment A, Price Proposal
A. Risk Sharing Based Per Prisoner Per Month (PPPM) Fee, Adjusted for Changing
Populations

                                                                               
                      Year One   Year Two   Year Three     Risk   Risk Share  
Risk   Risk Share   Risk   Risk Share     Share   Maximum   Share   Maximum  
Share   Maximum Population for Billing Purposes   Target   Cap   Target   Cap  
Target   Cap
50,000 and Greater
  $ 175.00     $ 196.24     $ 182.00     $ 200.16     $ 189.29     $ 204.15  
49,000 to 49,999
  $ 176.25     $ 197.49     $ 183.25     $ 201.41     $ 190.55     $ 205.41  
48,000 to 48,999
  $ 177.55     $ 198.79     $ 184.60     $ 202.76     $ 192.00     $ 206.86  
47,000 to 47,999
  $ 178.95     $ 200.19     $ 186.00     $ 204.16     $ 193.40     $ 208.26  

 

*   Note that the inflationary increase of the target rate is 4% for future
contract years, while the inflationary increase for the cap is limited to 2% for
future contract years.   **   Note: The adjusted PPPM does not go into effect
for shifted populations, such as when a facility may close, and the population
is moved to other facilities.

B. Risk Sharing Percentages Below the Target

  1.   Should the Actual Costs be below the Risk Share Target, the MDOC must
receive 85% of the amount between the Risk Share Target and the Actual Cost, and
the Contractor must receive the remaining 15%.

C. Risk Sharing Percentages Between the Target and the Cap.

  1.   Should the Actual Costs be up to, and including 9.0% above the Risk Share
Target, for this Tier the Contractor will absorb 15% of the difference between
the Actual Costs and the Risk Share Target, and the MDOC will absorb the
remaining 85%.     2.   Should the actual costs be more than 9.0% above the
target, up to the Risk Share Maximum Cap, for this Tier the Contractor will
absorb 30% of the excess costs, and the MDOC will absorb 70%.     3.   Should
the Risk Share Maximum Cap be reached, the Contractor must be responsible for
all costs above the Cap.

D. Medical Assistant Temporary Staff — Hourly Rate
     The Contract Year One hourly rate for the Contractor to provide temporary
medical assistants is $29.33.
E. Risk Share Assessment Methodology

  1.   See Appendix F for the detail of the Risk Share Assessment Methodology

F. Aetna Performance Guarantees

  1.   See Appendix G for the detail of the Aetna Performance Guarantees.

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Attachment B — Service Level Agreements

         
INTRODUCTION
    73  
 
MDOC SERVICE LEVEL AGREEMENTS (SLAs) OVERVIEW>>>
    73-75  
 
SLA OUTCOME MEASURES AND PERFORMANCE INDICATORS:
       
 
RECEIVING SCREENING
    76  
 
HEALTH ASSESSMENT
    77  
 
CHRONIC CARE CLINICS
    78  
 
INFECTION CONTROL MANAGEMENT
    79  
 
MEDICAL PROVIDER APPOINTMENT
    80  
 
SPECIALTY SERVICES
    81  
 
CREDENTIALING
    83  
 
EMERGENCY / DISASTER PLAN
    84  
 
ENCOUNTER DATA SUBMISSION
    85  
 
TRAINING AND EDUCATION
    86  
 
DISCHARGE PLANNING
    87  
 
CONTINUOUS QUALITY IMPROVEMENT (CQI)
    88  
 
SUMMARY OF SLA CREDITS
    89  
 
SAMPLE COMPONENT AUDIT SCHEDULE
    92  

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INTRODUCTION
The Michigan Department of Corrections (MDOC) and the Contractor will work in
collaboration to develop a detailed plan which provides both a clearly defined
process and measurable outcomes for successful monitoring and resolution of
performance issues, or Service Level Agreements (SLAs). These SLAs will be
annually reviewed and customized in partnership with the MDOC, reflecting the
specific issues, indicators, updates, operating characteristics and requirements
which are unique to this project while incorporating consistent “best practices”
and industry standards.
AUDIT PROCESS
Utilizing the current standards published by the National Commission on
Correctional Health Care (NCCHC) as its foundation, a list of twelve core
medical performance component SLAs have been identified, to be reviewed and
audited annually. Three of these SLAs will be audited each quarter. Any SLA that
falls below acceptable thresholds will automatically be audited again in the
next quarter to gauge progress and assure satisfactory recovery. A sample
Quarterly Audit Schedule is included at the back of this document.
An audit team consisting of the, MDOC staff designated by the Bureau of
Healthcare Leadership team, and the Contractor’s MP or designee will perform
audits on the performance of Contractor services. Each audit will be scheduled
in advance, and may include the Contractor’s Regional Manager as necessary. The
Contractor and the MDOC will provide the audit team access to all medical/mental
health/pharmacy/dental records, logbooks, staffing charts, time reports,
prisoner grievances, and other requested documents as required to assess
Contractor/MDOC performance. Such activities may be conducted in institution’s
clinic but will be conducted in a manner so as not to disrupt the routine
provision of prisoner healthcare. When necessary, MDOC custody and/or
administrative records will be utilized to establish facts or corroborate other
information. All audits are designed and performed in accordance with the
following standards:

  •   The current healthcare Contract     •   American Correctional Association
Standards (ACA)     •   National Commission on Correctional Health Care
Standards (NCCHC)     •   State of Michigan Rules and Regulations     •  
Michigan Department of Corrections Policies, Procedure, Formulary, and Medical
Services Advisory Committee Guidelines

General requirements applicable to all prisoners will be assessed via a data
review of a statistically appropriate sample, mutually agreed upon by the
Contractor and the MDOC of the prisoners’ concurrent health records at each
institution. Other requirements relevant to a segment of the prisoner population
may be monitored by a higher percentage (up to 100%) of the records of a
sub-population (i.e., Special Needs or Chronic Care roster, pregnant prisoners,
etc.).
The MDOC reserves the right to have the audit validated by their third party
reviewer. Penalties will be assessed after the third party reviewer validates
compliance for areas where the third party is requested and verification by the
Chief Medical Officer (CMO) for areas not needing the third party reviewer. The
third party reviewer, as part of their review, will evaluate any related MDOC
staffing vacancies or other factors beyond the Contractor’s control to determine
if they had a significant impact upon the Contractor’s ability to meet the SLA,
and shall take that into consideration when determining the Contractor’s SLA
compliance. The third party reviewer will also, as part of their review, accept
and evaluate additional information provided by the Contractor, within the
timelines of their review process.

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TRANSITION PERIOD
Recognizing the complexity inherent in transitioning a new healthcare provider
into an existing correctional system, the amount of change required in clinical
and administrative operations and the need for the parties to agree upon a clear
process and set of measures, an initial transition period during which the
parties put the components of the monitoring system in place, a “grace period:
of 180 days after the Contract Services “Go Live” date is allowed, prior to the
implementation of specific SLA Credits.
This does not mean that the performance monitoring process does not occur or is
put on hold; rather, this time period allows the parties to put in place and
test-run the monitoring/audit and corrective action processes and to make
adjustments as needed.
COMPLETION OF AUDIT
At the conclusion of an audit, the team will share the preliminary results with
the respective MDOC and Contractor Regional Management staff. An exit interview
shall be held with Site Senior Medical Practitioner, Regional Managers and
warden and/or designee regarding the audit results, wherein the team shall
provide final documents necessary for review.
Copies of completed audit documents will be provided to the Contractor’s Project
Manager, MDOC third party reviewer, and the MDOC designee. Necessary corrective
action plans will be initiated by the Contractor and/or MDOC HUM and
communicated to the MDOC Chief Medical Officer, the HUM and the Contractor’s
Project Manager.
The Contractor may request review and reconsideration in the findings via appeal
to the MDOC Chief Medical Officer. The Contractor must specifically address each
disputed finding and justification for appealing such. The MDOC Chief Medical
Officer will render a final decision on the appeal to Contractor within 30 days
of receipt.
CORRECTIVE ACTION PROCESS
Detailed Corrective Plans (CAP) will be developed and submitted to the MDOC CCI
within 15 days to address deficiencies when compliance thresholds are not met.
CAPs will be provided in a standardized format throughout the MDOC project and
will specify the following information:

  •   Compliance Criteria     •   Percent of Compliance     •   Specific
description of deficiency     •   Time frame for corrective action     •   Owner
responsible for corrective action     •   Completion Date

CAPs will be maintained on-site and will be reviewed and discussed as part of
regularly scheduled health unit meetings.
Documentation to support completion of corrective action will be provided to the
HUM and the Contractor’s Regional Manager.
THRESHOLD COMPLIANCE
For each element reviewed, an adjustment to compensation has been specified in
the case of non-compliance. MDOC shall withhold the monetary amount from the
Contractor’s compensation for substandard performance in the designated SLA
areas. The Contractor will be notified in writing and the appropriate deduction
will be made in the next monthly payment following the expiration of the appeal
deadline.

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The Contractor will implement a phased-in or tiered level of threshold
compliance be utilized in the initial stages of the audit process, allowing the
corrective actions and operational improvements to be implemented which will
impact successive performance results. The thresholds will be summed in
aggregate for each indicator, however an additional penalty will be assessed for
each facility that falls below 70% in the first assessment period and below 80%
in subsequent assessment periods.
For example, the first assessment non-compliance threshold for each indicator
may be placed at 75%, with a Tier One penalty of $2000 each for non-compliance.
For the initial non-compliance threshold on any SLA credit will be assessed at
the Tier One Level. Beginning with the second assessment, the non-compliance
threshold will be 85%, with a Tier Two penalty of $3000 each for non-compliance
and the intent to work towards 90-95% compliance. For the first 180 days of this
process, for each indicator, no SLA Credits will be assessed until the second
indicator of non-compliance, at which time the Tier Two penalty amount of $3000
will apply.
SLAs that are determined to fall below the compliance percentage will be
re-evaluated during the next quarterly audit. In the event they continue to fall
below the threshold, the penalty amount shall be double the original assessment.
The SLA Outcome Measures and Performance Guarantees outlines areas that are
subject to adjustment to the Contractor’s compensation. Objective performance
criteria are subject to change at the discretion of the MDOC in consultation
with the Contractor. The Contractor shall be given a 180-day notice to prepare
for any new or changed criterion. Audits will begin 180 days from the effective
date of the contract with adjustments to compensation beginning 180 days from
that date.
The Contractor anticipates meeting the contract requirements proposed by the
MDOC as outlined in a resulting contract, and will use the above SLAs in any
case of non-compliance.
DEVELOPMENT OF ADDITIONAL SLAs
MDOC and the Contractor shall consider development of additional SLAs as
appropriate which may address areas such as:

      w Medical Records         w No-Show Follow-Up         w Use of Informed
Consent         w Policies & Procedures         w Meetings & Reports         w
Grievance Tracking         w Environmental Health & Safety         w Medical
Waste         w Special Confinement         w Site Orientation         w
Transfer Screenings         w Mental Health — Use of Restraints

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SLA: RECEIVING SCREENING
Definition and Purpose of Auditing This Criterion
As per ACA / NCCHC standards, MDOC policy and procedures, and the contract, an
initial receiving screen shall be made on each new admission as soon as
feasible, within 24 hours of their arrival at designated intake facilities.
Elements of the Criterion
At any reception unit (new admissions) immediately upon receipt of a prisoner, a
health care staff member will perform a brief health screening to ensure timely
continuity of care. This screening will be composed of a review of all available
medical records, and a brief interview of the prisoner will be done to ensure
attention to any obvious acute or contagious conditions requiring care and any
medications that must be provided or continued.
Indicators/Methodology/Acceptable Standard
1) Indicator: The receiving screening shall note the existence of any obvious
acute or contagious conditions requiring immediate referral for emergent or
urgent care.
Methodology:
a. Review the medical record and county transfer forms.
b. Document on the appropriate encounter form in the medical record any obvious
contagious conditions that may require care and any medications that must be
provided or continued.
Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000
2) Indicator: When a newly admitted prisoner arrives on medication, there shall
be a referral to a provider for continuity of care.
Methodology:
a. Review the prisoner’s medical record and the Physician’s/NP Orders.
b. If the prisoner was on medication when he/she arrived, there shall be a
referral to a provider documented in the medical record.
c. Continuation of medications as required is documented.
Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000

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SLA: HEALTH ASSESSMENT
Definition and Purpose of Auditing This Criterion
As per the ACA / NCCHC standards and MDOC policy and procedures, an Initial
Assessment by the provider is required upon admission of all prisoners. The
Initial Assessment shall include history and hands on physical examination
(including breast, rectal and testicular exams as indicated by the patient’s
gender, age, and risk factors), review of all receiving screen and lab results,
and initiation of therapy and immunizations when appropriate.
Elements of the Criterion
All new admissions at any reception facility will undergo health appraisals to
include history and physical examinations as well as appropriate admission
testing as designated by policy.
Indicators/Methodology/Acceptable Standard
1) Indicator: Admission Testing shall be completed as required by MDOC policies.
Methodology: Review the Medical Record.
Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000
2) Indicator: Initial Health Assessment is completed by provider upon admission,
but in no case beyond 14 days post admission, in accordance with ACA / NCCHC
Standards and MDOC policy and procedures.
Methodology: Review the Medical Record for completion of appropriate forms.
Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000

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SLA: CHRONIC CARE CLINICS
Definition and Purpose of Auditing This Criterion
In accordance with ACA / NCCHC standards and MDOC policies, prisoners with
special medical conditions requiring medication for indefinite time frames shall
be evaluated for a Chronic Care Clinic (CCC).
Elements of the Criterion
For CCC prisoners the following elements are reviewed: maintenance medication
renewals, follow-up appointment, and referrals.
Indicators/Methodology/Acceptable Standard
Indicators:

  1.   All prisoners who have been diagnosed with chronic hypertension, cardiac
disease, neurologic disease including seizure disorder or other diagnosis
resulting in a disability, endocrine disease including diabetes and thyroid
disease, infectious disease including HIV and Hepatitis C, pulmonary disease
including asthma and COPD, and gastrointestional disease will be evaluated by a
Medical Provider every six months if in good control, every three months if in
fair control, and every month if in poor control.     2.   The MP evaluation
will consist of a documented history and review of systems and symptoms,
appropriate physical exam for system involved, diagnosis update as necessary,
and treatment plan to include medication, appropriate diagnostic testing,
referral to specialists, follow-up MP appointments entered into the scheduling
component, and education. This evaluation will be documented in the EMR at the
time of the visit.     3.   Medication prescriptions will include medication,
dosage, number of 30 day refills and expiration date. All chronic care
medications (except short term medication such as antibiotics) for each prisoner
will be on the same schedule and expire on the same date, and may be written in
the EMR for a period of up to one year.     4.   The MP will indicate the date
of the next MP appointment based on the degree of control of the least
controlled chronic care diagnosis. This date will be entered by the MP into the
scheduling component of the EMR.

Methodology: Review the prisoner’s medical record for chronic clinic visits.
Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000

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SLA: Infection Control Management
Definition and Purpose of Auditing This Criterion
As per the current Contract, ACA / NCCHC Standards and MDOC Policies/Procedures,
MDOC is responsible for maintaining infection control.
Elements of the Criterion
TB skin tests (PPD) will be given annually to prisoners. Prisoners with a
documented past positive PPD will be exempt from the annual PPD, but must be
informed about the symptoms of TB and evaluated annually for pulmonary symptoms
suggestive of TB by a nurse/physician. The annual encounter must be documented
on the appropriate medical record encounter form (flow sheet). A medical staff
member will counsel any prisoner who refused TB testing. This counseling will be
documented on the appropriate medical record encounter form. If he/she continues
to refuse,the institution’s CQI/ Infectious Diseases Coordinator shall be
notified. A healthcare staff member will counsel the prisoner. Documentation of
the refusal and the notification of the TB Coordinator will be made on the TB
Screening Refusal form. If he/she continues to refuse, the prisoner will be
referred to the MDOC QA Staff for action.
Indicators/Methodology/Acceptable Standard
Indicators:

  1.   MP evaluates all prisoners who have been referred due to positive TB test
or signs of active TB, draining wounds, physical sign that has the potential for
being chicken pox, herpes zoster, mumps or any other infectious disease that
could result in the need for quarantine the same day.     2.   The MP evaluation
will consist of a documented history and review of systems and symptoms,
appropriate physical exam for system involved, diagnosis update as necessary,
and treatment plan to include medication, appropriate diagnostic testing,
referral to specialists, follow-up MP appointments entered into the scheduling
component, and education. This evaluation will be documented in the EMR at the
time of the visit.

Methodology:
Review the prisoner’s medical record for documentation on the immunization
record. Review employee personnel record for proper documentation on
immunization form.
Acceptable Standard: Threshold 100% (TB)
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000

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SLA: MEDICAL PROVIDER APPOINTMENT
Definition and Purpose of auditing this Criterion:
As per the current Contract and ACA / NCCHC standards, daily sick call shall be
conducted at each correctional facility by a Contractor MP.
Elements of the Criterion
The prisoner sick call request will be screened and assessed for non-emergent
health problems by qualified MDOC healthcare staff within 24 hours of receipt of
request for healthcare on the proper form. Sick call will be available Monday
through Saturday (excluding holidays). The prisoner’s request will be triaged by
MDOC healthcare staff within 24 hours and prisoner will be seen by a Contractor
MP within 24 hours of the triage.
Indicators/Methodology/Acceptable Standard
Indicators:

  1.   MP evaluates all routine nursing referrals within five business days.    
2.   MP evaluates all urgent nursing referrals within one business day.     3.  
MP evaluates all emergent nursing referrals the same day.     4.   The MP
evaluation will consist of a documented history and review of systems and
symptoms, appropriate physical exam for system involved, diagnosis update as
necessary, and treatment plan to include medication, appropriate diagnostic
testing, referral to specialists, and education. This evaluation will be
documented in the EMR at the time of the visit.     5.   The MP will review all
diagnostic tests within two days of receipt at the facility or EMR and document
in the EMR any further recommended tests or changes in the treatment plan.

Methodology:
1. Review sick call documents to determine which prisoners were referred to the
MP.
2. Review prisoner’s medical record to determine if referral was completed in
accordance with policy.
Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000

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SLA: SPECIALTY SERVICES / CONSULTATIONS
Definition and Purpose of Auditing This Criterion:

As per the contract, ACA / NCCHC Standards and current Policy, the Contractor
shall make referral arrangements with Michigan licensed and Board Certified
specialty physicians for the treatment of those prisoners with health care
problems that extend beyond the primary care specialty clinics provided on-site.
Elements of the Criterion:
The Contractor will arrange for specialty care as medically needed. The
consultation request will be a part of the prisoner’s medical record.
Documentation of all requests will be noted on the appropriate forms. Requests
for specialty care will be maintained and tracked in the NextGen EMR at each
institution, as well as in the prisoner’s medical record. All specialty consults
will be approved or denied by the Contractor within seven working days upon
receiving request for consultation. When possible, specialty care will be
delivered at the prisoner’s parent institution or regional facility. In no case
shall a visit to a specialist be delayed for more than 30 days from the date of
request. Urgent specialty referrals will be handled within five working days.
The primary MP will review the consultation recommendation and document his/her
response to the consultant’s recommendations in the prisoner’s medical record
within three days.
Indicators/Methodology/Acceptable Standard
Indicators:

  1.   All initial visits to a specialist shall occur within 30 days of the MP’s
request.     2.   All follow-up visits to a specialist shall occur based on the
recommendations of the specialist.     3.   All prisoners who are not seen by
the specialist within 30 days, shall be re-evaluated by the MP every 30 days to
determine if the medical condition is resolved, stable, or has worsened. If the
medical condition has worsened, the Medical Provider shall take action to meet
the medical needs of the prisoner in a timely manner.     4.   The MP evaluation
will consist of a documented history and review of systems and symptoms,
appropriate physical exam for system involved, diagnosis update as necessary,
and treatment plan to include medication, appropriate diagnostic testing,
referral to specialists, follow-up MP visits entered into the scheduling
component and education. This evaluation will be documented in the EMR at the
time of the visit.     5.   The MP will document all requests on the appropriate
EMR screen.     6.   The MP will review all specialty care consultations within
two business days of receipt at the facility and document findings and further
treatment plan in the EMR.

Methodology:

a. Review the prisoner’s medical record and the consult log to determine the
date on which a specialty consult was completed.
b. Documentation of all requests will be noted on the appropriate medical record
encounter form.
Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000
Indicator: Regarding Specialty Care/Consultation findings/recommendations, the
provider will review the consultant recommendations and document those findings
in the medical record of the respective prisoner.

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Methodology:

a. Review the prisoner’s medical record for documentation of consultant’s
findings / recommendations
b. Review medical record for documentation by provider within three days of
receipt of consultation results.
Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000

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SLA: CREDENTIALING
Definition and Purpose of Auditing This Criterion

As per the contract, ACA / NCCHC Standards and MDOC Policies/Procedures, the
Contractor is responsible for ensuring all health care personnel are
appropriately licensed, registered or certified in the state of Michigan to
practice their respective discipline.
Elements of the Criterion

All health care will be performed as directed by personnel authorized to give
such orders. Nurse Practitioners and PA’s may practice within the limits of
their training and applicable laws. All physicians will be licensed to practice
medicine in the state of Michigan; non-physician health care personnel will be
licensed, registered or certified in their respective discipline. All licensed
professionals will maintain an unrestricted license.
Indicators/Methodology/Acceptable Standard
Indicators:

All physicians, consulting physicians, nurse practitioners, physicians
assistants, and allied health personnel have on file at the institution
documentation of a current unrestricted license or certification to practice
their respective discipline.
Methodology: Audit site personnel and credentialing files
Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000

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SLA: EMERGENCY / DISASTER PLAN
Definition and Purpose of Auditing This Criterion

As per the contract, ACA / NCCHC Standards and MDOC Policies/Procedures, MDOC is
responsible for the development and implementation of an emergency/disaster plan
to provide for the delivery of health services in the event of a man-made or
naturally occurring disaster. Disaster plan is to be finalized within 60 days of
contract award.
Elements of the Criterion

A medical emergency/disaster plan to provide for the delivery of health services
which includes the following key elements is in place:

  1.   Evacuation of infirmary patients     2.   Triage of casualties     3.  
Use of emergency vehicles     4.   Periodic training of health services staff  
  5.   Practice drills which are coordinated with facility practice drills    
6.   Key health care staff/health care professional recall roster     7.   Copy
of plan furnished institutional warden/superintendent

Indicators/Methodology/Acceptable Standard
Indicators:

  1.   Emergency/disaster plan is developed and in place     2.  
Emergency/disaster plan contains provision for all the key elements     3.  
Plan is practiced at least annually in conjunction with facility drills     4.  
Health services training records reflect periodic training on plan     5.  
Current recall roster is in place     6.   Copy of emergency/disaster plan has
been provided to the institutional warden/supervision     7.   The MP will
participate in facility emergency mobilizations.

Methodology:

Review emergency/disaster plan and related documentation attesting to
availability of the following:

  1.   Plan contains all key elements     2.   Plan has been practiced annually
in conjunction with facility drills     3.   Health services training records
reflect annual training on the plan     4.   Current recall roster is in place  
  5.   Copy of the plan has been provided to the warden/superintendent

Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000

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SLA: Electronic Claims/Encounter Submission
Definition and Purpose of Auditing This Criterion:

The purpose of this element is to ensure that the MDOC receives complete data
related to prisoner encounters to all the MDOC to effectively monitor the
contract, review and trend costs.
Elements of the Criterion:

Acceptable monthly encounter data containing detail for each patient encounter
provided by the Contractor directly and by all providers receiving payment from
the Contractor for services to prisoners within 90 days of the date of service.
The data must be submitted electronically into the MDOC data warehouse.
Indicators:

  1.   The Contractor records are submitted by the 12th of the following month
via electronic media in HIPAA compliant format.     2.   Submission includes all
patient encounters for both on-site and off-site services.     3.   The
Contractor’s data passes all required data quality edits prior to acceptance
into the data warehouse. Data not accepted into the warehouse will not be used
in any analysis of compliance with service level agreements or deliverables.    
4.   MDOC will not accept incomplete encounter data for inclusion into the MDOC
data warehouse and subsequent calculations.     5.   Stored data will be subject
to regular and on-going quality checks as developed by the MDOC.

Methodology:

  1.   The data will be electronically submitted to the data warehouse by the
12th day of the following month.     2.   MDOC will provide feedback to the
contractor for data that is not accepted.     3.   Contractor will correct and
resubmit data until they receive acceptance by the MDOC.     4.   The assessment
of the standard will occur with the first monthly attempt to submit the date.
The penalties will not be assessed for the first six months.

Acceptable Standard: Threshold 98%
Amount for failing to meet indicator: $10,000

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SLA: TRAINING AND EDUCATION
Definition and Purpose of Auditing This Criterion

As per the contract, ACA / NCCHC Standards and MDOC Policies/Procedures, the
Contractor is responsible for the provision of Medical Practitioner professional
continuing education in accordance with state of Michigan licensure
requirements.
Elements of the Criterion

Each site Lead MP will be responsible for overseeing and approving training in
the delivery of health care to enable Contractor employees to respond to
health-related situations. Such in-service training will include but not be
limited to response to emergency medical situations. In-service training will be
conducted at least monthly and will be mandatory for Contractor allied health
care personnel. MDOC Nursing staff may and Contractor allied health care
personnel will participate in the Contractor’s Monthly CEU Program which
provides for twelve continuing education credits annually. An approved Medical
Library containing a variety of standard medical publications will be available.
Indicators/Methodology/Acceptable Standard
Indicators:

  1.   Audit of Contractor employee training records and attendance rosters for
attendance at monthly in-service health related training.     2.   Audit of
Contractor employee personnel records for participation in the Contractor’
Monthly CEU program.     3.   MPs attend MDOC mandatory annual training.     4.
  MPs attend additional MDOC training as mutually agreed upon by MDOC and the
Contractor.

Methodology:

Review of Contractor employee training records and attendance rosters for
in-service training. Review of Contractor employee personnel records for
participation in CEU program.
Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000

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SLA: DISCHARGE PLANNING
Definition and Purpose of Auditing This Criterion

As per the contract, ACA / NCCHC Standards and MDOC Policies/Procedures, MDOC is
responsible of providing sufficient medications and arranging for necessary
follow-up health services before the prisoner’s release to the community.
Elements of the Criterion

Upon notification of a prisoner’s imminent release, MDOC medical staff will
review prisoner’s medical record to determine if discharge planning is needed.
If the prisoner is receiving medication, Contractor medical staff will prescribe
a sufficient supply of current medications be provided upon release, to last
until the prisoner can be seen by a community health care provider. If the
prisoner has critical medical or mental health needs, MDOC medical staff will
make the appropriate arrangements or referrals for follow-up services with
community providers.
Indicators/Methodology/Acceptable Standard
Indicators:

  1.   Prisoners receiving medications upon release should have a sufficient
supply of the current medications to last until the prisoner can be seen by a
community health care provider.     2.   Prisoners with critical medical or
mental health needs should have a referral for follow up services with a
community health provider.     3.   MPs write medication orders for discharge
medications prior to prisoner parole or discharge.

Methodology:

Review of medical records of released prisoners
Acceptable Standard: Threshold 85%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000

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SLA: CONTINUOUS QUALITY IMPROVEMENT (CQI)
Definition and Purpose of Auditing This Criterion

As per the contract, ACA / NCCHC Standards and MDOC Policies/Procedures, within
six months of contract award the Contractor is responsible for the provision of
a Continuous Quality Improvement/Quality Assurance program to evaluate the
health care provided to prisoners assigned to both on site and off site
facilities for quality, appropriateness and continuity of care. CQI program
includes provisions for independent CQI activities conducted by the MDOC.
Elements of the Criterion

The continuous quality improvement/quality assurance program will be system wide
and will incorporate a quality management program to provide for the following
elements:

  1.   Continuous Quality Improvement     2.   Infection Control     3.   Peer
Review     4.   Risk Management

Indicators/Methodology/Acceptable Standard
Indicators:

A Continuous Quality Improvement/Quality Assurance Committee as been appointed
and meets at least quarterly. The site’s Lead MP is the chairperson of the
committee. Minutes of meetings will be prepared, maintained and available for
review. CQI meeting agenda will include but not be limited to discussion of
institutional CQI activities and documentation; Infection Control monitoring;
status of provider Peer Review Program; Risk Management issues and development
of action plans to correct deficiencies noted during the conduct of Quality
Assurance Activities.
Methodology:

  1.   Review minutes of Continuous Quality Improvement/Quality Assurance
Committee for key elements of the program (Continuous Quality Improvement,
Infection Control, Peer Review and Risk Management).     2.   Audit
documentation of CQI chart reviews and activities as well as the timely
implementation of action plans relating to deficiencies noted in the chart
reviews.     3.   Review documentation of infection control activities. Audit
instances of reportable infections/diseases for compliance with appropriate
statutes.     4.   Audit peer review activities. Peer reviews should be
conducted on all physicians, nurse practitioners, and physicians assistants no
less than annually. Reviews should include audits of the following: chart
reviews, special needs prisoners’ treatment plans, off site consultations,
specialty referrals, emergencies and hospitalizations.     5.   Review mortality
and morbidity reports and related documentation for appropriateness and
compliance with applicable Michigan state laws. Review institutional critical
incident reports relating to health services activities as well as corrective
actions taken for those determined to demonstrate deficiencies.

Acceptable Standard: Threshold 90%
Amount for failing to meet indicator: Tier One: $2000 Tier Two: $3000

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SUMMARY OF SLA CREDITS
Following is a summary of the indicators and compensation adjustment amounts for
Objective Performance Criteria. This listing does not represent the complete
description or the Contractor’s responsibility for the stated criteria; details
are provided in the Performance Criteria and Critical Indicators section of this
Manual. The amounts indicated are the adjustment (deduction) to compensation
amounts that may be assessed to the Contractor as SLA Credits for substandard
performance by failing to meet indicator in the audit areas.
Basis for imposing damages/adjustments to compensation:

         
 
  ACA/NCCHC Accred   Requirement for accreditation by the ACA and NCCHC
 
  MDOC Policies   Required per MDOC and institutional policies
 
  Contract   Written agreement between parties

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                          ACA/                     NCCHC   MDOC                
Accred   Policies   Contract   Criteria   Indicators Update   Amount
X
  X   X   Receiving Screening   1. Note acute or contagious conditions   $
2,000/$3000  
X
  X   X       2. Refer prisoners on medication to provider for continuity of
care   $ 2,000    
X
  X   X   Health   1. Admission testing as required within 14 days   $ 2,000  
X
  X   X   Assessment   2. Initial health assessment is timely and complies with
ACA standards   $ 2,000    
X
  X   X   Chronic Care Clinics   1. CCC prisoners are scheduled for follow-up
appointments   $ 2,000    
X
  X   X   Infection Control   1. Annual tuberculin screening of prisoners   $
2,000  
 
          Management   2. Annual tuberculin screening of employees   $ 2,000    
X
  X   X   Medical Provider
 
1.    MP evaluates all routine nursing referrals within five business days.
  $ 2,000  
X
  X   X   Appointment  
2.    MP evaluates all urgent nursing referrals within one business day.
  $ 2,000  
 
             
3.    MP evaluates all emergent nursing referrals the same day.
       
 
             
4.    The MP evaluation will consist of a documented history and review of
systems and symptoms, appropriate physical exam for system involved, diagnosis
update as necessary, and treatment plan to include medication, appropriate
diagnostic testing, referral to specialists, and education. This evaluation will
be documented in the EMR at the time of the visit.
  $
$ 2,000
2,000  
 
             
5.    The MP will review all diagnostic tests within two days of receipt at the
facility or EMR and document in the EMR any further recommended tests or changes
in the treatment plan.
       
 
                       
 
                  $ 2,000  
X
  X   X   Specialty Service   1. Timely visits to a specialist   $ 2,000  
X
  X   X       2. Provider review and documentation of consultant recommendations
  $ 2,000  
X
  X   X   Credentialing   1. All health care providers will have on file an
unrestricted license to practice their respective discipline.   $ 2,000  
X
  X   X   Emergency/Disaster
 
1.    Emergency disaster plan developed and implemented
  $ 2,000  
X
  X   X   Plan  
2.    Emergency/disaster plan contains provision for all key elements
  $ 2,000  
X
  X   X      
3.    Plan is practiced at least annually in conjunction with MDOC drills
       
X
  X   X      
4.    Health services training records reflect periodic training on plan
  $ 2,000  
X
  X   X      
5.    Current recall roster is in place
       
X
  X   X      
6.    Copy of plan provided to the institutional warden/supervision
  $ 2,000  
 
                  $ 2,000  

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                          ACA/                     NCCHC   MDOC                
Accred   Policies   Contract   Criteria   Indicators Update   Amount
X
  X   X   Electronic Claims
Encounter
Submission  
1.    The Contractor records are submitted by the 12th of the following month
via electronic media in HIPAA compliant format.
  $ 10,000  
 
                       
 
             
2.    Submission includes all patient encounters for both on-site and off-site
services.
  $ 10,000  
 
                       
 
             
3.    The Contractor’s data passes all required data quality edits prior to
acceptance into the data warehouse. Data not accepted into the warehouse will
not be used in any analysis of compliance with service level agreements or
deliverables.
  $ 10,000  
 
                       
 
             
4.    MDOC will not accept incomplete encounter data for inclusion into the MDOC
data warehouse and subsequent calculations.
       
 
                       
 
             
5.    Stored data will be subject to regular and on-going quality checks as
developed by the MDOC.
  $ 10,000  
 
                  $ 10,000  
X
  X   X   Training & Education  
1.    Audit of employee training records and attendance rosters for attendance
at monthly in-service health related training.
  $ 2,000  
 
             
2.    Audit of employee personnel records for participation in the Contractor’s
Monthly CEU program.
  $ 2,000  
 
             
3.    Evaluate Job Training for Correctional Officers Health Services Program of
Instruction for key element contents.
  $ 2,000  
 
             
4.    Review attendance rosters of Correctional Officer Health Services Training
  $ 2,000  
x
  x   x   Discharge Planning  
1.    Sufficient supply of meds is provided to prisoners upon release to last
until appointment with community provider
  $ 2,000  
 
             
2.    Prisoners with critical medical/mental health needs should have referral
for follow-up with community provider
  $ 2,000  
X
  X   X   Continuous Quality
Improvement (CQI)  
1.    CQI Committee is appointed and meets at least quarterly, documenting
minutes and reviewing designated issues to be on each agenda.
  $ 2,000  

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PROPOSED SCHEDULE FOR QUARTERLY AUDITS

              QTR   AUDIT ELEMENTS
 
       
 
  1ST QUARTER   Receiving Screening
Health Assessment
Chronic Care Clinics
 
       
 
  2ND QUARTER   Infection Control
Medical Provider Appointment
Specialty Services
 
       
 
  3RD QUARTER   Credentialing
Emergency/Disaster
Encounter Data
 
       
 
  4TH QUARTER   Training & Education
Discharge Planning
Continuous Quality
Improvement (CQI)

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APPENDIX A
(FLOW CHART) [g17601g1760103.gif]
PHS President
State Correctior

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APPENDIX B
REQUIRED REPORTS

A.   To measure the Contractor’s accomplishments in the areas of access to care,
utilization, medical outcomes, prisoner satisfaction, and to provide sufficient
information to track expenditures and calculate future capitation rates the
Contractor must provide the MDOC with uniform data and information as specified
by MDOC.

B.   The Contractor must submit the following additional reports as specified in
this section. Any changes in the reporting requirements will be communicated to
the Contractor at least 30 calendar days before they are effective unless state
or federal law requires otherwise.

C.   The Contractor must provide sufficient financial reporting to meet the
intent of the State in monitoring the contracts. The Contractor must meet with
MDOC Bureau of Fiscal Management representatives to develop and review the
financial reporting requirements. The needs of the MDOC may vary over time. The
Contractor must assure that the reports submitted to the Department are final
and accurate. All financial reports submitted are subject to audit and must
reconcile to the financial statement and/or invoice submitted to the MDOC for
the final settlement of the contract year.

D.   The Contractor must also report each individual contract year independently
of each other. Once the contract year is settled and closed, all prior year
payments in the subsequent contract years must be reported separately in a
manner such that the closed and settled prior year records are not changed or
affected. Contract year will be reconciled per methodology in Appendix F.

E.   The Contractor must provide all data and/or reports requested by the
State’s third party auditor.

F.   The Contractor must obtain MDOC’s written approval prior to publishing or
making formal public presentations of statistical or analytical material based
on its prisoners other than as required by this contract, statute or
regulations.

G.   The following reports will be submitted within ten business days after the
end of the month, unless otherwise required, such as driven by legislative
reporting.

  1.   Critical Lab Results Summary Report I     2.   Report of Clinical
Coverage by Facility     3.   MP Utilization Report including back logs, wait
times, outlier reports, and productivity     4.   Quarterly telemedicine
utilization reports documenting usage     5.   Quality Improvement Project
Management Reports     6.   Secure Unit Occupancy Report     7.   Quality
Assurance Report (Quarterly)     8.   Off Formulary Drug Utilization Report    
9.   Specialty Utilization Referral Report     10.   Prosthetics, Physical
Therapy, Occupational Therapy and Related Services Utilization Report     11.  
Dialysis Utilization Report     12.   Diagnostic Testing and Laboratory
Utilization Report     13.   Emergency Room Utilization Report     14.  
Inpatient Utilization Report     15.   Provider prescription practices against
the MDOC formulary     16.   Annual Facility Audit Report (this is added as part
of the SLAs)     17.   AETNA Reports Levels A through D

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  18.   Other reports to be agreed upon by Contractor(s) and MDOC (the MDOC
would like to add a couple of additional reports; High Cost Cases, and
Benchmarks against other state contracts

H.   Encounter Data Submission

  1.   The Contractor must submit encounter data containing detail for each
patient encounter reflecting services provided by the Contractor by month, on or
before the 12th calendar day of the following month. Encounter records will be
submitted monthly via electronic media in a format as specified by MDOC to the
MDOC data warehouse.     2.   Submitted encounter data will be subject to
quality data edits prior to acceptance into MDOC’s data warehouse. The
Contractor’s data must pass all required data quality edits in order to be
accepted into MDOC’s data warehouse. Any data that is not accepted into the MDOC
data warehouse will not be used in any analysis, including, but not limited to,
rate calculations, DRG calculations, and risk score calculations. MDOC will not
allow Contractor to submit incomplete encounter data for inclusion into the MDOC
data warehouse and subsequent calculations.     3.   Stored encounter data will
be subject to regular and ongoing quality checks as developed by MDOC. MDOC will
give the Contractor(s) a minimum of 30 calendar days notice prior to the
implementation of new quality data edits; however, MDOC may implement
informational edits without 30 calendar days notice. The Contractor’s submission
of encounter data must meet timeliness and completeness requirements as
specified by MDOC. The Contractor must participate in regular data quality
assessments conducted as a component of ongoing encounter data on-site activity.

I.   Financial and Claims Reporting       Contractor must provide to MDOC
monthly statements that provide information regarding paid claims, aging of
unpaid claims, and denied claims in the format specified by MDOC by month, on or
before the 15th calendar day of the following month. The MDOC may also require
monthly financial statements from Contractor.   J.   Litigation Reports      
Contractor must submit annual litigation reports in a format established by
MDOC, providing detail for all civil litigation to which the Contractor or their
subcontractor(s) are party.   K.   Data Certification Report       The
Contractor’s CEO must submit a MDOC Data Certification form to MDOC that
requires the Contractor to attest to the accuracy, completeness, and
truthfulness of any and all data and documents submitted to the MDOC as required
by the Contract.

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L.   Quality Assurance and Performance Improvement Assessment       The
Contractor must perform and document an annual assessment of their QAPI program.
This assessment should include a description of any program completed and all
ongoing QI activities for the applicable year, an evaluation of the overall
effectiveness of the program, and an annual work plan. This work plan must be
approved by the MDOC. The initial plan must be submitted within 60 days of
contract award, and then annually 60 days prior to the beginning of the new
contract year. The plan and updates must be approved by the MDOC Quality
Administrator. MDOC may also request other reports or improvement plans
addressing specific contract performance issues identified through site visit
reviews, EQRs, focused studies, or other monitoring activities conducted by
MDOC.   M.   The Contractor must cooperate with MDOC in carrying out validation
of data provided by the Contractor by making available electronic medical
records and a sample of its data and data collection protocols. The Contractor
must develop and implement corrective action plans to correct data validity
problems as identified by the MDOC.   N.   The State reserves the right to amend
the Required Report list.

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APPENDIX C
Continuous Quality Assurance Plan
The Contractor, PHS, in partnership with their sub-contactor Aetna, agrees to
Contract requirements for the Michigan Department of Corrections (MDOC) Quality
Assurance Plan and will execute Contractor’s and MDOC quality assurance programs
for on-site and off-site services at the MDOC facilities to ensure the safety of
patients, health care staff, correctional colleagues and the community. The
Contractor’s Quality Assurance Plan may be updated and revised in conjunction
and consultation with the MDOC Quality Administrator and the MDOC CCI. Also, as
noted in the Staffing Plans, the Contractor will provide a Quality Improvement
Director that will liaison with the MDOC Quality Administrator and the MDOC
Bureau of Health Care Leadership Team to review data and make recommendations
through routinely scheduled meetings. Committees in this plan will be joint MDOC
and Contractor committees. The MDOC Bureau of Health Care Services Leadership
team will identify the MDOC participants. MDOC Quality Assurance will approve
all Quality Assurance Plan submissions and revisions within 60 days of contract
services start date, and then annually.
Continuous Quality Improvement (CQI) Program – On-site
The Contractor’s Continuous Quality Improvement Program based on the full
participation and cooperation of MDOC Civil Services Health Care staff, as well
as MDOC Dental and Mental Health subcontractor staff in the PHS CQI process. The
Contractor’s CQI Program is dedicated to the safety of patients, health care
staff, correctional colleagues and the community. The Contractor’s CQI program
will fulfill national correctional healthcare standards while adapting to
specific state agency requirements and offers a systematic approach to
monitoring, measuring and evaluating Contractor services. Additionally, the
Contractor’s CQI program is conducted in accordance with The Federal Patient
Safety & Quality Improvement Act of 2005 and applicable State Peer Review Laws.
As such, these CQI reviews are deemed confidential and privileged under state
and federal law. By continually critiquing the provision of services and
implementing corrective action as appropriate, the Contractor will facilitate
adherence to recognized healthcare standards and improvements to quality of
care. The Contractor’s CQI program is based on concepts and practices outlined
in reports issued by the Institute of Medicine (IOM). It efficiently and
effectively monitors correctional health care services provided at Contractor’s
facilities using the following framework:
Six Integrated Components of CQI
Each component of the CQI plan will be reported in the quarterly quality
assurance report.
1. Credentialing
The Contractor’s Credentialing Program is designed, implemented, and monitored
to assure that qualified, well trained, experienced, ethical and competent
licensed providers are selected. Initial practitioner applications for
employment and annual PEER review evaluations are audited by the Contractor’s
Credentialing Committee to assure continued competency of our providers. URAC is
a nationally recognized nonprofit organization which promotes healthcare quality
by accrediting healthcare organizations. The Contractor has achieved URAC
certification. With this certification, the credentialing department confirms
its commitment to quality and accountability.

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2. Training and Education
The Contractor’s Training and Education Program will have an extensive scope of
service. Programs such as monthly continuing education self-study packets and
emergency preparedness drills are designed to meet the requirements of national
correctional accrediting bodies. The Contractor’s Training and Education
department monitors the results of the site-based Quality Improvement
(QI) Program and develops educational programs and tools based upon identified
needs. Active participation in the Contractor’s Patient Safety Committee and QI
committees also contributes to the identification of site-specific needs. These
needs are reviewed and educational programs are developed as a result. This
method benefits not only the individual site, but all other sites that have
similar needs or challenges. This is the motivating force behind our Training
and Education program. All Contractor sites will have access to all materials
and educational tools for clinical staff, correctional staff and patients via a
number of avenues including the customized website, MyPHS. This service is
available to the Contractor’s administrative staff located at the Michigan
Regional Office on a 24/7 basis and contains the complete library of resources
provided by Contractor’s Training and Education program. Necessary information
will be disseminated to the site staff as needed. Entries include policy and
procedure templates, standardized forms, educational tools and programs for
clinical staff, correctional staff, prisoners and prisoner patients.
3. Utilization Management (UM)
The mission of the Contractor’s UM department is to provide appropriate care in
the most cost effective manner and setting. Ensuring that prisoners get
appropriate services delivered by qualified providers, within an appropriate
timeframe, improves quality and assures efficient utilization of resources and
optimized utilization of on-site services. The Contractor’s UM department will
actively participate in the identification, tracking and trending of inpatient
sentinel events. The Contractor entered into a long-term agreement with McKesson
Health Solutions to use InterQual, a nationally recognized set of decision
support tools, to evaluate medical necessity and appropriate level of care for
all imaging studies, outpatient procedures and elective surgeries. This
agreement allows the Contractor to provide consistent delivery of care across
all populations while providing impartial best practice parameters based on an
individual prisoner’s presentation. InterQual review is now offered as part of
the Contractor’s UM program and is managed by the Contractor’s State and
Regional Medical Directors and by Certified Professionals in Utilization
Management and Utilization Review.
4. Infection Control
The purpose of the Contractor Infection Control Program is to establish
principles and standards for surveillance, prevention, diagnosis and effective
treatment of communicable diseases within correctional facilities. The
Contractor works in concert with the MDOC and the local health department in
developing a community approach to infection control. The Contractor’s Infection
Control Program reflects standards of infection control in health services
established by OSHA, the NCCHC and ACA. The Contractor will incorporate their
infection control program into the MDOC Policies related to infection control
(Control of Communicable Diseases).
Routine monitoring of general infection control principles, tuberculosis
screening, identification and management, biohazardous waste disposal, and blood
borne pathogens safety is part of the Contractor’s CQI Program. The Contractor’s
CQI Program tracks each facility’s compliance with our Infection Control
Program.

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The Contractor’s Infection Control Program includes an Exposure Control Plan
that describes staff actions to be taken to prevent or minimize exposure to
pathogens. The Contractor’s Exposure Control Plan includes a Post-Exposure
Prophylaxis (PEP) Kit which can be used for emergency situations where exposure
to potentially infectious agents has occurred and access to offsite care is
delayed (typically due to inclement weather, such as hurricanes and snowstorms).
The PEP Kit includes a decision tree of steps to assist in determining the type
and risk of exposure, and a plan of action for each type of exposure. The
Contractor must incorporate their exposure control plan into the MDOC Exposure
control plan.
5. Disease Management
Disease Management is the concept of improving quality of care for individuals
with chronic disease conditions by preventing or minimizing the effects of a
disease, or chronic condition, through integrative care. Disease Management
refers to the processes and people concerned with improving or maintaining
health in populations. Disease Management encompasses the treatment of common
chronic illnesses, and the reduction of future complications associated with
those diseases.
The Contractor’s Disease Management program focuses on conditions such as
Coronary Heart Disease, Kidney Failure, Hypertension, Heart Failure, Diabetes,
Asthma, Cancer, Depression, as well as other common ailments. The underlying
premise of Disease Management is that when the right tools, experts, and
equipment are applied to a population; resources can be provided more
efficiently. The objective is to ease the disease path, rather than cure
disease. Improving quality of life and activities of daily living are first and
foremost. Improving cost is also an essential component
Some examples of tools used in Contractor’s Disease Management Program include
web-based assessment tools, clinical guidelines, health risk assessments, best
practices, formularies, and numerous other strategies, systems and protocols.
Specific Contractor disease management tools include, but are not limited to:

§   Contractor’s Disease Management Manual – This manual, available on MyPHS,
includes Disease Monographs, Clinical Guidelines, Disease Monitoring Tools,
Patient Education Information, Correctional Officer Training Information and a
Corrections Specific Laboratory Formulary.   §   Contractor’s Mental Health
Pharmacy Resource Manual   §   Contractor’s Pharmacy Resource Manual – The 2008
Pharmacy Resource Manual currently consists of 11 Treatment Guidelines, 9
Medication Monographs, 7 Medication Conversion Tables, Immunizations
Schedule Recommendations and the Medication Formulary.   §   CHOICES: The
Contractor’s Palliative Care and End of Life Program – This program is
highlighted by an Interdisciplinary Care Plan and includes Educational tools,
Assessment forms, and Psychosocial, Spiritual and Nursing Aspects of Palliative
Care assessment forms.   §   HIV and HCV Disease Monographs – These two disease
management monographs focuses on the primary care clinicians involvement in the
management of these complex disease entities.

6. Quality Improvement (QI)
The Contractor’s Quality Improvement process will examine negative as well as
positive events to improve the level of care. The Institute of Medicine
(IOM) defines quality as:  The degree to which health services for individuals
and populations increase the likelihood of desired health outcomes and are
consistent with current professional knowledge. The Contractor’s QI program
approaches improvements by making systems more supportive. Instead of focusing
on an individual involved when a problem occurs, the Contractor will examine how
to prevent recurrences of the problem by fixing systems. The Contractor’s QI
program is not just limited to problem areas, but also addresses areas with good
outcomes with the goal of making them even better. Best Practices which are
identified are shared with other Contractor facilities.

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Program Management
The Contractor’s Chief Medical Officer and Senior Vice President of Clinical
Affairs, administers the CQI program and serves as the CQI Committee
Chairperson. The CQI Committee, which meets at least once a month, is
responsible for the development, implementation and oversight of the
Contractor’s CQI Program.
Members of the multi-disciplinary committee:

§   Chief Medical Officer   §   President and CEO   §   Director of Quality
Improvement   §   Vice President of Utilization Management   §   Vice President
of Clinical Programs and Applications   §   General Counsel   §   Designated
Regional Medical Directors on a rotational basis   §   Risk Management personnel

Positive reinforcement for the efforts and strategies that have been developed
over the past five years are identified in the above referenced article:

§   Preexisting decision support   §   Patient Education   §   Change Management
  §   Package of QI tools   §   Training in QI   §   Both doing and improving
the work

Site Level QI Program
The Contractor has an established Site Level Quality Improvement Program (Site
Level QI) that monitors the healthcare delivery systems and processes at each
site with the goal of measuring and improving the health care delivered in the
facility. All Contactor facilities are required to participate in the program
and it is anticipated that State Civil Servant, Dental and Mental Health
subcontractors, as well as local facility security staff will actively
participate as required by NCCHC standards. The Contractor will work with the
Quality Assurance Office and the Bureau of Health Care Services to form teams
and get them functioning.
The objectives of the Site Level QI Program are:

§   To ensure timely treatment and continuity-of-care;   §   To ensure
compliance with national standards and contract requirements;   §   To ensure
continuity of care for patients with special health care needs;   §   To develop
and implement action plans when opportunities for improvement are identified;  
§   To monitor the cost effectiveness of the health care services delivered;   §
  To develop, record and collate QI data to enhance health care systems;   §  
To support Contractor Clinical Initiatives.

Committee
The Contractor has designed its Site Level QI Program to emphasize the
importance of a site-specific quality improvement process guided by a
multidisciplinary committee. This committee, which is chaired by the site
medical director, includes representation and/or input from each health care
discipline (medical, mental health, dental, pharmacy and nursing) and the MDOC
Health Unit Manager (HUM). The Contractor will work with Quality Assurance
office and the Bureau of Healthcare Services to establish the committee members.

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The multidisciplinary QI committee, which meets at least quarterly, or as
stipulated by NCCHC standards, identifies and addresses clinical and
correctional issues. Issues such as off-site transports, sick call schedules,
intake flow, infection control, collaboration with community providers for
additional services, training and education requirements are a few of the
day-to-day challenges of operating a correctional facility, which, when
addressed in a codified program, can define positive results. Reports and
recommendations from the committee will be forwarded to MDOC’s Bureau of
Healthcare Services Leadership Team and the Contractor’s management team for
consideration.
Annual Review
An annual review, performed by the Contractor’s designated staff and
participants identified by the MDOC Bureau of Healthcare Services and Quality
Assurance on a rotational basis, of:

§   access to care,   §   receiving screening,   §   health assessment,   §  
continuity of care (sick call, chronic disease management, discharge planning),
  §   infirmary care,   §   nursing care,   §   pharmacy services,   §  
diagnostic services,   §   mental health care (including substance abuse, as
appropriate),   §   dental care,   §   emergency care and hospitalizations,   §
  policies and procedures,   §   all deaths,   §   sentinel events,   §  
critiques of disaster drills,   §   environmental inspection,   §   prisoner
grievances and   §   infection control.

Summary Review
An annual summary review of the site specific QI program is done to ensure:

§   Completion of a minimum of one process quality improvement study per year.  
§   Completion of a minimum of one outcome quality improvement study per year.  
§   Implementation of corrective actions to solve identified problems.   §  
Compliance with the responding and review of all mortality and non-mortality
sentinel events.   §   Copies of site level QI meeting minutes are on file.

Requirements
With requirements for NCCHC and ACA accreditation interwoven throughout,
compliance with the Contractor Site Level QI Program plays a significant role in
ensuring compliance for accreditation by both the NCCHC and the ACA.
Four Essential Components of Site Level CQI
The four program components are as follows:

1.   Sentinel Event Reporting   2.   Peer Review Program   3.   Process Quality
Improvement Study   4.   Outcome Quality Improvement Study

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1. Site Level Sentinel Event Reporting
The QI program addresses both mortality and non-mortality sentinel events. 
Sentinel events are defined as an unexpected occurrence involving death or
serious physical or psychological injury, or the risk thereof.  Serious injury
includes loss of limb or function.  The phrase “or risk thereof” includes any
process variation for which a recurrence would carry a significant chance of
serious adverse outcome.  Sentinel Events are reviewed by the Contractor’s
Patient Safety Committee and the MDOC Bureau of Healthcare Services Leadership
team in accordance with the Federal Patient & Quality Improvement Act of 2005
and as such are considered confidential.
The Sentinel events designated for automatic review include:

§   Mortalities   §   Hospitalizations for any of the following diagnoses:   

      - Diabetic Ketoacidosis (DKA)         - Medication Error         - Heat
Related Illness         - Ruptured Appendix         - Status Asthmaticus        
- Suicide Attempt         - Other diagnosis as agreed upon by the MDOC CMO, QA,
and the Contractor.

Sentinel Event Reviews are also performed upon events if an adverse serious
adverse patient outcome occurred. By concentrating on events rather than errors,
the Contractor focuses on a broader range of factors and reduces the inclination
to attribute an event to a single cause or responsible party. In the Contractor
Site Level QI Program, the “pathophysiology” of adverse events is investigated
using a Root Cause Analysis. This process helps to identify true causes and
contributing factors or conditions. Corrective action plans are developed based
upon an analysis of the Patient Safety Committee’s findings.
A specific Review Form for each sentinel event has been developed, tested,
deployed and refined (the process itself is subject to QI principles) using
specific case review data to identify the most common areas that generate
avoidable adverse outcomes. This data is used to update the QI program, to focus
the Contractor’s educational efforts and to improve processes of care. This data
will be reported on hard copy forms from the site level to the Contractor’s QI
Director at the Regional Office.
Mortalities
The joint MDOC/Contractor Patient Safety Committee (comprised of participants
identified by MDOC Bureau of Healthcare Services Leadership team and Contractor
Administration) conducts Mortality Reviews on all prisoner patients who expire
while in custody at correctional institutions where Contractor is responsible
for providing health care. This includes patients who expire while housed in
alternative locations such as hospitals and nursing homes.  The Contractor
Patient Safety Committee also reviews the mortalities of prisoner patients who
expire shortly after release from custody. This includes, but is not limited to,
prisoner patients who are released from custody and expire while still in the
hospital. 
The Mortality Review evaluates the health care services provided, focusing on
opportunities to improve systems and the quality of care. It also identifies
variations in the systems and processes established to provide care and identify
opportunities for improvement in these areas.

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Mortality Review be initiated by the site Medical Director the first day at the
facility following the death. The completed Contractor Mortality Review form is
then sent to the Regional Medical Director, Contractor/MDOC Patient Safety
Committee, and the MDOC CMO. Significant findings from Patient Safety Committee
Mortality Reviews are communicated to the medical leadership of the facility and
MDOC Central Office.  The Contractor Patient Safety Committee makes
recommendations for plans of action when opportunities for improvement are
identified.   Mortality Reviews conducted by the Contractor Patient Safety
Committee are part of the Contractor Corporate QI Program.   
Medication Errors
The Contractor uses the medication error index established by the National
Coordinating Council for Medication Error Reporting and Prevention. Medication
errors are reported to the Site Level QI Committee. Medication errors designated
for review in the QI Program include:

§   E – An error occurred that may have contributed to or resulted in temporary
harm to the patient and required intervention.   §   F – An error occurred that
may have contributed to or resulted in temporary harm to the patient and
required initial or prolonged hospitalization.   §   G – An error that may have
contributed to or resulted in permanent patient harm.   §   H – An error
occurred that required intervention necessary to sustain life.   §   I – An
error occurred that may have contributed to or resulted in the patient’s death.

The Contractor will make the following available to the MDOC and it is
anticipated that MDOC nursing and medication administration staff will
participate in the reporting of such events.
Medication Safety Program
The Contractor Medication Safety Program is designed to assist sites in the
development and implementation of safe medication practices. The medication
error component of the program is based on the program established by the
National Coordination Council for Medication Error and Prevention (NCC MERP).
The Contractor Medication Safety Program addresses the following areas.

§   Pharmacy and Therapeutics – The Contractor in conjunction with MDOC has an
established Pharmacy and Therapeutics (P&T) committee responsible for reviewing
pharmaceutical utilization practices to ensure that medications are used
appropriately. The Contractor’s internal P&T committee is multidisciplinary and
includes pharmacy representation from Maxor Correctional Pharmacy Services
(Maxor CPS). Through the formulary review process the Contractor’s internal P&T
committee evaluates medication therapy based on efficacy, safety and cost
parameters. The Site Level QI committee addresses site-specific P&T issues. The
MDOC P&T committee includes its current health care and pharmaceutical
contractors.   §   Education – The Contractor anticipates that staff education
related to pharmaceuticals and medication systems is provided to MDOC nursing
staff during the orientation process and reviewed at least annually.   §   The
PHS QI Resource Manual includes information on various aspects of the Medication
Safety Program that can be used to facilitate the education process.   §  
Medication Refusals –Prisoners have the right to refuse prescribed therapies,
including medications; therefore, MDOC facilities have established policies and
procedures that address refusals of treatment and medications so that such
refusals can be appropriately discouraged, which should include nurse counseling
during the medication round and referral to the Medical Practitioner as
necessary.

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§   Verbal Orders – Verbal orders are reviewed and countersigned by a physician
in accordance with applicable state laws within 72 hours.   §   Site-Specific QI
Activities – In addition to the requirements outlined in the Contractor’s
policy, the Contractor’s Medication Safety Program requires each contract site
to establish and maintain a site-specific program addressing medication safety.
The Contractor’s Regional Managers will work with the MDOC HUM to establish
these site specific procedures.   §   Psychotropic Medication Reviews – As a
function of the Medication Safety Program, the Contractor performs periodic
quality improvement reviews on patients prescribed psychotropic medications. The
purpose of the review is to evaluate the appropriateness of psychotropic
medication therapy as supported by information documented in the prisoner’s
medical record. Recommendations will be shared with the MDOC HUM and the Mental
Health providers.   §   Continuing Education – A CEU on Preventing Medication
Errors is part of the Contractor’s 30-day clinical staff orientation program.

2. Peer Review Program
The Contractor has established a standardized peer review process to facilitate
the evaluation of physicians who provide service in contracted facilities. The
peer review is designed to evaluate both the appropriateness of the care
provided by the physician and compliance with the requirements of their position
description. The Peer Review Program is under the authority of the Contractor’s
Chief Medical Officer/Senior Vice President of Clinical Services, and includes
standardized forms for evaluating administrative responsibilities, provided in
physician sick call, chronic care, and the infirmary setting. Peer Review is
also used as part of the Contractor’s re-credentialing process. The Contractor’s
State Medical Director will provide direction and leadership for the Peer Review
Program and chart review process. The Regional Medical Directors, or other
appropriate physician designee, will perform peer review for the Site Medical
Director, while the Site Medical Director is responsible for performing peer
review for staff physicians. Benchmarking, the process of providing a
practitioner with feedback regarding their performance relative to that of their
peers, is an important part of Peer Review.
3. Site Level Process Quality Improvement Study
Contractor facilities with an average daily population (ADP) greater than 500
are required to complete at least one Site Level Process Quality Improvement
Study annually. This study examines the efficiency of the health care delivery
process at the facility. Completed studies are discussed at the monthly Site
Level QI Committee meeting. The MDOC Quality Administrator will approve all
studies.
To identify a process that may benefit from a Process Improvement Study, the
Contractor reviews a variety of sources including the Contractor’s Web-based QI
screens, accreditation audits, and information from QI committee meetings.

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4. Site Level Outcome Quality Improvement Study
Contractor facilities with an ADP greater than 500 are also required to complete
at least one Site Level Outcome Quality Improvement Study annually in accordance
with NCCHC Standards. The study requires the input and cooperation of the local
MDOC HUM and all necessary health and mental health staff. This study examines
the efficiency of the health care delivery process at the facility. Completed
studies are discussed at the monthly Site Level QI Committee meeting. Outcome
quality improvement studies examine whether expected outcomes of patient care
were achieved. An example of such a study would be measuring the effectiveness
of the chronic disease program in achieving control of the patient’s disease.
Each facility receives a copy of the Contractor’s QI Program Manual, which
includes a sample QI plan, committee meeting agenda and a variety of monitoring
forms designed to review systems and processes related to medical, mental health
and dental care. The Quality Administrator and the Contractor’s Director of QI
will review and approve all Quality Screen Tools and Studies.

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Aetna Quality Management (QM) Program – Off-site
The Contractor’s sub-contractor, Aetna, contractually requires providers to
comply with their current quality management (QM) and utilization management
policies and procedures. In addition, participating physicians serve on regional
Quality Advisory committees, including an MDOC representative, to review and
offer advice on clinical quality programs, guidelines, studies, indicators, and
communications. Aetna also provides input to the QM program, annual work plan,
and annual QM program evaluation.
Provider Quality
Aetna continuously profiles provider performance as part of the quality
management process. Aetna’s claim databases allow network managers and local
medical directors to analyze trends in provider utilization (both over and
under-utilization), with the intent of educating to improve performance, and
locate opportunities for improving the delivery of medical services. Aetna
combines utilization and unit-cost metrics of performance with clinical
effectiveness measures of performance.
Individual Practitioner Performance
The Aetna credentialing/recredentialing process is designed to evaluate the
qualifications of individual practitioners who participate with Aetna. This is
done prior to a practitioner joining the network and then ongoing on a periodic
two or three-year cycle, as required by regulatory agencies and accrediting
organizations.
Aetna systematically monitors clinical care and service activities that are
applicable to a large portion of the membership. Specific issues related to
member complaints, potential quality of care concerns, or other issues of
professional competence and conduct that adversely affect or could adversely
affect the health or welfare of a member, may be considered by a peer review
committee at any time between recredentialing cycles. These are formally
monitored at least every six months between recredentialing cycles for
practitioner-specific trends. Potential quality of care concerns are
investigated and referred to the peer review committee for action as indicated.
Aetna supports the use of nationally recognized metrics and currently have
several programs for measuring and rewarding individual practitioner
performance. These include Performance Networks (Aexcel) and pay-for-performance
programs. Aetna utilizes metrics from various nationally recognized
organizations such as the National Quality Forum (NQF), National Committee for
Quality Assurance (NCQA), Centers for Medicare & Medicaid Services (CMS) and
Agency for Healthcare Research and Quality (AHRQ). Aetna is also involved in
collaborative work with CMS, AHRQ, specialty societies, America’s Health
Insurance Plans, and the Ambulatory Quality Alliance to further identify
consistent reporting metrics and guidelines.

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Pay-For-Performance Program
Aetna’s national pay-for-performance program includes a performance-based
component of compensation that gives physicians and hospitals the opportunity to
earn reward payments based on recognized clinical effectiveness and efficiency
measures. Measures are based, as much as possible, on externally validated
measures such as those endorsed by the National Quality Forum, Ambulatory
Quality Alliance, National Committee for Quality Assurance, the Centers for
Medicare and Medicaid Services (CMS), as well as from Bridges to Excellence, The
Leapfrog Group and Care Focused Purchasing.
Episode Treatment Groups
Aetna Integrated Informatics utilizes Symmetry Health Data Systems’ Episode
Treatment Groups software to stratify providers by efficiency and uses Episode
Treatment Groups software for both their broad network and Performance Network.
The Aetna data warehouse contains the claims data that Aetna analyzes with this
efficiency software tool. Aetna Integrated Informatics uses industry accepted
clinical practices guidelines to create clinical effectiveness measures (e.g.,
NCQA guidelines for beta blocker use after a heart attack, HEDIS measures for
breast cancer screening and cervical cancer screening, and AHRQ’s inpatient
safety measures in an adverse event rate).
When measuring the actual performance of individual provider offices, Aetna
first adjusts for prisoner differences, such as age, gender, region, plan type,
and illness severity. Otherwise, the performance of some providers who care for
a sicker population might appear below average when calculating the scores.
Aetna can profile physician performance and generate reports that include rates
use by service (utilization), as well as associated patient outcomes. Examples
of services that they profile:

  §   Physician office visits     §   Inpatient     §   Outpatient     §  
Emergency room     §   Aggregate pharmacy     §   Disease-specific services    
§   Procedure-specific services     §   Diagnostic imaging     §   Laboratory
tests

Aetna can compare treatment continuums for similar cases or conditions to
determine the more effective courses of care and those physicians responsible
for implementing the more and less effective treatments, based on outcomes. This
analytical approach applies to care delivered to prisoners in all Aetna medical
plans; unlike an approach of tracking PCP or specialist referral rates, which
would not consider care delivered to prisoners in our many plans that do not
require referrals and which Aetna therefore does not typically implement.
Results from Episode Treatment Groups analyses are used internally; however, at
the network level, medical directors or provider relations staff may share
results with providers on a one-on-one, as-needed basis.

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Claims Data Analysis
Network managers and local medical directors, MDOC, and their third party
reviewer have access to claims data that help them analyze trends in provider
utilization (under and over), review CPT code patterns by physician and identify
providers who might require performance improvement. Each region has an assigned
medical director to assist in the review of claims as needed. Aetna medical
directors review those claims that merit in-depth analysis. Medical directors
have access to specialists for consultation and peer/specialty matched reviews
when indicated.
Clinical Information Lists
Selected Members’ Clinical Information lists were developed by Aetna Integrated
Informatics to provide PCPs with actionable information for reviewing members’
treatment and compliance with treatment. PCPs may access the lists on our secure
website for physicians, hospitals and other health care professionals at
www.aetna.com/provider. Based on widely accepted standards of treatment, the
lists profile patients in a practice that have asthma, diabetes, or cardiac
conditions, and who may benefit from an adjustment to their therapy or review
for medication compliance. The lists also identify members with potential drug
interactions or polypharmacy that may affect their health.
Network Level Quality
Aetna annually evaluates administrative data for HEDIS-like measures, with data
reported in aggregate by region and nationally. Results are compared to previous
performance and goals to assist in development of improvement plans.
Medical Network Trend Operating Report
Aetna’s approach is to rigorously evaluate medical costs and identify
opportunities to manage medical cost and trend. The overall approach is called
MENTOR (Medical Network Trend Operating Report), and it looks at medical costs
from both medical cost categories and medical condition perspectives. Aetna
analyzes medical costs by product on regional and local-market levels and
compare costs from one year to the next. Local-market unit costs and utilization
results are reviewed by medical cost categories such as ambulatory care,
hospitalizations, emergency room visits and pharmacy costs. Aetna evaluates each
market’s actual results against plan by the medical cost categories. If a
variance is identified, the market develops corrective action plans.
Aetna also analyzes medical costs by condition across the continuum of care and
across markets. This end-to-end analysis also seeks to identify opportunities to
better manage medical costs and improve health outcomes. Conditions with the
greatest potential for positively impacting costs and improving outcomes are
selected for analysis.
Internal Clinical Quality
Aetna has an ongoing process of monitoring internal quality at least annually.
Aetna regularly conducts internal mock accreditation reviews, patient management
inter-rater reliability audits, and reviews of denial and appeal processing. The
Aetna Quality Management (QM) program focuses on ongoing assessment and
improvement of clinical care and services. Aetna prepares an annual QM program
evaluation, which provides a comprehensive summary of completed and ongoing
quality improvement activities performed under the scope of our QM program,
which enables Aetna to plan activities for future years.

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Hospital Quality
Aetna relies on The Joint Commission review of the hospital. If the hospital is
Joint Commission-accredited, it meets our standards. If certain quality issues
arise from the hospital, Aetna has the right to suspend or terminate the
arrangement or to immediately terminate the agreement if a hospital loses its
Joint Commission accreditation. Hospitals undergo a Joint Commission
accreditation review every three years.
If the hospital is not Joint Commission accredited, it must be accredited by the
American Osteopathic Association (AOA) or an accrediting entity deemed
appropriate by Aetna policy, business participation requirements and/or
regulatory standards. If a hospital is not accredited, Aetna requires that it is
in good standing with Medicare and state licensing authorities.
Quality of Care Concerns
Aetna monitors potential quality of care concerns and identifies them for review
and action on a case-by-case basis. These potential quality of care concerns
include, but are not limited to, unexpected outcome/adverse events,
surgery-related events, mental health/substance abuse concerns, delay of
care/service, extension of length of facility stay, and member-reported events.
These are tracked in the region where the provider practices.
Aetna tracks 21 indicators as potential quality of care concerns and review
trended information. Aggregate reports of quality of care concerns are presented
to the regional Quality Oversight committees.
Inpatient Performance Measurement System
Aetna Integrated Informatics has created the In-patient Performance Measurement
System (IPMS), which compares hospital and provider performance in the inpatient
setting to case-mix adjusted averages. IPMS is Aetna’s system to apply clinical
logic to adjust for the severity of illness within the hospitalized population
and to provide indicators to evaluate performance associated with adverse events
and length of stay. This information is also included in Aetna’s Navigator
Hospital Comparison Tool on Aetna Navigator, the Aetna secure member website.
Aetna tracks adverse events through population-based trending analysis, as well
as on an individual patient level. Through proactive analysis, for instance,
Aetna has found hospitals with high nosocomial (hospital-acquired) infection
rates. Aetna was able to bring these high rates to the hospitals’ attention, and
they reduced the infection rate through programmatic efforts.
Aetna Integrated Informatics has approximately 30 criteria for evaluating
adverse events in the inpatient setting, including:

  §   Sepsis     §   Meningitis     §   Skin Infection     §   Wound disruption
    §   Coagulation complication     §   Hemorrhage

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  §   Pneumonia     §   Transfusion reaction     §   Embolism/Thrombosis     §  
Postoperative decubitus ulcer     §   Ulcer or gastrointestinal bleeding     §  
Surgical complication     §   Urinary complication     §   Respiratory
complication     §   Fluid or electrolyte complication     §   Gastrointestinal
complication     §   Anesthesia complication     §   Renal complication     §  
Neurologic complication     §   Acute myocardial infarction     §   Cardiac
arrest     §   Other cardiac complication     §   Birth canal injury     §  
Other medical complication     §   Other infection complication

Aetna Integrated Informatics also tracks unplanned readmission rates, unexpected
returns to surgery during the same hospitalization, and medication errors.
Security Procedures
The Contractor and Aetna will assure compliance with MDOC Security Procedures
for the above. The Contractor staff and sub-contractors will work with the
off-site providers in cooperation with local facility security staff to assure
all requirements are met.

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APPENDIX D
Utilization Management Program and Pre-Authorization Review Process
Contractor Utilization Management Program Summary
The Contractor Utilization Management (UM) Program effectively manages the
provision of services to avoid unnecessary off-site travel while ensuring that
necessary consultations and off-site services are provided. The Contractor UM
Program is designed to provide value through hospital diversion whenever
medically appropriate and through the selection of providers with skills that
increase available on-site procedures and specialties. The Contractor’s
commitment is to provide the right care, at the right place, at the right time.
The Quality Administrator will approve all studies.
The Contractor UM Program addresses the mechanisms that facilitate timely and
appropriate consultations, specialty referrals, and out-patient/in-patient
hospitalizations. The success of the UM Program is measured by outcome data,
which demonstrates cost-effective, medically necessary evidenced based health
care for offenders.
The major components of the Contractor’s Utilization Management Program include:

§   A credentialing program for professional staff that is accredited by
Utilization Review Accreditation Council (URAC).   §   Utilization of a
Credentialing Verification Organization (CVO) that conducts primary source
verification and queries the National Practitioners Data Bank.   §  
Pre-authorization with prospective review of inpatient care, continued stay
review, discharge planning and retrospective review and analysis.   §  
Authorization of off-site care in the areas of specialty consultation,
radiologic services and outpatient surgery.   §   An automated system with
available fields that allow for specific information codes that provides
customized reports for the client.   §   A Referral Review Tracking Log to
monitor requests for off-site services from the time they are requested from the
on-site physician, all the way to when the on-site physician reviews the results
of the requested services. This log is monitored weekly by the on-site
physician, and monthly by the Regional Medical Director.   §   A Provider file
for the authorization process for identifying preferred (contracted) providers  
§   A Daily census for all inpatient admissions for continuous on-line
monitoring of care.   §   Events analysis   §   A panel of physician specialists
for consultations in complicated cases.   §   A panel of physicians and case
managers

Clinical Criteria for Utilization Management Cases
The Contractor has entered into a long-term agreement with McKesson Health
Solutions to use InterQual a nationally recognized set of decision support tools
to evaluate medical necessity and appropriate level of care for all our imaging
studies, outpatient procedures and elective surgeries. This agreement allows the
Contractor to provide consistent delivery of care across all populations while
providing impartial best practice parameters based on an individual prisoner’s
presentation. InterQual review is now offered as part of our Utilization
Management Program and is managed by the Contractor’s Medical Directors and
Certified Professionals. The Contractor uses InterQual to review and document
medical necessity for radiological procedures and one-day surgeries. This
criteria set is used by mature, well-managed health care systems in the
commercial market. It is important to note that the Contractor does not provide
its physicians with any form of bonus or financial incentive related to the
level of services or medical treatment provided.

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The Contractor demonstrates value for clients while ensuring “best clinical
outcome standards” for prisoners.
The Contractor reviews and updates the UM manual annually. UM criteria are
updated continuously through the Contractor’s decision support system. InterQual
updates its criteria-based web-enabled utilization management product annually.
Provider Access to UM Criteria
Providers have four ways to access UM criteria:

§   Direct communication with the Contractor’s Regional Medical Director   §  
UM Manual   §   Disease Management Monographs   §   Clinical Evidence Summaries
from InterQual

The Aetna External Review
Aetna offers an external review program, at no additional cost to MDOC, that
offers the Contractor and MDOC the opportunity to have certain coverage
treatment plans reviewed by independent physician reviewers.
The Aetna National External Review Unit refers the request to an independent
review organization (IRO) who chooses an appropriate independent reviewer (or
reviewers if necessary or required by applicable law) to examine the case. After
all necessary information is submitted, external reviews are generally decided
within 30 days. The IRO is responsible for choosing a physician who is board
certified in the area of medical specialty at issue in the case.
Aetna has contracted with the following independent review organizations:
IMEDECS and MCMC, LLC. Both IROs use board-certified physician reviewers, are
URAC accredited, and, when applicable, take an evidence-based approach when
reviewing coverage decisions. This service may be of assistance in litigation
disputes for the Contractor or MDOC.
Clinical Policy Bulletins
Aetna supports the development and use of clinical guidelines and clinical
protocols to improve the quality of medical care. Aetna’s process has been
designed to adopt appropriate relevant guidelines for the provision of
preventive, acute, chronic and behavioral health services.
Aetna has adopted clinical preventive services recommendations from federal
agencies and medical professional organizations. These include the U.S.
Preventive Services Task Force (USPSTF) and the Centers for Disease Control and
Prevention (CDC). In the absence of a definitive recommendation from these
sources, Aetna recognizes recommendations from other nationally recognized
sources such as the American Cancer Society (ACS), National Cancer Institute
(NCI), American College of Obstetricians and Gynecologists (ACOG), American
College of Physicians, American Diabetes Association, and American Academy of
Pediatrics.
In addition, Aetna has mechanisms in place to evaluate the appropriate use of
new medical technologies. Aetna Clinical Policy Bulletins (CPBs) express their
views regarding the experimental and investigational status, cosmetic status,
and medical necessity of medical and behavioral health technologies (e.g.,
medical and surgical procedures, devices, pharmaceuticals, biological products)
that may be eligible for coverage.

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For this Contract, Aetna must direct the CPBs to only the Contractor’s and
MDOC’s Medical Directors, and may not distribute them directly to the MP’s until
after they have been considered and approved for distribution at the MSAC
meetings. CPBs apply to all Aetna medical benefit plans and are used in
conjunction with the terms of the member’s benefit plan and other
Aetna-recognized criteria to determine health care coverage for members. CPBs
are based on evidence in peer-reviewed published medical literature, technology
assessments and structured evidence reviews, evidence-based consensus
statements, expert opinions of health care providers, and evidence-based
guidelines from nationally recognized professional health care organizations and
government public health agencies.
Both new and revised CPB drafts undergo a comprehensive review process. This
includes review by Aetna’s Clinical Policy Council and external practicing
clinicians, and approval by Aetna’s Chief Medical Officer or his/her designee.
Aetna’s goals for the CPBs are to make significant new advances available to the
Contractor and the MDOC as soon as appropriate, and to prevent unproved,
ineffective and obsolete technologies from receiving coverage.
Contractor Pre-Authorization Review Process
The Contractor, and its sub-contractor Aetna will collaborate in the Utilization
Review (UR) process.
The Contractor’s Medical Practicioners (MPs) performing UM functions will be
licensed, credentialed practitioners providing competent correctional health
care services. The Contractor’s Michigan State Medical Director will be directly
responsible for prospective, concurrent and retrospective review processes.
Prospective training of clinicians in the system and process is ongoing and
focused.
Prospective review is performed for all non-emergent specialty services.
Retrospective review is performed benchmarking utilization in five categories,
including hospitalizations, ER and ambulance use, specialty office visits,
specialty radiological procedures and one-day surgeries/procedures. The
Contractor’s State Medical Director will be supported by the Contractor’s Chief
Medical Officer, a Specialty Panel and 15 of the Contractor’s other Regional
Medical Directors from various other clients and locations.
Review of Medically Necessary Services
The Contractor hires Medical Practitioners with the knowledge and skill to
diagnose and treat many medical conditions within the confines of the
correctional setting. Appropriate utilization of diagnostic services and
outpatient referrals is the responsibility of the Medical Practitioner under the
supervision of the Contractor’s Regional Medical Director. When services that
have been shown to produce the same or better outcomes when managed on-site or
are considered to be inappropriate, unnecessary or totally elective are
requested, review by the Contractor’s Regional Medical Director is required
prior to authorization. This review process assures that all appropriate
services are reviewed and approved by a physician to assure that our patients
receive quality efficient health care in a timely manner. The MDOC CMO will make
the final determination regarding medically necessary services.
The Contractor uses a multi-tiered physician review process for non-emergent
outpatient referral requests. The on-site Medical Practitioner initiates a
request and forwards it to Contractor’s Regional Medical Director. If the
Contractor’s Regional Medical Director concurs with the Medical Practitioner,
the service is authorized and the appointment is scheduled. In those instances
where, in the opinion of the Contractor’s Regional Medical Director, an
alternative treatment plan would be more appropriate, he/she confers with the
on-site Medical Practitioner to establish the most effective plan of care.

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The MDOC will have yet another level of UM Review in the State with the
Contractor’s State Medical Director. The Contractor’s State Medical Director
will review all cases not resolved by the Regional Medical Directors. The MDOC
CMO will have final authority related to unresolved cases, consistent with MDOC
policies and procedures.
Process for Determining the Appropriate Place of Service
The Contractor’s Regional Medical Director or physician-level designee reviews
all off-site specialty physician visits, outpatient surgeries, and non-emergent
admissions to the hospital within five working days. Pre-certification of any
off-site service is based upon two primary factors: medical necessity and
on-site facility capabilities. The Contractor’s managed care model is built on
the premise that the most effective management of medical care is provided by
the primary care physician on-site — a concept that the commercial HMO market
espouses. For the corrections field, the Contractor takes this model one step
further and delivers the care on-site, which delivers to prisoners medically
necessary and clinically appropriate health care on-site. The Contractor
recognizes that prisoners do at times require off-site care. The Contractor’s
pre-certification process provides the mechanism for oversight of the medical
appropriateness of off- site care.
Aetna Concurrent Review
Concurrent review is an integral part of the utilization review program. The
Contractor’s sub-contractor, Aetna will use their electronic Total Utilization
Management System (eTUMS) to record, monitor and track concurrent review and
discharge planning activity for inpatient admissions.
The in-patient concurrent review process includes:

  §   Obtaining necessary information from appropriate facility staff,
practitioners and providers regarding the clinical status, progress and care
being provided to prisoners     §   Assessing the clinical condition of
prisoners and the ongoing provision of medical services and treatments to
determine benefit coverage     §   Notifying practitioners and providers of
coverage determinations in the appropriate manner and within the appropriate
time frame     §   Identifying continuing care needs early in the inpatient stay
to facilitate discharge to the appropriate setting     §   Identifying prisoners
for referral to covered specialty programs

Aetna has assigned a Single Point of Contact in Patient Management to coordinate
the discharge planning nurses working with Michigan hospitals for daily
consolidated communication with the Contractor’s Michigan Regional medical teams
and documentation in the Appointment Center tracking logs.
In performing concurrent review, Aetna’s in-patient care coordinator obtains
information from discussions with the hospital utilization review department,
the attending physician, and/or the hospital discharge planning team and
compares this information to their nationally adopted guidelines, as well as the
Contractor’s medical guidelines and the security needs of MDOC. Inpatient care
coordinators consider the unique characteristics of each prisoner when using the
guidelines.

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As a standard practice, Aetna’s in-patient care coordinator makes telephone
contact with the attending Contractor on-site physician and/or the hospital’s
utilization review department to determine whether a continued in-patient stay
is covered and to gather information for assessing the prisoner’s discharge
plans. In the vast majority of cases, telephone contact is an effective means of
communication with the physician or hospital for determining the acuity of the
prisoner’s condition and whether the services the prisoner is receiving are
being rendered at the appropriate level of care.
Milliman Guidelines for UR
The Aetna utilization review staff use evidence-based clinical guidelines from
nationally recognized authorities in conjunction with regional criteria and the
terms of the member’s benefit plan to guide utilization management decisions
involving precertification, concurrent review, discharge planning and
retrospective review. Aetna staff consult guidelines from the following sources:
Milliman Care GuidelinesÒ (Seattle, WA: Milliman USA); internally developed
Clinical Policy Bulletins; national and local Medicare coverage policies, other
Aetna recognized criteria; and applicable state and federal guidelines. Aetna’s
Oral and Maxillofacial Surgery (OMS) unit uses the American Association of Oral
and Maxillofacial Surgeons (AAOMS) Parameters and Pathways 2000: Clinical
Practice Guidelines for Oral and Maxillofacial Surgery (ParPath 01) version 3.0
to guide utilization management decisions for oral and maxillofacial surgery
services.
Aetna reviews outpatient procedures using the same criteria or guidelines as
inpatient procedures. Decisions are made by licensed and experienced clinicians
and professionals based on the above criteria as well as the individual needs of
the prisoner.
The Contractor’s utilization management criteria are reviewed annually for
recommendations by Aetna regional Quality Advisory Committee. Criteria are
reviewed by the regional Quality Oversight Committees for adoption.

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APPENDIX E
Claims Processing Process
The Contractor must provide claims processing, and will do so in partnership
with their subcontractor Aetna.
Following is an overview of the Aetna Claims Processing System, as well as Aetna
Claims Accuracy and Performance.
Aetna Claims Process
Claim Submission
The Aetna system allows all provider claims, including Coordination of Benefits
claims, to be submitted electronically. Claims can be transmitted directly to us
through an Aetna-approved vendor; the Aetna secure provider website; the Aetna
direct-connect website, www.aetnaedi.com; or via any number of clearinghouses.
When providers submit claims electronically, the Aetna claim processors receive
system generated edit alerts letting them know there are electronic claims in
the system that need to be processed.
Paper claims addressed to Aetna claim P.O. boxes are routed to one of the Aetna
imaging suppliers, which perform the functions to open, date stamp, sort, and
prep incoming mail.
Claims System and Workflow
Aetna uses a customized version of the Dun & Bradstreet system ClaimFacts®,
which Aetna calls Automatic Claim Adjudication System (ACAS). ACAS is a
rules-based system that allows for improved online availability, increased
automatic adjudication, and scalability to handle projected claim volume
increases.
ACAS is an online, real-time system. It supports both automated and manual
claims processing and contains components for electronic claim intake, workflow
management and imaging systems; as well as our plan, member, provider, quality
management and utilization management databases.
In accordance with Aetna’s First Claim Resolution Proactive Call program,
processors will attempt to contact the provider for any missing information
(e.g., accident details, diagnosis, etc.). The First Claim Resolution initiative
substantially reduces the need to pend claims and avoids the paperwork and
delays associated with resubmission.
Ensuring Prompt Payment
In 2008 (as of 3/31/08), 90% of all claims received in Aetna’s New Albany, OH
service center were processed within 5.2 days of receipt. Provider EOBs and
checks are aged and bulked in a schedule allowing delivery within 24 days of the
claim received date. The majority are sent on either a weekly or biweekly
schedule, and on a consistent day of the week determined by state location of
the provider.
Physicians
Aetna’s standard physician contract states that payment for services will be
made within 30 days (or less if required by applicable law or regulation) of
actual receipt by Aetna of a clean claim.

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Hospitals
Aetna’s standard hospital contract states that payment for services will be made
within 45 days (or less if required by applicable law or regulation) of actual
receipt by Aetna of a clean claim.
First Claim Resolution
Aetna has instituted a strategic initiative, First Claim Resolution. First Claim
Resolution means that wherever possible, Aetna rapidly resolves a claim from the
first time it is submitted, avoiding the rework, delays, and customer
dissatisfaction associated with multiple submissions. First Claim Resolution
objectives are to process claims accurately the first time, improve customer
satisfaction through improved service delivery, and focus resources on regional
and national capabilities to support First Claim Resolution.
In support of the First Claim Resolution Program, Aetna implemented the
Proactive Calls process. For claims that are missing information (e.g., accident
details, diagnosis, other coverage information, etc.) processors will make
proactive calls (attempt to contact the provider) for the additional
information. To identify and resolve aged claims, Aetna’s claims system
automatically produces a daily report of internally pended claims. Supervisors
use this report to monitor the progress of pending situations.
Claim Accuracy Measures and Performance
Aetna uses the following categories to measure claim accuracy:

  §   Financial accuracy is measured by the dollar amount of claims paid
accurately divided by the total dollars paid. Aetna considers each underpayment
and overpayment an error; Aetna does not offset one by the other.     §  
Payment incidence accuracy is measured by the number of correct payments divided
by the total number of payments audited.     §   Overall accuracy is defined as
the number of claims with no errors (financial and non-financial) divided by the
total number of claims audited.     §   Coding accuracy is defined as any error
in coding claim data, which does not necessarily generate a payment error but
adversely impacts data management reports. Coding accuracy is determined by
dividing the number of correct coding entries by the total number of coding
entries audited. Each coding entry represents a correct or incorrect entry as
compared with the total number of coding entries included within the claim being
audited.     §   Procedural accuracy measures the quality of overall claim
handling procedures. Aetna calculates procedural accuracy by taking the total
number of procedures audited minus the procedural errors, divided by the total
number of procedures audited.

The following table represents Aetna claim accuracy goals and performance for
their New Albany Service Center, as of 3/31/08.

                  Measure   Goal   Actual Performance
Financial Accuracy
    99 %     99.74 %
Overall Accuracy
    95 %     99.36 %
Payment Incidence Accuracy
    96 %     99.84 %
Procedural Accuracy
  Not applicable.     99.98 %
Coding Accuracy
  Not applicable.     99.99 %

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Claim Cost Control Measures
Aetna uses the following automatic system controls to judge the appropriateness
of treatment and charges, automatic and processor-driven.

  §   Review of confinements to compare the current claim to the
precertification decisions of the nurse and physician consultants. Discrepancies
and noncertified confinements are flagged and electronically referred to patient
management staff for evaluation. The patient management staff will use the same
criteria in evaluating these confinements as used in the pre-certification and
concurrent review processes.     §   Review of services subject to Aetna’s
out-patient precertification program. The system presents a notice to the
processor regarding approved authorizations. Discrepancies and noncertified
procedures are electronically referred to the patient management staff for
evaluation. The patient management staff will use the same criteria in
evaluating these procedures as that used in the precertification process.     §
  Identification of providers participating in the Aetna networks with retrieval
of negotiated rates for automatic calculation of benefits (when applicable to
the plan design).     §   Reasonable and customary (R&C) controls for
non-network providers (when applicable to the plan design). Aetna’s R&C program
covers surgery, surgical assistance, general anesthesia, medical services (e.g.,
exams), X-rays, laboratory procedures, chiropractic services, psychiatric or
psychological services and vision care.     §   ClaimCheck software to detect
unbundled, upcoded, and fragmented provider bills. Aetna uses ClaimCheck to
address claims in a broad range of services: surgical, surgical assistance,
medical (e.g., office care) and diagnostic services (e.g., X-ray, lab).     §  
ClaimCheck software evaluates a claim containing multiple procedure codes (CPT
and HCPCS) on one date and alerts the processor to potential unbundling.
ClaimCheck further evaluates the claim and recommends the correct procedure
coding and multiple surgery percentages. ClaimCheck also recognizes potential
cosmetic procedures, gender and age discrepancies, obsolete codes and possible
duplicates.

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  §   Treatment guides reviewing procedures to signal validity conflicts (e.g.,
gynecological services for a male patient) and necessary treatment reviews
(e.g., rhytidectomy which may be cosmetic).     §   Duplicate bill edits
comparing the types of service and service dates of new expenses to the service
codes and dates of previously processed expenses.

Also included in the Aetna automatic system controls is Aetna Standard Table, a
claim system tool that supports the Aetna Clinical Policy Bulletins (CPBs)
across all products, claim processing platforms, and can include any customer,
benefit plan and state exceptions. Based on the CPT/HCPCS and ICD-9 codes
presented on a claim, the tool will automatically allow, deny or pend for review
by the Aetna Clinical Claim Review staff.
Aetna also utilize procedural, processor driven controls. While these are manual
controls, providers exhibiting a pattern contrary to the following guidelines
may automatically be flagged in the claims system for special handling.
Fraud and Abuse Program
Aetna subscribes to a zero tolerance policy on health care fraud. As a founding
member of the National Health Care Antifraud Association (NICAA), Aetna has been
an industry leader in the fight against health care fraud for many years. Our
Special Investigations Unit (SIU), comprised of 100 full-time employees, is
responsible for the Aetna health care fraud and abuse program.
The Aetna fraud program consists of:

  §   Identification – The Aetna SIU provides a national training program for
our claim processors. Most personnel in the Aetna customer service centers are
trained to identify potential fraudulent claims activity, and will refer suspect
claims to the Special Investigations unit for further investigation. The SIU
maintains staff (fraud analysts) attached to each claim processing service
center throughout the country.     §   Investigation – The Aetna investigators
use various techniques for performing comprehensive reviews; including a
complete review of present and prior billing practices and the use of provider
profiling computer systems.     §   Prosecution – Aetna refers suspected cases
to law enforcement agencies and State Insurance Fraud Bureaus (as required by
law) for investigation and possible prosecution. Aetna aggressively pursue full
recovery of money lost due to fraud. Aetna addresses the issue directly with the
suspect provider, and will file civil action using outside counsel, if
necessary.

Provider
SIU uses the Fraud and Abuse Management System (FAMS) tool, which examines
provider treatment and billing behavior to identify potential fraud. Providers
are profiled by peer group, specialty, product, geography, etc. Profiles are
typically based on 12 months of detail claims. FAMS has identified approximately
300 cases per year. FAMS is the primary proactive detection tool used by Aetna’s
SIU and Aetna is recognized as the industry leader in the use of FAMS by IBM
(the creator and owner of FAMS).
The claims system also employs automated claim review software to identify and
adjust for unbundling of services and duplicate claim billings. Additional
software, known as the Aetna Standard Table (AST) is also used to identify
diagnoses and procedures designated as inappropriate according to Aetna clinical
policy.

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The Aetna SIU is also made aware of cases of potential fraud through industry
and law enforcement contacts, state departments of insurance, medical review
boards, the Aetna toll-free fraud hotline, referrals from claim processors,
e-mail from the Aetna public Internet mailbox and from members responding to the
toll-free number printed on the Aetna EOBs. When fraud is suspected, a case is
created and assigned to an SIU investigator. When the investigator has
substantiated an allegation of fraud, a flag is placed on the provider’s file
which triggers an edit informing claim processors that the provider is under
investigation or review for a specific billing impropriety.
Customer/Employee/Member
Aetna has a strong rapport with various law enforcement groups and receive
frequent referrals from them. Aetna also has a toll-free hotline that can be
used by anyone. Aetna provides that telephone number on business envelopes,
health care spending account updates and EOBs.
Claims Personnel
Processors and other claim personnel are well informed about our fraud program.
Continued fraud education is a critical deterrent. Aetna claim personnel are
aware of the sophistication of the program and the extreme penalties for such
activity.
Aetna internal controls include the following:

  §   Password and procedural limitations within the claims system     §  
Security edits built into the claims system     §   A daily review of randomly
selected claim files of every processor and individual with access to the
processing system     §   A toll-free compliance alert line which provides
employees 7 day, 24 hour access to report known or suspected acts of employee
misconduct     §   Confirmation letters to randomly selected payees     §   An
automated check auditing system for each bank-cleared check

Internal investigations involving employees, agents or vendors are the
responsibility of the Investigative Services Unit, located in Hartford, CT.
Provider Appeals Process
To initiate an appeal, providers may call the Provider Service Center where a
provider service representative begins the review process, or the provider may
send a written appeal to Aetna. Practitioners/providers have 180 days from
receiving an initial benefit decision to submit a request for review of a claim
determination (unless state regulations or the provider contract allow for more
time).
A Claims Performance Guarantee from Aetna for the Contractor and the MDOC has
been included in Appendix G.

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APPENDIX F
Risk Share Reconciliation Methodology
The Contractor will maintain financial records and prepare financial statements
specific to this contract with the MDOC. The Contractor will charge to its
contract with the MDOC all costs and expenses associated with providing services
described under this contract, consistent with its accounting practices as
applied to this and its other contracts. These charges are primarily direct
expenses (e.g. staffing and benefits, contracted providers, ancillary services,
off-site costs, etc.) but also include allocations for such matters as
self-insurance plans consistent with the allocation of overall plan expenses
between all of its client contracts participating in the respective plans.
The Contractor will use United States generally accepted accounting principles
when preparing its contract specific financial statements which require the use
of accrual accounting. Accordingly, financial statements prepared during the
term of this contract and provided to MDOC will be prepared using the accrual
basis of accounting. Accrual basis accounting requires recording some
transactions using estimates which are adjusted to actual cost as the
transactions are settled (e.g. the cost of off-site care is initially recorded
at an estimate, then adjusted to actual when the claims are adjudicated).
The risk-sharing reconciliations prepared during the term of this contract will
be prepared using the contract specific financial statements except that instead
of using the off-site services expense calculated under the accrual method, the
reconciliations will use the amount paid by the Contractor for off-site services
through the date of the invoice (e.g. – for the reconciliation prepared for the
quarter ending June and to be delivered to the MDOC by July 30th, the
reconciliation will reflect cash payments through approximately July 30th).
The Contractor will prepare preliminary contract year financial statements and
the preliminary contract year reconciliation of the Actual Costs as compared to
the Risk Share Target (collectively, the “Preliminary Financials”) as of 91 days
of each contract year-end which will be provided to the MDOC within 120 days of
the contract year-end. This reconciliation period will allow for most
transactions that had been recorded using an estimated amount to be settled with
any corresponding adjustments reflected in Preliminary Financials.
MDOC and the Contractor recognize that 1) providers of off-site services have up
to 365 days to submit claims or 2) resolution of questions or disputes
concerning a claim could occur beyond 91 days following the end of the contract
year and therefore claims could be paid beyond the preparation of the
Preliminary Financials. Accordingly, the Contractor will prepare final contract
year financial statements and the final contract year reconciliation
(collectively, the “Final Financials”) as of 183 days of each contract year-end
which will be provided to the MDOC within 198 days of the contract year-end. The
only change that will occur from the Preliminary Financials to the Final
Financials will be to reflect the payment of any claims for off-site services
that occurred between the date of the Preliminary Financials and the Final
Financials. Additionally at the time it provides the Final Financials, the
Contractor will provide the MDOC with an estimate of outstanding claims for
off-site services for the contract year which have not yet been paid by the
Contractor as of the date of the Final Financials. Any claims that are paid
subsequent to 183 days following the end of the contract year will be charged to
the contract year in which they are paid. The Contractor will prepare a report
identifying for the MDOC claims charged to a contract year subsequent to the
contract year in which the services were provided.
MDOC’s third party reviewer may examine the Contractor’s Final Financials for
each contract year, including supporting documentation and records to
independently verify the Actual Costs and its calculation of any risk sharing
amounts.

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Following are the captions that are currently reflected in the Contractor’s
financial statements and a brief description of each category:
SALARIES & BENEFITS
This category will include the costs of personnel assigned to the MDOC contract,
including those employed by professional corporations which are sub-contractors
under the contract and those located in the Regional Office. It will include
their salaries and benefits, including health insurance and workers compensation
insurance which are currently self-insured plans, the estimated cost of which
the Contractor allocates across all contracts participating in the plans. Lines
items within this category are as follows:
Salaries
Fringe Benefits
Temporary Services
Temporary Services — Prof Corps
Salaries — Prof Corps
Fringe Benefits — Prof Corps
PROFESSIONAL SERVICES
This category will include the professional fees of contracted providers (not
employed by the Contractor or its sub-contractors) who provide services to the
MDOC on either on-site. Line items within this category are as follows:
Physician Fees
Subcontractors — Prof Corps
HOSPITALIZATION
This category will include the costs of off-site hospitalization services
provided to the MDOC prisoners. Line items within this category are as follows:
Hospitalization
ER and Ambulance
OUTPATIENT SERVICES
This category will include the costs of off-site outpatient services provided to
the MDOC prisoners. Outpatient Physician represents office visits. Outpatient
One Day represents one day surgery including professional fees. Line items
within this category are as follows:
Outpatient Physician
Outpatient Dialysis
Outpatient One Day

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AETNA NETWORK ACCESS FEE
This category represents the PPPM fee paid to Aetna for development of and
access to its provider network, resources of its Appointment Scheduling System
and for claim adjudication. This will include all fees paid to Aetna along with
any refund of those fees under the guarantees described in Appendix G.
DIAGNOSTIC SERVICES
This category will include the costs of diagnostic services provided to the MDOC
prisoners. Outpatient X-Ray represents diagnostic services provided on an
off-site basis. X-Ray On-Site represents the costs, if any, of providing x-ray
services on-site. Line items within this category are as follows:
Outpatient X-Ray
X-Ray-On-Site
Lab-On-Site
PHARMACEUTICALS
This category will include the costs of dialysis medications provided to the
MDOC prisoners. Line items within this category are as follows:
Pharmaceuticals
Pharmaceutical Returns/Credits
SUPPLIES
This category will include the costs of any supplies not provided by the MDOC
but which are necessary for the provision of care to the MDOC prisoners, if any.
Line items within this category are as follows:
Medical Supplies
OTHER
This category will include expenses incurred by the Contractor associated
directly with the contract with the MDOC, provision of services to its prisoners
and employment of individuals assigned to the contract to provide those
services. This category will not include any costs, including any allocations of
costs, which are not directly related to this contract and the services provided
there under. Line items within this category are as follows:

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Administrative Expense
Telephone Expense
Classified Ads
Equipment
Travel
Legal Fees (does not include expenses
associated with professional liability claims)
Background Checks
Inservice Educ.
Dues and Subscriptions
Other Expense — Prof Corps
MANAGEMENT FEE
This category will include the Contractor’s fee for management of services under
the contract, which covers such required contract costs and support services as
clinical service initiatives, provider credentialing and peer reviews, provider
training and education support, human resource and benefit management, payroll
and accounts payable processing, accounting and reporting support, executive
management and information technology and support, which are not provided by
individuals assigned directly to the contract.
This fee will be calculated based on the population at a fixed PPPM amount as
set forth in the following table. The amounts set forth below are a component of
and not in addition to the PPPM set forth in Attachment A.

                          Population   Year 1   Year 2   Year 3  
50,000 and above
  $ 22.97     $ 23.89     $ 24.84  
49,000 to 49,999
  $ 23.42     $ 24.36     $ 25.33  
48,000 to 48,999
  $ 23.89     $ 24.85     $ 25.84  
47,000 to 47,999
  $ 24.43     $ 25.41     $ 26.42    

TOTAL OPERATING EXPENSES
This category will be a sum of the above items and will represent the Actual
Costs under the contract.
The Contractor recognizes that expenses it incurs for professional liability
claims and income taxes cannot be charged to the contract under Michigan law and
therefore they are not included above and will not be charged to the contract.
A standard format of the financial statements is presented on the last page of
this appendix.

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The reconciliation of the Actual Costs to the Risk Share Target will be prepared
quarterly within 30 days of quarter-end and will be prepared on a contract
year-to-date basis. The reconciliation will result in either a credit due to the
MDOC or an invoice to the MDOC. A credit issued to the MDOC can be used at its
discretion. An invoice issued to the MDOC will be due within 30 days of the
invoice date.
Reconciliations will be in the following form. For demonstrative purposes, two
examples are also presented in the form. As they are for demonstrative purposes,
the form and examples are not a part of this contract and therefore are not
binding on the parties to the contract.
Assumptions made in the first example – 1) it is the reconciliation for the
second quarter of the first year of the contract, 2) Actual Costs are assumed to
be less than the target rate and 3) the Contractor had credited MDOC $2,000,000
through the first quarter of the contract as a result of the risk share
reconciliation.
Calculation of Risk Share Target and Risk Share Cap

                                                      Risk Share            
Risk Share                     Target     Risk Share     Cap     Risk Share  
Month   Population(1)     PPPM(2)     Target - $     PPPM(2)     Cap - $  
April
    49,328     $ 176.25     $ 8,694,060     $ 197.49     $ 9,741,787  
May
    50,132     $ 175.00     $ 8,773,100     $ 196.24     $ 9,837,904  
June
    48,533     $ 177.55     $ 8,617,034     $ 198.79     $ 9,647,875  
July
    49,501     $ 176.25     $ 8,724,551     $ 197.49     $ 9,775,952  
August
    49,433     $ 176.25     $ 8,712,566     $ 197.49     $ 9,762,523  
September
    50,325     $ 175.00     $ 8,806,875     $ 196.24     $ 9,875,778  
October
                                       
November
                                       
December
                                       
January
                                       
February
                                       
March
                                       
 
                                   
Total
                  $ 52,328,186             $ 58,641,819  
 
                                   

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Actual Costs(3)
  $ 49,000,000  
Less Off-Site Costs – Accrual Basis
  $ (25,000,000 )
Plus Off-Site Costs – Cash Basis
  $ 24,500,000  
 
     
Modified Actual Costs
  $ 48,500,000  
 
     
Difference
  $ (3,828,186 )
 
     

                             MDOC Portion of Difference:                
Tier 1
  $ (3,828,186 )(4)     85 %   $ (3,253,958 )
Tier 2
       (4)     70 %   $ 0  
 
                     
Total
                  $ (3,253,958 )
 
                     
 
                        Previously Billed / (Credited)           $ (2,000,000 )
(5)
 
                      Current Billing / (Credit)           $ (1,253,958 ) (6)
 
                     
 
                        Total Cost to MDOC — YTD           $ 49,074,228 (7) Risk
Share Cap — YTD           $ 58,641,819  

In the reconciliation,

  1.   The population would be as determined in accordance with Section X.xx of
the contract.     2.   The Risk Share Target and Risk Share Cap PPPM would be as
set forth in Attachment A of the contract.     3.   The Actual Costs would be as
set forth in the contract year-to-date financial statements for the applicable
month.     4.   Tier 1 costs represent up to 9% of the Risk Share Target — $. If
the Difference is a credit, the entire difference will be reflected in Tier 1.  
  5.   Previously Billed / (Credited) represents the total amount either billed
or credited to MDOC in the previous quarters of this contract year as a result
of the risk sharing reconciliation.     6.   The Current Billing / (Credit) is
the amount to be billed or credited in accordance with Attachment A for the
current quarter.     7.   The Total Cost to MDOC – YTD is the sum of the amounts
billed / (credited): 1) as base amounts pursuant to Section 1.061.A.1; 2) as
adjustments for differences in estimated and actual population pursuant to
Section 1.061.A.1; and 3) as risk sharing amounts pursuant to this
reconciliation.

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Assumptions made in the second example – 1) it is the reconciliation for the
second quarter of the first year of the contract, 2) Actual Costs are assumed to
be at a high enough level to demonstrate the use of both tiers of the pricing
structure and 3) the MDOC had reimbursed $1,600,000 to the Contractor through
the first quarter of the contract as a result of the risk share reconciliation.
Calculation of Risk Share Target and Risk Share Cap

                                                      Risk Share            
Risk Share                     Target     Risk Share     Cap     Risk Share  
Month   Population(1)     PPPM(2)     Target - $     PPPM(2)     Cap - $  
April
    49,328     $ 176.25     $ 8,694,060     $ 197.49     $ 9,741,787  
May
    50,132     $ 175.00     $ 8,773,100     $ 196.24     $ 9,837,904  
June
    48,533     $ 177.55     $ 8,617,034     $ 198.79     $ 9,647,875  
July
    49,501     $ 176.25     $ 8,724,551     $ 197.49     $ 9,775,952  
August
    49,433     $ 176.25     $ 8,712,566     $ 197.49     $ 9,762,523  
September
    50,325     $ 175.00     $ 8,806,875     $ 196.24     $ 9,875,778  
October
                                       
November
                                       
December
                                       
January
                                       
February
                                       
March
                                       
 
                                   
Total
                  $ 52,328,186             $ 58,641,819  
 
                                     

             
Actual Costs(3)
  $ 59,000,000  
Less Off-Site Costs – Accrual Basis
  $ (35,000,000 )
 
     
Plus Off-Site Costs – Cash Basis
  $ 34,000,000  
 
     
Modified Actual Costs
  $ 58,000,000  
 
     
Difference
  $ 5,671,814  
 
     

                             MDOC Portion of Difference:                
Tier 1
  $ 4,709,537  (4)     85 %   $ 4,003,106  
Tier 2
  $ 962,277  (5)     70 %   $ 673,594  (6)
 
                     
Total
                  $ 4,676,700  
 
                     
 
                        Previously Billed / (Credited)   $ 1,600,000  (7)
 
                      Current Billing / (Credit)   $ 3,076,700  (8)
 
                     
 
                        Total Cost to MDOC YTD   $ 57,004,886  (9) Risk Share
Cap YTD   $ 58,641,819  

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In the reconciliation,

  1.   The population would be as determined in accordance with Section X.xx of
the contract.     2.   The Risk Share Target and Risk Share Cap PPPM would be as
set forth in Attachment A of the contract.     3.   The Actual Costs would be as
set forth in the contract year-to-date financial statements for the applicable
month.     4.   Tier 1 costs represent up to 9% of the Risk Share Target — $.  
  5.   Tier 2 costs represent the difference between the Difference and the Risk
Share Target — $ plus the Tier 1 costs. If the Difference is a credit, the
entire difference will be reflected in Tier 1.     6.   The MDOC portion under
Tier 2 is limited to an amount that will result in the Total Cost to the MDOC –
YTD being no more than the Risk Share Cap – YTD.     7.   Previously Billed /
(Credited) represents the total amount either billed or credited to MDOC in the
previous quarters of this contract year as a result of the risk sharing
reconciliation.     8.   The Current Billing / (Credit) is the amount to be
billed or credited in accordance with Attachment A for the current quarter.    
9.   The Total Cost to MDOC – YTD is the sum of the amounts billed / (credited):
1) as base amounts pursuant to Section 1.061.A.1; 2) as adjustments for
differences in estimated and actual population pursuant to Section 1.061.A.1;
and 3) as risk sharing amounts pursuant to this reconciliation.

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Example financial statement row format:

              Month or year to       date period  
SALARIES & BENEFITS
       
Salaries
  $ 1  
Fringe Benefits
    1  
Temporary Services
    1  
Temporary Services — Prof Corps
    1  
Salaries — Prof Corps
    1  
Fringe Benefits — Prof Corps
    1  
 
     
Salaries & Benefits total
    6  
 
     
 
       
PROFESSIONAL SERVICES
       
Physician Fees
    1  
Dentist Fees
    1  
Psychiatric Fees
    1  
Subcontractors — Prof Corps
    1  
 
     
Professional Services Total
    4  
 
     
 
       
HOSPITALIZATION
       
Hospitalization
    1  
ER and Ambulance
    1  
 
     
Hospitalization Total
    2  
 
     
 
       
OUTPATIENT SERVICES
       
Outpatient Physician
    1  
Outpatient Dialysis
    1  
Outpatient One Day
    1  
 
     
Outpatient Services Total
    3  
 
     
 
       
AETNA NETWORK ACCESS FEE
    1  
 
     
 
       
DIAGNOSTIC SERVICES
       
Outpatient X-Ray
    1  
X-Ray-On-Site
    1  
Lab-On-Site
    1  
 
     
Diagnostic Services Total
    3  
 
       
PHARMACY
       
Pharmacy
    1  
Pharmacy Returns/Credits
    1  
 
     
Pharmary Total
    2  
 
     
 
       
SUPPLIES
       
Dental Supplies
    1  
Medical Supplies
    1  
 
     
Supplies Total
    2  
 
     
 
       
OTHER
       
Administrative Expense
    1  
Telephone Expense
    1  
Classified Ads
    1  
Equipment
    1  
Travel
    1  
Legal Fees
    1  
Background Checks
    1  
Inservice Educ.
    1  
Dues and Subscriptions
    1  
Other Expense — Prof Corps
    1  
 
     
Other Total
    10  
 
     
 
       
MANAGEMENT FEE
    1  
 
       
TOTAL OPERATING EXPENSES
  $ 34  
 
     

 

Note> The numerical data above is intended only for the illustration of how the
financial statement rows will accumulate to subtotals and the grand total.

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APPENDIX G
AETNA PERFORMANCE GUARANTEES
The guarantees provided herein are stated as a percentage of the network access
fee being charged by Aetna for its services under this contract. The fee is on a
PPPM basis and is $9.50 for the first year of the contract. This PPPM is
included, and is not in addition to, the PPPM in Attachment A. The Contractor
will notify the MDOC CCI 30 days in advance of any change to the network access
fee.
Medical PPO Discount Savings Guarantee from Aetna for the Contractor and the
MDOC: (see 1.022 T Network of On-site and Off-site Specialists/Consultants)

  a.   Medical Discount Guarantee:         Aetna will guarantee the discount
savings that result from negotiated arrangements with providers participating in
our PPO. These savings (the “Cumulative Target Discount”) will be calculated on
an aggregate basis, taking the service type (hospital inpatient, hospital
outpatient, physician/other) discounts based upon billed eligible expenses by
network.     b.   Definition: The Cumulative Target Discount would become a firm
aggregate target discount at the end of the first contract year once the actual
enrollment by network and by product are known. For subsequent contract years,
this Cumulative Target Discount will be calculated based on the previous year’s
weighting by population by region and services utilized. This discount weighting
will be blended based upon the total network billed eligible expenses prior to
discount for each of the service types, and prior to application of plan design
and member cost sharing (co-pays and deductibles). Aetna will calculate the
actual in-network discount by comparing the providers’ non-negotiated fee to the
negotiated fee within the PPO networks by way of the following equation:

{Provider Discounts (Hospital and Physician) in dollars} / {Total In-Network
(Hosp. and Phys.) Eligible Benefits Billed1 (before discount)}
This measurement will be reported using data from Aetna’s Integrated Informatics
data warehouse

  c.   Reconciliation: On an annual basis after the end of each contract year,
the total aggregated discount savings expected (based on actual enrollment by
network and by product, and billed eligible charges by service type) will be
compared to the total aggregated discount savings achieved.     d.   Penalty:
There will be a risk free corridor of 3.0 percentage points less than the target
discount. If the actual discount percentage is below this risk free corridor,
Aetna will decrease network access fee. The network access fee will be decreased
by an amount equal to 2% for each 1% of discount savings that the actual
discount falls below the risk free corridor. The maximum penalty will be 10% of
the network access fee.     e.   Assumptions:

  i)   In no event will fees be adjusted by more than 15% due to results of the
discount guarantee and all service based performance guarantees combined.    
ii)   This guarantee only applies to the in-network medical claims and Aetna
direct-contracted networks and will remain in force during the contract period.
    iii)   The final guarantee reconciliation will be based upon policy year
incurred claims, including three months of claim runoff.

 

1   excludes duplicate or other ineligible/denied claims, or claims paid by
coordination of benefits where Aetna was not primary (including Medicare);
includes network claim amounts billed above reasonable & customary levels.

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  iv)   Any non-facility billed charges (excluding ineligible and not covered
charges) at a level equal to the negotiated rates, along with some charges where
the contract allows us to pay the lesser of the billed amount or the contractual
rates will be excluded from this guarantee.     v)   This guarantee only applies
to medical fees and excludes pharmacy.     vi)   This guarantee requires that at
least 80% of claims paid are in- network claims.

This guarantee assumes that there will be no substantial changes (i.e. including
but not limited to the addition of a new participating hospital, termination of
participating hospital) in the Aetna PPO network that services the
Central/Western MI area, which could potentially affect the financial discounts
expected in place.
The following table is presented for purposes of illustrating the calculation of
the Cumulative Target Discount. As it does not reflect the actual population mix
or the actual discounts, the amounts contained in the illustration are not
binding on the parties to the contract or their sub-contractors.
Medical PPO Discount Savings Guarantee
Illustrative Calculation of Composite Target Discount

                                      Illustrative     Illustrative Inpatient
Hospital Discount   Illustrative Outpatient Hospital   Physician/Other Discount
  Illustrative Composite (1)   Discount(1)   (1)(3)   Target Discount(2)
28.9%
    27.7 %     31.1 %     30.0 %

 

(1)   These discounts are illustrative only. They do not reflect the actual
population or discounts provided.   (2)   This composite target is illustrative
only. The final guaranteed target will depend on the actual enrollment by
network and claim service mix known at the end of the guarantee period.   (3)  
Our non-facility discounts exclude the impact of claims where the provider is
billing at the contracted rates, along with some situations where the contract
allows us to pay the lesser of the billed amount or the contracted rate.

                                                          Network         Rating
          Inmates     Hospital     Hospital     Physician/   ID     Network Name
  Area ID     Rating Area     Within     Inpatient     Outpatient     Other (3)
    421    
Eastern MI MC
    363     Eastern Michigan     7000       35.00 %     25.00 %     25.00 %  
615    
Cent/West MI MC
    339     Central/Western MI     30000       30.00 %     27.00 %     30.00 %  
3286    
Northern MI MC
    378     Michigan - Upper Peninsula     10000       25.00 %     30.00 %    
35.00 %   3286    
Northern MI MC
    379     North Michigan     4000       20.00 %     32.00 %     40.00 %

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Aetna Provider Outreach Performance Partnership Guarantee (see 1.022 BB Secure
Unit) for the Contractor and the MDOC to arrange and facilitate meetings
generating new venues and solutions to lower the overall medical care cost for
prisoners. This includes new thought leadership, as well as sensitivity to the
shortcomings identified in prior audit reviews:

a.   Guarantee: Aetna will facilitate meetings with the Contractor on-site
management team and the Michigan Department of Corrections (MDOC) management
team to attempt to recruit providers and to add secure units in the critically
needed areas. Aetna will review the incumbent on-site clinicians to identify any
that may be in Aetna’s network for fee renegotiation.   b.   Definition: Aetna
will guarantee our efforts to set up meetings with the appropriate providers
that are:

  i)   Identified sites for outreach using the incumbent’s data based on
In-patient stays and unusually long Average Length of Stays (ALOS). The
Contractor, working with MDOC will prioritize the order of the outreach program
for Aetna Network Personnel.     ii)   Aetna and the Contractor will draft a new
mission message in their outreach to hospitals, skilled nursing facilities and
other providers. Using the Contractor’s other nationwide examples, and any
Michigan examples, Aetna will package a brief with realistic information on the
value of adding this clientele for particular providers. One of the critical
components to be stressed will be transparency. The MDOC will benefit directly
from all new arrangements.     iii)   Hospitals, and MD/DO Specialty types,
including but not limited to Cardiologists, Gastroenterologists, Orthopedists,
Otolaryngologists, OB/GYNs and Surgeons.     iv)   Providers incurring
significant utilization (incidence and/or claim dollars) to ensure that we are
targeting the providers that will most impact the members in this transition;

c.   Aetna cannot guarantee that the physicians and/or hospitals will add a
secure unit, or agree to become the onsite specialists, only that we will
attempt to recruit by: reaching out to local network contacts first to determine
the feasibility of this level of change, then by contacting the provider to set
up meetings to create a higher interest in the Michigan Department of Correction
offsite health care needs and/or to initiate the negotiation process.

MDOC, Contractor and Aetna will establish a list of priorities and actions to be
undertaken by Aetna on a quarterly basis. This will provide all parties the
opportunity to ensure that Aetna has an accurate listing and have mutually
agreed upon the basis for our recruitment efforts and performance guarantee
measurement. This same team will draft the briefing materials for the outreach
meetings for final approval by Michigan Department of Corrections. Aetna’s
network management resources will contact the providers for recruitment via
phone to establish presentation times. The networks will track their contact
with providers and the status of recruitment. Aetna will also track community
brainstorming ideas that may arise from these meetings, leading to different
solutions than expected. The Contractor, MDOC and Aetna will provide follow-up
information to questions posed at these meetings. If the provider is not
interested in researching the possibility of this arrangement with MDOC, Aetna
will not make further recruitment attempts. The network will continue to attempt
to contact all critical providers until an agreement has been signed, outreach
has been exhausted or the provider is not interested for a specific reason.
Aetna’s Account Management and Network Management staff, along with the
Contractor, will provide updates on the status of recruitment in a Monthly
Status Report to Michigan Department of Corrections.

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d.   Penalty and Measurement Criteria: Up to 5% of our network access fees shall
be at risk based on our efforts to facilitate the recruitment of critical
providers and to add secure units for MDOC off-site health care patients.
Contractor, Aetna and MDOC will assess the results of the effort quarterly using
a pass / fail system based on the goals established for the quarter.

Claims Performance Guarantee for claims processed by Aetna for the Contractor
and the MDOC (see Appendix E)
Claim Administration Turnaround Time
Guarantee: Aetna will guarantee that the claim turnaround time during the
guarantee period will not exceed 14 calendar days for 90.0% of the processed
claims on a cumulative basis each year.
Definition: Aetna measures turnaround time from the claimant’s viewpoint; that
is, from the date the claim is received in the service center to the date that
it is processed (paid, denied, or pended). Weekends and holidays are included in
turnaround time.
Penalty and Measurement Criteria: If the cumulative year turnaround time
(TAT) exceeds the day guarantee as stated above, Aetna will reduce its
compensation by an amount equal to 0.4% of the guarantee period network access
fees for each full day that Turnaround Time exceeds 14 calendar days for 90.0%
of all claims. There will be a maximum reduction of 2.0% of the guarantee period
network access fees. A computer generated turnaround time report for MDOC’s
specific claims will be provided on a quarterly basis. The guarantee will be
measured on an annual basis.
Financial Accuracy Guarantee: Aetna will guarantee that the guarantee period
dollar accuracy of the claim payment dollars will be 98.0% or higher.
Definition: Financial accuracy is measured by the dollar amount of claims paid
accurately divided by the total dollars paid. Aetna considers each underpayment
and overpayment an error; Aetna does not offset one by the other.
Penalty and Measurement Criteria: Aetna will reduce its compensation by an
amount equal to 0.33% of the guarantee period network access fees for each 1.0%
that financial accuracy drops below 98.0%. There will be a maximum reduction of
2.0% of the guarantee period network access fees. Aetna’s audit results for the
unit(s) processing MDOC’s claims will be used. The results for these guarantees
will be calculated using industry accepted stratified audit methodologies. The
guarantee will be measured on an annual basis.
Total Claim Accuracy Guarantee: Aetna will guarantee that the guarantee period
overall accuracy of the claim payments will not be less than 94.0% or higher.
Definition: Total claim accuracy is measured as the number of claims with no
errors (financial and non-financial) divided by the total number of claims
audited.
Penalty and Measurement Criteria: Aetna will reduce its compensation by 0.33% of
the guarantee period network access fees for each 1.0% that total claim accuracy
drops below 94.0%. There will be a maximum reduction of 2.0% of the guarantee
period network access fees.
Aetna’s audit results for the unit(s) processing MDOC’s claims will be used. The
results for these guarantees will be calculated using industry accepted
stratified audit methodologies. The guarantee will be measured on an annual
basis.

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