Exhibit 10.42

MOLINA HEALTHCARE OF CALIFORNIA
CAPITATED MEDICAL GROUP / IPA
PROVIDER SERVICES AGREEMENT

This Capitated Medical Group / IPA‌‌ (“Agreement”) is entered by and between
Molina Healthcare of California‌‌, a California corporation (“Health Plan”), and
Pacific Healthcare IPA (“Provider”).

RECITALS
A.
Health Plan arranges for the provision of certain Health Care services to
Members pursuant to contracts with various government sponsored health programs.
Health Plan intends to participate in additional government sponsored health
programs and offer other health products as the opportunities become available.

B.
Health Plan arranges for the provision of certain Health Care services to
Members by entering into provider service agreements with individual physicians,
groups of physicians, individual practice associations, hospitals, clinics,
ancillary health providers, and other health providers.

C.
Provider is licensed to render certain Health Care services and desires to
provide such services to Health Plan’s Members in connection with Health Plan’s
contractual obligations to provide and/or arrange for Health Care Services for
Health Plan’s Members.

Now, therefore, in consideration of the promises, covenants and warranties
stated herein, Health Plan and Provider agree as follows:

    
Page 1 of 1    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

ARTICLE ONE - DEFINITIONS
1.1
Provider means the health care professional(s), or entity(ies) identified in
Attachment A to this Agreement.

1.2
Capitalized words or phrases in this Agreement shall have the meaning set forth
in Attachment B.

ARTICLE TWO - PROVIDER OBLIGATIONS
2.1
Serving as a Panel Provider. Provider shall serve on Health Plan’s panel of
providers for the products specified in Attachment C. Provider agrees that its
practice information may be used in Health Plan’s provider directories,
promotional materials, advertising and other informational material made
available to the public and Members. Practice Information includes, but is not
limited to, name, address, telephone number, hours of operation, type of
practice, and ability to accept new patients. Provider shall promptly notify
Health Plan of any changes in this practice information.

2.2
Standards for Provision of Care.

a.
Provision of Covered Services. Provider shall provide Covered Services to
Members, within the scope of Provider’s business and practice, in accordance
with this Agreement, Health Plan’s policies and procedures, the terms and
conditions of the Health Plan product which covers the Member, and the
requirements of any applicable government sponsored program.

b.
Standard of Care. Provider shall provide Covered Services to Members at a level
of care and competence that equals or exceeds the generally accepted and
professionally recognized standard of practice at the time of treatment, all
applicable rules and/or standards of professional conduct, and any controlling
governmental licensing requirements.

c.
Facilities, Equipment, and Personnel. Provider’s facilities, equipment,
personnel and administrative services shall be at a level and quality as
necessary to perform Provider’s duties and responsibilities under this

    
Page 2 of 2    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

Agreement and to meet all applicable legal requirements, including the
accessibility requirements of the Americans with Disabilities Act.

d.
Prior Authorization. If Provider determines that it is Medically Necessary to
consult or obtain services from other health professionals that are Medically
Necessary, Provider shall obtain the prior authorization of Health Plan in
accordance with Health Plan’s Provider Manual unless the situation is one
involving the delivery of Emergency Services. Upon and following such referral,
Provider shall coordinate the provision of such Covered Services to Members and
ensure continuity of care.

e.
Contracted Providers. Except in the case of Emergency Services or upon prior
authorization of Health Plan, Provider shall use only those health
professionals, hospitals, laboratories, skilled nursing and other facilities and
providers which have contracted with Health Plan (“Participating Providers”).

f.
Member Eligibility Verification. Provider shall verify eligibility of Members
prior to rendering services.

g.
Admissions. Provider shall cooperate with and comply with Health Plan’s hospital
admission and prior authorization procedures.

h.
Emergency Room Referral. If Provider refers a Member to an emergency room for
Covered Services, Provider shall provide notification to Health Plan within
twenty-four (24) hours of the referral.

i.
Prescriptions. Except with respect to prescriptions and pharmaceuticals ordered
for in-patient hospital services, Provider shall abide by Health Plan’s drug
formularies and prescription policies, including those regarding the
prescription of generic or lowest cost alternative brand name pharmaceuticals.
Provider shall obtain prior authorization from Health Plan if Provider believes
a generic equivalent or formulary drug should not be dispensed. Provider
acknowledges the authority of Health Plan contracting pharmacists to substitute
generics for brand name pharmaceuticals unless counter indicated on the
prescription by the Provider.

    
Page 3 of 3    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

j.
Subcontract Arrangements. Any subcontract arrangement entered into by Provider
for the delivery of Covered Services to Members shall be in writing and shall
bind Provider’s subcontractors to the terms and conditions of this Agreement
including, but not limited to, terms relating to licensure, insurance, and
billing of Members for Covered Services.

k.
Availability of Services. Provider shall make necessary and appropriate
arrangements to assure the availability of Covered Services to Members on a
twenty-four (24) hours a day, seven (7) days a week basis, including arrangement
to assure coverage of Member patient visits after hours. Provider shall meet the
applicable standards for timely access to care and services, taking into account
the urgency of the need for the services.

l.
Treatment Alternatives. Health Plan encourages open Provider-Member
communication regarding appropriate treatment alternatives. Health Plan promotes
open discussion between Provider and Members regarding Medically Necessary or
appropriate patient care, regardless of Covered Services limitations. Provider
is free to communicate any and all treatment options to Members regardless of
benefit coverage limitations.

2.3
Promotional Activities. At the request of Health Plan, Provider shall (a)
display Health Plan promotional materials in its offices and facilities as
practical, and (b) shall cooperate with and participate in all reasonable Health
Plan's marketing efforts. Provider shall not use Health Plan’s name in any
advertising or promotional materials without the prior written permission of
Health Plan.

2.4    Nondiscrimination.
a.
Enrollment. Provider shall not differentiate or discriminate in providing
Covered Services to Members because of race, color, religion, national origin,
ancestry, age, sex, marital status, sexual orientation, physical, sensory or
mental handicap, socioeconomic status, or participation in publicly financed
programs of health care. Provider shall render Covered Services to Members in
the same location, in the same manner, in accordance with the same standards,
and within the same time availability regardless of payor.

    
Page 4 of 4    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

b.
Employment. Provider shall not differentiate or discriminate against any
employee or applicant for employment, with respect to their 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, sensory or mental
disability unrelated to the individual’s ability to perform the duties of the
particular job or position.

2.5
Recordkeeping.

a.
Maintaining Member Medical Records. Provider shall maintain a medical record for
each Member to whom Provider renders health care services. Provider shall open
each Member’s medical record upon the Member’s first encounter with Provider.
The Member’s medical record shall contain all information required by state and
federal law, generally accepted and prevailing professional practice, applicable
government sponsored health programs, and all Health Plan policies and
procedures. Provider shall retain all such records for at least ten (10) years.

b.
Confidentiality of Member Health Information. Provider shall comply with all
applicable state and federal laws, Health Plan’s policies and procedures,
government sponsored program requirements regarding privacy and confidentiality
of Members’ health information and medical records, including mental health
records. Provider shall not disclose or use Member names, addresses, social
security numbers, identities, other personal information, treatment modalities,
or medical records without obtaining appropriate authorization to do so. This
provision shall not affect or limit Provider’s obligation to make available
medical records, encounter data and information concerning Member care to Health
Plan, any authorized state or federal agency, or other Providers of health care
upon authorized referral.

c.
HIPAA. To the extent Provider is considered a covered entity under the Health
Insurance Portability and Accountability Act (“HIPAA”), Provider shall comply
with all provisions of HIPAA including, but not limited to, provisions
addressing privacy, security, and confidentiality.

    
Page 5 of 5    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

d.
National Provider Identification (“NPI”). In accordance with applicable statutes
and regulations of the Health Insurance Portability and Accountability Act
(HIPAA) of 1996, Provider shall comply with the Standard Unique Identifier for
Health Care Provider regulations promulgated under HIPAA (45 CFR Section
162.402, et seq.) and use only the NPI to identify HIPAA covered health care
providers in standard transactions. Provider shall obtain an NPI from the
National Plan and Provider Enumeration System (“NPPES”) for itself or for any
subpart of the Provider. Provider shall make best efforts to report its NPI and
any subparts to Health Plan. Provider shall report any changes in its NPI or
subparts to Health Plan within thirty (30) days of the change. Provider shall
use its NPI to identify itself on all claims and encounters (both electronic and
paper formats) submitted to Health Plan.

e.
Delivery of Patient Care Information. Provider shall promptly deliver to Health
Plan, upon request and/or as may be required by state or federal law, Health
Plan’s policies and procedures, applicable government sponsored health programs,
Health Plan’s contracts with the government agencies, or third party payers, any
information, statistical data, encounter data, or patient treatment information
pertaining to Members served by Provider, including but not limited to, any and
all information requested by Health Plan in conjunction with utilization review
and management, grievances, peer review, HEDIS Studies, Health Plan’s Quality
Improvement Program, or claims payment. Provider shall further provide direct
access at reasonable times to said patient care information as requested by
Health Plan and/or as required to any governmental agency or any appropriate
state and federal authority having jurisdiction over Health Plan. Health Plan
shall have the right to withhold compensation from Provider in the event that
Provider fails or refuses to promptly provide any such information to Health
Plan.

f.
Member Access to Health Information. Provider shall give Health Plan and Members
access to Members’ health information including, but not limited to, medical
records and billing records, in accordance with the requirements of state and
federal law, applicable government sponsored health programs, and Health Plan’s
policies and procedures.

2.6    Program Participation.

    
Page 6 of 6    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

a.
Participation in Grievance Program. Provider shall participate in Health Plan’s
Grievance Program and shall cooperate with Health Plan in identifying,
processing, and promptly resolving all Member complaints, grievances, or
inquiries.

b.
Participation in Quality Improvement Program. Provider shall participate in
Health Plan’s Quality Improvement Program and shall cooperate with Health Plan
in conducting peer review and audits of care rendered by Provider.

c.
Participation in Utilization Review and Management Program. Provider shall
participate in and comply with Health Plan’s Utilization Review and Management
Program, including all policies and procedures regarding prior authorizations,
and shall cooperate with Health Plan in audits to identify, confirm, and/or
assess utilization levels of Covered Services. If Provider is a medical group or
IPA, Provider shall accept delegation of utilization management responsibilities
from Health Plan at Health Plan’s request. If delegation of utilization
management responsibilities is revoked, Health Plan shall reduce any otherwise
applicable payments owing to Provider by the Utilization Payment Reduction
Amount specified in Attachment D.

d.
Participation in Credentialing. Provider shall participate in Health Plan’s
credentialing and re-credentialing process and shall satisfy, throughout the
term of this Agreement, all credentialing and re-credentialing criteria
established by the Health Plan. Provider shall immediately notify Health Plan of
any change in the information submitted or relied upon by Provider to achieve
credentialed status. If Provider’s credentialed status is revoked, suspended or
limited by Health Plan, Health Plan may at its discretion terminate this
Agreement and/or reassign Members to another provider. If Provider is a medical
group or IPA, Provider shall accept delegation of credentialing responsibilities
at Health Plan’s request and shall cooperate with Health Plan in establishing
and maintaining appropriate credentialing mechanisms within Provider’s
organization. If delegation of credentialing responsibilities to a group or IPA
is revoked, Health Plan shall reduce any otherwise applicable payments owing to
group or IPA by the Credentialing Reduction Amount specified in Attachment D.

    
Page 7 of 7    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

e.
Provider Manual. Provider shall comply and render Covered Services in accordance
with the contents, instructions and procedures set forth in Health Plan’s
Provider Manual, which may be amended from time to time. Health Plan’s Provider
Manual is incorporated in this Agreement by this reference.

f.
Health Education/Training. Provider shall participate in and cooperate with
Health Plan’s Provider education and training efforts as well as Member
education and efforts. Provider shall also comply with all Health Plan health
education, cultural and linguistic standards, policies, and procedures, and such
standards, policies, and procedures as may be necessary for Health Plan to
comply with its contracts with employers, the state, or federal government.
Provider shall ensure that Provider promptly delivers to Provider’s constituent
providers, if any, all informational, promotional, educational, or instructional
materials prepared by Health Plan regarding any aspect of providing Covered
Services to Members.

2.7
Licensure and Standing.

a.
Licensure. Provider warrants and represents that it is appropriately licensed to
render health care services within the scope of Provider’s practice, including
having and maintaining a current narcotics number, where appropriate, issued by
all proper authorities. Provider shall provide evidence of licensure to Health
Plan upon request. Provider shall maintain its licensure in good standing, free
of disciplinary action, and in unrestricted status throughout the term of this
Agreement. Provider shall immediately notify Health Plan of any change in
Provider’s licensure status, including any disciplinary action taken or proposed
by any licensing agency responsible for oversight of Provider.

b.
Unrestricted Status. Provider warrants and represents that it has not been
convicted of crimes as specified in Section 1128 of the Social Security Act (42
U.S.C. 1320a-7), excluded from participation in the Medicare or Medicaid
program, assessed a civil penalty under the provisions of Section 1128, entered
into a contractual relationship with an entity convicted of a crime specified in
Section 1128, or taken any other action that would prohibit it from
participation in Medicaid and/or state health care programs.

    
Page 8 of 8    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

c.
Malpractice and Other Actions. Provider shall give immediate notice to Health
Plan of: (a) any malpractice claim asserted against it by a Member, any payment
made by or on behalf of Provider in settlement or compromise of such a claim, or
any payment made by or on behalf of Provider pursuant to a judgment rendered
upon such a claim; (b) any criminal investigations or proceedings against
Provider; (c) any convictions of Provider for crimes involving moral turpitude
or felonies; and (d) any civil claim asserted against Provider that may
jeopardize Provider’s financial soundness.

d.
Staffing Privileges for Providers. Consistent with community standards, every
physician Provider shall have staff privileges with at least one Health Plan
contracted Hospital as necessary to provide services to members under this
Agreement, and shall authorize each hospital at which he/she maintains staff
privileges to notify Health Plan should any disciplinary or other action of any
kind be initiated against such provider which could result in any suspension,
reduction or modification of his/her hospital privileges.

e.
Liability Insurance. Provider shall maintain premises and professional liability
insurance in coverage amounts appropriate for the size and nature of Provider’s
facility and the nature of Provider’s health care activities. Every physician
Provider shall maintain, at a minimum, professional liability insurance with
limits of not less than one million dollars ($1,000,000) per occurrence and
three million dollars ($3,000,000) in the aggregate for the policy year and for
each physician comprising Provider. If the coverage is claims made or reporting,
Provider agrees to purchase similar “tail” coverage upon termination of the
Provider’s present or subsequent policy. Provider shall deliver copies of such
insurance policies to Health Plan within five business days of a written request
by Health Plan.

2.8
Claims Payment.

a.
Submitting Claims. If applicable, Provider shall promptly submit to Health Plan
claims for Covered Services rendered to Members. All claims shall be submitted
in a form acceptable to and approved by Health Plan, and shall include any and
all medical records pertaining to the claim if requested by Health Plan or
otherwise required by Health Plan’s policies and procedures. Except as otherwise
provided by law or provided by government sponsored

    
Page 9 of 9    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

program requirements, any claims that are not submitted by Provider to Health
Plan within ninety (90)‌‌ days of providing the Covered Services that are the
subject of the claim shall not be eligible for payment, and Provider hereby
waives any right to payment therefor.

b.
Compensation. When applicable, Health Plan shall pay Provider for Clean Claims
for Covered Services provided to Members, including Emergency Services, in
accordance with applicable law and regulations and in accordance with the
compensation schedule set forth in Attachment D. Provider shall accept such
payment, applicable co-payments, deductibles, and coordination of benefits
collections as payment in full for services provided under this Agreement.
Provider shall not balance bill Members for any Covered Services.

c.
Co-payments and Deductibles. Provider is responsible for collection of
co-payments and deductibles, if any.

d.
Coordination of Benefits. Health Plan is a secondary payer in any situation
where there is another payer as primary carrier. Provider shall make reasonable
inquiry of Members to learn whether Member has health insurance or health
benefits other than from Health Plan or is entitled to payment by a third party
under any other insurance or plan of any type, and Provider shall immediately
notify Health Plan of said entitlement. In the event that coordination of
benefits occurs, Provider shall be compensated in an amount equal to the
allowable Clean Claim less the amount paid by other health plans, insurance
carriers and payers, not to exceed the amount specified in Attachment D.

e.
Offset. In the event that Health Plan determines that a claim has been overpaid
or paid in duplicate, or that funds were paid which were not provided for under
this Agreement, Provider shall make repayment to Health Plan within thirty
(30)‌‌ working days of written notification by Health Plan of the overpayment,
duplicate payment, or other excess payment. In addition to any other contractual
or legal remedy, Health Plan may recover the amounts owed by way of offset or
recoupment from current or future amounts due Provider by giving Provider not
less than thirty (30)‌‌ working days notice in which to exercise Provider’s
appeal rights under this Agreement. As a material

    
Page 10 of 10    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

condition to Health Plan’s obligations under this Agreement, Provider agrees
that the offset and recoupment rights set forth herein shall be deemed to be and
to constitute rights of offset and recoupment authorized in state and federal
law or in equity to the maximum extent legally permissible, and that such rights
shall not be subject to any requirement of prior or other approval from any
court or other governmental authority that may now or hereafter have
jurisdiction over Health Plan and/or Provider.

f.
Claims Review and Audit. Provider acknowledges Health Plan’s right to review
Provider’s claims prior to payment for appropriateness in accordance with
industry standard billing rules, including, but not limited to, current UB
manual and editor, current CPT and HCPCS coding, CMS billing rules, CMS
bundling/unbundling rules, National Correct Coding Initiatives (NCCI) Edits, CMS
multiple procedure billing rules, and FDA definitions and determinations of
designated implantable devices and/or implantable orthopedic devices. Provider
acknowledges Health Plan’s right to conduct such review and audit on a
line-by-line basis or on such other basis as Health Plan deems appropriate, and
Health Plan’s right to exclude inappropriate line items to adjust payment and
reimburse Provider at the revised allowable level. Provider also acknowledges
Health Plan’s right to conduct utilization reviews to determine medical
necessity and to conduct post-payment billing audits. Provider shall cooperate
with Health Plan’s audits of claims and payments by providing access at
reasonable times to requested claims information, all supporting medical
records, Provider’s charging policies, and other related data. Health Plan shall
use established industry claims adjudication and/or clinical practices, state
and federal guidelines, and/or Health Plan’s policies and data to determine the
appropriateness of the billing, coding and payment.

g.
Payments which are the Responsibility of a Capitated Provider. Provider agrees
that if Provider is or becomes a party to a subcontract or other agreement with
another provider contracted with Health Plan; who receives capitation from
Health Plan and is responsible for arranging for Covered Services through
subcontract arrangements (“Capitated Provider”), Provider shall look solely to
the Capitated Provider, and not Health Plan, for payment of Covered Services
provided to Members that are covered by Health Plan’s agreements with such
Capitated Providers.

    
Page 11 of 11    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

2.9
Compliance with Applicable Law. Provider shall comply with all applicable state
and federal laws governing the delivery of Covered Services to Members
including, but not limited to, title VI of the Civil Rights Act of 1964; title
IX of the Education Amendments of 1972 (regarding education programs and
activities); the Age Discrimination Act of 1975; the Rehabilitation act of 1973;
the Balanced Budget Act of 1997; and the Americans with Disabilities Act:

a.
Provider acknowledges that this Agreement and all Covered Services rendered
pursuant to this Agreement are subject to state licensing statutes and
regulations set forth in Attachment E and all applicable sub-attachments to
Attachment E.

b.
Provider acknowledges that all Covered Services rendered in conjunction with the
state Medicaid program are subject to the additional provisions set forth in
Attachment F and all applicable sub-attachments to Attachment F, the effect of
which provisions is limited solely to activities and Covered Services related to
the state Medicaid program.

c.
Provider acknowledges that all Covered Services rendered in conjunction with the
Medicare program are subject to the Medicare provisions set forth in Attachment
H, the effect of which provisions is limited solely to activities and Covered
Services related to the Medicare program.

2.10
Provider Non-solicitation Obligations. Provider shall not unilaterally assign or
transfer patients served under this Agreement to another medical group, IPA, or
provider without the prior written approval of Health Plan. Nor shall Provider
solicit or encourage Members to select another health plan for the primary
purpose of securing financial gain for Provider. Nothing in this provision is
intended to limit Provider’s ability to fully inform Members of all available
health care treatment options or modalities.

2.11
Fraud and Abuse Reporting. Provider shall report to Health Plan’s compliance
officer all cases of suspected fraud and/or abuse, as defined in Title 42, of
the Code of Federal Regulations, Section 455.2, where there is reason to believe
that an incident of fraud and/or abuse has occurred, by subcontractors, Members,
providers, or employees within ten (10) state working days of the date when
Provider first becomes aware of, or is on notice of, such activity. Provider
shall

    
Page 12 of 12    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

establish policies and procedures for identifying, investigating, and taking
appropriate corrective action against fraud and/or abuse in the provision of
Health Care Services under the Medi-Cal program. Upon the request of Health Plan
and/or the State, Provider shall consult with the appropriate State agency prior
to and during the course of any such investigations.

2.12
Advance Directive. Provider shall document all patient records with respect to
the existence of an Advance Directive in compliance with the Patient
Self-Determination Act (Section 4751 of the Omnibus Reconciliation Act of 1990),
as amended, and other appropriate laws.

2.13
Reciprocity Agreements. Provider shall cooperate with Health Plan’s
Participating Providers and affiliates of Health Plan and agrees to provide
Covered Services to Members enrolled in various government sponsored health
programs and other health products, and various government sponsored health
programs and other health products of affiliates, and to assure reciprocity of
health care services. Without limiting the foregoing, if any Member receives
services or treatment constituting Covered Services from Provider and a
capitated Participating Provider is financially responsible for such services,
such Participating Provider shall be solely responsible for compensating
Provider for any Covered Services provided by the Provider in accordance with
the applicable Payments which are the Responsibility of a Capitated Provider
provisions of this Agreement. Payment by the Participating Provider shall be at;
(i) the rates agreed by the Participating Provider and Provider, or (ii) if
there is no applicable agreement, at the lesser of Provider’s billed charges or
an amount equivalent to one hundred percent (100%) of the governing rates
provided by applicable State and Federal Law specific to the Member's enrolled
benefit plan (i.e. Medicaid, Medicare, etc) in place at the time services are
rendered, or (iii) at the election of the Participating Provider, at the rates
set forth in this Agreement. Provider agrees that the applicable provisions of
the Compensation section of this Agreement shall continue to be binding upon
Provider, especially in that Provider shall not balance bill Members for any
Covered Services. Provider shall comply with the procedures established by
Health Plan or its affiliates and this Agreement for reimbursement of such
services or treatment. Provider shall not encourage Members to receive Covered
Services from non-Participating Providers. Breach of this section shall
constitute breach of a material term of the Agreement and will give rise to
cause for termination of this Agreement pursuant to the applicable Termination
with Cause provisions of this Agreement. Provider shall abide by all

    
Page 13 of 13    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

provisions of this Agreement relating to non-billing of Members with respect to
all services and treatment subject to this reciprocity arrangement.

2.14
Reassignment of Members. Health Plan reserves the right to reassign Members from
Provider to another provider or to limit or deny the assignment or selection of
new Members to Provider during any termination notice period or if Health Plan
determines that assignment to Provider poses a threat to the Members’ health and
safety. If Provider requests reassignment of a Member, Health Plan, in its sole
discretion, will make the determination regarding reassignment based upon good
cause shown by the Provider. When the Health Plan reassigns Member(s), Provider
shall forward copies of the Member’s medical records to the new provider within
ten (10) business days of receipt of the Plan’s or the Member’s request to
transfer the records.

2.15
Notification of Network Change. Where Provider constitutes specialists, is a
medical group, IPA, or any other similar entity/organization, Provider shall
provide Health Plan and Member with timely written notification in the event a
constituent specialty provider terminates its contract with Provider. Said
written notification shall be in compliance with all state and federal laws or
government sponsored program requirements.

ARTICLE THREE - HEALTH PLAN’S OBLIGATIONS
3.1
Compensation. Health Plan shall pay Provider in accordance with the terms and
conditions of this Agreement and the compensation schedule set forth in
Attachment D.

3.2
Member Eligibility Determination. Health Plan shall maintain data on Member
eligibility and enrollment. Health Plan shall promptly verify Member eligibility
at the request of Provider.

3.3
Prior Authorization Review. Health Plan shall timely respond to requests for
prior authorization and/or determination of Covered Services.

    
Page 14 of 14    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

3.4
Medical Necessity Determination. Health Plan’s determination with regard to
Medically Necessary services and scope of Covered Services, including
determinations of level of care and length of stay benefits available under the
Member’s health program shall govern. The primary concern with respect to all
medical determination shall be the interest of the Member.

3.5
Member Services. Health Plan will provide services to Members including, but not
limited to, assisting Members in selecting a primary care physician, processing
Member complaints and grievances, informing Members of the Health Plan’s
policies and procedures, providing Members with membership cards, providing
Members with information about Health Plan, and providing Members with access to
Health Plan’s Provider Directory, updated from time to time, identifying the
professional status, specialty, office address, and telephone number of Health
Plan contracted providers.

3.6
Provider Services. Health Plan will maintain a Provider Manual describing Health
Plan’s policies and procedures, Covered Services, limitations and exclusions,
and coordination of benefits information. Health Plan will maintain a Provider
Services Department available to educate Provider regarding Health Plan’s
policies and procedures.

3.7
Medical Director. Health Plan will employ a physician as medical director who
shall be responsible for the management of both the; (i) medical, and (ii)
medically-related scientific and technical, aspects of Health Plan.

 
ARTICLE FOUR - TERM AND TERMINATION
4.1
Term. This Agreement shall commence on the effective date indicated by Health
Plan on the signature page of this Agreement (“Effective Date”) and shall
continue in effect for one year; thereafter, it shall automatically renew for
successive one (1) year‌‌ terms unless and until terminated by either party in
accordance with the provisions of this Agreement or in accordance with
applicable provisions set forth in the attachments.

    
Page 15 of 15    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

4.2
Termination without Cause. This Agreement may be terminated without cause by
either party on at least one hundred and fifty (150)‌‌ days written notice to
the other party.

4.3
Termination with Cause. In the event of a breach of any material provision of
this Agreement, the party claiming the breach will give the other party written
notice of termination setting forth the facts underlying its claim(s) that the
other party has breached the Agreement. The party receiving the notice of
termination shall have thirty (30) days from the date of receipt of such notice
to remedy or cure the claimed breach to the satisfaction of the other party.
During this thirty (30) day period, the parties agree to meet as reasonably
necessary and to confer in good faith in an attempt to resolve the claimed
breach. If the party receiving the notice of termination has not remedied or
cured the breach within such thirty (30) day period, the party who provided the
notice of termination shall have the right to immediately terminate this
Agreement.

4.4
Immediate Termination. Notwithstanding any other provision of this Agreement,
Health Plan may immediately terminate this Agreement and transfer Member(s) to
another provider by giving notice to Provider in the event of any of the
following:

a.
Provider’s license or certificate to render health care services is limited,
suspended or revoked, or disciplinary proceedings are commenced against Provider
by the state licensing authority;

b.
Provider fails to maintain insurance required by this Agreement;

c.
Provider loses credentialed status;

d.
Provider becomes insolvent or files a petition to declare bankruptcy or for
reorganization under the bankruptcy laws of the United States, or a trustee in
bankruptcy or receiver for Provider is appointed by appropriate authority;

e.
If Provider is capitated and Health Plan determines Provider to be financially
incapable of bearing capitation or other applicable risk-sharing compensation

    
Page 16 of 16    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

methodology;

f.
Health Plan determines that Provider’s facility and/or equipment is insufficient
to render Covered Services to Members;

g.
Provider is excluded from participation in Medicare and state health care
programs pursuant to Section 1128 of the Social Security Act or otherwise
terminated as a provider by any state or federal health care program;

h.
Provider engages in fraud or deception, or knowingly permits fraud or deception
by another in connection with Provider’s obligations under this Agreement;

i.
Health Plan determines that health care services are not being properly
provided, or arranged for, and that such failure poses a threat to Members’
health and safety.

4.5
Notice to Members of Termination. In the event one of the parties to this
Agreement provides notification of termination of this Agreement, Health Plan
shall provide affected Members with timely written notification, of such
termination, prior to the effective date of specialist termination, as required
for compliance with any state and federal laws, government sponsored program
requirement, or accreditation requirement. Notification to affected members
shall comply with the notification requirements set forth in Health and Safety
Code section 1373.65(f).

ARTICLE FIVE - GENERAL PROVISIONS
5.1
Indemnification. Each party shall indemnify and hold harmless the other party
and its officers, directors, shareholders, employees, agents, and
representatives from any and all liabilities, losses, damages, claims, and
expenses of any kind, including costs and attorneys’ fees, which result from the
duties and obligations of the indemnifying party and/or its officers, directors,
shareholders, employees, agents, and representatives under this Agreement.

    
Page 17 of 17    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

5.2
Relationship of the Parties. Nothing contained in this Agreement is intended to
create, nor shall it be construed to create, any relationship between the
parties other than that of independent parties contracting with each other
solely for the purpose of effectuating the provisions of this Agreement. This
Agreement is not intended to create a relationship of agency, representation,
joint venture, or employment between the parties. Nothing herein contained shall
prevent any of the parties from entering into similar arrangements with other
parties. Each of the parties shall maintain separate and independent management
and shall be responsible for its own operations. Nothing contained in this
Agreement is intended to create, nor shall be construed to create, any right in
any third party, including but not limited to Health Plan’s Members. Nor shall
any third party have any right to enforce the terms of this Agreement.

5.3
Entire Agreement. This Agreement, together with Attachments and incorporated
documents or materials, contains the entire agreement between Health Plan and
Provider relating to the rights granted and obligations imposed by this
Agreement. The contract between the state and the Health Plan is incorporated
herein by reference and shall be the guiding and controlling document when
interpreting the terms of this Agreement. Any prior agreements, promises,
negotiations, or representations, either oral or written, relating to the
subject matter of this Agreement are of no force or effect.

5.4
Severability. If any term, provision, covenant, or condition of this Agreement
is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions shall remain in full force and effect
and shall in no way be affected, impaired, or invalidated as a result of such
decision.

5.5
Non-exclusivity. This Agreement shall not be construed to be an exclusive
Agreement between Health Plan and Provider. Nor shall it be deemed to be an
Agreement requiring Health Plan to refer Members to Provider for health care
services.

5.6
Amendment. Health Plan may, without Provider’s consent, amend this Agreement to
maintain consistency and/or compliance with any state or federal law, policy,
directive, or government sponsored program requirement upon forty-five (45)‌‌
business days’ notice to Provider unless a shorter timeframe is necessary for
compliance. Health Plan may otherwise materially amend this Agreement

    
Page 18 of 18    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

only after forty-five (45)‌‌ business days prior written notice to Provider and
only if mutually agreed to by the parties as evidenced by the amendment being
executed by each party hereto.

5.7
Assignment. Provider may not assign, transfer, subcontract or delegate, in whole
or in part, any rights, duties, or obligations under this Agreement without the
prior written consent of Health Plan. Subject to the foregoing, this Agreement
is binding upon, and inures to the benefit of the Health Plan and Provider and
their respective successors in interest and assigns. Neither the acquisition of
Health Plan nor a change of its legal name shall be deemed an assignment.

5.8
Arbitration. Any claim or controversy arising out of or in connection with this
Agreement shall be resolved, to the extent possible, within forty-five (45) days
through informal meetings and discussions held in good faith between appropriate
representatives of the parties. Any remaining claim or controversy shall be
settled by binding arbitration administered by the American Arbitration
Association (“AAA”) in accordance with its Commercial Arbitration Rules then in
effect by a single arbitrator in Los Angeles County; provided, however, that
binding arbitration shall not be utilized to adjudicate matters that primarily
involve review of Provider’s professional competence or professional conduct,
and shall not be available as a mechanism for appeal of any determinations made
as to such matters. If possible, the arbitrator shall be an attorney with at
least fifteen (15) years of experience, including at least five (5) years of
experience in managed health care. The parties shall conduct a mandatory
settlement conference at the initiation of arbitration, to be administered by
AAA. The arbitrator shall have no authority to provide a remedy or award damages
that would not be available to such prevailing party in a court of law, nor
shall the arbitrator have the authority to award punitive damages. Each party
shall bear its own costs and expenses, including its own attorneys’ fees, and
shall bear an equal share of the arbitrator’s and administrative fees of
arbitration. The parties agree to accept any decision by the arbitrator as a
final determination of the matter in dispute, and judgment on the award rendered
by the arbitrator may be entered in any court having jurisdiction. Arbitration
must be initiated within one year of the earlier of the date the claim or
controversy arose, was discovered, or should have been discovered with
reasonable diligence; otherwise it shall be deemed waived. The use of binding
arbitration shall not preclude a request for equitable and injunctive relief
made to a court of appropriate jurisdiction.

    
Page 19 of 19    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

5.9
Attachments. Each of the Attachments identified below is hereby made a part of
this Agreement:

Attachment A – Provider Identification Sheet
Attachment B – Definitions
Attachment C – Products/Programs
Attachment D – Compensation Schedule
Attachment E – Licensing Provisions
Attachment E-1 – Financial Solvency Provisions
Attachment E-2 – Provider Claims Processing Provisions
Attachment F – Medicaid Program Provisions
Attachment F-1 – Emergency Services Provisions
Attachment G – Acknowledgment of Receipt of Provider Manual
Attachment H – Medicare Program Provisions
Attachment I – Disclosure Form
Attachment J – Certificate of Ownership
Attachment K – Matrix of Financial Responsibility
Attachment L – Business Associate Addendum

5.10
Notice. All notices required or permitted by this Agreement shall be in writing
and may be delivered in person or may be sent by registered or certified mail or
U.S. Postal Service Express Mail, with postage prepaid, or by Federal Express or
other overnight courier that guarantees next day delivery, or by facsimile
transmission, and shall be deemed sufficiently given if served in the manner
specified in this Section. The addresses below shall be the particular party’s
address for delivery or mailing of notice purposes:

    If to Health Plan:
    Molina Healthcare of California‌‌
    200 Oceangate, Suite 100‌‌, Long Beach‌‌, California‌‌, 90802‌‌
    Attention: President/CEO

    If to Provider:
     Pacific Healthcare IPA Associates, Inc.

5000 Airport Plaza Drive, Suite 150,Long Beach, CA 90815
    Attention: Kathy Hegstrom

The parties may change the names and addresses noted above through written

    
Page 20 of 20    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

notice in compliance with this Section. Any notice sent by registered or
certified mail, return receipt requested, shall be deemed given on the date of
delivery shown on the receipt card, or if no delivery date is shown, the
postmark date. Notices delivered by U.S. Postal Service Express mail, Federal
Express or overnight courier that guarantees next day delivery shall be deemed
given twenty-four (24) hours after delivery of the notice to the United States
Postal Service, Federal Express or overnight courier. If any notice is
transmitted by facsimile transmission or similar means, the notice shall be
deemed served or delivered upon telephone confirmation of receipt of the
transmission, provided a copy is also delivered via delivery or mail.

 
*** THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK ***

    
Page 21 of 21    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

   
SIGNATURE AUTHORIZATION

IN WITNESS WHEREOF, the parties hereto have agreed to and executed this
Agreement by their officers thereunto duly authorized as of the Effective Date
set forth by Health Plan below. The individual signing below on behalf of
Provider acknowledges, warrants, and represents that said individual has the
authority and proper authorization to execute this Agreement on behalf of
Provider and its constituent providers, if any, and does so freely with the
intent to fully bind Provider, and its constituent providers, if any, to the
provisions of this Agreement.

Pacific Healthcare IPA      Molina Healthcare of California‌‌

Provider Signature:
/s/ Faustino Bernadett
Molina Signature:
/s/ Teri Lauenstein
Signatory Name (Printed):
Faustino Bernadett, M.D.
Signatory Name (Printed):
Teri Lauenstein‌‌
Signatory Title (Printed):
President
Signatory Title (Printed):
Vice President, Network Management & Operations‌‌
Signature Date:
3/12/2013
Signature Date:

3/28/13
 
 
Effective Date:

(To be completed by Health Plan)
 May 1, 2013 

    
Page 22 of 22    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

ATTACHMENT A
Provider Identification Sheet
Mark applicable category(ies) below. For those Providers representing multiple
health care professional(s) or entity(ies), please check all the categories that
apply.

Y
Group/IPA (a list of constituent members with their License No., UPIN and DEA
numbers is attached and incorporated herein)

Please enter “N/A” for the following if not applicable or not available:
Provider Name
Pacific Healthcare IPA
Billing Address: 5000 Airport Plaza Drive #150, Long Beach, CA 90815
Telephone No.
(562) 766-2000
Facsimile No.
( 562) 766-2008
Tax I.D. No. (TIN)
20-4396324
License No.
 
NPI
1265785323
Physical Address (if different than above): 5000 Airport Plaza Drive #150, Long
Beach, CA 90815
NPI Taxonomy
 
DEA No.
 
 
 

(Use continuation pages if multiple providers under common ownership will submit
bills under this Agreement)

I, the undersigned, am authorized to and do hereby verify the accuracy of the
foregoing Provider information.

/s/ Faustino Bernadett             
Provider Signature

Faustino Bernadett MD_______________‌‌
Signatory Name (Printed)

President __________________________‌‌
Signatory Title (Printed)

3/12/2013_____                
Signature Date

    
Page 23 of 23    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

ATTACHMENT B
Definitions

1.
Advance Directive is a Member’s written instructions, recognized under state
law, relating to the provision of health care when the Member is not competent
to make a health care decision as determined under state law. Examples of
Advance Directives are living wills and durable powers of attorney for health
care.

2.
Agreement means this Provider Services Agreement, all Attachments, and
incorporated documents or materials.

3.
Claim means an invoice for services rendered to a Member by Provider, submitted
in a format approved by Health Plan, and with all service and encounter
information required by Health Plan.

4.
Clean Claim means a claim for Covered Services that has no defect, impropriety,
lack of any required substantiating documentation, or particular circumstance
requiring special treatment that prevents timely payment from being made on the
claim.

5.
CMS means the Centers for Medicare and Medicaid Services, an administrative
agency of the United States Government, responsible for administering the
Medicare program.

6.
CMS Agreement means the Medicare Advantage contract between Health Plan and CMS.

7.
Covered Services means those health care services that are Medically Necessary,
are within the normal scope of practice and licensure of Provider, and are
benefits of the Health Plan product or a Health Plan affiliate’s product which
covers the Member.

    
Page 24 of 24    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

8.
Credentialing Payment Reduction Amount means that amount by which payments
otherwise owing to Provider are reduced in the event Provider is dedelegated
responsibility for credentialing.

9.
Emergency Services are Covered Services necessary to evaluate or stabilize a
medical or psychiatric condition manifesting itself by acute symptoms of
sufficient severity (including severe pain) so as to cause a prudent layperson,
who possesses an average knowledge of health and medicine, to reasonably expect
the absence of immediate medical attention to result in: (a) placement of the
Member’s health (or the health of the Member’s unborn child) in serious
jeopardy; (b) serious impairment to bodily functions; or (c) serious dysfunction
of any bodily organ or part. For Health Plan’s Medicaid / Medi-Cal members,
Emergency Services also includes any services defined as emergency services
under 42 C.F.R. §438.114.

10.
Grievance Program means the procedures established by Health Plan to timely
address Enrollee and Provider complaints or grievances.

11.
Health Plan means Molina Healthcare of California.

12.
HEDIS Studies means Health Employer Data and Information Set.

13.
IPA means Independent Practice Association.

14.
Medically Necessary means those medical services and supplies which are provided
in accordance with professionally recognized standards of practice which are
determined to be: (a) appropriate and necessary for the symptoms, diagnosis or
treatment of the Member’s medical condition; (b) provided for the diagnosis and
direct care and treatment of such condition; (c) not furnished primarily for the
convenience of the Member, the Member’s family, the treating provider, or other
provider; (d) furnished at the most appropriate level which can be provided
consistent

    
Page 25 of 25    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

with generally accepted medical standards of care; and (e) consistent with
Health Plan policy.

15.
Medicare means the Hospital Insurance Plan (Part A) and the Supplementary
Medical Insurance Plan (Part B) provided under Title XVIII of the Social
Security Act, as amended.

16.
Medicare Advantage means the managed care program established by the Medicare
Modernization Act of 2003 to serve Medicare-eligible beneficiaries. Medicare
Advantage plans generally cover Part A and Part B services and may also include
Part D Services.

17.
Medicare Advantage Special Needs Plan (MA-SNP) means the managed care program
established by the Medicare Modernization Act of 2003 which allows health plans
to create specialized plans for beneficiaries who are eligible for Medicare and
Medicaid.

18.
Member(s) means a person(s) enrolled in one of Health Plan’s benefit products or
a Health Plan affiliate’s benefit product and who is eligible to received
Covered Services.

19.
Provider means the person(s) and/or entity identified in Attachment A to this
Agreement. Where Provider is a Group/IPA or Hospital, Provider means and
includes all constituent physicians, allied health professionals and staff
persons who provide health care services to Members by and/or through the
Group/IPA or Hospital. All of said persons are bound by the terms of this
Agreement.

20.
Provider Manual means the compilation of Health Plan policies, procedures,
standards and specimen documents, as may be unilaterally amended or modified
from time to time by Health Plan or mutually amended or modified from time to
time by the parties, that have been compiled by Health Plan for the use and
instruction of Provider, and to which Provider must adhere.

    
Page 26 of 26    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

21.
Quality Improvement Program means the policies, procedures and systems developed
by Health Plan for monitoring, assessing and improving the accessibility,
quality and continuity of care provided to Members.

22.
Utilization Review and Management Program means the policies, procedures and
systems developed by Health Plan for monitoring the utilization of Covered
Services by Members, including but not limited to under-utilization and
over-utilization.

23.
Utilization Management Reduction Amount means that amount by which payments
otherwise owing to Provider are reduced in the event that Provider is
de-delegated responsibility for utilization management.

    
Page 27 of 27    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

ATTACHMENT C
Products/Programs

Provider hereby elects to participate as a panel provider for each of the
following Health Plan products as offered and applicable.

N    Medi-Cal Geographic Managed Care

N    Medi-Cal Two-Plan Model

‌‌ Y    MA-SNP (Molina Medicare Options Plus)

Y
CFAD (Medicare Capitated Financial Alignment Demonstration and successor(s))

N    Molina Health Benefit Exchange Product

N    Other Products - Provider agrees that Health Plan may from time to time add
additional products for which provider agrees to participate as a contracted
provider

Health Plan shall maintain any applicable benefit and Covered Services
descriptions in its Provider Manual.

ATTACHMENT D
Compensation Schedule

    
Page 28 of 28    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

Health Plan shall pay Provider in accordance with the terms and conditions of
this Agreement and the reimbursement terms set forth in this Attachment and any
applicable sub-attachments referenced hereto and incorporated herein.

ARTICLE ONE – COMPENSATION TERMS
6.1
Definitions. The following terms shall have the meanings attributed below for
purposes of this attachment. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Agreement.

a.
Capitation Payments are the monthly payments made to Provider on a prepaid basis
for Covered Services provided or arranged by Provider under this Agreement.
Capitation Payments to Provider shall be made to the Provider by the fifteenth
(15th)‌‌ day of each month. In the event the fifteenth (15th)‌‌ day of the month
is not a business day, the Capitation Payment shall be due and payable on the
next business day following the fifteenth (15th)‌‌ day of the month.

b.
Medicare Program Members are the Members enrolled in the following Medicare
program(s) as specified in Attachment C and checked below:

    Y‌‌ MA-SNP (Molina Medicare Options Plus))
    Y CFAD (Capitated Financial Alignment Demonstration and successor(s)

c.
Medicare Program Revenue is the Part A and B Monthly CMS Payment that Health
Plan receives from CMS for Medicare Program Members assigned to Provider.

6.2
Capitation Payment Terms.

a.
Matrix of Financial Responsibility. For each Health Plan program or set of
programs (ie. Medicaid Programs, Medicare Programs, etc) that Provider is
reimbursed on a Capitation Payment basis, there is an attached Matrix of
Financial Responsibility at Attachment K specifying the financial responsibility
for Covered Services between Health Plan and Provider.

b.
Capitation Payments for Medicare Program Members assigned to Provider shall be
made based upon a per Member per month capitation rate.

    
Page 29 of 29    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

For Medicare Program Members, Health Plan shall pay provider at thirty-eight
percent (38%) of the Medicare Program Revenue per Medicare Program Member per
month. Health Plan may amend this Agreement, in accordance with the applicable
Amendment section of this Agreement, to modify these Capitation Payments in
order to account for any revenue reduction in the applicable
government-sponsored program(s) and benefits, if any.

c.
Collection of Copayments. Provider shall be responsible for the collection of
copayments and deductibles (if any) upon rendering Covered Services to Members.
Any copayments or deductibles which are stated as a percentage shall be
calculated utilizing the fee-for-service rates set forth in the "Non-Capitated
Services Submission of Claims/Claims Payment" provisions in this Attachment,
applicable to Member’s Health Plan program, for such Covered Services. Provider
shall not refuse to provide Covered Services in the event a Member is unable to
pay their copayment or deductible except as may be specifically permitted in the
Provider Manual or as approved in advance by Health Plan.

d.
Coordination of Benefits for Capitated Providers. Notwithstanding any other
provisions of this Agreement, if Provider is reimbursed on a capitated basis and
a coordination of benefits occurs, Provider shall not be eligible for additional
compensation from Health Plan beyond the applicable Capitation Payments or
Non-Capitated Services Submission of Claims/Claims Payments.

e.
Retroactive Adjustments. Capitation Payments shall be subject to retroactive
adjustments due to retroactive changes in the following; (i) for those programs
based on a percent of premium capitation payment method, the amounts related to
such premium adjustments for each program as demographic (ie. age, gender,
hospice, ESRD, part A/B coverage, institutionalized, working aged, Medicaid,
etc) and/or risk adjustments (ie. CMS Hierarchical Condition Category “HCC”
adjustments), if any, which Health Plan receives in government funding sources
for each Member assigned to Provider, and/or (ii) for all capitation payment
methods, whether on a per Member per month or percent of premium basis, the
retroactive changes in the number of Members assigned to Provider for each
program.

    
Page 30 of 30    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

f.
Character of Payments. Capitation Payments to Provider pursuant to this
Agreement are for the primary purpose of compensating Provider for the value of
Covered Services provided pursuant to this Agreement. Provider shall assure that
claims and compensation for Covered Services provided or arranged pursuant to
this Agreement are paid from the Capitation Payments from Health Plan to
Provider as may be necessary for Provider to satisfy its financial obligations
under this Agreement. Health Plan shall have the right, but not the obligation,
to pay claims which Provider fails to pay for Covered Services provided to
Members. Provider specifically agrees that Health Plan may recover such owed
amounts by way of offset or recoupment in accordance with the Offset provisions
of this Agreement.

g.
Legislation Regulating Provider Risk. Provider recognizes that the compensation
terms set forth in this Attachment are established in exchange for Provider’s
provision of Covered Services that are the financial responsibility of Provider,
as outlined in the applicable Matrix of Financial Responsibility. In the event
that any state or federal law, policy, directive, or government sponsored
program requirement requires Health Plan to assume financial risk for certain
Covered Services previously assigned to Provider, Health Plan may, without
Provider’s consent, amend this Agreement to comply. Health Plan will provide
Provider with forty-five (45) business days’ notice of the change unless a
shorter timeframe is necessary for compliance.

Health Plan will present Provider with its actuarial valuation of the services
that will no longer be the financial risk of Provider. Provider will have the
opportunity to either present Health Plan with its expense data or an
independent actuarial valuation of the same services. If Provider chooses to
retain an independent actuary at its expense, the selection of the actuary must
be mutually agreeable to both parties. If the independent actuary’s findings
indicate that the value of the services is less than Health Plan’s valuation and
if Health Plan and Provider reach mutual agreement on a lower valuation, then an
adjustment corresponding to the mutually agreed upon valuation shall be made to
the Health Plan’s compensation as of the effective date of Health Plan’s
implementation of the legislation. The negotiated rate will be documented via an
amendment of the Agreement by the parties.

h.
Non-Capitated Services Submission of Claims/Claims Payment. For Clean Claims for
Covered Services rendered to Members which are provided

    
Page 31 of 31    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

or arranged by Provider, but are (i) Health Plan’s financial responsibility
under the applicable Matrix of Financial Responsibility, and (ii) are not
covered by Capitation Payments (collectively the “Non-Capitated Services”),
Provider shall obtain the prior authorization of Health Plan in accordance with
Health Plan’s Provider Manual unless the situation is one involving the delivery
of Emergency Services. Health Plan shall then reimburse Provider for such
Non-Capitated Services on a fee-for-service basis in accordance with the
applicable Claims Payment provisions of this Agreement, at the lesser of; (i)
Provider’s billed charges, or (ii) the applicable fee-for-service rates set
forth below less any applicable Member co-payments, deductibles, co-insurance,
or amounts paid or to be paid by other liable third parties, if any:

(1)
Non-Capitated Services Payment Rate for Medicare Program Members. An amount
equivalent to one hundred‌‌ percent (100‌‌%) of the payment Provider would
otherwise have been entitled to had the Covered Services been billed directly
under the prevailing local and geographically adjusted Medicare Fee-For-Service
program payment rates as of the date(s) of service.

If there is no payment rate in the prevailing local and geographically adjusted
Medicare Fee-For-Service program as of the date(s) of service, payment shall be
at thirty‌‌ percent (30‌‌%) of Provider’s billed charges.

(2)
Non-Capitated Services Payment Rate for all other Members not otherwise
designated above. An amount equivalent to sixty-five percent‌‌ percent (65‌‌%)
of the payment Provider would otherwise have been entitled to had the Covered
Services been billed directly under the prevailing local and geographically
adjusted Medicare Fee-For-Service program payment rates as of the date(s) of
service.

If there is no payment rate in the prevailing local and geographically adjusted
Medicare Fee-For-Service program as of the date(s) of service, payment shall be
at thirty‌‌ percent (30‌‌%) of Provider’s billed charges.

i.
Adequacy of Compensation. Provider shall accept payments as provided herein,
along with any applicable co-payments, deductibles, and coordination of benefits
collections as payment in full for providing or arranging Covered Services under
this Agreement. Provider shall not balance bill Members for

    
Page 32 of 32    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

any Covered Services.

ARTICLE TWO – REVOCATION OF DELEGATED RESPONSIBILITIES
7.1
Revocation of Delegated Responsibilities. If applicable, Health Plan shall
reduce any otherwise applicable payments owing to Provider by the amounts
specified below in the event delegation of the responsibilities set forth in the
applicable Program Participation sections in this Agreement are revoked.

a.
Utilization Management Payment Reduction Amount. If delegation of utilization
management responsibilities is revoked, Health Plan shall reduce any otherwise
applicable payments owing to Provider by sixty-five cents‌‌ ($0.65‌‌) per Member
per month.

b.
Credentialing Payment Reduction Amount. If delegation of credentialing
responsibilities is revoked, Health Plan shall reduce any otherwise applicable
payments owing to Provider by sixty-five cents‌‌ ($0.65‌‌) per Member per month.

ATTACHMENT E
REQUIRED PROVISIONS
(Health Care Service Plans)

The following provisions are required by (i) federal statutes and regulations
applicable to Health Plan, or (ii) state statutes and regulations applicable to
health care service plans. Any purported modifications to these provisions
inconsistent with such statutes, regulations, and agreements shall be null and
void.

DMHC Provisions

1.
In the event that Health Plan fails to pay Provider for Covered Services, the
Member or subscriber shall not be liable to Provider for any sums owed by Health
Plan.

    
Page 33 of 33    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

Provider shall not collect or attempt to collect from a Member or subscriber any
sums owed to Provider by the Health Plan. Provider may not and will not maintain
any action at law against a Member or subscriber to collect sums owed to the
Provider by Health Plan. (Health and Safety Code section 1379)

2.
To the extent that any of Health Plan’s quality of care review functions or
systems are administered by Provider, Provider shall deliver to Health Plan any
information requested in order to monitor or require compliance with Health
Plan’s quality of care review system. (Rule 1300.51, J-5)

3.
Provider is responsible for coordinating the provision of Health Care Services
to Members who select Provider if Provider is a primary care physician. (Rule
1300.67.1(a))

4.
Provider shall maintain Member medical records in a readily available manner
that permits sharing within Health Plan of all pertinent information relating to
the health care of Members. (Rule 1300.67.1(c))

5.
Provider shall maintain reasonable hours of operation and make reasonable
provisions for after-hour services. (Rule 1300.67.2(b))

6.
To the extent Provider has any role in rendering Emergency Services, Provider
shall make such Emergency Services available and accessible twenty-four (24)
hours a day, seven days a week. (Rule 1300.67.2(c))

7.
Provider shall participate in Plan’s system for monitoring and evaluating
accessibility of care including but not limited to waiting times and appointment
availability, and addressing problems that may develop. Provider shall timely
notify Health Plan of any changes to address or inability to maintain Health
Plan’s access standards. (Rule 1300.67(f))

    
Page 34 of 34    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

8.
Health Plan is subject to the requirements of the Knox-Keene Health Care Service
Plan Act of 1975, as amended (Chapter 2.2 of Division 2 of the Health and Safety
Code), and the Regulations promulgated hereunder (subchapter 5.5 of Chapter 3 of
Title 28 of the California Code of Regulations). Any provision of the
aforementioned statutes or regulation that is required to be in this Agreement
shall bind the Health Plan whether or not expressly set forth in this Agreement.
(Rule 1300.67.4(a)(9))

9.
Upon the termination of this Agreement, Health Plan shall be liable for Covered
Services rendered by Provider (other than for copayments as defined in
subdivision (g) of Section 1345 of the Health and Safety Code) to a subscriber
or Member who retains eligibility under the applicable plan contract or by
operation of law under the care of Provider at the time of termination of the
Agreement until the services being rendered to the subscriber or Member by
Provider are completed, unless the Health Plan makes reasonable and medically
appropriate provision for the assumption of services by a contracting provider.
(Health and Safety Code section 1373.96) (Rule 1300.67.4(a)(10))

10.
Any written communications to Members that concern a termination of this
agreement shall comply with the notification requirements set forth in Health
and Safety Code section 1373.65(f)

11.
Provider shall maintain all records and provide all information to the Health
Plan or the DMHC as may be necessary for compliance by the Health Plan with the
provisions of the Knox-Keene Health Care Service Plan Act of 1975, as amended
and any regulations promulgated thereunder. To the extent feasible, all such
records shall be located in this state. Provider shall retain such records for
at least two years: this obligation shall not terminate upon termination of the
Agreement, whether by rescission or otherwise. (Health and Safety Code section
1381) (Rule 1300.67.8(b))

12.
Provider shall afford Health Plan and the DMHC access at reasonable times upon
demand to the books, records and papers of Provider relating to health services
provided to Members and subscribers, to the cost thereof, to payments received
by Provider from Members and subscribers of the Health Plan (or from others on
their behalf), and, unless Provider is compensated on a fee-for-services basis,
to the

    
Page 35 of 35    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

financial condition of Provider. Provider shall promptly deliver to Health Plan,
any financial information requested by Health Plan for the purpose of
determining Provider’s ability to bear capitation or other applicable forms of
risk sharing compensation. (Rule 1300.67.8(c))

13.
Provider shall not and is hereby prohibited from demanding surcharges from
Members for Covered Services. Should Health Plan receive notice of any such
surcharges by Provider, Health Plan may take any action it deems appropriate
including but not limited to demanding repayment by Provider to Members of any
surcharges, terminating this Agreement, repaying surcharges to Members and
offsetting the cost of the same against any amounts otherwise owing to Provider.
(Rule 1300.67.8(d))

14.
Upon Health Plan’s request, provider shall report all co-payments paid by
Members to provider. (Health and Safety Code section 1385)

15.
To the extent that any of Health Plan’s quality assurance functions are
delegated to Provider, Provider shall promptly deliver to Health Plan all
information requested for the purpose of monitoring and evaluating Provider’s
performance of those quality assurance functions. (Rule 1300.70)

16.
Provider may utilize Health Plan’s Provider Dispute Resolution Process by
phoning or writing the Provider Services Department, Molina Medical Centers,
Third Floor, One Golden Shore Drive, Long Beach, CA 90802 (800) 526-8196, ext.
1249. The Provider Dispute Resolution Process, however, does not and cannot
serve as an appeal process from any fair hearing proceeding held pursuant to
Health and Safety Code Section 809, et. seq. Please see the Provider Manual for
more information regarding the dispute resolution process. (Health and Safety
Code Section 1367(h).) (Rule 1300.71.38)

17.
Provider shall display in each reception and waiting area a notice informing
Members how to contact their health plan, file a complaint with their plan,
obtain assistance from the DMHC, and seek an independent medical review. (Rule
1300.67.8(f))

    
Page 36 of 36    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

18.
Provider shall provide grievance forms and assist Members in filing grievances.
Provider shall cooperate with Health Plan in responding to Member grievances and
requests for independent medical reviews. (Rule 1300.68(b))

19.
In the event a Member seeks and obtains a recovery from a third party or a third
party’s insurer for injuries caused to that Member, and only to the extent
permitted by the Member’s evidence of coverage and by California law, Provider
may have the right to assert a third party lien for and to recover from the
Member the reasonable value of Covered Services provided to the Member by
Provider for the injuries caused by the third party. Health Plan shall similarly
have the right to assert a lien for and recover for payments made by Health Plan
for such injuries. Provider shall cooperate with Health Plan in identifying such
third party liability claims and in providing such information. Pursuit and
recovery of under third party liens shall be conducted in accordance with
California Civil Code section 3040.

20.
The Provider Manual may be unilaterally amended or modified by Health Plan to
maintain consistency and/or compliance with any state or federal law, policy,
directive, or government sponsored program requirement upon forty-five (45)
business days’ notice to Provider unless a shorter timeframe is necessary for
compliance. Health Plan may otherwise materially amend the Provider Manual only
after forty-five (45) business days prior written notice to Provider and only if
mutually agreed to by the parties as evidenced by the amendment being executed
by each party.

21.
Notwithstanding any other provision in this Agreement, if Health Plan or Health
Plan’s capitated provider is not the primary payer under coordination of
benefits, Provider may submit claims to Health Plan or Health Plan’s capitated
provider within ninety (90) days from the date of payment or date of contest,
denial or notice from the primary payer. Except as otherwise provided by law or
provided by government sponsored program requirements, any claims that are not
submitted by Provider to Health Plan within ninety (90) days from the date of
payment or date of contest, denial or notice from the primary payer shall not be
eligible for payment, and Provider hereby waives any right to payment therefore.

    
Page 37 of 37    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

22.
Notwithstanding any other provision in this Agreement, if Health Plan or Health
Plan’s capitated provider denies a claim because it was filed beyond the claim
filing deadline, Health Plan will, upon Provider’s submission of a provider
dispute pursuant to Title 28, California Code of Regulations, section 1300.71.38
and the demonstration of good cause for the delay, accept, and adjudicate the
claim according to California Health & Safety Code section 1371 or 1371.35,
whichever is applicable, and the California Code of Regulations.

    
Page 38 of 38    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

ATTACHMENT E-1
DMHC Financial Solvency Provisions

This Attachment is required to comply with the financial standards and reporting
requirements Rules 1300.75.4 through 1300.75.4.8. References to the term “Rule”
identify regulatory citations in Title 28 of the California Code of Regulations.

NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties agree as follows:

I. DEFINITIONS

1.1
“Cash-to-Claims Ratio” is Provider’s cash, readily available marketable
securities and receivables, excluding all risk pool, risk-sharing, incentive
payment program and pay-for-performance receivables, reasonably anticipated to
be collected within sixty (60) days divided by Provider’s unpaid claims
liability. Unpaid claims liability is claims payable plus incurred but not
reported claims (“IBNR”).

1.2
“Contracted Plans” means all full-service health care service plans as defined
in Section 1345(f) of the California Health & Safety Code with which Provider
has contracts involving a Risk Arrangement.

1.3
“Corrective Action Plan" (“CAP”) means a plan reflected in a document containing
requirements for correcting and monitoring Provider's efforts to correct any
financial solvency deficiencies in the Grading Criteria, financial deficiencies
or other claims payment deficiencies, determined through the DMHC’s review or
audit process, indicating that Provider may lack the capacity to meets its
contractual obligations consistent with the requirements of Rule
1300.70(b)(2)(H)(1).

    
Page 39 of 39    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

1.4
“DMHC” means the California Department of Managed Health Care. Whenever the
Solvency Regulations reference the Department, that reference includes the DMHC
or its External Party.

1.5
“External Party” means the DMHC or its designated agent, which may be contracted
or appointed to fulfill the functions stated in these Solvency Regulations.

1.6
“Grading Criteria” means the four grading/reviewing criteria specified in Health
and Safety Code sections 1375.4(b)(1)(A)(i), (ii), (iii), and (iv) and the
Cash-to-Claims Ratio as defined above.

1.7
“Risk Arrangement” is defined to include both "risk-sharing arrangement" and
"risk-shifting arrangement," which are defined as follows:

(a)
Risk-Sharing Arrangement means any compensation arrangement between Provider and
Health Plan under which Provider shares the risk of financial gain or loss with
Health Plan.

(b)
Risk-Shifting Arrangement means a contractual arrangement between Provider and
Health Plan under which Health Plan pays Provider on a fixed, periodic or
capitated basis, and the financial risk for the cost of services provided
pursuant to the contractual arrangement is assumed by Provider.

1.8
"Solvency Regulations" means Rules 1300.75.4 through 1300.75.4.8 .

II. OBLIGATIONS OF HEALTH PLAN

    
Page 40 of 40    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

2.1
Monthly Membership Reports. Notwithstanding any different provisions of the
Agreement, Health Plan will provide the following information to Provider on a
monthly basis for members assigned to Provider, within ten (10) calendar days
following the start of each month:

(a)
Membership information containing at least the following elements for each
member: i) identification number; ii) name; iii) birth date; iv) gender; v)
address (including zip code); vi) benefit plan selected; vii) employer group
identification (name and number); viii) identity of other third party coverage
(if known); ix) dates of enrollment/disenrollment from Provider; x) Provider
number; xi) primary care physician selected; xii) primary care physician
effective date; xiii) type of change to coverage; xiv) co-payment amounts; xv)
deductible (if applicable); xvi) amount of monthly capitation payment.

(b)
The following additional information: i) member additions and terminations for
the month (including at least: member name, member identification number); ii)
number of additional members under each managed care plan; iii) number of
terminated members under each managed care plan.

(c)
Health Plan shall submit the information from Section 2.1(a) and 2.1(b) to
Provider electronically, unless both Health Plan and Provider agree in writing
that hard copy reports will be submitted instead.

(d)
If the information from Section 2.1(a) and 2.1(b) above is provided to Provider
in more than one report, all reports shall be processed by Health Plan on the
same date.

(e)
Within forty-five (45) calendar days of the close of each calendar quarter,
Health Plan shall disclose to Provider a reconciliation of any variances between
the reports for information listed in sections 2.1(a) and 2.1(b) above through
electronic transmission, or in hard copy if mutually agreed upon by Provider and
Health Plan.

    
Page 41 of 41    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

2.2
Intentionally Left Blank.

2.3
Intentionally Left Blank.

2.4
Annual Financial Risk Disclosure. On the Agreement anniversary date each year,
Health Plan shall disclose to Provider the financial risk assumed under the
Agreement by providing to Provider the following information for each and every
type of Risk Arrangement (including, but not limited to, Medicare Advantage,
Medi-Cal, commercial, point of service, small group, and individual plans)
covered under the Agreement:

(a)
A matrix of responsibility for medical expenses (physician, institutional,
ancillary, and pharmacy) which will be allocated to Provider, a hospital(s) or
Health Plan under the Risk Arrangement.

(b)
Expected/projected utilization rates and unit costs for each major expense
service group (inpatient, outpatient, primary care physician, specialist,
pharmacy, injectables, home health, durable medical equipment, ambulance and
other), as well as the source of the data and the actuarial methods employed in
determining the utilization rates and unit costs by each and every type of Risk
Arrangement.

2.5
Annual Disclosure of Capitation Payments. On the Agreement anniversary date each
year, Health Plan shall disclose to Provider the amount of capitation payments
to be paid per member per month.

2.6
Capitation Deduction Detail. Health Plan shall provide to Provider sufficient
details to allow Provider to verify the accuracy and appropriateness of any
deductions from capitation payments made by Health Plan including, but not

    
Page 42 of 42    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

limited to, member name, member number, member date-of-birth, billing provider
name, date-of-service, procedure/service codes billed, and amount paid.
 
III. OBLIGATIONS OF MEDICAL GROUP

3.1
Cash-to-Claims Ratio. Provider shall maintain at least the following
Cash-to-Claims Ratio:

(a)
0.60 – January 1, 2006 through June 30, 2006

(b)
0.65 – July 1, 2006 through December 31, 2006

(c)
0.75 – January 1, 2007 and thereafter

3.2
Quarterly Financial Survey. No later than forty-five (45) calendar days
following the close of each quarter of its fiscal year beginning on or after
July 1, 2005, Provider agrees to submit a quarterly financial survey report in
an electronic format to the DMHC as required by Rule 1300.41.8 of Title 28 of
the California Code of Regulations as set forth below:

(a)
The quarterly financial survey report shall include the following if Provider
has at least 10,000 covered lives under all Risk Arrangements as of December 31
of the preceding calendar year:

(i)
A Financial survey report, (including a balance sheet, an income statement and a
statement of cash flows), or comparable financial statements if Provider is a
nonprofit entity, and supporting schedule information (including, but not
limited to, aging of receivable information), reflecting the results of
operations for the immediately preceding quarter, prepared in accordance with
Generally Accepted Accounting Principles ("GAAP"). Financial survey reports must
be on a combining basis with an affiliate, if Provider or such Provider
affiliate is legally or financially responsible for payment of Provider’s
claims. Any affiliated entity included in this

    
Page 43 of 43    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

financial survey report must be separately identified in a combining schedule
format. For the purposes of this section, Provider’s use: (1) of a “sponsoring
organization” arrangement to reduce its liabilities for the purposes of
calculating tangible net equity and working capital or (2) an affiliated entity
to provide claims processing services shall not be construed to automatically
create a legal or financial obligation to pay Provider’s claims liability.

(ii)
A claims report, which includes the percentage of claims that have been timely
reimbursed, contested or denied during the quarter by Provider in accordance
with the requirements of sections 1371 and 1371.35 of the California Health &
Safety Code, Rule 1300.71, and any other applicable state and federal laws and
regulations. If less than ninety-five percent (95%) of all complete claims have
been reimbursed, contested or denied on a timely basis, the claims report must
also describe the reasons why Provider’s claims adjudication process is not
meeting the requirements of applicable law, any actions taken to correct the
deficiency, and any results of the actions. This claims report is for the
purpose of monitoring the financial solvency of Provider and is not intended to
change or alter existing state and federal laws and regulations relating to
claims payment settlement practices and timeliness.

(iii)
A statement as to whether or not Provider has estimated and documented, on a
monthly basis, its liability for (“IBNR”) claims in accordance with Rule
1300.77.2 ("IBNR Statement") and that these estimates are the basis for the
quarterly financial survey report submitted to the DMHC. If the estimated and
documented liability is not in compliance with Rule 1300.77.2 in any way, the
IBNR Statement shall describe in detail for each deficiency the nature of the
deficiency, the reasons for the deficiency, any actions taken to correct the
deficiency, and any results of those actions. Provider’s failure to: (1)
estimate and document, on a monthly basis, its liability for IBNR claims or (2)
maintain its books and records on an accrual accounting basis shall result in
Provider’s failure to maintain, at all times, positive tangible net equity
(“TNE”) and positive working capital as set forth in section 3.2(a)(iv) below.

    
Page 44 of 44    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

(iv)
A statement as to whether or not Provider has maintained at all times throughout
the quarter (1) a positive TNE as defined in Rule 1300.76(e) and (2) a positive
level of working capital, calculated according to GAAP (“TNE/Working Capital
Statement”). If either the required TNE or the required working capital has not
been maintained at all times, a statement must be included in the quarterly
financial survey report that describes in detail the nature of the deficiency,
the reasons for the deficiency, any actions taken to correct the deficiency, and
any results of those actions. Provider may reduce its liabilities or increase
its cash for purposes of calculating its TNE, working capital and Cash-to-Claim
Ratio in a manner allowed by Health and Safety Code Section 1375.4(b)(1)(B) so
long as the sponsoring organization has filed with the DMHC: (1) its audited
annual financial statements within one hundred twenty (120) calendar days of the
end of the sponsoring organization’s fiscal year and (2) a copy of the written
guarantee meeting the requirements of Health and Safety Code Rule
1375.4(b)(1)(B). For purposes of the Health and Safety Code Rule
1375.4(b)(1)(B), a sponsoring organization shall have a TNE of at least twice
the total of all amounts that it has guaranteed to all persons and entities, or
TNE in a lesser amount approved by the DMHC, in situations where Provider can
demonstrate to the DMHC’s satisfaction that a lesser amount of TNE is
sufficient. If Provider has a sponsoring organization, Provider shall provide a
statement demonstrating the capacity of the sponsoring organization to guarantee
Provider’s debts as well as the nature and scope of the guarantee provided
consistent with Health and Safety Code Section 1375.4(b)(1)(B).

(v)
For the quarter beginning on or after January 1, 2006, a statement as to whether
or not Provider has, at all times during the quarter, maintained a
Cash-to-Claims Ratio as required in section 3.1 above, calculated in a manner
consistent with GAAP. If the required Cash-to-Claims Ratio has not been
maintained at all times, a statement shall be included in the quarterly
financial survey report that describes in detail the nature of the deficiency,
the reasons for the deficiency, any action taken to correct the deficiency, and
any results of that action.

    

    
Page 45 of 45    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

(b)
The quarterly financial survey report shall include the following if Provider
has fewer than 10,000 covered lives under all Risk Arrangements as of December
31 of the preceding calendar year:

(i)
The disclosure statements set forth in sections 3.2(a)(ii),(iii), (iv) and (v)
above.

(ii)
In the event Provider serves fewer than 10,000 covered lives under all Risk
Arrangements and it: (i) fails to satisfactorily demonstrate its compliance with
the Grading Criteria; (ii) experiences an event that materially alters its
ability to remain compliant with the Grading Criteria; (iii) is found, by the
DMHC’s (or the DMHC’s designee’s) review or audit activities, to potentially
lack sufficient financial capacity to continue to accept financial risk for the
delivery of health care services consistent with the requirements of Rule
1300.70(b)(2)(H)(1); or (iv) is found, through the DMHC’s HMO Help Center,
medical audits and surveys, or any other source, to be delaying referrals,
authorizations, or access to basic health care services based on financial
considerations, Provider shall, within thirty (30) calendar days of the DMHC’s
written request, begin submitting all quarterly financial survey reports set
forth in sections 3.2(a) above.

3.3
Annual Financial Survey. Provider agrees to submit to the DMHC on a yearly
basis, not more than one hundred fifty (150) calendar days after the close of
Provider’s fiscal year beginning on or after January 1, 2005, annual financial
survey reports, in an electronic format determined by the DMHC as required by
Rule 1300.41.8, based upon Provider’s annual audited financial statement
prepared in accordance with generally accepted auditing standards and containing
all of the following:

(a)
An annual financial survey report, based upon Provider’s annual audited
financial statements, (including at least a balance sheet, an income statement,
a statement of cash flows, and footnote disclosures) or comparable financial
statements if Provider is a nonprofit entity, and supporting schedule
information, (including, but not limited to, aging of receivable information

    
Page 46 of 46    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

and debt maturity information) for the immediately preceding fiscal year,
prepared by an independent certified public accountant in accordance with GAAP.
For the purposes of determining the independence of the certified public
accountant, the regulations of the California State Board of Accountancy
(Division 1, Sections 1 through 99.2, Title 16 of the California Code of
Regulations) shall apply.

(b)
The financial survey reports of Provider shall be on a combining basis with an
affiliate if Provider or such affiliate is legally or financially responsible
for the payment of Provider’s claims. Any affiliated entity included in the
report shall be separately identified. Provider’s use of: (1) a “sponsoring
organization” arrangement to reduce its liabilities for the purposes of
calculating TNE and working capital or (2) an affiliated entity to provide
claims processing services shall not be construed to automatically create a
legal or financial obligation to pay Provider’s claims liability. When combined
financial statements are required, the independent accountant's report or
opinion must address all the entities included in the combined financial
statements. If the accountant's report or opinion makes reference to the fact
that another auditor performed a part of the examination, Provider shall also
file the report or opinion issued by the other auditor.

(c)
Opinion of an independent certified public accountant indicating whether
Provider’s annual audited statements present fairly, in all material respects,
the financial position of Provider and whether the financial statements were
prepared in accordance with GAAP. If the opinion is qualified in any way, the
survey report shall include an explanation regarding the nature of the
qualification.

(d)
An IBNR Statement consistent with the requirements outlined in section
3.2(a)(iii) of this Amendment. If the estimated and documented liability is not
in compliance with Rule 1300.77.2 in any way, the IBNR Statement shall describe
in detail for each deficiency the nature of the deficiency, the reasons for the
deficiency, any actions taken to correct the deficiency, and any results of
those actions. Provider’s failure to: (1) estimate and document, on a monthly
basis, its liability for IBNR claims or (2) maintain its books and

    
Page 47 of 47    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

records on an accrual accounting basis shall result in Provider’s failure to
maintain, at all times, positive tangible net equity (“TNE”) and positive
working capital as set forth in section 3.3(e) below.

(e)
A TNE/Working Capital Statement consistent with the TNE reporting requirements
as outlined in Section 3.2(a)(iv) of this Amendment. If either the required TNE
or the required working capital has not been maintained at all times, the
TNE/Working Capital Statement shall describe in detail the nature of the
deficiency, the reasons for the deficiency, any actions taken to correct the
deficiency, and any results of those actions. Provider may reduce its
liabilities for purposes of calculating its TNE and working capital in a manner
as required by Rule 1300.41.8 and as outlined in section 3.2(a)(iv) of this
Amendment.

(f)
For fiscal years beginning on or after January 1, 2006, a statement as to
whether or not Provider has at all times during the year maintained a Cash-to
Claims Ratio as required in section 3.1 above, calculated in a manner consistent
with GAAP. If the required Cash-to-Claims Ratio has not been maintained at all
times, a statement shall be included in the quarterly financial survey report
that describes in detail the nature of the deficiency, the reasons for the
deficiency, any action taken to correct the deficiency, and any results of that
action.    

(g)
A statement as to whether Provider maintains reinsurance and/or professional
stop-loss coverage.

(h)
A copy of Provider’s complete annual audited financial statement, including
footnotes and the certificate or opinion of the independent certified public
accountant.    

3.4
Annual Statement of Organization Survey. Provider shall submit to the DMHC a
"Statement of Organization," in an electronic format determined by the DMHC to
be filed with Provider's annual financial survey report. Such Statement of

    
Page 48 of 48    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

Organization shall include the following information as of December 31 of each
calendar year prior to the filing:

(a)
Name and address of Provider;

(b)
Financial and public contact person, with title, address, telephone, fax and
e-mail address;

(c)
A list of all health plans with which Provider has Risk Arrangements;

(d)
Type of Provider: Independent Practice Association (IPA), Medical Group,
Foundation or other entity, or some combination. If Provider is a foundation,
identify each and every medical group within the foundation and whether any of
those medical groups independently qualifies as a risk-bearing organization as
defined in Health and Safety Code Section 1375.4(g).

(e)
Corporate status: professional corporation, partnership, not-for-profit
corporation, sole proprietor or other form of business;

(f)
The name, address and principal officer of each of Provider’s affiliates as
defined in Rule 1300.45(c)(1) and (2);

(g)
Whether Provider is partially or wholly owned by a hospital or hospital system;

(h)
A matrix listing all major categories of medical care offered by Provider,
including but not limited to anesthesiology, cardiology, orthopedics,
ophthalmology, oncology, obstetrics/gynecology, and radiology, and next

    
Page 49 of 49    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

to each listed category in the matrix a disclosure of the compensation model
(salary, fee-for-service, capitation, other) used by Provider to compensate the
majority of providers of that category of care;    

(i)
An approximation of the number of enrollees served by Provider through Risk
Arrangements, pursuant to a list of ranges developed by the DMHC;

(j)
The name of any Management Services Organization (“MSO”) that Provider contracts
with for administrative services;

(k)
Total number of contracted physicians in employment and/or contractual
arrangements with Provider;

(l)
Disclosure by California county or counties of Provider’s primary service area
(excluding out-of-area tertiary facilities and providers);

(m)
Provider’s address, telephone number and website link, if available, where
providers may access written information and instructions for filing of provider
disputes with Provider’s dispute resolution mechanism consistent with
requirements of Rule 1300.71.38;

(n)
Any other information which the DMHC deems reasonable and necessary, as
permitted by law, to understand the operational structure and finances of
Provider.

3.5
Attestation. Provider shall submit a written verification for each report made
under Sections 3.2, 3.3, and 3.4 of this Amendment stating that the report is
true and correct to the best knowledge and belief of a principal officer of
Provider, and signed by a principal officer, as defined by Rule 1300.45(o).

    
Page 50 of 50    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

3.6
Notification to DMHC & Health Plan. Provider agrees to notify the DMHC and
Health Plan no later than five (5) business days from discovering that Provider
has experienced any event that materially alters its financial situation or
threatens its solvency.

3.7
DMHC Evaluation of Provider. Provider shall:

(a)
Permit the DMHC to make any examination that it deems reasonable and necessary
to implement section 1375.4 of the Health and Safety Code, and provide to the
DMHC for inspection and copying, upon request, any books or records that the
DMHC deems relevant or useful in such examination, as permitted by law.

(b)
Comply with the DMHC’s review and audit process that is used to determine
Provider’s compliance with the Grading Criteria.

(c)
Permit the DMHC to obtain and evaluate supplemental financial information
pertaining to Provider when:

(i)
Provider fails to satisfactorily demonstrate its compliance with the Grading
Criteria;

(ii)
Provider experiences an event that materially alters its ability to remain
compliant with the Grading Criteria;

(ii)
The External Party’s review or audit process indicates that Provider may have
insufficient financial capacity to continue to accept financial risk for the
delivery of health care services consistent with the requirements of Rules
1300.70(b)(2)(H)(1);

    
Page 51 of 51    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

(iv)
The DMHC receives information from complaints submitted to the HMO Help Center,
Health Plan reporting, medical audits and surveys or any other source that
indicates Provider may be delaying referrals or authorizations or failing to
meet access standards for basic health care services based on financial
considerations.

IV. OBLIGATIONS OF MEDICAL GROUP & HEALTH PLAN

4.1
Corrective Action Plans. Provider and Health Plan shall comply with the DMHC’s
Corrective Action Plan (“CAP”) process as set forth below.

(a)
Beginning with the financial survey submission filed for the third quarter of
calendar year 2005, in the event Provider has deficiencies in any of the Grading
Criteria, it shall simultaneously submit a self-initiated CAP proposal, in an
electronic format developed by the DMHC, to the DMHC and Health Plan that meets
the following requirements:

(i)
Identifies the Grading Criteria that Provider has failed to meet;

(ii)
Identifies the amount by which Provider has failed to meet the Grading Criteria;

(ii)
Identifies Health Plan and other Contracted Plans, including the identification
of the name, title, telephone and facsimile numbers, and postal and e-mail
addresses for the person responsible at Health Plan and each Contracted Plan for
monitoring compliance with the CAP;

    
Page 52 of 52    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

(iv)
Describes the specific actions Provider has taken or will take to correct the
identified deficiencies, including any written representations made by Health
Plan and/or other Contracted Plans to assist Provider in the implementation of
its CAP. The actions shall be appropriate and reasonable in scope and breadth
depending upon the nature and degree of the deficiency, and acceptable to the
DMHC;

(v)
Describes the timeframe for completing the corrective action and specifies a
schedule for submitting progress reports to the DMHC, Health Plan and all other
Contracted Plans. All corrective actions must be completed within the following
timeframes, unless an extension is approved in writing by the DMHC:

(A)
Timeframes for correcting working capital deficiencies shall not exceed 12
months;

(B)
Timeframes for correcting TNE deficiencies shall not exceed 12 months;

(C)
Timeframes for correcting IBNR deficiencies shall not exceed three (3) months;

(D)
Timeframes for correcting claims timeliness deficiencies shall not exceed six
(6) months;

(E)
Timeframes for correcting cash-to-claims ratio deficiencies shall not exceed
twelve (12) months.

    
Page 53 of 53    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

(vi)
Identifies the name, title, telephone and facsimile numbers, and postal and
e-mail addresses for the person responsible at Provider for ensuring compliance
with the CAP;

(vii)
Describes:

(A)
Provider’s patient record retention and storage policies;

(B)
The procedures and the steps Provider will take to ensure that patient medical
records are appropriately stored and maintained;

(C)
The procedures and the steps Provider will take to ensure that patient medical
records will be readily available and transferable to patients in the event
Provider ceases operations or Provider fails to meet its obligations set forth
in the CAP. At a minimum, Provider’s patient medical records policies and
procedures shall be consistent with existing laws relating to the
responsibilities for the preservation and maintenance of medical records and the
protection of the confidentiality of medical information.

(b)
Notwithstanding section 4.1(a) above, Provider shall not be required to submit a
CAP if Provider proactively demonstrates to the DMHC’s written satisfaction that
necessary and prudent capital investments have or may cause a temporary
deficiency in Provider’s TNE, working capital or Cash-to-Claims Ratios and that
Provider has implemented an appropriate business plan that will correct the
deficiency within a reasonable time period without causing a deficiency in its
claim payment timeliness.

    
Page 54 of 54    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

(c)
To the extent possible, the self-initiated CAP proposal shall be set forth in a
single document that addresses the concerns of Health Plan and all other
Contracted Plans.

(d)
The self-initiated CAP shall be considered a final CAP, subject to the DMHC’s
approval process as set forth in section 4.1(j) below, unless, within fifteen
(15) calendar days of the receipt of Provider’s self-initiated CAP proposal,
Health Plan or another Contracted Plan provides written notice to the DMHC and
Provider stating the reason for its objections and recommendations for
revisions,

(e)
In the event that Health Plan or another Contracted Plan files a written
objection with the DMHC and Provider, Provider shall within twenty (20) calendar
days: (1) implement all corrective action strategies contained in its
self-initiated CAP proposal that were not objected to by Health Plan or another
Contracted Plan; and (2) submit to Health Plan, all other Contracted Plans and
the DMHC a revised CAP proposal that addresses the concerns raised by the
objecting Contracted Plan(s), including Health Plan. To the extent possible, the
revised CAP proposal shall be prepared as a single document that addresses the
concerns of Health Plan and all other Contracted Plans.

(f)
Health Plan shall have ten (10) calendar days to submit to Provider and the DMHC
its objections and recommended revisions, in an electronic format determined by
the DMHC, to the self-initiated revised CAP proposal.

(g)
Within fifteen (15) calendar days of receipt of Health Plan’s or any other
Contracted Plan’s objections and recommended revisions to the revised CAP
proposal, the DMHC shall schedule a meeting (“CAP Settlement Conference”) with
Provider, Health Plan and all other Contracted Plans to discuss and reconcile
the differences.

    
Page 55 of 55    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

(h)
Within seven (7) calendar days of the CAP Settlement Conference, Provider shall
submit a final self-initiated CAP proposal to Health Plan and the DMHC.

(i)
Within ten (10) calendar days of receipt of Provider’s final self-initiated CAP
proposal, the External Party shall submit its recommendation to the DMHC to
approve, disapprove or modify Provider’s final self-initiated CAP proposal.

(j)
Within ten (10) calendar days of receipt of the External Party’s recommendation,
the DMHC shall approve, disapprove or modify Provider’s final self-initiated CAP
proposal, which shall then become the final CAP. If the DMHC does not act upon
the recommendations of the External Party within ten (10) calendar days, the
External Party’s recommendation shall be deemed approved.

(k)
A final CAP shall remain in effect until Provider demonstrates compliance with
the requirements of the CAP, or the CAP expires in accordance with its own
terms.

(l)
In addition to the CAP requirements specified in section 4.1(a) above, the DMHC
may direct Provider to initiate a CAP whenever it determines that Provider has
experienced an event that materially alters its ability to remain compliant with
the Grading Criteria or when the DMHC’s review process indicates that Provider
may lack sufficient financial capacity to meet its contractual obligations
consistent with the requirements of Rule 1300.70(b)(2)(11)(1).

(m)
Provider shall submit to the DMHC and Health Plan each periodic progress report
prepared pursuant to a final CAP, and shall include a written verification
stating that the periodic progress report is true and correct to the best
knowledge and belief of a principal officer of Provider, as defined by Rule
1300.45(o) of Title 28 California Code of Regulations.

    
Page 56 of 56    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

(n)
Provider shall advise Health Plan and the DMHC in writing within five (5)
calendar days if Provider experiences an event that materially alters Provider’s
ability to remain compliant with the requirements of a final CAP.

(o)
Upon request from the DMHC, Provider shall provide additional documentation to
the DMHC and Health Plan to demonstrate Provider’s progress towards fulfilling
the requirements of a CAP.

(p)
All draft, preliminary and final CAPs and all CAP compliance reports required by
a final CAP, including supporting documentation and supplemental financial
information, submitted to the DMHC shall be received and maintained on a
confidential basis by Health Plan and shall not be disclosed, except as allowed
or required under this Amendment.

    
Page 57 of 57    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

ATTACHMENT E-2
DMHC Provider Claims Processing Provisions

This Attachment is required to comply with the claims payment and processing
requirements. In processing claims, Provider shall comply with Title 42 U.S.C.
Section 1396u-2(f) and Health and Safety Code Sections 1371 through 1371.8.
Unless otherwise stated, references to the term “Rule” identify regulatory
citations in Title 28 of the California Code of Regulations.

NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties agree as follows:

(1)
Provider shall accept and adjudicate claims for health care services provided to
plan enrollees in accordance with the provisions of sections 1371, 1371.1,
1371.2, 1371.22, 1371.35, 1371.36, 1371.37, 1371.38, 1371.4, and 1371.8 of the
Health and Safety Code and Rules 1300.71, 1300.71.38, 1300.71.4, and 1300.77.4.

(2)
Provider shall establish and maintain a fair, fast and cost-effective dispute
resolution mechanism to process and resolve provider disputes in accordance with
the provisions of sections 1371, 1371.1, 1371.2, 1371.22, 1371.35, 1371.36,
1371.37, 1371.38, 1371.4, and 1371.8 of the Health and Safety Code and Rules
1300.71, 1300.71.38, 1300.71.4, and 1300.77.4.

(3)
Provider shall submit a Quarterly Claims Payment Performance Report (“Quarterly
Claims Report") to Health Plan within thirty (30) days of the close of each
calendar quarter. The Quarterly Claims Report shall, at a minimum, disclose
Provider's compliance status with sections 1371, 1371.1, 1371.2, 1371.22,
1371.35, 1371.36, 1371.37, 1371.4, and 1371.8 of the Health and Safety Code and
Rules 1300.71, 1300.71.38, 1300.71.4, and 1300.77.4.

    
Page 58 of 58    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

Provider shall include in its Quarterly Claims Report a tabulated record of each
provider dispute it received, categorized by date of receipt, and including the
identification of the provider, type of dispute, disposition, and working days
to resolution, as to each provider dispute received. Each individual dispute
contained in a Provider's bundled notice of provider dispute shall be reported
separately to the Heath Plan

The Quarterly Claims Report be signed by and include the written verification of
a principal officer, as defined by Rule 1300.45(o), of Provider, stating that
the report is true and correct to the best knowledge and belief of the principal
officer.

(4)
Provider shall make available to Health Plan and the DMHC all records, notes and
documents regarding its provider dispute resolution mechanism(s) and the
resolution of its provider disputes.

(5)
Any provider that submits a claim dispute to Provider's dispute resolution
mechanism(s) involving an issue of medical necessity or utilization review shall
have an unconditional right of appeal for that claim dispute to Health Plan's
dispute resolution process for a de novo review and resolution for a period of
60 working days from Provider's Date of Determination, pursuant to the
provisions of Rule 1300.71.38(a)(4).

(6)
In the event Provider fails to timely and accurately reimburse its claims
(including the payment of interest and penalties), Health Plan and Provider
shall attempt to establish an approved corrective action plan consistent with
section 1375.4(b)(4) of the Health and Safety Code. Health Plan shall have the
authority to assume processing and timely reimbursement of Provider’s claims
while the parties are attempting to establish a corrective action plan. In the
event Health Plan and Provider fail to agree upon an approved corrective action
plan or if Provider fails to comply with the corrective action plan, Health Plan
shall have the authority to assume responsibility for the processing and timely
reimbursement of Provider’s claims. Health Plan shall recover any such amounts
paid by way of offset or recoupment from current or future amounts due Provider.

    
Page 59 of 59    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

(7)
In the event Provider fails to timely resolve its provider disputes including
the issuance of a written decision, Health Plan and Provider shall attempt to
establish an approved corrective action plan consistent with section
1375.4(b)(4) of the Health and Safety Code. Health Plan shall have the authority
to assume responsibility for the administration of the Provider's dispute
resolution mechanism(s) and for the timely resolution of provider disputes while
the parties are attempting to establish a corrective action plan. In the event
Health Plan and Provider fail to agree upon an approved corrective action plan
or if Provider fails to comply with the corrective action plan, Health Plan
shall have the authority to assume responsibility for the administration of the
Provider's dispute resolution mechanism(s) and for the timely resolution of
provider disputes.

    
Page 60 of 60    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

ATTACHMENT F [Not Applicable]
DHCS Provisions

The following provisions apply exclusively to Covered Services provided and
activities engaged in pursuant to Medicaid Program:

1.
All Medicaid covered services are set forth in Attachment C and the Provider
Manual as set forth in this Agreement. (Rule 53250(c)(1))

2.
This Agreement shall be governed by and construed in accordance with all laws,
regulations and contractual obligations incumbent upon the Health Plan. (Rule
53250(c)(2))

3.
This Agreement shall become effective upon approval by the Department of Health
Care Services (“DHCS”) in writing, or by operation of law where the DHCS has
acknowledged receipt of this Agreement and has failed to approve or disapprove
the Agreement within 60 days of receipt. (Rule 53250(c)(3))

4.
Amendments to this Agreement shall be submitted to the DHCS, for prior approval,
at least thirty (30) days before the effective date of any proposed changes
governing compensation, services or term. Proposed changes which are neither
approved nor disapproved by the DHCS, shall become effective by operation of law
thirty (30) days after the DHCS has acknowledged receipt, or upon the date
specified in the Amendment, whichever is later. (Rule 53250(c)(3))

5.
Provider agrees to submit all reports required and requested by Health Plan, in
a form acceptable to Health Plan. (Rule 53250(c)(5))

    
Page 61 of 61    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

6.
Provider shall make all of its books and records, pertaining to the goods and
services furnished under the terms of this Agreement, available for inspection,
examination or copying:

a.
By the DHCS, the United States Department of Health and Human Services, the
DMHC, and the Department of Justice;

b.
At all reasonable times, at Provider’s place of business or at such other
mutually agreeable location in California;

c.
In a form maintained in accordance with the general standards applicable to such
book or record keeping;

d.
For a term of at least five years from the close of the fiscal year in which the
date of service occurred, in which the record or data was created or applied,
and for which the financial record was created;

e.
Including all encounter data for a period of at least five years. (Rule
53250(e)(1))

7.
Provider agrees to notify the DHCS in the event that this Agreement is amended
or terminated. Notice to the DHCS shall be considered given when properly
addressed and deposited in the United States Postal Service as First Class
Registered Mail, postage attached. (Rule 53250(e)(4))

8.
Provider shall maintain and make available to the DHCS, upon request, copies of
all subcontracts and shall ensure that all subcontracts are in writing and
require that subcontractors:

    
Page 62 of 62    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

a.
Make all applicable books and records available at all reasonable times for
inspection, examining or copying by the DHCS, the U.S. Department of Health and
Human Services, the DMHC, and the Department of Justice;

b.
Retain such books and records for a term of at least five years from the fiscal
year in which the date of service occurred, in which the record or data was
created or applied, and for which the financial record was created. (Rule
53250(e)(3))

9.
Provider agrees that any assignment or delegation of this Agreement shall be
void unless prior written approval is obtained from the DHCS in those instances
where prior approval by the DHCS is required. (Rule 53250(e)(5))

10.
Provider agrees to hold harmless both the State of California and Health Plan
members in the event that Health Plan cannot or will not pay for services
performed by Provider pursuant to this Agreement. (Rule 53250(e)(6))

11.
Provider shall assist Health Plan in the transfer of care in the event Health
Plan’s Two-Plan Model Contract with the DHCS expires or terminates. Providers
shall assist Health Plan in the transfer and care in the event this Agreement
expires or terminates for any reason.

12.
Provider shall not attempt recovery in circumstances involving casualty
insurance, tort liability or workers’ compensation. Provider shall report to the
DHCS within ten (10) days after discovery any circumstances which may result in
casualty insurance payments, tort liability payments, or workers’ compensation
award. (Rule 53222(b))

13.
Provider shall disclose the names of the officers and owners of Provider,
stockholders owning more than ten percent (10%) of the stock issued by Provider,
if any, and major creditors holding more than five percent (5%) of the debt of
Provider. For that purpose, Provider shall use the Disclosure Form made
available by Health Plan. (W&I Code section 14452(a))

    
Page 63 of 63    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

14.
Provider acknowledges that Health Plan bears significant risk by assuming
financial responsibility for all in-patient hospitalization expenditures,
including expenditures for services connected with the period of
hospitalization. (Rule 53251(c) & (e))

15.
Non-Discrimination Clause.

a. During the performance of this Agreement, Provider and Provider’s
subcontractors will not unlawfully discriminate, harass, or allow harassment,
against any employee or applicant for employment because of sex, race, color,
ancestry, religious creed, national origin, physical disability (including HIV
and AIDS), mental disability, medical condition (including cancer), age (over
40), marital status, and denial of family care leave. Provider and Provider’s
subcontractors will ensure the evaluation and treatment of their employees and
applicants for employment are free from discrimination and harassment. Provider
and Provider’s subcontractors will comply with the provisions of the Fair
Employment and Housing Act (Government Code, Section 12900, et. seq.) and the
applicable regulations promulgated thereunder (California Code of Regulations,
Title 2, Section 7285.0, et seq.). The applicable regulations of the Fair
Employment and Housing Commission implementing Government Code Section
12990(a-f), set forth in Chapter 5 of Division 4 of Title 2 of the California
Code of Regulations are incorporated into this Agreement by reference and made a
part hereof as if set forth in full. Provider and Provider’s subcontractors as
the case may require will give notice of their obligations under this clause to
labor organizations with which they have a collective bargaining or other
agreement.

b. Provider shall permit a Member to be visited by a Member’s domestic partner,
the children of the Member’s domestic partner, and the domestic partner of the
Member’s parent or child.

16.
Provider agrees to arrange for the provision of interpreter services for Members
at all provider sites.

    
Page 64 of 64    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

17.
Nothing in this Agreement shall be interpreted in any manner to terminate or
diminish Health Plan’s independent obligations to the State of California under
one or more of its contracts with the Department of Health Care Services.

18. Provider shall ensure the provision of a blood lead screening test to
Members at ages one (1) and two (2) in accordance with Title 17, California Code
of Regulations, Division 1, Chapter 9, commencing with Section 37000. Provider
shall document and appropriately follow up on blood lead screening test results.

Provider shall make reasonable attempts to ensure the blood lead screen test is
provided and shall document attempts to provide the test in the Member’s Medical
Record. If the blood lead screen test is refused, proof of voluntary refusal of
the test in the form of a signed statement by the Member’s parent(s) or guardian
shall be documented in the Member’s Medical Record. If the responsible party
refuses to sign this statement, the refusal shall be documented in the Members
Medical Record. Documented attempts that demonstrate Provider’s unsuccessful
efforts to provide the blood lead screen test shall be considered towards
meeting this requirement.

19. Provider shall provide Health Plan with the Disclosure Statement set forth
in Title 22, California Code of Regulations Section 51000.35 prior to commencing
services under this Agreement

20. Upon request by DHCS, Provider shall timely gather, preserve and provide to
DSHS, in the form and manner specified by DHCS, any information specified by
DHCS, subject to lawful privileges, in Provider’s possession, related to
threatened or pending litigation by or against DHCS. If Provider asserts that
any requested documents are covered by a privilege, Provider shall: (1) identify
such privileged documents with sufficient particularity to reasonably identify
the document while retaining the privilege; and (2) state the privilege being
claimed that supports withholding production of the document. Such request shall
include, but is not limited to, a response to a request for documents submitted
by any party in any

    
Page 65 of 65    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

litigation by or against DHCS. Provider acknowledges that time may be of the
essence in responding to such request. Provider shall use all reasonable efforts
to immediately notify DHCS and Health Plan of any subpoenas, document production
requests, or requests for records, received by Provider related to Health Plan’s
contract with DHCS. Provider shall be reimbursed by DHCS for the services
necessary to comply with this requirement under the reimbursement terms
specified in Health Plan’s contract with DHCS.

    
Page 66 of 66    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

ATTACHMENT F-1 [Not Applicable]
DHCS Provisions

The following provisions apply exclusively to Covered Services provided and
activities engaged in pursuant to Medicaid Program, and those Providers that
have assumed financial obligations for certain Emergency Services:

Non-Contracting Emergency Service Providers

Provider shall cover Emergency Services in accordance with the requirements of
Title 22, CCR, Section 53855 and 53912.5 including the following:

A.
Provider shall pay for Emergency Services received by a Member from
non-contracting providers. Payments to non-contracting providers shall be for
the treatment of the emergency medical condition including Medically Necessary
services rendered to a Member until the Member's condition has stabilized
sufficiently to permit discharge, or referral and transfer in accordance with
instructions from Health Plan. Emergency Services shall not be subject to Prior
Authorization by Provider or Health Plan. The attending emergency physician, or
the provider treating the Member is responsible for determining when the Member
is sufficiently stabilized for transfer or discharge. Emergency Services shall
not be subject to Prior Authorization by Provider.

B.
At a minimum, Provider must reimburse the non-contracting emergency department
and, if applicable, its affiliated providers for Physician services at the
lowest level of emergency department evaluation and management CPT (Physician's
Current Procedural Terminology) codes, unless a higher level is clearly
supported by documentation, and for the facility fee and diagnostic services
such as laboratory and radiology.

    
Page 67 of 67    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

C.
For all other non-contracting providers, reimbursement by Provider for properly
documented claims for services rendered by a non-contracting provider pursuant
to this provision shall be the lower of the following rates applicable at the
time the services were rendered by the non-contracting provider:

1)
The usual charges made to the general public by the non-contracting provider.

2)
The maximum Fee-For-Service rates for similar services under the Medi-Cal
program.

3)    The rate agreed to by Provider and the non-contracting provider.

D.
Provider shall not refuse to cover reimbursement for Emergency Services rendered
by a non-contracting provider based on the emergency room provider, hospital, or
fiscal agent not notifying the Member's Primary Care Physician or Provider of
the Member's screening and treatment within 10 calendar days of presentation for
emergency. Provider shall not limit what constitutes an emergency medical
condition solely on the basis of lists of diagnoses or symptoms.

E.
In accordance with California Code of Regulations, Title 28, Section 1300.71.4,
Provider shall approve or disapprove a request for post-stabilization inpatient
services made by a non-contracting provider on behalf of a Member within 30
minutes of the request. If Provider fails to approve or disapprove authorization
within the required timeframe, the authorization will be deemed approve.
Provider is financially responsible for post-stabilization service payment as
provided by subprovision C above.

F.
Disputed Emergency Services claims may be submitted to DHCS, Office of
Administrative Hearings and Appeals, 1029 J Street, Suite 200, Sacramento,
California 95814 for resolution under the provisions of Welfare and Institutions
Code Section 14454 and California Code of Regulations, Title 22, Section

    
Page 68 of 68    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

53620et. eq., except Section 53698. Provider agrees to abide by the findings of
DHCS in such cases, to promptly reimburse the non-contracting provider within 30
calendar days of the effective date of a decision that Provider is liable for
payment of a claim and to provide proof of reimbursement in such form as the
DHCS Director may require. Failure to reimburse the non-contracting provider and
provide proof or reimbursement to DHCS within 30 calendar days shall result in
liability offsets in accordance with Welfare and Institutions Code Sections
14454(c) and 14115.5, and California Code of Regulations, Title 22, section
53702.

    
Page 69 of 69    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

ATTACHMENT G
Acknowledgement of Receipt of Provider Manual

Provider hereby acknowledges receipt of Health Plan’s Provider Manual.

                    

Date of receipt: 3/8/2013_______

Initials of authorized
representative of Provider: KH

    
Page 70 of 70    Provider or authorized
representative’s initials: FB

--------------------------------------------------------------------------------

ATTACHMENT H
MEDICARE PROGRAM REQUIREMENTS---HEALTH CARE SERVICES

This Attachment H sets forth Medicare program requirements that are hereby
incorporated into contracts and/or agreements with Providers covering the
provision of health care services. The Agreement and this attachment shall be
automatically modified to conform to subsequent amendments to Medicare program
requirements. In the event of any inconsistency between the terms of this
attachment and the Agreement, the terms of this attachment shall control.

1.
Downstream Compliance. Provider agrees to require all of its downstream, related
entity(s), and transferees that provide any services benefiting Health Plan’s
Medicare enrollees to agree in writing to all of the terms provided herein.

2.
Right to Audit. HHS, the Comptroller General, or their designees have the right
to audit, evaluate, and inspect any books, contracts, records, including medical
records and documentation that pertain to any aspect of services performed,
reconciliation of benefit liabilities, and determination of amounts payable
under Health Plan’s contract with CMS, or as the Secretary may deem necessary to
enforce Health Plan’s contract with CMS. Provider agrees to make available, for
the purposes specified in this paragraph, its premises, physical facilities and
equipment, records relating to its Medicare enrollees, and any additional
relevant information that CMS may require. HHS, the Comptroller General, or
their designee's right to inspect, evaluate, and audit extends through ten (10)
years from the end of the final contract period or completion of audit,
whichever is later. (42 CFR 422.504(e)(2), 422.504(e)(3), 422.504(e)(4) and
422.504(i)(2)(ii)).

3.
Confidentiality. Provider shall comply with the confidentiality and enrollee
record accuracy requirements set forth in 42 CFR 422.118.
(42 CFR 422.504(a)(13)).

4.
Hold Harmless/Cost Sharing. Provider agrees it may not under any circumstances,
including nonpayment of moneys due the providers by the Health Plan, insolvency
of the Health Plan, or breach of this Agreement, bill, charge, collect a
deposit, seek compensation, remuneration, or reimbursement from, or have any
recourse against the

--------------------------------------------------------------------------------

Member, or any persons other than the Health Plan acting on their behalf, for
services provided in accordance with this Agreement. Members who are dually
eligible for Medicare and Medicaid will not be held liable for Medicare Part A
and B cost sharing when the State or another payor such as a Medicaid Managed
Care Plan is responsible for paying such amounts. Health Plan will inform
providers of applicable Medicare and Medicaid benefits and rules for eligible
Members. Provider agrees to accept payment from Health Plan as payment in full,
or bill the appropriate State source, for any Medicare Part A and B cost sharing
that is covered by Medicaid. Collection from the Member of copayments or
supplemental charges in accordance with the terms of the Member’s contract with
the Health Plan, or charges for services not covered under the Member’s
contract, may be excluded from this provision. The Hold Harmless clause will
survive the termination of this Agreement, regardless of the cause of
termination. (42 CFR 422.504(g)(1)(i)) and (42 CFR 422.504(g)(1)(iii)).

5.
Delegation. Health Plan may only delegate activities or functions to a first
tier, downstream, or related entity, in a manner that is consistent with the
provisions set forth in Attachment H-1. Any services or other activity performed
by a first tier, downstream, or related entity in accordance with a contract or
written agreement shall be consistent and comply with the Health Plan’s contract
with CMS. (42 CFR 422.504(i)(3)(iii) and 422.504(i)(4)).

6.
Prompt Payment. Health Plan and Provider agree that Health Plan shall pay all
clean claims for services that are covered by Medicare within sixty (60) days of
the date such claim is delivered by Provider to Health Plan and Health Plan
determines such claim is complete/clean. Any claims for services that are
covered by Medicare that are not submitted to Health Plan within six (6) months
of providing the services that are subject of the claim shall not be eligible
for payment, and Provider hereby waives any right to payment therefor. Health
Plan reserves the right to deny any claims that are not in accordance with the
Medicare Claims Processing Manual and Medicare rules for billing. (42 CFR
422.520(b)).

7.
Reporting. Provider agrees to provide relevant data to support Health Plan in
complying with the requirements set forth in 42 CFR 422.516 and 42 CFR 422.310.
(42 CFR 504(a)(8)).

--------------------------------------------------------------------------------

8.
Accountability. Health Plan may only delegate activities or functions to a first
tier, downstream, or related entity, in a manner that is consistent with the
provisions set forth in Attachment H-1. (42 CFR 422.504(i)(3)(ii)).

9.
Compliance with Medicare Laws and Regulations. Provider shall comply with all
applicable Medicare laws, regulations, and CMS instructions. (42 CFR
422.504(i)(4)(v)).

10.
Benefit Continuation. Provider agrees to provide for continuation of enrollee
health care benefits (i) for all Members, for the duration of the period for
which CMS has made payments to Molina for Medicare services; and (ii) for
Members who are hospitalized on the date Molina's contract with CMS terminates,
or, in the event of an insolvency, through discharge. (42 CFR 422.504(g)(2)(i),
422.504(g)(2)(ii) and 422.504(g)(3).

--------------------------------------------------------------------------------

ATTACHMENT H-1
Medicare Program Requirements---Delegated Services

This Attachment H-1 sets forth Medicare program requirements that are hereby
incorporated into contracts and/or agreements that delegate to Provider
responsibility for any management or administrative services. The Agreement and
this attachment shall be automatically modified to conform to subsequent
amendments to Medicare program requirements. In the event of any inconsistency
between the terms of this attachment and the Agreement, the terms of this
attachment shall control.

1.
Downstream Compliance. Provider agrees to require all of its downstream, related
entity(s), and transferees that provide any services benefiting Health Plan’s
Medicare enrollees to agree in writing to all of the terms provided herein.

2.
Medicare Compliance. Provider shall comply with all applicable Medicare laws,
regulations, and CMS instructions. (42 CFR 422.504(i)(4)(v)).

3.
Confidentiality. Provider shall comply with the confidentiality and enrollee
record accuracy requirements set forth in 42 CFR 422.118.
(42 CFR 422.504(a)(13)).

4.
Right to Audit. HHS, the Comptroller General, or their designees have the right
to audit, evaluate, and inspect any books, contracts, records, including medical
records and documentation that pertain to any aspect of services performed,
reconciliation of benefit liabilities, and determination of amounts payable
under the contract, or as the Secretary may deem necessary to enforce Health
Plan’s contract with CMS. Provider agrees to make available, for the purposes
specified in this paragraph, its premises, physical facilities and equipment,
records relating to its Medicare enrollees, and any additional relevant
information that CMS may require. HHS, the Comptroller General, or their
designee's right to inspect, evaluate, and audit extends through ten (10) years
from the end of the final contract period or completion of audit, whichever is
later. (42 CFR 422.504(e)(2), 422.504(e)(3), 422.504(e)(4) and
422.504(i)(2)(ii)).

--------------------------------------------------------------------------------

5.
Responsibilities and Reporting Arrangements. The Agreement specifies the
delegated activities and reporting responsibilities. To the extent applicable,
Provider shall support Health Plan in complying with the reporting requirements
set forth in 42 CFR 422.516 and 42 CFR 310 by providing relevant data . (42 CFR
504(a)(8)).

6.
Revocation of Delegated Activities. In the event CMS or Health Plan determines,
in its sole discretion, that Provider has not performed the delegated activities
or functions satisfactorily, the delegated activities shall be revoked upon not
less than five (5) days prior written notice. (42 CFR 422.504(i)(4)(ii)).

7.
Accountability Notwithstanding any relationship(s) Health Plan may have with
first tier, downstream, and related entities, Health Plan maintains ultimate
responsibility for adhering to and otherwise fully complying with all terms and
conditions of its contract with CMS. Any services or other activity performed by
a first tier, downstream, or related entity in accordance with a contract or
written agreement shall be consistent and comply with the Health Plan’s contract
with CMS. (42 CFR 422.504(i)(1) and 422.504(i)(3)(iii)).

8.
Credentialing. If Provider is delegated credentialing activities, Provider's
credentialing process will be reviewed and approved by Health Plan, and such
credentialing process will be audited by Health Plan on an ongoing basis;
further, Provider agrees that its credentialing process will comply with all
applicable NCQA standards. Health Plan retains the right to approve, suspend, or
terminate any credentialing delegation arrangement. (422.504(i)(4) and
422.504(i)(5)).

9.
Monitoring. Notwithstanding any relationship(s) Health Plan may have with first
tier, downstream, and related entities, Health Plan maintains ultimate
responsibility for adhering to and otherwise fully complying with all terms and
conditions of its contract with CMS. Any services or other activity performed by
a first tier, downstream, or related entity in accordance with a contract or
written agreement shall be consistent and comply with the Health Plan’s
contractual obligations. Health Plan shall monitor the performance of first
tier, downstream, and related entities. (42 CFR 422.504(i)(1) and
422.504(i)(4)).

--------------------------------------------------------------------------------

10.
Further Requirements. Any services or other activity performed by a first tier,
downstream, or related entity in accordance with a contract or written agreement
shall be consistent and comply with Health Plan’s contractual obligations. If
Health Plan delegates selection of the providers, contractors, or subcontractor
to another organization, Health Plan retains the right to approve, suspend, or
terminate any such arrangement. (42 CFR 422.504(i)(3)(iii), 42 CFR 422.504(i)(4)
and 42 CFR 422.504(i)(5)).

--------------------------------------------------------------------------------

ATTACHMENT I
DISCLOSURE FORM
(Welfare and Institutions Code Section 14452 (a))

Name of Subcontractor: Pacific Healthcare IPA

The undersigned hereby certifies that the following information regarding
Pacific Healthcare IPA‌‌ (the “Organization”) is true and correct as of the date
set forth below.

--------------------------------------------------------------------------------

1. Officers/Directors General Partners:
Faustino Bernadett, Jr. MD, Robert Lugliani, MD

--------------------------------------------------------------------------------

2. Co-Owner(s):
See #1

--------------------------------------------------------------------------------

3. Stockholders owning more than ten percent (10%) of the stock of the
Organization:
See #1

--------------------------------------------------------------------------------

4. Major creditors holding more than five percent (5%) of Organization’s debt:
N/A

--------------------------------------------------------------------------------

5. Form of Organization (Corporation, Partnership, Sole Proprietorship,
Individual):
corporation

--------------------------------------------------------------------------------

6. If not already disclosed above, is Organization, either directly or
indirectly, related to
or affiliated with the Contracting Health Plan? Explain:

--------------------------------------------------------------------------------

Date: 3/12/2013_________________        By: Faustino Bernadett________________

Print Name: Faustino Bernadett, MD__________

Title: President _______________________

--------------------------------------------------------------------------------

ATTACHMENT J
CERTIFICATE OF OWNERSHIP
I, Faustino Bernadett, MD, an authorized representative of Pacific Healthcare,
IPA, do certify that, to the best of my knowledge, the individuals or entities
listed below have a five percent or more ownership, direct or indirect, or
control interest in the aforementioned entity as defined under 42 U.S. C.
Section 1320 a 3 (2). This form is to be submitted annually to the organization
contracting with the Managed Risk Medical Insurance Board for the Healthy
Families Program and/or Access to Infants and Mothers Program.

Name of Individual/Entity
Employer Identification Number
Social Security Number
Faustino Bernadett, MD
 
 
Robert Lugliani, MD
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

–
No one is listed because there are no individuals or entities with a five (5%)
percent or more interest

–
No one is listed because the plan is under government ownership.

–
No one is listed because the provider of services is a non-profit, public
benefit corporation for which there are no outside controlling interests.

Faustino Bernadett__________________________            3/12/2013_________
Signature of Authorized Representative and Title            Date

--------------------------------------------------------------------------------

ATTACHMENT K
Matrix of Financial Responsibility

The following matrices outlines the division of financial responsibility between
Health Plan and Provider (“Matrix of Financial Responsibility”), the intent
being to clarify Covered Services categories in order to provide for accurate
administration of this Agreement. For services not specifically listed, each
matrix serves as a model under which broad service categories suggest the
appropriate financial responsibility. The applicable provisions and attachments
of this Agreement, including Health Plan's Provider Manual, should be consulted
for an accurate and complete description of Covered Services. Member benefit
information and eligibility shall be verified by Provider prior to the provision
of any services. The following matrices are included in this Agreement,
referenced hereto and incorporated herein:

        
Attachment K-1 (MA-SNP & CFAD)
    

--------------------------------------------------------------------------------

ATTACHMENT K-1
Matrix of Financial Responsibility
MA-SNP (Molina Medicare Options Plus) Program
CFAD (Capitated Financial Alignment Demonstration and successor(s))
[matrix1.jpg]

--------------------------------------------------------------------------------

[matrix2a01.jpg]

--------------------------------------------------------------------------------

[matrix3.jpg]

--------------------------------------------------------------------------------

[matrix4.jpg]

--------------------------------------------------------------------------------

[matrix5.jpg]

--------------------------------------------------------------------------------

[matrix6.jpg]

--------------------------------------------------------------------------------

[matrix7.jpg]

--------------------------------------------------------------------------------

[matrix8.jpg]

--------------------------------------------------------------------------------

[matrix9.jpg]

--------------------------------------------------------------------------------

[matrix10.jpg]

ATTACHMENT L
Business Associate Addendum

With respect to the creation, receipt, maintenance, or transmission of Protected
Health Information in the performance of certain delegated functions on behalf
of Health Plan ("Molina Healthcare") in accordance with the term and conditions
set forth in this Agreement, Provider agrees that it is Health Plan’s business
associate (“Business Associate”) with all the rights and obligations set forth
in this Attachment.

RECITALS

WHEREAS, Business Associate may create, receive, maintain, or transmit protected
health information on behalf of Molina Healthcare in conjunction with the
services described in the Agreement;

WHEREAS, such protected health information may be used or disclosed only in
accordance with the Privacy Rule issued by the U.S. Department of Health and
Human Services under the Health Insurance Portability and Accountability Act of
1996 (“HIPAA”);

WHEREAS, Business Associate must safeguard any electronic protected health
information that it creates, receives, maintains, or transmits on behalf of
Molina Healthcare as required by the Security Rule issued by the U.S. Department
of Health and Human Services under HIPAA and;

WHEREAS, Subtitle D of the Health Information Technology for Economic and
Clinical Health Act (“HITECH Act”) provisions in the American Recovery and
Reinvestment Act of 2009 (“ARRA”) amended HIPAA and its implementing
regulations.

--------------------------------------------------------------------------------

NOW THEREFORE, the parties agree as follows:

1.
DEFINITIONS

Unless otherwise provided for in this Addendum, terms used in this Attachment
shall have the same meanings as set forth in HIPPA, ARRA, the Privacy Rule and
the Security Rule.

“ARRA” means Subtitle D of the Health Information Technology for Economic and
Clinical Health Act provisions of the American Recovery and Reinvestment Act of
2009, 42 U.S.C. §§17921-17954, and any and all references in this Addendum to
sections of ARRA shall be deemed to include all associated existing and future
implementing regulations, when and as each is effective.

"Availability" means the property that data or information is accessible and
useable upon demand by an authorized person.

“Breach” shall mean the acquisition, access, use or disclosure of PHI in a
manner not permitted by the Privacy Rule that compromises the security or
privacy of the PHI as defined, and subject to the exceptions set forth, in 45
C.F.R. 164.402.

"Business Associate" means an entity or a person that performs a function on
behalf of, or provides a service to, Molina Healthcare that involves the
creation, receipt, use or disclosure of PHI.

“Compliance Date” shall mean, in each case, the date by which compliance is
required under the referenced provision of ARRA and/or its implementing
regulations, as applicable; provided that, in any case for which that date
occurs prior to the effective date of this Addendum, the Compliance Date shall
mean the effective date of this Addendum.

Confidentiality means the property that data or information is not made
available or disclosed to unauthorized persons or processes.

Electronic Protected Health Information (“Electronic PHI”) means Protected
Health Information that is transmitted by, or maintained in, electronic media.

Integrity means the property that data or information have not been altered or
destroyed in an unauthorized manner.

Protected Health Information (“PHI”) means individually identifiable
information, transmitted or maintained in any form or medium, relating to the
past, present or future physical or mental health or condition of an individual,
provision of health care to an individual, or the past, present or future
payment for health care

--------------------------------------------------------------------------------

provided to an individual, as more fully defined in 45 CFR § 160.103, and any
amendments thereto.

Privacy Rule means the Standards for Privacy of Individually Identifiable Health
Information, set forth at 45 CFR Parts 160 and 164.

Security Incident means the attempted or successful unauthorized access, use,
disclosure, modification, or destruction of information or interference with
system operations in an information system.

Security Rule means the Security Standards for the Protection of Electronic
Protected Health Information, set forth at 45 CFR Parts 160 and 164.

“Services” shall mean, to the extent and only to the extent they involve the
creation, use or disclosure of PHI, the services provided by Business Associate
to Molina Healthcare under the Agreement, including those set forth in this
Addendum, as amended by written agreement of the parties from time to time.

“Unsecured PHI” means PHI that is not rendered unusable, unreadable, or
indecipherable to unauthorized individuals through the use of a technology or
methodology specified by the Secretary of Health and Human Services (HHS) in
guidance issued pursuant to ARRA.

2.
GENERAL PROVISIONS

2.1        Effect. This Addendum supersedes any agreements between the parties
involving the disclosure of PHI by Molina Healthcare to Business Associate. To
the extent any conflict or inconsistency between this Addendum and the terms and
conditions of any agreement exists, the terms of this Addendum shall prevail.

2.2     Amendment. The parties agree to amend this Addendum as necessary to
comply with the Privacy Rule, the Security Rule, and such other regulations
promulgated by the Secretary of Health and Human Services pursuant to HIPAA.

3.
SCOPE OF USE AND DISCLOSURE

3.1        Business Associate may use or disclose PHI as required to provide
Services and satisfy its obligations under this Agreement, if such use or
disclosure of PHI would not violate the Privacy Rule. Unless otherwise limited
herein, Business Associate may use or disclose PHI:

a.
for Business Associate’s proper management and administrative services;

--------------------------------------------------------------------------------

b.
to carry out the legal responsibilities of Business Associate; and

c.
to provide data aggregation services relating to the health care operations of
Molina Healthcare if required under the Agreement.

3.2    Business Associate shall not request, use or release more than the
minimum amount of PHI necessary to accomplish the purpose of the use or
disclosure and comply with 42 U.S.C. § 17935(b) as of its Compliance Date..
Business Associate hereby acknowledges that all PHI created or received from, or
on behalf of, Molina Healthcare is the sole property of Molina Healthcare.

3.3    Business Associate. or its agents or subcontractors shall not perform any
work outside the United States of America that involves access to, or the
disclosure of, PHI without the prior written consent of Molina Healthcare.

3.4    As of the Compliance Date, Business Associate shall not directly or
indirectly receive remuneration in exchange for any PHI as prohibited by 42
U.S.C. § 17935(d) as of its Compliance Date.

3.5    As of the Compliance Date, Business Associate shall not make or cause to
be made any communication about a product or service that is prohibited by 42
U.S.C. § 17936(a) as of its Compliance Date.

3.6    As of the Compliance Date, Business Associate shall not make or cause to
be made any written fundraising communication that is prohibited by 42 U.S.C. §
17936(b) as of its Compliance Date.

4.
OBLIGATIONS OF BUSINESS ASSOCIATE.

4.1    Use or disclose PHI only as permitted or required by this Addendum or as
required by law.

4.2     Establish and use appropriate safeguards to prevent unauthorized use or
disclosure of PHI.

4.3    Implement administrative, physical, and technical safeguards that
reasonably and appropriately protect the confidentiality, integrity, and
availability of the electronic PHI that it creates, receives, maintains, or
transmits on behalf of Health Plan.

4.4    Promptly report to Molina Healthcare any unauthorized use or disclosure
of PHI, or security incident, with no more than three (3) days after Business
Associate becomes aware of the unauthorized use of disclosure of PHI or security
Incident..

--------------------------------------------------------------------------------

Business Associate shall take all reasonable steps to mitigate any harmful
effects of such breach or security incident. Business Associate shall indemnify
Molina Healthcare against any losses, damages, expenses or other liabilities
including reasonable attorney’s fees incurred as a result of Business
Associate’s or its agent’s or subcontractor’s unauthorized use or disclosure of
PHI or Breach of Unsecured PHI including but not limited to, the costs of
notifying individuals affected by a Breach of Unsecured PHI.

4.5    Business Associate shall, following discovery of a Breach of Unsecured
PHI that is caused by Business Associate or its agents or subcontractors, notify
Molina Healthcare of such Breach, without unreasonably delay, and in no event
more than thirty (30) days after the discovery of the Breach. The notification
by the Business Associate to Molina Healthcare shall include: (1) the
identification of each individual whose Unsecured PHI was accessed, acquired,
used or disclosed during the Breach; and (2) any other available information
that Molina Healthcare is required to include in its notification to individuals
affected by the Breach including, but not limited to, the following:

a.
a brief description of what happened, including the date of the Breach and the
date of the discovery of the Breach;

b.
a description of the types of Unsecured PHI that were involved in the Breach;

c.
a brief description of what the Business Associate is doing to investigate the
Breach, to mitigate harm to individuals, and to protect against any further
Breaches.

4.6    Ensure that all of its subcontractors and agents are bound by the same
restrictions and obligations contained herein, whenever PHI is made accessible
to such subcontractors or agents.

4.7    Within ten (10) days of receiving a request, make all PHI and related
information in its possession available as follows:

a.
To the individual or Molina Healthcare to the extent necessary to permit Molina
Healthcare to respond to an individual’s request for access to their PHI for
inspection and copying in accordance with 45 CFR § 164.524, to the extent the
PHI is maintained in a Designated Record Set;

b.
To the individual or Molina Healthcare to the extent necessary to permit Molina
Healthcare to make an accounting of disclosures of PHI about the individual, in
accordance with 45 CFR § 164.528. At a minimum, Business Associate shall provide
Health Plan with the following information: (i) the date of the disclosure, (ii)
the name of the entity or person who received the PHI, and if known, the address
of such entity or person, (iii) a brief

--------------------------------------------------------------------------------

description of the PHI disclosed, and (iv) a brief statement of the purpose of
such disclosure which includes an explanation of the basis for such disclosure.

c. In the event that Business Associate in connection with the Services uses or
maintains an Electronic Health Record of PHI of or about an individual, then
Business Associate shall provide an accounting of disclosures of PHI, within ten
(10) days, to Molina Healthcare, or when and as directed by Molina Healthcare,
directly to an individual in accordance with the requirements for accounting for
disclosures made through an Electronic Health Record in 42 U.S.C. 17935(c), as
of its Compliance Date.

4.8    Within fifteen (15) days of receiving a request from Molina Healthcare,
incorporate any amendment or correction to the PHI in accordance with the
Privacy Rule, to the extent the PHI is maintained in a Designated Record Set.

4.9    Make its internal practices, books and records relating to the use or
disclosure of PHI received from or on behalf of Molina Healthcare available to
Molina Healthcare or the U. S. Secretary of Health and Human Services for
purposes of determining compliance with the Privacy Rule.

4.10    Upon termination of the Agreement, Business Associate shall, at the
option of Molina Healthcare, return or destroy all PHI created or received from,
or on behalf of, Molina Healthcare. Business Associate shall not retain any
copies of PHI except as required by law. If PHI is destroyed, Business Associate
agrees to provide Molina Healthcare with certification of such destruction. If
return or destruction of all PHI, and all copies of PHI, is not feasible,
Business Associate shall extend the protections of this Attachment to such
information for as long as it is maintained. Termination of this Agreement
attached hereto shall not affect any of its provisions that, by wording or
nature, are intended to remain effective and to continue in operation.

4.11    Standard Transactions. To the extent Business Associate conducts
Standard Transaction(s) on behalf of Molina Healthcare, Business Associate shall
comply with the HIPAA Regulations, “Administrative Requirements,” 45 C.F.R. §
162.100 et seq., by the applicable compliance date(s) and shall not: (a) Change
the definition, data condition or use of a data element or segment in a
standard; (b) Add any data elements or segments to the maximum defined data set;
(c) Use any code or data elements that are either marked “not used” in the
standard’s implementation specification or are not in the standard’s
implementation specification(s); or (d) Change the meaning or intent of the
standard’s implementation specifications.

5.
INDEMNIFICATION

--------------------------------------------------------------------------------

Each party will indemnify and defend the other party from and against any and
all claims, losses, damages, expenses or other liabilities, including reasonable
attorney’s fees, incurred as a result of any breach by such party of any
representation, warranty, covenant, agreement or other obligation contained
herein by such party, its employees, agents, subcontractors or other
representatives.
    
6.
TERMINATION OF AGREEMENT

Notwithstanding any other provision of this Addendum or the Agreement, Molina
Healthcare may terminate this Addendum and the Agreement upon five (5) days
written notice to Business Associate if Molina Healthcare determines, in its
sole discretion, that Business Associate has violated a material term of this
Addendum and such breach is not cured within such five (5) day period.

*** THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK ***