Exhibit 10.45

 

SPECIALTY PHARMACY AGREEMENT

 

This Agreement made and effective March 1, 2006 (the Effective Date”), by and
between Blue Cross Blue Shield of Michigan, a Michigan nonprofit healthcare
corporation (“BCBSM”), whose address is 600 Lafayette East, Detroit, Michigan
48226, Blue Care Network of Michigan, a Michigan nonprofit corporation and
health maintenance organization, with offices at 20500 Civic Center Drive,
Southfield, Ml 48076 (“BCN”), collectively referred to as “BCBSM and BCN,” and
Option Care, Inc. a for profit corporation with offices at 485 Half Day Road,
Suit 300, Buffalo Grove, IL 60089 (“Provider”).

 

WHEREAS, BCBSM, BCN and Provider recognize as a mutual objective continuing
efforts toward the goal of cost containment and the delivery of high quality
specialty pharmacy mail order services;

 

WHEREAS, Provider is in the business of providing high quality specialty
pharmacy mail order services at discounted prices;

 

WHEREAS, Provider’s specialty pharmacy service program includes the provision of
specialty pharmacy medications, ancillary products and focused therapy
management to individuals and to employees or members of companies, labor
unions, municipalities, associations, and others;

 

WHEREAS, BCBSM and BCN desire to offer such products and services to their
customers;

 

WHEREAS, Provider’s specialty pharmacy service program includes the provision of
specialty pharmacy medications and ancillary products to health plan physicians;

 

WHEREAS, BCBSM and BCN desire to offer such products to physicians, at a date to
be determined by BCBSM and BCN;

 

WHEREAS, the parties desire to enter into this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1                                 “Agreement” means this Agreement, as updated
or amended from time to time, and all Addenda attached hereto and made part of
this Agreement by reference.

 

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1.2                                 “Ancillary Products” means products,
equipment and supplies necessary to administer a Specialty Medication (needles,
syringes, alcohol swabs, sharps containers, infusion related supplies, other
medical supplies, etc.).

 

1.3                                 “ASP” means [ * ]

 

1.4                                 “AWP” means [ * ]

 

1.5                                 “BCBSM and BCN Rebates” mean rebates
directly or indirectly attributable to the purchase or utilization of any
Covered Service by a Member.

 

1.6                                 “Brand Drug” means a prescribed drug
designated as brand according to the First Data Bank, or another mutually agreed
upon nationally recognized source, Generic Price Indicator with values of “0”
for non-drug, “2” for prescribed drugs priced as a brand name, “3” for
prescribed drugs that are patent protected and cross licensed products, and “4”
for repackaged products. In addition, as requested by BCBSM and/or BCN and
mutually agreed upon by Option Care, the Provider will provide a claim line
reconciliation and explanation of products that have been modified no more
frequently than once per month.

 

1.7                                 “Certificate” means benefit plan
descriptions under the sponsorship of BCBSM; or certificates and riders issued
by BCBSM, BCN or BCBSM’s sponsorship, or benefits provided pursuant to contracts
issued by other Blue Cross or Blue Shield Plans, administered through
reciprocity of benefit agreements or other Inter-Plan Arrangements.
“Certificate” does not include benefits provided pursuant to automobile no fault
or worker’s compensation insurance coverage.

 

1.8                                 “Cost” means Provider’s acquisition cost as
reflected in Provider’s invoices for Specialty Medications that are Brand Drugs
with new Generic Code Numbers (GCNs).

 

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1.9                                 “Covered Services” means prescription only
Specialty Medications and Ancillary Products listed or provided in Certificates
or other benefit documents.

 

1.10.                        “Exclusive Provider” refers to the Provider’s
selection as the sole specialty pharmacy mail order provider for BCBSM and BCN’s
Specialty Pharmacy program. This term does not mean that BCBSM and BCN, Members
or Physicians must obtain these products and services exclusively from the
Provider.

 

1.11                           “Formulary” means a continually updated list or
lists of prescription medications developed by BCBSM and BCN, which represent
the current clinical judgment of providers and experts in the diagnosis and
treatment of disease.

 

1.12                           “Generic Drug” means a drug designated as generic
according to First Data Bank Generic Price Indicator values, or another mutually
agreed upon nationally recognized source, of “1” - priced as generics.

 

1.13                           “Group” means a corporation, association,
governmental unit, BCBSM subsidiary or other entity or group of individuals
who’s Members are entitled to receive Covered Services.

 

1.14                           “Maximum Allowable Cost” or “MAC” [ * ]

 

1.15                           “Member” means a person entitled by contract on
the date the Covered Service was dispensed, to receive Covered Services.

 

1.16                           “Physician” means a physician licensed to provide
health care services to BCBSM and BCN’s Members or the Members of any other
Blues’ plan.

 

1.17                           “Pharmacist Professional Judgment” means a
determination made by the pharmacist that Covered Services are dispensed in
accordance with all ethical and professional standards prevailing in the
pharmacy community and with Members’ Certificates.

 

1.18                           “Plan Design” means the Covered Services,
exclusions, co-payment, formulary (including formulary drug selection cost
indications, and formulary compliance programs), and other specifications
applicable to each Group.

 

1.19                           “Prescriber” means a health care professional
authorized by law to prescribe Specialty Medications.

 

1.20                           “Program Requirements” mean those criteria and
specifications, established by BCBSM and BCN which are used to determine a
specialty pharmacy’s eligibility

 

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to become and remain a specialty pharmacy participating Provider as set forth on
Addendum C.

 

1.21                           “Provider” means a mail order pharmacy having in
effect a Specialty Pharmacy Agreement.

 

1.22                           “Rebates” mean any and all upfront, concurrent,
or retrospective reimbursement or discount (other than a purchase price
discount) received from a pharmaceutical manufacturer, distributor, wholesaler,
or other entity, including, but not limited to, monetary amounts associated with
(i) formulary, (ii) market share, (iii) utilization, (iv) clinical allocations,
(v) formation and administration of rebate contracts with pharmaceutical
manufacturers, distributors, wholesalers, or other entities (vi) any other
administrative or data fees, (vii) funding for targeted purposes, and/or
(ix) royalties and bonuses.

 

1.23                           “Specialty Medications” means biotech drugs,
including high cost infused medications, oral and self-injectable drugs and
other drugs related to specialty disease categories or other categories, as
agreed upon between BCBSM and BCN and Provider. The term “Specialty Medications”
includes vaccines, but excludes injectable insulin.

 

1.24                           “Specialty Pharmacy” refers to specialized drug
distribution service and focused therapy management conducted with respect to
Specialty Medications and Ancillary Products.

 

ARTICLE II PROVIDER
RESPONSIBILITIES

 

2.1                                 Compliance With Legal, Program, and Other
Administrative Requirements

 

A.                                   Provider shall comply with all Program
Requirements established by BCBSM and BCN and further agrees that BCBSM and BCN
have sole discretion to amend and modify the Program Requirements from time to
time upon sixty (60) days written notice to Provider. Notice to Provider shall
be provided in accordance with section 3.1 (F).

 

B.                                     Provider shall comply with such other
policies, procedures and administrative requirements (including, without
limitation, Quality Management and Utilization Management Programs) as BCBSM and
BCN may set forth from time to time in administrative manuals or in other
provider communications. Changes to such policies, procedures and administrative
requirements shall be effective with notice.

 

C.                                     Provider shall observe and comply with,
and will require that its employees and subcontractors comply with, all
applicable local, state and federal laws, regulations, ordinances and rules of
professional ethics, that in any manner affect

 

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the conduct of its work, including but not limited to those relating to the
procurement and dispensing of prescription drugs and other pharmaceutical
products, fraud and abuse, discrimination, disabilities, confidentiality
including but not limited to the Health Insurance Portability and Accountability
Act of 1996 and its implementing regulations, and P.A. 350, self-referral, false
claims and prohibition of kickbacks. Provider shall hold and will require its
employees and subcontractors to hold all licenses and/or permits required by
local, state, or federal authorities applicable to Specialty Pharmacy, including
but not limited to those required by Michigan law (including certain controlled
medications) as well as wholesale / distribution licenses (or registrations) to
service BCBSM/BCN Physicians. BCBSM and BCN require that Provider have and
maintain Drug Enforcement Agency (DEA) registration number(s). Provider shall
certify annually in writing, on or before December 31, to BCBSM and BCN that
Provider, its employees and subcontractors complied with all applicable legal
requirements and shall promptly disclose to BCBSM and BCN in writing any
non-compliance for the year at issue. Provider will submit copies of such
documents upon request.

 

D. Provider certifies that Provider and its officers and directors do not have
and will not have, during the term of this Agreement, any felony convictions.

 

2.2                                 Credentialing Standards

 

A.                                   Provider shall require that: a) All
pharmacists employed or contracted by Provider will maintain a current/valid
State Board of Pharmacy License that contains no restrictions; b) all personnel
employed by, associated or contracted with Provider are licensed or certified
and supervised (when and as required by state law), and qualified by education,
training and experienced to perform their professional duties, c) act within the
scope of their licensure or certification as the case may be; d) are not on the
List Of Excluded Individuals/Entities or List of Debarred Contractors published
by the General Service Administration; e) that all prescription drugs are
dispensed by licensed pharmacists; and f) periodic re- verification of
pharmacist and other licensed personnel (technician, RN, LPN, etc.) licensure
will be maintained by Provider.

 

B.                                     Provider shall maintain a pharmacist to
technician ratio consistent with good pharmacy practice standards as approved by
BCBSM and BCN or as specified by the applicable State Board(s) of Pharmacy.

 

C.                                     Provider shall obtain and maintain
Accreditation in Pharmacy from a nationally recognized accrediting body as
determined by BCBSM and BCN. BCBSM and BCN have determined that accreditation in
specialty pharmacy from ACHC is acceptable accreditation.

 

2.3                                 Insurance - The minimum amount of
comprehensive general liability coverage that Provider shall have and maintain
is one million dollars ($1,000,000) per

 

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occurrence and five million dollars ($5,000,000) aggregate. Provider shall
maintain valid professional liability (druggist) and product liability insurance
at a minimum of ($10,000,000) per occurrence. Evidence thereof shall be
furnished to BCBSM and BCN upon request. All insurance shall be held with
carriers having at least an “A” rating and, with respect to comprehensive
general liability coverage, include BCBSM and BCN as additional named insured’s.
If Provider fails to provide coverage in a continuous manner, BCBSM and BCN will
charge back to Provider any expense incurred by BCBSM and BCN, or a reasonable
estimate of the expense, in purchasing like protection, plus the value of any
claims that would not have been paid by BCBSM and BCN had Provider obtained
proper insurance coverage.

 

2.4                                 Notification and Reporting

 

A.                                   Provider shall notify BCBSM and BCN in
writing: 1) immediately upon Provider learning of any circumstances that
may have an adverse impact on the quality of care, or Provider’s ability to
provide Covered Services under this Agreement; 2) immediately upon Provider
learning of any loss or threatened loss of license or accreditation; 3)
immediately upon Provider learning of any proposed acquisition, or sale or other
transfer of Provider’s business, including but not limited to Provider’s mail
order pharmacy, 3) immediately upon Provider learning of any litigation brought
against Provider; 4) immediately upon Provider learning of any actions taken or
investigations initiated by any government agency involving Provider or any
health care entity in which Provider holds more than five percent (5%) interest;
5) immediately upon Provider learning of any claim relating to fraud, abuse,
self-referral, false claims or kickbacks or any claims involving Medicare,
Medicaid, FEP or other health care programs or insurance carriers.

 

B.                                     Provider shall immediately notify BCBSM
and BCN of any changes in Provider’s business which may have an adverse impact
on the quality of, or Provider’s ability to provide, Covered Services under this
Agreement, including, but not limited to, the transfer of at least half of the
Provider’s pharmacy assets. Prior notification of adverse circumstances or of
changes in Provider’s business does not guarantee continued participation as a
BCBSM/BCN Provider. Business changes include change in ownership, name, business
structure, range of services offered, bankruptcy proceedings or pharmacy
business termination.

 

C.                                     Provider shall, within fifteen (15) days
after receipt of information, notify BCBSM and BCN in writing of any lapse,
restriction, suspension or revocation of Pharmacy’s license, DEA registration
number(s), Medicare or Medicaid participation status; any conviction or
settlement that relates to performance of Covered Services or the provision of
health care; any cancellation of required insurance; placement of Provider or
any employee on the LEIE or GSA exclusion list; and any other matters which
materially affect performance under this

 

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Agreement, including, without limitation, any impairment of pharmacist’s
professional license.

 

2.5                                 Education and Training

 

A.                                   Provider shall provide Members with
customized educational materials explaining the services available through
Provider. Provider shall obtain BCBSM and BCN’s approval prior to distributing
any written materials developed.

 

B.                                     Provider shall provide such sales support
and training as BCBSM and BCN deem appropriate to assist BCBSM and BCN in
marketing and administering the Specialty Pharmacy program.

 

C.                                     Provider shall comply with the training
standards contained in Addendum E and incorporated herein by reference.

 

2.6                                 Customer Service Requirements

 

A.                                   Provider will provide an experienced and
dedicated account management team.

 

B.                                     Provider will provide a Client Service
Team which will respond to BCBSM and BCN questions, including but not limited to
Members and their concerns, claim payments, and daily interaction between the
parties.

 

C.                                     Provider will establish a customer
business unit (CBU) appropriately staffed to handle the enrolled BCBSM / BCN
population.

 

D.                                    Provider shall respond to all inquiries
from Physicians and Members and shall maintain a toll free telephone line

 

E.                                      Provider shall comply with the customer
service requirements and standards contained in Addendum E.

 

F.                                      Provider must demonstrate an ability to
cooperate with BCBSM and BCN, their Members and Groups and Physicians.

 

2.7                                 Operational Service Requirements and
Standards

 

A. Provider shall comply with the operational service requirements and standards
contained in Addendum E.

 

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2.8                                 Contractual Service Requirements

 

A. Provider shall comply with the contractual service requirements contained in
Addendum E and the requirements contained in the Statement(s) of Work, which is
incorporated herein by reference.

 

2.9                                 Disease Management

 

A.                                   Disease management services are included in
Provider’s service program and shall be provided to BCBSM and BCN.

 

B.                                     The parties’ statement of work shall
address the following, if applicable:

 

1                  A              description of the disease management
program—the disease states/medications covered (as agreed upon by Provider,
BCBSM and/or BCN);

 

2.                                       The objective of the program—the goals,
what will be measured;

 

3.                                       The program specifications—an
explanation of how the program will work. This section shall also specify the
party responsible for any action that needs to be taken as part of the program;

 

4.                                       Program reporting—what will be
measured, how it will be measured, the frequency and timeliness of the
reporting;

 

5.                                       Expectations—Group specific
expectations of the results of the program. The templates from the reporting
section should be used to demonstrate expected results based on past history of
the client modeled against the provider’s book of business, with appropriate
demographic weighting;

 

6.                                       Performance guarantees associated with
the program, if applicable; and

 

7.                                       Implementation timeline.

 

C.                                     Provider will educate patients about
their disease state (including long term and short term effects if treated and
untreated) and their medication (including benefits, side effects and drug
interactions);

 

D.                                    Provider will coordinate patient education
and management with BCBSM’s and/or BCN’s Case Management departments.

 

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2.10                           Prior Authorization

 

A.                                   Provider’s service program includes prior
authorization services. If BCBSM and BCN elect to use Provider’s prior
authorization services, Provider shall utilize BCBSM’s and BCN’s existing prior
authorization standards and criteria (the Existing Prior Authorization
Standards). In addition, BCBSM and BCN will work with Provider to develop the
criteria to be applied by Provider in determining whether to designate certain
BCBSM and/or BCN Covered Services as requiring prior approval before dispensing
(“the Prior Authorization List”). BCBSM and BCN will have final approval of the
Prior Authorization List.

 

B.                                     BCBSM and BCN will work with Provider to
develop additional prior authorization criteria and standards to be applied by
Provider to all or select BCBSM and/or BCN Covered Services in determining
whether to grant prior authorization (“the Prior Authorization Standards”).
BCBSM and BCN will have final approval of the Prior Authorization Standards.

 

C.                                     Provider agrees to dispense Covered
Services in accordance with the Prior Authorization List, Existing Prior
Authorization Standards, and additional Prior Authorization Standards, including
Provider’s review of physician supplied documentation, Provider’s follow up with
physician and return of prescriptions to Members with appropriate explanations
when prior authorization for dispensing is denied by Provider. In addition,
Provider will follow up with the physician when a prescription is not legible or
complete.

 

D.                                    Provider shall not return unfilled any
prescription to a Member unless Provider provides a written explanation to the
Member stating the reason for the return of the prescription and advises the
Member and the Member’s Physician of the Member’s right to appeal the coverage
denial. The appeal should be directed to BCBSM at the following address:

 

Blue Cross Blue Shield of Michigan
Pharmacy Department 27000 West 11
Mile Mail Code B. 780 Southfield, Ml
48024

 

Or to BCN at the following address or phone:

 

Provider

Blue Care Network

Appeals/Care Management—Mail Code C336

PO Box 5043

Southfield, Ml 48086-5043

Phone (248) 799-6312

Fax (248) 223-5474

 

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Member

Appeals and Grievance Unit - Mail Code C248

Blue Care Network

P.O. Box 248

Southfield, Ml 48086

Phone 1-800-662-6667

Fax 1-888-458-0716

 

E.                                      BCBSM and BCN will respond to the first
and second level appeals of the coverage denials.

 

F                                         Provider will comply with the BCBSM
and BCN member appeals procedure and abide by decisions reached through that
procedure.

 

2.11                           Dispensing and Delivery Procedures

 

A.                                   Provider agrees to dispense Covered
Services in a manner that conforms to all applicable federal, state and local
laws, rules and regulations including but not limited to those relating to the
procurement and dispensing of prescription drugs and other pharmaceutical
products, fraud and abuse, discrimination, disabilities, confidentiality,
self-referral, false claims and prohibition of kickbacks; with Pharmacist
Professional Judgment; with the ethical standards and standards of professional
conduct and practice prevailing in the pharmacy community; with provider manuals
guidelines and other provider communications, all BCBSM and BCN requirements;
and the terms and conditions of this Agreement.

 

B.                                     Provider shall dispense the quantity of
prescription drugs indicated on the prescription order, up to a maximum of a
ninety (90) day supply per prescription or refill, or as otherwise permitted
under the Member’s Certificate and Program Requirements, subject to the
professional judgment of the dispensing pharmacist, any legal limitations
imposed on the dispensing of controlled substances, and the manufacturer’s
recommendations. Prescription orders may be refilled provided the prescription
order so states. Prescription orders will not be filled (i) more than twelve
(12) months after issuance for non-controlled substances, (ii) more than six
(6) months after issuance for controlled substances or (iii) if prohibited by
applicable law or regulation.

 

C.                                     Provider agrees to provide Covered
Services to Members with the same quality and in the same manner as to
Provider’s other patients and without any prohibited discrimination.

 

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D.                                    Provider will use Pharmacist Professional
Judgment in determining whether drug contra-indications/adverse reactions
may exist and whether the drug therapy prescribed exceeds acceptable norms. In
such situations, Provider must contact the Prescriber to verify the prescription
information prior to dispensing and document the results of the Prescriber
interaction in terms of the necessity and appropriateness for dispensing the
prescription as written. This documentation must be maintained for audit
purposes and shall be provided to BCBSM and BCN upon request.

 

E.                                      Provider shall dispense generic
equivalent prescription drugs unless “Dispense as Written” is required by the
physician, or unless the Member requests brand name prescription drugs. If a
Member requests a brand name prescription drug when a generic drug is available,
the Member will be responsible for paying the difference in cost between the
brand and generic drugs, as well as the Member co-payment and deductible if
required by applicable Plan Design.

 

F.                                      Except as otherwise provided in 2.11 B.
and C, all matters pertaining to the dispensing of prescription drugs or to the
practice of pharmacy in general are subject to the dispensing Pharmacist
Professional Judgment.

 

G.                                     Provider shall supply stamped,
preaddressed envelopes for use by Members in mailing their orders to Provider at
Provider’s expense.

 

H.                                    Covered Services will be shipped to
Members “signature required,” at Provider’s expense. In cases when the patient
cannot sign for the package, the courier/carrier may leave the package without
receiving a signature, provided that the patient signs and returns the enclosed
delivery document to Option Care. The package shall be deemed delivered when the
courier/carrier confirms delivery. All prescriptions will be sent in a manner to
assure the integrity of the prescriptions per manufacturer specifications,
including temperature controls.

 

I.                                         Where appropriate, Provider will
dispense Ancillary Products to Members with Specialty Medication orders.

 

J.                                        Provider shall support next-day
delivery.

 

K.                                    Provider shall support same-day (stat)
delivery directly (or in partnership with a Michigan based pharmacy).

 

L.                                      Where a Member does not receive an item
due to provider error, including but not limited to Provider’s shipment of the
wrong item, damaged items, or items that are shipped but not received, Provider
shall immediately correct the error via overnight shipping.

 

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M.                                 If Provider makes an error in dispensing a
Covered Service, Provider shall issue a credit to the Member for the amount the
Member was charged for the Covered Service along with a written explanation of
the reason for the credit. If there is no activity on the account for 60 days,
Provider will issue a refund to the Member. Provider will dispense and ship the
correct Covered Service immediately upon notification of the mistake and will
cover the cost of shipping. Provider shall also credit BCBSM/ BCN, as
appropriate, for the error and send written notice to BCBSM identifying the
Member by name and I.D., the Specialty Medication and Ancillary Products at
issue, the error, the cost of the Specialty Medication, the amount of the credit
provided to BCBSM/BCN, and the amount credited/refunded to the Member. Provider
shall provide any additional the information requested by BCBSM and BCN. Notice
shall be sent pursuant to section 15.1.

 

N.                                    Provider will implement appropriate
quality controls to prevent the dispensing of counterfeit prescription drugs and
drugs illegally imported from foreign countries.

 

O.                                    In the event of an over-payment by a
Member or Physician, Provider will issue a credit to the Member or Physician,
along with a written explanation for the reason for the credit. Provider shall
apply credits to open receivables as applicable. If there is no activity on the
Member’s or Physician’s account sixty (60) days after the credit is issued and
no open receivable exists, Provider shall issue a refund to the Member or
Physician in the amount of the overpayment.

 

In the event of an under-payment by a Member or Physician, the Provider shall
nevertheless dispense the drug as indicated and invoice the Member or Physician
for the underpayment.

 

In the event of an overpayment to BCBSM/BCN, Provider shall issue a credit to
BCBSM/BCN. In the event of an underpayment to BCBSM/BCN, Provider shall issue an
invoice in the amount of the underpayment to BCBSM/BCN. In the event of an
overpayment or underpayment to or by BCBSM or BCN, Provider shall send BCBSM/BCN
written notice of such over/under payment along with a written explanation of
how the overpayment/underpayment occurred, the amount of same, and the amount of
over/under payment attributable to individual BCBSM/BCN members.

 

Provider will reconcile overpayments (i.e. credits), underpayments, and any
amount owing to or by BCBSM and/or BCN due to errors in dispensing, monthly, on
the last day of the month, and will provide a monthly report to BCBSM and BCN
regarding the same. If BCBSM and/or BCN owe Provider additional funds due to
underpayments, Provider will invoice BCBSM and/or BCN and will explain the
reason for the underpayment on the invoice. BCBSM and BCN have the right to deny
recovery of underpayments incorrectly made. If Provider owes

 

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BCBSM and/or BCN money due to overpayments, Provider will issue a check to
BCBSM/BCN with a voucher describing the reason for the check.

 

P. Provider will accept personal checks, cashier checks, money orders and credit
cards as well as other methods of payment for Covered Services. In the event
that Members are not able to afford their lump sum out-of-pocket expense,
Provider may provide payment plans to assist affordability of care.

 

Q.                                    Delivery is guaranteed by Provider.
Provider will respond promptly to all claims by Members for non-delivery or of
delivery of less than the full amount. In the event of a claim of non-delivery
or delivery of less than the full amount and Provider cannot prove that delivery
occurred, Provider shall immediately replace the order (or the amount shorted)
without charge and shall ship the order via overnight mail.

 

R.                                     Provider will reverse claims for
shipments that are lost or damaged within two weeks of discovery of such loss or
damage. Or, alternatively, Provider shall reship at no additional charge (no
bill is issued). If a claim cannot be reversed or reshipped at no charge, it
will be handled in the same manner as a dispensing error.

 

S.                                      In the event that it becomes
impracticable, for reasons of a force majeure or otherwise, for Provider to
dispense Covered Services to Members, Provider shall notify BCBSM, BCN and use
reasonable efforts to have these items dispensed from an affiliated mail
services pharmacy, subject to BCBSM/BCN approval and applicable laws and
regulations.

 

T.                                     Sections 2.11 M, O, Q and R shall survive
termination or expiration of this Agreement.

 

2.12                           Performance Guarantees

 

A.                                   Provider agrees to the performance
guarantees as stated in Addendum F. Failure to meet one or more of the
performance guarantees shall subject provider to the associated penalties.
Provider’s obligations under this section shall survive termination or
expiration of this Agreement.

 

B.            Provider, BCBSM and BCN may negotiate additional performance
guarantees with defined financial risk as part of the RFP process. In that
event, those performance guarantees and associated penalties will be reflected
in a separate document, signed by the parties and incorporated herein by
reference. Provider must meet the negotiated performance guarantees and will be
subject to the financial penalties for failure to meet the guarantees.

 

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C.                                     Provider shall monitor and track each
performance guarantee on a monthly basis which shall include trend analysis;
provide a written report on each performance guarantee on a calendar quarter
basis within thirty (30) days following the end of each calendar quarter; and
reconcile any penalties on a calendar year basis, any applicable penalties or
other amounts due to be paid out by April 1st following the end of each calendar
year (e.g., any applicable penalties or other amounts due for performance during
2006 shall be paid by April 1, 2007). During the first year of the Agreement,
Provider shall track performance beginning on the Effective Date but performance
guarantees shall only be evaluated beginning January 1, 2007. Written reports
and reconciliations shall be in the form and contain the information requested
by BCBSM and BCN. Provider’s obligations under this section shall survive
termination or expiration of this Agreement.

 

D.                                    Provider shall provide an annual
reconciliation report in the form and containing the content requested by BCBSM
and BCN, by the following April 1st whether or not any penalties or other
amounts are due under the terms of this Agreement. BCBSM and/or BCN reserve the
right to conduct its own verification of any performance analysis or, if no
analysis is provided, of any guarantee, at its expense by utilizing the data
provided by Provider. If such data is insufficient or inaccurate, BCBSM and/or
BCN may, at its sole discretion, designate parties to conduct independent
audits, or utilize other means. Unless otherwise indicated below, Provider shall
monitor, track report and reconcile each performance guarantee separately for
each of BCBSM and BCN. Provider’s obligations under this section shall survive
termination or expiration of this Agreement.

 

E.                                      If BCBSM and BCN receive and validate
complaints from patients, pharmacists, or physicians that Provider has violated
these standards (which complaints have not been accounted for in Provider’s
reports) BCBSM and/or BCN may impose additional penalties consistent with those
penalties referenced in Addendum F.

 

F.                                      BCBSM and BCN may audit Provider at
their convenience and expense to ensure compliance and/or validate compliance
with standards, and may recover amounts owed pursuant to Article VII. Provider’s
obligations under this section shall survive termination or expiration of this
Agreement.

 

2.13                           Claims

 

A.                                   Provider shall establish technical
connections necessary to submit claims using BCBSM’s/BCN’s designated
processors, and Provider agrees to comply with BCBSM’s/BCN’s administrative
requirements governing the use of these systems. Provider shall pay the cost of
all system modifications, line charges

 

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and other communication costs associated with the installation and use of these
systems as well as all fees charged by BCBSM’s/BCN’s claims processors.

 

B.                                     Provider agrees not to turn off edits at
the facility level and to respond appropriately to on-line messages, including
but not limited to edits that may impact the member’s medical status or
coverage. Provider will provide instruction to the patient on use of
medications, information received in on-line drug messages (e.g., DUR), and in
accordance with state and federal law.

 

C.                                     Provider shall submit claims for Covered
Services, including claims for Covered Services where the co-payment is equal to
or greater than BCBSM/BCN’s reimbursement, and any documentation requested in
relation to such claims.

 

D.                                    Provider will not waive or discount the
applicable co-payment/deductible under any circumstance unless authorized by
BCBSM and BCN.

 

E.                                      For Specialty Medications dispensed to
Members for self-administration, Provider will submit claims on-line utilizing
the most current NCPDP format or other designated form as required by BCBSM and
BCN. For Specialty Medications dispensed to physicians for in-office
administration, Provider will submit claims in electronic format using the
professional 837 HIPAA format, or other designated form as required by BCBSM and
BCN. Provider will be able to accept edits according to the most current NCPDP
Telecommunication Standard for on-line claim submissions.

 

F.                                      Provider will submit claims within 60
days of date of service; otherwise BCBSM and BCN are under no obligation to pay
for services rendered.

 

G.                                     To be reimbursed, all claims must be
complete and accurate, including without limitation, reporting the National Drug
Code which correctly indicates the package size from which the prescription was
dispensed, the prescription must be signed or called in by the Prescriber and
received by the Member, and no charge for submission may be made to BCBSM, BCN
or the Member.

 

H.                                    BCBSM/BCN will be permitted to deduct
overpayments (whether discovered by Provider or BCBSM/BCN) from future BCBSM/BCN
payments along with an explanation of the credit action taken. In audit refund
recovery situations, where Provider appeals the BCBSM/BCN determination,
BCBSM/BCN will defer deduction of overpayments until the last unappealed
determination. Audit refund recoveries and other overpayment obligations which
cannot be fully repaid over the course of one month, will bear interest at the
BCBSM/BCN prevailing rate, until fully repaid.

 

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I.                                         Provider will reconcile its
reimbursements and appeal any disputed claims within a maximum of 180 days from
date payment is made. All actions to be initiated against BCBSM must be
initiated within 180 days from the date payment is made.

 

2.14                           Provider Responsibilities Related To Payment

 

A.                                   Except in the event that Member has primary
coverage with another carrier or third party payer, where Covered Services are
purchased by a Physician, and except for applicable co-payments or deductibles,
Provider agrees to look solely to BCBSM and BCN for payment for Covered Services
rendered to Members under this Agreement and to accept payment made in
accordance with this Agreement as payment in full. Provider will in no event,
including but not limited to nonpayment by BCBSM and BCN, insolvency or breach
of this Agreement, bill, charge, collect a deposit from, seek payment from,
maintain any action at law or in equity or have any other recourse against a
Member or person (other than BCBSM and BCN) acting on behalf of Member for
Covered Services provided pursuant to this Agreement. This provision does not
prohibit Provider from collecting charges for supplemental benefits or Co-
payments or Deductibles, where appropriate, or for non-Covered Services provided
to Members on a fee-for-service basis. This provision shall survive termination
or expiration of this Agreement for Covered Services rendered to a Member prior
to termination or expiration regardless of the cause giving rise to such
termination or expiration and shall be construed to be for the benefit of the
Member. This provision is not intended to apply to services provided after
termination or expiration of the Agreement. This provision supersedes any oral
or written agreement to the contrary now existing or hereafter entered into
between Provider and Member or person acting on Member’s behalf, insofar as such
contrary agreement relates to liability for payment of Covered Services provided
to a Member under this Agreement.

 

B.                                     Co-payments and Deductibles Provider
shall not bill or collect from a Member for Covered Services or Non-Reimbursable
Covered Services, except Provider may bill or collect from a Member for any one
or more of the following:

 

1. Provider shall collect from Members payment for the full amount of any
co-payments and deductibles relating to Covered Services except where the Member
share is greater than the cost of the Covered Service, in which case Provider
will credit the Member the difference between the Member’s share and the cost of
the Covered Service provided in Addendum A, or unless authorized by BCBSM and
BCN. However, in no case will a Member be required to pay any amounts denied or
recovered due to overpayment, audit, sanctions or any other reason as a result
of an error by Provider.

 

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C.                                     Nothing in this Agreement shall be
construed to prohibit or otherwise restrict Provider from advising or advocating
on behalf of Member about Member’s health status, medical care, or treatment
options; the risks, benefits and consequences of treatment or non-treatment; or
future treatment decision, regardless of BCBSM or BCN benefit coverage
limitations. It is recognized that Members may consent to receive services that
are not Covered Services or, where authorization is required, have not been
authorized by BCBSM or BCN and therefore may be payable by Member. When Provider
is aware that certain proposed services are not Covered Services or payable by
BCBSM or BCN, Provider must inform Member in advance that such services are not
payable by BCBSM or BCN and must obtain Member’s signed consent to be billed.

 

D.                                    Provider shall hold BCBSM and BCN harmless
from any responsibility for Member co-payments and deductibles.

 

E.                                      If required by applicable Plan Design,
Provider will collect from all Members the difference in cost between the Brand
Drug and BCBSM’s/BCN’s Multi-source Drug Products List (MAC List) if the Member
refuses substitution of a lower cost generic equivalent drug and the physician
did not require “Dispense as Written.”

 

2.15                           Identification Number - Provider agrees that
Provider’s BCBSM and BCN identification number is the exclusive property of
BCBSM and BCN and may not be sold or transferred.

 

2.16                           Publication - Provider shall permit BCBSM and BCN
to publish Provider’s name and appropriate identifying information in connection
with Provider’s participation in BCBSM’s/BCN’s Specialty Pharmacy program.
Providers’ name and identifying information will be and remain its exclusive
property.

 

2.17                           Reports - Provider shall compile and send to
BCBSM and BCN such reports as BCBSM and BCN shall from time to time request,
including, but not limited to:

 

A.                                   At least monthly, a comprehensive package
of reports that detail utilization by type (Pharmacy / Medical), Billing report,
detail by prescriber, detail by patient, etc.

 

B.                                     Ad hoc reporting as requested.

 

2.18                           Coordination Of Benefits - Provider shall assist
BCBSM and BCN in coordinating benefits and subrogation rights by obtaining
Member’s specific information regarding third party liability.

 

2.19                           Formulary - Provider shall make reasonable
efforts to educate members and prescribers on the benefits of following BCBSM’s
and BCN’s formulary(s).

 

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2.20                           Cooperation - Provider shall cooperate with all
claims submission requests, pharmacy reviews, quality assurance audits and
teams, and utilization review audits and comply with BCBSM and BCN
determinations and corrective action plans.

 

2.21                           Grace Period - In connection with direct to
provider services, Provider will offer physicians an extended grace period of no
less than [ * ] days before assessing finance charges. However, if Physician
consolidates the Physician’s orders to once [ * ], Provider shall offer an
extended grace period of [ * ] days to the Physician before assessing finance
charges.

 

2.22                           Prompt-Pay Discounts - Provider will offer prompt
pay discounts to physicians.

 

ARTICLE III BCBSM AND BCN

RESPONSIBILITIES

 

3.1 A.                 BCBSM and BCN shall promptly furnish eligibility data;
benefit information, including Covered Services, exclusions, deductible and
co-payment amount, as well as drug risk analysis information, such as drug to
drug interactions, ingredient duplications, therapeutic duplications, early
refills, and disease alerts.

 

B.                                     BCBSM and BCN shall provide provider
manuals and any other communications that affect Provider’s participation in the
Specialty Pharmacy program.

 

C.                                     BCBSM and BCN shall give Provider sixty
(60) days prior written notice of substantial modifications to the Specialty
Pharmacy program in accordance with section 3.1 (F). Other changes will be
effective with notice.

 

D.                                    BCBSM and BCN shall provide a mechanism to
receive input from Provider regarding the Specialty Pharmacy program.

 

E.                                      BCBSM and BCN agree to use their best
efforts to maintain and provide access to benefit and eligibility data for each
Member; provided, however, that the data will be subject to retroactive
correction as necessary and access does not guarantee payment for any Covered
Services dispensed.

 

F.                                      Notice of substantial modifications to
this Agreement required to be provided to Provider by BCBSM and BCN will be
provided in writing, sent by first class mail, postage pre-paid, to the address
stated in Section 15.1

 

3.2                                 Payment to Pro vider

 

A.                                   Covered Services Provided to Members —
BCBSM and BCN’s reimbursement obligation for Covered Services provided to
Members is governed by Addendum A.

 

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B.                                     Covered Services Provided To Physicians -
When BCBSM and BCN invoke their option to include Covered Services provided to
Physicians in the pricing offered under this Agreement, then at a date to be
determined by BCBSM and BCN, Provider will provide, through mail order, Covered
Services, in such quantities as Physicians may request from time to time, to
Physicians.

 

1.                                       Covered Services Provided To Physicians
And Billed To BCBSM/BCN By Provider. Covered Services provided to Physicians and
billed to BCBSM/BCN by Provider will be reimbursed according to Addendum A.

 

2.                                       Covered Services Provided And Billed To
Physicians. Covered Services provided and billed to Physicians will be billed to
Physicians at the rates set forth in Addendum A. Provider will look solely to
the Physician for payment for such Covered Services. The remaining terms and
conditions of such orders (including, without limitation, payment and credit)
are subject to negotiation between Provider and Physician.

 

ARTICLE IV MUTUAL

RESPONSIBILITIES

 

As participating Provider under BCBSM’s and BCN’s Specialty Pharmacy Program,
Provider and BCBSM/BCN will assume the following mutual responsibilities:

 

4.1                                 Independent Contractor - Provider, BCBSM and
BCN shall perform as independent contractors. Nothing in this Agreement shall be
construed or be deemed to create a relationship of employer and employee, or
principal and agent, or any relationship other than that of independent parties
contracting with each other for the sole purpose of carrying out this Agreement.

 

4.2                                 Independent Status. This Agreement is
between Provider, BCN and BCBSM, an independent corporation licensed by the Blue
Cross Blue Shield Association (BCBSA) to use the Blue Cross and Blue Shield
names and service marks in Michigan. However, BCBSM is not the agent of BCBSA
and, by accepting this Agreement, Provider agrees that it made this Agreement
based only on what it was told by BCBSM, BCN or their agents. Only BCN and BCBSM
have an obligation to Provider under this Agreement and no other obligations are
created or implied by this language.

 

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4.3                                 Confidential Information - Provider
acknowledges that all information, written or oral, acquired from BCBSM and BCN
is the sole property of BCBSM and BCN and is considered confidential
(Confidential Information). Provider may disclose this Confidential Information
to third parties only with BCBSM’s and BCN’s written consent. All files or other
documents, including but not limited to, photocopies, microfiche, microfilm and
electronic data, supplied to Provider by BCBSM and BCN will remain BCBSM’s and
BCN’s property and will promptly be returned to BCBSM and BCN at the conclusion
of the work. At the conclusion of the work, Provider will also deliver a written
statement that a diligent search and inquiry has been made for any BCBSM and BCN
documents delivered to contractor during its engagement and that all BCBSM and
BCN documents are returned. Provider has no right to keep or use any BCBSM or
BCN documents or information after the engagement is completed, except to the
extent required to document its compliance with professional work standards.

 

4.4                                 Proprietary Information - BCBSM and BCN have
proprietary rights to various systems and databases and data contained in those
systems and databases, pertaining to its business matters. BCBSM’s and BCN’s
proprietary rights include ownership rights in all claims, Member, provider, and
customer data in all forms, including but not limited to raw data as well as
statistical compilations, both electronic and hard copy; trade secrets; patents;
copyrights; trademarks; algorithms; tables; documentation; processes; and
techniques currently existing or subsequently upgraded or modified (Proprietary
Information). Provider may use BCBSM’s and BCN’s Proprietary Information during
the course of this Agreement only as permitted under this Agreement. Provider
may not keep or use Proprietary Information, including paid claims data,
belonging to a Group shared with BCBSM and BCN for the purpose of having the
Group’s pharmacy benefit administered under this Agreement. Notwithstanding the
foregoing, Provider may use non-BCBSM/BCN or non-patient identifiable data for
statistical compilation purposes. Provider may not use, sell or disclose this
information to any third party without BCBSM’s/BCN’s written consent. Upon
BCBSM’s/BCN’s request, no more than annually, Provider will warrant in writing
its compliance with this provision.

 

4.5                                 Subject to the other terms of this
Agreement, BCBSM and BCN will have the right to access and use and share with
BCBSM and BCN Groups, all Provider data as reasonably necessary to administer
the Agreement.

 

4.6                                 Individually Identifiable Health Information

 

A. The parties acknowledge that certain member-specific information, reports and
data generated under this Agreement are subject to state and federal
confidentiality laws and regulations. The parties agree to comply in all
material respects with these laws regulations.

 

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B.                                     Provider will maintain as confidential
medical records or any of the information contained therein, as well as
aggregate data that could implicitly identify an individual, to third parties.
Provider will obtain appropriate consent from members for release of medical
records or any information contained therein, to third parties.

 

C.                                     Additional requirements regarding the
parties obligations with respect to the handling of Individually Identifiable
Health Information (IIHI) are set forth in the terms attached and made part of
this Agreement as Addendum B (the Business Associate Addendum).

 

4.7                                 Publication - Neither party may use
information identifying the other party without prior written consent, except as
otherwise provided in this Agreement. Upon termination or expiration of this
Agreement, all use of identifying information will cease.

 

4.8                                 Fraud and Abuse - Provider and BCBSM/BCN
shall mutually agree on actions to be taken to prevent and detect fraud and
abuse in the operation of the Specialty Pharmacy program.

 

ARTICLE V RECORDKEEPING

AND AUDITS

 

5.1                                 Records

 

A.                                   Provider shall maintain accurate records,
in a current, detailed, organized and comprehensive manner, of all matters
relating to Provider’s obligations under this Agreement. These records must be
kept for seven (7) years from the date of performance of the last Covered
Service, be in writing, comply with applicable state and federal laws, generally
accepted business and customary pharmacy practice, this Agreement, and be
available for examination and audit without charge. Provider’s obligations under
this section shall survive termination or expiration of this Agreement.

 

5.2                                 Audit

 

A.                                   Provider will permit BCBSM and BCN or, at
BCBSM’s/BCN’s discretion, BCBSM’s and BCN’s duly authorized representatives, to
audit review and duplicate these records and any other records in Provider’s
possession which relate to Provider’s obligations under this Agreement, upon
reasonable notice and during regular business hours.

 

B.                                     Audits include standard BCBSM and BCN
review of Provider’s records relating to Members, facilities and billing of
Covered Services. Provider shall provide BCBSM and BCN with documentation of
provider’s last inspection by its State Board of Pharmacy and all other
inspections (e.g., flow hood inspection,

 

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etc.). Continued participation may be affected by Provider’s performance,
including quality and utilization reviews conducted under all BCBSM and BCN
programs

 

C.                                     Audits will be conducted pursuant to
BCBSM’s and BCN’s standard business practices. BCBSM and BCN have the right to
audit Provider’s records up to 4 years after termination or expiration of this
Agreement. Once audits are complete, that audit is considered closed and is no
longer eligible for further audits. However, this shall not prevent BCBSM and
BCN or Provider from complying with requests for audit from external sources
(such as customer groups, government agencies, etc.).

 

D.                                    BCBSM/BCN Group Audits. Provider
acknowledges that BCBSM’s/BCN’s groups have the right to audit prescription drug
claims. BCBSM and BCN shall use reasonable efforts to contractually limit the
scope of a BCBSM/BCN Group audit. Upon notice from BCBSM/BCN, Provider will
fully cooperate with any such audit request and shall provide the necessary data
and documents.

 

5.3                                 Access

 

A.                                   In accordance with applicable laws and in
particular HIPAA record access standards, Provider shall provide BCBSM and BCN
representatives’ reasonable access to the pharmacist, the premises, and member
pharmacy records to: inspect equipment and space related to the provision of
Covered Services; to perform utilization and quality management; facilitate the
adjudication of claims; perform peer review activities; handle member
complaints; conduct financial audits; and duplicate records. Access to the
premises is without charge.

 

B.                                     Provider shall make Member records and
related information available as BCBSM and BCN deem necessary to administer this
Agreement. Records must also be promptly available when a member transfers to
another Provider.

 

C.                                     Upon reasonable request by BCBSM and BCN
or a BCN Member’s primary care physician, Provider shall provide copies of the
Member’s pharmacy records and Member encounter data to BCBSM and BCN or the BCN
primary care physician, as applicable, without additional charge.

 

D.                                    Provider agrees to allow the Michigan
Office of Financial and Insurance Services, NCQA or their authorized
representatives to access: (1) Provider’s premises for the purpose of inspecting
the equipment and space used to provide services to Members, (2) the pharmacy
records of those Members as permitted or required under applicable state and
federal law, and (3) financial records as they pertain to prescription drug
coverage.

 

E.                                      This Article shall survive termination
or expiration of this Agreement.

 

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ARTICLE VI

INDEMNIFICATION

 

6.1                                 Provider agrees to defend, indemnify and
hold BCBSM, BCN and their officers, directors, employees, Groups and Members
(“BCBSM and BCN Indemnities”) harmless from and against all claims, liabilities,
damages, causes of action, losses, injury, demands, costs and expenses,
including legal fees, that arise out of or result from, or allege to arise out
of or result from, the acts or omissions of Provider, its officers, directors,
employees, subcontractors, other agents, and/or anyone for whose acts the
Provider, and not BCBSM/BCN, may be liable, including claims by pharmaceutical
manufacturers arising out of, or relating to, or allegedly arising out of or
relating to, Provider’s contracts with such manufacturers.

 

6.2                                 In furtherance of the foregoing indemnity
and not in limitation therefore, Provider agrees that BCBSM and BCN are entitled
to all incidental and consequential damages resulting from a breach of
Section 6.1 of this Agreement by Provider, including but not limited to,
expenses incurred to recover from the breach. Vouchers or other evidence showing
payment amounts to be paid to BCBSM and BCN of any loss, damage or expense
resulting from breach of the Agreement shall be conclusive evidence against
Provider of the fact and amount of Provider’s liability.

 

6.3                                 This Article shall survive termination or
expiration of this Agreement.

 

ARTICLE VII RIGHT

OF RECOVERY

 

7.1                                 BCBSM and BCN reserve the right to and
Provider agrees that BCBSM and BCN may recover for amounts paid for Covered
Services not meeting applicable benefit criteria, Program Requirements,
performance guarantees, legal, contractual, quality management, utilization
management or administrative requirements. BCBSM and BCN may also recover any
overpayments for Covered Services that were incorrectly made, or are: not
verified through Provider’s records; not received by the Member; furnished when
license(s) was lapsed, restricted or revoked, or suspended; or that do not meet
the standards of professional conduct prevailing in community.

 

7.2                                 BCBSM and BCN will not utilize statistical
sampling methodologies to extrapolate refund requests on medical necessity
issues identified through sampling. BCBSM and BCN may extrapolate refund
recoveries from statistically valid samples involving issues other than medical
necessity, including, but not limited to, procedure code billing errors.

 

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7.3                                 BCBSM and BCN may offset any amounts owed by
Provider against any amounts BCBSM and/or BCN owe Provider under any BCBSM or
BCN program.

 

7.4                                 Recovery and offset related to billing code
errors and other business matters confirmed by audit may be based on statistical
sampling methodology.

 

7.5                                 BCBSM and BCN will have the right to
initiate recovery or offset of amounts paid up to [ * ] from the date of
payment; however there is no time limitation on recovery or offset in instances
of fraud and the right to recover or offset shall survive termination or
expiration of this Agreement.

 

ARTICLE VIII

ASSIGNMENT

 

8.1                                 Assignment - Any assignment of this
Agreement by either Party without the prior written consent of the other shall
be void, except that BCBSM and BCN may assign to any affiliate or subsidiary
upon notice.

 

8.2                                 Successor In Interest - Provider agrees that
upon transfer of at lease one-half of Provider’s pharmacy business assets,
Provider will provide a signed agreement from the successor stating that
successor assumes liability for any amounts for which Provider may owe but has
not paid to BCBSM and BCN under this Agreement, and upon determination by BCBSM
and BCN that reasonable grounds exist to question pharmacy’s ability to pay any
amounts it may owe under this Agreement, Pharmacy will establish an escrow
account or Letter of Credit in an amount satisfactory to BCBSM and BCN. Such
assumption of liability shall be one of the conditions for BCBSM and BCN
approval of any successor in interest as a participating provider. Such
assumption of liability shall not release Provider from the indebtedness unless
an agreement to that effect is entered into between BCBSM, BCN and Provider.

 

8.3                                 Successor Participation - Upon sale or other
transfer of Provider’s specialty pharmacy business, Provider must inform the
successor pharmacy in writing that there in no guarantee that BCBSM and BCN will
accept successor as a participant under this agreement.

 

ARTICLE IX AMENDMENT

AND WAIVER

 

This Agreement may be amended by BCBSM and BCN at any time with sixty (60) days
prior written notice for any substantial modifications to Agreement in
accordance with section 3.1 (F), except that BCBSM and BCN may not amend
Addendum A without the written consent of Provider. All other amendments by
BCBSM and BCN shall be effective with thirty (30) days notice to Provider. This
Agreement may also be amended by written agreement executed by the parties
thereto. No waiver of any of the provisions of this Agreement shall be valid

 

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unless in writing and signed by the appropriate representatives of BCBSM, BCN
and Provider, against whom such a waiver is being sought. No waiver of one or
more of the provisions of this Agreement or failure to enforce the Agreement by
either of the Parties hereto shall be construed as a waiver of any subsequent
breach of the Agreement or any of its provisions.

 

ARTICLE X TERM, RENEWAL AND

EXPIRATION

 

10.1                           This Agreement shall remain in force for a Term
of three and one half (3 1/2) years from the Effective Date, until September 30,
2009, and shall automatically renew thereafter for one (1) year term unless
written notice is given pursuant to Article XV.

 

10.2                           This Agreement may be terminated by BCBSM and
BCN, without cause, on ninety (90) days written notice to Provider, which notice
shall be provided pursuant to Article XV.

 

10.3                           Provider shall provide prompt written notice to
BCBSM and BCN of any of the following, and BCBSM and BCN may terminate this
Agreement immediately if: 1) Provider’s license, DEA registration or Medicare or
Medicaid participation status is lapsed, restricted, suspended or revoked or
Provider is placed on the List if Excluded Individuals/Entities or List of
Debarred Contractors as published by the General Services Administration; 2) If
any formal action or investigation is initiated by any government agency
involving Provider or any health care entity in which Provider holds more than
5% interest, or any claim is made against Provider relating to fraud, abuse,
self-referral, false claims, kickbacks, or any claims involving Medicare,
Medicaid, FEP or other health care programs or insurance carriers; 3) if
Provider or any officer/director/owner of Provider pleads guilty to or is
convicted of fraud or a felony relating the provision of health care; 4) if
Provider ceases to offer mail order services; 5) bankruptcy proceedings are
initiated by or against Provider; 6) if Provider’s liability insurance is
reduced below require amounts or terminated or 7) in the event of a Change in
Control of Provider. “Change in Control” shall be defined as (1) consolidation
or merger of Provider with or into any entity, (2) sale, transfer or other
disposition of all or substantially all of the assets of Provider or
(3) acquisition by any entity, or group of entities acting in concert, of
beneficial ownership of twenty (20%) percent or more of the outstanding voting
securities of the Provider.

 

10.4                           This Agreement may be terminated immediately by
BCBSM, BCN or Provider where there is a material breach in the Agreement by the
other Party that remains uncured thirty (30) days after written notice of the
breach specifying the nature of the breach, which notice is provided pursuant to
Article XV.

 

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10.5                           This Agreement may be terminated immediately by
BCBSM and BCN if, during the term of this Agreement BCBSM and/or BCN lose two
(2) or more existing Groups of over 100,000 lives each to an independent
relationship with Provider.

 

10.6                           Upon termination or expiration of this Agreement,
BCBSM and BCN shall be obligated to pay claims to the Provider only for Covered
Services dispensed through the date of termination or expiration.

 

10.7                           The expiration or termination of this Agreement
or any changes as provided in the Agreement shall not terminate or otherwise
limit BCBSM’s and BCN’s right of recovery from Provider as set forth in
Article VII of this Agreement, which right shall survive this Agreement.

 

10.8                           Obligation to Cooperate. Upon notice of
termination of this Agreement, Provider shall cooperate fully with BCBSM and BCN
and comply with BCBSM and BCN procedures, if any, in the transfer of Members to
other Providers.

 

10.9                           Material breach. A material breach of this
Agreement includes but is not limited to: (i) termination of this Agreement by
any party for any reason not permitted in Article X, including termination of
this Agreement by Provider as a result of financial losses or the inability to
satisfy the financial guarantees or (ii) material failure of any party to comply
with the provisions of Article XIV of this Agreement. The Provider acknowledges
and agrees that a material breach described in (i) and (ii) will cause BCBSM and
BCN great economic damage as well as other associated damage, including loss of
reputation and credibility with customers and others. The parties agree that the
precise amount of damages for these non-economic losses would be difficult or
impossible to ascertain. Therefore, the parties agree that (i) in the case of a
material breach based on a wrongful termination of this Agreement by Provider,
Provider will pay BCBSM and BCN liquidated damages in the amount of [ * ]
Dollars to compensate them for non-economic losses. The parties agree that this
liquidated sum is reasonable and is not a penalty. Payment of liquidated damages
under this provision will not prejudice BCBSM and BCN’s right to pursue other
available remedies including recovery of actual contract damages arising out of
the material breach.

 

10.10                     When this Agreement terminates or expires:

 

A.                                   The liability of the parties for
obligations incurred prior to the termination or expiration date will survive
termination or expiration;

 

B.                                     BCBSM and BCN may, at their election,
extend this Agreement for a maximum of six (6) months as necessary for the
orderly transfer of administration;

 

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C. In connection with the transition, upon termination or expiration, Provider
will cooperate by forwarding to the entity or entities designated by BCBSM and
BCN-

 

1)                                      A minimum of twelve (12) months
utilization history;

 

2)                                      Unprocessed Provider and Member
submitted hard copy claims;

 

3)                                      Unfilled mail order prescription and
open refill files;

 

4)                                      Open prior authorizations and support
documentation;

 

5)                                      Any other information the parties
mutually agree is necessary for the transition.

 

ARTICLE XI DISPUTES

AND APPEALS

 

Disputes arising under this Agreement must first be appealed through the BCBSM
and BCN appeals process. This requires that, within thirty (30) days of an
adverse determination or breach of this Agreement, Provider file a written
response documenting Provider’s position. Within thirty (30) days of receipt of
sufficient documentation, BCBSM and BCN will schedule an informal conference
with the Provider in an effort to resolve the dispute. If the conference fails
to resolve the dispute, Provider may pursue independent review or remedies.

 

ARTICLE XII BUSINESS CONTINUITY AND DISASTER

RECOVERY

 

12.1                           Business Continuity Plan. Provider shall
institute a business continuity plan that includes prudent executive succession
planning and executive travel policies consistent with industry standards.

 

12.2                           Disaster Recovery Plan.

 

A.                                   Provider shall maintain and document a
comprehensive Disaster Recovery program for all technical systems (computer,
telephone, fax, etc.).

 

B.                                     Provider’s disaster recovery plan shall
provide for the backup, storage and restoration of data and information used and
generated as a result of this Agreement.

 

C.                                     Provider’s disaster recovery plan shall
enable Provider to perform its duties, obligations and services under this
Agreement within forth-eight (48) hours of a disaster.

 

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D.                                    Disaster means any occurrence, natural or
otherwise, that materially affects Provider’s ability to perform its duties and
obligations under this Agreement.

 

E.                                      Provider’s disaster recovery plan shall
comply with HIPAA regulations and good business practices.

 

ARTICLE XIII

SERVICE MARKS

 

13.1                           It is understood by the parties that the Blue
Cross and Blue Shield Trademarks (the Blue Cross and Blue Shield names and
symbols) are owned by the Blue Cross and Blue Shield Association and licensed by
the Association to Local Blue Cross and/or Blue Shield Plans and their
affiliates for their respective licensed geographical areas. Accordingly,
Provider will not obtain under this Agreement any rights to these Marks and will
not conduct any activity or make any statement, written or oral, that
may constitute an infringement upon the use of these marks by the Blue Cross and
Blue Shield Association or any licensed Blue Cross and/or Blue Shield plan.
Provider will indemnify and hold harmless BCBSA and any licensed Plan against
any action, claim or loss arising from any infringement by Provider including
all costs and reasonable attorneys’ fees.

 

13.2                           It is also understood by the parties that any
trademarks owned by either party are its exclusive property and may only be used
as permitted by or licensed by it. Accordingly, no party will obtain any rights
to the other’s marks and will not conduct any activity or make any statement,
written or oral, which in any manner may constitute an infringement upon the
other party’s use of its marks. Each party will hold harmless and indemnify the
other against any action, claim or loss arising from any infringement of its
marks, including all costs and reasonable attorneys’ fees.

 

13.3                           This Article survives termination or expiration
of this Agreement.

 

ARTICLE XIV

MARKETING PROTOCOL

 

14.1                           Each party to this Agreement has considerable
complementary expertise in various aspects of the marketing and provision of
Specialty Pharmacy services. The parties shall coordinate their efforts in a
teaming arrangement to more effectively and efficiently promote their respective
services to existing and potential BCBSM and BCN customers by establishing the
following marketing arrangement. Any limitations are based on the fact that
BCBSM, BCN and Provider have shared and will be sharing confidential information
with respect to certain groups such as utilization data or prescribing patterns
of physicians within BCBSM’s and BCN’s service area, which would provide
Provider with a

 

28

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competitive advantage in submitting an independent competing bid for any BCBSM
and BCN group or potential group.

 

14.2                           BCBSM and BCN shall have the sole responsibility
for marketing specialty pharmacy drug plans to Michigan headquartered groups.
However, the provisions of this Article do not apply to any federal government
group plan; to any group that is headquartered outside the State of Michigan but
has a division, subsidiary or affiliate located in the State of Michigan; or
third party administrators, health plan carriers (e.g. health maintenance
organizations, preferred provider organizations etc.) or other insurance
companies.

 

14.3                           In recognition of this teaming arrangement, with
respect to existing and potential groups, BCBSM, BCN and Provider shall
coordinate with and convey to them the specialty pharmacy program offered by
them as a team under this Agreement. However, the parties recognize that from
time to time a potential group may directly approach a party to obtain a
separate bid or to otherwise discuss establishing an independent relationship
with such party relative to one or more of the services that are intended to be
jointly offered by the parties under this Agreement. Under such circumstances,
the party that is approached by the potential group shall immediately notify the
other party that it has been contacted and shall advise the potential group that
a teaming arrangement is place which requires the parties to submit a joint
response to the bid for the services that are contemplated by this Agreement.

 

The party shall also describe to the potential group the value of the teaming
arrangement and request that the potential group allow a joint response to the
bid. If the potential group declines the request for a joint response to the bid
and instead insists on receiving a separate bid or having independent
discussions with a party, then before such bid or discussions may occur, the
party will notify the other party that it believes it has fulfilled the
requirements of this paragraph and intends to proceed with a separate bid or
discussions. The party not bidding or having such discussions may nevertheless
have contacts with a potential group that is otherwise permissible. Furthermore,
following the Group’s decision, the parties will discuss the circumstances
surrounding the decision; the parties shall discuss the circumstances
surrounding the decision and devise ways to strengthen their teaming
arrangement.

 

14.4                           This Section shall not apply if a potential group
(a) expressly excludes a party from bidding on its business after being notified
of the relationship between the parties; (b) requests separate bids from any of
the parties; or (c) specifies that it no longer desires to have its specialty
pharmacy drug program administered by the parties pursuant to the terms of this
Agreement; or d) is an existing Provider account that includes retail
prescription drug services. In such cases, the parties may separately market
their services to the group. However, based on the substantial volume of BCBSM’s
and BCN’s business and the resulting increased efficiencies and financial
benefits that accrue to all parties, during the term of this

 

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Agreement, Provider agrees that the pricing in Addendum A shall be no less
favorable than the pricing Provider offers to any third party for comparable
volume, services and prescription drug plans. Upon BCBSM’s or BCN’s request,
Provider shall warrant that it has complied with this Section.

 

14.5                           The provisions of this Article will not prohibit
Provider from providing similar specialty pharmacy services to other Blue Cross
Blue Shield Plans, carriers, HMO’s, third party administrators, or other similar
entities (whether or not these entities are competitors of BCBSM and/or BCN).
BCBSM and BCN reserve no rights with respect to Provider’s other business,
except to the extent that any activity may be reasonably construed as in
conflict with BCBSM’s and BCN’s rights as set forth herein. In case of such
conflict, provider shall not provide such other services. Financial interest in
a competing organization consisting of ownership of publicly traded securities
is not considered a conflict of interest for the purposes of this paragraph.

 

14.6                           During the term of this Agreement and for one
year after, Provider agrees that no Provider personnel working on BCBSM and BCN
business will have any financial interest in any person or organization that
competes with BCBSM without BCBSM’s prior written consent. This provision does
not require disclosure if the financial interest in a competing organization
consists of ownership of publicly traded securities.

 

14.7                           This Article will not prevent BCBSM and BCN from
entering into other marketing arrangements with other providers/vendors or PBM’s
relating to specialty, retail or mail order pharmacy business.

 

14.8                           This Article will not prevent BCBSM and BCN from
contracting with other providers/vendors or PBM’s with respect to specialty,
retail or mail order pharmacy business.

 

ARTICLE XV

MISCELLANEOUS

 

15.1                           Notices - Unless otherwise permitted by the
Agreement, all notices required under this Agreement shall be in writing and
sent by First Class mail, postage paid, addressed as follows:

 

If to BCBSM:

 

Blue Cross Blue Shield of Michigan

C/o Pharmacy Services

MC B774

27000 W. 11 Mile Road.

Southfield Michigan 48034

Attention: Director Pharmacy Services

 

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If to BCN:

 

Blue Care Network of Michigan C/o Pharmacy Services MC C303

20500 Civic Center Drive Southfield, Ml 48076 Attention: Director of Pharmacy

 

If Care Management for BCN

Blue Care Network of Michigan

C/o Pharmacy Services

MC C336

20500 Civic Center Drive

Southfield, Ml 48076

Attention: Director of Care Management

 

If Provider Appeals to BCN:

Provider

Blue Care Network of Michigan

Appeals/Care Management - MC C336

P.O. Box 5043

Southfield, Ml 48086-5043

Phone (248) 799-6312

Fax (248) 223-5474

 

If Member Appeals to BCN:

Member

Blue Care Network of Michigan

Appeals and Grievance Unit- MC C248

P.O. Box 248

Southfield, Ml 48086-5043

Phone 1-800-662-6667

Fax 1-800-458-0716

 

 

If to Provider:

Corporate

Option Care, Inc.

Attn: General Counsel

485 Half Day Road

Suite 300

Buffalo Grove, IL 60089

 

Copy to:

Corporate

Option Care, Inc.

Attn: CEO

485 Half Day Road

Suite 300

Buffalo Grove, IL 60089

 

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Copy to:

 

Option Care, Inc.

Attn: EVP of Specialty Operations

1350 Highland Dr.

Suite D

Ann Arbor, Ml 48108

 

15.2                           Governing Law and Venue - This Agreement shall be
construed and governed in accordance with the laws of the State of Michigan,
without regard to any conflicts of law principles applied in that State. Any
suit or proceeding relating to this Agreement shall be brought only in Oakland
County, Michigan. Each party consents to the exclusive personal jurisdiction and
venue of the courts, state and federal, located in Oakland County, Michigan.
Provider will, nevertheless, comply with all applicable laws and regulations
governing its operations, including but not limited to Michigan law and the law
in the State in which Provider’s specialty pharmacy is located.

 

15.3                           Enforceability - The invalidity or
unenforceability of any of the terms or provisions hereof shall not affect the
validity or enforceability of any other term or provision.

 

15.4                           Section Headings - Section headings are inserted
for convenience only and shall not be used in any way to construe the terms of
this Agreement.

 

15.5                           Entire Agreement - This Agreement, together with
the Addenda hereto, embodies the entire understanding of the parties in relation
to the subject matter hereof, superseding any prior agreements, understandings
or negotiations, whether written or oral, and shall be binding upon their
successors and assigns.

 

15.6                           Illegal Provisions - If a court determines that
any provision of this Agreement is illegal, the remainder of the Agreement will
remain in full force.

 

15.7                           Subcontract/Delegation  — Provider may not
delegate or subcontract this Agreement without the prior written consent of
BCBSM and BCN and the express consent of the assignee to be bound by all of the
terms and conditions of the Agreement. If BCBSM and BCN consent and Provider
subcontracts or delegates any responsibilities under this Agreement, such
responsibilities must

 

32

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be performed under Provider’s guidance and Provider remains fully responsible
for the performance of such responsibilities.

 

15.8                           Outsourcing - Provider may not outsource any work
under outside the United States this Agreement without the written consent of
BCBSM and BCN.

 

15.9                           Exclusive Provider - Provider is the sole
Specialty Pharmacy mail order provider for BCBSM’s and BCN’s Specialty Pharmacy
program. This does not mean, however, that BCBSM and BCN must obtain Specialty
Pharmacy exclusively from Provider.

 

15.10                     Preferred Customer Status - Provider will treat BCBSM
and BCN as a preferred customer to any BCBSM/BCN requests for enhancements or
product changes.

 

15.11                     Conflicts of Interest - Provider will, at all times,
act in, and protect BCBSM’s and BCN’s, their Groups’ and Members’ best interests
when providing services under this Agreement. Provider will not engage in any
activity that could be reasonably perceived as being directly or indirectly as
in conflict with its obligations to BCBSM, BCN, their Groups or members.

 

15.12                     Non-discrimination - Pharmacy shall provide Covered
Services to Members without regard to health status or health care needs of such
Members. Pharmacy shall not differentiate or discriminate in the provision of
Covered Services to Members on the basis of race, gender, creed, ancestry,
lawful occupation, age, religion, marital status, sexual orientation, mental or
physical disability color, national origin, place of residence, health status,
source of payment for services, cost or extent of Covered Services required,
status as Members, or any other grounds prohibited by law or this Agreement.
Pharmacy shall provide Covered Services to Members: (a) in no less than the same
manner and in accordance with at least the same standards as offered to
Provider’s patients who are not Members; and (b) in accordance with at least the
same standard of practice, care, skill and diligence customarily used by
similarly situated pharmacies at the time at which such services are rendered.

 

15.13                     No Third Party Rights - This Agreement is intended
solely for the benefit of the parties hereto and there is no intention, express
or otherwise, to create rights or interests for any party or persons other than
BCBSM, BCN and Provider. This Agreement shall be enforceable only by the parties
hereto and no other person shall have the right to enforcement of the provisions
contained herein, including, without limitation, any BCBSM/BCN customer, member
or any other individual.

 

15.14                     Advertisement - Provider will not, in any manner
advertise or publish the fact that it has furnished, or contracted to furnish,
services to BCBSM or BCN without BCBSM’s and BCN’s prior written consent.

 

33

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15.15                     Changes In Corporate Status - Subject to applicable
law, Provider will provide BCBSM and BCN advance written notice of any changes
or projected changes in its corporate status, including changes in existing
shareholders, mergers, consolidations, and sale of all or substantially all of
its assets. Provider will provide at least five months’ notice of such changes.

 

15.16                     Contact with Groups - The parties will agree on how
contacts with groups will be handled. In general, however, Provider will not
initiate communication with any BCBSM or BCN Group without the prior written
consent of BCBSM’s and BCN’s Director of Pharmacy Services Administration. Once
consent is given, BCBSM and BCN will be afforded the opportunity to participate
in all contacts between Provider and Group.

 

15.17                     Force Majeure - Subject to Section 2.11(s), none of
the parties will be liable, in any manner, for failure to meet its obligations
under this Agreement if that failure is directly or indirectly caused by matters
which are beyond the party’s reasonable control, including any delay or failure
due to strikes or labor disputes; earthquakes, storms, floods or other extreme
weather or acts of God; riots, fires, explosions, embargoes, war or other
outbreak of hostilities; delay of carriers, suppliers or telecommunication
providers; or government acts or regulations, including any change in law. “Law”
means any federal, state, or local constitution, charter, act, statute, law,
ordinance, code, rule, regulation, or order, or any other binding legislative,
executive, judicial or administrative action.

 

15.18                     Signature - Signature on this page binds the parties
to the entire Agreement as defined in Article I, and warrants that signatory is
authorized to sign this Agreement.

 

IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed
this Agreement on the date set forth below:

 

PROVIDER

 

BLUE CROSS BLUE SHIELD

 

 

OF MICHIGAN

 

 

 

BY:

 

 

BY:

 

 

 

 

 

 

TITLE:

 

 

TITLE:

 

 

 

 

 

 

DATE:

 

 

DATE:

 

 

 

 

 

 

 

 

 

 

BLUE CARE NETWORK

 

BLUE CROSS BLUE SHIELD

OF MICHIGAN

 

OF MICHIGAN

 

 

 

 

 

 

BY:

 

 

BY:

 

 

 

 

 

 

TITLE:

 

 

TITLE:

 

 

 

 

 

 

DATE:

 

 

DATE:

 

 

 

34

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

 

ADDENDUM A

 

SPECIALTY PHARMACY PROGRAM

REIMBURSEMENT/RATES

 

A. Covered Services Provided To Members. Under the Specialty Pharmacy program,
reimbursement for Covered Services provided to Members will be based on the
following formula: Drug Product Cost minus Member co-payment and deductible
equals the reimbursement to Provider.

 

Drug Product Cost

 

1.             Price List. Reimbursement for Specialty Medications listed on
Addendum A-1 (the Price List) is [ * ] as described in the Provider’s response
to the RFP and mutually agreed upon by the parties in writing (Addendum A-1*).

 

2.             Generics Drugs not on the Price List.

 

A.            Reimbursement for Specialty Medications is [ * ] for drugs: 1)
approved as Generic Drugs beginning when the drug comes to market as a [ * ]and
ending when the drug is placed on the [ * ] list; or 2) the drug is not
referenced on the Price List and is placed on the [ * ] list.

 

B.            When the drug is placed on the [ * ] list, the [ * ]list price
applies.

 

C.            Immediately upon the drug being placed on the [ * ] list the
parties agree to negotiate an [ * ] within 60 days (or until such agreement is
reached) for the Specialty Medication for placement on the Price List. Such
negotiated price will replace the [ * ] at that time. The target reference for
the [ * ] will be the [ * ].

 

D.            Dispense As Written (DAW) requests will be processed and paid
according the Member’s Plan Design.

 

3.             New Brand Drugs. Reimbursement for Specialty Medications that are
Brand Drugs with new GCNs is [ * ]. Within sixty (60) days of introduction of
the product and the [ * ] is established (or as soon as an agreement can be
reached), the parties will negotiate an [ * ]for the Specialty Medication for
placement on the Price List.

 

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

*Addendum A-1 lists the [ * ] for Specialty Medications by NDC. In the event
that an NDC becomes obsolete, Provider shall use the replacement NDC upon the
date that the previous NDC becomes obsolete as indicated by First Data Bank, the
FDA or any other mutually agreed upon source. Provider shall immediately

 

35

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notify BCBSM and BCN of the new NDC. The [ * ] on the obsolete NDC will apply to
any replacement NDC.

 

Member Co-payment

 

The co-payment level for Members under the Specialty Pharmacy program will be
determined by each Group (or in the case of individual coverage, individual)
purchasing the Specialty Medication under this Agreement and will vary per Group
(or individual in the case of individual coverage).

 

Deductible

 

The deductible for Members under the Specialty Pharmacy program will be
determined by each Group (or individual in the case of individual coverage)
purchasing the Specialty Medication under this Agreement and will vary per Group
(or individual in the case of individual coverage).

 

Dispensing Fee

 

[ * ]

 

Pharmacy Incentive

 

[ * ]

 

Ancillary Products

 

Provider shall dispense Ancillary Products to Members with Specialty
Medications. The Drug Product Cost includes the cost of Ancillary Products.
BCBSM and BCN will not provide additional reimbursement to Provider for
Ancillary Product costs.

 

Programs and Services

 

The Drug Product Cost includes the costs of all programs and services included
in the Provider’s service program and/or provided to the Member by the Provider,
including but not limited to focused therapy management. Additional
reimbursement will not be made to the Provider for these costs unless otherwise
agreed to by the parties in writing.

 

B. Covered Services Provided To Physicians And Billed To BCBSM/BCN. When BCBSM
and BCN invoke the option to include Covered Services provided to Physicians
under the this Agreement, at a date to be determined by BCBSM and BCN,
reimbursement for Covered Services provided to Physicians and billed by Provider
to BCBSM/BCN will equal the Drug Product Cost as set forth below:

 

36

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Drug Product Cost

 

Reimbursement for Specialty Medications is [ * ]

 

Reimbursement for Specialty Medications [ * ] is [ * ]. Once an [ * ] is
established, pricing shall change to [ * ].

 

Dispensing/Other Fees

 

[ * ]

 

Pharmacy Incentive

 

[ * ]

 

Ancillary Products

 

If Provider dispenses Ancillary Products to Physicians, Provider may bill
Physicians directly for these costs but BCBSM and BCN will not reimburse
Provider for these costs.

 

C. Covered Services Provided And Billed To Physicians. When BCBSM and BCN invoke
the option to include Covered Services provided to Physicians under the pricing
provided in this Agreement, at a date to be determined by BCBSM and BCN,
reimbursement for Covered Services provided to Physicians and billed by Provider
to Physicians will equal the Drug Product Cost as set forth below:

 

Drug Product Cost

 

Reimbursement for Specialty Medications is[ * ].

 

Reimbursement for Specialty Medications [ * ] is [ * ]. Once an [ * ] is
established, pricing shall change to [ * ].

 

Dispensing/Other Fees

 

[ * ].

 

Pharmacy Incentive

 

[ * ]

 

37

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Ancillary Products

 

If Provider dispenses Ancillary Products to Physicians, Provider may, bill
Physicians directly for these costs but BCBSM and BCN will not reimburse
Provider for these costs.

 

D.                                    No Other Remuneration

 

No other remuneration of any kind will be paid to Provider in connection with
this Agreement by BCBSM or BCN or others, including but not limited to
administrative fees, service fees, shipping and handling costs, or sales tax,
unless otherwise agreed to by the parties in writing.

 

E.                                      [ * ]

 

38

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ADDENDUM A-1

 

[ * ]  — NOTE: Addendum A-1 has been deleted as it is a confidential drug
pricing schedule.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41

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ADDENDUM B BUSINESS

ASSOCIATE ADDENDUM

 

1.             Applicable Law and Policy. Provider acknowledges that pursuant to
this Agreement, it performs services or assists BCBSM and BCN in the performance
of a function or service that involves the use or disclosure of a BCBSM/BCN
member’s individually identifiable health information (IIHI). Consequently, the
Health Insurance Portability and Accountability Act of 1996, as amended
(“HIPAA”), and stricter state laws, as applicable, require that the IIHI be
protected from inappropriate uses or disclosures.

 

2.             Use or Disclosure of IIHI. IIHI, in electronic form or otherwise,
may be used or disclosed only when required by law or as otherwise provided in
this Agreement, unless the prior and specific informed written consent of the
person to whom the data or information pertains has been obtained. Provider
shall not, and shall ensure that its directors, officers, employees, contractors
and agents, do not, use or disclose IIHI received from BCBSM or BCN in any
manner that would constitute a violation of applicable law.

 

Provider shall not and shall ensure that its directors, officers, employees,
contractors, and agents do not disclose IIHI received from BCBSM or BCN in any
manner that would constitute a violation of applicable law if disclosed by BCBSM
or BCN, except that Provider may disclose IIHI in a manner permitted pursuant to
this Agreement or as required by law. To the extent Provider discloses IIHI to a
third party, Provider must obtain, prior to making any such disclosure: (i)
reasonable assurances from such third party that such IIHI will be held
confidential as provided pursuant to this Agreement, and only disclosed as
required by law or for the purposes for which it was disclosed to such third
party; and (ii) an agreement from such third party to immediately notify
Provider of any breaches of the confidentiality of the IIHI, to the extent it
has obtained knowledge of such breach. Provider agrees to indemnify and hold
BCBSM and BCN harmless from any and all liability, damages, costs (including
reasonable attorney fees and costs) and expenses imposed upon or asserted
against BCBSM and/or BCN arising out of any claims, demands, awards, settlements
or judgments relating to Provider’s use or disclosure of IIHI contrary to the
provisions of this Agreement.

 

3.             Safeguards Against Misuse of Information. Provider agrees that it
will implement all appropriate safeguards to prevent the use or disclosure of
IIHI other than pursuant to the terms and conditions of this Agreement. Such
safeguards include administrative, physical, and technical safeguards that
reasonably and appropriately protect the Confidentiality, Integrity, and
Availability (as those terms are defined in 45 CFR §164.304) of the electronic
IIHI that it creates, receives, maintains, or transmits on behalf of BCBSM
and/or BCN as required by 45 CFR Part 160 and Subparts A and C of Part 164
(“Security Rule”).

 

43

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4.             Reporting of Disclosures of I1HI. Provider shall, within five (5)
days of becoming aware of a Security Incident (as defined in 45 CFR §164.304) or
of a disclosure of IIHI in violation of this Agreement by Provider, its
officers, directors, employees, contractors, or agents, or by a third party to
which Provider disclosed IIHI pursuant to Section 2 (Use or Disclosure of IIHI),
report any such disclosure to BCBSM and BCN.

 

5.             Agreements by Third Parties. Provider shall enter into an
agreement with any agent or subcontractor that will have access to IIHI that is
received from, or created or received by Provider on behalf of, BCBSM and BCN
pursuant to which such agent or subcontractor agrees to be bound by the same
restrictions, terms, and conditions that apply to Provider pursuant to this
Agreement with respect to such IIHI, including that such agent or subcontractor
implement reasonable and appropriate safeguards to protect it as described in
Section 3 (Safeguards Against Misuse of Information).

 

6.             Access to Information. Within five (5) days of a request by BCBSM
or BCN for access to IIHI about a member, Provider shall make available to BCBSM
or such IIHI for so long as such information is maintained by Provider. In the
event any individual requests access to IIHI directly from Provider, Provider
shall within two (2) days forward such request to BCBSM or BCN. Any denials of
access to the IIHI requested shall be the responsibility of BCBSM or BCN.

 

7.             Availability of I1HI for Amendment. Within ten (10) days of
receipt of a request from BCBSM or BCN for the amendment of an individual’s
IIHI, Provider shall provide such information to BCBSM or BCN for amendment and
incorporate any such amendments in the IIHI as required by 45 CFR § 164.526.

 

8.             Accounting of Disclosures. Within ten (10) days of notice by
BCBSM or BCN to Provider that it has received a request for an accounting of
disclosures of IIHI regarding an individual during the six (6) years prior to
the date on which the accounting was requested, Provider shall make available to
BCBSM or BCN such information as is in Provider’s possession and is required for
BCBSM and BCN to make the accounting required by 45 CFR §164.528. At a minimum,
Provider shall provide BCBSM and BCN with the following information: (i) the
date of the disclosure; (ii) the name of the entity or person who received the
IIHI, and if known, the address of such entity or person; (iii) a brief
description of the IIHI disclosed; and (iv) a brief statement of the purpose of
such disclosure which includes an explanation of the basis for such disclosure.
In the event the request for an accounting is delivered directly to Provider,
Provider shall within two (2) days forward such request to BCBSM and BCN. It
shall be BCBSM’s and BCN’s responsibility to prepare and deliver any such
accounting requested. Provider hereby agrees to implement an appropriate
recordkeeping process to enable it to comply with the requirements of this
Section 8.

 

9.             Availability of Books and Records. Provider hereby agrees to make
its internal practices, books, and records relating to the use and disclosure of
IIHI received from, or created or received by Provider on behalf of, BCBSM
and/or BCN available to

 

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the Secretary of the Department of Health and Human Services for purposes of
determining BCBSM’s and/or BCN’s and Provider’s compliance with the Standard for
Privacy of Individually Identifiable Health Information, 45 CFR Parts 160 and
164 (“Privacy Standards”).

 

10.           Compliance with Transaction Standards. If Provider conducts in
whole or part electronic Transactions on behalf of Organization for which
Department of Health and Human Services (DHHS) has established Standards,
Provider will comply, and will require any subcontractor or agent it involves
with the conduct of such Transactions to comply, with each applicable
requirement of the Transaction Rule, 45 CFR Part 162. Provider will not enter
into, or permit its subcontractors or agents to enter into, any Trading Partner
Agreement in connection with the conduct of Standard Transactions on behalf of
Organization that:

 

•                                         Changes the definition, data
condition, or use of a data element or segment in a Standard Transaction;

•                                         Adds any data element or segment to
the maximum defined data set;

•                                         Uses any code or data element that is
marked “not used” in the Standard Transaction’s implementation specification or
is not in the Standard Transaction’s implementation specification; or

•                                         Changes the meaning or intent of the
Standard Transaction’s implementation specification.

 

11.           Amendment to Agreement. Upon the effective date of any amendment
to the Privacy Standards or the Security Rule or the effective date of any other
final regulations with respect to IIHI, this Section 11 and the Agreement of
which it is part will automatically be amended so that the obligations they
impose on Provider shall remain in compliance with such regulations.

 

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ADDENDUM C SPECIALTY PHARMACY PROGRAM

REQUIREMENTS

 

Program applicants will be required to initially meet and continue to meet the
following standards and BCBSM’s/BCN’s policies and procedures, which are subject
to change from time to time, in addition to the Specialty Pharmacy Agreement.

 

Note: Headings in this document are for illustrative purposes only. Standards
are not limited to the headings under which they appear. Most standards listed
are applicable to multiple headings.

 

I.             STANDARDS FOR MAINTAINING QUALITY HEALTH CARE

 

A.            Dispensing and Delivery

 

1.                                       Agree to dispense the quantity of
prescription drugs indicated on the prescription, up to a maximum of a ninety [
* ] day supply per prescription or refill, or as otherwise permitted under the
Member’s Certificate and Program Requirements.

 

2.                                       Agree to dispense all prescription
drugs in a manner that conforms to all applicable federal, state and local laws,
standards of professional conduct and practice prevailing in the community, all
BCBSM and BCN reimbursement policies and requirements, and the terms and
conditions of the Specialty Pharmacy Agreement.

 

3.                                       Agree to dispense all prescription
drugs according to manufacturer’s recommendation. All prescriptions will be sent
in a manner to assure the integrity of the prescriptions per manufacturer
specifications, including temperature controls.

 

4.                                       Provide unit dose preparations of
prescriptions for those injectable medications where stability is not an issue

 

5.                                       Agree to dispense covered services in
accordance with BCBSM’s and BCN’s prior authorization requirements.

 

6.                                      Agree to provide BCBSM and BCN with
documentation of dispensing and non-dispensing errors and how each of these
errors was corrected.

 

B.                                    Quality Assurance

 

1.                                       Agree to obtain and maintain
accreditation in pharmacy from a nationally recognized accrediting body, as
determined by BCBSM and BCN (e.g., JCAHO, ACHC, etc.). BCBSM and BCN having
determined that ACHC is acceptable accreditation. Provider shall obtain and
maintain their Accreditation Commission of Health Care (ACHC) accreditation in
Specialty Pharmacy.

 

2.                                       Have a comprehensive Quality
Assurance/Quality Improvement (QA/QI) program and commit to the following
requirements and standards:

 

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a.                                       Use Best efforts to obtain a clean and
legible prescription. Contact physician’s office if script is not legible.

 

b.                                      Guarantee a non-dispensing error rate of
[ * ] or less, which includes but is not limited to clerical errors, incorrect
address, incorrect co-pays, physician information and errors which impact the
delivery and claim processing of orders.

 

c.                                       Guarantee a dispensing error rate of [
* ] or less, which includes, but is not limited to incorrect medication,
incorrect dosage, incorrect dosing information and any medication errors.

 

3.                                       Have formal prescription quality
assurance and error prevention policies, procedures and protocols, and maintain
documentation of utilization review activities. In addition, provide copies to
BCBSM and BCN of protocols used to ensure member safety for specialty medication
dispensed to members; maintain comprehensive member profiling (medical
histories) for all enrolled members; request medication histories from each new
member and maintain adequate drug risk analysis procedures.

 

4.                                       Support a comprehensive Hemophilia Care
Management program, including the provision of nursing services.

 

5.                                       Support a comprehensive Compounding
Management program, and upon request by BCBSM and BCN, support a comprehensive
program for IVIG Distribution Management, and/or Chemotherapy Care Management.

 

6.                                       Upon request by BCBSM and/or BCN,
provide customize services to meet the unique clinical and
psycho-social-economic needs of patients.

 

7.                                       Have a reliable product recall policy
and procedures.

 

8.                                       Acquire all products and supplies from
reputable manufacturers.

 

9.                                       Pro-actively contact prescribing
physicians to confirm prescriptions, dosing, regimen, etc. as appropriate.

 

10.                                 Demonstrate how automation is used and have
acceptable quality control policies and procedures to assure quality care.

 

C.                                     Member Education/Assistance and
Monitoring

 

1.                                       Educate members about their disease
state (including long-term and short-term effects if treated and untreated) and
their medication, including benefits, side effects and drug interactions.

 

2.                                       Coordinate member education and
management with BCBSM’s and/or BCN’s case management departments.

 

3.                                       Include high-quality educational
materials as necessary, subject to BCBSM and BCN prior review and written
approval.

 

4.                                       Document BCBSM and BCN member
compliance and other applicable clinical and quality of life data as applicable
to members’ therapy regimens.

 

5.                                       Provide instructions to members on use
of medications and information received in on line drug messages (e.g., DUR).

 

6.                                       Provide member issue triage and
resolution process for program inquiries.

 

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D.                                    Credentialing

 

1.                                       Have all licenses and permits required
by local, state and federal authorities applicable to dispensing specialty
medications (including certain controlled medications) as well as wholesale /
distribution licenses (and registrations) to service BCBSM and BCN physicians.

 

2.                                       Comply with all state and federal
requirements applicable to dispensing and mailing prescriptions.

 

3.                                       Provide BCBSM and BCN with
documentation of provider’s last inspection by its State Board of Pharmacy and
all other inspections (e.g., flow hood inspection, etc.)

 

E.                                      Staffing

 

1                                          Employ or contract with pharmacists
that have and maintain current/valid State Board of Pharmacy Licenses that
contain no restrictions.

 

2.             Re-verify pharmacist, technician, RN, LPN, etc. licensure
annually.

 

3.                                       Maintain a pharmacist-to-technician
ratio consistent with good pharmacy practice standards as approved by BCBSM and
BCN or as specified by the applicable State Board of Pharmacy.

 

4.                                       Maintain rigorous initial training and
ongoing training for all clinicians.

 

5.                                       Provide all (non-clinician) associates
who will service members, with comprehensive training regarding the standards
for triaging clinical issues to a clinician.

 

6.                                       Provide comprehensive training for all
associates (clinicians and non-clinicians) who will service prescribing
physicians or physician’s office staff.

 

II.                                     STANDARDS FOR CONTROLLING HEALTH CARE
COSTS

A.                                   Dispensing

 

1                                          Dispense generic equivalent
prescription drugs unless “Dispense as Written” is required by the physician or
unless the member requests a brand name prescription drug. If a member requests
a brand name prescription drug when a generic drug is available, the member is
responsible for paying the difference in cost between the brand and generic
drugs, as well as the member co-payment and deductible if required by applicable
Plan Design.

 

2.                                       Ship dispensed specialty medication and
ancillary products to members at provider’s expense.

 

3.                                       Administer a prior authorization
program for all or select products covered by BCBSM and/or BCN, at BCBSM’s
and/or BCN’s discretion, subject to existing standards and criteria and
standards developed by BCBSM, BCN and provider. BCBSM and BCN will have final
approval of criteria and standards.

 

4.                                       Pro-actively support the use of generic
drugs whenever available.

 

5.                                       Possess specific programs, protocols,
tools, etc., to manage or prevent waste.

 

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6.                                       Agree to comply with BCBSM and BCN
formulary, clinical programs and drug policies.

 

B.                                     Pricing

 

[ * ]

 

C.                                     Payments

 

1.                                       Agree to issue a credit to the account
of BCBSM, BCN, a physician or the member, pursuant to procedures outlined by
BCBSM and BCN, if there is an overpayment by one of these parties. In the event
of an under-payment by BCBSM, BCN, a physician or a member, agree to obtain
payment pursuant to BCBSM and BCN policies. In addition, Provider agrees to
reconcile overpayments and underpayments and provide reports to BCBSM and BCN
pursuant to their requirements.

 

2.                                       Agree to cooperate with the BCBSM’s and
BCN’s Audit and Compliance Units, and recovery of any overages identified as a
result of an audit.

 

III.                                 STANDARDS FOR ASSURING APPROPRIATE
UTILIZATION OF HEALTH CARE SERVICES

 

1                                          Provide best-in-class utilization
management programs to improve therapy adherence, appropriate utilization
management standards and patient outcomes

 

2.                                       Comply with periodic audits of claims
and verification of performance standards. Once audits are complete, that audit
is considered closed and is no longer eligible for further audits. However, this
shall not prevent BCBSM and BCN or Provider from complying with requests for
audit from external sources (such as customer groups, government agencies,
etc.).

 

3.                                       Provide BCBSM and BCN with a
comprehensive package of reports, at least monthly, that detail utilization by
type (Pharmacy / Medical), billing report, prescriber, patient and other factors
determined by BCBSM and BCN.

 

IV.                                STANDARDS FOR ASSURING REASONABLE LEVELS OF
ACCESS TO HEALTH CARE SERVICES

 

1                                          Have acceptable hours of operation,
as determined by BCBSM and BCN.

 

2.                                       Ship dispensed prescription drugs to
members at provider’s expense and guarantee delivery. In the event of a claim of
non-delivery and provider cannot prove that delivery occurred, provider must
immediately replace the order without charge and ship the order via overnight
mail.

 

3.                                       Have an established infrastructure to
fill prescriptions at a rate sufficient to meet the needs of BCBSM and BCN
member population

 

4.                                       Have sufficient capacity and experience
in the specialty pharmacy business and the infrastructure to support the
dispensing of at least 50,000 specialty pharmacy prescriptions per year.

 

5.                                       Agree to dispense administration
supplies to Members, as appropriate, with injectable orders at all inclusive
pricing.

 

6.                                       Guarantee a [ * ] or less out-of-stock
rate, excluding manufacturer backorders.

 

7.                                       Have the ability to provide all
specialty medications and ancillary products covered by BCBSM and BCN.

 

8.                                       Support a next-day delivery capability.

 

9.                                       Provide same-day (stat) delivery
capabilities directly (or in partnership with a Michigan based pharmacy capable
of meeting this service requirement).

 

10.                                 Agree not to return unfilled any
prescription to a member unless provider provides a written explanation to the
member stating the reason for the return of the prescription and advising the
member and the member’s physician of the member’s rights to appeal the coverage
denial.

 

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11.                                 Guarantee that [ * ] of prescriptions
requiring no intervention (including out-of-stock) will be sent or scheduled to
be sent within an average of 5 calendar days from the date the prescription is
received, but none shall exceed 10 calendar days, excluding manufacturer back
order without notification to BCBSN and BCN. Orders received after normal
business hours will be considered to have been received on the next business
day.

 

12.                                 Guarantee that [ * ] of prescriptions
requiring intervention (including out-of-stock) will be sent or scheduled to be
sent within [ * ] calendar days from the date the prescription is received, but
none shall exceed [ * ] calendar days without notification to BCBSM and BCN,
excluding manufacturer back order. Orders received after normal business hours
will be considered to have been received on the next business day.

 

13.                                 Have an owned and operated Michigan- based
dispensing facility to support BCBSM’s and BCN’s member population or agree to
provide specialty medications in association with a local pharmacy in emergency
and ‘stat’ of medication within the same day to any geographic location within
Michigan or in locations where significant BCBSM or BCN population resides
outside of Michigan.

 

14.                                 Have an established disaster recovery plan
that enables provider to perform its duties, obligations and services under this
program within forty-eight (48) hours of a disaster.

 

15.                                 Provide easy access to BCBSM and BCN members
for order requests, refill requests, documentation, etc.

 

V.            OTHER STANDARDS

 

A.                                   Telephone, Written and Internet
Communications

 

1.                                       Provide dedicated Toll-free telephone
access for use by members, BCBSM and BCN and physicians and a dedicated customer
service center to handle BCBSM and BCN member calls. Provide TDD-TTY services
for hearing impaired to access Customer Service Department.

 

2.                                       Locate call center within the
continental US and agree to no outsourcing without written permission from BCBSM
and BCN.

 

3.                                       Guarantee that less than [ * ]% of
calls will be abandoned; less than [ * ] % of calls will be blocked and that the
average time to answer a call is less than [ * ].

 

4.                                       Maintain a website that contains
updated information regarding, among other things: on line order and status,
prescription pricing information, coverage and benefit plan information, health
news information and health assessment tools and resources.

 

5.                                       Clearly offer the ability to speak with
a pharmacist, nurse and administrative support associate in all communications
with members (telephone, writing, publications, etc.) and provide a client
service team which will respond to BCBSM’s and BCN’s questions, including but
not limited to member concerns, claim payments, and daily interaction between
the parties.

 

6.                                       Prepare and distribute group and member
communications on program use and access to services.

 

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B.                                     Claims Submission

 

1.                                       Guarantee that claims will be submitted
to the claims processor(s) in accordance with BCBSM and BCN policies and
requirements.

 

2.                                       For specialty medications dispensed to
Members for self-administration, submit claims on-line utilizing the most
current NCPDP format, to BCBSM’s and BCN’s preferred claims processor(s) (or via
a mutually agreeable format and submission method.) For specialty medications
dispensed to physicians for in-office administration, submit claims
electronically using the professional 837 HIPAA format or other designated form
as required by BCBSM or BCN. Accept edits according to the most current NCPDP
Telecommunication Standard for on-line claim submissions. Agree to not turn off
edits at the facility level and respond appropriately to on-line messages.

 

3.                                       Agree to reconcile [ * ]% of Provider’s
reimbursements and appeal any disputed claims within a maximum of [ * ] days
from date payment is made.

 

4.                                       React appropriately to on-line edits
which may adversely affect the member’s medical status or coverage.

 

5.                                       Reverse claims for shipments that are
lost or damaged, or reship at no additional charge. If a claim cannot be
reversed or reshipped at no charge, handle as a dispensing error.

 

6.                                       Establish technical connections
necessary to submit claims transactions for members using BCBSM’s and BCN’s
preferred claims processors and agree to comply with BCBSM’s and BCN’s
administrative requirements governing the use of these systems. Provider must
pay the cost of all system modifications, line charges and other communication
costs associated with changes to provider’s systems as well as all fees charged
by the Blues claims processor(s).

 

7.                                       Agree to submit [ * ]% of initial
claims within [ * ] days of the date of service, otherwise BCBSM and BCN will be
under no obligation to pay the claims.

 

8.                                       Guarantee that [ * ]% of all claims
submitted by Provider to the claims processor(s) will have no errors.

 

C.                                     Complaint Resolution

 

1                                          Maintain a formal procedure to assure
complaint resolution within 5 calendar days of receipt. Provider will provide
BCBSM and BCN with reports regarding complaints, including the number and types
of complaints.

 

2.                                       Maintain policies and procedures to
address member problems, complaints and timely resolution.

 

3.                                       Meet with BCBSM and BCN monthly to
review implementation, performance, resolve member and ordering physician issues
and complaints, review reports, billing issues, payment issues, audit issues,
discuss areas for improvement, etc.

 

D.                                    Disaster Recovery

 

1.                                       Maintain and document a comprehensive
disaster recovery program for all technical systems (computer, telephone, fax,
etc.). The plan must provide for the backup, storage

 

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and restoration of data and information used and generated as a result of this
program and must comply with HIPAA.

 

E.                                      Information Technology

 

I                                            Provide comprehensive information
technology capabilities required to service the proposed program and provide the
operational capabilities comparable to nationally recognized, best-in-class
specialty pharmacies.

 

F.                                      Miscellaneous

 

1.                                       Be in the business of distributing
specialty medications to physicians for office administration.

 

2.                                       Provide acceptable references.

 

3.                                       Agree to not outsource any work under
this program outside the United States without the written consent of the BCBSM
and BCN.

 

4.                                       Be fully HIPAA compliant, which
includes Identifiers, Privacy, Security, and Electronic Transactions/Code Sets.

 

5.                                       Have no felony convictions of provider,
provider’s officers or directors.

 

6.                                       Provide an experienced and dedicated
account management team and establish a dedicated and branded (as defined by
BCBSM and BCN) customer business unit (CBU) appropriately staffed to handle the
enrolled BCBCM/ BCN population.

 

7.                                       Submit all pertinent clinical
information on new drugs to BCBSM and BCN for drug coverage and policy
decisions.

 

8.                                       Provide a comprehensive implementation
plan for all services (or select services as may be awarded) to BCBSM and BCN to
assure a smooth program launch on a date specified by BCBSM and BCN.

 

9.                                       Agree to not assess any implementation
charges to BCBSM and BCN for any services performed in connection with
implementation(s).

 

10.                                 Adhere to Omnibus Budget Reconciliation Act
requirements in the dispensing process.

 

I1                                      Agree to accept personal checks, cashier
checks, money orders and credit cards as well as other methods of payment for
covered services. In the event that Members are not able to afford their lump
sum out-of-pocket expense, Provider may provide payment plans to assist
affordability of care.

 

12.                                 Maintain valid general liability insurance
for all facilities in minimum amounts of $1,000,000 per occurrence and
$5,000,000 aggregate coverage. Maintain valid professional liability (druggist)
and product liability in minimum amount of $10,000,000 per occurrence.

 

13.                                 Be able to meet all state and federal
requirements pertaining to this program.

 

14.                                 Agree to not utilize BCBSM’s and BCN’s
corporate names or logos in any way or form without the written approval of
BCBSM and BCN.

 

15.                                 Agree to accept all terms and conditions of
the Specialty Pharmacy Agreement.

 

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16.                                 Have the ability to effectively manage
unique benefit designs, eligibility criteria, reimbursement variations, etc. by
line of business / product / account.

 

17.                                 Demonstrate the ability to support the full
book of BCBSM’s and BCN’s specialty pharmacy business to bid as an ‘exclusive
provider(1), or similarly as a ‘semi-exclusive’ provider as those terms are
defined in the Request for Proposal.

 

18.                                 Be free of conflicts of interest relative to
BCBSM and BCN, their groups and members during the term of the Specialty
Pharmacy Agreement.

 

19.                                 Recognize that BCBSM will consider any other
matters that materially affect the provider’s performance in the selection
process.

 

20.                                 Recognize that customer preference maybe
considered in the selection process.

 

21.                                 Demonstrate an ability to cooperate with
BCBSM and BCN, their members, groups and providers.

 

22.                                 Recognize that BCBSM and BCN have the right
to exercise business judgment in the selection process.

 

23.                                 Agree that the Request for Proposal must be
completed in it’s entirely at the time of submission.

 

24.                                 Be financially stable as defined by BCBSM
and BCN at all relevant times.

 

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ADDENDUM D REBATE / DISCLOSURE

REQUIREMENTS

 

1.             Provider shall not apply for or receive any Rebates, including
BCBSM and BCN Rebates (other than purchase price discounts), from any
pharmaceutical manufacturer or other person or entity, in connection with this
Agreement, unless BCBSM and BCN otherwise agree in writing. Provider warrants
this to BCBSM and BCN. BCBSM and BCN, or their representative, may apply for and
receive Rebates, including BCBSM and BCN Rebates, related to this Agreement.
Provider will cooperate with BCBSM and BCN and/or their representatives, and
will provide data to support application for the various Rebates upon request by
BCBSM and BCN.

 

2.             Provider shall certify annually in writing on or before December
31 to BCBSM and BCN that Provider, its officers, directors, employees and
subcontractors did not apply for or receive any Rebates in connection with this
Agreement, including BCBSM and BCN Rebates.

 

3.             Provider shall provide BCBSM and BCN with quarterly and annual
reports disclosing Provider funding and any clinical consultant or physician
education program in which BCBSM and BCN participate, unless BCBSM and BCN
otherwise agree in writing.

 

4.             If requested by BCBSM and/or BCN, Provider agrees to provide the
terms of its manufacturer contracts and will provide copies of its contracts to
a third party auditor, subject to a confidentiality agreement, so that
compliance with this Addendum can be verified.

 

5.             Provider’s obligations under this Addendum D shall survive
termination or expiration of this Agreement.

 

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ADDENDUM E

 

ADDITIONAL SERVICE REQUIREMENTS AND STANDARDS 1.

 

Customer (Patient / Provider) Service Requirements & Standards

 

A.                                   Hours of Operation:

 

Provider’s hours of operation will be as follows:

 

Customer Service: Monday thru Friday-8:00 AM - 8:00 PM (Eastern) Saturdays-8:00
AM - 8:00 PM (Eastern) Sundays- 8:00 AM-1:00 PM (Eastern)

 

Pharmacy Department: Monday thru Friday-8:00 AM - 8:00 PM (Eastern) Billing /
Reimbursement: Monday thru Friday-8:00 AM - 8:00 PM (Eastern) Emergency Access /
Clinical Support:             24 / 7 / 365

 

B.                                      Telephone Access Requirements, &
Standards:

 

1.              Provider shall provide dedicated toll-free telephone access to
Customer Service for the Specialty Pharmacy Program for use by Members,
BCBSM/BCN and physicians.

 

2.              Provider shall provide 24 hour access to a pharmacist and
registered nurse via dedicated toll-free telephone service.

 

3.              Provider shall provide Member issue triage and resolution
process between BCBSM, BCN and Provider for Specialty Pharmacy Program
inquiries.

 

4.              Provider will provide dedicated customer service center to
handle BCBSM and BCN member calls.

 

5.              Provider shall provide TDD-TTY services for hearing impaired to
access Customer Service Department.

 

C.                                      Web Access Requirements:

 

Provider’s standard website capabilities must include:

Online prescription ordering and status
Prescription pricing information Coverage and benefit plan information

 

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Health news information

 

Health assessment tools and resources

 

2. Operational Service Requirements & Standards

 

A.            Fulfillment Capabilities Requirements:

 

1.             Direct to patient

 

a.              Provider must have infrastructure to fill prescriptions at a
rate sufficient to meet the needs of the BCBSM and BCN patient population.

 

b.             Provider shall have sufficient infrastructure and capacity to
support at least 50,000 specialty pharmacy prescriptions per year.

 

2.                                       Direct to provider. Provider must meet
the following direct to provider requirements:

 

a. Provider shall have sufficient infrastructure to support distribution to
BCBSM/BCN Physicians.

 

B.                                    Hemophilia Care Management—as part of the
service program, Provider shall provide a Hemophilia Care Management Program if
requested by BCBSM and/or BCN as follows:

 

1.             Provider shall support a comprehensive Hemophilia management
program.

 

2.             Provider shall provide tailored services unique to the clinical,
psycho-social-economic needs of individuals with Hemophilia or other bleeding
disorders.

 

3.             Provider shall provide utilization management programs that
promote excellent patient care and appropriate utilization (cost) management
standards.

 

4.             Provider shall provide nursing services as part of the Hemophilia
management program.

 

C.                                    Other Care Management Programs—Provider
shall provide a Compounding Management Program as follows and, if requested by
BCBSM and/or BCN, Provider shall provide IVIG Distribution Management and
Chemotherapy Care Management Programs as follows:

 

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1.             Provider shall support a comprehensive therapy management program
for a Compounding Management Program and, if requested by BCBSM and/or BCN, for
an IVIG Distribution Management Program and Chemotherapy Care Management
Program.

 

2.             Provider shall customize services to meet the unique clinical and
psycho-social-economic needs of patients.

 

3.             Provider shall provide utilization management programs that
promote excellent patient care and appropriate utilization (cost) management
standards.

 

D.            Quality Assurance and Utilization

 

1              Provider shall provide best in class utilization management
programs to improve therapy adherence, compliance and patient outcomes.

 

2.             Provider shall have a comprehensive Quality Assurance / Quality
Improvement (QA/QI) program and shall meet the following requirements and
standards:

 

a.              Provider shall provide BCBSM and BCN with documentation of
dispensing and non-dispensing errors and how each of these errors was corrected.

 

b.             Provider will contact physician’s office and clarify any part of
a script that is not legible.

 

c.              Provider must have formal prescription quality assurance and
error prevention policies, procedures and protocols - and shall maintain
documentation of utilization review activities. Copies of these documents must
be provided to BCBSM and BCN upon request.

 

d.             Provider shall provide BCBSM and BCN with copies of protocols
used to ensure patient safety for products dispensed to BCBSM and BCN members.

 

e.              Provider shall provide best in class utilization management
programs to improve therapy adherence, compliance and patient outcomes.

 

f.              Provider shall have a reliable product recall policy and
procedures.

 

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g. Provider shall maintain comprehensive patient profiles (medical histories)
for all enrolled patients and shall request medication histories from each new
patient.

 

h. Provider shall acquire all products and supplies from reputable
manufacturers.

 

i. Provider (Pharmacists) will pro-actively contact prescribing physicians to
confirm prescriptions, dosing, regimen, etc.

 

j. Provider shall demonstrate how automation is used and have acceptable quality
control policies and procedures to assure quality care.

 

k. Provider shall maintain adequate drug risk analysis procedures.

 

I. Provider will maintain a formal procedure to assure complaint resolution
within 5 calendar days of receipt of complaint, and will immediately forward the
member complaint to BCBSM or BCN, as applicable, when the member or his/her
representative indicates the member wishes the matter to be handled as an
expedited grievance. Provider will provide reporting on complaints with number
and types of complaints in the form required by BCBSM/BCN.

 

m. Provider will adhere to the Ominbus Budget Reconciliation Act requirements in
the dispensing process.

 

n Provider will possess specific programs, protocols, tools, etc., to manage or
prevent waste.

 

o. Provider will comply with BCBSM’s and BCN’s formulary, clinical programs and
drug policies.

 

E.             Patient Education and Assistance and Monitoring

 

1              Provider shall send high-quality educational materials with all
filled prescriptions, subject to BCBSM’s and BCN’s prior written approval.

 

2.             Provider shall prepare and distribute group and member
communications on program use and access to services, subject to BCBSM and BCN
prior approval.

 

3.             Provider shall make a Nurse, Pharmacist and administrative
support associates easily accessible to answer Member questions.

 

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4.             Provider shall provide easy access to patients for order
requests, refill requests, documentation, etc.

 

5.             Provider shall maintain policies and procedures to address
patient problems, complaints and timely resolution.

 

6.             Provider shall clearly offer the ability to speak with a
Pharmacist or Nurse in all communications with patients (telephone, writing,
publications, etc.).

 

7.             Provider shall document patient compliance and other applicable
clinical and quality of life data as applicable to patients’ therapy regimen.

 

3.             Training

 

1.             Provider shall maintain rigorous initial and ongoing training for
all clinicians.

 

2.             Provider shall provide comprehensive training for all
non-clinician associates who will service Members with respect to the triage of
clinical issues.

 

3.             Provider shall provide comprehensive training for all associates
(clinicians and non-clinicians) who will service prescribing physicians (or
office staff)

 

4.             Contractual Service Requirements

 

A.            Capabilities - General/IT Systems/Eligibility &
Membership/Reporting

 

1.             Provider will effectively manage unique benefit designs,
eligibility criteria, reimbursement variations, etc. by line of business /
product / account.

 

2.             Provider agrees to -

 

a.             Provide an owned and operated Michigan based dispensing facility
to support the BCBSM and BCN population, or

 

b.             Provide Specialty Medications in association with a local
pharmacy in emergency and ‘stat’ situations. Emergency/stat situations require
delivery of medication within the same day to any geographic location within
Michigan or in locations where significant BCBSM or BCN population resides
outside of Michigan.

 

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3. Provider will provide comprehensive Information Technology capabilities
required to service the proposed program and provide the operational
capabilities comparable to nationally recognized, best-in-ciass specialty
pharmacies.

 

B.            Account Service and Specialty Pharmacy Program Implementation

 

1.              Provider will submit all pertinent clinical information on new
drugs to BCBSM and BCN for drug coverage and policy decisions.

 

2.              Provider will provide a comprehensive Implementation Plan for
all services (or select services as may be awarded) to BCBSM and BCN to assure a
smooth Specialty Pharmacy program launch.

 

3.              Provider will not assess any Implementation charges to BCBSM or
BCN for any services performed in connection with the implementation(s).

 

4.              Provider will meet with BCBSM and BCN monthly to review
implementation, performance, resolve patient and ordering physician issues and
complaints, review reports, billing issues, payment issues, audit issues, to
discuss areas for improvement, etc.

 

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ADDENDUM F
PERFORMANCE GUARANTEES

 

Item
#

 

Performance Guarantee:

 

Service Standard:

 

Penalty:

1

 

Provider guarantees that less than [ * ]%of callswillbe abandoned.

 

Forthepurposesofthis Agreement, “abandoned” means that Provider did not answer
the incoming call within 20 seconds and the customer disconnected after placing
the call but before thecallwasansweredby Provider.

 

[ * ]

 

 

 

 

 

 

 

2

 

Provider guarantees that less than [ * ]% of calls will be blocked.

 

For the purposes of this Agreement, “blocked” calls are incoming phone calls
that, due to volume, can not be completed. They are calls that are initially
received by the Provider telephonic system, but are not received by either a
live representative or the Interactive Voice Response (IVR) system. D

 

[ * ]

 

 

 

 

 

 

 

3

 

Provider guarantees an average speed to answer of less than [ * ].

 

Forthepurposesofthis Agreement, “answer” means by a live representative or
Interactive Voice Response (IVR) system.

 

[ * ]

 

 

 

 

 

 

 

4

 

Provider guarantees that [ * ]% of written inquiries will be responded to within
[ * ] calendar days.

 

Forthepurposesofthe Agreement,“respondedto” means by a letter sent within 5
calendar days of receipt of written inquiry. “Written Inquiries” include
inquiries received by fax, U.S. mailorprivatecarrier,or electronic mail. It is
understood that calendar days shall exclude recognized national holidays.

 

[ * ]

 

 

 

 

 

 

 

5

 

Provider guarantees that [ * ]% of claims will be submitted in accordance with
BCBSM and BCN policies, procedures and administrative requirements, which
include

 

a TBD

 

N/A*

 

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Item
#

 

Performance Guarantee:

 

Service Standard:

 

Penalty:

 

 

the requirements contained in 2.13 of the Specialty Pharmacy Agreement.

 

 

 

 

 

 

 

 

 

 

 

6

 

Provider guarantees that [ * ]% of all claims processed will have no financial
errors.

 

For purposes of this Agreement, “no financial error” means a complete and
accurate claim for payment of Covered Services, free of outstanding subrogation,
coordination of benefits, or other secondary payer issues, filed in the correct
electronic format and containing all pertinent information as may be required in
applicable statutory and regulatory guidelines and in compliance with applicable
BCBSM/BCN policies, procedures and administrative requirements.

 

N/A*

 

 

 

 

 

 

 

7

 

Provider guarantees that [ * ]% of all claims submitted by Provider to the
claims processor will have no errors.

 

For purposes of this Agreement, “no errors” means a complete and accurate claim
for payment of Covered Services, free of outstanding subrogation, coordination
of benefits, or other secondary payer issues, filed in the correct electronic
format and according to the applicable fee schedule, free of incorrect patient,
charge, dosage, or quantity information, in compliance with applicable BCBSM/BCN
policies, procedures and administrative requirements, excluding incorrect price
for medical claims.

 

N/A*

 

 

 

 

 

 

 

8

 

Provider guarantees that [ * ]% of initial claims will be submitted within [ * ]
days of the date of service; otherwise BCBSM and BCN will be under no obligation
to pay for services rendered.

 

For the purposes for this agreement, “initial claim” does not include any
resubmitted claim for claims already submitted or processed.

 

N/A*

 

 

 

 

 

 

 

9

 

Provider guarantees that Provider will reconcile [ * ]% of reimbursements and
appeal any disputed claims

 

N/A

 

[ * ]

 

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Item
#

 

Performance Guarantee:

 

Service Standard:

 

Penalty:

 

 

within a maximum of [ * ] days from date the payment is made.

 

 

 

 

 

 

 

 

 

 

 

10

 

Provider guarantees that [ * ]% of prescriptions requiring no intervention
(including out of stock) will be sent or scheduled to be sent within average of
[ * ] calendar days from the date the prescription is received, but none shall
exceed [ * ] calendar days, excluding manufacturer back order.

 

For purposes of this Agreement, orders received after normal business hours will
be considered to have been received on the next business day.

 

[ * ]

 

 

 

 

 

 

 

11

 

Provider guarantees that [ * ]% of prescriptions requiring intervention
(including out of stock) will be sent or scheduled to be sent within average of
[ * ] calendar days from the date the prescription is received, but none shall
exceed [ * ] calendar days, excluding manufacturer back order, without
notification to BCBSM and BCN.

 

For purposes of this Agreement, orders received after normal business hours will
be considered to have been received on the next business day.

 

[ * ]

 

 

 

 

 

 

 

12

 

Provider guarantees a non-disoensinq error rate of [ * ]% or less.

 

For the purposes of this Agreement, “non-dispensing error” includes but is not
limited to clerical errors, incorrect address, incorrect co-pays, physician
information and errors which impact the delivery and claim processing of orders.

 

[ * ]

 

 

 

 

 

 

 

13

 

Provider guarantees a dispensing error rate of [ * ]% or less.

 

For the purpose of this Agreement, “dispensing error” includes, but is not
limited to incorrect medication, incorrect dosage, incorrect dosing information
and any medication errors.

 

[ * ]

 

63

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Item
#

 

Performance Guarantee:

 

Service Standard:

 

Penalty:

14

 

Provider guarantees an out-of-stock rate of [ * ]% or less, excluding
manufacturer backorders.

 

N/A

 

[ * ]

 

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

*Each $[ * ] penalty will fluctuate in direct proportion to Provider’s Specialty
Medication sales through the BCBSM and BCN Specialty Pharmacy program
(self-administered and Physician office) relative to sales of $[ * ]. Thus, each
$[ * ] penalty will fluctuate as follows:

 

Sales Volume

 

Impact on $[ * ]Penalty

 

Resulting Penalty

 

 

 

 

 

$[ * ]

 

Cut in half No

 

$[ * ]

$[ * ]

 

impact One and

 

$[ * ]

$[ * ]

 

a half Double

 

$[ * ]

$[ * ]

 

 

 

$[*]

 

Provider’s obligations under this Addendum F shall survive termination or
expiration of this Agreement.

 

64

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Addendum G

Medicare Attestation

 

1.             Provider acknowledges to the best of its knowledge, information
and belief, there are no past or pending investigations, legal actions, or
matters subject to arbitration involving Provider or any key management,
executive staff, or any major shareholders (5% or more) of Provider on matters
relating to payments from governmental entities, both federal and state, for
healthcare and/or prescription drug services.

 

2.             Provider acknowledges to the best of its knowledge, information,
and belief that Provider has not been criminally convicted nor has a civil
judgment been entered against it for fraudulent activities nor is it sanctioned
under any Federal program involving the provision of health care or prescription
drug services.

 

3.             Provider acknowledges to the best of its knowledge, information
and belief, neither Provider nor any key management, executive staff, or any
major shareholders (5% or more) of Provider appear in the List of Excluded
Individuals/Entities as published by the Department of Health and Human Services
Office of the Inspector General, nor in the List of Debarred Contractors as
published by the General Services Administration.

 

The List of Excluded Individuals/Entities published by the Department of Health
and Human Services Office of the Inspector General can be found at
http://oiq.hhs.gov/fraud/exclusions/database.html. The List of Debarred
Contractors published by the General Services Administration can be found at
http://epls.arnet.gov/.

 

4.             Provider is obligated to notify BCBSM immediately to the best of
its knowledge, information and belief of any change in circumstances occurring
after the Effective Date of this Medicare Amendment which would require the
Provider or its key management, executive staff, or any major shareholders (5%
or more) to then respond affirmatively to any of the questions posed in
paragraphs 1, 2 and 3 of this Medicare Attestation.

 

65

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Statement of  Work #1

to

SPECIALTY PHARMACY AGREEMENT

 

 

BLUE CROSS AND BLUE SHIELD OF MICHIGAN,

 

BLUE CARE NETWORK OF MICHIGAN

 

and OPTION

 

CARE, INC.

 

 

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

[ * ] = THIS STATEMENT OF WORK IS CONFIDENTIAL INFORMATION AND HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

 

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATIONCONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

 

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

 

 

TABLE OF CONTENTS

 

 

PAGE

ARTICLE I

 

DEFINITIONS

1

 

 

ARTICLE II

 

PROVIDER RESPONSIBILITIES

4

 

 

ARTICLE III

 

BCBSM AND BCN RESPONSIBILITIES

18

 

 

ARTICLE IV

 

MUTUAL RESPONSIBILITIES

19

 

 

ARTICLE V

 

RECORDKEEPING AND AUDITS

21

 

 

ARTICLE VI

 

INDEMNIFICATION

23

 

 

ARTICLE VII

 

RIGHT OF RECOVERY

23

 

 

ARTICLE VIII

 

ASSIGNMENT

24

 

 

ARTICLE IX

 

AMENDMENT AND WAIVER

24

 

 

ARTICLE X

 

TERM, RENEWAL AND EXPIRATION

25

 

 

ARTICLE XI

 

DISPUTES AND APPEALS

27

 

 

ARTICLE XII

 

BUSINESS CONTINUITY AND DISASTER RECOVERY

27

 

 

ARTICLE XIII

 

SERVICE MARKS

28

 

 

ARTICLE XIV

 

MARKETING PROTOCOL

28

 

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

 

ARTICLE XV

 

MISCELLANEOUS

30

 

 

ADDENDUM A

 

SPECIALTY PHARMACY PROGRAM REIMBURSEMENT RATES

36

 

 

ADDENDUM A-1

 

NEGOTIATED AWP DISCOUNT FOR SPECIALTY MEDICATIONS BYNDC

41

 

 

ADDENDUM B

 

BUSINESS ASSOCIATE AGREEMENT

48

 

 

ADDENDUM C

 

SPECIALTY PHARMACY PROGRAM REQUIREMENTS

51

 

 

ADDENDUM D

 

REBATE/DISCLOSURE REQUIREMENTS

60

 

 

ADDENDUM E

 

ADDITIONAL SERVICE REQUIREMENTS AND STANDARDS

61

 

 

ADDENDUM F

 

PERFORMANCE GUARANTEES

67

 

 

ADDENDUM G

 

MEDICARE ATTESTATION

71

 

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