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Back to Form 10-Q [form10q.htm]
 
Exhibit 10.14
 
 

Contract with Eligible Medicare Advantage Organization Pursuant to
Sections 1851 through 1859 of the Social Security Act for the Operation
of a Medicare Advantage Private Fee-For-Service Plan(s)
 
 
CONTRACT (#H6499)
Between
Centers for Medicare & Medicaid Services (hereinafter referred to as CMS)
Stone Harbor Insurance Company
(hereinafter referred to as the MA Organization)
 
CMS and the MA Organization, an entity which has been determined to be an
eligible Medicare Advantage Organization by the Administrator of the Centers for
Medicare & Medicaid Services under 42 CFR 422.503, agree to the following for
the purposes of sections 1851 through 1859 of the Social Security Act
(hereinafter referred to as the Act):
 
(NOTE: Citations indicated in brackets are placed in the text of this contract
to note the regulatory authority for certain contract provisions. All references
to Part 422 are to 42 CFR Part 422.)
 

 
You must check off AND initial each required Addendum type to reflect the
coverage offered under the H (or R) number associated with this contract

Addendum Type
Initials
ü 
Part D Addendum
TF   
ü
Employer-Only MA-PD Addendum (800 Series)
TF   
__
Employer-Only MA Only Addendum (800 Series)
____
__
Variances/Waivers (Provided directly to Demonstration Organizations by CMS)
____

 

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Article I
Term of Contract
 
The term of this contract shall be from the date of signature by CMS' authorized
representative through December 31, 2007, after which this contract may be
renewed for successive one-year periods in accordance with 42 CFR 422.505(c).
[422.505]
 
This contract governs the respective rights and obligations of the parties as of
the effective date set forth above, and supersedes any prior agreements between
the MA Organization and CMS as of such date. MA organizations offering Part D
benefits also must execute an Addendum to the Medicare Managed Care Contract
Pursuant to Sections 1860D-1 through 1860D-42 of the Social Security Act for the
Operation of a Voluntary Medicare Prescription Drug Plan (hereafter the "Part D
Addendum"). For MA Organizations offering MA-PD plans, the Part D Addendum
governs the rights and obligations of the parties relating to the provision of
Part D benefits, in accordance with its terms, as of its effective date.

Article II
Private Fee-For-Service Plan
 
A. The MA Organization agrees to operate one or more private fee-for-service
plans (as defined in 42 CFR 422.4(a)(3)), as described in its final Plan Benefit
Package (PBP) bid submission (benefit and price bid) proposal as approved by CMS
and as attested to in the Medicare Advantage Attestation of Benefit Plan and
Price, and in compliance with the requirements of this contract and applicable
Federal statutes, regulations, and policies.
B. Except as provided in paragraph (C) of this Article, this contract is deemed
to incorporate any changes that are required by statute to be implemented during
the term of the contract and any regulations or policies implementing or
interpreting such statutory provisions.
C.CMS will not implement, other than at the beginning of a calendar year,
requirements under 42 CFR Part 422 that impose a new significant cost or burden
on MA organizations or plans, unless a different effective date is required by
statute. [422.521]
 
Article III
 
Functions To Be Performed By Medicare Advantage Organization
 
A. PROVISION OF BENEFITS
1. The MA Organization agrees to provide enrollees in each of its MA plans the
basic benefits as required under §422.101 and, to the extent applicable,
supplemental benefits under §422.102 and as established in the MA Organization's
final benefit and price bid proposal as approved by CMS and listed in The MA
Organization Attestation of Benefit Plan and Price, which is attached to this
contract. The MA Organization agrees to provide access to such benefits as
required under subpart C in a manner consistent with professionally recognized
standards of health care and according to the access standards stated in
§422.114. The MA Organization agrees to
 

2

provide post-hospital extended care services, should an MA enrollee elect such
coverage, through a skilled nursing facility according to the requirements of
section 1852(1) of the Act and §422.133 . A home skilled nursing facility is a
facility in which an MA enrollee resided at the time of admission to the
hospital, a facility that provides services through a continuing care retirement
community, or a facility in which the spouse of the enrollee is residing at the
time of the enrollee's discharge from the hospital, or hospital, or wherever the
enrollee resides immediately before admission for extended care services.
[422.133; 422.504(a)(3)] 2. The MA Organization shall authorize benefits
according to the local medical review policies (LMRPs) for services provided in
geographic areas where the LMRPs represent an expansion of Medicare coverage
policies as compared to national Medicare coverage policies. [422.101(b)(2)]
 
B. ENROLLMENT REQUIREMENTS
1. The MA Organization agrees to accept new enrollments, make enrollments
effective, process voluntary disenrollments, and limit involuntary
disenrollments, as provided in subpart B of part 422.
2. The MA Organization shall comply with the provisions of §422.110 concerning
prohibitions against discrimination in beneficiary enrollment. [422.504(a)(2)]
 
C. BENEFICIARY PROTECTIONS
1. The MA Organization agrees to comply with all requirements in subpart M of
part 422 governing coverage determinations, grievances, and appeals.
[422.504(a)(7)]
2. The MA Organization agrees to comply with the confidentiality and enrollee
record accuracy requirements in §422.118.
3. Beneficiary Financial Protection. The MA Organization agrees to comply with
the following requirements:
(a) Each MA Organization must adopt and maintain arrangements satisfactory to
CMS to protect its enrollees from incurring liability for payment of any fees
that are the legal obligation of the MA Organization. To meet this requirement
the MA Organization must—
(i) Ensure that all contractual (including deemed contracts under §422.216) or
other written arrangements with providers prohibit the Organization's providers
from holding any beneficiary enrollee liable for payment of any fees that are
the legal obligation of the MA Organization; and
(ii) Indemnify the beneficiary enrollee for payment of any fees that are the
legal obligation of the MA Organization for services furnished by providers that
do not contract, or that have not otherwise entered into an agreement with the
MA Organization, to provide services to the organization's beneficiary
enrollees. This provision does not apply to providers operating under deemed
contracts under §422.216. [422.504(g)(l)]
(iii) Ensure that in the MA Organization's terms and conditions of payment to
hospitals, if balance billing is imposed, the hospitals are obligated to provide
notice to enrollees of their potential liability for services where balance
billing could amount to not less than $500. This notice shall be provided
according to the requirements of§422.216(d)(2).
(b) The MA Organization must provide for continuation of enrollee health care
benefits-(i) For all enrollees, for the duration of the contract period for
which CMS payments have been made; and
 

3

(ii) For enrollees who are hospitalized ofi.the date its contract with CMS
terminates, or, in the event of the MA Organization's insolvency, through the
date of discharge. [422.504(g)(2)]
(c) In meeting the requirements of this section (C), other than the provider
contract requirements specified in paragraph (C)(3)(a) of this Article, the MA
Organization may use—
(i) Contractual arrangements;
(ii) Insurance acceptable to CMS;
(iii) Financial reserves acceptable to CMS; or
(iv) Any other arrangement acceptable to CMS. [422.504(g)(3)]
 
D. PROVIDER PROTECTIONS
1. The MA Organization agrees to comply with all applicable provider
requirements in 42 CFR Part 422 Subpart E, including provider certification
requirements, anti-discrimination requirements, provider participation and
consultation requirements, the prohibition on interference with provider advice,
limits on provider indemnification, rules governing payments to providers, and
limits on physician incentive plans. [422.504(a)(6)]
2. Prompt Payment.
(a) The MA Organization must pay 95 percent of "clean claims" within 30 days of
receipt if they are submitted by, or on behalf of, an enrollee of a MA PFFS plan
or are for claims for services that are not furnished under a written agreement
between the organization and the provider.
(i) The MA Organization must pay interest on clean claims that are not paid
within 30 days in accordance with sections 1816(c)(2) and 1842(c)(2) of the Act.
(ii) All other claims from non-contracted providers must be paid or denied
within 60 calendar days from the date of the request. [422.520(a)]
(b) Contracts, deemed contracts, or other written agreements between the MA
Organization and its providers must contain a prompt payment provision, the
terms of which are developed and agreed to by both the MA Organization and the
relevant provider. [422.520(b)]
(c) If CMS determines, after giving notice and opportunity for hearing, that the
MA Organization has failed to make payments in accordance with subparagraph
(2)(a) of this section, CMS may provide—
(i) For direct payment of the sums owed to providers; and
(ii) For appropriate reduction in the amounts that would otherwise be paid to
the MA Organization, to reflect the amounts of the direct payments and the cost
of making those payments. [422.520(c)]
 
3. Payment Rates:
(a) The MA Organization shall make payments to providers according to the
requirements of §422.114.
(b) CMS and the MA Organization shall reach agreement, on or before the
effective date of this contract, on provider payment methodologies, which shall
include provider payment proxies, also described as estimated Original Medicare
payment amounts.
(c) The MA Organization agrees to implement revised provider payment schedules
on the same date that such changes are required of contractors administering the
Original Medicare benefit.
 
 
4
 

(d) The MA Organization agrees that it ; shall revise its provider payment
schedule to reflect the requirements of legislative or regulatory changes made
during the term of this contract. Also, the MA Organization agrees that CMS may
require the MA Organization to revise its provider payment schedule if CMS
determines that the existing schedule does not comply with the provisions of
§422.114(a)(2). [422.114]
(e) The MA Organization agrees that it shall establish and maintain a payment
appeal system under which MA plan providers may have their payment claims
reviewed in the event that the provider believes he was paid less than he would
have been paid under Original Medicare. Under such a system, if a provider
reasonably demonstrates that they have not received proper payment, the MA
Organization shall pay the provider the difference between what the provider had
received and what he would have received under Original Medicare.
(f) The MA Organization agrees to make its provider payment schedule available
to the public in such a manner as to allow providers a reasonable opportunity to
be informed about payment methodologies under the MA plan. This includes posting
the schedule on a Web site maintained by the Organization.
 
E. QUALITY REQUIREMENTS
 
The MA Organization agrees to comply with quality requirements as described in
§422.152(f).
 
F. COMPLIANCE PLAN
The MA Organization agrees to implement a compliance plan in accordance with the
requirements of §422.503(b)(4)(vi). (422.503(b)(4)(vi)]
 
G. COMPLIANCE DEEMED ON THE BASIS OF ACCREDITATION: CMS may deem the MA
Organization to have met the quality improvement requirements of§1852(e) of the
Act and §422.152, the confidentiality and accuracy of enrollee records
requirements of§1852(h) of the Act and §422.118, the anti-discrimination
requirements of§1852(b) of the Act and §422.110, the access to services
requirements of§1852(d) of the Act and §422.112, the advance directives
requirements of§1852(i) of the Act and §422.128, the provider participation
requirements of § 1852(J) of the Act and 42 CFR Part 422, Subpart F, and the
applicable requirements described in §423.165, if the MA Organization is fully
accredited (and periodically reaccredited) by a private, national accreditation
organization approved by CMS and the accreditation organization used the
standards approved by CMS for the purposes of assessing the MA Organization's
compliance with Medicare requirements. The provisions of §422.156 shall govern
the MA Organization's use of deemed status to meet MA program requirements.
 
H. PROGRAM INTEGRITY
1. The MA Organization agrees to provide notice based on best knowledge,
information, and belief to CMS of any integrity items related to payments from
governmental entities, both federal and state, for healthcare or prescription
drug services. These items include any investigations, legal actions or matters
subject to arbitration brought involving the MA Organization (or MA
Organization's firm if applicable) and its subcontractors (excluding contracted
network providers), including any key management or executive staff, or any
major shareholders (5% or more), by a government agency (state or federal) on
matters relating to payments from governmental entities, both federal and state,
for healthcare and/or prescription drug services.
 

5

In providing the notice, the sponsor shall keep the government informed of when
the integrity item is initiated and when it is closed. Notice should be provided
of the details concerning any resolution and monetary payments as well as any
settlement agreements or corporate integrity agreements.
 
2. The MA Organization agrees to provide notice based on best knowledge,
information, and belief to CMS in the event the MA Organization or any of its
subcontractors is criminally convicted or has a civil judgment entered against
it for fraudulent activities or is sanctioned under any Federal program
involving the provision of health care or prescription drug services.
 
I. MARKETING
1. The MA Organization may not distribute any marketing materials, as defined in
42 CFR 422.80(b) and in the Marketing Materials Guidelines for Medicare
Advantage-Prescription Drug Plans and Prescription Drug Plans (Medicare
Marketing Guidelines), unless they have been filed with and not disapproved by
CMS in accordance with §422.80. The file and use process set out at
§422.80(a)(2) must be used, unless the MA organization notifies CMS that it will
not use this process.
2. CMS and the MA Organization shall agree upon language setting forth the
benefits, exclusions and other language of the Plan. The MA Organization bears
full responsibility for the accuracy of its marketing materials. CMS, in its
sole discretion, may order the MA Organization to print and distribute the
agreed upon marketing materials, in a format approved by CMS. The MA
Organization must disclose the information to each enrollee electing a plan as
outlined in 42 CFR422.111.
3. The MA Organization agrees that any advertising material, including that
labeled promotional material, marketing materials, or supplemental literature,
shall be truthful and not misleading. All marketing materials must include the
Contract number. All membership identification cards must include the Contract
number on the front of the card.
4. The MA Organization must comply with the Medicare Marketing Guidelines, as
well as all applicable statutes and regulations, including and without
limitation Section 1851(h) of the Act and 42 CFR §§422.80, 422.111 and 423.50.
Failure to comply may result in sanctions as provided in 42 CFR Part 422 Subpart
0.
 
Article IV
 
CMS Payment to MA Organization
 
A. The MA Organization agrees to develop its annual benefit and price bid
proposal and submit to CMS all required information on premiums, benefits, and
cost sharing, as required under 42 CFR Part 422 Subpart F. [422.504(a)(10)]
 
B. Methodology. CMS agrees to pay the MA Organization under this contract in
accordance with the provisions of section 1853 of the Act and 42 CFR Part 422
Subpart G. [422.504(a)(9)]

 
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C. Attestation of payment data (Attachments A, B, and C).
As a condition for receiving a monthly payment under paragraph B of this
article, and 42 CFR Part 422 Subpart G, the MA Organization agrees that its
chief executive officer (CEO), or chief financial officer (CFO), or an
individual delegated with the authority to sign on behalf of one of these
officers, and who reports directly to such officer, must request payment under
the contract on the forms attached as Attachment A (enrollment attestation) and
Attachment B (risk adjustment data) hereto which attest to (based on best
knowledge, information and belief, as of the date specified on the attestation
form) the accuracy, completeness, and truthfulness of the data identified on
these attachments. The Medicare Advantage Plan Attestation of Benefit Plan and
Price must be signed and attached to the executed version of this contract.
1. Attachment A requires that the CEO, or CFO, or an individual delegated with
the authority to sign on behalf of one of these officers, and who reports
directly to such officer, must attest based on best knowledge, information, and
belief that each enrollee for whom the MA Organization is requesting payment is
validly enrolled, or was validly enrolled during the period for which payment is
requested, in an MA plan offered by the MA Organization. The MA Organization
shall submit completed enrollment attestation forms to CMS, or its contractor,
on a monthly basis. (NOTE: The forms included as attachments to this contract
are for reference only. CMS will provide instructions for the completion and
submission of the forms in separate documents. MA Organizations should not take
any action on the forms until appropriate CMS instructions become available.)
2. Attachment B requires that the CEO, or CFO, or an individual delegated with
the authority to sign on behalf of one of these officers, and who reports
directly to such officer, must attest to (based on best knowledge, information
and belief, as of the date specified on the attestation form) that the risk
adjustment data it submits to CMS under §422.310 are accurate, complete, and
truthful. The MA Organization shall make annual attestations to this effect for
risk adjustment data on Attachment B and according to a schedule to be published
by CMS. If such risk adjustment data are generated by a related entity,
contractor, or subcontractor of an MA Organization, such entity, contractor, or
subcontractor must similarly attest to (based on best knowledge, information,
and belief, as of the date specified on the attestation form) the accuracy,
completeness, and truthfulness of the data. [422.504(1)]
3. The Medicare Advantage Plan Attestation of Benefit Plan and Price (which is
attached hereto) requires that the CEO, CFO, or an individual delegated with the
authority to sign on behalf of one of these officers, and who reports directly
to such officer, must attest (based on best knowledge, information and belief,
as of the date specified on the attestation form) that the information and
documentation comprising the bid submission proposal is accurate, complete, and
truthful and fully conforms to the Bid Form and Plan Benefit Package
requirements; and that the benefits described in the CMS-approved proposal bid
submission agree with the benefit package the MA Organization will offer during
the period covered by the proposal bid submission. This document is being sent
separately to the MA Organization and must be signed and attached to the
executed version of this contract, and is incorporated herein by reference.
[422.502(1)]
 

7

Article V
MA Organization Relationship with Related Entities, Contractors, and
Subcontractors
 
A. All references to "contracts" and "contractors" in this Article shall include
deemed contracts (where applicable) and deemed contract providers (where
applicable) as defined in §422.216(f).
 
B. Notwithstanding any relationship(s) that the MA Organization may have with
related entities, contractors, or subcontractors, the MA Organization maintains
full responsibility for adhering to and otherwise fully complying with all terms
and conditions of its contract with CMS. [422.504(i)(l)]
 
C. The MA Organization agrees to require all related entities, contractors, or
subcontractors to agree that—
1. HHS, the Comptroller General, or their designees have the right to inspect,
evaluate, and audit any pertinent contracts, books, documents, papers, and
records of the related entity(s), contractors), or subcontractors) involving
transactions related to this contract; and
2. HHS, the Comptroller General, or their designees have the right to inspect,
evaluate, and audit any pertinent information for any particular contract period
for 10 years from the final date of the contract period or from the date of
completion of any audit, whichever is later. [422.504(i)(2)]
 
D. The MA Organization agrees that all contracts or written arrangements into
which the MA Organization enters with providers, related entities, contractors,
or subcontractors (first tier and downstream entities) shall contain the
following elements:
1. Enrollee protection provisions that provide—
(a) Consistent with Article III(C), arrangements that prohibit providers from
holding an enrollee liable for payment of any fees that are the legal obligation
of the MA Organization; and
(b) Consistent with Article III(C), provision for the continuation of benefits.
2. Accountability provisions that indicate that—
(a) The MA Organization oversees and is accountable to CMS for any functions or
responsibilities that are described in these standards; and
(b) The MA Organization may only delegate activities or functions to a provider,
related entity, contractor, or subcontractor in a manner consistent with
requirements set forth at paragraph D of this article.
3. A provision requiring that any services or other activity performed by a
related entity, contractor or subcontractor in accordance with a contract or
written agreement between the related entity, contractor, or subcontractor and
the MA Organization will be consistent and comply with the MA Organization's
contractual obligations to CMS. [422.504(i)(3)]
 
E. If any of the MA Organization's activities or responsibilities under this
contract with CMS is delegated to other parties, the following requirements
apply to any related entity, contractor, subcontractor, or provider:
 
1. Written arrangements must specify delegated activities and reporting
responsibilities.

 
 
8
 

 

2. Written arrangements must either provide for revocation of the delegation
activities and reporting requirements or specify other remedies in instances
where CMS or the MA Organization determine that such parties have not performed
satisfactorily.
3. Written arrangements must specify that the performance of the parties is
monitored by the MA Organization on an ongoing basis.
4. Written arrangements must specify that either—
(a) The credentials of medical professionals affiliated with the party or
parties will be either reviewed by the MA Organization; or
(b) The provider verification process will be reviewed and approved by the MA
Organization and the MA Organization must audit the provider verification
process on an ongoing basis. The provider verification process will consist, at
a minimum, of ensuring that providers have a state license to operate and be
eligible for payment by Medicare.
5. All contracts or written arrangements must specify that the related entity,
contractor, or subcontractor must comply with all applicable Medicare laws,
regulations, and CMS instructions. [422.504(i)(4)]
 
F. If the MA Organization delegates selection of the providers, contractors, or
subcontractors to another organization, the MA Organization's written
arrangements with that organization must state that the MA Organization retains
the right to approve, suspend, or terminate any such arrangement.
[422.504(i)(5)]
 
Article VI
 
Records Requirements
 
A. MAINTENANCE OF RECORDS
1. The MA Organization agrees to maintain for 10 years books, records,
documents, and other
evidence of accounting procedures and practices that—
(a) Are sufficient to do the following:
(i) Accommodate periodic auditing of the financial records (including data
related to Medicare utilization, costs, and computation of the benefit and price
bid) of the MA Organization.
(ii) Enable CMS to inspect or otherwise evaluate the quality, appropriateness
and timeliness of services performed under the contract, and the facilities of
the MA Organization.
(iii) Enable CMS to audit and inspect any books and records of the MA
Organization that pertain to the ability of the organization to bear the risk of
potential financial losses, or to services performed or determinations of
amounts payable under the contract.
(iv) Properly reflect all direct and indirect costs claimed to have been
incurred and used in the preparation of the benefit and price bid proposal.
(v) Establish component rates of the benefit and price bid for determining
additional and supplementary benefits.
(vi) Determine the rates utilized in setting premiums for State insurance agency
purposes and for other government and private purchasers; and
(b) Include at least records of the following:

 
9

(i) Ownership and operation of the MA Organization's financial, medical, and
other record keeping systems.
(ii) Financial statements for the current contract period and ten prior periods.
(iii) Federal income tax or informational returns for the current contract
period and ten prior periods.
(iv) Asset acquisition, lease, sale, or other action.
(v) Agreements, contracts (including, but not limitedto with related or
unrelated prescription drug benefit managers) and subcontracts.
(vi) Franchise, marketing, and management agreements.
(vii) Schedules of charges for the MA Organization's fee-for-service patients.
(viii) Matters pertaining to costs of operations.
(ix) Amounts of income received, by source and payment.
(x) Cash flow statements.
(xi) Any financial reports filed with other Federal programs or State
authorities. [422.504(d)]
 
2. Access to facilities and records. The MA Organization agrees to the
following:
(a) The Department of Health and Human Services (HHS), the Comptroller General,
or their designee may evaluate, through inspection or other means—
(i) The quality, appropriateness, and timeliness of services furnished to
Medicare enrollees under the contract;
(ii) The facilities of the MA Organization; and
(iii) The enrollment and disenrollment records for the current contract period
and ten prior periods.
(b) HHS, the Comptroller General, or their designees may audit, evaluate, or
inspect any books, contracts, medical records, documents, papers, patient care
documentation, and other records of the MA Organization, related entity,
contractor (including deemed contract providers as defined in §422.216(f)),
subcontractor, or its transferee that pertain to any aspect of services
performed, reconciliation of benefit liabilities, and determination of amounts
payable under the contract, or as the Secretary may deem necessary to enforce
the contract.
(c) The MA Organization agrees to make available, for the purposes specified in
section (A) of this article, its premises, physical facilities and equipment,
records relating to its Medicare enrollees, and any additional relevant
information that CMS may require, in a manner that meets CMS record maintenance
requirements.
(d) HHS, the Comptroller General, or their designee's right to inspect,
evaluate, and audit extends through 10 years from the final date of the contract
period or completion of audit, whichever is later unless-
(i) CMS determines there is a special need to retain a particular record or
group of records for a longer period and notifies the MA Organization at least
30 days before the normal disposition date;
(ii) There has been a termination, dispute, or fraud or similar fault by the MA
Organization, in which case the retention may be extended to 10 years from the
date of any resulting final resolution of the termination, dispute, or fraud or
similar fault; or
(iii) HHS, the Comptroller General, or their designee determines that there is a
reasonable possibility of fraud, in which case they may inspect, evaluate, and
audit the MA Organization at any time. [422.504(e)]
 
10
 

B. REPORTING REQUIREMENTS
1. The MA Organization shall have an effective procedure to develop, compile,
evaluate, and report to CMS, to its enrollees, and to the general public, at the
times and in the manner that CMS requires, and while safeguarding the
confidentiality of the doctor-patient relationship, statistics and other
information as described in the remainder of this section (B). (422.516(a)]
2. The MA Organization agrees to submit to CMS certified financial information
that must include the following:
(a) Such information as CMS may require demonstrating that the organization has
a fiscally sound operation, including:
(i) The cost of its operations;
(ii) A description, submitted to CMS annually and within 120 days of the end of
the fiscal year, of significant business transactions (as defined in §422.500)
between the MA Organization and a party in interest showing that the costs of
the transactions listed in paragraph (2)(a)(v) of this section do not exceed the
costs that would be incurred if these transactions were with someone who is not
a party in interest; or
(iii) If they do exceed, a justification that the higher costs are consistent
with prudent management and fiscal soundness requirements.
(iv) A combined financial statement for the MA Organization and a party in
interest if either of the following conditions is met:
(aa) Thirty-five percent or more of the costs of operation of the MA
Organization go to a party in interest.
(bb) Thirty-five percent or more of the revenue of a party in interest is from
the MA Organization. (422.516(b)]
(v)Requirements for combined financial statements.
(aa) The combined financial statements required by paragraph (2)(a)(iv) must
display in separate columns the financial information for the MA Organization
and each of the parties in interest.
(bb) Inter-entity transactions must be eliminated in the consolidated column.
(cc) The statements must have been examined by an independent auditor in
accordance with generally accepted accounting principles and must include
appropriate opinions and notes.
(dd) Upon written request from the MA Organization showing good cause, CMS may
waive the requirement that the organization's combined financial statement
include the financial information required in paragraph (2)(a)(v) with respect
to a particular entity. [422.516(c)]
(vi) A description of any loans or other special financial arrangements the MA
Organization makes with contractors, subcontractors, and related entities.
(b) Such information as CMS may require pertaining to the disclosure of
ownership and control of the MA Organization. [422.504(f)(l)(ii)]
(c) Patterns of utilization of the MA Organization's services.
3. The MA Organization agrees to participate in surveys required by CMS and to
submit to CMS all information that is necessary for CMS to administer and
evaluate the program and to simultaneously establish and facilitate a process
for current and prospective beneficiaries to exercise choice in obtaining
Medicare services. This information includes, but is not limited to:
(a) The benefits covered under the MA plan;
(b) The MA monthly basic beneficiary premium and MA monthly supplemental
beneficiary premium, if any, for the plan.
 
 
11
 

(c) The service area and continuation area, if any, of each plan and the
enrollment capacity of each plan;
(d) Plan performance indicators for the benefits under the plan including — (i)
Disenrollment rates for Medicare enrollees electing to receive benefits through
the plan for the previous 2 years;
(ii) Information on Medicare enrollee satisfaction;
(iii) The patterns of utilization of plan services;
(iv) The availability, accessibility, and acceptability of the plan's services;
(v) Information on health outcomes and other performance measures required by
CMS;
(vi) The recent record regarding compliance of the plan with requirements of
this part, as determined by CMS; and
(vii) Other information determined by CMS to be necessary to assist
beneficiariesin making an informed choice among MA plans and traditional
Medicare;
(e) Information about beneficiary appeals and their disposition;
(f) Information regarding all formal actions, reviews, findings, or other
similar actions by States, other regulatory bodies, or any other certifying or
accrediting organization;
(g) Any other information deemed necessary by CMS for the administration or
evaluation of the Medicare program. [422.504(f)(2)]
4. The MA Organization agrees to provide to its enrollees and upon request, to
any individual eligible to elect an MA plan, all informational requirements
under §422.64 and, upon an enrollee's, request, the financial disclosure
information required under §422.516. [422.504(f)(3)]
5. Reporting and disclosure under ERISA.
(a) For any employees' health benefits plan that includes an MA Organization in
its offerings, the MA Organization must furnish, upon request, the information
the plan needs to fulfill its reporting and disclosure obligations (with respect
to the MA Organization) under the Employee Retirement Income Security Act of
1974 (ERISA).
(b) The MA Organization must furnish the information to the employer or the
employer's designee, or to the plan administrator, as the term "administrator"
is defined in ERISA. [422.516(d)]
6. Electronic communication. The MA Organization must have the capacity to
communicate with CMS electronically. [422.504(b)]
7. Risk Adjustment data. The MA Organization agrees to comply with the
requirements in §422.310 for submitting risk adjustment data to CMS.
[422.504(a)(8)]

Article VII
Renewal of the MA Contract
 
A. Renewal of contract: In accordance with §422.505, following the initial
contract period, this contract is renewable annually only if-
(1) The MA Organization has not provided CMS with a notice of intention not to
renew; [422.506(a)]
 
 
12
 

(2) CMS and the MA Organization reach'."agreement on the bid under 42 CFR Part
422 Subpart F; and [422.505(d)]
 
(3) CMS informs the MA Organization that it authorizes a renewal.
 
B. Nonrenewal of contract
(1) Nonrenewal by the Organization.
(a) In accordance with §422.506, the MA Organization may elect not to renew its
contract with CMS as of the end of the term of the contract for any reason,
provided it meets the time frames for doing so set forth in subparagraphs (b)
and (c) of this paragraph.
(b) If the MA Organization does not intend to renew its contract, it must
notify—
(i) CMS, in writing, by the first Monday in June of the year in which the
contract would end, pursuant to §422.506;
(ii) Each Medicare enrollee, at least 90 days before the date on which the
nonrenewal is effective. This notice must include a written description of all
alternatives available for obtaining Medicare services within the service area
including alternative MA plans, Medigap options, and original Medicare and
prescription drug plans and must receive CMS approval prior to issuance.
(iii) The general public, at least 90 days before the end of the current
calendar year, by publishing a CMS-approved notice in one or more newspapers of
general circulation in each community located in the MA Organization's service
area.
(c) CMS may accept a nonrenewal notice submitted after the applicable annual
non-renewal notice deadline if—
(i) The MA Organization notifies its Medicare enrollees and the public in
accordance with subparagraph (l)(b)(ii) and (l)(b)(iii) of this section; and
(ii) Acceptance is not inconsistent with the effective and efficient
administration of the Medicare program.
(d) If the MA Organization does not renew a contract under subparagraph (1), CMS
will not enter into an MA contract with the Organization for 2 years from the
date of contract separation unless there are special circumstances that warrant
special consideration, as determined by CMS. [422.506(a)]
(2) CMS decision not to renew.
(a) CMS may elect not to authorize renewal of a contract for any of the
following reasons:
(i) The MA Organization's level of enrollment, growth in enrollment, or
insufficient number of contracted providers is determined by CMS to threaten the
viability of the organization under the MA program and or be an indicator of
beneficiary dissatisfaction with the MA plan(s) offered by the organization.
(ii) For any of the reasons listed in §422.510(a) [Article VIII, section
(B)(l)(a) of this contract], which would also permit CMS to terminate the
contract.
(iii) The MA Organization has committed any of the acts in §422.752(a) that
would support the imposition of intermediate sanctions or civil money penalties
under 42 CFR Part 422 Subpart 0.
(iv) The MA Organization did not submit a benefit and price bid or the benefit
and price bid was not acceptable.
 
 
13
 

(b) Notice. CMS shall provide notice of "its decision whether to authorize
renewal of the contract as follows:
(i) To the MA Organization by May 1 of the contract year, except in the event of
(2)(a)(iv) above, for which notice will be sent by September 1.
(ii) To the MA Organization's Medicare enrollees by mail at least 90 days before
the end of the current calendar year.
(iii) To the general public at least 90 days before the end of the current
calendar year, by publishing a notice in one or more newspapers of general
circulation in each community or county located in the MA Organization's service
area.
(c) Notice of appeal rights. CMS shall give the MA Organization written notice
of its right to reconsideration of the decision not to renew in accordance with
§422.644. [422.506(b)]
 
 
Article VIII
 
Modification or Termination of the Contract
 
A. Modification or Termination of Contract by Mutual Consent
 
1. This contract may be modified or terminated at any time by written mutual
consent.
(a) If the contract is modified by written mutual consent, the MA Organization
must notify its Medicare enrollees of any changes that CMS determines are
appropriate for notification within time frames specified by CMS.
[422.508(a)(2)]
(b) If the contract is terminated by written mutual consent, except as provided
in section (A)(2) of this Article, the MA Organization must provide notice to
its Medicare enrollees and the general public as provided in section B(2)(b)(ii)
and B(2)(b)(iii) of this Article. [422.508(a)(l)]
2. If this contract is terminated by written mutual consent and replaced the day
following such termination by a new MA contract, the MA Organization is not
required to provide the notice specified in section B of this article.
[422.508(b)]
 
B. Termination of the Contract by CMS or the MA Organization 1. Termination by
CMS.
(a) CMS may terminate a contract for any of the following reasons:
(i) The MA Organization has failed substantially to carry out the terms of its
contract with CMS.
(ii) The MA Organization is carrying out its contract with CMS in a manner that
is inconsistent with the effective and efficient implementation of 42 CFR Part
422.
(iii) CMS determines that the MA Organization no longer meets the requirements
of 42 CFR Part 422 for being a contracting organization.
(iv) There is credible evidence that the MA Organization committed or
participated in false, fraudulent or abusive activities affecting the Medicare
program, including submission of false or fraudulent data.
(v) The MA Organization experiences financial difficulties so severe that its
ability to make necessary health services available is impaired to the point of
posing an imminent and serious risk to the health of its enrollees, or otherwise
fails to make services available to the extent that such a risk to health
exists.
 
14
 

(vi) The MA Organization substantially fails to comply with the requirements in
42 CFR Part 422 Subpart M relating to grievances and appeals.
(vii) The MA Organization fails to provide CMS with valid risk adjustment data
as required under §422.310 and 423.329(b)(3).
(viii) The MA Organization substantially fails to comply with the prompt payment
requirements in §422.520.
(ix) The MA Organization substantially fails to comply with the service access
requirements in §422.114.
(x) The MA Organization fails to comply with the requirements of §422.208
regarding physician incentive plans.
(xi) The MA Organization substantially fails to comply with the marketing
requirements in §422.80.
(b) Notice. If CMS decides to terminate a contract for reasons other than the
grounds specified in section (B)(l)(a) above, it will give notice of the
termination as follows:
(i) CMS will notify the MA Organization in writing 90 days before the intended
date of the termination.
(ii) The MA Organization will notify its Medicare enrollees of the termination
by mail at least 30 days before the effective date of the termination.
(iii) The MA Organization will notify the general public of the termination at
least 30 days before the effective date of the termination by publishing a
notice in one or more newspapers of general circulation in each community or
county located in the MA Organization's service area.
(c) Immediate termination of contract by CMS.
(i) For terminations based on violations prescribed in paragraph (B)(l)(a)(v) of
this article, CMS will notify the MA Organization in writing that its contract
has been terminated effective the date of the termination decision by CMS. If
termination is effective in the middle of a month, CMS has the right to recover
the prorated share of the capitation payments made to the MA Organization
covering the period of the month following the contract termination.
(ii) CMS will notify the MA Organization's Medicare enrollees in writing of CMS'
decision to terminate the MA Organization's contract. This notice will occur no
later than 30 days after CMS notifies the plan of its decision to terminate this
contract. CMS will simultaneously inform the Medicare enrollees of alternative
options for obtaining Medicare services, including alternative MA Organizations
in a similar geographic area and original Medicare.
(iii) CMS will notify the general public of the termination no later than 30
days after notifying the MA Organization of CMS' decision to terminate this
contract. This notice will be published in one or more newspapers of general
circulation in each community or county located in the MA Organization's service
area.
(d) Corrective action plan
(i) General. Before terminating a contract for reasons other than the grounds
specified in section (B)(l)(a)(v) of this article, CMS will provide the MA
Organization with reasonable opportunity, not to exceed time frames specified at
42 CFR Part 422 Subpart N, to develop and receive CMS approval of a corrective
action plan to correct the deficiencies that are the basis of the proposed
termination.
 
15
 

(ii) Exception. If a contract is terminated under section (B)(l)(a)(v) of this
article, the MA Organization will not have the opportunity to submit a
corrective action plan.
(e) Appeal rights. IfCMS decides to terminate this contract, it will send
written notice to the MA Organization informing it of its termination appeal
rights in accordance with 42 CFR Part 422 SubpartN. [422.510]
2. Termination by the MA Organization
(a) Cause for termination. The MA Organization may terminate this contract if
CMS fails to substantially carry out the terms of the contract.
(b) Notice. The MA Organization must give advance notice as follows:
(i) To CMS, at least 90 days before the intended date of termination. This
notice must specify the reasons why the MA Organization is requesting contract
termination.
(ii) To its Medicare enrollees, at least 60 days before the termination
effective date. This notice must include a written description of alternatives
available for obtaining Medicare services within the service area, including
alternative MA and MA-PD plans, PDP plans, Medigap options, and original
Medicare and must receive CMS approval.
(iii) To the general public at least 60 days before the termination effective
date by publishing a CMS-approved notice in one or more newspapers of general
circulation in each community or county located in the MA Organization's
geographic area.
c) Effective date of termination. The effective date of the termination will be
determined by CMS and will be at least 90 days after the date CMS receives the
MA Organization's notice of intent to terminate.
(d) CMS' liability. CMS* liability for payment to the MA Organization ends as of
the first day of the month after the last month for which the contract is in
effect, but CMS shall make payments for amounts owed prior to termination but
not yet paid.
(e) Effect of termination by the organization. CMS will not enter into an
agreement with the MA Organization for a period of two years from the date the
Organization has terminated this contract, unless there are circumstances that
warrant special consideration, as determined by CMS. [422.512]
 
Article IX
Restrictions on Use of Data
 
The MA Organization agrees that its use of the data it is authorized to collect
to carry out the terms of this contract shall be used exclusively for the
purpose of operating its MA private fee-for-service plan. The MA Organization
may not use data collected under this contract in the operation of any other
line of business offered by the MA Organization or its related entities,
contractors, or subcontractors.
 
16
 

Article X
Requirements of Other Laws and Regulations
 
A. The MA Organization agrees to comply with-
(1) Federal laws and regulations designed to prevent or ameliorate fraud, waste,
and abuse, including, but not limited to, applicable provisions of Federal
criminal law, the False Claims Act (31 USC 3729 et seq.), and the anti-kickback
statute (section 1128B(b) of the Act): and
(2) HIPAA administrative simplification rules at 45 CFR Parts 160, 162, and 164.
[422.504(h)]
 
B. The MA Organization maintains ultimate responsibility for adhering to and
otherwise fully complying with all terms and conditions of its contract with
CMS, notwithstanding any relationship(s) that the MA organization may have with
related entities, contractors, or subcontractors. [422.504(i)]
 
C. In the event that any provision of this contract conflicts with the
provisions of any statute or regulation applicable to an MA Organization, the
provisions of the statute or regulation shall have full force and effect.
 
Article XI Severability
 
The MA Organization agrees that, upon CMS' request, this contract will be
amended to exclude any MA plan or State-licensed entity specified by CMS, and a
separate contract for any such excluded plan or entity will be deemed to be in
place when such a request is made. [422.504(k)]

Article XI Miscellaneous
 
A. Definitions. Terms not otherwise defined in this contract shall have the
meaning given to such terms in 42 CFR Part 422.
B. Alteration to Original Contract Terms. The MA Organization agrees that it has
not altered in any way the terms of this contract presented for signature by
CMS. The MA Organization agrees that any alterations to the original text the MA
Organization may make to this contract shall not be binding on the parties.
C. Approval to Begin Marketing and Enrollment. The MA Organization agrees that
it must complete CMS operational requirements prior to receiving CMS approval to
begin Part C marketing and enrollment activities. Such activities include, but
are not limited to, establishing and successfully testing connectivity with CMS
systems to process enrollment applications (or contracting with an entity
qualified to perform such functions on the MA Organization's Sponsor's behalf)
and successfully demonstrating capability to submit accurate and timely price
 
17
 

comparison data. To establish and successfully te'st connectivity, the MA
Organization must,
1) establish and test physical connectivity to the CMS data center, 2) acquire
user identifications and passwords, 3) receive, store, and maintain data
necessary to perform enrollments and send and receive transactions to and from
CMS, and 4) check and receive transaction status information.
D. Incorporation of Applicable Addenda. All addenda checked off and initialed on
the cover sheet of this contract by the MA Organization are hereby incorporated
by reference.
 
18
 
 

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

In witness whereof, the parties hereby execute this contract. FOR THE MA
ORGANIZATION

Todd S. Farha 
Printed Name
President and CEO
Title
 
/s/ Todd S. Farha
Signature
9/14/06
Date
 
Stone Harbor Ins. Co.
Organization
8735 Henderson Rd Tampa, FL 33634
Address
   
 
 
 
 
FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES
 
/s/  David Lewis   
David A. Lewis
Acting Director
Medicare Advantage Group
Center for Beneficiary Choices
 
9/29/06
Date

 
19
 

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

ATTACHMENT A
 
ATTESTATION OF ENROLLMENT INFORMATION RELATING TO CMS PAYMENT TO A MEDICARE
ADVANTAGE ORGANIZATION
 
Pursuant to the contract(s) between the Centers for Medicare & Medicaid Services
(CMS) and (INSERT NAME OF MA ORGANIZATION), hereafter referred to as the MA
Organization, governing the operation of the following Medicare Advantage plans
(INSERT PLAN IDENTIFICATION NUMBERS HERE), the MA Organization hereby requests
payment under the contract, and in doing so, makes the following attestation
concerning CMS payments to the MA Organization. The MA Organization acknowledges
that the information described below directly affects the calculation of CMS
payments to the MA Organization and that misrepresentations to CMS about the
accuracy of such information may result in Federal civil action and/or criminal
prosecution. This attestation shall not be considered a waiver of the MA
Organization's right to seek payment adjustments from CMS based on information
or data which does not become available until after the date the MA Organization
submits this attestation.
 
1. The MA Organization has reported to CMS for the month of (INDICATE MONTH AND
YEAR) all new enrollments, disenrollments, and changes in enrollees'
institutional status with respect to the above-stated MA plans. Based on best
knowledge, information, and belief, all information submitted to CMS in this
report is accurate, complete, and truthful.
 
2. The MA Organization has reviewed the CMS monthly membership report and reply
listing for the month offINDICATE MONTH AND YEAR) for the above-stated MA plans
and has reported to CMS any discrepancies between the report and the MA
Organization's records. For those portions of the monthly membership report and
the reply listing to which the MA Organization raises no objection, the MA
Organization, through the certifying CEO/CFO, will be deemed to have attested,
based on best knowledge, information, and belief, as of the date indicated
below, to their accuracy, completeness, and truthfulness.

To be signed monthly by CFO
(INDICATE TITLE [CEO or CFO, or person delegated to sign for either officer])
 
(INDICATE MA ORGANIZATION)
 

 
20
 

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

ATTACHMENT B
 
ATTESTATION OF RISK ADJUSTMENT DATA INFORMATION RELATING TO CMS PAYMENT TO A
MEDICARE ADVANTAGE ORGANIZATION
 
Pursuant to the contract(s) between the Centers for Medicare & Medicaid Services
(CMS) and (INSERT NAME OF MA ORGANIZATION), hereafter referred to as the MA
Organization, governing the operation of the following Medicare Advantage plans
(INSERT PLAN IDENTIFICATION NUMBERS HERE), the MA Organization hereby requests
payment under the contract, and in doing so, makes the following attestation
concerning CMS payments to the MA Organization. The MA Organization acknowledges
that the information described below directly affects the calculation of CMS
payments to the MA Organization or additional benefit obligations of the MA
Organization and that misrepresentation to CMS about the accuracy of such
information may result in Federal civil action and/or criminal prosecution.
 
The MA Organization has reported to CMS for the period of (INDICATE DATES) all
(INDICATE TYPE OF DATA-INPATIENT HOSPITAL. OUTPATIENT HOSPITAL. OR PHYSICIAN)
risk adjustment data available to the MA Organization with respect to the
above-stated MA plans. Based on best knowledge, information, and belief that, as
of the date indicated below, all information submitted to CMS in this report is
accurate, complete, and truthful.

To be signed monthly by CFO
(INDICATE TITLE (CEOor CFO, or person delegated to sign for either officer])
 
(INDICATE MA ORGANIZATION)

 

21
 

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

[SAMPLE - DO NOT USE - THIS DOCUMENT WILL BE SENT DIRECTLY TO THE MAO THROUGH
HPMS] ATTACHMENT C - Medicare Advantage Plan Attestation of Benefit Plan and
Price

<Legal Entity Name>
<Contract #>

Date: <XX/XX/XXXX>
 
I attest that the following plan numbers as established in the final Plan
Benefit Package (PBP) will be operated by the above-stated organization and made
available to eligible Medicare beneficiaries in the approved service area during
program year 2007.
 
 
Plan
 
ID
 
Segment
 
ID
 
Version
 
Plan Name
 
Plan Type
 
Transaction
 
Type
 
MA
 
Premium
 
Part D Premium
 
CMS
 
Approval
 
Date
 
Effective Date
 
<xxx>
 
<x>
 
<x>
 
<Plan Name>
 
<Plan Type>
 
<Transaction Type>
 
$<Plan Premium>
 
$<Part D Premium>
 
<xx/xx/xx>
 
<xx/xx/xx>
 
<xxx>
 
<x>
 
<x>
 
<Plan Name>
 
<Plan Type>
 
<Transaction Type>
 
$<Plan Premium>
 
$<Part D Premium>
 
<xx/xx/xx>
 
<xx/xx/xx>
 
<xxx>
 
<x>
 
<x>
 
<Plan Name>
 
<Plan Type>
 
<Transaction Type>
 
$<Plan Premium>
 
$<Part D Premium>
 
<xx/xx/xx>
 
<xx/xx/xx>

CEO
 
CFO
         
<Name of CEO>
Date
<Name of CEO>
Date
<Title>
 
<Title>
 
<Address 1>
 
<Address 1>
 
<Address 2>
 
<Address 2>
 
<City, State Zip>
 
<City, State Zip>
 
<Phone #>
 
<Phone #>
 

 
22
 

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

ADDENDUM TO MEDICARE MANAGED CARE CONTRACT PURSUANT TO SECTIONS 1860D-1 THROUGH
1860D-42 OF THE SOCIAL SECURITY ACT FOR THE OPERATION OF A VOLUNTARY MEDICARE
PRESCRIPTION DRUG PLAN
 
The Centers for Medicare & Medicaid Services (hereinafter referred to as "CMS")
and Stone Harbor Insurance Co.  managed care organization (hereinafter referred
to as the MA-PD Sponsor) agree to amend the contract (INSERT "H" OR "R" NUMBER)
governing the MA-PD Sponsor's operation of a Part C plan described in Section
1851(a)(2)(A) of the Social Security Act (hereinafter referred to as "the Act")
or a Medicare cost plan to include this addendum under which the MA-PD Sponsor
shall operate a Voluntary Medicare Prescription Drug Plan pursuant to sections
1860D-1 through 1860D-42 (with the exception of section 1860D-22 and 1860D-31)
of the Act.
 
This addendum is made pursuant to Subpart L of 42 CFR Part 417 (in the case of
cost plan sponsors offering a Part D benefit) and Subpart K of 42 CFR Part 422
(in the case of an MA-PD Sponsor offering a Part C plan).
 
NOTE: For purposes of this addendum, unless otherwise noted, reference to an
"MA-PD Sponsor" or "MA-PD Plan" is deemed to include a cost plan sponsor or a MA
private fee-for-service contractor offering a Part D benefit.
 
1
 

Article I
Medicare Voluntary Prescription Drug Benefit
 
A. The MA-PD Sponsor agrees to operate one or more Medicare Voluntary
Prescription Drug Plans as described in its application and related materials,
including but not limited to all the attestations contained therein and all
supplemental guidance, for Medicare approval and in compliance with the
provisions of this addendum, which incorporates in its entirety the Solicitation
For Applications for New Medicare Advantage Prescription Drug Plan (MA-PD)
Sponsors, released on January 24. 2006 [applicable to Medicare Part C
contractors] or the Solicitation for Applications for New Cost Plan Sponsors,
released on January 24., 2006 [applicable to Medicare cost plan contractors]
(hereinafter collectively referred to as "the addendum"). The MA-PD Sponsor also
agrees to operate in accordance with the regulations at 42 CFR §423.1 through 42
CFR §423.910 (with the exception of Subparts Q, R, and S), sections 1860D-1
through 1860D-42 (with the exception of sections 1860D-22(a) and 1860D-31) of
the Social Security Act, and the applicable solicitation identified above, as
well as all other applicable Federal statutes, regulations, and policies. This
addendum is deemed to incorporate any changes that are required by statute to be
implemented during the term of this addendum and any regulations or policies
implementing or interpreting such statutory provisions.
 
B. CMS agrees to perform its obligations to the MA-PD Sponsor consistent with
the regulations at 42 CFR §423.1 through 42 CFR §423.910 (with the exception of
Subparts Q, R, and S), sections 1860D-1 through 1860D-42 (with the exception of
sections 1860D-22(a) and 1860D-31) of the Social Security Act, and the
applicable solicitation, as well as all other applicable Federal statutes,
regulations, and policies.
 
C. CMS agrees that it will not implement, other than at the beginning of a
calendar year, regulations under 42 CFR Part 423 that impose new, significant
regulatory requirements on the MA-PD Sponsor. This provision does not apply to
new requirements mandated by statute.
 
D. This addendum is in no way intended to supersede or modify 42 CFR, Parts 417,
422 or 423. Failure to reference a regulatory requirement in this addendum does
not affect the applicability of such requirements to the MA-PD Sponsor and CMS.
 
Article II
Functions to be Performed by the MA-PD Sponsor
 
A. ENROLLMENT
 
1. MA-PD Sponsor agrees to enroll in its MA-PD plan only Part D-eligible
beneficiaries as they are defined in 42 CFR §423.30(a) and who have elected to
enroll in MA-PD Sponsor's Part Cor Section 1876 benefit.

 

2

2. If the MA-PD Sponsor is a cost plan- sponsor, the MA-PD Sponsor acknowledges
that its Section 1876 plan enrollees are not required to elect enrollment in its
Part D plan.
 
B. PRESCRIPTION DRUG BENEFIT
1. MA-PD Sponsor agrees to provide the required prescription drug coverage as
defined under 42 CFR §423.100 and, to the extent applicable, supplemental
benefits as defined in 42 CFR §423.100 and in accordance with Subpart C of 42
CFR Part 423. MA-PD Sponsor also agrees to provide Part D benefits as described
in the MA-PD Sponsor's Part D bid(s) approved each year by CMS (and in the
Attestation of Benefit Plan and Price, attached hereto).

2. MA-PD Sponsor agrees to calculate and collect beneficiary Part D premiums in
accordance with 42 CFR §§423.286 and 423.293.
3. If the MA-PD Sponsors is a cost plans sponsor, it acknowledge that its Part D
benefit is offered as an optional supplemental service in accordance with 42 CFR
§417.440(b)(2)(ii).
 
C. DISSEMINATION OF PLAN INFORMATION
 
1. MA-PD Sponsor agrees to provide the information required in 42 CFR §423.48.
 
2. MA-PD Sponsor agrees to disclose information related to Part D benefits to
beneficiaries in the manner and the form specified by CMS under 42 CFR §§423.128
and 423.50 and in the "Marketing Materials Guidelines for Medicare
Advantage-Prescription Drug Plans (MA-PDs) and Prescription Drug Plans (PDPs)."
 
3. MA-PD Sponsor certifies that all materials it submits to CMS under the File
and Use Certification authority described in the Marketing Materials Guidelines
are accurate, truthful, not misleading, and consistent with CMS marketing
guidelines.
 
D. QUALITY ASSURANCE/UTILIZATION MANAGEMENT
 
MA-PD Sponsor agrees to operate quality assurance, cost, and utilization
management, medication therapy management programs, and support electronic
prescribing in accordance with Subpart D of 42 CFR Part 423.
 
E. APPEALS AND GRIEVANCES
 
MA-PD Sponsor agrees to comply with all requirements in Subpart M of 42 CFR Part
423 governing coverage determinations, grievances and appeals, and formulary
exceptions. MA-PD Sponsor acknowledges that these requirements are separate and
distinct from the appeals and grievances requirements applicable to the MA-PD
Sponsor through the operation of its Part C or cost plan benefits.
 

 
3
 

F. PAYMENT TO MA-PD SPONSOR
 
1. MA-PD Sponsor and CMS agree that payment paid for Part D services under the
addendum will be governed by the rules in Subpart G of 42 CFR Part 423.
 
2. If the MA-PD Sponsor is participating in the Part D Reinsurance Payment
Demonstration, described in 70 FR 9360 (Feb. 25, 2005), it affirms that it will
not seek payment under the demonstration for services provided to employer group
enrollees.
 
G. BID SUBMISSION AND REVIEW
 
If the MA-PD Sponsor intends to participate in the Part D program for the future
year, MA-PD Sponsor agrees to submit a future year's Part D bid, including all
required information on premiums, benefits, and cost-sharing, by the applicable
due date, as provided in Subpart F of 42 CFR Part 423 so that CMS and the MA-PD
Sponsor may conduct negotiations regarding the terms and conditions of the
proposed bid and benefit plan renewal. MA-PD Sponsor acknowledges that failure
to submit a timely bid under this section may affect the sponsor's ability to
offer a Part C plan, pursuant to the provisions of 42 CFR §422.4(c).
 
H. COORDINATION WITH OTHER PRESCRIPTION DRUG COVERAGE
 
1. MA-PD Sponsor agrees to comply with the coordination requirements with State
Pharmacy Assistance Programs (SPAPs) and plans that provide other prescription
drug coverage as described in Subpart J of 42 CFR Part 423.
 
2. MA-PD Sponsor agrees to comply with Medicare Secondary Payer procedures as
stated in 42 CFR §423.462.
 
I. SERVICE AREA AND PHARMACY ACCESS
 
1. The MA-PD Sponsor agrees to provide Part D benefits in the service area for
which it has been approved by CMS to offer Part C or cost plan benefits
utilizing a pharmacy network and formulary approved by CMS that meet the
requirements of 42 CFR §423.120.
 
2. The MA-PD Sponsor agrees to ensure adequate access to Part D-covered drugs at
out- of-network pharmacies according to 42 CFR §423.124.
 
3. MA-PD Sponsor agrees to provide benefits by means of point-of-service systems
to adjudicate prescription drug claims in a timely and efficient manner in
compliance with CMS standards, except when necessary to provide access in
underserved areas, I/T/U pharmacies (as defined in 42 CFR §423.100), and
long-term care pharmacies (as defined in 42 CFR §423.100).

 
4

4. MA-PD Sponsor agrees to contract with any pharmacy that meets the MA-PD
Sponsor's reasonable and relevant standard terms and conditions. If MA-PD
Sponsor has demonstrated that it historically fills 98% or more of its
enrollees' prescriptions at pharmacies owned and operated by the MA-PD Sponsor
(or presents compelling circumstances that prevent the sponsor from meeting the
98% standard or demonstrates that its Part D plan design will enable the sponsor
to meet the 98% standard during the contract year), this provision does not
apply to MA-PD Sponsor's plan.
 
5. The provisions of 42 CFR §423.120(a) concerning the TRICARE retail pharmacy
access standard do not apply to MA-PD Sponsor if the Sponsor has demonstrated to
CMS that it historically fills more than 50% of-its enrollees' prescriptions at
pharmacies owned and operated by the MA-PD Sponsor. MA-PD Sponsors excused from
meeting the TRICARE standard are required to demonstrate retail pharmacy access
that meets the requirements of 42 CFR §422.112 for a Part C contractor and 42
CFR §417.416(e) for a cost plan contractor.
 
J. COMPLIANCE PLAN/PROGRAM INTEGRITY
 
MA-PD Sponsor agrees that it will develop and implement a compliance plan that
applies to its Part D-related operations, consistent with 42 CFR
§423.504(b)(4)(vi).
 
K. LOW-INCOME SUBSIDY
 
MA-PD Sponsor agrees that it will participate in the administration of subsidies
for low-income individuals according to Subpart P of 42 CFR Part 423.
 
L. BENEFICIARY FINANCIAL PROTECTIONS
 
The MA-PD Sponsor agrees to afford its enrollees protection from liability for
payment of fees that are the obligation of the MA-PD Sponsor in accordance with
42 CFR §423.505(g).
 
M. RELATIONSHIP WITH RELATED ENTITIES, CONTRACTORS, AND SUBCONTRACTORS
 
1. The MA-PD Sponsor agrees that it maintains ultimate responsibility for
adhering to and otherwise fully complying with all terms and conditions of this
addendum.
 
2. The MA-PD Sponsor shall ensure that any contracts or agreements with
subcontractors or agents performing functions on the MA-PD Sponsor's behalf
related to the operation of the Part D benefit are in compliance with 42 CFR
§423.505(i).

5

N. CERTIFICATION OF DATA THAT DETERMINE PAYMENT
 
MA-PD Sponsor must provide certifications in accordance with 42 CFR §423.505(k).
 
 
Article III
Record Retention and Reporting Requirements
 
A. MAINTENANCE OF RECORDS
 
MA-PD Sponsor agrees to maintain records and provide access in accordance with
42 CFR §§423.504(d) and 505(d) and (e).
 
B. GENERAL REPORTING REQUIREMENTS
 
The MA-PD Sponsor agrees to submit to information to CMS according to 42 CFR
§§423.505(f), 423.514, and the "Final Medicare Part D Reporting Requirements," a
document issued by CMS and subject to modification each program year.
 
C. CMS LICENSE FOR USE OF PLAN FORMULARY
 
PDP Sponsor agrees to submit to CMS each plan's formulary information, including
any changes to its formularies, and hereby grants to the Government!", and any
person or entity who might receive the formulary from the Government,] a
non-exclusive license to use all or any portion of the formulary for any purpose
related to the administration of the Part D program, including without
limitation publicly distributing, displaying, publishing or reconfiguration of
the information in any medium, including www.medicare.gov, and by any
electronic, print or other means of distribution.
 
Article IV
HIPAA Transactions/Privacy/Security
 
A. MA-PD Sponsor agrees to comply with the confidentiality and enrollee record
accuracy requirements specified in 42 CFR §423.136.
 
B. MA-PD Sponsor agrees to enter into a business associate agreement with the
entity with which CMS has contracted to track Medicare beneficiaries' true
out-of-pocket costs.

 
6
 

Article V
Addendum Term and Renewal
 
A. TERM OF ADDENDUM
 
This addendum is effective from the date of CMS' authorized representative's
signature through December 31, 2007. This addendum shall be renewable for
successive one-year periods thereafter according to 42 CFR §423.506. MA-PD
Sponsor shall not conduct Part D-related marketing activities prior to October
1, 2006 and shall not process enrollment applications prior to November 15,
2006. MA-PD Sponsor shall begin delivering Part D benefit services on January 1,
2007.
 
B. QUALIFICATION TO RENEW ADDENDUM
 
1. In accordance with 42 CFR §423.507, the MA-PD Sponsor will be determined
qualified to renew this addendum annually only if—
(a) CMS informs the MA-PD Sponsor that it is qualified to renew its addendum;
and
(b) The MA-PD Sponsor has not provided CMS with a notice of intention not to
renew in accordance with Article VII of this addendum.
 
2. Although MA-PD Sponsor may be determined qualified to renew its addendum
under this Article, if the MA-PD Sponsor and CMS cannot reach agreement on the
Part D bid under Subpart F of 42 CFR Part 423, no renewal takes place, and the
failure to reach agreement is not subject to the appeals provisions in Subpart N
of 42 CFR Parts 422 or 423. (Refer to Article XI for consequences of non-renewal
on the Part C contract and the ability to enter into a Part C contract.)
 

Article VI
Nonrenewal of Addendum
 
A. NONRENEWAL BY THE MA-PD SPONSOR
 
1. MA-PD Sponsor may non-renew this addendum in accordance with 42
CFR423.507(a).
2. If the MA-PD Sponsor non-renews this addendum under this Article, CMS cannot
enter into a Part D addendum with the organization for 2 years unless there are
special circumstances that warrant special consideration, as determined by CMS.
 
B. NONRENEWAL BY CMS
 
CMS may non-renew this addendum under the rules of 42 CFR 423.507(b). (Refer to
Article X for consequences of non-renewal on the Part C contract and the ability
to enter into a Part C contract.)
 
 
 
7

Article VII
Modification or Termination of Addendum by Mutual Consent
 
This addendum may be modified or terminated at any time by written mutual
consent in accordance with 42 CFR 423.508. (Refer to Article X for consequences
of non-renewal on the Part C contract and the ability to enter into a Part C
contract.)
 

Article VIII
Termination of Addendum by CMS
 
CMS may terminate this addendum in accordance with 4-2 CFR 423.509. (Refer to
Article X for consequences of non-renewal on the Part C contract and the ability
to enter into a Part C contract.)
 
Article IX
Termination of Addendum by the MA-PD Sponsor
 
A. The MA-PD Sponsor may terminate this addendum only in accordance with 42 CFR
423.510.
 
B. CMS will not enter into a Part D addendum with an organization that has
terminated its addendum within the preceding 2 years unless there are
circumstances that warrant special consideration, as determined by CMS.
 
C. If the addendum is terminated under section A of this Article, the MA-PD
Sponsor must ensure the timely transfer of any data or files. (Refer to Article
X for consequences of non-renewal on the Part C contract and the ability to
enter into a Part C contract.)
 
Article X
Relationship Between Addendum and Part C Contract or 1876 Cost Contract
 
A. MA-PD Sponsor acknowledges that, if it is a Medicare Part C contractor, the
termination or nonrenewal of this addendum by either party may require CMS to
terminate or non-renew the Sponsor's Part C contract in the event that such
non-renewal or termination prevents the MA-PD Sponsor from meeting the
requirements of 42 CFR §422.4(c), in which case the Sponsor must provide the
notices specified in this contract, as well as the notices specified under
Subpart K of 42 CFR Part 422. MA-PD Sponsor also acknowledges that Article X.B.
of this addendum may prevent the sponsor from entering into a Part C contract
for two years following an addendum termination or non-renewal where such
non-renewal or termination prevents the MA-PD Sponsor from meeting the
requirements of 42 CFR §422.4(c).
 

 
8
 

B. The termination of this addendum by either party shall not, by itself,
relieve the parties from their obligations under the Part C or cost plan
contracts to which this document is an addendum.
 
C. In the event that the MA-PD Sponsor's Part C or cost plan contract (as
applicable) is terminated or nonrenewed by either party, the provisions of this
addendum shall also terminate. In such an event, the MA-PD Sponsor and CMS shall
provide notice to enrollees and the public as described in this contract as well
as 42 CFR Part 422, Subpart K or 42 CFR Part 417, Subpart K, as applicable.
 
Article XI Intermediate Sanctions
 
The MA-PD Sponsor shall be subject to sanctions and civil monetary penalties,
consistent with Subpart 0 of 42 CFR Part 423.
 

Article XII Severability
 
Severability of the addendum shall be in accordance with 42 CFR §423.504(e).
 
Article XIII Miscellaneous
 
A. DEFINITIONS: Terms not otherwise defined in this addendum shall have the
meaning given such terms at 42 CFR Part 423 or, as applicable, 42 CFR Part 422
or Part 417.
 
B. ALTERATION TO ORIGINAL ADDENDUM TERMS: The MA-PD Sponsor
agrees that it has not altered in any way the terms of the MA-PD addendum
presented for signature by CMS. MA-PD Sponsor agrees that any alterations to the
original text the MA-PD Sponsor may make to this addendum shall not be binding
on the parties.
 
C. ADDITIONAL CONTRACT TERMS: The MA-PD Sponsor agree to include in this
addendum other terms and conditions in accordance with 42 CFR §423.505(j).
 
D. CMS APPROVAL TO BEGIN MARKETING AND ENROLLMENT ACTIVITIES:
The MA-PD Sponsor agrees that it must complete CMS operational requirements
related to its Part D benefit prior to receiving CMS approval to begin MA-PD
plan marketing activities relating to its Part D benefit. Such activities
include, but are not limited to, establishing and successfully testing
connectivity with CMS systems to process enrollment applications (or contracting
with an entity qualified to perform

 

9

such functions on MA-PD Sponsor's behalf) and successfully demonstrating the
capability to submit accurate and timely price comparison data. To establish and
successfully test connectivity, the PDP Sponsor must, 1) establish and test
physical connectivity to the CMS data center, 2) acquire user identifications
and passwords, 3) receive, store, and maintain data necessary to perform
enrollments and send and receive transactions to and from CMS, and 4) check and
receive transaction status information.
 
10
 
 

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

MA-PD PART D CONTRACT ADDENDUM
 
In witness whereof, the parties hereby execute this Addendum.
 
FOR THE MA ORGANIZATION
Todd Farha
 
President and CEO
Printed Name
 
 
Title
/s/ Todd Farha          
 
9-14-06
Signature
 
 
 
Date
Stone Harbor Ins. Co.
 
8735 Henderson Road-Ren 2 Tampa FL 33634
Organization
 
 
Address
 FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES
 
       /s/   Brenda Tranchida             
Brenda J. Tranchida
Deputy Director
Employer Policy & Operations Group
Center for Beneficiary Choices
   

 

Page 1 of 1
 

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

PART C/D BENEFIT PLAJV(S) DESCRIPTION TO BE ATTACHED TO MA CONTRACT
 
SECTION 1876/PART D OPTIONAL SUPPLEMENTAL BENEFIT PLAN DESCRIPTION TO BE
ATTACHED TO SECTION 1876 CONTRACT
 
MA-PD EMPLOYER/UNION-ONLY GROUP CONTRACT ADDENDUM
 
EMPLOYER/UNION-ONLY GROUP ADDENDUM TO CONTRACT WITH APPROVED ENTITY PURSUANT TO
SECTIONS 1851 THROUGH 1859 AND
1860D-1 THROUGH 1860D-42 OF THE SOCIAL SECURITY ACT FOR THE OPERATION OF A
MEDICARE ADVANTAGE PRESCRIPTION DRUG PLAN
 
The Centers for Medicare & Medicaid Services (hereinafter referred to as "CMS")
and  Stone Harbor Insurance Co., a Medicare Advantage Organization (hereinafter
referred to as the "MA Organization") agree to amend the contract H6499(INSERT
"H" OR "R" NUMBER) governing the MA Organization's operation of a Medicare
Advantage plan described in section 1851(a)(2)(A) or section 1851(a)(2)(C) of
the Social Security Act (hereinafter referred to as "the Act"), including all
attachments, addenda, and amendments thereto, to include the provisions
contained in this Addendum (collectively hereinafter referred to as the
"contract"), under which the MA Organization shall offer Employer/Union-Only
Group MA-PD Plans (hereinafter referred to as "employer/union-only group
MA-PDs") in accordance with the waivers granted by CMS under section 1857(i) of
the Act. The terms of this Addendum shall only apply to MA-PD plans offered
exclusively to employers/unions.
 
This Addendum is made pursuant to Subparts K of 42 CFR Parts 422 and 423.
 
Page 1 of 10
 

MA-PD EMPLOYER/UNION-ONLY GROUP CONTRACT ADDENDUM
 
ARTICLE I
EMPLOYER/UNION-ONLY GROUP MEDICARE ADVANTAGE PRESCRIPTION DRUG PLANS
 
A. MA Organization agrees to operate one or more employer/union-only group
MA-PDs in accordance with the terms of the Medicare Advantage contract, this
Addendum, which incorporates in its entirety: either the 2006 Solicitation For
Applications From Prescription Drug Plans released on January 21, 2005 (as
revised on March 9, 2005) or the 2007 Solicitation For Applications For New
Medicare Advantage Prescription Drug (MA-PD) Sponsors released on January 27,
2006 (as revised on February 2, 2006), as modified by the 2007 Application For
Medicare Advantage Organizations To Offer New Employer/Union-Only Group Waiver
Plans (EGWPs) (released on January 27, 2006) (except for requirements
contained-therein that are expressly waived or modified by this Addendum), all
provisions of Federal statutes, regulations, and policies applicable to MA
Organizations and MA plans (except to the extent any such provisions are
expressly waived or modified by this Addendum); and any employer/union-only
group waiver guidance. MA Organization also agrees to operate one or more
employer/union-only group MA-PDs in accordance with the regulations at 42 CFR
Parts 422 and 423 (with the exception of Subparts Q, R, and S), sections 1851
through 1859 and 1860D-1 through 1860D-42 of the Act (with the exception of
1860D-22(a) and 1860D-31), and the applicable solicitations/applications, as
well as all other applicable Federal statutes, regulations, and policies,
including any employer/union-only group waiver guidance.
 
B. This Addendum is deemed to incorporate any changes that are required by
statute to be implemented during the term of the contract, and any regulations
and policies implementing or interpreting such statutory provisions.
 
C. In the event of any conflict between the employer/union-only group waiver
guidance issued prior to the execution of the contract and this Addendum, the
provisions of this Addendum shall control. In the event of any conflict between
the employer/union-only group waiver guidance issued after the execution of the
contract and this Addendum, the provisions of the employer/union-only group
guidance shall control.
 
D. This Addendum is in no way intended to supersede or modify 42 CFR Parts 422
and 423 or sections 1851 through 1859 and 1860D-1 through D-42 of the Act,
except as specifically provided in applicable employer/union-only group waiver
guidance and/or in this Addendum. Failure to reference a statutory or regulatory
requirement in this Addendum does not affect the applicability of such
requirement to the MA Organization and CMS.
 
E. The provisions of this Addendum apply to all employer/union-only group MA-PDs
offered by MA Organization under this contract number. In the event of any
conflict between the provisions of this Addendum and any other provision of the
contract, the terms of this Addendum shall control.
 
Page 2 of 10
 

MA-PD EMPLOYER/UNION-ONLY GROUP CONTRACT ADDENDUM
 
ARTICLE II
FUNCTIONS TO BE PERFORMED BY THE MEDICARE ADVANTAGE ORGANIZATION
 
A. PROVISION OF MA BENEFITS
 
1. MA Organization agrees to provide enrollees in each of its
employer/union-only group MA-PDs the basic benefits (hereinafter referred to as
"basic benefits") as required under 42 CFR §422.101 and, to the extent
applicable, supplemental benefits under 42 CFR §422.102 and as established in
the MA Organization's final benefit and price bid proposal as approved by CMS.
 
2. The requirements in section 1852 of the Act and 42 CFR §422.100(c)(l)
pertaining to the offering of benefits covered under Medicare Part A and in
section 1851 of the Act and 42 CFR §422.50(a)(l) pertaining to who may enroll in
an MA-PD are waived for employer/union-only group MA-PD enrollees who are not
entitled to Medicare Part A.
 
3. For employer/union-only group MA-PDs offering non-calendar year coverage, MA
Organization may determine basic and supplemental benefits (including
deductibles, out-of-pocket limits, etc.) on a non-calendar year basis subject to
the following requirements:
 
(a) Applications, bids, and other submissions to CMS must be submitted on a
calendar year basis; and
 
(b) CMS payments will be determined on a calendar year basis.
 
4. For employer/union-only group MA-PDs that have a monthly beneficiary rebate
described in 42 CFR §422.266;
 
(a) MA Organization may vary the form of rebate for a particular plan benefit
package so that the total monthly rebate amount may be credited differently for
each employer/union group to whom MA Organization offers the plan benefit
package, with the exception of a rebate credited toward the reduction of the
Part B premium as stated in ILA.4(b); and
 
(b) MA Organization must:
 
(i) ensure Part B premium reductions are the same for all enrollees in a plan
benefit package;
 
(ii) ensure that the total monthly rebate amount per enrollee is uniform across
all employer/union groups within the plan benefit package;
 
Page 3 of 10
 

MA-PD EMPLOYER/UNION-ONLY GROUP CONTRACT ADDENDUM
 
(iii) ensure that all rebates are accounted for and used only for the purposes
provided in the Act;and
 
(iv) retain documentation that supports the use of all of the rebates on a
detailed basis for each employer/union group within the plan benefit package and
must provide access to this documentation in accordance with the requirements of
42 CFR §422.501.
 
B. PROVISION OF PRESCRIPTION DRUG BENEFITS
 
1. (a) Except as provided in II.B. 1 (b), MA Organization agrees to provide
basic prescription drug coverage, as defined under 42 CFR §423.100, under any
employer/union-only group MA-PD, in accordance with Subpart C of 42 CFR Part
423. MA Organization also agrees to provide Part D benefits under any
employer/union-only group MA-PD as described in MA Organization's bid approved
each year by CMS.
 
(b) CMS agrees that MA Organization will not be subject to the actuarial
equivalence requirement set forth in 42 CFR §423.104(e)(5) with respect to any
employer/union-only group MA-PD and may provide less than the defined standard
coverage between the deductible and initial coverage limit. MA Organization
agrees that its basic prescription drug coverage under any employer/union-only
group MA-PD will satisfy all of the other actuarial equivalence standards set
forth in 42 CFR §423.104, including but not limited to the requirement set forth
in 42 CFR §423.104(e)(3) that the plan has a total or gross value that is at
least equal to the total or gross value of defined standard coverage.
 
(c) CMS agrees that nothing in this Addendum prevents MA Organization from
offering benefits in addition to basic prescription drug coverage to
employers/unions. Such additional benefits offered pursuant to private
agreements between MA Organization and employers/unions will be considered
non-Medicare Part D benefits. MA Organization agrees that such additional
benefits may not reduce the value of basic prescription drug coverage (e.g.,
additional benefits cannot impose a cap that would preclude enrollees from
realizing the full value of such basic prescription drug coverage).
 
(d) MA Organization agrees that enrollees of employer/union-only group MA-PDs
shall not be charged more than the sum of his or her monthly beneficiary premium
attributable to basic prescription drug coverage and 100% of the monthly
beneficiary premium attributable to his or her supplemental prescription drug
coverage (if any). MA Organization must pass through the direct subsidy payments
received from CMS to reduce the amount that the beneficiary pays.
 
Page 4 of 10
 

MA-PD EMPLOYER/UNION-ONLY GROUP CONTRACT ADDENDUM
 
(e) MA Organization agrees that any additional non-Medicare Part D benefits
offered to an employer/union will always pay primary to the subsidies provided
by CMS to low-income individuals under Subpart P of 42 CFR Part 423 (the
"Low-Income Subsidy"),
 
2. MA Organization agrees enrollees of employer/union-only group MA-PDs will not
be permitted to make payment of premiums under 42 CFR §423.293(a) through
withholding from the enrollee's Social Security, Railroad Retirement Board, or
Office of Personnel Management benefit payment.
 
3. MA Organization agrees it shall obtain written agreements from each
employer/union that provide that the employer/union may determine how much of an
enrollee's Part D monthly beneficiary premium it will subsidize, subject to the
restrictions set forth in II.B.3(a) through (e). MA Organization agrees to
retain these written agreements with employers/unions and provide access to
these written agreements to CMS in accordance with 42 CFR §§423.504(d) and
423.505(d) and (e).
 
(a) The employer/union can subsidize different amounts for different classes of
enrollees in the employer/union-only group MA-PD provided such classes are
reasonable and based on objective business criteria, such as years of service,
date of retirement, business location, job category, and nature of compensation
(e.g., salaried v. hourly). Different classes cannot be based on eligibility for
the Low Income Subsidy.
 
(b) The employer/union cannot vary the premium subsidy for individuals within a
given class of enrollees.
 
(c) The employer/union cannot charge an enrollee for prescription drug coverage
provided under the plan more than the sum of his or her monthly beneficiary
premium attributable to basic prescription drug coverage and 100% of the monthly
beneficiary premium attributable to his or her supplemental prescription drug
coverage (if any). The employer/union must pass through direct subsidy payments
received from CMS to reduce the amount that the beneficiary pays.
 
(d) For all enrollees eligible for the Low Income Subsidy, the low income
premium subsidy amount will first be used to reduce the portion of the monthly
beneficiary premium attributable to basic prescription drug coverage paid by the
enrollee, with any remaining portion of the premium subsidy amount then applied
toward the portion of the monthly beneficiary premium attributable to basic
prescription drug coverage paid by the employer/union.
 
(e) If the low income premium subsidy amount for which an enrollee is eligible
is less than the portion of the monthly beneficiary premium paid by the
enrollee, then the employer/union should communicate to the enrollee the
financial consequences for the beneficiary of enrolling in the
employer/union-only group
 
Page 5 of 10
 

MA-PD EMPLOYER/UNION-ONLY GROUP CONTRACT ADDENDUM
 
MA-PD as compared to enrolling in another Part D plan with a monthly beneficiary
premium equal to or below the low income premium subsidy amount.
 
4. For non-calendar year employer/union-only group MA-PDs, MA Organization may
determine benefits (including deductibles, out-of-pocket limits, etc.) on a
non-calendar year basis subject to the following requirements:
 
(a) Applications, formularies, bids and other submissions to CMS must be
submitted on a calendar year basis;
 
(b) The employer/union-only group MA-PD must be actuarially equivalent to
defined standard coverage for the portion of its plan year that falls in a given
calendar year. An employer/union-only group MA-PD will meet this standard if it
is actuarially equivalent for the calendar year in which the plan year starts
and no design change is made for the remainder of the plan year. In no event can
MA Organization increase during the plan year the annual out-of-pocket
threshold;
 
(c) After an enrollee's incurred costs exceed the annual out-of-pocket
threshold, the employer/union-only group MA-PD must provide coverage that is at
least actuarially equivalent to that provided under standard prescription drug
coverage; eligibility for such coverage can be determined on a plan year basis.
 
C. ENROLLMENT REQUIREMENTS
 
1. MA Organization agrees to restrict enrollment in an employer/union-only group
MA-PD to those individuals eligible for the employer's/union's employment-based
group coverage.
 
2. MA Organization will not be subject to the requirement to offer the
employer/union-only group MA-PD to all Medicare eligible beneficiaries residing
in its service area as set forth in 42 CFR §422.50.
 
3. If an employer/union elects to enroll individuals eligible for its
employer/union-only group MA-PD through a group enrollment process, MA
Organization will not be subject to the individual enrollment requirements set
forth in 42 CFR §422.60 and §423.32(b). MA Organization agrees that all
individuals eligible for its employer/union-only group MA-PD will be advised
that the employer/union contracting with MA Organization to offer an
employer/union-only group MA-PD (hereinafter referred to as "employer/union")
intends to enroll them into the plan through a group enrollment process unless
the individual affirmatively opts out of such enrollment. MA Organization agrees
that all such individuals will be provided this information at least 30 days
prior to the effective date of the individual's enrollment in the
employer/union-only group MA-PD. MA Organization agrees the information must
include a summary of benefits offered under the employer/union-only group MA-PD,
an explanation of how to get more information on such plan, and an explanation
of how to contact Medicare for
 
Page 6 of 10
 

MA-PD EMPLOYER/UNION-ONLY GROUP CONTRACT ADDENDUM
 
information on other MA-PD plans that might be available to the individual. In
addition, MA Organization agrees that all information necessary to effectuate
enrollment must be submitted electronically to CMS, consistent with CMS
instructions.
 
D. BENEFICIARY PROTECTIONS
 
1. Except as provided in II.D.2., CMS agrees that, with respect to any
employer/union-only group MA-PDs, MA Organization will not be subject to the
information requirements set forth in 42 CFR §423.48 and the prior review and
approval of marketing materials and election forms requirements set forth in 42
CFR §422.80 and §423.50. MA Organization will be subject to all other disclosure
and dissemination requirements contained in 42 CFR §422.111, §423.128 and in CMS
guidance, including those requirements contained in the "Medicare Marketing
Materials Guidelines for Medicare Advantage Plans (MAs), Medicare Advantage
Prescription Drug Plans (MA-PDs), Prescription Drug Plans (PDPs) and 1876 Cost
Plans."
 
2. CMS agrees that the disclosure and dissemination requirements set forth in 42
CFR §422.111 and §423.128 will not apply with respect to any employer/union-only
group MA-PD when the employer/union is subject to alternative disclosure
requirements (e.g., the Employee Retirement Income Security Act of 1974
("ERISA")) and fully complies with such alternative requirements. MA
Organization agrees to comply with the requirements for this waiver contained in
employer/union-only group waiver guidance, including those requirements
contained in Chapter 13 of the "Medicare Marketing Guidelines for Medicare
Advantage Plans (MAs), Medicare Advantage Prescription Drug Plans (MA-PDs),
Prescription Drug Plans (PDPs) and 1876 Cost Plans."
 
E. SERVICE AREA, FORMULARIES AND PHARMACY ACCESS
 
1. CMS agrees that employer/union-only group Local MA-PDs that provide coverage
to individuals in any part of a State can offer coverage to retirees eligible
for the employer/union-only group MA-PD throughout that State. CMS also agrees
that employer/union-only group Regional MA-PDs that provide coverage to
individuals in any part of a Region can offer coverage to retirees eligible for
the employer/union-only group MA-PD throughout that Region.
 
2. CMS agrees that non-network Private Fee-for-Service employer/union-only group
MA-PDs may extend coverage beyond their designated service areas to all
enrollees of a particular employer/union-only group plan, regardless of where
they reside in the nation, when the most substantial portion of the employer's
employees (or in the case of a union, the union's participants) reside in the
service area where the MA Organization, either itself or through subcontractors
or other partners, is a provider of non-group MA-PD coverage. The MA
Organization agrees to conduct an actual review of where the substantial portion
of the
 
Page 7 of 10
 

MA-PD EMPLOYER/UNION-ONLY GROUP CONTRACT ADDENDUM
 
employer's/union's employees/participants reside and to maintain adequate
supporting documentation of such review (including the date of such review, by
whom the review was conducted, and any other relevant documentation to
substantiate the review), and to permit CMS to audit and review such
documentation. Such expanded service areas must have convenient Part D pharmacy
access sufficient to meet the needs of enrollees wherever they reside.
 
3. MA Organization agrees to utilize, as the formulary for any
employer/union-only group MA-PD, a base formulary that has received approval
from CMS, in accordance with CMS formulary guidance, for use in a non-group
MA-PD offered by MA Organization. Except as set forth in 42 CFR §423.120(b) and
sub-regulatory guidance, MA Organization may not modify the approved base
formulary used for any employer/union-only group MA-PD by removing drugs, adding
additional utilization management restrictions, or increasing the cost-sharing
status of a drug from the base formulary. Enhancements that are permitted to the
base formulary include adding additional drugs, removing utilization management
restrictions, and improving the cost-sharing status of drugs.
 
4. For any employer/union-only group MA-PD, MA Organization agrees to provide
Part D benefits in the plan's service area utilizing a pharmacy network and
formulary that meets the requirements of 42 CFR §423.120, with the following
exception: CMS agrees that the retail pharmacy access requirements set forth in
42 CFR §423.120(a)(l) ("Tricare" standards) will not apply when the
employer/union-only group MA-PD's pharmacy network is sufficient to meet the
needs of its enrollees throughout the employer/union-only group MA-PD's service
area, as determined by CMS. CMS may periodically review the adequacy of the
employer/union-only group MA-PD's pharmacy network and require the
employer/union-only group MA-PD to expand access if CMS determines that such
expansion is necessary in order to ensure that the employer/union-only group
MA-PD's network is sufficient to meet the needs of its enrollees.
 
F. PAYMENT TO MA ORGANIZATION
 
Except as provided in II.F. 1 through 4, payment under this Addendum will be
governed by the rules of Subparts G and J of 42 CFR Part 423.
 
1. MA Organization acknowledges that the risk sharing, plan entry and retention
bonus provisions of section 1858 of the Act and 42 CFR §422.458 shall not apply
to any employer/union-only group Regional MA-PDs.
 
2. MA Organization acknowledges that the risk-sharing payment adjustment
described in 42 CFR §423.336 is not applicable for any employer/union-only group
MA-PD enrollee.
 
3. MA Organization will receive a monthly direct subsidy under 42 CFR Subpart G
 
Page 8 of 10
 

MA-PD EMPLOYER/UNION-ONLY GROUP CONTRACT ADDENDUM
 
for each employer/union-only group MA-PD enrollee equal to the amount of the
national average monthly bid amount (not its approved standardized bid),
adjusted for health status (as determined under 42 CFR §423.329(b)(l)) and
reduced by the base beneficiary premium for the employer/union-only group MA-PD,
as adjusted under 42 CFR §423.286(d)(3), if applicable. The further adjustments
to the base beneficiary premium contained in 42 CFR §423.286(d)(l) and (2) will
not apply.
 
4. MA Organization will not receive monthly reinsurance payment amounts in the
manner set forth in 42 CFR §423.329(c)(2)(i) for any employer/union-only group
MA-PD enrollee, but instead will receive the full reinsurance payment following
the end of year reconciliation as described in 42 CFR §423.329(c)(2)(ii).
 
5. For non-calendar year plans:
 
(a) CMS payments will be determined on a calendar year basis;
 
(b) Low income subsidy payments and reconciliations will be determined based on
the calendar year for which the payments are made; and
 
(c) MA Organization acknowledges that it will not receive reinsurance payments
under 42 CFR §423.329(c).
 
Page 9 of 10
 

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MA-PD EMPLOYER/UNION-ONLY GROUP CONTRACT ADDENDUM
 
In witness whereof, the parties hereby execute this Addendum.
 

Todd Farha
 
President and CEO
Printed Name
 
 
Title
/s/ Todd Farha    
 
9-14-06
Signature
 
 
 
Date
Stone Harbor Insurance Co.
 
8735 Henderson Road-Ren 2 Tampa FL 33634
Organization
 
Address
 
 
 FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES    
 
  /s/  Brenda Tranchida 
Brenda J. Tranchida
Deputy Director
Employer Policy & Operations Group
Center for Beneficiary Choices
 
 
10/14/06

 
 
 
Page 10 of 10
 

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Medicare Advantage Attestation of Benefit Plan and Price
STONE HARBOR INSURANCE COMPANY
H6499
Date: 09/12/2006
 
 
I attest that the following plan numbers as established in the final Plan
Benefit Package (PBP) will be operated by the above-stated organization and made
available to eligible beneficiaries in the approved service area during program
year 2007. I further attest that the organization will comply with all
applicable program guidance that CMS has issued to date and will issue during
the remainder of 2006 and 2007 pursuant to Medicare program authorizing statutes
and regulations, including but not limited to, the 2007 Call Letters, the 2007
Solicitations for New Contract Applicants, and the CMS memoranda issued through
the Health Plan Management System (HPMS).
 
 
Plan ID
Segment ID
Version
Plan Name
Plan Type
Transaction Type
MA Premium
Part D Premium
CMS Approval Date
Effective Date
005
0
3
Duet
PFFS
Initial
0.00
N/A
9/10/2006
01/01/2007
006
0
3
Summit
PFFS
Initial
91.00
0.00
9/10/2006
01/01/2007
007
0
3
Summit
PFFS
Initial
121.00
0.00
9/10/2006
01/01/2007
008
0
5
Summit
PFFS
Initial
135.60
5.30
9/10/2006
01/01/2007
009
0
5
Summit
PFFS
Initial
134.60
26.40
9/10/2006
01/01/2007
010
0
3
Summit
PFFS
Initial
132.90
48.10
9/10/2006
01/01/2007
011
0
3
Summit
PFFS
Initial
168.10
42.90
9/10/2006
01/01/2007
012
0
3
Freedom
PFFS
Initial
0.00
0.00
9/10/2006
01/01/2007
013
0
3
Concert
PFFS
Initial
0.00
0.00
9/10/2006
01/01/2007
014
0
3
Concert
PFFS
Initial
35.60
5.40
9/10/2006
01/01/2007
015
0
5
Concert
PFFS
Initial
48.30
31.70
9/10/2006
01/01/2007
016
0
3
Concert
PFFS
Initial
90.60
48.40
9/10/2006
01/01/2007
801
0
4
Employer Plan 5
PFFS
Initial
0.00
28.50
9/10/2006
01/01/2007
802
0
4
Employer Plan 6
PFFS
Initial
0.00
28.50
9/10/2006
01/01/2007

 
Page 1 of 2 - STONE HARBOR INSURANCE COMPANY - H6499 - 09/12/2006
 

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* For all 800-series Plan IDs, plans have the flexibility to vary the premium
amounts that they charge. Therefore, the amount listed in the "MA Premium" and
"Part D Premium" columns may not coincide with the amount actually charged. For
CY2007, the direct subsidy payment will be based on the national average monthly
bid amount rather than on the bid submitted by the plan. Also, the base
beneficiary premium will be used rather than the plan's premium as derived from
their standardized bid in determining the low-income premium subsidy.
 
/s/ Todd Farha            
 
9-14-06
CEO:
 
Date:
Todd Farha
   
CEO/President
   
8735 Henderson Rd Ren 2
         
Tampa, FL 33634
   
813-290-6200
         
CFO:
   
Paul Behrens
 
Date:
CFO
   
8735 Henderson Rd Ren 2
               
Tampa, FL 33634
   
813-290-6200
   

 
Page 2 of 2 - STONE HARBOR INSURANCE COMPANY - H6499 - 09/12/2006