Exhibit 10.1
SUBSTITUTE AGREEMENT BETWEEN THE
ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM
ADMINISTRATION AND
Health Choice Arizona FOR
THE IMPLEMENTATION OF EXECUTIVE ORDER 2006-01
          Whereas Governor Janet Napolitano issued Executive Order 2006-01 on
January 13, 2006 regarding supplementing Medicare Drug Coverage for dual
eligible persons during the Medicare Part D transition, and amended it with
Executive Order 2006-02 and 2006-05 (copies attached hereto);
          Whereas, the United States Department of Health & Human Service,
Center for Medicare and Medicaid Services (“CMS”) has approved a Section 402
Demonstration Application for Reimbursement of State Costs for Provision of
Part D Drugs (Attachment B) the terms of which were extended to include Part D
drugs dispensed to dual eligibles through March 31, 2006;
          Whereas Health Choice Arizona (hereinafter “Contractor”) currently is
under contract with the Arizona Health Care Cost Containment System
Administration (hereinafter “AHCCCS”) to serve as a managed care entity pursuant
to A.R.S. § 36-2906 and/or A.R.S. § 36-2940 (hereinafter “the AHCCCS MCO
Contract”);
          Whereas Contractor is desirous of assisting the AHCCCS with the
implementation of Executive Order 2006-01, 2006-02 and 2006-05;
          Whereas AHCCCS intends to execute identical agreements with all
entities that currently have an AHCCCS MCO Contract;
          Therefore, the parties have agreed to enter into and be mutually bound
by the following terms and conditions;

  1.   SCOPE OF WORK–

  a.   Contractor agrees to coordinate with pharmacies to provide medically
necessary prescription medications for its dually eligible members under the
terms and conditions described in Executive Order 2006-01.     b.   Contractor
agrees to reimburse pharmacies for the cost of medically necessary medications
which are provided to its dually eligible members under the terms and conditions
described in Executive Order 2006-01.     c.   Contractor shall provide data to
AHCCCS, at such reasonable times and in such format as requested by AHCCCS, to
facilitate reimbursement for medication costs incurred during the implementation
of Executive Order 2006-01.

 

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  d.   The scope of coverage of the medications covered by this agreement shall
be the same as the scope of coverage the Contractor provided to its dually
eligible members under its AHCCCS MCO Contract prior to January 1, 2006.

  2.   REIMBURSEMENT - On or before March 31, 2007, AHCCCS shall reimburse the
Contractor for the Contractor’s expenditures under this Agreement using federal
funds made available to AHCCCS through the Secretary’s Section 402 Demonstration
authority and, to the extent necessary, funds transferred to AHCCCS pursuant to
A.R.S. § 36-797 under Executive Order 2006-01;

  a.   provided however, in the event that total expenditures reported by all
entities that have entered into agreements identical to this Agreement exceeds
the total of all sums transferred to AHCCCS pursuant to the Section 402
Demonstration authority and Executive Order 2006-01, AHCCCS shall make
reasonable efforts to obtain an Executive Order to transfer additional funds
sufficient to reimburse all participating entities;     b.   provided further
however, that in the event the total expenditures reported by all participating
entities is insufficient to fully reimburse all participating entities, all
participating entities, including the Contractor, agree to reimbursement from
funds transferred to AHCCCS pursuant to A.R.S. § 36-797 on a pro rata basis for
those services not reimbursed under the Section 402 Demonstration authority.

  3.   SUBSTITUTE AGREEMENT - Contractor acknowledges that this agreement is a
substituted contract for the Agreement between AHCCCS and the Contractor for the
implementation of Executive Order 2006-01 and Contractor accepts this substitute
agreement in satisfaction of the AHCCCS duty under that prior agreement.
Contractor acknowledges further that the additional reimbursement available
through the Section 402 Demonstration serves as adequate consideration for this
substitute agreement.     4.   TERMINATION FOR CONFLICT OF INTEREST- AHCCCSA may
cancel this contract without penalty or further obligation if any person
significantly involved in initiating, negotiating, securing, drafting or
creating the contract on behalf of AHCCCSA is, or becomes at any time while the
contract or any extension of the contract is in effect, an employee of, or a
consultant to, any other party to this contract with respect to the subject
matter of the contract. The cancellation shall be effective when the Contractor
receives written notice of the cancellation unless the notice specifies a later
time.

 

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  5.   TERMINATION FOR CONVENIENCE - AHCCCSA reserves the right to terminate the
contract in whole or in part at any time for the convenience of the State
without penalty or recourse. The Contracting Officer shall give written notice
by certified mail, return receipt requested, to the Contractor of the
termination at least 10 days before the effective date of the termination. The
Contractor shall be entitled to receive just and equitable compensation for work
in progress, work completed and materials accepted before the effective date of
the termination.     6.   TERMINATION FOR DEFAULT - AHCCCSA reserves the right
to terminate this contract in whole or in part due to the failure of the
Contractor to comply with any term or condition of the contract or failure to
take corrective action as required by AHCCCSA to comply with the terms of the
contract. The Contracting Officer shall mail written notice of the termination
and the reason(s) for it to the Contractor by certified mail, return receipt
requested. Upon termination under this paragraph, all documents, data, and
reports prepared by the Contractor under the contract shall be delivered to
AHCCCSA on demand.     7.   RELATIONSHIP OF PARTIES - The Contractor under this
contract is an independent contractor. Neither party to this contract shall be
deemed to be the employee or agent of the other party to the contract.     8.  
GENERAL INDEMNIFICATION - The Contractor shall defend, indemnify and hold
harmless the State from any claim, demand, suit, liability, judgment and expense
(including attorney’s fees and other costs of litigation) arising out of or
relating to injury, disease, or death of persons or damage to or loss of
property resulting from or in connection with the negligent performance of this
contract by the Contractor, its agents, employees, and subcontractors or anyone
or whom the Contractor may be responsible. The obligations, indemnities and
liabilities assumed by the Contractor under this paragraph shall not extend to
any liability caused by the negligence of the State or its employees. The
Contractor’s liability shall not be limited by any provisions or limits of
insurance set forth in this contract. The State shall reasonably notify the
Contractor of any claim for which it may be liable under this paragraph. The
Administration shall bear no liability for subcontracts that a Contractor
executes with other parties for the provision of administrative or management
services, medical services or covered health care services, or for any other
purposes.     9.   THIRD PARTY ANTITRUST VIOLATIONS - The Contractor assigns to
the State any claim for overcharges resulting from antitrust violations to the
extent that those violations concern materials or services supplied by third
parties to the Contractor toward fulfillment of this contract.

 

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  10.   NON-DISCRIMINATION - The Contractor shall comply with State Executive
Order No. 99-4, which mandates that all persons, regardless of race, color,
religion, sex, national origin or political affiliation, shall have equal access
to employment opportunities, and all other applicable Federal and state laws,
rules and regulations, including the Americans with Disabilities Act and Title
VI. The Contractor shall take positive action to ensure that applicants for
employment, employees, and persons to whom it provides service are not
discriminated against due to race, creed, color, religion, sex, national origin
or disability.     11.   AUDITS AND INSPECTIONS - The Contractor shall comply
with all provisions specified in applicable AHCCCS Rule R9-22-519, -520 and -521
and AHCCCS policies and procedures relating to the audit of the Contractor’s
records and the inspection of the Contractor’s facilities. The Contractor shall
fully cooperate with AHCCCSA staff and allow them reasonable access to the
Contractor’s staff, subcontractors, members, and records. At any time during the
term of this contract, the Contractor’s or any subcontractor’s books and records
shall be subject to audit by AHCCCSA to the extent that the books and records
relate to the performance of the contract or subcontracts. AHCCCSA, or its duly
authorized agents, may evaluate through on-site inspection or other means, the
quality, appropriateness and timeliness of services performed under this
contract.     12.   APPLICABLE LAW - The law of Arizona applies to this
contract.     13.   DISPUTES - The exclusive manner for the Contractor to assert
any claim, grievance, dispute or demand against AHCCCSA shall be in accordance
with A.A.C. 22, Article 34. Pending the final resolution of any disputes
involving this contract, the Contractor shall proceed with performance of this
contract in accordance with AHCCCSA’s instructions, unless AHCCCSA specifically,
in writing, requests termination or a temporary suspension of performance.    
14.   CHOICE OF FORUM - The parties agree that jurisdiction over any action
arising out of or relating to this contract shall be brought or filed in a court
of competent jurisdiction located in the State of Arizona.     15.   EFFECTIVE
DATE - The effective date of this contract shall be January 1, 2006.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
and year specified below.

     
Contractor:
  Arizona Health Care Cost
Containment System (AHCCCS)
 
   
/s/ Carolyn Rose
  /s/ Michael Veit
 
   
Signature
  Signature
 
   
1/25/07
  JAN 22 2007
 
   
Date
  Date
 
   
Carolyn Rose
  Michael Veit
 
   
Typed or Printed Name
  Typed or Printed Name
 
   
1/25/07
  Contracts Administrator
 
   
Title
  Title

 

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EXECUTIVE ORDER 2006-01
Supplementing Medicare Drug Coverage For Dual Eligible Persons
During The Medicare Part D Transition
WHEREAS, the federal government mandated that as of January 1, 2006,
approximately 97,000 Arizona citizens who are dually eligible for Medicare and
Medicaid services switch prescription drug coverage from the Arizona Health Care
Cost Containment System (AHCCCS) to Medicare; and
WHEREAS, dual eligible persons are among Arizona’s most frail and vulnerable
citizens; and
WHEREAS, despite extraordinary efforts by the State to prepare for this massive
change, there remain instances almost two weeks after implementation of members
being unable to receive the medication coverage that they require; and
WHEREAS, without the ability to obtain prescriptions, dual eligible persons who
have life threatening conditions face immediate and future health care crises;
and
WHEREAS, this situation puts the personal health of our citizens in jeopardy;
and
WHEREAS, AHCCCS is charged with administering a system of contracts for the
provision of medical care coverage for dual eligible persons; and
WHEREAS, this situation is neither a contingency nor an emergency pursuant to
A.R.S. § 35-192 because it requires neither state-municipal resource
coordination nor Department of Emergency and Military Affairs assistance;
NOW, THEREFORE, I Janet Napolitano, by virtue of the authority vested in me as
Governor by the Arizona Constitution and the laws of the State, declare a
significant potential for a health crisis in the State, and hereby order as
follows:

1.   Pursuant to A.R.S. § 36-797, the sum of five hundred thousand dollars
($500,000.00) may be transferred as needed in increments of fifty thousand
dollars ($50,000.00) from the Health Crisis Fund to AHCCCS to pay for the
following expenses that may be uncovered during the period January 1, 2006 —
February 1, 2006 (or any extension of such period that may be granted by further
Executive Order):

  q   Prescription medications for dual eligible persons who have received organ
and tissue transplants; and     q   Prescription medications for dual eligible
persons with life threatening conditions that need to be immediately filled; and
    q   Prescription medications for dual eligible persons who have not been
assigned to a Medicare prescription drug plan.

 

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Executive Order 2006-01
Page Two

2.   Any transferred but unused funds shall be remitted back to the Health
Crisis Fund at the conclusion of the period specified in paragraph one
(1) above.   3.   In addition, AHCCCS shall endeavor to seek repayment from the
federal government of all expenses paid pursuant to this Executive Order. All
such repaid sums shall be deposited in the medically needy account of the
tobacco tax and health care fund pursuant to A.R.S. § 36-797(G).   4.   No later
than one hundred twenty (120) days following the receipt of Health Crisis Funds,
AHCCCS shall submit to the Governor a report on how the funds were spent and the
status of efforts to seek reimbursement from the federal government.

              IN WITNESS WHEREOF, I have hereunto set my hand and caused to be
affixed the Great Seal of the State of Arizona.
 
       
 
      (SIGNATURE) [g05395g0539501.gif]
 
      GOVERNOR
 
        (SEAL)   DONE at the Capitol in Phoenix on this 13th day of January in
the Year Two Thousand and Six and of the Independence of the United States of
America the Two Hundred and Thirtieth.
 
            ATTEST:
 
       
 
      (SIGNATURE) [g05395g0539502.gif]
 
      SECRETARY OF STATE

 

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EXECUTIVE ORDER 2006-02
Supplementing Medicare Drug Coverage For Dual Eligible Persons
During The Medicare Part D Transition
(Amending Executive Order 2006-01)
WHEREAS, the federal government mandated that as of January 1, 2006,
approximately 97,000 Arizona citizens who are dually eligible for Medicare and
Medicaid services switch prescription drug coverage from the Arizona Health Care
Cost Containment System (AHCCCS) to Medicare; and
WHEREAS, dual eligible persons are among Arizona’s most frail and vulnerable
citizens; and
WHEREAS, despite extraordinary efforts by the State to prepare for this massive
change, there remain instances of members being unable to receive the medication
coverage that they require; and
WHEREAS, without the ability to obtain prescriptions, dual eligible persons who
have life threatening conditions face immediate and future health care crises;
and
WHEREAS, this situation puts the personal health of our citizens in jeopardy;
and
WHEREAS, on January 13, 2006, I issued Executive Order 2006-01, authorizing
expenditures from the Health Crisis Fund to allow AHCCCS to help pay certain
expenses incurred between January 1, 2006 and February 1, 2006 by dual eligible
person seeking needed medications; and
WHEREAS, the Department of Health and Human Services has since announced that it
will coordinate reimbursement from Medicare Part D plans to the state for
prescription drug costs that are the responsibility of the federal government
during the period January 1, 2006 through February 15, 2006; and
WHEREAS, the federal government has also announced that it will reimburse states
for their administrative expenses associated with providing drug coverage to
dual eligible persons during the period January 1, 2006 through February 15,
2006; and
WHEREAS, this situation is neither a contingency nor an emergency pursuant to
A.R.S. § 35-192 because it requires neither state-municipal resource
coordination nor Department of Emergency and Military Affairs assistance;
NOW, THEREFORE, I Janet Napolitano, by virtue of the authority vested in me as
Governor by the Arizona Constitution and the laws of the State, declare a
significant potential for a health crisis in the State, and hereby order as
follows:

1.   The period of time set forth in Executive Order 2006-01 during which
incurred expenses may be paid pursuant to the terms of that Order is hereby
extended to and including February 15, 2006.

 

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Executive Order 2006-02
Page Two

2.   In addition to the sums set forth in Executive Order 2006-01, an additional
one hundred thousand dollars ($100,000.00) may be transferred if necessary in
increments of twenty-five thousand dollars ($25,000.00) each from the Health
Crisis Fund to AHCCCS to pay expenses allowed under Executive Order 2006-01 as
amended herein.

              IN WITNESS WHEREOF, I have hereunto set my hand and caused to be
affixed the Great Seal of the State of Arizona.
 
       
 
      (SIGNATURE) [g05395g0539501.gif]
 
      GOVERNOR
 
        (SEAL)   DONE at the Capitol in Phoenix on this 31st day of January in
the Year Two Thousand and Six and of the Independence of the United States of
America the Two Hundred and Thirtieth.
 
            ATTEST:
 
       
 
      (SIGNATURE) [g05395g0539502.gif]
 
      SECRETARY OF STATE

 

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EXECUTIVE ORDER 2006-05
Supplementing Medicare Drug Coverage For Dual Eligible Persons
During The Medicare Part D Transition
(Amending Executive Orders 2006-01 and 2006-02)
WHEREAS, the federal government mandated that as of January 1, 2006,
approximately 97,000 Arizona citizens who are dually eligible for Medicare and
Medicaid services switch prescription drug coverage from the Arizona Health Care
Cost Containment System (AHCCCS) to Medicare; and
WHEREAS, dual eligible persons are among Arizona’s most frail and vulnerable
citizens; and
WHEREAS, despite extraordinary efforts by the State to prepare for this massive
change, there remain instances of members being unable to receive the medication
coverage that they require; and
WHEREAS, without the ability to obtain prescriptions, dual eligible persons who
have life threatening conditions face immediate and future health care crises;
and
WHEREAS, this situation puts the personal health of our citizens in jeopardy;
and
WHEREAS, on January 13, 2006, I issued Executive Order 2006-01, authorizing
expenditures from the Health Crisis Fund to allow AHCCCS to help pay certain
expenses incurred between January 1, 2006 and February 1, 2006 by dual eligible
person seeking needed medications; and
WHEREAS, on January 31, 2006, I extended the period for which Health Crisis Fund
monies could be used to pay such expenses to and including February 15, 2006;
and
WHEREAS, there continue to be instances of eligible citizens not receiving the
prescription coverage they need; and
WHEREAS, this situation is neither a contingency nor an emergency pursuant to
A.R.S. § 35-192 because it requires neither state-municipal resource
coordination nor Department of Emergency and Military Affairs assistance;
NOW, THEREFORE, 1 Janet Napolitano, by virtue of the authority vested in me as
Governor by the Arizona Constitution and the laws of the State, declare a
significant potential for a health crisis in the State, and hereby order as
follows:

  1.   The period of time set forth in Executive Order 2006-01 (as amended by
Executive Order 2006-02) during which incurred expenses may be paid pursuant to
the terms of those Orders is hereby extended to and including March 15, 2006.

 

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Executive Order 2006-05
Page Two

  2.   All other terms set forth in Executive Order 2006-01 (as amended by
Executive Order 2006-02) shall remain in full force and effect.

              IN WITNESS WHEREOF, I have hereunto set my hand and caused to be
affixed the Great Seal of the State of Arizona,
 
       
 
      (SIGNATURE) [g05395g0539501.gif]
 
      GOVERNOR
 
        (SEAL)   DONE at the Capitol in Phoenix on this 15th day of February in
the Year Two Thousand and Six and of the Independence of the United States of
America the Two Hundred and Thirtieth.
 
            ATTEST:
 
       
 
      (SIGNATURE) [g05395g0539502.gif]
 
      SECRETARY OF STATE