Exhibit 10.1

 

Explanatory Note regarding Medicare Contracts between Humana and CMS

 

Recently, various subsidiaries of Humana Inc. and the Centers for Medicaid and
Medicare Services entered into some 28 separate contracts that allow Humana to
provide Medicare services under 42 CFR Part 422. In each case, the relevant
contract designates the participating Humana entity as a Medicare Advantage
Organization (“MA”). One form of contract provides for the operation of one of
three kinds of coordinated care plans (health maintenance organization (“HMO”),
regional preferred provider organization (“RPPO”), or local preferred provider
organization (“LPPO”)). Exhibit 10.1 is the form of coordinated care contract.
Twenty-four of the 28 Humana/CMS agreements are coordinated care agreements.

 

Exhibits 10.3, 10.4 and 10.5 are forms of addenda to the base contract which
provide more specificity as to the types of services offered. Exhibit 10.3
provides for the operation of a Medicare Prescription Drug Plan; Exhibit 10.4
provides for the operation of an Employer/Union-only Group Medicare Advantage
Prescription Drug Plan; and Exhibit 10.5 provides for the operation of an
Employer/Union-only Group Medicare Advantage Health Plan. Exhibit 10.6 is
another form of addendum that allows for the operation of a regional PPO plan.
Exhibit 10.6 is relevant to only one contract, R5286

 

The following chart summarizes the 24 individual contracts by type and entity:

 

Contract

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  Participating Humana Entity

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

  Product 

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

 

Applicable

Addenda

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1. R5286   Humana Insurance Company   RPPO   10.3, 10.4, 10.5, 10.6 2. H4520  
Humana Insurance Company   LPPO   10.3, 10.4, 10.5 3. H0317   Humana Insurance
Company   LPPO   10.3, 10.4, 10.5 4. H1418   Humana Insurance Company   LPPO  
10.3, 10.4, 10.5 5. H1716   Humana Insurance Company   LPPO   10.3, 10.4, 10.5
6. H1806   Humana Insurance Company   LPPO   10.3, 10.4, 10.5 7. H3619   Humana
Insurance Company   LPPO   10.3, 10.4, 10.5 8. H5214   Humana Insurance Company
  LPPO   10.3, 10.4, 10.5 9. H0623   Humana Insurance Company   LPPO   10.3,
10.4, 10.5 10. H4408   Humana Insurance Company   LPPO   10.3, 10.4, 10.5
11. H5216   Humana Insurance Company   LPPO   10.3, 10.4, 10.5 12. H4606  
Humana Insurance Company   LPPO   10.3, 10.4, 10.5 13. H3405   Humana Insurance
Company   LPPO   10.3, 10.4, 10.5 14. H1510   Humana Insurance Company   LPPO  
10.3, 10.4, 10.5 15. H5415   HHIC of Florida   LPPO   10.3, 10.4, 10.5 16. H1905
  HHBP of Louisiana   LPPO   10.3, 10.4, 10.5 17. H1019   CarePlus Health Plans
  HMO   10.3 18. H0307   Humana Health Plan   HMO   10.3, 10.4, 10.5 19. H1406  
Humana Health Plan   HMO   10.3, 10.4, 10.5 20. H2649   Humana Health Plan   HMO
  10.3, 10.4, 10.5 21. H1951   HHBP of Louisiana   HMO   10.3, 10.4, 10.5
22. H1036   Humana Medical Plan   HMO   10.3, 10.4, 10.5 23. H4510   HHP of
Texas   HMO   10.3, 10.4, 10.5 24. H4007   HHP of Puerto Rico   HMO   10.3,
10.4, 10.5

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Contract with Eligible Medicare Advantage (MA) Organization Pursuant to

Sections 1851 through 1859 of the Social Security Act for the Operation

of a Medicare Advantage Coordinated Care Plan(s)

 

CONTRACT (#                 )

 

Between

 

Centers for Medicare & Medicaid Services (hereinafter referred to as CMS)

 

and

 

________________________________________

(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

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

¨ Part D Addendum

   ________

¨ Employer-Only MA-PD Addendum (800 Series)

   ________

¨ Employer-Only MA Only Addendum (800 Series)

   ________

¨ Variances/Waivers (Provided directly to Demonstration Organizations by CMS)

   ________

¨ Regional Preferred Provider Organization Addendum (Provided directly to RPPOs
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, 2006, after which this contract may be
renewed for successive one-year periods in accordance with 42 CFR 422.505(c) and
as discussed in Paragraph A in Article VII below. [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
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

 

Coordinated Care Plan

 

A. The Medicare Advantage Organization agrees to operate one or more coordinated
care plans as defined in 42 CFR 422.4(a)(1)(iii)), including at least one MA-PD
plan as required under 42 CFR 422.4(c), 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 Plan Attestation of Benefit Plan and Price, which is attached to
this contract. The MA Organization agrees to provide access to such benefits as

 

2

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required under subpart C in a manner consistent with professionally recognized
standards of health care and according to the access standards stated in
§422.112.

 

2. The MA Organization agrees to provide post-hospital extended care services,
should an MA enrollee elect such coverage, through a skilled nursing home
facility according to the requirements of section 1852(l) of the Act and
§422.133. A skilled nursing home 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, 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)]

 

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, other than in
enrolling eligible beneficiaries in a CMA-approved special needs plan that
exclusively enrolls special needs individuals as consistent with §§422.2,
422.4(a)(1)(iv) and 422.52. [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 Protections. 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 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. [422.504(g)(1)]

 

(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

 

(ii) For enrollees who are hospitalized on 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)]

 

3

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(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 claims for covered 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 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)]

 

E. QUALITY IMPROVEMENT PROGRAM

 

1. The MA Organization agrees to operate, for each plan that it offers, an
ongoing quality improvement program as stated in accordance with Section 1852(e)
of the Social Security Act and 42 CFR 422.152.

 

2. Chronic Care Improvement Program

 

(a) Each MA organization (other than MA private-fee-for-service plans) must have
a chronic care improvement program and must establish criteria for participation
in the program. The CCIP must have a method for identifying enrollees with
multiple or sufficiently severe chronic conditions who meet the criteria for
participation in the program and a mechanism for monitoring enrollees’
participation in the program.

 

(b) Plans have flexibility to choose the design of their program; however, in
addition to meeting the requirements specified above, the CCIP selected must be
relevant to the plan’s MA population. MA organizations are required to submit
annual reports on their CCIP program to CMS.

 

4

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3. Performance Measurement and Reporting: The MA Organization shall measure
performance under its MA plans using standard measures required by CMS, and
report (at the organization level) its performance to CMS. The standard measures
required by CMS during the term of this contract will be uniform data collection
and reporting instruments, to include the Health Plan and Employer Data
Information Set (HEDIS), Consumer Assessment of Health Plan Satisfaction (CAHPS)
survey, and Health Outcomes Survey (HOS). These measures will address clinical
areas, including effectiveness of care, enrollee perception of care and use of
services; and non-clinical areas including access to and availability of
services, appeals and grievances, and organizational characteristics.
[422.152(b)(1), (e)]

 

4. Utilization Review:

 

(a) An MA Organization for an MA coordinated care plan must use written
protocols for utilization review and policies and procedures must reflect
current standards of medical practice in processing requests for initial or
continued authorization of services and have in effect mechanisms to detect both
underutilization and over utilization of services. [422.152(b)]

 

(b) For MA regional preferred provider organizations (RPPOs) and MA local
preferred provider organizations (PPOs) that are offered by an organization that
is not licensed or organized under State law as an HMOs, if the MA Organization
uses written protocols for utilization review, those policies and procedures
must reflect current standards of medical practice in processing requests for
initial or continued authorization of services and include mechanisms to
evaluate utilization of services and to inform enrollees and providers of
services of the results of the evaluation. [422.152(e)]

 

5. Information Systems:

 

(a) The MA Organization must:

 

(i) Maintain a health information system that collects, analyzes and integrates
the data necessary to implement its quality improvement program;

 

(ii) Ensure that the information entered into the system (particularly that
received from providers) is reliable and complete;

 

(iii) Make all collected information available to CMS. [422.152(f)(1)]

 

6. External Review

 

The MA Organization will comply with any requests by Quality Improvement
Organizations to review the MA Organization’s medical records in connection with
appeals of discharges from hospitals, skilled nursing facilities, and home
health agencies.

 

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, and the
advance directives requirements of §1852(i) of the Act and §422.128, the

 

5

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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. 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 CFR 422.111.

 

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

 

6

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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 O.

 

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)]

 

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), 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 hereto as Attachment A (enrollment attestation) and Attachment B
(risk adjustment data) 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, 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, 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(l)]

 

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

 

7

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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(l)]

 

Article V

 

MA Organization Relationship with Related Entities, Contractors, and
Subcontractors

 

A. 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)(1)]

 

B. 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), contractor(s), or subcontractor(s) 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)]

 

C. 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 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)]

 

8

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D. 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.

 

(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 credentialing process will be reviewed and approved by the MA
Organization and the MA Organization must audit the credentialing process on an
ongoing basis.

 

(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)]

 

E. 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)]

 

F. As of the date of this contract and throughout its term, the MA Organization

 

(1) Agrees that any physician incentive plan it operates meets the requirements
of §422.208, and

 

(2) Has assured that all physicians and physician groups that the MA
Organization’s physician incentive plan places at substantial financial risk
have adequate stop-loss protection in accordance with §422.208(f). [422.208]

 

9

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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:

 

(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 six prior periods.

 

(iii) Federal income tax or informational returns for the current contract
period and six prior periods.

 

(iv) Asset acquisition, lease, sale, or other action.

 

(v) Agreements, contracts (including, but not limited to, 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

 

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(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, 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. [422.502(e)]

 

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.

 

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(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. [422.502(f)(1)(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.

 

(c) The service area and continuation area, if any, of each plan and the
enrollment capacity of each plan;

 

(d) Plan quality and 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
beneficiaries in 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. [422.502(f)(2)]

 

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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. [422.502(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)]

 

(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.

 

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(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 (1)(b)(ii) and (1)(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 a 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)(1)(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 O.

 

(iv) The MA Organization did not submit a benefit and price bid or the benefit
and price bid was not acceptable [422.505(d)]

 

(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)]

 

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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)(1)]

 

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.

 

(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 fails to implement an acceptable quality improvement
program as required under 42 CFR Part 422 Subpart D.

 

(ix) The MA Organization substantially fails to comply with the prompt payment
requirements in §422.520.

 

(x) The MA Organization substantially fails to comply with the service access
requirements in §422.112.

 

(xi) The MA Organization fails to comply with the requirements of §422.208
regarding physician incentive plans.

 

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(xii) 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)(1)(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)(1)(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)(1)(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.

 

(ii) Exception. If a contract is terminated under section (B)(1)(a)(v) of this
article, the MA Organization will not have the opportunity to submit a
corrective action plan.

 

(e) Appeal rights. If CMS 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 Subpart N. [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.

 

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(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

 

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.

 

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Article X

 

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
comparison data. To establish and successfully test 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.

 

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In witness whereof, the parties hereby execute this contract.

 

FOR THE MA ORGANIZATION

        Stefen F. Brueckner       Vice President, Senior Products

Printed Name

     

Title

/s/ Stefen F. Brueckner       September-October, 2005

Signature

     

Date

(See Chart)         

Organization

     

Address

FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES

    /s/ David Lewis           September-October, 2005 Patricia P. Smith        
 

Date

Director             

Medicare Advantage Group

Center for Beneficiary Choices

            

 

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