Exhibit 10.142


 


 


2001 AMENDMENT

TO THE PACIFICARE OF CALIFORNIA

MEDICAL GROUP/IPA SERVICE AGREEMENT

(PROFESSIONAL CAPITATION)


 


This 2001 Amendment to the
Professional Capitation Medical Group/IP A Services Agreement (the “Amendment”)
is entered into effective as of January 1, 2001 by and between PACIFICARE
OF CALIFORNIA, a California corporation (“PacifiCare”), and Sierra Medical
Group (“Medical Group”), with respect to the following facts:


 


The parties have previously
entered into that certain Professional Capitation Medical Group/IPA Services
Agreement dated July 1, 1999 (the “Agreement”).


 


Definitions utilized in this
Amendment shall have the same meaning set forth in the Agreement. Except as
specifically amended by this Amendment, the Agreement shall continue in full
force and effect.


 


NOW, THEREFORE, in
consideration of the foregoing the parties hereto agree as follows:


 


Article 5
Section 5.4 of the Base Agreement is hereby deleted and replaced with the
following:


 


5.4         Incentive Programs. 
Incentive programs are designed to ensure that PacifiCare and Medical
Group work collaboratively to deliver Covered Services in an effective and
efficient manner by ensuring appropriate utilization of Covered Services.
Incentive programs for each Managed Care Plan are set forth in the applicable
Product Attachment.


 


5.4.1                        Incentive Program Withholds. 
PacifiCare shall establish a single withhold from Medical Group’s
monthly Capitation Payment for purposes of offsetting potential deficits for
the combined incentive programs. The monthly incentive withhold for Commercial
Hospital Incentive Program shall initially be *** of monthly capitation for
each Commercial Member, such withhold shall not exceed *** PMPM of Medical
Group’s monthly Capitation Payments for Commercial Members.


 


For Secure Horizons Members
the monthly incentive withhold for Secure Horizons Incentive Program shall
initially be *** PMPM of the monthly capitation for each Secure Horizons
Member, however such withhold shall not exceed *** PMPM of Medical Group’s
monthly Capitation Payments for Secure Members. PacifiCare will examine the
Secure Horizons Incentive pool for 1st and 2nd Quarters of 2001 by July 15, 2001 and, if necessary, will make a
one time adjustment effective July 1, 2001 to increase the amount of the
withhold based on the pool status at that time. But at no time is Secure
Horizons Incentive Program withhold to be more than *** PMPM.


 


 











*** Confidential Information
omitted and filed separately with the Securities and Exchange Commission.


 


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5.4.2                        Incentive Program Settlements.    
PacifiCare shall conduct combined settlements for all of the incentive
programs for Managed Care Plans applicable to Medical Group. Surpluses and
deficits under each of the incentive programs shall be aggregated and offset
against one another. PacifiCare will conduct an estimated calculation after six
(6) months (the “Interim Calculation”) and a final calculation annually (the
“Final Calculation”) based on the calendar year. The incentive program withhold
described above shall be refunded to the Medical Group at the time of the
incentive program settlements, except that Medical Group’s share of any
incentive program deficits shall be deducted from such refund. Payments under the
combined incentive programs will be due from the owing party within one hundred
and twenty (120) days following the end of the six (6) months for the Interim
Calculation and within one hundred and eighty (180) days following the end of
the calendar year for the Final Calculation. For the Interim Calculation, the
payment due will be limited to *** of the calculated amount due to account for
incurred but not received claims. To the extent a Medical Group deficit has
been carried forward from a prior settlement period, this deficit shall be
offset against amounts due to Medical Group hereunder.  Medical Group shall have thirty (30) days
from the date of written notice to audit and submit any revisions to the
incentive program settlement to PacifiCare. Any submitted revisions must be
approved by PacifiCare and such approval shall not be unreasonably withheld.
PacifiCare shall then have thirty (30) days to make any necessary adjustment to
the calculation and return the itemized calculation to Medical Group.  Such calculation shall be considered the
final calculation unless Medical Group and PacifiCare agree to extend the
calculation process. Any amounts owing shall be paid to the appropriate party
within thirty (30) days of the release of the final itemized calculation. In
the event that claims for providers were incurred during the calendar year in
question but were not paid until after the final calculation, such costs shall
be carried forward and applied to the subsequent calendar year’s incentive
program as an expense for that calendar year.


 


The following additional
settlement will occur for establishing or changing the Secure Horizons Hospital
Incentive withhold amounts:


 


PacifiCare has the sole
right to adjust withholds for the purposes of adjusting the Commercial and
Secure Horizons Incentive pools. The following additional settlement will occur
as follows:


 


PacifiCare
will examine the Secure Horizons Hospital Incentive Pool for lst and
2nd Quarters 2001 by July 15, 2001. For
January through April 2001 dates of service PacifiCare will examine
all paid and pended claims, apply a completion factor, and add ten percent
(10%) to the total. For expenses related to May and June 2001 dates of
service, PacifiCare will establish the expenses based on the previous 8 months
experience (September 2000-April 2001) and apply that experience to
May and June 2001. Medical Group shall have thirty (30) days from the date
of written notice to audit and submit any revisions to the additional incentive


 


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program
settlement to PacifiCare. PacifiCare must approve any submitted revisions and
such approval shall not be unreasonably withheld.  PacifiCare shall then have thirty (30) days to make any necessary
adjustment to the calculation and return the itemized calculation to Medical
Group. Such calculation shall be considered the final calculation for this
additional settlement unless Medical Group and PacifiCare agree to extend the
calculation process.  Based on the
settlement status, the withhold of the monthly capitation for Secure Horizons
Members may be increased up to the limit of $*** PMPM. This adjustment to the
withhold would be effective July 1, 2001 and would remain in place through
the end of the calendar year.


 


5.4.3                        Incentive Program Compliance with State and
Federal Law.  PacifiCare and Medical Group acknowledge and
agree that the payments which may be made directly or indirectly under the
incentive programs described in this Agreement are not made as an inducement to
reduce or limit Covered Services to any specific Member.  Medical Group acknowledges and agrees that
any payments which may be made directly or indirectly under physician incentive
programs Medical Group may utilize with respect to its Participating Providers shall
not be made as an inducement to reduce or limit Covered Services to any
specific Member. Medical Group further acknowledges and agrees that the
incentive programs described in this Agreement shall be subject to modification
by PacifiCare during the term of this Agreement in order to comply with changes
in State and Federal Law, and Medical Group further agrees to modify any
physician incentive programs utilized with respect to its Participating
Providers to comply with such changes.


 


5.4.4                        Limitation on Medical Group’s Risk.  In
the event Medical Group incurs an obligation under the overall incentive
program settlement described above, Medical Group shall not be responsible for
reimbursing PacifiCare nor shall PacifiCare offset the Medical Group’s obligation
against Medical Group’s Capitation Payments due under this Agreement.
PacifiCare shall carry forward any Medical Group obligations as the result of
an incentive program obligation and the amount carried forward shall be offset
against amounts otherwise due to Medical Group under future settlements for the
combined incentive programs. 
Notwithstanding the foregoing, Medical Group shall be responsible for
reimbursing PacifiCare for deficits in pharmacy incentive programs to the
extent there are insufficient surpluses due Medical Group from other incentive
programs to offset pharmacy deficits; such reimbursement shall be made within
thirty (30) days following completion of the Final Calculation for all
incentive program settlements described above.


 


PacifiCare will have the
right to establish pharmacy deficit withholds as necessary to allow collection
of any pharmacy deficits up to the downside limit.


 


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Section 5.12
or the Base Agreement is hereby deleted and replaced by the following:


 


5 12                           Recoupment Rights.            Except as may otherwise be specifically
provided in this Agreement, PacifiCare shall have the right to immediately
recoup any and all amounts owed by Medical Group to PacifiCare against amounts,
including Capitation Payments, owed by PacifiCare to Medical Group. This right
shall include, without limitation, PacifiCare’s right to recoup the following
amounts owed to PacifiCare by Medical Group: (i) amounts owed by Medical Group
due to overpayments or payments made in error by PacifiCare; (ii) amounts owed
by Medical Group as a result of claims for Medical Group Services that
PacifiCare may pay on behalf of Medical Group; (iii) amounts owed by Medical
Group for Covered Services provided outside the Medical Group Service Area;
(iv) amounts owed by Medical Group as a result of the outcome of the Member
appeals and grievance procedure; (v) amounts owed by Medical Group in
connection with any other prior or existing agreement between Medical Group and
PacifiCare or any PacifiCare Affiliate; (vi)
PacifiCare has the right to collect Pharmacy deficits in the form of withholds
if PacifiCare is unable to collect from Medical Group up to the maximum limits
as set forth in this Agreement. As a material condition to PacifiCare’s
obligations under this Agreement, Medical Group agrees that all recoupment and
any offset rights pursuant to this Agreement shall be deemed to be and to
constitute rights of recoupment authorized in State or Federal law or in equity
to the maximum extent possible under law or in equity and that such rights
shall not be subject to any requirement of prior or other approval from any
court or other government authority that may now or hereafter have jurisdiction
over Medical Group.


 


Product Attachment A PacifiCare Commercial Health Plan,
Article 3 –
Section 3.1, 3.3.2 , 3.3.4, and 3.4.5 are hereby deleted and replaced by
the following:


 


3.1                                 Capitation Payments for Commercial Plan Members.                                      Capitation Payments for Commercial Plan
Members shall be made based upon a per Member per month base capitation rate
(“Base Capitation Rate”) adjusted to reflect the Medical Group Members’ age,
gender, and benefit plan participation. The Base Capitation Rate shall be ***
dollars and twelve cents *** per Commercial Plan Member per month for Antelope
Valley Medical Group Members and *** dollars and seventy-four cents ($***) per
Commercial Plan Member per month for Sierra Medical Group Members. The Base
Capitation Rate shall be adjusted for each Medical Group Member by multiplying
the adjustment factor for the applicable Member by the Base Capitation Rate.
Age/gender adjustment factors are actuarially determined and are listed below.
Benefit adjustment factors are actuarially determined and take into
consideration various co-pay and coinsurance levels. PacifiCare may modify the
adjustment factors based on actuarially determined changes. Based on Medical
Group Members for the month of March 2001 (without taking into account
retroactive adjustments), the Medical Group’s average capitation rate would be
*** per Member per month. The average capitation rate will vary during
subsequent months as a result of changes in the age, gender, and benefit plan
participation of the Medical Group’s


 


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Members for the applicable
month. The total monthly Capitation Payment shall also be adjusted in the
manner set forth in Article 5 of the Base Agreement.


 


The following are
PacifiCare’s age/gender adjustment factors:


 


	
  Child 0

  	
   

  	
  1.9939

  
	
  Child 1

  	
   

  	
  1.2664

  
	
  Child 2 – 9

  	
   

  	
  0.4730

  
	
  Child 10 – 17

  	
   

  	
  0.4375

  
	
  Female 18 – 19

  	
   

  	
  0.7395

  
	
  Female 20 – 24

  	
   

  	
  1.4564

  
	
  Female 25 – 29

  	
   

  	
  1.6593

  
	
  Female 30 – 34

  	
   

  	
  1.4785

  
	
  Female 35 – 39

  	
   

  	
  1.2495

  
	
  Female 40 – 44

  	
   

  	
  1.3095

  
	
  Female 45 – 49

  	
   

  	
  1.2221

  
	
  Female 50 – 54

  	
   

  	
  1.5869

  
	
  Female 55 – 59

  	
   

  	
  1.7404

  
	
  Female 60 – 64

  	
   

  	
  2.0135

  
	
  Female 65 plus

  	
   

  	
  2.0630

  
	
  Male 18 – 19

  	
   

  	
  03554

  
	
  Male 20 – 24

  	
   

  	
  0.4774

  
	
  Male 25 – 29

  	
   

  	
  0.5702

  
	
  Male 30 – 34

  	
   

  	
  0.6033

  
	
  Male 35 – 39

  	
   

  	
  0.7038

  
	
  Male 40 – 44

  	
   

  	
  0.7700

  
	
  Male 45 – 49

  	
   

  	
  0.8742

  
	
  Male 50 – 54

  	
   

  	
  1.3235

  
	
  Male 55 – 59

  	
   

  	
  1.7024

  
	
  Male 60 – 64

  	
   

  	
  2.2284

  
	
  Male 65 plus

  	
   

  	
  2.3563

  



 


3
3.2                        CHIP Budget.  The CHIP Budget for
Commercial Plan Members shall be *** PMPM, excluding Commercial POS Plan
Members, subject to the adjustments set forth in Article 5 of the Base
Agreement and further specified below.


 


3.3.4                        CHIP Surplus.  In
the event the CHIP Expense is less than the CHIP Budget, the surplus shall be
allocated as follows:


 


*** to Medical Group


*** to PacifiCare


 


3.4.5                        PIP Deficit.  In the event that the PIP
Expense is greater than the PIP Budget, *** of the deficit shall be allocated
to Medical Group with a limit of *** PMPM.


 


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Product
Attachment  C Secure Horizons
Health Plan, Article 3 – Section 3.1, 3.3.2, 3.3.4; and 3.4 are
hereby deleted and replaced by the following:


 


3.1                                 Capitation Payments for Secure Horizons
Members.  Capitation Payments for Secure Horizons
Members shall be *** of the Secure Horizons Revenue per Secure Horizons member
per month, subject to the adjustments set forth in Article 5 of the Base
Agreement.


 


3.3.2                        SHIP Budget.  The SHIP Budget for Secure
Horizons Members shall be *** percent *** of the Secure Horizons Revenue per
Secure Horizons member per month, subject to the adjustments set forth in
Article 5 of the Base Agreement and further specified below.


 


3.3.4                        SHIP Surplus.  In
the event the SHIP Expense is less than the SHIP Budget, the surplus shall be
allocated as follows:


 


***to Medical Group


***to PacifiCare


 


3.4                                 Market-Specific Benefit Program. 
PacifiCare may establish, at its sole discretion, an annual
Market-Specific Benefit Program (the “MSBP”). The MSBP is designed to provide
an incentive to control costs for certain additional benefits (the “MSBP
Benefits”) offered to Secure Horizons Members, as defined in the applicable
Subscriber Agreement, for the purpose of enhancing the marketability of the
Secure Horizons Health Plan.  The MSBP
may include the following additional benefits and may be amended from time to
time by PacifiCare to reflect changes in the benefits:


 


Dental Benefits


Immunosuppressive
Drugs


Outpatient
Pharmacy Benefits


Respite
Care


 


PacifiCare shall retain ***
of the Monthly HCFA Payment (the “MSBP Budget”) per Secure Horizons Plan Member
per month. The MSBP shall be calculated as follows:


 


3.4.1                        MSBP Benefits. 
shall be the additional benefits listed above in this Section and
made available under the Secure Horizons Health Plan as defined in the
applicable Subscriber Agreement.


 


3.4.2                        MSBP Expense. 
shall equal the expense incurred for the provision of MSBP Benefits during the applicable period.


 


3.4.3                        MSBP Surplus.  In
the event the MSBP Expense is less than the MSBP Budget, the surplus shall be
allocated as follows:


 


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*** to Medical Group

*** to PacifiCare


 


3.4.4                        MSBP Deficit.  In
the event the MSBP Expense is greater than the MSBP Budget, *** of the deficit shall be allocated to the
Medical Group, but not more than *** PMPM of the MSBP Budget for the calendar
year.


 


3.4.5                        Settlements.  The calculations in this
Section and settlements shall be performed in accordance with the
procedures specified in Article 5 of the Base Agreement.


 


IN WITNESS WHEREOF, the
undersigned parties hereby agree to this Amendment as of the date first set
forth above.


 


	
  PacifiCare
  of California

  	
  Sierra
  Medical Group

  
	
  A
  California Corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
  /s/ Brian Jeffrey

  	
   

  	
  Signature:

  	
  /s/ Peter G. Goll

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  5/21/01

  	
   

  	
  Date:

  	
  5-15-01

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   Brian Jeffrey

  	
   

  	
  Print Name:

  	
  Peter G. Goll

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Title:

  	
  Vice President

  	
   

  	
  Print Title:

  	
  Senior Vice President

  	
   

  
											



 


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