Exhibit 10.188


 


PacifiCare of California Medical Group/IPA
Services Agreement (Professional Capitation), effective January 1, 2001,
between PacifiCare of
California, Inc.  and Gateway Physicians
Medical Associates, Inc.


 












*** Confidential Treatment Requested


 

















 


PACIFICARE OF CALIFORNIA

MEDICAL GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)


 


THIS PACIFICARE MEDICAL
GROUP/IPA SERVICES AGREEMENT (this “Agreement”) is made and entered into this
1st day of January, 2001, by and between PACIFICARE OF CALIFORNIA, INC., a
California corporation (“PacifiCare”), and Gateway Physicians Medical
Associates, Inc.  (“Medical Group”),
with reference to the following facts;


 


WHEREAS, PacifiCare operates
various prepaid health plans for the provision of Covered Services to persons
enrolled as Members in such plans in a manner consistent with the laws of the
State of California and the United States; and


 


WHEREAS, Medical Group and
its Participating Providers desire to participate in PacifiCare’s prepaid
health service delivery system by providing or arranging for Covered Services
to Members on a prepaid basis in coordination with PacifiCare and its
Participating Providers under the terms specified in this Agreement.


 


NOW, THEREFORE, it is agreed
as follows:


 


ARTICLE 1

DEFINITIONS


 


Whenever used in this
Agreement, the following terms shall have the definitions contained in this
Article 1:


 


1.1                                 Accreditation Organization is any organization, including, without
limitation, the National Committee for Quality Assurance (NCQA), engaged in
accrediting or certifying PacifiCare, any Managed Care Plans, or any
Participating Providers.


 


1.2                                 Agreement is this Medical Group/IPA Services Agreement between PacifiCare and
Medical Group, and any amendments, exhibits and attachments hereto, including
Product Attachments.


 


1.3                                 Base Agreement is this Medical Group/IPA Services Agreement
between PacifiCare and Medical Group, and any amendments, exhibits and
attachments hereto, excluding Product Attachments.


 


1.4                                 Capitation Payments are monthly payments made to Medical Group
on a prepaid basis for Covered Services provided or arranged by Medical Group
under this Agreement.


 

















 


1.5                                 Commencement Date is the commencement date of this Agreement
as specified in Section 6.1.


 


1.6                                 Copayment is a fee that may be charged to Members for certain Medical Group
Services and collected by Medical Group or its Participating Providers at the
time Medical Group Services are provided, as set forth in the applicable
Managed Care Plan.


 


1.7                                 Cost of Care is the valuation of Covered Services and
other health care services provided or arranged by Medical Group, as described
in Section 5.7.


 


1.8                                 Covered Services are those medically necessary health care
services, supplies and benefits which are required by a Member as determined by
Medical Group or PacifiCare in accordance with the Member’s Managed Care Plan
and PacifiCare’s Quality Improvement Program and Utilization Management
Program.  For purposes of this
Agreement, “medically necessary” shall have the meaning set forth in the
applicable Subscriber Agreement.


 


1.9                                 Division of Financial Responsibility is the matrix for each Managed Care Plan
which specifies the financial responsibility for Covered Services between
PacifiCare, Medical Group and the Hospital Incentive Program.  The Division of Financial Responsibility is
an integral part of this Agreement.


 


1.10                           Eligibility List is the list of Members for whom Medical
Group shall provide or arrange Covered Services.


 


1.11                           Emergency Services are Covered Services required by a Member as
the result of a medical condition manifesting itself by the sudden onset of
symptoms of sufficient severity, which may include severe pain, such that a
reasonable person would expect the absence of immediate medical attention to
result in: (i) placing the health of the Member in serious jeopardy; (ii)
serious impairment to bodily functions; or (iii) serious dysfunction of any
bodily part.  The final determination of
whether Emergency Services were required shall be made by the PacifiCare medical
director or designee, subject to appeal under the applicable Member appeals
procedure.


 


1.12                           Government Agency shall mean any local, State or Federal
government agency or entity with regulatory or other authority over PacifiCare,
this Agreement or any Managed Care Plan.


 


1.13                           Hospitals are licensed acute care hospitals in the Medical Group Service Area
which have entered into a written agreement with PacifiCare to provide Hospital
Services to Members.


 


1.14                           Hospital Services are Covered Services for Medical Group
Members which are initially paid for by PacifiCare and are the shared financial
responsibility


 

















 


of
PacifiCare and Medical Group, as specified in the Hospital Incentive Programs
set forth in the Product Attachments. A summary of Hospital Services is set
forth in the Division of Financial Responsibility for each Managed Care Plan.


 


1.15                           Insolvent or the condition of Insolvency means that Medical Group or any
management company providing material management services to Medical Group (i)
ceases or fails to be solvent, or generally fails to pay, or admits in writing
its inability to pay its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise; (ii) fails to
maintain the financial reserves specifically required either by this Agreement
or State and Federal Law or otherwise agreed to in writing by the parties;
(iii) voluntarily ceases to conduct its business in the ordinary course; (iv)
commences any Insolvency proceeding with respect to itself; or (v) takes any
action to effectuate or authorize an Insolvency proceeding.  No Insolvency shall be deemed to exist if
such conditions are solely the result of PacifiCare’s failure to pay Medical
Group amounts that are currently due and payable by PacifiCare after
consideration of PacifiCare’s withhold, recoupment, offset and other rights
pursuant to this Agreement.


 


1.16                           Managed Care Plan is any one of the various health plans or
products sponsored or administered by PacifiCare or its subsidiaries or affiliates
including, without limitation, a commercial prepaid health plan (“PacifiCare
Commercial Health Plan”), a commercial point-of-service plan (“PacifiCare
Commercial POS Health Plan”), and a Medicare + Choice plan (“Secure Horizons
Health Plan”).  Each Managed Care Plan
is described in the applicable Subscriber Agreement and Product
Attachment.  PacifiCare may make
available some, and not all, of the Managed Care Plans under this Agreement.  For purposes of this Agreement, PacifiCare
Affiliates shall mean all entities which currently are controlled by,
controlling, or under common control with PacifiCare or which in the future may
be controlled by, controlling, or under common control with PacifiCare,
including, without limitation, PacifiCare Life and Health Insurance Company and
PacifiCare Life Assurance Company.  When
a PacifiCare Affiliate is responsible for payment under this Agreement,
“PacifiCare” shall mean and refer to the PacifiCare Affiliate.


 


1.17                           Medical Group Facility is each office of Medical Group and its
Participating Providers, identified in Exhibit 1 to this Agreement,
where Medical Group Services may be provided to Medical Group Members.


 


1.18                           Medical Group Members are the Members listed on the Eligibility
List.


 


1.19                           Medical Group Service Area is the geographic area as defined in Exhibit
1 to this Agreement.


 

















 


1.20                           Medical Group Services are Covered Services for Medical Group
Members which are the financial responsibility of Medical Group, as specified
in the Division of Financial Responsibility for each Managed Care Plan.


 


1.21                           Member is an individual who is enrolled in a Managed Care Plan and meets all
the eligibility requirements for membership in the Managed Care Plan and for
whom the applicable Premium has been received by PacifiCare.


 


1.22                           Out-of-Area Medical Services are those Urgently Needed Services and
Emergency Services provided while a Member is outside the Medical Group Service
Area which would have been the financial responsibility of Medical Group had
the services been provided within the Medical Group Service Area.  Medical Services which are to be provided
outside of the Medical Group Service Area and are arranged by Medical Group for
assigned Members are not considered Out-of-Area Medical Services.


 


1.23                           Participating Providers are (i) physicians and health care
professionals who are shareholders, partners or employees of Medical Group and
(ii) physicians, medical groups, individual practice associations (“IPA”),
health care professionals, hospitals, facilities and other providers of health
care services or supplies that have entered into written contracts with
PacifiCare, Medical Group or Hospital to provide Covered Services to Members
pursuant to Managed Care Plans.


 


1.24                           Premium is the payment for Covered Services under each Managed Care Plan as
defined in the applicable Product Attachment.


 


1.25                           Primary Care Physician is any of Medical Group’s Participating
Providers who meet PacifiCare’s criteria for providing initial and primary care
Covered Services to Medical Group Members, for maintaining the continuity of
patient care, and for initiating and coordinating referrals for Covered
Services to Medical Group Members.


 


1.26                           Product Attachments are the attachments to the Base Agreement
which set forth additional terms and conditions under which Medical Group shall
provide or arrange Covered Services to Medical Group Members pursuant to the
Managed Care Plans.  All Product
Attachments which are signed by both PacifiCare and Medical Group shall become
a part of this Agreement and are incorporated herein.


 


1.27                           Provider Manual is the PacifiCare Provider Policies and
Procedures Manual and related written materials which shall be provided to
Medical Group by PacifiCare prior to or concurrent with the execution of this
Agreement.  The Provider Manual is
incorporated into this Agreement, and may be updated from time to time by
PacifiCare as provided in this Agreement.


 

















 


1.28                           Quality Management and Improvement (“QI”)
Program are those standards,
protocols, policies and procedures adopted by PacifiCare to monitor and improve
the quality of clinical care and quality of services provided to Members.  The QI Program is described in the Provider
Manual, and may be updated from time to time by PacifiCare as provided in this
Agreement.


 


1.29                           State and Federal Law shall mean any and all laws and regulations
of the State of California or of the United States and all orders and other
requirements of any government agency which are applicable to PacifiCare, this
Agreement, Managed Care Plans, and Medical Group and its Participating
Providers.


 


1.30                           Subscriber Agreement and Evidence of Coverage are the PacifiCare documents that describe
the costs, benefits or services, procedures, conditions, limitations,
exclusions, and other obligations to which Members are entitled and subject to
under a Managed Care Plan.  A copy of a
current standard Subscriber Agreement and Evidence of Coverage for each Managed
Care Plan shall be provided to Medical Group by PacifiCare and may be updated
from time to time by PacifiCare.


 


1.31                           Subscriber or Subscriber Group is the individual or employer, organization,
firm or other entity which contracts with PacifiCare under a Subscriber
Agreement to obtain the benefits of a Managed Care Plan.


 


1.32                           Urgently Needed Services are Covered Services under a Managed Care
Plan which are required without delay in order to prevent the serious
deterioration of a Member’s health as a result of an unforeseen illness or
injury and it was not reasonable given the circumstances to obtain the services
in accordance with the terms of the applicable Managed Care Plan.


 


1.33                           Utilization Management (“UM”) Program are those standards, protocols, policies and
procedures adopted by PacifiCare regarding the management, review and approval
of the provision of Covered Services to Members.  The UM Program is described in the Provider Manual, and may be
updated from time to time by PacifiCare as provided in this Agreement.


 


ARTICLE 2

DUTIES OF MEDICAL GROUP


 


2.1                                 Provide or Arrange Covered Services.  Medical
Group, through its Participating Providers, shall provide or arrange Covered
Services in the Medical Group Service Area to Medical Group Members, in
coordination with PacifiCare and PacifiCare’s Participating Providers and in
accordance with the terms and conditions set forth in this Agreement and the
Managed Care Plans.  Medical Group shall
be financially responsible for Medical Group Services.


 

















 


2.2                                 Professional Standards.  The
primary concern of Medical Group and its Participating Providers under this
Agreement shall be the quality of Covered Services provided to or arranged for
Medical Group Members.  Nothing stated
in this Agreement shall be interpreted to diminish this responsibility.  All Covered Services provided or arranged by
Medical Group shall be provided or arranged by duly licensed, certified or
otherwise authorized professional personnel in a culturally competent manner
and at physical facilities in accordance with (i) the generally accepted
medical and surgical practices and standards prevailing in the applicable
professional community at the time of treatment, (ii) the provisions of
PacifiCare’s QI Program and UM Program, (iii) the requirements of State and
Federal Law and (iv) the standards of Accreditation Organizations.


 


PacifiCare
and Medical Group acknowledge and agree that Medical Group or each of Medical
Group’s Participating Providers shall maintain the physician-patient
relationship with each Medical Group Member. 
Nothing contained in this Agreement is intended to interfere with such
physician-patient relationship.  Nothing
in this Agreement shall be interpreted to discourage or prohibit Medical Group
and its Participating Providers from discussing treatment options or providing
other medical advice or treatment deemed appropriate by Medical Group or its
Participating Providers.  Medical Group
or its Participating Providers shall have the sole responsibility for the
medical care and treatment of Medical Group Members.


 


2.2.1                        Licensure of Medical Group. 
Medical Group is legally organized and incorporated under the laws of
the State of California.  Medical Group
shall maintain in good standing at all times during the term of this Agreement
any and all licenses, certificates and/or approvals required under State and
Federal Law for the performance by Medical Group of the duties required by this
Agreement.


 


Medical
Group shall notify PacifiCare upon receiving any notice from the Department of
Managed Health Care or any other entity with the regulatory or contractual
authority to audit Medical Group relating to compliance with applicable law,
including, without limitation, notices of medical surveys or financial audits.


 


2.2.2                        Licensure/Certification of Medical Group’s
Participating Providers.  Each of Medical Group’s Participating Providers
shall maintain in good standing at all times during the term of this Agreement
the necessary licenses or certifications required by State and Federal Law and
by the Managed Care Plans to provide or arrange Covered Services to Medical
Group Members.


 


2.2.3                        Hospital Privileges for Medical Group’s
Participating Providers.  Unless otherwise specified by Medical Group
and approved by


 

















 


PacifiCare
for specific Participating Providers, each of Medical Group’s Participating
Providers who is a physician shall maintain in good standing at all times
during the term of this Agreement medical staff membership and clinical
privileges at Hospital necessary to provide or arrange Covered Services to
Medical Group Members.


 


2.3                                 Medical Group’s Participating Providers. 
Medical Group shall have a sufficient number of Participating Providers
throughout the Medical Group Service Area to provide or arrange Covered
Services and meet the needs of PacifiCare and Medical Group Members as
determined by PacifiCare’s QI Program and in accordance with State and Federal
Law.  Medical Group’s Participating
Providers shall provide or arrange Covered Services, including Emergency
Services, to Medical Group Members twenty-four (24) hours a day, seven (7) days
a week.  Medical Group’s Participating
Providers must meet PacifiCare’s credentialing standards and must be approved
by PacifiCare before providing or arranging Covered Services to Medical Group
Members.


 


2.3.1                        Participating Provider Information. 
Medical Group shall provide PacifiCare with a complete list of its
Participating Providers, together with the provider specific information
required by PacifiCare for credentialing and for administration of the Managed
Care Plans, at the time this Agreement is signed.


 


2.3.2                        Notice of Participating Provider Additions. 
Medical Group shall use its best efforts to provide at least sixty (60)
calendar days prior written notice to PacifiCare of the addition of any
Participating Providers.  Such notice
shall include the provider-specific information required by PacifiCare.  All Participating Providers must be approved
by PacifiCare before providing or arranging Covered Services to Medical Group
Members.  PacifiCare shall use its best
efforts to approve Participating Providers as quickly as possible after
receiving the written notice from Medical Group.


 


2.3.3                        Notice of Participating Provider Terminations. 
Medical Group shall provide ninety (90) calendar days’ prior written
notice to PacifiCare of the termination of any of its Participating Providers;
provided, however, that if any Participating Providers are terminated with less
than ninety (90) calendar days’ notice, then Medical Group shall provide
written notice to PacifiCare within five (5) business days of Medical Group
becoming aware of such termination. 
Notwithstanding the termination of any Participating Providers, Medical
Group shall remain responsible for providing or arranging Covered Services
through its remaining Participating Providers and shall remain financially
responsible for Medical Group Services provided to Medical Group Members under
this Agreement.


 

















 


2.3.4                        Restriction, Suspension or  Termination of Participating Providers. 
Medical Group shall, as warranted, immediately restrict, suspend or
terminate its Participating Providers from providing or arranging Covered
Services to Medical Group Members in the following circumstances: (i) the
Participating Provider ceases to meet the licensing/certification requirements
or other professional standards described in this Agreement; (ii) PacifiCare or
Medical Group reasonably determines that there are serious deficiencies in the
professional competence, conduct or quality of care of the Participating
Provider which affects or could adversely affect the health or safety of
Medical Group Members; or (iii) the Participating Provider files an affidavit
with the Medicare Program promising to furnish Medicare-covered services to
Medicare beneficiaries only through private contracts under Section 1802 (b) of
the Social Security Act.  Medical Group
shall immediately notify PacifiCare of any of its Participating Providers who
cease to meet the licensing/certification requirements or other professional
standards described in this Agreement and Medical Group’s actions under this
Section.  If Medical Group fails to act
as required by this Section with respect to any of its Participating Providers,
PacifiCare shall have the right to immediately prohibit such Participating
Providers from continuing to provide Covered Services to Medical Group Members.


 


2.3.5                        Adverse Changes in Capacity. 
Medical Group and its Participating Providers will continue to accept
Members enrolled by PacifiCare for so long as Medical Group and its
Participating Providers have the capacity to provide and arrange Covered Services
under this Agreement and for so long as Medical Group continues to accept new
patients from any HMO or other prepaid health plan.  Medical Group shall provide at least ninety (90) calendar days’
prior written notice to PacifiCare of any significant changes in the capacity
of Medical Group to provide or arrange Covered Services that would prevent
Medical Group from accepting additional Members.  Medical Group shall use reasonable efforts to eliminate or remedy
any condition which results in a significant adverse change in capacity.  A significant change in capacity includes,
without limitation, the following: (i) inability of Medical Group to properly
serve additional Members due to a lack of Primary Care Physicians or other
Participating Providers; (ii) inability of any one of Medical Group’s Primary
Care Physicians or other Participating Providers to serve additional Members;
or (iii) closure of any Medical Group Facility.  PacifiCare may continue to enroll Members with Medical Group
until the expiration of the notice period required under this Section, and in
such event, Medical Group and its Primary Care Physicians and other
Participating Providers shall continue to accept such Members.  PacifiCare shall discontinue the enrollment
of Members with Medical Group upon expiration of the


 

















 


notice period required under this Section
until such time, if any, that Medical Group provides written notification to
PacifiCare that it has the capacity to accept additional Members.


 


2.4           Medical Group’s Subcontracts with
Participating Providers.  Medical Group shall demonstrate and certify
to PacifiCare prior to the Commencement Date and upon PacifiCare’s written
request at any time during the term of this Agreement (in the format specified
by PacifiCare) that its subcontracts with Participating Providers comply with
requirements of this Agreement.  Medical
Group shall amend any and all of its existing subcontracts with Participating
Providers which do not comply with this Agreement within thirty (30) calendar
days following the execution of this Agreement and shall provide PacifiCare
with written certification thereof. 
Without limiting any other provision of this Agreement, all of Medical
Group’s subcontracts shall contain the requirements set forth at Sections 8.3.3
of this Agreement pertaining to the provision of Covered Services in Special
Circumstances.


 


2.4.1        Compliance with Provisions of Agreement. 
Medical Group’s subcontracts with Participating Providers shall be in
writing.  All such subcontracts shall be
consistent with the terms and conditions of this Agreement (including the
Product Attachments) and shall meet PacifiCare’s requirements for Participating
Provider subcontracts.  If this
Agreement is amended or modified, all such subcontracts shall be amended or modified
within thirty (30) calendar days to be consistent with such amendments or
modifications.


 


2.4.2        Compliance with Standards of Accreditation
Organizations and Requirements of State and Federal Law. 
Medical Group’s subcontracts with Participating Providers shall comply
with the standards of Accreditation Organizations and requirements of State and
Federal Law.  If there are changes in
such standards and/or requirements, Medical Group shall amend its subcontracts
with Participating Providers to comply with such changes within thirty (30)
calendar days following notice thereof from PacifiCare.


 


2.4.3        Access by PacifiCare, Accreditation
Organizations and Government Agencies to Subcontracts and Books and Records of
Participating Providers.  Medical Group shall make available for
inspection, examination and copying by PacifiCare, Accreditation Organizations
and Government Agencies during normal business hours (i) its Participating
Provider subcontracts and (ii) books and records of its Participating Providers
relating to Covered Services provided to Medical Group Members.  Copies of subcontracts and the books and
records of Participating Providers shall be maintained for at least six (6)
years from the close of the fiscal year in which the Covered Services were
provided.


 

















 


2.4.4        Medical Group’s Responsibility for Providing
or Arranging Covered Services.  Notwithstanding the existence of Medical
Group’s subcontracts with its Participating Providers, Medical Group shall
remain responsible for satisfying the obligations of Medical Group set forth in
this Agreement.  If any of Medical
Group’s subcontracts with Participating Providers are terminated.  Medical Group shall remain responsible for
providing or arranging Covered Services through its remaining Participating
Providers and shall remain financially responsible for Medical Group Services
provided to Medical Group Members under this Agreement.


 


2.4.5        Performance of Subcontract Rights. 
Medical Group’s subcontracts shall require its Participating Providers
who are independent contractors to agree to perform their obligations under
their subcontract for the benefit of PacifiCare in the event of dissolution or
Insolvency of Medical Group, in the event of termination of this Agreement by
PacifiCare for cause pursuant to Section 6.2.2 or in the event of termination
by PacifiCare pursuant to Section 6.3. 
Such obligation shall continue through the continuing care period
provided by this Agreement, Medical Group’s subcontracts shall provide that in
the event PacifiCare exercises such option, Medical Group’s subcontractors
agree to accept payment from PacifiCare, as payment in full, at rates which are
the lesser of the Cost of Care or the rate set forth in the applicable
subcontract.  To the extent Medical
Group’s subcontracts do not comply with the requirements of this Section 2.4.5
as of the date this Agreement is executed and delivered, Medical Group shall
cause its subcontracts to be amended to comply with the forgoing by 1 January,
2000.


 


2.5           Acceptance and Transfer of Members. 
Medical Group and its Participating Providers may not impose any
limitations on the acceptance of Members for care or treatment that are not
imposed on other patients, PacifiCare, Medical Group and its Participating
Providers shall not request, demand, require or seek directly or indirectly the
transfer, discharge or removal of any Member for reasons of Member’s need for,
or utilization of, Covered Services, except in accordance with the procedures
established by PacifiCare for such action. 
Medical Group and its Participating Providers shall not refuse or fail
to provide or arrange Covered Services to any Member.


 


PacifiCare
and Medical Group shall exercise reasonable efforts in following the procedures
for transfer, discharge or removal of Members as set forth in the Provider
Manual.  Nevertheless, PacifiCare may
require transfer of Medical Group Members for any reason, with notification to
Medical Group’s medical director, and Medical Group may request that PacifiCare
transfer Medical Group Members to another of PacifiCare’s Participating
Providers if


 

















 


Medical
Group is unable to provide the Covered Services required by this Agreement for
reasons related to capacity of Medical Group and its Participating
Providers.  In addition, Medical Group
may request that PacifiCare transfer a Medical Group Member to another of
PacifiCare’s Participating Providers in the event of a material breakdown in
the physician-patient relationship. 
PacifiCare shall evaluate such requests considering the best interests
of the Member.  In the event PacifiCare
grants a request for transfer of a Member by Medical Group, the transfer shall
not be effective until the end of the month following the month in which the
Member receives notice of transfer, unless the Member agrees to an earlier
transfer and PacifiCare has made arrangements with another of PacifiCare’s
Participating Providers to accept the Member.


 


2.6           Medical Records. 
Medical Group and its Participating Providers shall maintain all patient
medical records relating to Covered Services provided to Members, in such form
and containing such information as required by the QI Program, Accreditation
Organizations and State and Federal Law. 
Medical records shall be maintained in amanner that is current, detailed, organized and permits effective
patient care and quality review by Medical Group and PacifiCare pursuant to the
QI Program.  Medical records shall be
maintained in a form and physical location which is accessible to Medical
Group’s Participating Providers, PacifiCare, Government Agencies and
Accreditation Organizations, Upon request and within the time frame requested,
Medical Group and its Participating Providers shall provide to PacifiCare, at
*** expense, copies of Member medical records for purposes of conducting
quality assurance, case management and utilization reviews, credentialing and
peer review, claims processing, verification and payment, resolving Member
grievances and appeals and other activities reasonably necessary for the proper
administration of the Managed Care Plans consistent with State and Federal
Law.  If Medical Group or its
Participating Providers do not provide copies of Member medical records to
PacifiCare within the time frame requested, Medical Group and its Participating
Providers shall allow PacifiCare immediate access to such medical records for
onsite copying ***.  Medical Group and
its Participating Providers shall maintain the confidentiality of all Member
medical records and treatment information in accordance with State and Federal
Law.  Medical records shall be retained
by Medical Group and its Participating Providers for at least six (6) years
following the provision of Covered Services and as required by State and
Federal Law.  The provisions of this
Section shall survive termination of this Agreement for the period of time
required by State and Federal Law.


 


2.7           Insurance.  Medical Group, at its sole
cost and expense, shall maintain throughout the term of this Agreement and, if
coverage is provided on a claims-made basis, for a period of four years
following termination of this Agreement, professional liability insurance
(i.e., medical malpractice


 

















 


insurance)
and, if delegated for any Managed Care Services, managed care errors and
omissions insurance in the minimum amount of one million dollars ($1,000,000)
per occurrence and three million dollars ($3,000,000) annual aggregate, the
annual aggregate to apply separately for each physician and health care
practitioner who is insured under the policy (or policies) purchased by Medical
Group.


 


Medical
Group, at its sole cost and expense, shall also maintain throughout the term of
this Agreement, workers’ compensation insurance as required by the State of
California and general liability insurance, including but not limited to
premises, personal injury and contractual liability insurance, in a minimum
amount of one million dollars ($1,000,000) per occurrence, combined single
limit, bodily injury and property damage, to insure Medical Group and its
employees, agents, and representatives against claims for damages arising by
reason of (i) personal injuries or death occasioned in connection with the
performance of any Covered Services provided under this Agreement, (ii) the use
of any property and facilities of the Medical Group, and (iii) activities
performed in connection with this Agreement.


 


Medical
Group’s Participating Providers who are not insured under the Medical Group’s
policy (or policies) shall maintain the same insurance coverage required of
Medical Group under this Section, unless otherwise consented to by PacifiCare
in writing.


 


All
insurance required under this Agreement shall be provided by insurers licensed
to do business in the State of California and who have obtained an A.M.  Best rating of A:VIII or better.


 


If
any of the required coverage is proposed to be provided by a self insurance
agreement, a wholly owned insurance subsidiary (captive) or a risk retention
group, the above insurance requirements may be waived in the sole discretion of
PacifiCare, but only after review of the self insured’s, captive’s or risk
retention group’s audited financial statement and latest actuarial report.


 


A
certificate of insurance shall be issued to PacifiCare prior to the
Commencement Date and upon the renewal of the insurance coverage specified in
this Section.  The certificate shall
provide that PacifiCare shall receive thirty (30) days’ prior written notice of
cancellation or material reduction in the insurance coverage specified in this
Section.  Notwithstanding anything to the
contrary, if Medical Group has a claims-made based policy and anticipates that
such policy (or policies) will be canceled or not renewed, Medical Group agrees
to exercise any option contained in the policy (or policies) to extend the
reporting period to the maximum period permitted, provided, however, that
Medical Group need not exercise such option if the superseding insurer will
accept all prior claims. 
Notwithstanding any other provision of this Agreement, failure to
provide the certificate of insurance


 

















 


shall
be grounds for immediate termination of this Agreement.


 


2.8           Financial Statements.


 


2.8.1        Copies of Financial Statements. 
Medical Group shall provide to PacifiCare within forty-five (45)
calendar days of the end of each calendar quarter copies of its quarterly
financial statements, which shall include a balance sheet, statement of income
and statement of cash flow (the “Financial Statements”) prepared in accordance
with generally accepted accounting principles. 
Such quarterly Financial Statements shall be certified by the chief
financial officer of Medical Group as  accurately
reflecting the financial condition of Medical Group, including without
limitation, its operations in the Medical Group Service Area for the period
indicated.  In addition, Medical Group
shall provide to PacifiCare, within forty-five (45) calendar days of the end of
each fiscal year, copies of its audited annual Financial Statements together
with copies of all auditor’s letters to management in connection with such
audited annual financial statements.


 


2.8.2        Security Reserve.


 


(a)           Establishment. 
Upon execution and delivery of this Agreement, Medical Group shall
establish for the benefit of PacifiCare a deposit in the amount of ***
representing a claims and capitation liability reserve for Medical Group’s
obligations under this Agreement (the “Security Reserve”).  The initial amount of the Security Reserve
shall be an amount based on PacifiCare’s reasonable determination of an amount equal
to two (2) months of Medical Group’s IBNP Expenses, as defined below.


 


(b)           IBNP Expense. 
IBNP Expense shall mean all provider liabilities that are incurred but
not paid (IBNP) for PacifiCare Members. 
Medical Group’s IBNP liabilities shall include estimated provider claims
that have been incurred but not paid and provider capitation for periods where
PacifiCare has paid capitation to Medical Group, but Medical Group has not paid
capitation to its capitated Participating Providers.


 


(c)           Adjustment/Funding.  The
amount of the Security Reserve shall be adjusted by PacifiCare from time to
time, upon written notice to Medical Group, to equal an amount reasonably
estimated by PacifiCare to equal two (2) months of the Medical Group’s
anticipated IBNP Expense.  PacifiCare
shall provide Medical Group with at least thirty (30) days’ prior written


 

















 


notice
of any change in the Security Reserve amount required under this Agreement as a
result of any review performed by PacifiCare. 
Any amounts due by Medical Group under this Section 2.8.2 shall be paid
to the Reserve Account within thirty (30) days of PacifiCare’s written notice
to Medical Group.  PacifiCare shall have
the right to distribute any portion of Capitation Payments due Medical Group or
any amounts otherwise due Medical Group from PacifiCare as necessary to fund
any adjustments to the Reserve Account which are not funded by Medical Group as
and when required by this Subsection. 
Medical Group may, upon request, review PacifiCare’s methodology for
determining IBNP Expense for purposes of establishing Medical Group’s Security
Reserve requirements under this Section.


 


(d)           Condition to Agreement.  The
Security Reserve shall remain in place until the later of the termination of
this Agreement or the performance of all financial obligations of Medical Group
arising under this Agreement.


 


(e)           Bank Account/Security Interest.  The
Security Reserve shall be maintained in an account established at a financial
institution approved by PacifiCare.  The
account shall be in the name of Medical Group and all interest accruing on such
account may be disbursed to Medical Group. 
Medical Group shall grant PacifiCare a security interest in all sums
maintained in such account to secure Medical Group’s obligations under this Agreement,
which security interest shall be in accordance with the terms of a Security
Agreement (or Account Control Agreement) in a form acceptable to PacifiCare.


 


(f)            Terms of Bank Account. 
Medical Group shall cause the bank to mail a duplicate monthly statement
of all transactions and balances in the Reserve Account to PacifiCare
simultaneously with the mailing of the statement to Medical Group.  Medical Group and PacifiCare shall, in
mutual agreement, designate a person or persons appointed by Medical Group and
PacifiCare respectively as having authority to sign checks on the Reserve
Account, provided, however, that PacifiCare shall require signature of a
PacifiCare employee on any withdrawals from the Reserve Account.


 


(g)           Application of Reserve. 
PacifiCare shall be entitled to apply the Security Reserve to satisfy
Medical Group’s financial obligations under this Agreement with prior notice to
the Medical Group.  The exercise of
PacifiCare’s rights with


 

















 


respect
to the Security Reserve shall not be deemed to be an election of any remedy of the
forfeiture of any rights by PacifiCare. 
All of PacifiCare’s rights are cumulative and the exercise of any remedy
shall not preclude the exercise of any other remedies available to PacifiCare
under this Agreement and applicable law.


 


2.9           Administrative Requirements


 


2.9.1        Administrative Guidelines. 
Medical Group agrees to perform its duties under this Agreement in
accordance with the administrative guidelines, policies and procedures set
forth in the Provider Manual and State and Federal Law.  Medical Group shall be responsible for
distributing copies of the Provider Manual, as necessary, to its Participating
Providers.


 


2.9.2        Medical Director, Health Plan Coordinator,
Quality Improvement Committee and Utilization Management Committee. 
Medical Group shall designate one of its Participating Providers who is
a physician or osteopath to act as Medical Group’s medical director and shall
designate an individual to act as the health plan coordinator with
PacifiCare.  The duties of Medical
Group’s medical director and health plan coordinator shall be set forth in the
Provider Manual.  In addition, Medical
Group shall establish and maintain a quality improvement committee and a  utilization management committee to
assist PacifiCare in implementing the QI Program and UM Program with respect to
PacifiCare Members.


 


2.9.3        Participation in PacifiCare Orientation and
Training Programs.  Medical Group shall require its
administrative personnel and its Participating Providers to participate in
PacifiCare’s orientation and training programs.


 


2.9.4        Encounter Data. 
Medical Group shall maintain and provide to PacifiCare, no later than
the fifteenth (15th) day of each month, (i) the utilization data pertaining to
Covered Services which are provided directly by Medical Group and its
Participating Providers and (ii) the utilization data pertaining to Covered
Services which are paid for by Medical Group during the preceding month,
including data not provided in the most recent submission, as required by
PacifiCare (the “Encounter Data”). 
Medical Group shall submit Encounter Data in accordance with the
procedures and standards established by PacifiCare.  Medical Group shall submit Encounter Data in an electronic format
acceptable to PacifiCare.


 


For
each month in which Medical Group fails to submit Encounter


 

















 


Data
described above in this Section, PacifiCare shall deduct one percent (1%) of
the Medical Group’s Capitation Payment until such data is submitted.


 


2.9.5        General Data and Information Requirements. 
Medical Group shall maintain and provide to PacifiCare, upon written
request, any and all information required by PacifiCare, State and Federal Law,
Government Agencies or Accreditation Organizations for the administration of
Managed Care Plans.  Medical Group shall
submit such information and data to PacifiCare in the format and within the
time periods specified by PacifiCare. 
Medical Group shall accurately and completely maintain all Encounter
Data, all other information and data required by this Agreement, including
medical records, necessary to characterize the scope and purpose of Covered
Services provided to Members.  Medical
Group shall provide to PacifiCare and to HCFA any required certification as to
Medical Group’s compliance with the foregoing.


 


2.10         Medical Group’s Failure to Comply with
Agreement, Provider Manual or Managed Care Plans.  If
Medical Group fails to comply with any provision(s) of this Agreement, the
Provider Manual or the Managed Care Plans, PacifiCare may provide written
notice of such failure to Medical Group, specifying a date at least thirty (30)
days following the date of the notice by which Medical Group must be in
compliance with such provision(s), as reasonably determined by PacifiCare.  If Medical Group fails to comply with such
provision(s) by the date specified in the notice, PacifiCare shall have the
right to cease marketing efforts on behalf of Medical Group and/or discontinue
assignment of Members to Medical Group until such time as Medical Group
complies with such provision(s), as reasonably determined by PacifiCare.  In addition, PacifiCare shall have the right
to either (i) collect from Medical Group or (ii) recoup against amounts due
Medical Group under this Agreement, any penalties or other monetary amounts
payable by PacifiCare to Government Agencies, Subscriber Groups, Participating
Providers or any other health care providers as a result of Medical Group’s
failure to comply with any provision(s) of this Agreement, the Provider Manual
or Managed Care Plans.  PacifiCare’s
rights and remedies under this Section shall be in addition to all other rights
and remedies available to PacifiCare to enforce this Agreement, including the
right of termination.


 


2.11         Reciprocity Arrangements.  If
any Member who is not a Medical Group Member or if any individual who is
enrolled in a benefit plan and program of any PacifiCare affiliated entity
(“PacifiCare Affiliate”) receives services or treatment from Medical Group or
its Participating Providers, Medical Group or the Participating Provider agrees
to bill PacifiCare or the PacifiCare Affiliate (or their respective designees),
as applicable, at billed charges and to accept the Cost of Care amount less any
applicable Copayments.  coinsurance


 

















 


and/or
deductibles as payment in full for such services or treatment.  PacifiCare or the PacifiCare Affiliate will
process payment for such services or treatment in accordance with the payment
procedures for the applicable benefit plan or program.


 


If
any Medical Group Member receives Covered Services from a PacifiCare
Participating Provider or PacifiCare Affiliate contracted provider, PacifiCare
shall, where contractually available, provide reciprocity to Medical Group at
PacifiCare rates for such Covered Services. 
Medical Group shall comply with the procedures established by PacifiCare
or the PacifiCare Affiliate for reimbursement of such Covered Services.


 


Only
medically appropriate Covered Services, as determined by PacifiCare, shall be
subject to the reciprocity arrangement specified in this Section.  Medical Group shall abide by all provisions
of this Agreement relating to non-billing of Members with respect to all
services and treatment subject to this reciprocity arrangement.


 


2.12         Hospital Admissions.  In
recognition of the need for coordination, continuity, and quality of care of
Covered Services provided to Medical Group Members, Medical Group agrees to
utilize Hospital(s) as provider of Hospital Services for Medical Group Members,
subject to the following exceptions:


 


(i)            Medical Group Members admitted for Emergency
Services or Urgently Needed Services; and


 


(ii)           Medical Group Members requiring Hospital
Services not available at Hospital.


 


2.13         PacifiCare Rights in the Event of Insolvency
of Medical Group.  In the event that Medical Group is
determined to be Insolvent by PacifiCare’s independent accountants, Medical
Group shall be in material breach of this Agreement.  Upon such breach, PacifiCare shall, without waiving any of its
other rights under this Agreement, including the rights set forth above, and
rights of termination, have the following rights to:


 


(i)            Increase withholds for the payment of claims
as provided pursuant to Section 5.3 of this Agreement;


 


(ii)           Cease enrollment of PacifiCare Members with
Medical Group, transfer Members, and cease marketing efforts;


 


(iii)          Require Medical Group, at its cost, to
retain, on terms and conditions acceptable to PacifiCare, a third party manager
approved by PacifiCare to assist Medical Group in addressing its financial and
operational problems.


 

















 


ARTICLE 3

ADMINISTRATIVE DUTIES OF PACIFICARE


 


3.1           Administration and Provision of Data. 
PacifiCare shall perform administrative, accounting, enrollment,
eligibility verification and other functions necessary for the administration
and operation of the Managed Care Plans. 
PacifiCare shall provide Medical Group with management information and
data reasonably necessary to carry out the terms and conditions of this
Agreement and for the operation of the Managed Care Plans.


 


3.2           Marketing.  PacifiCare shall make reasonable
efforts to market the Managed Care Plans. 
Medical Group agrees that PacifiCare may, in its discretion, use Medical
Group’s name, address and telephone number as well as the names, addresses and
telephone numbers and specialties of its Participating Providers in
PacifiCare’s marketing and informational materials including, without
limitation, PacifiCare’s directory of Participating Providers.  Nothing in this Agreement shall be deemed to
require PacifiCare to conduct any specific marketing activities on behalf of
Medical Group and its Participating Providers or to identify Medical Group or
its Participating Providers in any specific PacifiCare marketing or
informational materials.


 


3.3           Enrollment and Assignment of Members. 
PacifiCare shall be responsible for distributing the PacifiCare
Enrollment Packet to Members upon enrollment and at open enrollment
periods.  PacifiCare shall provide
benefit information to Members concerning the type, scope and duration of benefits
to which Members are entitled under the Managed Care Plans.  Nothing in this Agreement shall be construed
to require PacifiCare to assign any minimum or maximum number of Members to
Medical Group or to utilize Medical Group for any Members in the Medical Group
Service Area.


 


3.4           Eligibility Information. 
PacifiCare shall provide the Eligibility List to Medical Group on or
about the fifteenth (15th) day of each month.


 


3.5           Benefit Design and Interpretation; Coverage
Decisions.  PacifiCare shall be solely responsible for
the benefit design of all Managed Care Plans, including establishing benefits,
Premiums and Copayments.  PacifiCare
shall be solely responsible for interpreting the terms of and making final
coverage determinations under the Managed Care Plans.


 


3.6           Case Management. 
PacifiCare shall manage and coordinate Covered Services for Medical
Group Members (including Emergency Services and Urgently Needed Services) with
complex medical conditions to ensure that care is provided in a manner which
encourages quality, continuity of care and cost-effectiveness (“Case
Management”).  Medical Group shall
cooperate fully with PacifiCare in providing information that may be required
in determining


 

















 


the
need for Case Management and in the transfer of Medical Group Members to
designated PacifiCare Participating Providers for cost effective care.


 


3.7           Out-of-Area Medical Services. 
PacifiCare shall manage and coordinate Out-of-Area Medical
Services.  Medical Group shall cooperate
fully with PacifiCare in providing information that may be required for
transferring Members back into the Medical Group Service Area, including
promptly notifying PacifiCare of known or suspected Out-of-Area Medical
Services, and shall accept the prompt transfer of Members to the care of
Medical Group and its Participating Providers following the receipt of
Out-of-Area Medical Services, PacifiCare, in conjunction with Medical Group and
Hospital, shall make all decisions regarding the duration of a Member’s care at
the Out-of-Area facility and transfer of the Member to a Medical Group Service
Area facility.


 


ARTICLE 4

MANAGED CARE PROGRAM SERVICES


 


4.1           Managed Care Program Services. 
Consistent with the requirements of State and Federal Law and the
standards of Accreditation Organizations, PacifiCare shall be accountable for
the performance of the following services for all Managed Care Plans: (i)
quality management and improvement, (ii) utilization management, (iii)
credentialing, (iv) Member rights and responsibilities, (v) preventive health
services, (vi) medical record review and (vii) payment and processing of claims
(collectively, “Managed Care Program Services”).  Medical Group and its Participating Providers shall cooperate
with PacifiCare in the performance of all Managed Care Program Services and
conduct their activities in a manner consistent with the provisions of this
Article 4 including specifically, but without limitation, PacifiCare’s QI
Program, UM Program, Credentialing Program, Member Services activities, and
Claims Processing Guidelines.


 


4.1.1        Quality Management and Improvement. 
PacifiCare shall maintain an ongoing Quality Management and Improvement
Program (“QI Program”) to assess and improve the quality of clinical care and
the quality of service provided to Members under the Managed Care Plans.  The QI Program shall be maintained in
accordance with the requirements of State and Federal Law and the standards of
Accreditation Organizations.


 


Medical
Group shall, at the written request of PacifiCare, make available its
Participating Providers who are physicians to serve on PacifiCare’s QI
Committee.  Medical Group shall
establish and maintain an independent quality improvement committee which shall
meet as frequently as advisable (but not less than ten (10) times throughout
the year).  A member of the PacifiCare
medical services


 

















 


staff
may participate in Medical Group’s quality improvement committee meetings.  Medical Group shall keep minutes of its
quality improvement committee and subcommittee meetings, copies of which shall
be made available to PacifiCare upon ten (10) days’ written notice by
PacifiCare to Medical Group.  If the
functions of the quality improvement committee are performed together with its
utilization review committee, Medical Group shall implement and maintain
procedures which maintain all applicable confidentiality protections for
quality assurance activities and decisions.


 


Medical
Group shall develop and provide for PacifiCare’s review and approval written
procedures for focused review or remedial action whenever it is determined by
PacifiCare’s QI Committee that inappropriate or substandard Covered Services
have been furnished or Covered Services that should have been furnished have
not been furnished.  Upon request,
PacifiCare shall assist Medical Group in the formulation of such focused review
and remedial procedures.


 


4.1.2        Utilization Management. 
PacifiCare shall maintain an ongoing Utilization Management Program (“UM
Program”) to address pre-authorization, concurrent and retrospective review of
the quality, appropriateness, level of care and utilization of all Covered
Services provided or to be provided to Members under the Managed Care
Plans.  The UM Program shall be
maintained in accordance with the requirements of State and Federal Law and the
standards of Accreditation Organizations.


 


Medical
Group shall establish and maintain a utilization review committee which shall
meet as frequently as necessary.  A
member of the PacifiCare medical services staff may participate in Medical
Group’s utilization review committee meetings. 
Medical Group shall keep minutes of its utilization review committee
meetings, copies of which shall be made available to PacifiCare upon ten (10)
days’ written notice by PacifiCare to Medical Group.  Medical Group’s utilization review committee shall review, as
necessary, elective referrals and hospital and skilled nursing facility
admissions on a prospective basis, and Emergency Services and Urgently Needed
Services requiring hospital admissions on a retrospective basis.  The committee shall also be responsible for
monitoring patterns of care, isolating inappropriate utilization and performing
other management and review duties as specified in the UM Program.


 


4.1.3        Credentialing. 
PacifiCare shall maintain standards, policies and procedures for
credentialing and recredentialing physicians, hospitals and other health care
professionals and facilities that provide Covered Services to Members under the
Managed Care Plans (“Credentialing


 

















 


Program”).  The Credentialing Program shall be
maintained in accordance with the requirements of State and Federal Law and the
standards of Accreditation Organizations.


 


4.1.4        Member Rights and Responsibilities. 
PacifiCare shall inform Members of their rights and responsibilities
under each Managed Care Plan, provide Members with membership cards and member
handbooks, distribute periodic communications to Members, process Member
complaints and grievances and respond to inquiries and requests from Members
regarding Managed Care Plans (collectively “Member Services”).


 


4.1.5        Preventive Health Services. 
PacifiCare shall develop preventive health guidelines for the prevention
and early detection of illness and disease (“Preventive Health Guidelines”) and
shall encourage Members to use preventive health services.  The Preventive Health Guidelines shall be
maintained in accordance with the standards of Accreditation Organizations and
shall be distributed to Participating Providers.  Medical Group and its Participating Providers shall provide
preventive health services required pursuant to the applicable Subscriber
Agreements to Medical Group Members in accordance with the Preventive Health
Guidelines.


 


4.1.6        Medical Record Review. 
PacifiCare shall on an ongoing basis review medical records maintained
by Medical Group and its Participating Providers to assess compliance with the
requirements of State and Federal Law and the standards of Accreditation
Organizations.  Medical Group and its
Participating Providers shall maintain medical records in accordance with the
provisions of this Agreement regarding medical records and in accordance with
PacifiCare’s guidelines regarding medical records.


 


4.1.7        Claims Processing. 
PacifiCare shall establish and maintain standards, policies and
procedures for the timely and accurate processing and payment of claims for
Covered Services provided to Members (“Claims Processing Guidelines”).  The Claims Processing Guidelines shall be
maintained in accordance with the requirements of State and Federal Law and the
Managed Care Plans.


 


4.1.8        Policies and Procedures.  For
Managed Care Program Services not delegated to Medical Group, Medical Group
agrees to abide by PacifiCare’s policies and procedures pertaining to the
administration of such services.  The
applicable policies and procedures may include, but not be limited to, policies
and procedures pertaining to PacifiCare’s Utilization Management Program,
Credentialing Program, and Claims Processing Guidelines.  Such policies and


 

















 


procedures
will outline the non-delegated requirements for claims submission, subcontract
rate information, utilization management, and credentialing.


 


4.2           Delegation of Managed Care Activities.


 


4.2.1        Delegation Audits and Determinations. 
PacifiCare may, in its discretion, delegate utilization management,
credentialing, medical records review, claims processing, and/or other
activities consistent with regulatory and accrediting standards to Medical
Group.  Such delegation may occur at any
time during the term of this Agreement if PacifiCare determines the Medical
Group is capable of performing such activities and if Medical Group consents in
writing to such delegation.  Medical
Group’s consent and written agreement may be evidenced by this Agreement,
amendments to this Agreement, or a separate delegation agreement between PacifiCare
and Medical Group.


 


Managed
Care Program Services which are delegated to Medical Group shall be specified
in Exhibit 2 to this Agreement (collectively, the “Delegated Activities”).  Exhibit 2 may be amended from time to time
during the term of this Agreement by PacifiCare to reflect changes in
delegation standards; delegation status; performance measures; reporting
requirements; and other provisions of Exhibit 2.  Any and all changes to Exhibit 2 shall not be deemed a material
amendment to this Agreement, but shall, to the extent provided at Section 5.2
of this Agreement result in an automatic adjustment to Medical Group’s
Capitation Payment.


 


4.2.2        Medical Group’s Responsibility for Delegated
Activities.  Medical Group shall be responsible for the performance
of all Delegated Activities, as specified in Exhibit 2.  Medical Group shall have no right to modify
Exhibit 2 or Medical Group’s obligations to perform Delegated Activities
without PacifiCare’s prior written consent.


 


4.2.3        PacifiCare Policies.  For
all Delegated Activities, PacifiCare shall provide Medical Group with
PacifiCare’s standards and requirements applicable to the Delegated Activities,
as amended from time to time (the “PacifiCare Delegation Policies”) and shall
notify Medical Group of all substantive changes to the PacifiCare Delegation
Policies.  Medical Group may utilize its
own policies and procedures for the Delegated Activities, provided that such
policies and procedures are consistent with the PacifiCare Delegation Policies
and are provided to PacifiCare for its review and approval.  If Medical Group’s policies and procedures
are inconsistent with the PacifiCare Delegation Policies, the PacifiCare
Delegation Policies shall apply.


 

















 


4.2.4        Sub-Delegation. 
Medical Group shall not further  delegate
the performance of Delegated Activities to any of its Participating Providers
or any other organization or entity without the prior written consent of
PacifiCare.


 


4.2.5        Maintenance of Information and Records. 
Medical Group shall maintain all information and records reviewed or
created in connection with performing the Delegated Activities in a form
acceptable to PacifiCare, provide PacifiCare with access to such information
and records, and permit PacifiCare to review and copy such information and
records.


 


4.2.6        Reporting Obligations. 
Medical Group shall provide PacifiCare with periodic written reports
regarding all Delegated Activities in the formats specified by PacifiCare for
each of the Delegated Activities. 
Medical Group’s arrangements with its Participating Providers shall
provide that Medical Group may disclose to PacifiCare its Participating
Provider credentialing files.


 


4.2.7        Monitoring/Audits. 
PacifiCare shall oversee Medical Group’s performance of Delegated
Activities through review of periodic written reports provided by Medical Group
as described above and meetings with appropriate Medical Group representatives
and on-site audits and assessments of Medical Group.  Medical Group shall cooperate, participate and comply with
PacifiCare in such monitoring and oversight activities.  Such audits and assessments will be
performed in accordance with the requirements of State and Federal Law and the
standards of Accreditation Organizations, PacifiCare’s Delegation Policies and
the terms of this Agreement.


 


4.2.8        Insurance.  Medical Group shall comply
with the insurance provisions of this Agreement relating to managed care errors
and omissions insurance.


 


4.3           Payment for Delegated Activities. 
PacifiCare’s payment for Delegated Activities is specified in Section
5.2 of this Agreement.


 


4.4           Revocation and Resumption of Delegated
Activities.


 


4.4.1        PacifiCare’s Right to Revoke Delegated
Activities.  PacifiCare may, in its sole discretion,
revoke any or all Delegated Activities at any time if PacifiCare determines
that such Delegated Activities are not being performed in accordance with the
standards and requirements established by PacifiCare or if Medical Group’s
performance of Delegated Activities is inconsistent with, or in violation of,
State and Federal Law or the standards of any Accreditation Organization.


 

















 


4.4.2        Revocation Notices.


 


(a)           Deficiencies Capable of Cure.  For
deficiencies in Medical Group’s performance of Delegated Activities, which
PacifiCare determines are capable of being cured, PacifiCare shall provide
Medical Group with reasonable prior written notice of not less than thirty (30)
days specifying the Delegated Activities which PacifiCare intends to revoke
(the “revocation notice”).  PacifiCare
shall specify in its revocation notice the corrective actions to be taken by
Medical Group to continue performance of Delegated Activities and the
timeframes within which such corrective actions must be completed (the “cure
period”).  Promptly following the cure
period, PacifiCare shall advise the Medical Group, in writing, whether
PacifiCare will proceed with revocation of the Delegated Activities.


 


(b)           Deficiencies Not Capable of Cure.  For
deficiencies which PacifiCare determines are not capable of being cured,
including but not limited to PacifiCare’s determination that Medical Group’s
continued performance of Delegated Activities presents a risk of imminent harm
to PacifiCare Members or would be contrary to the requirements of any
Government Agency, State or Federal Law or Accreditation Standard, PacifiCare
shall provide Medical Group with written notice that the Delegated Activities
shall be revoked by the effective date of revocation.


 


(c)           Contents of Notices.  The
written notices from PacifiCare to Medical Group under this Section shall,
where applicable, specify (i) the adjustments to Capitation Payments as a
result of the revocation of any Delegated Activities in accordance with the
allocations set forth in Section 5.2  of
this Agreement, (ii) in the event that claims processing is revoked, the
adjustments to Capitation Payments for claims payment as set forth in Section
5.3 of this Agreement, and (iii) any and all changes to Exhibit 2 resulting
from revocation.


 


4.4.3        Continued Cooperation Following Revocation. 
Upon revocation of any of the Delegated Activities, or any portion
thereof, PacifiCare will resume responsibility for performing such activities,
and Medical Group and its Participating Providers shall continue to cooperate
with PacifiCare with respect to the performance of Managed Care Services.


 


4.4.4        Revocation Not Exclusive Remedy. 
Notwithstanding PacifiCare’s right to revoke the Delegated Activities,
Medical Group’s failure to


 

















 


perform
the Delegated Activities shall be a breach of the Agreement.  In such event, PacifiCare may exercise all
of its other rights and remedies to enforce the Agreement, including the right
of termination.


 


4.4.5        Resumption of Delegated Activities. 
Following the revocation of Delegated Activities by PacifiCare, any
resumption by Medical Group of responsibility for Delegated Activities shall be
pursuant to the provisions of Section 4.2.1, above.


 


ARTICLE 5

COMPENSATION


 


5.1           Capitation Payments. 
PacifiCare shall make monthly Capitation Payments to Medical Group as
payment for providing and arranging Covered Services to Medical Group Members
for each Managed Care Plan, as specified in this Agreement and the applicable
Product Attachment.


 


5.1.1        Due Date.  Each Capitation Payment shall
be due and payable on the tenth (10th) day of the month for the current month’s
Covered Services.  In the event the
tenth (10th) day of the month is not a business day, the Capitation Payment
shall be due and payable on the next business day following the tenth (10th)
day of the month.


 


5.1.2        Documentation. 
PacifiCare shall provide Medical Group with documentation, as specified
in the Provider Manual, in support of each Capitation Payment.


 


5.1.3        Retroactive Adjustments. 
Capitation Payments shall be subject to retroactive adjustments either
upward or downward due to retroactive changes in the Premium for each Managed
Care Plan as specified in the applicable Product Attachment and retroactive
changes in the number of Medical Group Members for each Managed Care Plan.  Retroactive adjustments to Capitation
Payments for Medical Group Members enrolled in Managed Care Plans which are
government funded (including, without limitation, Medicare, Medicaid, public
employees) shall be made within ninety (90) days after the adjustment is
determined.  Retroactive adjustments to
Capitation Payments for Medical Group Members enrolled in Managed Care Plans
which are not government funded shall be made within one hundred eighty (180)
days after the end of the month for which the Capitation Payment applies.


 


5.2           Payment for Performance of Delegated
Activities.  PacifiCare’s payment for performance of the
Delegated Activities by Medical Group is included in Capitation Payments made
to Medical Group.  The Capitation
Payment rates set forth in each Product Attachment assume that the Medical
Group is fully


 

















 


delegated
to perform Managed Care Program Services. 
Accordingly, for each month in which any Delegated Activity is not
delegated or has been revoked by PacifiCare as provided at Article 4, the
Medical Group’s Capitation Payment shall be reduced by the following
percentages:


 


	
  Activity Not Delegated

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Utilization
  Management

  	
   

  	
  4

  	
  %

  
	
  Credentialing

  	
   

  	
  0.5

  	
  %

  
	
  Claims Processing

  	
   

  	
  3

  	
  %

  



 


If
only a portion of a specific Delegated Activity is delegated or revoked, PacifiCare
shall have the right to adjust percentages set forth above to reflect the
portion of the specific Delegated Activity performed by Medical Group.  PacifiCare may modify the payment for
Delegated Activities effective at the beginning of any calendar year by
providing Medical Group with sixty (60) days’ prior written notice.


 


5.3           Withhold to Pay Claims.  If
PacifiCare does not delegate performance of claims processing to Medical Group
or if the delegation of claims processing is revoked by PacifiCare, PacifiCare
shall deduct from Medical Group’s monthly Capitation Payments an amount
reasonably estimated by PacifiCare to be necessary for PacifiCare to process
and pay claims for Medical Group Services which are not provided directly by
Medical Group and its employed Participating Providers.  Initially, this amount shall be three
percent (3%) of Medical Group’s monthly Capitation Payment.  This amount may be increased or decreased each
month to more accurately reflect Medical Group’s actual and expected claims
experience and any changes in Covered Services which are provided or arranged
by Medical Group and its Participating Providers, with adjustments for claims
incurred but not received.


 


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
Withhold.  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 shall initially be one dollar ($1.00) per
Member per month for the PacifiCare Commercial Health Plan and five percent
(5%) for the Secure Horizons Health Plan. 
PacifiCare, in its sole discretion, shall prospectively adjust the
withhold based on Medical Group’s experience under the combined


 

















 


incentive
programs at the time of the program settlements described below.


 


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
seventy-five percent (75%) 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.


 


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.


 


5.5           Stop-Loss Program(s)


 


5.5.1        Individual Stop-Loss Program. 
PacifiCare shall provide Individual Stop-Loss (“ISL”) protection in
order to limit Medical Group’s financial risk for Medical Group Services (“ISL
Program”).  The ISL Program is designed
to limit Medical Group’s financial responsibility for Medical Group Services to
a specified dollar amount per Medical Group Member per calendar year (“ISL
Deductible”), while encouraging Medical Group’s continuing involvement with
Medical Group Member’s care by sharing a portion of the financial
responsibility for Medical Group Services which exceed the ISL Deductible (“ISL
Coinsurance”).  PacifiCare shall charge
a premium (“ISL Premium”) as consideration for the ISL Program.  The ISL Deductible, ISL Coinsurance and ISL
Premium for Medical Group are specified in each Product Attachment.  Notwithstanding any other provision of this
Agreement, PacifiCare may amend the ISL Deductible, ISL Coinsurance and ISL
Premium on an annual basis effective at the beginning of any calendar year by
providing sixty (60) calendar days prior written notice to Medical Group.  For Medical Group Services which exceed the
ISL Deductible, PacifiCare will pay Cost of Care, less the Medical Group’s ISL
Coinsurance amount,


 

















 


subject
to the Medical Group’s compliance with the procedures set forth in the Provider
Manual and the provisions of this Section set forth below.


 


5.5.2        Reinsurance Program. 
PacifiCare shall provide reinsurance protection (“Reinsurance Program”)
in order to limit Medical Group’s financial risk for Hospital Services under
the Commercial Hospital Incentive Program and Secure Horizons Hospital
Incentive Program (the “Hospital Incentive Programs”), when administered by
PacifiCare, and to limit POS Out-of-Network risk under the Commercial POS
Control Program, to a specified dollar amount per Medical Group Member per calendar
year (the “Reinsurance Deductible”), while encouraging Medical Group’s
continuing involvement with Medical Group Member’s care by sharing a portion of
the financial responsibility for Hospital Services which exceed the Reinsurance
Deductible (“Reinsurance Coinsurance”). 
The Reinsurance Deductible and Reinsurance Coinsurance for Medical Group
are specified in each Product Attachment. 
Notwithstanding any other provision of this Agreement, PacifiCare may
amend the Reinsurance Deductible and Reinsurance Coinsurance on an annual basis
effective at the beginning of any calendar year by providing sixty (60)
calendar days’ prior written notice to Medical Group.  For Hospital Services which exceed the Reinsurance Deductible,
the Reinsurance Coinsurance shall be based on the Reinsurance Program as
defined in the applicable Product Attachment, subject to the Medical Group’s
compliance with the procedures set forth in the Provider Manual and the
provisions set forth below.


 


5.5.3        Submission of Claims. 
Medical Group shall submit all claims under the ISL Program and
Reinsurance Program in accordance with the procedures set forth in the Provider
Manual.  PacifiCare shall pay claims
under the ISL Program and Reinsurance Program only if such claims are submitted
within one (1) year following the date the claim is incurred.


 


5.5.4        Notification of Claims. 
Medical Group shall provide written notification to PacifiCare when Medical Group Services or Hospital
Services for any Medical Group Member(s) equal fifty percent (50%) of the ISL
Deductible or fifty percent (50%) of the Reinsurance Deductible,
respectively.  Such written notification
shall be provided to PacifiCare no later than the fifteenth (15th) day of the
month following the month in which such threshold is reached.  Medical Group acknowledges and agrees that
if Medical Group fails to provide the written notice required by this Section
within the time frame specified in this Section, Medical Group shall be
financially responsible for ten percent (10%) of all Medical Group Services or
ten percent (10%) of all Hospital Services provided to the Medical Group


 

















 


 


Member(s)
in excess of the ISL Deductible or Reinsurance Deductible, as applicable, which
amount shall be in addition to the ISL Coinsurance or Reinsurance Coinsurance,
as applicable.


 


5.5.5                        Opt Out from ISL and/or Reinsurance Program. 
Subject to PacifiCare’s approval, Medical Group may elect to opt out of
the ISL Program or Reinsurance Program, effective upon the Commencement Date or
at the beginning of any calendar year. 
In such event, Medical Group shall be required to obtain ISL/reinsurance
coverage from a third-party insurance carrier acceptable to PacifiCare and in
the amounts required by PacifiCare and State and Federal Law.  In order to opt out of PacifiCare’s ISL
Program or Reinsurance Program, Medical Group must provide written notice to
PacifiCare at least thirty (30) days prior to the beginning of the calendar
year.  Such notice shall specify the
name of the third-party insurance carrier, and proposed effective date,
coverage levels and charges.  If
PacifiCare does not object to such coverage in writing within fifteen (15) days
of the date of the notice from Medical Group. 
Medical Group shall be required to purchase such coverage as of the
effective date specified in the notice.


 


Medical
Group shall provide PacifiCare with a certificate of insurance evidencing the
stop-loss coverage as described in the Medical Group’s notice within ten (10)
days following the effective date of such insurance.  The certificate of insurance shall provide that PacifiCare
receive thirty (30) days’ prior written notice of cancellation or material
reduction in Medical Group’s ISL/reinsurance coverage.  If the Medical Group does not purchase
coverage acceptable to PacifiCare or provide PacifiCare with evidence of the
ISL/reinsurance coverage as described herein, PacifiCare shall have the right
to provide the ISL/reinsurance protection at the deductible level determined by
PacifiCare to be appropriate for the Medical Group and shall deduct the
applicable ISL Premium from Medical Group’s Capitation Payments, or deduct the
applicable Reinsurance Premium from the Incentive Program Budget, as described
in the applicable Product Attachment. 
If PacifiCare approves Medical Group’s opt out of the Reinsurance
Program, PacifiCare will not be obligated to support the administration of a
third-party reinsurance program.


 


5.6                                 Payments Following Termination of this
Agreement.  Following termination of this Agreement,
PacifiCare shall make Capitation Payments to Medical Group as compensation for
providing and arranging Covered Services to remaining Medical Group Members
until such Members are assigned to other PacifiCare Participating
Providers.  For Members who are assigned
to other PacifiCare Participating Providers but who will continue to receive
certain ongoing services from Medical Group Participating Providers in
accordance with the provisions of Section 8.3 of this Agreement, Medical Group
shall be paid for such services at the Cost of Care or as otherwise agreed in
writing by Medical Group.


 

















 


 


 


5.7                                 Cost of Care. 
Certain provisions of this Agreement require that Medical Group provide
or arrange health care services which are not covered by Capitation Payments at
Cost of Care and certain provisions of this Agreement require that Covered
Services be valued at Cost of Care.  For
purposes of this Agreement, “Cost of Care” shall be calculated using the lesser
of billed charges or in accordance with the PacifiCare Fee Schedule.  The PacifiCare Fee Schedule shall be based
upon the following: (i) for professional services that are included under the
Medicare RBRVS Fee Schedule, reimbursement shall be one hundred percent (100%)
of Medicare’s geographically adjusted fee schedule according to the Medicare
payment locality the provider resides in; (ii) for all other health care
services (other than inpatient and outpatient Hospital Services) that are not
included in RBRVS but included in a Medicare Fee Schedule, reimbursement shall
be one hundred percent (100%) of the Medicare rate for the current period as
released by HCFA by December of the preceding year; (iii) for inpatient and
outpatient Hospital Services, the Cost of Care shall be the actual amounts paid
by PacifiCare; (iv) for any other Covered Services that do not fall within any
of the above specified categories, (other than inpatient and outpatient
Hospital Services), reimbursement shall be the lesser of fifty percent (50%) of
billed charges or amount determined under PacifiCare’s Fee Schedule.


 


5.8                                 Collection
of Copayments.  Medical Group and
its Participating Providers shall be
responsible for the collection of Copayments upon rendering Medical Group
Services to Medical Group Members in accordance with the applicable Subscriber
Agreement.  Any Copayments which are
stated as a percentage shall be calculated using the Cost of Care for such
Medical Group Services.


 


5.9                                 Collection of Charges from Third Parties.  If
a Member is entitled to payment from a third party (excluding a workers’ compensation
carrier or primary insurance carrier under applicable coordination of benefits
rules), PacifiCare hereby assigns to Medical Group for collection, any claims
or demands against such third parties for amounts due for Medical Group
Services, subject to the following conditions: (i) To the extent liens are
utilized, Medical Group shall utilize lien forms which are provided by
PacifiCare or approved in advance by PacifiCare; (ii) Medical Group shall
notify PacifiCare each time it pursues and each time it obtains a signed lien
from a Member; (iii) Medical Group shall not commence any legal action as it
relates to this Agreement against a third party without obtaining the prior
written consent of PacifiCare; and (iv) PacifiCare may immediately rescind the assignment
of any or all claims and demands against third parties by providing written
notice of rescission to Medical Group.


 


If
Medical Group obtains ISL coverage from PacifiCare, the following shall also
apply:


 

















 


(i)                                     Medical
Group shall make no demand upon PacifiCare for reimbursement under the ISL Program until all third-party claims have
been pursued and it is determined that full payment cannot be obtained within
twelve (12) months from the date of the provision of Medical Group Services;
and


 


(ii)                                  In the event Medical Group receives payment
from a third party after receipt of an ISL payment from PacifiCare, Medical
Group shall reimburse PacifiCare to the extent that the combined amounts
received from all parties exceeds one hundred percent (100%) of Medical Group’s
usual and customary fee-for-service rates.


 


5.10                           Coordination of Benefits. 
Medical Group shall cooperate with and support, as mutually agreed upon
by the parties, PacifiCare’s coordination of benefits rights.


 


5.10.1                  Plan Is Primary.  If
a Medical Group Member possesses health benefits coverage through another
policy which is secondary to PacifiCare under applicable coordination of
benefits rules, including the Medicare secondary payor program, Medical Group
shall accept payment from PacifiCare for Covered Services as provided herein as
full payment for such Covered Services, except for applicable Copayments.  Medical Group Member shall have no
obligation for any fees, regardless of whether secondary insurance is
available.


 


5.10.2                  Plan is Secondary.  If
a Medical Group Member possesses health benefits coverage through another
policy which is primary to PacifiCare under applicable coordination of benefits
rules, including the Medicare secondary payor program, or if Medical Group
Member is entitled to payment under a workers’ compensation policy or
automobile insurance policy, Medical Group may pursue payment from the primary
payor or workers, compensation carrier consistent with applicable law and
regulations and Medical Group’s contract, if any, with the primary payor.  In such event, PacifiCare’s responsibility
shall equal the amount of out-of-pocket expenses (i.e., Copayments,
coinsurance, and deductibles) that Medical Group Member would incur in the
absence of PacifiCare’s secondary coverage, minus the ISL Deductible and ISL
Coinsurance.


 


5.11                           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.  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.


 


5.12                           Adequacy of Compensation. 
Medical Group agrees to accept payment as provided herein as payment in
full for providing and arranging the Covered Services required under this Agreement,
whether that amount is paid in whole or in part by Member, PacifiCare or any
Subscriber, including other health care plans that pay before PacifiCare as
required by applicable State or Federal coordination of benefits provisions.  This Section does not prohibit Medical Group
from collecting applicable Copayments, coinsurance or deductibles consistent
with the Managed Care Plans.


 


5.13                           Character of Payments from PacifiCare. 
Capitation Payments to Medical Group pursuant to this Agreement are for
the primary purpose of compensating Medical Group for the value of Medical
Group Services provided pursuant to this Agreement.  Medical Group shall assure that claims and compensation for
Medical Group Services provided or arranged pursuant to this Agreement are paid
from the Capitation Payments from PacifiCare and from other funds available to
Medical Group as may be necessary for Medical Group to satisfy its financial
obligations under this Agreement. 
Medical Group specifically agrees that PacifiCare may exercise its
recoupment rights as set forth above in the event Medical Group fails to comply
with the foregoing.


 


ARTICLE 6

TERM AND TERMINATION


 


6.1                                 Term.  The term of this Agreement
shall commence on February 1, 2001 (the “Commencement Date”) and end on December
31, 2001.  Thereafter, the term of this
Agreement shall be automatically extended for one (1) year on each January 1
(“Anniversary Dale”), unless either party provides the other with written
notice of such party’s intention not to extend the term at least one hundred
eighty (180) calendar days prior to the Anniversary Date or until this


 

















 


Agreement
is appropriately terminated by either party as provided herein.


 


6.2                                 Termination of Agreement with Cause. 
Either PacifiCare or Medical Group may terminate this Agreement for
cause as set forth below, subject to the notice requirement and cure period set
forth below.


 


6.2.1                        Cause for Termination of Agreement by Medical
Group.  The following shall constitute cause for
termination of this Agreement by Medical Group:


 


(i)                                     Non-Payment.  Failure by PacifiCare to pay
Capitation Payments due Medical Group hereunder within thirty (20)  days of the Capitation Payment due date
or failure by PacifiCare to make any other payments due Medical Group hereunder
within forty-five (20) days of any such payment’s due date.


 


(ii)                                  Breach of Material Term and Failure to Cure. 
PacifiCare’s breach of any material term, covenant, or condition and
subsequent failure to cure such breach as provided below.


 


6.2.2                        Cause for Termination of Agreement by
PacifiCare.  The following shall constitute cause for
termination of this Agreement by PacifiCare:


 


(i)                                     Financial Failure of Medical Group. Insolvency of Medical Group, Medical Group
shall have the opportunity to dispute such determination by PacifiCare by
providing reasonable evidence and assurances of financial stability and
capacity to perform under this Agreement within fifteen (15) days of
PacifiCare’s determination.


 


(ii)                                  Failure to Provide Quality Services. 
Medical Group’s failure to arrange or provide Covered Services in
accordance with the standards set forth in this Agreement and PacifiCare’s QI
Program and UM Program.  Notwithstanding
the foregoing, PacifiCare reserves the right to immediately withdraw from
Medical Group or any of its Participating Providers any or all Members in the
event the health or safety of Members is endangered by the actions of Medical
Group or any of its Participating Providers or as a result of continuation of
this Agreement.


 


(iii)                               Change in Medicare Status. 
Such time as Medical Group files an affidavit with the Medicare Program
promising to furnish Medicare covered services to Medicare beneficiaries only
through private contracts under Section 1802 (b) of the Social Security Act.


 

















 


(iv)                              Breach of Material Term and Failure to Cure. 
Medical Group’s breach of any material term, covenant or condition of
this Agreement and subsequent failure to cure such breach as provided below.


 


6.2.3                        Notice of Termination and Effective Date of
Termination.  The party asserting cause for termination of
this Agreement (the “terminating party”) shall provide written notice of
termination to the other party.  The
notice of termination shall specify the breach or deficiency underlying the
cause for termination.  The party receiving
the written notice of termination shall have thirty (30) calendar days from the
receipt of such notice to cure the breach or deficiency to the satisfaction of
the terminating party (the “Cure Period”). 
If such party fails to cure the breach or deficiency to the satisfaction
of the terminating party within the Cure Period or if the breach or deficiency
is not curable, the terminating party shall provide written notice of failure
to cure the breach or deficiency to the other party following expiration of the
Cure Period. This Agreement shall terminate upon receipt of the written notice
of failure to cure or at such other date as may be specified in such
notice.  During the Cure Period,
PacifiCare may cease marketing efforts for Medical Group, discontinue
enrollment of Members with Medical Group and begin transferring Medical Group
Members to other PacifiCare Participating Providers.


 


6.3                                 Automatic Termination Upon Revocation of
License or Certificate.  This Agreement shall automatically terminate
upon the revocation, suspension or restriction of any license, certificate or
other authority required to be maintained by Medical Group or PacifiCare in
order to perform the services required under this Agreement or upon the Medical
Group’s or PacifiCare’s failure to obtain such license, certificate or
authority.


 


6.4                                 Termination for Transfer to a Successor
Entity.  As set forth in Section 7.11, PacifiCare
shall have the right to terminate this Agreement on ninety (90) days’ prior
written notice to Medical Group if PacifiCare reasonably determines that any
successor entity or management company, as defined in Section 7.11, cannot
satisfactorily perform the obligations of Medical Group under this Agreement or
that PacifiCare prefers not to do business with the successor entity or
management company.


 


6.5                                 Transfer of Medical Records. 
Following termination of this Agreement, at PacifiCare’s request,
Medical Group and its Participating Providers shall copy all requested Medical
Group Member patient medical files in the possession of Medical Group or its
Participating Providers and forward such files to another provider of Covered
Services designated by PacifiCare, provided such copying and forwarding is not
otherwise objected to by such Members. 
The


 

















 


copies
of such medical files may be in summary form. 
The cost of copying the patient medical files shall be borne by Medical
Group.  Medical Group shall cooperate
with PacifiCare in maintaining the confidentiality of such Member medical
records at all times.


 


6.6                                 Repayment Upon Termination. 
Within one hundred eighty (180) calendar days of the effective date of
termination of this Agreement, an accounting shall be made by PacifiCare of the
monies due and owing either party and payment shall be forthcoming by the appropriate
party to settle such balance within thirty (30) calendar days of such
accounting.  Either party may request an
independent audit of such PacifiCare accounting by a mutually acceptable
independent certified public accountant and such audit shall be equally paid
for by both parties.  The parties agree
to abide by the findings of such independent audit.  Appropriate payment, if any, by the appropriate party shall be
made within thirty (30) calendar days of such independent audit.


 


6.7                                 Termination Not an Exclusive Remedy. Any termination by either party pursuant to
this Article is not meant as an exclusive remedy and such terminating party may
seek whatever action in law or equity as may be necessary to enforce its rights
under this Agreement.


 


ARTICLE 7

GENERAL PROVISIONS


 


7.1                                 Independent Contractor Relationship.  The
relationship between PacifiCare and Medical Group is an independent contractor
relationship.  Neither Medical Group nor
its Participating Providers, employees or agents are employees or agents of
PacifiCare and neither PacifiCare nor its employees or agents are members,
partners, employees or agents of Medical Group.  None of the provisions of this Agreement shall be construed to
create a relationship of agency, representation, joint venture, ownership,
control or employment between the parties other than that of independent
parties contracting solely for the purpose of effectuating this Agreement.  Nothing contained in this Agreement shall
cause either party to be liable or responsible for any debt, liability or
obligation of the other party or any third party unless such liability or
responsibility is expressly assumed by the party sought to be charged
therewith.


 


7.2                                 Responsibility For Own Acts. 
Each party shall be responsible for its own acts or omissions and for
any and all claims, liabilities, injuries, suits, demands and expenses of all
kinds which may result or arise out of any alleged malfeasance or neglect
caused or alleged to have been caused by that party or its employees or representatives
in the performance or omission of any act or responsibility of that party under
this Agreement.


 


7.3                                 Member Appeals and Grievances. 
PacifiCare shall be responsible for


 

















 


resolving
Member claims for benefits under the Managed Care Plans and all other claims
against PacifiCare.  PacifiCare shall
resolve such claims utilizing the Member Appeals and Grievance Procedures set
forth in the Subscriber Agreement and the Provider Manual.  Medical Group shall assist PacifiCare in the
handling of Member complaints, grievances and appeals, consistent with the
Member Appeals and Grievance Procedures. 
In the event an oral or written complaint, grievance or appeal is
presented to Medical Group or any of its Participating Providers relating to
benefits or coverage under a Managed Care Plan, Medical Group or its
Participating Providers will immediately refer Members to contact PacifiCare or
deliver any written complaint, grievance or appeal to PacifiCare for handling
pursuant to the Member Appeals and Grievance Procedures.  Medical Group and its Participating
Providers shall comply with all final determinations made by PacifiCare through
the Member Appeals and Grievance Procedures. 
Member claims against Medical Group or its Participating Providers,
other than claims for benefits under the Managed Care Plans, are not subject to
the Member Appeals and Grievance Procedures and are not governed by this
Agreement.


 


7.4                                 Disputes Between Medical Group or its
Participating Providers and Member.  Any controversies or claims
between Medical Group or its Participating Providers and a Member arising out
of the performance of this Agreement by Medical Group or the Medical Group’s
Participating Provider, other than claims for benefits under Managed Care
Plans, are not governed by this Agreement. Medical Group or its Participating
Provider and the Member may seek any appropriate legal action to resolve such
controversy or claim deemed necessary.


 


7.5                                 Disputes Between PacifiCare and Medical Group


 


7.5.1                        Dispute Resolution Procedure. 
PacifiCare has established a Provider Dispute Resolution Procedure, set
forth in the Provider Manual, to provide a mechanism by which PacifiCare’s
Participating Providers, including Medical Group and any of its Participating
Providers, may submit to PacifiCare certain disputes arising out of the
performance of this Agreement or relating to the decisions made by PacifiCare
under this Agreement for resolution on an informal basis.  Any dispute submitted pursuant to the
Provider Dispute Resolution Procedure should be addressed to the appropriate
PacifiCare person(s) or department(s) at the address and/or telephone number
identified in the Provider Manual.  Any
provider dispute which is not resolved informally through the Provider Dispute
Resolution Procedure may be submitted for arbitration as provided in Section
7.5.2 below.


 


7.5.2                        Arbitration.  Any controversy, dispute or
claim arising out of the interpretation, performance or breach of this
Agreement which is not resolved pursuant to the Provider Dispute Resolution
Procedure


 

















 


specified
above shall be resolved by binding arbitration at the request of either party,
in accordance with the Commercial Rules of the American Arbitration
Association.  Such arbitration shall
occur in Los Angeles, California, unless the parties mutually agree to have
such proceeding in some other locale. 
The arbitrators shall apply California substantive law and Federal
substantive law where State law is preempted. 
Civil discovery for use in such arbitration may be conducted in accordance
with the provisions of California law, and the arbitrator(s) selected shall
have the power to enforce the rights, remedies, duties, liabilities and
obligations of discovery by the imposition of the same terms, conditions and
penalties as can be imposed in like circumstances in a civil action by a court
of competent jurisdiction of the State of California.  The provisions of California law concerning the right to
discovery and the use of depositions in arbitration are incorporated herein by
reference and made applicable to this Agreement.


 


The
arbitrators shall have the power to grant all legal and equitable remedies and
award compensatory damages provided by California law, except that punitive
damages shall not be awarded.  The
arbitrators shall prepare in writing and provide to the parties an award
including factual findings and the legal reasons on which the award is
based.  The arbitrators shall not have
the power to commit errors of law or legal reasoning.


 


Notwithstanding
the above, in the event either Medical Group or PacifiCare wishes to obtain
injunctive relief or a temporary restraining order, such party may initiate an
action for such relief in a court of general jurisdiction in the State of
California.  The decision of the court
with respect to the requested injunctive relief or temporary restraining order
shall be subject to appeal only as allowed under California law.  However, the courts shall not have the
authority to review or grant any request or demand for damages.


 


7.6                                 Notice.  All notices required or
permitted by this Agreement shall be in writing and may be delivered in person
or may be sent by registered or certified mail or U.S.  Postal Service Express Mail, with postage
prepaid, or by Federal Express or other overnight courier that guarantees next
day delivery, or by facsimile transmission, and shall be deemed sufficiently
given if served in the manner specified in this Section.  The addresses below shall be the particular
party’s address for delivery or mailing of notice purposes:


 


If
to PacifiCare:


 


PacifiCare
of California


10833
Valley View Street


 

















 


Cypress, California 90630


Attention: President


 


If to Medical Group:


 


Gateway Physicians
Medical Associates, Inc.

710 N. Euclid Street

Anaheim, California 92801

Attention: CEO


 


The parties may change
the names and addresses noted above through written notice in compliance with
this Section.  Any notice sent by
registered or certified mail, return receipt requested, shall be deemed given
on the date of delivery shown on the receipt card, or if no delivery date is
shown, the postmark date.  Notices
delivered by U.S.  Postal Service
Express mail, Federal Express or overnight courier that guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the notice
to the United States Postal Service, Federal Express or overnight courier.  If any notice is transmitted by facsimile
transmission or similar means, the notice shall be deemed served or delivered
upon telephone confirmation of receipt of the transmission, provided a copy is
also delivered via delivery or mail.


 


7.7                                 Assignment.  This Agreement and the
rights, interests and benefits hereunder shall not be assigned, transferred or
pledged in any way by Medical Group or PacifiCare and shall not be subject to
execution, attachment or similar process. 
However, PacifiCare may assign this Agreement and its rights, interests
and benefits hereunder to any entity which is a corporate affiliate of
PacifiCare, [ILLEGIBLE]


 


7.8                                 Amendments


 


7.8.1                        Amendments or Modifications to Agreement. 
Except as otherwise provided in this Section 7.8, all amendments or
modifications to this Agreement shall be effective only upon mutual written
agreement of the parties.


 


7.8.2                        Amendments to Provider Manual. 
PacifiCare may amend the Provider Manual by providing thirty (30)
calendar days’ prior written notice to Medical Group. Such amendments shall be
binding upon Medical Group at the end of the thirty (30) calendar-day
period.  Medical Group shall be bound by
such amendment unless (i) Medical Group provides PacifiCare with notice of
objection within the thirty (30) calendar-day notice period, (ii) such change
is not made in order to comply with a change in State or Federal Law, (iii)
such change is not


 

















 


made
in order to address a change in PacifiCare’s Managed Care Plans, (iv) such
change affects a material duty or responsibility of Medical Group, and (v) the
change has a  material adverse
economic effect upon Medical Group as reasonably demonstrated by Medical Group
to PacifiCare. In such event, Medical Group and PacifiCare shall seek to agree
to an amendment to this Agreement which satisfactorily addresses the effect on
Medical Group’s material duty or responsibility and reimburses the material
economic detriment caused to Medical Group. 
In such event, the amendment to the Provider Manual shall not be
effective until the parties amend the Agreement through a written amendment
signed by both parties.


 


7.8.3                        Amendments to Agreement to Comply with State
and Federal Law.  PacifiCare may amend this Agreement by
providing thirty (30) calendar days’ prior written notice to Medical Group in
order to maintain compliance with State and Federal Law.  Such amendment shall be binding upon Medical
Group at the end of the thirty (30) calendar-day period and shall not require
the consent of Medical Group.


 


7.8.4                        Amendments to Managed Care Plans. 
PacifiCare may amend or change any or all provisions of the Managed Care
Plans by providing thirty (30) calendar days’ prior written notice to Medical
Group. Such amendment shall be binding upon Medical Group at the end of the
thirty (30) calendar-day period and shall not require the consent of Medical
Group.


 


7.9                                 Confidential and Proprietary Information


 


7.9.1                        Information Confidential and Proprietary to PacifiCare. 
Medical Group and its Participating Providers shall maintain
confidential all information designated in this Section.  The information which Medical Group and its
Participating Providers shall maintain confidential (the “Confidential
Information”) consists of: (i) the Eligibility List and any other information
containing the names, addresses and telephone numbers of Members which has been
compiled by PacifiCare; (ii) lists or documents compiled by PacifiCare which
include the names, addresses and telephone numbers of employers, employees of
such employers responsible for health benefits and the officers and directors
of such employers; (iii) PacifiCare’s Provider Manual and any of PacifiCare’s
member, employer and administrative service manuals and all forms related
thereto; (iv) the financial arrangements between PacifiCare and any of
PacifiCare’s Participating Providers; (v) PacifiCare underwriting and rating
information and any other information utilized by PacifiCare for determining
eligibility or rates for the Managed Care Plans: and (vi)


 

















 


any
other information compiled or created by PacifiCare which is proprietary to
PacifiCare and which PacifiCare identifies in writing to Medical Group.


 


7.9.2                        Non-Disclosure of Confidential Information.  Medical Group and its Participating Providers shall not disclose
or use the Confidential Information for their own benefit or gain either during
the term of this Agreement or after the date of termination of this Agreement.  Medical Group and its Participating
Providers may use the Confidential Information to the extent necessary to
perform their duties under this Agreement or upon express prior written
permission of PacifiCare.  Upon the
effective date of termination of this Agreement, Medical Group and its
Participating Providers shall provide and return to PacifiCare the Confidential
Information in their possession in the manner specified by PacifiCare.


 


7.9.3                        Information Confidential and Proprietary to
Medical Group.  Medical Group shall provide PacifiCare with
a written description of all information proprietary to Medical Group which is
confidential or contains trade secrets of Medical Group (the “Medical Group
Information”).  PacifiCare shall
maintain and shall cooperate with Medical Group to maintain the confidentiality
of Medical Group Information. 
PacifiCare shall not disclose or use any Medical Group Information for
its own benefit either during the term of this Agreement or after the effective
date of termination of this Agreement. 
Upon termination of this Agreement, PacifiCare shall provide and return
to Medical Group all Medical Group Information in its possession in the manner
to be specified by Medical Group.


 


7.9.4                        PacifiCare Names, Logos and Service Marks. 
Medical Group shall obtain the written consent of PacifiCare prior to
using PacifiCare’s name, product names, logos and service marks in any of
Medical Group’s promotional, marketing or advertising materials or for any
other reason.


 


7.10                           Solicitation of PacifiCare Members or
Subscriber Groups.  Medical Group and its Participating
Providers shall not engage in the practice of solicitation of Members,
Subscribers and Subscriber Groups without PacifiCare’s prior written consent.  Solicitation shall mean conduct by an
officer, agent, employee of Medical Group or its Participating Providers or
their respective assignees or successors during the term of this Agreement and
continuing for a period of six (6) months after the effective date of
termination of this Agreement which may be reasonably interpreted as designed
to persuade Members, Subscribers or Subscriber Groups to disenroll from any
Managed Care Plan or discontinue their relationship with PacifiCare.  Notwithstanding any other provision of this
Agreement, Medical Group agrees that PacifiCare


 

















 


shall,
in addition to any other remedies provided for under this Agreement, have the
right to seek a judicial temporary restraining order, preliminary injunction,
or other equitable relief against Medical Group and its Participating Providers
to enforce its rights under this Section. 
Nothing in this Agreement shall be interpreted to discourage or prohibit
Medical Group and its Participating Providers from discussing a Member’s health
care including, without limitation, communications regarding treatment options,
alternative plans or other coverage arrangements, unless such communications
are for the primary purpose of securing financial gain.


 


7.11                           Notification and Approval of Sale or Change
in Management of Medical Group.
Medical Group agrees that it shall provide prior written notice to PacifiCare
of its intent to either (i) sell, transfer or convey its business or any
substantial portion of its business assets to another entity (“successor
entity”) or (ii) enter into a management contract with a physician practice
management company (“management company”) which does not manage Medical Group
as of the Commencement Date.  Medical
Group shall use its best efforts to provide PacifiCare with written notice of at
least one hundred twenty (120) days prior to Medical Group selling its business
or entering into such contract.  As set
forth in Section 6.4, PacifiCare shall have the right to terminate this
Agreement upon one hundred twenty (120) days’ written notice to Medical Group
if PacifiCare reasonably determines that any successor entity or any management
company cannot satisfactorily perform the obligations of Medical Group under
this Agreement or that PacifiCare prefers not to do business with the successor
entity or management company.  Medical
Group warrants and assures that this Agreement, if not otherwise terminated by
PacifiCare, will be assumed by all successor entities and that all successor
entities and management companies will be bound by the terms and conditions of
this Agreement.


 


7.12                           Confidentiality of this Agreement.  To
the extent reasonably possible, each party agrees to maintain this Agreement as
a confidential document and not to disclose the Agreement or any of its terms
without the approval of the other party.


 


7.13                           Invalidity of Sections of Agreement.  The
unenforceability or invalidity of any paragraph or subparagraph of any section
or subsection of this Agreement shall not affect the enforceability and
validity of the balance of this Agreement.


 


7.14                           Captions.  Captions in this Agreement
are descriptive only and do not affect the intent or interpretation of the
Agreement.


 


7.15                           Waiver of Breach.  The
waiver by either party to this Agreement of a breach or violation of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any subsequent breach or violation thereof.


 

















 


7.16                           Medical Group’s Authorized Representative. 
Unless otherwise indicated in writing to PacifiCare, Medical Group
warrants and authorizes its administrator to act as its fully authorized
representative to represent Medical Group in this Agreement and to receive any
and all communications and notices hereunder.


 


7.17                           No Third Party Beneficiaries. 
This Agreement shall not create any rights in any third parties who have
not entered into this Agreement, nor shall this Agreement entitle any such
third party to enforce any rights or obligations that may be possessed by such
third party.


 


7.18                           Entire Agreement. 
This Agreement, including all exhibits, attachments and amendments
hereto, contains all the terms and conditions agreed upon by the parties
regarding the subject matter of this Agreement. Any prior agreements, promises,
negotiations or representations of or between the parties, either oral or
written, relating to the subject matter of this Agreement, which are not
expressly set forth in this Agreement are null and void and of no further force
or effect.


 


7.19                           Applicable Federal Laws.  The
compensation payable to Medical Group pursuant to this Agreement consists of
federal funds; accordingly, Medical Group acknowledges that it will be required
to comply with certain laws applicable to entities and individuals receiving
federal funds.


 


7.20                           Incorporation of Exhibits, Attachments and
Provider Manual.  The exhibits and attachments to this Agreement
and the Provider Manual are an integral part of this Agreement and are
incorporated in full herein by this reference.


 


ARTICLE 8

GOVERNING LAW AND REGULATORY REQUIREMENTS


 


8.1                                 Governing Law. 
This Agreement and the rights and obligations of the parties hereunder
shall be construed, interpreted, and enforced in accordance with, and governed
by, the laws of the State of California and the United States of America,
including, without limitation, the Knox-Keene Health Care Service Plan Act of
1975, as amended, and the regulations adopted thereunder by the California
Department of Managed Health Care, the federal Health Maintenance Organization
Act of 1973, as amended, and the regulations adopted thereunder by the United
States Department of Health and Human Services.  Any provisions required to be in this Agreement by State and
Federal Law or by Government Agencies shall bind PacifiCare and Medical Group
whether or not expressly provided in this Agreement.


 


8.2                                 No Billing of Members (Member Hold Harmless
Provision).  With the exception of Copayments and charges
for non-Covered Services delivered on a fee-for-service basis to Members,
Medical Group and its Participating Providers shall in no event, including,
without limitation, non-payment by


 

















 


PacifiCare,
insolvency of PacifiCare, or breach of this Agreement, bill, charge, collect a
deposit from, seek compensation or remuneration or reimbursement from, or have
any recourse against any Member or any person (other than PacifiCare) acting on
behalf on any Member or attempt to do any of the foregoing for Covered Services
provided or arranged pursuant to this Agreement.


 


Medical
Group and its Participating Providers shall not maintain any action at law or
equity against a Member to collect sums owed by PacifiCare to Medical
Group.  Upon notice of any such action,
PacifiCare may terminate this Agreement as provided above and take all other
appropriate action consistent with the terms of this Agreement to eliminate
such charges, including, without limitation, requiring Medical Group and its
Participating Providers to return all sums collected as surcharges from Members
or their representatives.  For purposes
of this Agreement, “Surcharges” are additional fees for Covered Services which
are not disclosed to Members in the Subscriber Agreement and/or Evidence of
Coverage, are not allowable Copayments and are not authorized by this
Agreement.  Nothing in this Agreement
shall be construed to prevent Medical Group from providing non-Covered Services
on a usual and customary fee-for-service basis to Members.


 


Medical
Group and its Participating Providers’ obligations under this Section shall
survive the termination of this Agreement with respect to Covered Services
provided or arranged during or after the term of this Agreement, regardless of
the cause giving rise to such termination, and this Section shall be construed
to be for the benefit of Members.  This
Section supersedes any oral or written contrary agreement now existing or
hereafter entered into between Medical Group and any Member or a person acting
on behalf of any Member.


 


Any
modification, additions, or deletions to the provisions of this Section shall
be effective only following any required notice to HCFA or other applicable
Government Agency.


 


8.3                                 Continuing Care Obligations of Medical Group.


 


8.3.1                        General Obligations.  In
the event of termination of this Agreement for any reason, Medical Group and
its Participating Providers shall continue to provide or arrange Covered
Services to Members, including any Members who become eligible during the
termination notice period, beginning on the effective date of termination and
continuing until the later of (a) six (6) months following the effective date
of termination of this Agreement, (b) December 31 of the then current calendar
year, or (c) the expiration of the period in which Medical Group is obligated
to arrange or provide Covered Services in Special Circumstances as provided at
Section 8.3.3 below.


 

















 


Notwithstanding
the foregoing, with respect to Members for whom PacifiCare arranges for a
transfer to another PacifiCare Participating Provider and provides written
notice to Medical Group of such transfer, this Agreement shall  cease  to
apply for such Members, as of the effective date of such Member’s transfer.  In addition to the foregoing, Medical Group
and its Participating Providers will continue to provide or arrange Covered
Services to any Members who cannot be transferred within the time period
specified above in accordance with PacifiCare’s legal and contractual
obligations to (i) provide Covered Services under the Managed Care Plans and
Subscriber Agreement and/or Evidence of Coverage, (ii) provide notice of
termination to Members and (iii) ensure continuity of care for its Members.


 


8.3.2                        Obligations if PacifiCare Ceases Operating or
Termination of Agreement for Nonpayment.  Notwithstanding any other
provisions of this Agreement, Medical Group agrees that in the event PacifiCare
ceases operations for any reason, including insolvency, Medical Group and its
Participating Providers shall provide or arrange Covered Services and shall not
bill, charge, collect or receive any form of payment from any Member for
Covered Services provided after PacifiCare ceases operations.  Such obligation shall be for the period for
which Premium has been paid, but shall not exceed a period of thirty (30)
calendar days, except for those Members who are hospitalized on an inpatient
basis as provided below.


 


In
the event PacifiCare ceases operations or Medical Group terminates this
Agreement on the basis of PacifiCare’s failure to make timely Capitation
Payments, Medical Group and its Participating Providers shall continue to
provide or arrange for Covered Services to those Members who are hospitalized
on an inpatient basis at the time PacifiCare ceases operations or Medical Group
terminates this Agreement until such Members are discharged from the
hospital.  Practitioner shall not bill,
charge, collect or receive any form of payment from any Member for such Covered
Services.


 


8.3.3                        Obligations to Continue to Provide Covered
Services in Special Circumstances.


 


(a)                                  Definitions:  For the purposes of this
Section 8.3.3, the terms set forth below shall have the following meanings:


 


(i)                                     “Covered Services in Special Circumstances”
shall mean Covered Services provided by a  Medical
Group Participating Provider following termination to a Member who is
undergoing a course of treatment from


 

















 


the
Participating Provider for an acute condition, serious chronic condition,
high-risk pregnancy, or a pregnancy that has reached the second or third
trimester at the time of termination. 
The foregoing definition shall be interpreted in a manner consistent
with applicable law, including California Health and Safety Code Section
1373.96.


 


(ii)                                  “Termination” or “terminated,” as used in
this Section 8.3.3, shall mean (i) any circumstance which terminates,
non-renews or otherwise ends the arrangement by which a Participating Provider
provides Covered Services to Members or (ii) termination of this Agreement.


 


(iii)                               “Participating Provider,” as used in this
Section 8.3.3, shall be limited to persons who are physicians, podiatrists,
clinical psychologists, dentists, and chiropractors, as applicable.


 


(b)                                 Notifications Regarding Termination. 
Medical Group shall provide advance written notice to PacifiCare of the
impending termination of a Participating Provider in accordance with Section
2.3.3 of this Agreement.  Additionally,
Medical Group and the Participating Provider shall identify to PacifiCare, in
writing, any Members who are receiving treatment from the Participating
Provider for an acute condition or serious chronic condition, high-risk
pregnancy or pregnancy in the second or third trimester at the time of such
written notice and on the effective date of termination.  In the event of termination of this
Agreement, Medical Group shall provide information to PacifiCare to identify
Members who may be eligible for Covered Services in Special Circumstances from
a Medical Group Participating Provider.


 


(c)                                  Termination of Participating Provider. 
Following the termination of any Medical Group Participating Provider,
Medical Group shall, at the request of the applicable Member and in accordance
with PacifiCare’s policies and procedures, assure that such Participating
Provider shall provide Covered Services in Special Circumstances to Members as
required by this Section 8.3.3.


 


(d)                                 Termination of this Agreement. 
Following termination of this Agreement, Medical Group shall, at the
request of the applicable Member and in accordance with PacifiCare’s


 

















 


policies
and procedures, assure that all of its Participating Providers shall provide
Covered Services in Special Circumstances to Members as required by this
Section 8.3.3.


 


(e)                                  Exceptions.  Medical Group is not obligated
to arrange for its Participating Provider(s) to provide Covered Services in
Special Circumstances to Members if the terminated Participating Provider (i)
was terminated for a medical disciplinary cause or reason, fraud or other
criminal activity, (ii) voluntarily terminated his or her agreement with
Medical Group, (iii) does not agree to comply or does not comply with the same
terms and conditions set forth in the terminated Participating Provider’s
subcontract with Medical Group in providing Covered Services in Special
Circumstances, including, but not limited to, credentialing, hospital
privileging, utilization review, peer review, and quality assurance
requirements, or (iv) has not agreed in advance to compensation terms for the
provision of Covered Services in Special Circumstances or does not otherwise
accept payment rates for such services similar to rates and methods of payment
used by Medical Group for its contracted providers providing similar services
who are not capitated and who are practicing in the same or a similar
geographic area as the terminated Participating Provider.


 


(f)                                    Time Periods for Provision of Covered
Services in Special Circumstances.


 


(i)                                     In the case of a Member who has an acute
condition or serious chronic condition, the Covered Services in Special
Circumstances shall be provided to the Member by the terminated Participating
Provider for up to ninety (90) days following the termination date or a longer
period if necessary for a safe transfer to another Participating Provider as
determined by Medical Group in consultation with the terminated Participating
Provider.


 


(ii)                                  In the case of a Member who has a high-risk
pregnancy or a pregnancy that has reached the second or third trimester, the
Covered Services in Special Circumstances shall be provided to the Member by
the terminated Participating Provider until postpartum services related to the
delivery are completed or for a longer period if necessary for a safe transfer
to another Participating Provider as determined by Medical Group


 

















 


in
consultation with the terminated Participating Provider.


 


(g)                                 Compensation of Medical Group Participating
Providers.  Medical Group shall be solely responsible
for compensating any terminated Participating Provider for the provision of
Covered Services in Special Circumstances to Members as agreed upon in writing
between the terminated Participating Provider and Medical Group or at the rate
and method of payment used by Medical Group for its contracting providers
providing similar services who are not capitated and who are practicing in the
same or a similar geographic area as the terminated Participating Provider.


 


8.3.4                        Survival of Provisions following Termination. 
Medical Group agrees that the provisions of this Section and the
obligations of Medical Group and its Participating Providers herein shall
survive termination of this Agreement regardless of the cause giving rise to
such termination, and shall be construed to be for the benefit of Members.


 


8.4                                 Inspection and Audit of Records and Facilities. 
Medical Group and its Participating Providers shall provide access at
reasonable times upon demand by PacifiCare, Accreditation Organizations and
Government Agencies to periodically audit or inspect the facilities, offices,
equipment, books, documents and records of Medical Group and its Participating
Providers relating to the performance of this Agreement and the Covered
Services provided to Members, including, without limitation, all phases of
professional and ancillary medical care provided or arranged for Members by
Medical Group and its Participating Providers, Member medical records and
financial records pertaining to the cost of operations and income received by
Medical Group for Covered Services rendered to Members.  Medical Group and its Participating
Providers shall comply with any requirements or directives issued by
PacifiCare, Accreditation Organizations and Government Agencies as a result of
such evaluation, inspection or audit of Medical Group and its Participating
Providers.  Medical Group and its
Participating Providers shall retain the books and records described in this
Section for at least six (6) years and acknowledge that certain Government
Agencies may have the right to inspect and audit Medical Group’s books and
records following termination of this Agreement. Without limiting the
foregoing, following the commencement of any audit by a Government Agency,
Medical Group shall retain its relevant books and records until completion of
said audit.  The provisions of this
Section shall survive termination of this Agreement for the period of time
required by State and Federal Law.


 


8.5                                 Nondiscrimination. 
Medical Group assures that Covered Services shall be provided to Members
in the same manner as such services are provided to


 

















 


other
patients of Medical Group and its Participating Providers, except as required
pursuant to this Agreement.  Medical
Group and its Participating Providers shall not unlawfully discriminate against
any Member on the basis of source of payment or in any manner in regards to
access to, and the provision of, Covered Services.  Medical Group and its Participating Providers shall not
unlawfully discriminate against any Member, employee or applicant for
employment on the basis of race, religion, color, national origin, ancestry,
physical handicap, medical condition, marital status, age or sex.


 


ARTICLE 9

EXPRESS REFERRALS


 


9.1                                 Additional Defined Terms.  The
capitalized terms used in this Article 9, which are not otherwise defined
herein, shall have the meanings ascribed to them in the Agreement.


 


9.1.1                        Express Referrals is the name of the program established by
PacifiCare for streamlined referrals of Medical Group Members from Primary Care
Physicians to specialists in Express Referrals Specialties.


 


9.1.2                        Express Referrals Provider is any PacifiCare Participating Provider
that offers Express Referrals.


 


9.1.3                        Express Referrals Specialties include, but are not limited to, the
following specialties: Cardiology, Dermatology, Endocrinology, Ear, Nose and
Throat, Gastroenterology, General Surgery, Hematology, Neurology,
Obstetrics/Gynecology, Oncology, Ophthalmology, Orthopedic Surgery, Podiatry,
Routine Lab, Routine X-Ray, and Urology. 
PacifiCare may modify the list of Express Referrals Specialties at any
time upon at least ninety (90) days’ prior written notice to Medical Group.


 


9.2                                 Duties of Medical Group


 


9.2.1                        Establish Streamlined Referral Process. 
Medical Group shall establish a streamlined referral process, through
which any Primary Care Physician who deems that a referral to a specialist in
any Express Referrals Speciality for any Member is necessary, may refer the
Member to Medical Group’s Participating Providers specializing in such Express
Referrals Speciality without the prior authorization of the Medical Group or
the Medical Group’s utilization review committee.  The Medical Group must, however, continue to track all
referrals.  If, for any reason, Medical
Group fails to maintain a streamlined referral process which meets all of the
requirements of Express Referrals, Medical Group shall provide immediate
written notice thereof to PacifiCare Medical Group’s failure to so notify
PacifiCare that it is no


 

















 


longer
maintaining standards in compliance with Express Referrals shall be a material
breach of the Agreement, subjecting Medical Group to all of the remedies
contemplated thereby.


 


9.2.2                        Access to Records. 
Medical Group will provide PacifiCare with any and all necessary
information including medical records, policies and procedures, utilization
review procedures and reports and other related information necessary, in order
for PacifiCare to verify that Medical Group has a streamlined referral process
which meets the requirements of Express Referrals in a manner acceptable to
PacifiCare.


 


9.2.3                        Marketing Activities. 
Medical Group agrees to participate in PacifiCare’s marketing activities
to promote Express Referrals and to promote the Medical Group as an Express
Referrals Provider.


 


9.3                                 Duties of PacifiCare


 


9.3.1                        Marketing Activities. 
PacifiCare shall engage in marketing activities to promote Express
Referrals, including identifying Medical Group as an Express Referrals Provider
in PacifiCare’s Provider Directory.


 


9.3.2                        Determination of Compliance by Medical Group. 
PacifiCare reserves the right to determine whether Medical Group is in
compliance with the terms of this Article 9 and the requirements of Express
Referrals.  If PacifiCare determines
that Medical Group is not properly maintaining a streamlined referral process
in compliance with the requirements of Express Referrals, PacifiCare shall
cease marketing Medical Group as an Express Referrals Provider, and any future
marketing of Medical Group as an Express Referrals Provider will be at the sole
discretion of PacifiCare.


 


9.4                                 Termination.  The provisions of this
Article 9 may be terminated by PacifiCare at any time upon ninety (90) days’
prior written notice to Medical Group.


 

















 


IN
WITNESS WHEREOF, the parties hereto have executed this Agreement in
                                  ,
California.


 


	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  4/17/01

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  
	
   

  	
  Gateway Physicians Medical

  
	
   

  	
  Associates, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Tsoong

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  1/30/01

  	
   

  
						



 

















 


PRODUCT ATTACHMENT A


 


PACIFICARE COMMERCIAL HEALTH PLAN


 


This Product Attachment A,
along with the Base Agreement, sets forth the specific terms and conditions
which are applicable to the PacifiCare Commercial Health Plan, as defined
below.


 


ARTICLE I

DEFINITIONS


 


The following terms shall
have the meaning attributed below for purposes of the PacifiCare Commercial
Health Plan, as described in this Product Attachment A.  Capitalized terms not otherwise defined
herein shall have the meaning assigned to them in the Base Agreement.


 


1.1                                 Commercial Plan Premium is the premium received by PacifiCare each
month for PacifiCare Commercial Plan Members, excluding amounts to pay broker
and agent commissions/compensation, Premium taxes and premiums for Supplemental
Benefits.


 


1.2                                 OPM Agreement is the agreement between PacifiCare and the
Federal Office of Personnel Management for the provision of Covered Services to
persons enrolled in the PacifiCare Commercial Plan through their participation
in the health benefits programs for federal employees and their dependents.


 


1.3                                 PacifiCare Commercial Plan is any and all of the various Managed Care
Plans sold by PacifiCare to individuals (excluding individuals eligible for the
PacifiCare Medicaid Plan and the Secure Horizons Health Plan) and employer
groups, associations with employer group participation and unions which
purchase benefits for their employees and their dependents.


 


1.4                                 Commercial Plan Member are Medical Group Members enrolled in the
PacifiCare Commercial Plan.


 


1.5                                 Supplemental Benefits are benefits offered under the PacifiCare
Commercial Plan which require separate premium, in addition to the Commercial
Plan Premium, as consideration for the additional benefits.


 


ARTICLE 2

DUTIES OF MEDICAL GROUP


 


2.1                                 Provision of Covered Services. 
Medical Group and its Participating Providers shall provide Covered
Services to Commercial Plan Members pursuant to the terms of the Base Agreement
and this Product Attachment A.


 

















 


2.2                                 Compliance with OPM Agreement. 
Medical Group shall comply with all requirements in the OPM Agreement
which are applicable to Medical Group as a subcontractor of PacifiCare as a
result of this Agreement.  Without
limiting the foregoing, Medical Group shall ensure that all provisions of the
OPM Agreement which are applicable to Medical Group’s Participating Providers
are included in Medical Group’s subcontracts with its Participating
Providers.  A copy of the OPM Agreement
shall be provided to Medical Group concurrent with the execution of this
Agreement.


 


2.3                                 Compliance with Subscriber Agreements for
PacifiCare Commercial Plan.  Medical Group and its Participating
Providers shall comply with all requirements in Subscriber Agreements for the
PacifiCare Commercial Plan which are applicable to Medical Group.  PacifiCare shall make good faith efforts to
notify Medical Group of any such requirements that are not otherwise reflected
in this Agreement.


 


ARTICLE 3

COMPENSATION


 


3.1                                 Capitation Payments for Commercial Plan
Members.  Capitation payments to IPA for Commercial
Plan Members shall be age/sex/plan adjusted to reflect eligible Commercial Plan
Members.  PacifiCare shall produce
age/sex/plan tables, which during the first month of the effective date of any
rate change shall yield an average per member per month (“PMPM”) rate based
upon the membership assigned to the applicable IPA, as of the October prior to
the effective date of the applicable rate change.  For capitation payments to IPA for Commercial Plan, the average
PMPM yield shall be *** dollars ***, subject to the adjustments set forth in
Article 5 of the Base Agreement and the adjustments set forth below in this
Section.  PacifiCare shall disclose the
yield to IPA in writing and IPA shall have the right to audit for verification.  The age/sex/plan tables shall be based on an
actuarial analysis by a mutually acceptable third party.


 


3.1.1                        Premium Adjustments.  The
Commercial Plan Premium and benefits may be amended for each Subscriber
Agreement upon the annual renewal date of each Subscriber Agreement at the sole
discretion of PacifiCare.


 


3.1.2                        Adjustment for ISL Premium.  In
calculating Capitation Payments due to Medical Group, PacifiCare shall deduct
the ISL Premium amount set forth herein from the amounts otherwise due to
Medical Group, unless PacifiCare has approved of Medical Group’s opting out of
PacifiCare’s ISL Program.


 


3.1.3                        Adjustment for Experience-Rated Managed Care
Plans.  Capitation


 

















 


Payments
for Experience Rated Plans shall be calculated utilizing the following
definitions and methodology:


 


(i)                                     An “Experience-Rated Plan” is a
non-federally-qualified plan in which the Subscriber Group’s premium is
partially deferred or adjusted to reflect the actual medical costs incurred by
Commercial Plan Members.


 


(ii)                                  The “Net Actuarial Experience Rate” shall mean
a rate calculated by the same method used to determine premium for
federally-qualified plans, except that trended claims and utilization data may
be considered to determine expected medical costs and PacifiCare’s
administrative retention may be adjusted to reflect actuarial risk taken by the
Subscriber Group instead of PacifiCare.


 


(iii)                               For Experience-Rated Plans, Capitation
Payments shall be calculated as a  percent
of the Net Actuarial Experience Rate rather than based on a percent of the
Commercial Plan Premium.  The Net
Actuarial Experience Rate, like the Commercial Plan Premium, shall exclude
broker and agent commissions, premium taxes and premiums for Supplemental
Benefits.


 


3.2                                 ISL Program.  The ISL Deductible, ISL
Premium and ISL Coinsurance for the Commercial Plan shall initially be:


 


(i)                                     ISL Deductible shall be zero dollars ($0) per
Commercial Plan Member per calendar year.


 


(ii)                                  ISL Premium shall be zero percent (0%) of the
Commercial Plan Premium.


 


(iii)                               ISL Coinsurance shall be zero percent (0%) of
Cost of Care in excess of the ISL Deductible.


 


If
PacifiCare has approved of Medical Group’s opt out of the ISL Program, the
above amounts and percentages will reflect “zero.” In such event, Medical Group
shall be required to obtain ISL coverage from a third-party insurance carrier
in accordance with Section 5.5.5 of the Base Agreement.


 


3.3                                 Commercial Hospital Incentive Program. 
PacifiCare shall establish and administer an annual Commercial Hospital
Incentive Program for the PacifiCare Commercial Plan (the “CHIP”).  The CHIP is designed to provide an incentive
for the efficient and effective use of Hospital Services, and shall be
calculated utilizing the terms defined below. 
All calculations for the CHIP shall be based upon Commercial Plan
Members, excluding Commercial POS


 

















 


Plan
Members.


 


3.3.1                        Reinsurance Program. 
Claims under the Reinsurance Program shall be valued at the Cost of Care
as defined in this Agreement.  The
Reinsurance Deductible, Reinsurance Premium and Reinsurance Coinsurance for the
Commercial Plan shall initially be:


 


(i)                                     Reinsurance Deductible shall be zero dollars
($0) per Commercial Plan Member per calendar year.


 


(ii)                                  Reinsurance Premium shall be zero percent
(0%) of Commercial Plan Premium.


 


(iii)                               Reinsurance Coinsurance shall be fifty
percent (50%) of the Cost of Care for amounts in excess of the Reinsurance
Deductible but less than two hundred fifty thousand dollars ($250,000) and
twenty percent (20%) of the Cost of Care for amounts in excess of two hundred
fifty thousand dollars ($250,000).


 


3.3.2                        CHIP Budget.  The CHIP Budget for
Commercial Plan Members shall be forty percent (40%) of the Commercial Plan
Premium per Member per month, excluding Commercial POS Plan Members, less
PacifiCare Commercial Plan Reinsurance Premium, if any, and is subject to the
adjustments set forth in Article 5 of the Base Agreement and the adjustments
further specified below.


 


3.3.3                        CHIP Expense. 
CHIP Expense shall be equal to the sum of the following:


 


(i)                                     Inpatient costs for Hospital Services
rendered to Commercial Plan Members, excluding Commercial POS Plan Members, by
Participating Providers, valued at the actual costs incurred by PacifiCare; plus,


 


(ii)                                  Other Hospital Services rendered to
Commercial Plan Members, excluding Commercial POS Plan Members, by
Participating Providers other than inpatient services, valued at actual costs
incurred by PacifiCare; plus,


 


(iii)                               The actual amount paid for Hospital Services
which are rendered by non- Participating Providers; minus,


 


(iv)                              Amounts paid by PacifiCare under the
Reinsurance Program, if any; minus


 


(v)                                 Any and all amounts received from third
parties for Hospital


 

















 


Services
provided to Commercial Plan Members, excluding Commercial POS Plan Members,
through coordination of benefits, work-related accidents or injuries, stop-loss
and reinsurance payments and Member Copayments.


 


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


 


3.3.5                        CHIP Deficit.  In
the event the CHIP Expense is greater than the CHIP Budget, the deficit shall
be allocated as follows:


 


*** to Medical Group up to five percent (5%)


of the CHIP Budget


*** to PacifiCare


 


3.3.6                        Settlements and Reconciliation. 
Interim settlements and the final settlement and reconciliation of the
CHIP shall be performed by PacifiCare as provided in Article 5 of the Base
Agreement.


 


3.4                                 Commercial Plan Pharmacy Incentive Program. 
PacifiCare shall establish and administer an annual Pharmacy Incentive
Program for the PacifiCare Commercial Plan (the “PIP”).  The PIP is designed to provide an incentive
for the efficient and effective use of Outpatient Pharmacy Supplemental
Benefits for Commercial Plan Members. 
The PIP shall be calculated as follows:


 


3.4.1                        Outpatient Pharmacy Supplemental Benefits shall be the benefits made available by
PacifiCare under the PacifiCare Supplemental Pharmacy Benefit, as defined in
the applicable Subscriber Agreement.


 


3.4.2                        PIP Budget shall equal *** of the premium received by PacifiCare for Outpatient
Pharmacy Supplemental Benefits for Commercial Plan Members plus *** per
Commercial Plan Member per month, which amount is established as a credit for
rebates received from pharmaceutical manufacturers.  This credit may or may not reflect the total pharmaceutical
manufacturer rebate revenues received by PacifiCare.  The PIP Budget shall be retained by PacifiCare for purposes of
administering the PIP.


 


3.4.3                        PIP Expense shall equal the expense incurred for the provision of Outpatient
Pharmacy Supplemental Benefits during the applicable period.


 


3.4.4                        PIP Surplus.  In the event the PIP Expense
is less than the PIP Budget, fifty percent (50%) of the surplus shall be
allocated to Medical Group.


 

















 


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 not to exceed *** PMPM.


 

















 


IN WITNESS WHEREOF, the parties hereto have executed this Product
Attachment A.


 


 


	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Jeffrey

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  4/17/01

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  
	
   

  	
  Gateway Physicians Medical
  Associates,

  
	
   

  	
  Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Tsoong

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  1/30/01

  	
   

  
								



 

















 


PRODUCT ATTACHMENT B


 


PACIFICARE COMMERCIAL POINT-OF-SERVICE PLAN


 


This Product Attachment B,
along with Product Attachment A and the Base Agreement, sets forth the terms
and conditions which are applicable to the PacifiCare Commercial
Point-of-Service Plan, as defined below.


 


ARTICLE I

DEFINITIONS


 


The following terms shall
have the meaning attributed below for purposes of the PacifiCare Commercial
Point-of-Service Plan, as described in this Product Attachment B.  Capitalized terms not otherwise defined
herein shall have the meaning assigned to them in the Base Agreement.


 


1.1                                 In-Network Services are Covered Services received by Commercial
POS Plan Members which are (a) provided or arranged by Medical Group pursuant
to the PacifiCare Commercial Plan; (b) received from a non-contracting Provider
following an authorization from Medical Group; (c) Emergency Services; and (d)
Urgently Needed Services.


 


1.2                                 In-Network Hospital Services are Hospital Services received by Commercial
POS Plan Members which are (a) provided or arranged by Medical Group pursuant
to the PacifiCare Commercial Plan; (b) received from a non-contracting Provider
following an authorization from Medical Group; (c) Emergency Services; and (d)
Urgently Needed Services.


 


1.3                                 Out-of-Network Services are Covered Services, excluding Emergency
Services and Urgently Needed Services, which are received by Commercial POS
Plan Members without the prior authorization of Medical Group.


 


1.4                                 PacifiCare Commercial Point-of-Service
(“POS”) Plan is any
PacifiCare Commercial Plan, as defined in Product Attachment A, under which
Members are entitled to coverage for both In-Network Services and
Out-of-Network Services.


 


1.5                                 Commercial POS Plan Members are Medical Group Members enrolled in the
PacifiCare Commercial POS Plan.


 


1.6                                 POS Plan Premium is the sum of the In-Network Premium and the
Out-of-Network Premium, as defined below:


 


1.6.1                        In-Network Premium is the Commercial Plan Premium, as defined
in Product Attachment A, billed or accounted for by PacifiCare for


 

















 


coverage
of In-Network Services under the PacifiCare Commercial POS Plan.


 


1.6.2                        Out-of-Network Premium is the Commercial Plan Premium, as defined
in Product Attachment A, billed or accounted for by PacifiCare (or an insurance
company or self-insured employer which has assumed the risk for the
Out-of-Network Services), for coverage of Out-of-Network Services under the
PacifiCare Commercial POS Plan.


 


ARTICLE 2

DUTIES OF MEDICAL GROUP


 


2.1                                 Covered Services. 
Medical Group and its Participating Providers shall provide or arrange
Covered Services to Commercial POS Plan Members under same terms and conditions
as Commercial Plan Members.


 


2.2                                 Reciprocity: Reimbursement for Out-of-Network
Services.  If any of Medical Group’s Participating
Providers provides Out-of-Network Services to a Commercial POS Plan Member,
such Medical Group Participating Provider shall bill PacifiCare or the payor
responsible for payment for Out-of-Network Services for such services and
agrees to accept full payment at the Cost of Care.  Neither Medical Group nor its Participating Providers shall
encourage Members to receive Covered Services from non-Participating
Providers.  Medical Group shall include
the requirements of this Section in all subcontracts with its Participating
Providers.


 


ARTICLE 3

COMPENSATION


 


3.1                                 Capitation Payments for Commercial POS Plan
Members.  For Commercial POS Plan Members, PacifiCare
will pay Medical Group *** percent *** of the Capitation Payment for Commercial
Plan Members, subject to the adjustments set forth in Article 5 of the Base
Agreement and the adjustments set forth below in this Section.  Capitation Payments for Commercial POS Plan
Members will be based on a percentage of the In-Network Premium only.  The payment described in this Section is
payment in full for In-Network Services, except for Copayments, coordination of
benefits, third party recoveries and payments under the PacifiCare POS Control
Program set forth below.


 


3.1.1                        Adjustment for ISL Premium.  In
calculating Capitation Payments due to the Medical Group for Commercial POS Plan
Members, PacifiCare shall deduct *** of the ISL Premium amount set forth in
Section 3.2 of Product Attachment A from the amounts otherwise due to Medical
Group, unless PacifiCare has approved of Medical Group’s opt out of
PacifiCare’s ISL Program.


 

















 


3.2                                 Commercial POS Control Program. 
PacifiCare shall establish and administer an annual Control Program for
the PacifiCare Commercial Point-of-Service Plan (“Commercial POS Control
Program”).  The Commercial POS Control
Program is designed to provide an incentive for the efficient and effective use
of In-Network Hospital Services and to control Out-of-Network Services, and
shall be calculated in accordance with the following provisions.


 


3.2.1                        Definitions.  The following terms shall
have the meaning attributed below for purposes of the Commercial POS Control
Program.


 


(i)                                     POS Plan Budget shall equal *** of In-Network Premium plus *** of Out-of-Network Premium, less PacifiCare POS Control
Program Reinsurance Premium, if any.


 


(ii)                                  POS Plan Costs shall mean the following:


 


(a)                                  Claims paid for In-Network Hospital Services
incurred during the current period, calculated at the actual amount paid; plus,


 


(b)                                 Claims paid for Out-of-Network Services
incurred during the current period, calculated at the actual amount paid; plus,


 


(c)                                  Claims paid for In-Network Hospital Services
and Out-of-Network Services incurred but not included in prior period
Commercial POS Control Program calculations, calculated at the actual amount
paid; minus,


 


(d)                                 Any and all amounts received from third party
liability and coordination of benefit recoveries for In-Network Hospital
Services and Out-of-Network Services that are received during the period of
calculation.


 


(iii)                               Budget Surplus.  The
amount, if any, by which the POS Plan Budget exceeds the POS Plan Costs for any
calendar year.


 


(iv)                              Budget Deficit.  The
amount, if any, by which the POS Plan Costs exceeds the POS Plan Budget for any
calendar year.


 


(v)                                 Capitation Restoration Amount.  The
difference between (a) the amount Medical Group would have received if Medical
Group’s Capitation Payments for Commercial POS Plan Members had been determined
by multiplying the percentage set forth in Section 3.1 of Product Attachment A
by the In-


 

















 


Network
Premium and (b) the actual capitation paid to Medical Group for Commercial POS
Plan Members for the relevant contract year.


 


3.2.2                        POS Control Program Reinsurance. 
Unless PacifiCare has approved of Medical Group’s opt out of POS
reinsurance (“POS Control Program Reinsurance”), PacifiCare shall provide
reinsurance (the “Commercial POS Control Program Reinsurance”) in order to
provide protection for the Commercial POS Plan Budget when Cost of Care for POS
In-Network Hospital Services and Out-of-Network Medical Group and Hospital
Services (“Out-of-Network Services”) exceeds a specified dollar amount per
Medical Group Member per calendar year (the “Commercial POS Control Program
Reinsurance Deductible”).  Costs for
In-Network Hospital Services and Out-of-Network Services that exceed the
Commercial POS Control Program Reinsurance Deductible shall be considered an
expense against the Commercial POS Plan Budget, of which surpluses and deficits
are shared equally between PacifiCare and the Commercial POS Plan Budget.


 


3.2.3                        Reinsurance Program. 
Claims under the POS Control Program Reinsurance shall be valued at one
thousand five hundred dollars ($1,500) per acute inpatient day, four hundred
dollars ($400) per skilled nursing facility day, and zero dollars ($0) for all
other claims.  The Reinsurance Deductible
and Reinsurance Premium for the Commercial POS Plan shall initially be:


 


(i)                                     Reinsurance Deductible shall be zero dollars
($0) per Commercial Plan Member per calendar year.


 


(ii)                                  In-Network Reinsurance Premium shall be zero
(0%) of the Commercial Plan Reinsurance Premium amount set forth in Section
3.3.1 of Product Attachment A.


 


(iii)                               Out-of-Network Reinsurance Premium shall be
zero percent (0%) of the Commercial Plan Reinsurance Premium amount set forth
in Section 3.3.1 of Product Attachment A.


 


If
PacifiCare has approved of Medical Group’s opt out of the Reinsurance Program,
the above amounts and percentages will reflect “zero.” In such event, Medical
Group shall be required to obtain reinsurance coverage from a third-party
insurance carrier in accordance with Section 5.5.5 of the Base Agreement.


 


3.2.4                        Documentation. 
PacifiCare shall provide Medical Group with a list of In-Network
Hospital Services claim payments and Out-of-Network claim payments in support
of computation and accuracy of POS Plan 


 

















 


Costs,
third party liability and coordination of benefit recoveries, assumptions and
data supporting the POS Plan Budget, the Budget Surplus, and the Budget Deficit
and the Capitation Restoration Amount.


 


3.2.5                        Budget Surplus-Reconciliation. 
Medical Group shall receive one hundred percent (100%) of the Budget
Surplus, until such time as Medical Group has received the applicable
Capitation Restoration Amount.  If the
Budget Surplus exceeds the Capitation Restoration Amount, then PacifiCare and
Medical Group shall each be entitled to fifty percent (50%) of the remaining
Budget Surplus.


 


3.2.6                        Budget Deficit Reconciliation.  In
the event of a Budget Deficit, Medical Group shall not be responsible for
making any payments under the PacifiCare POS Control Program.  However, fifty  percent (50%) of the Budget Deficit amount shall be
considered a Medical Group obligation for purposes of offsetting surpluses
under other incentive programs under the Agreement.


 


3.3                                 Adjustment of Rate. 
Capitation Payments for Commercial POS Plan Members and the POS Plan
Budget may be prospectively adjusted on an annual basis to reflect actual
experience under the Commercial POS Plan; provided, however, that in no event
shall the amount of any increase or decrease to such Capitation Payments be
greater than ten (10) percentage points in any given year.


 

















 


PACIFICARE OF CALIFORNIA


 


MEDICAL GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)


 


EXHIBIT 1

MEDICAL GROUP FACILITIES AND SERVICE AREA

(This Exhibit 1 is an integral part of this Agreement)


 


Medical
Group Facilities:


 


Prior to the Commencement
Date, Medical Group shall provide PacifiCare with a list of all Medical Group
Facilities.


 


Facilities shall also
include each facility at which a Medical Group Participating Provider routinely
provides services pursuant to this Agreement.


 


All Medical Group Facilities
shall, in accordance with PacifiCare’s policies and procedures, be subject to
PacifiCare’s prior written approval.


 


Hospital(s):


•                  Western
Medical Center - Santa Ana


•                  Placentia
Linda Hospital


•                  Chapman
Hospital


•                  Garden
Grove Hospital and Medical Center


 


Medical
Group Service Area:


 


The Medical Group Service
Area is the geographic area within a thirty (30) mile radius of each of the
Medical Group Facilities, excluding the offices of specialists as approved by
PacifiCare in writing.  The Medical
Group Service Area shall be determined by PacifiCare, based upon the shortest
route using public streets and highways.


 












*** Confidential Treatment Requested


 

















 


PACIFICARE OF CALIFORNIA


 


MEDICAL GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)


 


EXHIBIT 2


DELEGATED ACTIVITIES

(This Exhibit 2 is an integral part of this Agreement)


 


The purpose of the following
Grids is to specify the responsibilities of PacifiCare and Medical Group under
the Agreement with respect to: (i) claims processing and payment, (ii)
credentialing and recredentialing, (iii) medical records, (iv) quality
management and improvement and (v) utilization management.


 


The Grids set forth the
specific activities with respect to (i) claims processing and payment, (ii)
credentialing and recredentialing, (iii) medical records, (iv) quality
management and improvement and (v) utilization management, which PacifiCare has
delegated to Medical Group and which Medical Group shall perform on behalf of
PacifiCare.  The Grids also set forth
the specific activities with respect to: (i) claims processing and payment,
(ii) credentialing and recredentialing, (iii) medical records, (iv) quality
management and improvement and (v) utilization management, which PacifiCare has
not delegated to Medical Group under the Agreement and which PacifiCare shall
perform directly utilizing its own personnel. 
Medical Group is responsible for cooperating, participating and
complying with PacifiCare’s performance of such activities.


 


PacifiCare does not formally
delegate to its contracting medical groups the responsibility for performing
quality management and improvement activities on behalf of PacifiCare.  However, PacifiCare does require contracting
medical groups to maintain a quality improvement and management program,
participate and cooperate in PacifiCare’s quality improvement program, collect
data for PacifiCare’s quality improvement activities, and carry out corrective
actions as required by PacifiCare. 
Accordingly, the Grids set forth certain quality improvement activities
which PacifiCare has not delegated to Medical Group to perform on behalf of
PacifiCare, but which PacifiCare and Medical Group shall perform concurrently
under the Agreement.  PacifiCare also
does not formally delegate to contracting medical groups the responsibility for
performing member services.  However,
PacifiCare does require contracting medical groups under the Agreement to
participate, cooperate and comply with PacifiCare’s activities relating to
member services, preventive health services, and medical record reviews as
required by PacifiCare.


 


The Grids also identify (i)
the elements and performance measures established by PacifiCare for the
Delegated Activities in accordance with the NCQA accreditation standards and
State and Federal law and regulatory requirements, (ii) the reports


 












*** Confidential Treatment Requested


 

















 


which shall be provided to
PacifiCare by Medical Group for each of the Delegated Activities and the
frequency of reporting, and (iii) the oversight activities which PacifiCare
shall perform with respect to each of the Delegated Activities.


 


Exhibit 2 may be amended
from time to time during the term of this Agreement by PacifiCare to reflect changes
in delegation standards; delegation status; performance measures, reporting
requirements; and other provisions of Exhibit 2.


 

















 


CLAIMS
DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  HCFA Regulations

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Compliance with all HCFA
  regulations & guidelines for claims processing and payment including:

  •   Claims payment turnaround times

  •   Appropriate reimbursement for contracted
  and non-contracted providers

  •    Interest payments

  •   Denials/denial letters

  •   BBA regulations

  •    Provider reporting

  •    Y2K compliance

  	
   

  	
  Monthly

  	
   

  	
  •   Initial onsite assessment utilizing
  approved oversight tool

  •   Annual oversight assessment utilizing
  approved oversight tool.

  •   Additional onsite reviews as warranted by
  the plan utilizing approved oversight tool

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PacifiCare Standards for
  Commercial Products

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Compliance with
  PacifiCare’s standards for processing and payment of claims for Commercial
  Products including:

  •   Claims payment turnaround times

  •   Appropriate reimbursement for contracted
  and non-contracted providers

  •    Interest payments

  •   Denials/denial letters

  •    Provider reporting

  •    Appropriate IBNR reserves

  	
   

  	
  Monthly

  	
   

  	
  •   Initial onsite assessment utilizing
  approved oversight tool

  •   Annual oversight assessment utilizing
  approved oversight tool.

  •   Additional onsite reviews as warranted by
  the plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State Regulations

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Compliance with State
  Regulations for claims processing:

  •   COB and TPL review

  •   Compliance with all Medicaid Regulations

  	
   

  	
  N/A

  	
   

  	
  •   Initial onsite assessment utilizing
  approved oversight tool.

  •   Annual oversight assessment utilizing
  approved oversight tool.

  •   Additional onsite reviews as warranted by
  the plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPM Requirements

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Compliance with Office of
  Personnel Management for Federal Employees requirements for claims processing
  and payment including:

  •   COB identification

  •    Debarred providers suspended

  	
   

  	
  N/A

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standards for Employer
  Performance Guarantees

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Meet Employer performance
  guarantee measurements for claims processing and payment.

  	
   

  	
  As required by employer

  	
   

  	
  •   Initial onsite assessment utilizing
  approved oversight tool.

  •   Annual oversight assessment utilizing
  approved oversight tool.

  •   Additional onsite reviews as warranted by
  the plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eligibility and Benefits

  	
   

  	
  Not Delegated

  	
   

  	
  Medical Group must:

  Verify eligibility at time
  of claim review

  •    Update eligibility and benefit information in their system as often as
  communicated by the plan.

  	
   

  	
  N/A

  	
   

  	
  •   Initial onsite assessment utilizing
  approved oversight tool.

  •   Annual oversight assessment utilizing
  approved oversight tool.

  •   Additional onsite reviews as warranted by
  the plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financial Accounting

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Meets PacifiCare financial
  accounting requirements and solvency requirements including those for

  •    Financial statements

  •    IBNR reserves

  •    Processes for expense reduction

  	
   

  	
  Annually

  	
   

  	
  •   Initial onsite assessment utilizing
  approved oversight tool.

  •   Annual oversight assessment utilizing
  approved oversight tool.

  •   Additional onsite reviews as warranted by
  the plan utilizing approved oversight tool.

  



 

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  •   Implementation of Corrective Action Plan(s)
  for elements of non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Check Production Processes

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Compliance with timely
  claims payments and IRS requirements including:

  •    Check production processes

  •   Performing Provider Satisfaction Survey

  •    Process to settle claims in collections 

  •    1099 production processes

  	
   

  	
  N/A

  	
   

  	
  •   Initial onsite assessment utilizing
  approved oversight tool.

  •   Annual oversight assessment utilizing
  approved oversight tool.

  •   Additional onsite reviews as warranted by
  the plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Staffing

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Staffing sufficient to
  support claims volume and processing timeliness requirements including:

  •    Staffing levels

  •    Customer Service capabilities

  •    Past experience for claims resolution

  •    Staff available to answer claims questions during normal hours of
  operation

  	
   

  	
  N/A

  	
   

  	
  •   Initial onsite assessment utilizing
  approved oversight tool.

  •   Annual oversight assessment utilizing
  approved oversight tool.

  •   Additional onsite reviews as warranted by
  the plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Audit Reporting

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Appropriate and adequate
  audit reporting available including:

  •    Reports provided for audit

  	
   

  	
  As needed for audits

  	
   

  	
  •   Initial onsite assessment utilizing
  approved oversight tool.

  •   Annual oversight assessment utilizing approved
  oversight tool.

  •   Additional onsite reviews as warranted by
  the plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Encounter Data

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  The Medical Group must
  have an encounter data submission process with encounter data reported and
  submitted to PacifiCare monthly

  	
   

  	
  Monthly

  	
   

  	
  •   Initial onsite assessment utilizing
  approved oversight tool.

  •   Annual oversight assessment utilizing
  approved oversight tool.

  •   Additional onsite reviews as warranted by
  the plan utilizing approved oversight tool.

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance.

  



 


PacifiCare’s
responsibilities relating to Claims and those responsibilities which PacifiCare
has delegated to the Medical Group, are outlined above.


 


The
Medical Group agrees to be accountable for all responsibilities delegated by
PacifiCare and will not further delegate any such responsibilities without
prior written approval by PacifiCare.


 


PacifiCare
will perform audits annually and as needed to evaluate group’s delegated
status.  In the event there are
deficiencies identified in the audit, PacifiCare will provide a specific
corrective action plan.  If the group is
not able to comply with the corrective action plan within the specified time
frame, PacifiCare may revoke the group's delegated status.


 

















 


CREDENTIALING DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Credentialing Policies and
  Procedures

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Full Compliance with NCQA
  Standards:

  •    Identify scope

  •    Define criteria and verification of criteria

  •    Describe decision making process, including how advice is received from
  participating practitioners

  •    Describe extent of any delegated credentialing/recredentialing
  arrangements

  •    Describe right of practitioner to review information.

  •    Develop process to notify practitioner of discrepancies.

  •    Include practitioner's right to correct erroneous information.

  •    Ensure confidentiality.

  •    Define Medical Director responsibilities and participation.

  	
   

  	
  Submit Credentialing
  Program annually.

   

   

  Revised credentialing
  policies and procedures submitted quarterly, if applicable.

  	
   

  	
  •   Initial onsite assessment

  •   Annual oversight assessment 

  •   Annual PacifiCare Committee approval

  •    Evaluate and approve written Credentialing Program

  •    Implementation of Corrective 

  •             Action Plan(s) for elements of
  non-compliance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credentialing Committee

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Full Compliance with NCQA
  Standards:

   

  •    The MG designates a credentialing committee or other review body that
  makes recommendations regarding credentialing decisions

  	
   

  	
  Annual credentialing
  program to include committee structure.

  	
   

  	
  •   Initial onsite assessment

  •   Annual oversight assessment 

  •   Annual PacifiCare Committee approval

  •    Annual Review of Committee
  minutes

  •    Annual review of membership

  •    Frequency of meetings

  •    Implementation of Corrective Action Plan(s) for elements of non-compliance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Primary source
  verification of credentialing information

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Full Compliance with NCQA
  Standards regarding verification of information within 180 days of Committee
  approval date.

   

  Meet 90% of all NCQA
  credentialing standards (exempt from primary source verification of license).

   

  Meet 100% of NCQA
  standards related to primary source verification of licenser.

   

  •    Primary source verification to include:

  •    License

  •    Clinical privileges

  •    DEA/CDS

  •    Education

  •    Board certification

  •    Work history

  •    Malpractice insurance

  •    Professional liability claims

  	
   

  	
  Submit current list of
  physicians credentialed and recredentialed with quarterly report.

  	
   

  	
  •   Initial onsite assessment

  •   Annual oversight assessment 

  •   Annual PacifiCare Committee approval

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance

  •   Audit conducted of provider credentialing and recredentialing files (5%
  or 50 credentialing files reviewed, whichever is less, with a minimum of 10
  credentialing and 10 recredentialing files reviewed).

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Application/Attestation

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Full compliance with NCQA
  Standards.

   

  The PMG/IPA application
  must include a statement regarding

  •    Reasons for any inability to perform.

  •    Lack of present illegal drug use

  •    History of loss of license or felony conviction

  •    History of loss or limitation of

  	
   

  	
  Immediate submission of
  any changes to application.

  	
   

  	
  •   Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval.

  •    Annual review of credentialing files (5% or 50 credentialing files
  reviewed, whichever is less, with a minimum of 10 credentialing and 10
  recredentialing files.

  •    Implementation of Corrective Action Plan(s) for elements of

  



 

















 


	
   

  	
   

  	
   

  	
   

  	
  Privileges or disciplinary activity

  •    Attestation by applicant of the correctness and completeness of the
  application

  •    Signed within 180 days of
  Committee approval date.

  	
   

  	
   

  	
   

  	
  non-compliance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National Practitioner Data
  Base (NPDB) Information/Sanction Information

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Full compliance with NCQA
  Standards regarding verification of information within 180 days of Committee
  Approval date

   

  For all Medicare and/or
  Medicaid sanctions as appropriate:

   

  •    State Board of Dental Examiners

  •    State Board of Pediatric Examiners

  •    State Board of Medical Examiners

  •   Federation of State Medical Boards or
  Department of Professional Regulations

  •    State Board of Chiropractic Examiners of the Federation of Chiropractic
  Licensing Boards

  	
   

  	
  NONE

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare committee approval

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial office visit of
  all PCPs and OB/GYNs and medical record keeping review

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Full compliance with NCQA
  Standards regarding Initial site visit/medical record review and subsequent
  biannual site visit/medical record review

   

  Structured review that
  evaluates the office site against standards in the following areas:

   

  •    Physical accessibility

  •    Physical appearance

  •    Adequacy of waiting room and exam room space

  •    Availability of appointments vs expected performance standards

  •    Documentation of an evaluation of medical record keeping practices for
  conformity with standards

  •    Incorporation of this information into the credentialing process

  	
   

  	
  Include list of all
  initial site reviews completed on an annual basis.

  	
   

  	
  •   Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval

  •    Biannual site review

  •    Biannual medical record review

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance

  •    Annual review of audit tool

  •    Verification of all sites completed within 2 years prior to initial
  credentialing

  •    Review of credential files annually as above to include evidence of
  initial site review and record keeping review.

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Recredentialing Primary
  source verification (PSV)

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Meet 90% of all NCQA
  Recredentialing standards (except PSV of Licenser).

   

  Meet 100% of all NCQA
  Standards related to PSV of Licenser

   

  Recredentialing to
  include.

  License, clinical privileges, DEA/CDS, Board Certification, Malpractice
  Insurance, Professional Liability claims, signed Attestation regarding any
  inability to perform and lack of present illegal drug use.

  	
   

  	
  Include list of all
  providers recredentialed on a quarterly basis (with quarterly report)

  	
   

  	
  •    Annual audit of files of 5% or random sample of 50 to represent entire
  contracted network

  •    Annual onsite assessment

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Recredentialing National
  Practitioner Data Base (NPDB) information/Sanction information

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Full compliance with NCQA
  Recredentialing Standards regarding verification of information within 180
  days of Committee approval date

   

  Recredentialing conducted
  biannually by the Provider.

   

  Recredentialing must be
  completed

  	
   

  	
   

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance

  •    Annual audit of files of 5% or random sample of 50 to represent

  



 

















 


	
   

  	
   

  	
   

  	
   

  	
  within 24 months of prior
  credentialing or recredentialing activity

   

  Recredentialing
  information found in credentialing files includes the following:

   

  •    Information from NPDB

  •    Sanction information, as appropriate:

  •    State Board of Medical Examiners, Federation of State Medical Boards

  •    Department of Professional Regulations

  •    State Board of Chiropractic Examiners on the Federation of Chiropractic
  Licensing Boards

  •    State Board of Dental Examiners

  •    For all providers review of Medicare/ Medicaid sanctions

  	
   

  	
   

  	
   

  	
  the entire contracted network to include sanction information.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Incorporation of the
  following data in the Recredentialing decision-making process:

  •    Member complaints

  •    QI activities

  •    UM

  •    Member Satisfaction

  •    MCO uses performance monitoring in the recredentialing of PCPs

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Full compliance with NCQA
  Recredentialing Standards.

   

  Recredentialing conducted
  biannually by the Provider.

   

  Recredentialing must be
  completed within 24 months of prior credentialing or recredentialing
  activity.

   

  Incorporate the following
  information into the recredentialing decision making process for PCPs:

  •    Member complaints

  •    Information from quality improvement activities

  •    Member satisfaction

  •    Site visits conducted

   

   

  	
   

  	
  List of all
  recredentialing site reviews completed on an annual basis

  	
   

  	
  •    Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare Committee approval

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance

  •    Annual review of audit tool

  •    Verification of all sites completed within 2 years prior to
  recredentialing

  •    Review of files annually includes verification of recredentialing site
  visit

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Site Visits

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Full compliance with NCQA
  Standards regarding biannual recredentialing site visit/medical record
  review.

   

  Visit to offices of all
  PCP sites with 50 or more members within 2 years prior to Recredentialing.

   

  Review office vs. standards
  in areas listed under PSV section and documented evaluation of medical record
  keeping practices.

  	
   

  	
  List of all
  recredentialing site reviews completed on an annual basis

  	
   

  	
  •   Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare committee approval

  •   Biannual Site Review

  •    Biannual Medical Record Review

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance

  •   Annual
  review of audit tool

  •    Verification of all sites completed within 2 years prior to
  recredentialing

  •    Review of files annually includes verification of recredentialing site
  visit

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Peer Review/Disciplinary
  Action

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Full compliance with NCQA
  Standards Policy and Procedures (P&Ps) for reporting of quality
  deficiencies

   

  P&Ps for range of
  actions to be taken to improve performance prior to termination.

   

  P&Ps to describe
  appeals process

   

  P&Ps for altering the
  conditions of the

  	
   

  	
  New P&Ps submitted
  quarterly

  	
   

  	
  •   Initial onsite assessment

  •    Annual oversight assessment

  •    Annual PacifiCare committee approval

  •    Implementation of Corrective Action Plan(s) for elements of
  non-compliance

  



 

















 


 


	
   

  	
   

  	
   

  	
   

  	
  practitioner’s participation with PacifiCare based
  on quality of care of service.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Assessment of Organizational Providers (hospitals,
  home health agencies, SNFs, and free-standing surgical centers)

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  For subcontracted acute care hospitals, home health
  agencies, SNFs, and free-standing surgical centers:

  1.   Confirms good standing with
  State and Federal regulatory bodies; and

  2.   Confirms accreditation; or

  3.   If not accredited, develops
  standards of participation and reviews for compliance; and

  4.   At least every three years,
  confirms continued good standing of regulatory bodies, and if applicable,
  accreditation

  	
   

  	
  Submit list of subcontracted organizational
  providers on an annual basis

  	
   

  	
  •    Annual assessment including
  P&Ps and random pull of files; two in each of the four categories;
  one accredited, one non-accredited as applicable.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sub-Delegation of Credentialing

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  If MG sub-delegates Credentialing to a CVO,
  Hospital, IPA, etc

  1.   Detailed documentation of
  delegation agreement

  2.   Initial evaluation

  3.   Annual evaluation, including
  file review

  4.   MG retains right to approve/
  disapprove new providers and to discipline providers

  	
   

  	
  Submit copies of sub-delegation agreements to
  PacifiCare on an annual basis

  	
   

  	
  •    Annual assessment of
  sub-delegation process agreements, and policies and procedures

  



 


PacifiCare’s responsibilities
relating to Credentialing and those responsibilities, which PacifiCare has
delegated to the Medical Group, are outline above.


 


The Medical Group agrees to be
accountable for all responsibilities delegated by PacifiCare and will not
further delegate any such responsibilities without the prior approval by
PacifiCare.


 


PacifiCare will perform audits
annually and as needed to evaluate the group’s delegated status.  In the event there are deficiencies
identified in the audit, PacifiCare will provide a specific corrective action
plan.  If the group is not able to
comply with the corrective action plan within the specified time frame,
PacifiCare may revoke the group’s delegated status.


 

















 


MEDICAL
RECORDS DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation Status

  	
   

  	
  Medical Group

  Responsibility/

  Performance Measure

  	
   

  	
  Reporting Frequency

  	
   

  	
  PacifiCare Oversight

  
	
  Systematic Review and Action

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  •    Audit medical records from
  at least 90% of all primary care practice sites with 50 members or more, and
  2 years participation in the Medical Group.



  •    Audit tool to include all
  elements required by NCQA and PacifiCare.



  •    Trend results by
  practice-site and organization-wide. 
  Identify opportunities for improvement, describe interventions, and
  assess subsequent performance

  	
   

  	
  Annual submission of medical records review
  workplan.

  

  At least twice a year report at a minimum; the number of physicians whose
  medical records were reviewed; any practice- specific or organization-wide
  actions taken for improvement; and the results of those actions.

  	
   

  	
  •    Quality Improvement
  Committee or their designee reviews and approves Annual Workplan and
  monitoring report.



  •    Audit Medical Group’s
  policies and processes on an annual basis to include 5% or 50 worksheets to
  ensure conformance to standards and note deficiencies identified Facilitate
  and monitor Medical Group’s compliance with work plan and corrective action
  plans.



  •    Site visit assessments
  correlates with review of medical records

  



 


PacifiCare’s responsibilities
relating to Medical Records and those responsibilities, which PacifiCare has
delegated to the Medical Group, are outlined above.


 


The Medical Group agrees to be
accountable for all responsibilities delegated by PacifiCare and will not
further delegate any such responsibilities without the prior approval by
PacifiCare.


 


PacifiCare will perform audits
annually and as needed to evaluate the group’s delegated status.  In the event there are deficiencies
identified in the audit, PacifiCare will provide a specific corrective action
plan.  If the group is not able to
comply with the corrective action plan within the specified time frame,
PacifiCare may revoke the group’s delegated status.


 

















 


QUALITY
IMPROVEMENT DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting Frequency

  	
   

  	
  PacifiCare Oversight

  
	
  Program Structure

  	
   

  	
  Not Delegated

  	
   

  	
  Medical Group is required to maintain the following:

  •    QM Program

  •    Structure to carry out
  Quality Mgmt, Program

  •    QM Program outlining
  structure and content

  •    Program description must be
  evaluated annually and updated as necessary

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Program Operations

  	
   

  	
  Not Delegated

  	
   

  	
  •    Participate and cooperate in
  PacifiCare’s Quality Improvement program

  •    Collect data for
  PacifiCare’s Quality Improvement Activities

  •    Carry out corrective actions
  required by PacifiCare

  •    Have a peer review process

  •    Participate in PacifiCare
  Quality Improvement Committee, (if requested)

  •    Provide PacifiCare access to
  Medical Records

  •    Identify barriers to
  improving key initiatives

  •    Implement interventions

  •    Comply with PacifiCare’s
  confidentiality standards

   

  	
   

  	
   

  	
   

  	
   

  



 


PacifiCare does not formally delegate
to its contracting Medical Groups the responsibility for performing quality
management and improvement activities on behalf of PacifiCare.


 

















 


UTILIZATION
MANAGEMENT DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  PacifiCare
  Responsibility

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
  Prior Authorization

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  •    Responsible for ensuring
  eligibility and benefits appropriately followed.

  •    Responsible for ensuring
  appropriate structure, standards and Policies and Procedures followed.

  	
   

  	
  For prior authorization Medical Group (MG) must:

  •    Comply with PacifiCare’s
  Turn Around Times

  •    Follow PacifiCare’s approved
  medical necessity criteria

  •    Develop and document program
  to perform prior authorization function of OP and IP care meeting all
  regulatory and PacifiCare standards

  	
   

  	
  •   Weekly submission of
  authorization/denial logs

  •   Monthly
  submission of encounter data

  	
   

  	
  •  Pre-delegation onsite
  assessment to determine ability to perform function

  •  Annual onsite assessment to
  determine ability to perform function

  
	
  Concurrent Review

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  •    Responsible for ensuring
  eligibility and benefits appropriately followed.

  •    Responsible for ensuring
  appropriate structure, standards and Policies and Procedures followed.

  	
   

  	
  For concurrent review MG must:

  •    Comply with PacifiCare’s
  Turn Around Times

  •    Follow PacifiCare’s approved
  medical necessity criteria

  •    Develop and document
  programs to perform concurrent review of acute and Skilled Nursing Facility
  inpatients meeting all regulatory and PacifiCare standards

   

  	
   

  	
  •    Daily submission of
  inpatient census

  •    Monthly submission of Bed
  Days per thousand members per year

  	
   

  	
  •  Pre-delegation onsite
  assessment to determine ability to perform function

  •  Annual onsite assessment to
  determine ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Discharge Planning

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  •    Responsible for ensuring
  benefits appropriately followed.

  •    Responsible for ensuring
  appropriate structure, standards and Policies and Procedures followed.

  	
   

  	
  Develop and document program to perform discharge
  planning functions for Acute and Skilled Nursing Facility meeting all regulatory
  and PacifiCare standards

  	
   

  	
   

  	
   

  	
  •  Pre-delegation onsite
  assessment to determine ability to perform function

  •  Annual onsite assessment to
  determine ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Out Of Area (OOA)

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  •    If Group NOT delegated,
  responsible for concurrent review, authorization of services.

  •    PacifiCare responsible to
  report OOA cases to Group, and coordinate with Group returning patient to
  network providers.

  •    If Group is delegated,
  responsible for ensuring eligibility and benefits appropriately followed.

  •    Responsible for ensuring
  appropriate structure, standards and Policies and Procedures followed.

  	
   

  	
  Develop and document program to perform OOA
  concurrent review meeting all regulatory and PacifiCare standards

  	
   

  	
  If Group delegated should be included in weekly
  authorization/denial log submission

  	
   

  	
  •  Pre-delegation onsite
  assessment to determine ability to perform function

  •  Annual onsite assessment to
  determine ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Case Management

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  •    Responsible for ensuring
  eligibility and benefits appropriately followed.

  •    Responsible for ensuring
  appropriate structure, standards and Policies and Procedures followed.

  •    If NOT delegated,
  responsible for performing Case Management functions and coordinating care
  with Group

   

  	
   

  	
  Develop and document program to perform Case
  Management function meeting all regulatory and PacifiCare standards

   

   

  If NOT delegated, responsible to coordinate care
  with PacifiCare Case Managers

  	
   

  	
  Monthly submission of Case Management Log

  	
   

  	
  •  Pre-delegation onsite
  assessment to determine ability to perform function

  •  Annual onsite assessment to
  determine ability to perform function

  



 

















 


	 
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
  Transplants

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  •  Responsible for ensuring
  eligibility and benefits appropriately followed.

  •  Responsible for ensuring
  appropriate structure, standards, and Policies and Procedures followed.

  •  If not delegated to MG,
  responsible for providing medical necessity determination to MG and
  notification of status for pending transplants.

  	
   

  	
  Develop and document case management program to
  include transplants.

   

  •  Required to case manage these
  cases if delegated.

  •  If not delegated, responsible
  to provide PacifiCare with all necessary information to make medical
  determination.

  	
   

  	
  Monthly submission of transplant cases

  	
   

  	
  • Pre-delegation onsite
  assessment to determine ability to perform function.

  • Annual onsite assessment to
  determine ability to perform function.

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
  New Technology

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  •  Responsible for ensuring
  eligibility and benefits for new technology, and new uses for existing
  technology.

  •  Medical case review for
  determining appropriateness and medical necessity .

  •  Technology Assessment
  Committee will develop guidelines to support new technology and new uses for
  existing technology.

  	
   

  	
  Develop and document Policies and Procedures to
  support notification to PacifiCare of requests for new technology and
  coordination of making determinations.

  	
   

  	
  Ad Hoc

  	
   

  	
  • Pre-delegation onsite
  assessment to determine ability to perform function.

  • Annual onsite assessment to
  determine ability to perform function.

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
  Retroactive-review

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  •  Responsible for ensuring
  eligibility and benefits appropriately followed.

  •  Responsible for ensuring
  appropriate structure, standards and Policies and Procedures followed.

  	
   

  	
  For Retroactive-review MG must:

  •  Comply with PacifiCare’s Turn
  Around Times

  •  Follow PacifiCare’s approved
  medical necessity criteria 

  •  Develop and document program
  to perform retrospective review function.

  	
   

  	
  Weekly submission of authorization/denial logs

  	
   

  	
  • Pre-delegation onsite
  assessment to determine ability to perform function. 

  • Annual onsite assessment to
  determine ability to perform function.

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
  Denials

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  •  Responsible for ensuring
  eligibility and benefits appropriately followed.

  •  Responsible for ensuring
  appropriate structure, standards and Policies and Procedures followed.

  	
   

  	
  For Denials MG must: 

  •  Comply with PacifiCare’s Turn
  Around Times

  •  Follow PacifiCare’s approved
  medical necessity criteria 

  •  Develop and document of
  program to perform denial function meeting all regulatory and PacifiCare
  standards.

  	
   

  	
  Weekly submission of denial logs.

  	
   

  	
  • Pre-delegation onsite
  assessment to determine ability to perform function. 

  • Annual onsite assessment to
  determine ability to perform function.

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
  Benefit Interpretations

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  •   Responsible for ensuring
  eligibility and benefits appropriately followed. 

  •   Responsible for ensuring
  appropriate structure, standards and Policies and Procedures followed.

  	
   

  	
  For Benefit Interpretations MG must:

  •  Comply with PacifiCare’s Turn
  Around Times 

  •  Develop and document program
  to perform benefit interpretations function meeting all regulatory and
  PacifiCare standards.

  	
   

  	
   

  	
   

  	
  • Pre-delegation onsite
  assessment to determine ability to perform function. 

  • Annual onsite assessment to
  determine ability to perform function.

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
  Appeals

  	
   

  	
  Delegated or Not Delegated

  	
   

  	
  Responsible for handling all member and provider
  appeals.

  	
   

  	
  •  Develop and document program
  to support cooperation with PacifiCare in handling appeals.

  	
   

  	
  PacifiCare will provide the MG a quarterly report to
  show number of

  	
   

  	
  • Pre-delegation onsite
  assessment to determine ability to perform function.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  •   Notify PacifiCare of all
  member and provider appeals coming through MG.

  	
   

  	
  appeals and overturn rate for specific MG.

  	
   

  	
  • Annual onsite assessment to
  determine ability to perform function.

  
																	



 


PacifiCare’s responsibilities
relating to Medical Management and those responsibilities, which PacifiCare has
delegated to the Medical Group, are outlined above.


 


The Medical Group agrees to be
accountable for all responsibilities delegated by PacifiCare and will not
further delegate any such responsibilities without the prior written approval
by PacifiCare.


 


PacifiCare will perform audits
annually and as needed to evaluate the group’s delegated status.  In the event there are deficiencies
PacifiCare will perform audits annually and as needed to evaluate the group’s
delegated status.  In the event there
are deficiencies identified in the audit, PacifiCare will provide a specific
corrective action plan.  If the group is
not able to comply with the corrective action plan within the specified time
frame, PacifiCare may revoke the group’s delegated status.


 

















 


	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  11/17/01

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  
	
   

  	
  Gateway Physicians Medical
  Associates, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Tsoong

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  1/30/01

  	
   

  
								



 

















 


PACIFICARE OF CALIFORNIA


 


MEDICAL GROUP/IPA SERVICES AGREEMENT


(PROFESSIONAL CAPITATION)


 


EXHIBIT 3


 


PRODUCT ATTACHMENTS


VERIFICATION OF RECEIPT OF PROVIDER MANUAL,

FORM SUBSCRIBER AGREEMENT AND EVIDENCE OF COVERAGE


(This Exhibit 3 is an integral part of this Agreement)


 


MEDICAL GROUP NAME: Gateway
Physicians Medical Associates, Inc.


 


VERIFICATION
OF RECEIPT OF PROVIDER MANUAL AND SUBSCRIBER AGREEMENT AND EVIDENCE OF COVERAGE:


 


A
copy of the PacifiCare Provider Policies and Procedures Manual and standard
form Subscriber Agreement and Evidence of Coverage for each of the Managed Care
Plans specified below has been provided to Medical Group by PacifiCare prior to
the execution of this Agreement:


 


	
  By:

  	
  /s/ David
  Tsoong

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  3/01/01

  	
   

  



 


ATTACHMENTS:


 


The
following attachments, when initialed by  PacifiCare
and Medical Group, are an integral part of this Agreement:


 


	
   

  	
   

  	
  PacifiCare

  	
   

  	
  Medical

  
	
  Group

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PacifiCare Commercial
  Health Plan

  	
   

  	
  /s/ Brian Jeffrey

  	
   

  	
  /s/ David Tsoong

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PacifiCare Commercial POS
  Health Plan

  	
   

  	
  /s/ Brian Jeffrey

  	
   

  	
  /s/ David Tsoong

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Secure Horizons Health
  Plan

  	
   

  	
  /s/ Brian Jeffrey

  	
   

  	
  /s/ David Tsoong

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Division of Financial
  Responsibility

  	
   

  	
  /s/ Brian Jeffrey

  	
   

  	
  /s/ David Tsoong

  



 


 

















 


PRODUCT ATTACHMENT C


 


SECURE HORIZONS HEALTH PLAN


 


This
Product Attachment C, along with the Base Agreement, sets forth the terms and
conditions which are applicable to the Secure Horizons Health Plan, as defined below.


 


ARTICLE 1

DEFINITIONS


 


The
following terms shall have the meaning attributed below for purposes of the
Secure Horizons Health Plan, as described in this Product Attachment C.  Capitalized terms not otherwise defined herein
shall have the meaning assigned to them in the Base Agreement.


 


1.l                                    HCFA is the Health Care Financing Administration, an administrative agency
of the United States Government, responsible for administering the Medicare
program.


 


1.2                              HCFA Agreement is the Medicare + Choice contract between
PacifiCare and HCFA.


 


1.3                              Medicare is the Hospital Insurance Plan (Part A) and the Supplementary Medical
Insurance Plan (Part B) provided under Title XVIII of the Social Security Act,
as amended.


 


1.4                              Monthly HCFA Payment is the revenue received by PacifiCare each
month from HCFA, as determined by HCFA, for providing Covered Services to
Secure Horizons Members.


 


1.5                              Secure Horizons Health Plan is the prepaid health plan operated by
PacifiCare pursuant to the HCFA Agreement which provides Covered Services to
individuals (including retirees) eligible to receive Medicare benefits.


 


1.6          Secure Horizons Members are Medical Group Members enrolled in the
Secure Horizons Health Plan.


 


1.7                                 Secure Horizons Revenue is the Monthly HCFA Payment for Medical
Group Members enrolled in the Secure Horizons Health Plan, less payments
for broker and agent commissions/compensation (when applicable), premium taxes
and amounts used to fund the Market Specific Benefit Program (as defined below).


 

















 


ARTICLE 2

DUTIES OF MEDICAL GROUP


 


2.1                                 Compliance with HCFA Agreement and Federal
Medicare Law.  Medical Group shall comply with all
requirements in the HCFA Agreement which are applicable to Medical Group as a
subcontractor of PacifiCare as a result of this Agreement.  Without limiting the foregoing, Medical
Group shall ensure that all provisions of the HCFA Agreement which are
applicable to Medical Group’s Participating Providers as a subcontractor of
PacifiCare are included in Medical Group’s subcontracts with its Participating
Providers.  A copy of the HCFA Agreement
shall be made available to Medical Group concurrent with the execution of this
Agreement.  Medical Group and its
Participating Providers shall comply with Title XVIII of the Social Security
Act and the regulations adopted thereunder by HCFA for the Medicare program.


 


2.2                                 Medicare Participation Standards. 
Medical Group shall require that all of its Participating Providers who
provide services to Secure Horizons Members meet the standards for
participation and all applicable requirements for providers of health care
services under the Medicare program.  In
addition, Medical Group shall require that all facilities and offices utilized
by Medical Group and its Participating Providers to provide or arrange Covered
Services to Secure Horizons Members shall comply with facility standards
established by HCFA.


 


2.3                                 Specific Provisions Pertaining to Benefits,
Coverage and Beneficiary Protections.  Without limiting any of
Medical Group’s other obligations under this Agreement, Medical Group
specifically agrees to comply with the following policies and procedures:


 


(i)                                     PacifiCare’s policies pertaining to the
collection of copayments which prohibit the collection of copayments for
routine injections, routine immunizations, flu immunizations, and the
administration of pneumococcal/pneumonia vaccine.


 


(ii)                                  PacifiCare’s policies pertaining to
pre-certification which provide that Secure Horizons Members may directly
access a provider for mammography and influenza vaccinations and women’s health
specialists for routine and preventative health care.


 


(iii)                               PacifiCare’s policies pertaining to complex
and serious conditions which provide for procedures to identify, assess and
establish treatment plans for persons with complex or serious medical
conditions.


 


(iv)                              PacifiCare’s policies pertaining to
enrollment and assessment of new Secure Horizons Members including requirements
to conduct a health


 

















 


assessment
of all new Secure Horizons Members within ninety (90) days of the effective
date of their enrollment.


 


2.4                                 Confidentiality of Medical Records. 
Medical Group shall establish and maintain procedures and controls so
that no information contained in its records or obtained from HCFA or from
others in carrying out the terms of this Agreement shall be used by or
disclosed by it, its agents, officers, or employees except as provided in
Section 1106 of the Social Security Act, as amended, and regulations prescribed
thereunder.


 


2.5                                 Submission of Data. 
Medical Group shall cooperate with PacifiCare in submitting to the
Secretary of Health and Human Services statistical data pertaining to Covered
Services provided by Medical Group, enrollment and disenrollment data and any
other reports the Secretary may reasonably require to carry out its functions
under the Medicare + Choice program.


 


2.6                                 Advance Directives. Medical Group shall document all Secure
Horizons Member patient records with respect to the existence of an Advance
Directive in compliance with the Patient Self-Determination Act (Section 4751
of the Omnibus Reconciliation Act of 1990), as amended, and other appropriate
laws.  For purposes of this Agreement,
an Advance Directive is a  Member’s
written instructions, recognized under State law, relating to the provision of
health care when the Member is not competent to make health care decisions as
determined under State law.  Examples of
Advance Directives are living wills and durable powers of attorney for health
care.


 


2.7                                 Non-Discrimination. 
Medical Group understands that HCFA requires compliance with the
provisions of this Section as a condition for participation in the Secure
Horizons Health Plan.  Medical Group and
its Participating Providers shall not unlawfully discriminate against any of
their employees or applicants for employment or against any Members on the
basis of race, color, creed, national origin, ancestry, religion, sex, marital
status, age (except as provided by law), sexual orientation, gender identity,
or physical or mental handicap, including HIV status.  Medical Group and its Participating Providers shall ensure that
the evaluation and treatment of their employees and applicants for employment
and of Members are free of such discrimination.  Medical Group and its Participating Providers shall comply with
Title VI of the Civil Rights Act of 1964, as amended (42 U.S.C Section 2000d
et. seq.), Section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C.
Section 794) and the regulations thereunder, Title IX of the Education
Amendments of 1972, as amended (20 U.S.C. Section 1681 et. seq.), the Age
Discrimination Act of 1975, as amended (42 U.S.C. Section 6101 et. seq.),
Section 654 of the Omnibus Budget Reconciliation Act of 1981, as amended (42
U.S.C. Section 9849), the Americans With Disabilities Act (P.L. 101-365) and
all implementing regulations, guidelines and standards as are now or may be
lawfully adopted under the above statutes.


 

















 


2.8                                 Termination of HCFA Agreement.  In
the event the HCFA Agreement is terminated or not renewed, the provisions of
this Agreement relating to the Secure Horizons Health Plan shall automatically
terminate unless otherwise agreed by HCFA and PacifiCare.


 


ARTICLE 3

COMPENSATION


 


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, plus zero dollars ($0) for each Secure Horizons Member for whom
PacifiCare has received a monthly member premium, subject to the adjustments
set forth in Article 5 of the Base Agreement and the adjustments set forth
below in this Section.


 


3.1.1                        Adjustment for ISL Premium.  In
calculating Capitation Payments due to Medical Group, PacifiCare shall deduct
the ISL Premium amount set forth herein from the amounts otherwise due to
Medical Group, unless PacifiCare has approved of Medical Group’s opting out of
PacifiCare’s ISL Program.


 


3.2           ISL Program.  The ISL Deductible, ISL
Premium and ISL Coinsurance for the Secure Horizons Plan shall initially be:


 


(i)                                     ISL Deductible shall be zero dollars ($0) per
Secure Horizons Member per calendar year.


 


(ii)                                  ISL Premium shall be zero percent (0%) of the
Secure Horizons Revenue.


 


(iii)                               ISL Coinsurance shall be zero percent (0%) of
the Cost of Care in excess of the ISL Deductible.


 


If
PacifiCare has approved of Medical Group’s opt out of the ISL Program, the
above amounts and percentages will reflect “zero.” In such event, Medical Group
shall be required to obtain ISL coverage from a third-party insurance carrier
in accordance with Section 5.5.5 of the Base Agreement.


 


3.3                                 Secure Horizons Hospital Incentive Program. 
PacifiCare shall establish and administer an annual Hospital Incentive
Program for the Secure Horizons Health Plan (the “SHIP”).  The SHIP is designed to provide an incentive
for the efficient and effective use of Hospital Services, and shall be
calculated utilizing the terms defined below.


 


3.3.1                        Reinsurance Program. 
Claims under the Reinsurance Program shall be valued at the Cost of Care
as defined in this Agreement.  The


 

















 


Reinsurance
Deductible, Reinsurance Premium and Reinsurance Coinsurance for the Secure
Horizons Plan shall initially be:


 


(i)                                     Reinsurance Deductible shall be zero dollars
($0) per Secure Horizons Member per calendar year.


 


(ii)                                  Reinsurance Premium shall be zero percent
(0%) of the Secure Horizons Revenue.


 


(iii)                               Reinsurance Coinsurance shall be fifty
percent (50%) of the Cost of Care for amounts in excess of the Reinsurance
Deductible but less than two hundred fifty thousand dollars ($250,000) and
twenty percent (20%) of the Cost of Care for amounts in excess of two hundred
fifty thousand dollars ($250,000).


 


3.3.2                        SHIP Budget.  The SHIP Budget for Secure
Horizons Members shall be forty percent (40%) 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, less PacifiCare
Secure Horizons Plan Reinsurance Premium, if any.


 


3.3.3                        SHIP Expense. 
SHIP Expense shall be equal to the sum of the following:


 


(i)                                     Inpatient costs for Hospital Services
rendered to Secure Horizons Members by Participating Providers valued at the
actual costs incurred by PacifiCare; plus,


 


(ii)                                  Other Hospital Services rendered to Secure
Horizons Members by Participating Providers other than inpatient services,
valued at actual costs incurred by PacifiCare; plus,


 


(iii)                               The actual amount paid for Hospital Services,
which are rendered by non-Participating Providers; minus,


 


(iv)                              Amounts paid by PacifiCare under the
Reinsurance Program, if any; minus,


 


(v)                                 Any and all amounts received from third
parties for Hospital Services provided to Secure Horizons Members through
coordination of benefits, work-related accidents or injuries, stop-loss and
reinsurance payments and Medical Group Member Copayments.


 


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


 


3.3.5                        SHIP Deficit.  In
the event the SHIP Expense is greater than the SHIP Budget, the deficit shall
be allocated as  follows:


 


*** to Medical Group up to five percent (5%) of the
SHIP Budget


***
to PacifiCare


 


3.3.6                        Settlements and Reconciliation. 
Interim settlements and the final settlement and reconciliation of the
SHIP shall be performed by PacifiCare as provided in Article 5 of the Base
Agreement.


 


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”) and add to it
*** per Secure Horizons Plan Member per month, which amount is established as a
credit for rebates received from pharmaceutical manufacturers.  This credit may or may not reflect the total
pharmaceutical manufacturer rebate revenues received by PacifiCare for purposes
of funding and administering the MSBP. 
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, fifty percent (50%) of
the surplus shall be allocated to Medical Group.


 

















 


 


 


3.4.4                        MSBP Deficit.  In
the event the MSBP Expense is greater than the MSBP Budget, fifty percent (50%)
of the deficit shall be allocated to Medical Group not to exceed five dollars
($5.00) PMPM.


 


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.


 


3.5                                 Collection of Charges From Third Parties When
Medicare Is Not the Primary Payor.  Medical Group shall accept
Capitation Payments from PacifiCare as payment in full for Covered Services
provided to Secure Horizons Members; provided, however, when Medicare is not
the primary payor for Covered Services, such as when the Secure Horizons Member
is entitled to payment from another third party or for payment for a workers’
compensation claim, or from other primary insurance coverage maintained by
Secure Horizons Member, Medical Group shall make no demand upon PacifiCare for
reimbursement under the Individual Stop-Loss Program until all primary sources
of payment have been pursued and it is  determined
that full payment cannot be obtained within ten (10) months from the date of
the provision of Covered Services.


 

















 


IN WITNESS WHEREOF, the
parties hereto have executed this Product Attachment C.


 


 


	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Jeffrey

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  11/17/01

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  
	
   

  	
  Gateway Physicians Medical
  Associates, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Tsoong

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  1/30/01

  	
   

  
							



 

















 


DIVISION OF
FINANCIAL RESPONSIBILITY


 


The following matrix
outlines the division of financial responsibility between PacifiCare, Medical
Group and the Hospital Incentive Program, the intent being to clarify Covered
Services categories in order to provide for accurate administration.  The matrix serves as a model under which
broad Covered Service categories suggest the appropriate financial responsibility
for Covered Services not specifically listed. 
The applicable Subscriber Agreement and Evidence of Coverage should be
consulted for an accurate and complete description of Covered Services and the
Provider Manual for administrative clarification.  Member benefit information should be verified prior to the
provision of services.


 


Division
of Financial Responsibility


 


KEY:
M=Opt-out to Medicare benefit for Hospice


 


	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
  Allergy
  - Serum - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Allergy
  - Testing & Tx - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Ambulance
  (Air and Ground) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Amniocentesis
  - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Anesthesiology
  - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Autologous
  Blood Services - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Biofeedback
  (Medically Necessary) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Detox) - IP & OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Detox) - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - IP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - IP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - IP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - IP - Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - OP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - OP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - OP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - OP - Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemotherapy
  (Including Chemotherapy Drugs - Inject/Oral) - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemotherapy
  - IP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic
  - Medical - OP - Fac  & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic
  - Supplemental - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Circumcision
  - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Diagnostic
  Tests - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME
  - IP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME
  Ostomy/Colostomy Supplies, Prosthetics/Orthotics - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Emergency
  Room - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Emergency
  Room - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic
  Studies - IP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic
  Studies - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic
  Studies - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Abortions - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Abortions - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Contraceptive Devices - Insertion - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Contraceptive Devices - Non-Rx (eg. Norplant/IUD) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Contraceptive Devices - Prescription - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  



 












*** All references to
division of financial responsibility have been deleted.


 

















 


	
  Family
  Planning - GIFT/ZIFT/IVF - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Infertility Procedures - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Infertility Procedures - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Infertility Testing - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Sterilization - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Sterilization - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Sterilization - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Fetal
  Monitoring - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Health
  Education - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Health
  Eval/Physical

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing
  Aids/Molds - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing
  Screening (Audiologic Evaluation) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hemodialysis
  / Dialysis - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hemodialysis
  / Dialysis - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Home
  Health Care / Home Infusion Therapy - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hosp
  Based Phys Interpretative Serv Incl Radiology & Pathology - IP & OP -
  Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospice
  Services (Medicare) - IP - Fac & Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospice
  Services - IP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospitalization
  Services - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Immunizations
  & Inoculations (Medically Necessary) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Injectables
  - Not Part of Outpatient Pharmacy Benefits - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Laboratory/Pathology
  (Diagnostic Only) - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Laboratory/Pathology
  (Diagnostic Only) - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Laboratory/Pathology
  - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Lithotripsy
  - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Lithotripsy
  - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Med/Surg
  Supplies (casts, splints, bandages) - Office - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Medication
  - Prescription - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental
  Health (Crisis Intervention) - OP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental
  Health - IP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental
  Health - IP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental
  Health - IP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental
  Health - IP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental
  Health - OP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental
  Health - OP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental
  Health - OP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental
  Health - OP - Prof - SF

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Observation
  Room - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Oral
  Surgery / Dental Services - Accident & Injury Only - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Oral
  Surgery / Dental Services - Accident & Injury Only - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Out
  of Area - IP & OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Out
  of Area - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Outpatient
  Surgery - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Outpatient
  Surgery - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Physician
  Services (All Professional Services) - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Prosthetics
  - Surgical Implants - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation
  Therapy - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation
  Therapy - OP - Fac

  	
   

  	
  *** 

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiology
  (Diagnostic Only) - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiology
  (Diagnostic Only) - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiology
  - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Reconstructive
  Surgery - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Reconstructive
  Surgery - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Rehabilitation
  - Cardiac/OT/PT/RT/ST - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Rehabilitation
  - Cardiac/OT/PT/RT/ST - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Skilled
  Nursing Facility - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Sleep
  Studies - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  



 












*** All references to
division of financial responsibility have been deleted.


 

















 


	
  TMJ
  - Evaluation (excludes dental exams/treatment) - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transfusions
  - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplants
  - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplants
  - IP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Urgent
  Care - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Vision
  - Medical Treatment - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Vision
  - Refraction for Contact Lenses/Frames - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Vision
  Care Materials - Contact Lenses/Frames (non-cataract) - OP - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Vision
  Care Materials - Contact Lenses/Frames (non-cataract) - OP - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  



 


 












*** All references to
division of financial responsibility have been deleted.

















 





 


	
   

  	
  5701 Karella Avenue

  
	
   

  	
  Cypress, California
  90630-5019

  
	
   

  	
  Tel (714) 952-1121

  



 


July 11, 2001


 


 


	
  Raj Takhar, CEO

  	
  SENT VIA FACSIMILE: 714-490-1975

  
	
  Gateway Physicians
  Medical Associates

  
	
  710 North Euclid Street

  
	
  Anaheim, CA 92801

  



 


 


Dear Raj,


 


In follow up to our
previous discussions about the implementation of Age/Sex/Benefit Adjusted
Capitation for Gateway Physicians Medical Associates – Placentia Linda &
United Western Medical Center, attached please find our Rate Grid that will be
effective 7/1/2001.  The calculation is
based on Membership distribution as of July, 2001.  The grid for Gateway 16206 ties to Gateway – Placentia, and the
grid for 16210 ties to Gateway – United Western Medical Center.


 


Effective 8/1/2001
capitation will be paid at the schedule attached.  Should you have any questions, please give me a call at 714-226-8719.


 


Yours truly,


 


	
  /s/ Ivy Thomas-Mathews

  	
   

  
	
  Ivy Thomas-Mathews

  
	
  Contract Manager

  
	
  PacifiCare of
  California

  



 

















 


PacifiCare of California - Commercial


Gateway (#16206)


 


Calculation of
Fixed Rate Capitation - Age/Sex & Benefit Adjusted


 


	
  Base Rate

  Age/Sex Plan Factor

  	
  ***

  	
   

  
	
  Expected Cap
  Yield

  	
  ***

  	
   

  



 


A. Rate Grid


 


	
  Age Sex
  Category

  	
   

  	
  CV Copay

  Plan Factor

  Age/Sex Factor

  	
   

  	
   

  	
   

  	
  Total

  	
   

  
	
  Child 0

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Child 1

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Child 2-9

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Child 10-17

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Female 18-19

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Female 20-24

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Female 25-29

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Female 30-34

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Female 35-39

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Female 40-44

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Female 45-49

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Female 50-54

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Female 55-59

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Female 60-64

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Female 65 plus

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Male 18-19

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Male 20-24

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Male 25-29

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Male 30-34

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Male 35-39

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Male 40-44

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Male 45-49

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Male 50-54

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Male 55-59

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Male 60-64

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Male 65 plus

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  
	
  Total

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  	
   

  



 












*** All references to division of financial responsibility


 

















 


Calculation of
Fixed Rate Capitation - Age/Sex & Benefit Adjusted


B. Membership Distribution as of:
07/2001


 


	
  Age Sex Category

  	
   

  	
  Membership

  	
   

  
	
  Child 0

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Child 1

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Child 2-9

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Child 10-17

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 18-19

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 20-24

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 25-29

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 30-34

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 35-39

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 40-44

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 45-49

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 50-54

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 55-59

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 60-64

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 65 plus

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 18-19

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 20-24

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 25-29

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 30-34

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 35-39

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 40-44

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 45-49

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 50-54

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 55-59

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 60-64

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 65 plus

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  



 


C. Percentage Membership
Distribution


 


	
  Age Sex Category

  	
   

  	
  Membership

  	
   

  
	
  Child 0

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Child 1

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Child 2-9

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Child 10-17

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 18-19

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 20-24

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 25-29

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 30-34

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 35-39

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 40-44

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 45-49

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 50-54

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 55-59

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 60-64

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Female 65 plus

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 18-19

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 20-24

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 25-29

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 30-34

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 35-39

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 40-44

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 45-49

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 50-54

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 55-59

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 60-64

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Male 65 plus

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  ***

  	
   

  	
   

  	
   

  



 












*** All references to division of financial responsibility


 

















 


Calculation of
Fixed Rate Capitation - Age/Sex & Benefit Adjusted


 


	
  Base Rate

  Age/Sex Plan Factor

  	
  ***

  	
   

  
	
  Expected Cap
  Yield

  	
  ***

  	
   

  



 


A. Rate Grid


 


	
  Age Sex Category

  	
   

  	
  CV Copay

  Plan Factor

  Age/Sex Factor

  	
   

  	
   

  	
   

  	
  Total

  
	
  Child 0

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Child 1

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Child 2-9

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Child 10-17

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Female 18-19

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Female 20-24

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Female 25-29

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Female 30-34

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Female 35-39

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Female 40-44

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Female 45-49

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Female 50-54

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Female 55-59

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Female 60-64

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Female 65 plus

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Male 18-19

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Male 20-24

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Male 25-29

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Male 30-34

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Male 35-39

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Male 40-44

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Male 45-49

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Male 50-54

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Male 55-59

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Male 60-64

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Male 65 plus

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  
	
  Total

  	
   

  	
  ***

  	
   

  	
   

  	
   

  	
  ***

  



 












*** All references to division of financial responsibility


 

















 


Calculation of
Fixed Rate Capitation - Age/Sex & Benefit Adjusted


B. Membership Distribution as of:
07/2001


 


	
  Age Sex Category

  	
   

  	
  Membership

  
	
  Child 0

  	
   

  	
  ***

  
	
  Child 1

  	
   

  	
  ***

  
	
  Child 2-9

  	
   

  	
  ***

  
	
  Child 10-17

  	
   

  	
  ***

  
	
  Female 18-19

  	
   

  	
  ***

  
	
  Female 20-24

  	
   

  	
  ***

  
	
  Female 25-29

  	
   

  	
  ***

  
	
  Female 30-34

  	
   

  	
  ***

  
	
  Female 35-39

  	
   

  	
  ***

  
	
  Female 40-44

  	
   

  	
  ***

  
	
  Female 45-49

  	
   

  	
  ***

  
	
  Female 50-54

  	
   

  	
  ***

  
	
  Female 55-59

  	
   

  	
  ***

  
	
  Female 60-64

  	
   

  	
  ***

  
	
  Female 65 plus

  	
   

  	
  ***

  
	
  Male 18-19

  	
   

  	
  ***

  
	
  Male 20-24

  	
   

  	
  ***

  
	
  Male 25-29

  	
   

  	
  ***

  
	
  Male 30-34

  	
   

  	
  ***

  
	
  Male 35-39

  	
   

  	
  ***

  
	
  Male 40-44

  	
   

  	
  ***

  
	
  Male 45-49

  	
   

  	
  ***

  
	
  Male 50-54

  	
   

  	
  ***

  
	
  Male 55-59

  	
   

  	
  ***

  
	
  Male 60-64

  	
   

  	
  ***

  
	
  Male 65 plus

  	
   

  	
  ***

  
	
  Total

  	
   

  	
  ***

  



 


C. Percentage Membership
Distribution


 


	
  Age Sex Category

  	
   

  	
  Membership

  
	
  Child 0

  	
   

  	
  ***

  
	
  Child 1

  	
   

  	
  ***

  
	
  Child 2-9

  	
   

  	
  ***

  
	
  Child 10-17

  	
   

  	
  ***

  
	
  Female 18-19

  	
   

  	
  ***

  
	
  Female 20-24

  	
   

  	
  ***

  
	
  Female 25-29

  	
   

  	
  ***

  
	
  Female 30-34

  	
   

  	
  ***

  
	
  Female 35-39

  	
   

  	
  ***

  
	
  Female 40-44

  	
   

  	
  ***

  
	
  Female 45-49

  	
   

  	
  ***

  
	
  Female 50-54

  	
   

  	
  ***

  
	
  Female 55-59

  	
   

  	
  ***

  
	
  Female 60-64

  	
   

  	
  ***

  
	
  Female 65 plus

  	
   

  	
  ***

  
	
  Male 18-19

  	
   

  	
  ***

  
	
  Male 20-24

  	
   

  	
  ***

  
	
  Male 25-29

  	
   

  	
  ***

  
	
  Male 30-34

  	
   

  	
  ***

  
	
  Male 35-39

  	
   

  	
  ***

  
	
  Male 40-44

  	
   

  	
  ***

  
	
  Male 45-49

  	
   

  	
  ***

  
	
  Male 50-54

  	
   

  	
  ***

  
	
  Male 55-59

  	
   

  	
  ***

  
	
  Male 60-64

  	
   

  	
  ***

  
	
  Male 65 plus

  	
   

  	
  ***

  
	
  Total

  	
   

  	
  ***