Exhibit
10.168


 


PacifiCare of California
Medical Group/IPA Services Agreement (Professional Capitation), effective
January 1, 2001, between PacifiCare of California, Inc.  and Prospect Health Source Medical Group


 












*** 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 Prospect Health Source
Medical Group (“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.


 


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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 arc 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


 


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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.


 


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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.


 


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1.28                           Quality Management and
Improvement (“OI”) 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
Service.  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.


 


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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
Corporations 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 Slate 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 


 


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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.


 


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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


 


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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 ninety (90) 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.


 


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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 2.4.5 or in the event of termination
by PacifiCare pursuant to Section x.x. 
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 January 1, 2001.


 


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


 


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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 a
manner 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 Medical Group’s or
Participating Provider’s 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 and shall reimburse PacifiCare for the actual
copying expense.  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


 


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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.


 


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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                        Letter of Credit.  As a material condition to PacifiCare’s obligations pursuant to
this Agreement, Medical Group shall obtain for the benefit of PacifiCare a
Letter of Credit to secure the obligations of Medical Group under this
Agreement (“Letter of Credit”).


 


The
Letter of Credit shall be in the minimum amount of ***, which amount shall be
increased with the mutual consent of Medical Group as reasonably determined by
PacifiCare from time to time throughout the term of this Agreement (but not
more often than semi-annually) to equal three (3) months of Medical Group’s
IBNP Expenses, as defined below.


 


All
the terms and conditions of the Letter of Credit shall be subject to
PacifiCare’s approval.  Without limiting
the foregoing, the Letter of Credit shall provide that at such time that
Medical Group is Insolvent, the Letter of Credit funds shall be unconditionally
available to PacifiCare to satisfy Medical Group’s obligations under this
Agreement.  The Letter of Credit shall
be effective as of the Commencement Date and shall remain in full force and
effect throughout the entire term of this Agreement.  In the event Medical Group fails to maintain a Letter of Credit
for the entire term of the Agreement, PacifiCare shall withhold ten percent
(10%) of Medical Group’s monthly Capitation Payments until the total amount of
capitation withheld pursuant to this Section 2.8.2 is ***.  Any amounts withheld pursuant to this
Section shall be used to secure Medical Group’s obligations under this
Agreement.


 


13

















 


PacifiCare shall not be responsible for
any cost, expense, or administrative fee in connection with the establishment
or maintenance of the Letter of Credit. 
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.


 


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


 


14

















 


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


 


15

















 


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 and Medical Group has had an opportunity to review these findings,
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


 


16

















 


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, 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


 


17

















 


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


 


18

















 


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


 


19

















 


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,


 


20

















 


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


 


21

















 


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


 


22

















 


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.


 


23

















 


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


 


24

















 


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

  	
   

  	
  4.0

  	
  %

  
	
  Credentialing

  	
   

  	
  0.5

  	
  %

  
	
  Claims Processing

  	
   

  	
  3.0

  	
  %

  



 


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
initially be zero percent (0%) of premium 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 may establish and/or adjust a withhold from Medical
Group’s monthly Capitation Payment for purposes of offsetting potential
incentive program deficits.  PacifiCare
shall provide full and complete data, of which shall be in mutually agreeable
data format and which calculations, including IBNR, shall consistent with
industry standards and accounting principles, which


 


25

















 


demonstrates
the basis of the withhold modification to the group prior to any withhold
modification.  The group will have
thirty (30) days to review and respond to the data.  At no time will the Incentive Program Withhold exceed the
downside risk limit proposed, or any mutually agreed upon limit.  The Incentive Program Withhold 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.  As of the date of
this Agreement, it is understood that the withhold for Secure Horizons is set
at *** PMPM; and the withhold for PacifiCare Commercial and Commercial POS is
***.


 


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.


 


26

















 


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


 


27

















 


(“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%)


 


28

















 


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.


 


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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
eighty–five percent (85%) 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


 


30

















 


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 payer 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


 


31

















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 recoup any and all amounts owed
by Medical Group to PacifiCare against amounts, including Capitation Payments,
owed by PacifiCare to Medical Group. 
Before exercising such right, PacifiCare shall provide Medical Group
with at least thirty (30) days’ prior written notice specifying the amount to
be recouped, and if PacifiCare receives payment of such amount from Medical
Group prior to the expiration of such thirty (30) day period, such amount shall
not be recouped.  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 as a result of the
outcome of the Member appeals and grievance procedure; (iv) 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.


 


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5.14                           Signing Bonus.  In addition to the compensation described elsewhere in this
Agreement, PacifiCare shall pay to Medical Group a signing bonus equal to
$488,000 within thirty (30) days following the execution of this
Agreement.  The Signing Bonus shall be
utilized for Medical Group solely for the purposes set forth below:


 


5.14.1                  System Enhancement.  Enhancement of Medical Group’s IDX system’s reporting
capabilities so that level of care information can be effectively reported to
PacifiCare as determined by PacifiCare. 
Medical Group agrees to complete this enhancement on or before August
31, 2001.


 


5.14.2                  Hospitalist Program.  Implementation of a hospitalist program which covers Midway
Medical Center, Brotman Medical Center, Century City Medical Center, and
Cedars-Sinai Medical Center by June 30, 2001. 
The hospitalist program, including without limitation personnel and
staffing levels, must be acceptable to PacifiCare as determined by PacifiCare’s
Regional Medical Director.  The
hospitalist program must utilize medical management decision criteria and
critical paths in daily patient management consistent with PacifiCare’s
criteria.


 


5.14.3                  SNF Management Program.  Implementation of a Skilled Nursing Facility (“SNF”) Management
program by June 30, 2001.  The SNF
Management Program, including personnel and staffing levels, must be acceptable
to PacifiCare, as determined by PacifiCare’s Regional Medical Director.


 


5.15                           Additional Funds Bonus.  Medical Group shall be eligible for the Additional Funds Bonus
(“AFB”) to the extent resources are available to fund this bonus and to the
extent Medical Group has complied with the requirements as described below.


 


5.15.1                  Funding of AFB.  PacifiCare has created a fund in the amount of $300,000 (the “AFB
Fund”) to cover expenses that it may incur as the result of insolvency,
bankruptcy or dissolution (collectively, the “Dissolution of Old Health
Source”) of Health Source Medical Group, a California professional medical corporation
(“Old Health Source”).  PacifiCare shall
deduct from the AFB Fund any and all expenses it incurs during the period
beginning December 1, 2000 and ending January 31, 2002 (the “Calculation
Period”) as the result of the Dissolution of Old Health Source.  These expenses may include, without
limitation, costs incurred by PacifiCare in paying member or provider claims
that were unpaid by Old Health Source or in paying any claims that may be
asserted by Old Health Source against PacifiCare.


 


5.15.2                  Excluded Expenses.  Expenses deducted from the AFB Fund shall not include the
following:


 


(a)                                  Claims paid by PacifiCare prior
to April 10, 2001.


(b)                                 Claims not reviewed by Medical
Group in accordance with the following. 
PacifiCare shall provide Medical Group with prior notice of claims that
PacifiCare intends to pay.  Medical
Group may reasonably object to any


 


33

















 


proposed
payment on the basis that the claim has already been paid or to provide
PacifiCare with information on the correct contracted rate for payment.  If Medical Group fails to respond with
information on such claims within ten (10) working days for non-urgent claims
or within forty-eight (48) hours (based on a calendar day) for claims which are
urgent, PacifiCare may deduct the claim payment from the AFB Fund.  Urgent claims shall be those claims
identified by PacifiCare upon its provision of the foregoing notice to the
Medical Group and shall be claims which require immediate payment in order to
assure regulatory compliance or ensure access to health care services by
PacifiCare Members.


 


5.15.3                  Interim Settlement.  PacifiCare shall provide Medical Group with a report on the
balance of funds in the AFB Fund for the period ended September 1, 2001 no later
than September 30, 2001.  Together with
delivery of the report, PacifiCare shall pay Medical Group one-half (1/2) of
the balance of funds in the AFB Fund, which payment shall not be subject to
recumbent upon final settlement of the AFB Fund as provided below.


 


5.15.4                  Fund Calculation and
Distribution of AFB.  Within thirty (30) days following the
expiration of the Calculation Period, PacifiCare shall calculate whether any
funds remain in the AFB Fund and notify Medical Group of the results of this
calculation.  If Funds are available in
the AFB Fund at the end of the Calculation Period, PacifiCare shall distribute
these funds to Medical Group within sixty (60) days following the expiration of
the Calculation Period.  However,
PacifiCare shall have no obligation to pay Medical Group any of the AFB Funds
if Medical Group is Insolvent, is in material breach of the Agreement, has
failed to meet its obligations under Section 5.14 above or if Medical Group has
provided a notice of non-renewal or notice of termination for cause under the
terms of this Agreement.


 


ARTICLE 6

TERM AND TERMINATION


 


6.1                                 Term.  The term of this Agreement shall commence on January 1, 2001 (the
“Commencement Date”) and end on December 31, 2001.  Thereafter, the term of this Agreement shall be automatically
extended for twelve months on each January 1 (“Anniversary Date”), unless
either party provides the other with written notice of such party’s intention
not to extend the term at least one hundred twenty (120) calendar days prior to
the Anniversary Date or until this Agreement is appropriately terminated by
either party as provided herein.


 


6.2                                 Deletion of Secure Horizons
without Cause.  Notwithstanding the above, and only after
June 1, 2001, Product Attachment C, Secure Horizons Healthplan, may be deleted
in its entirety upon ninety (90) days prior written notice by either party.


 


34

















 


6.3                                 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.


 


6.3.1                        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 (30) days of the Capitation Payment due date or
failure by PacifiCare to make any other payments due Medical Group hereunder
within forty-five (45) 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.


 


6.3.2                        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 thirty (30) 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.


 


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(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.


 


6.3.3                        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.


 


6.4                                 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.


 


6.5                                 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.


 


6.6                                 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


 


36

















 


the
patient medical files shall be borne by Medical Group if Medical Group
terminates this Agreement or by PacifiCare if PacifiCare terminates this
Agreement.  Medical Group shall
cooperate with PacifiCare in maintaining the confidentiality of such Member
medical records at all times.


 


6.7                                 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.


 


6.8                                 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


 


37

















 


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


 


38

















 


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


 


39

















 


Cypress,
CA 90630-5015

Attn: Vice President


 


If
to Medical Group:


 


Prospect Health Source Medical Group

6083 Bristol Parkway, Suite 100

Culver City, CA 90230

Attn: Vice President


 


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.


 


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


 


40

















 


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


 


41

















 


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


 


42

















 


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.  Such prior written notice shall be given 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


 


43

















 


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 Corporations, 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


 


44

















 


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) twelve (12) 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


 


45

















 


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


 


46

















 


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


 


47

















 


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.


 


48

















 


(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 arc 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.


 


8.3.5                        Services to be Provided to
Members Transferred to Medical Group from a Terminated Participating Provider.  Subject to Medical Group’s capacity to accept additional Members,
Medical Group agrees to accept transfers of Members from other Participating
Providers in circumstances in which such Participating Provider’s agreement
with PacifiCare has terminated.  Upon
such transfer, Medical Group agrees that it shall accept prior authorizations
for Covered Services provided to such Members and shall be financially
responsible for all continuing Covered Services to be provided or arranged for
such transferred Members following termination of the other Participating
Provider’s agreement with PacifiCare. 
PacifiCare agrees that to the best of their ability, any services to be
provided to Members transferred to Medical Group from a terminated Participating
Provider shall be coordinated with Medical Groups Medical Director or
designee.  Medical Group will review
authorizations for appropriateness and will redirect, where medically
appropriate and in accordance with PacifiCare’s Continuity of Care Policy, to
Medical Group Participating Providers.


 


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


 


49

















 


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.


 


50

















 


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.


 


51

















 


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


 


	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  6/20/01

  
	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  
	
   

  	
  Prospect
  Health Source Medical

  
	
   

  	
  Group

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G.
  Goll

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  5-16-01

  
					



 


52

















 


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):


•                  Midway Hospital Medical Center


•                  Brotman Medical Center


•                  Century City Hospital


•                  Cedars Siani Medical Center


•                  Centinela Hospital 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


 


53

















 


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


 


54

















 


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.


 


55

















 


CLAIMS
DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare Oversight

  
	
  HCFA Regulations

  	
   

  	
  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

  	
   

  	
  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

  	
   

  	
  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

  	
   

  	
  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

  	
   

  	
  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

  	
   

  	
  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.

  



 


56

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Check Production Processes

  	
   

  	
  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

  	
   

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

  •             Staffing levels

  •             Customer Services 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

  	
   

  	
  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

  	
   

  	
  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 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.


 


57

















 


CREDENTIALING
DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare Oversight

  
	
  Credentialing Policies and
  Procedures

  	
   

  	
  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

  	
   

  	
  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

  	
   

  	
  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

  	
   

  	
  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 

  



 


58

















 


	
   

  	
   

  	
   

  	
   

  	
  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

  	
   

  	
  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

  	
   

  	
  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

  	
   

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



  Meet 100% of 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 recredentiated 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

  	
   

  	
  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

  



 


59

















 


	
   

  	
   

  	
   

  	
   

  	
  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

  	
   

  	
  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

  	
   

  	
  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

  	
   

  	
  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

  



 


60

















 


	
   

  	
   

  	
   

  	
   

  	
  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

  	
   

  	
  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

  	
   

  	
  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 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.


 


61

















 


MEDICAL RECORDS
DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation Status

  	
   

  	
  Medical Group

  Responsibility/

  Performance Measure

  	
   

  	
  Reporting Frequency

  	
   

  	
  PacifiCare Oversight

  
	
  Systematic Review and
  Action

  	
   

  	
  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, arc 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.


 


62

















 


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.


 


63

















 


UTILIZATION
MANAGEMENT DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  PacifiCare Responsibility

  	
   

  	
  Medical Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
  Prior Authorization

  	
   

  	
  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

  	
   

  	
  •             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

  	
   

  	
  •             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

  	
   

  	
  •             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

  	
   

  	
  •             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

  	
   

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



  If NOT delegated,
  responsible in 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

  



 


64

















 


	
   

  	
   

  	
   

  	
   

  	
  and
  coordinating care with Group

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Transplants

  	
   

  	
  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

  	
   

  	
  •             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

  	
   

  	
  •             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

  	
   

  	
  •             Responsible for ensuring eligibility and
  benefits appropriately followed

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

  	
   

  	
  For Denials MO 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

  	
   

  	
  •             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

  	
   

  	
  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.

  



 


65

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  •             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
tune frame, PacifiCare may revoke the group’s delegated status.


 


66

















 


	
   

  	
  PACIFICARE OF
  CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  6/20/01

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  
	
   

  	
  Prospect Health Source Medical Group

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G.
  Goll

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  5-16-01

  	
   

  
								



 


67

















 


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: Prospect Health Source Medical Group


 


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/ Peter G. Goll

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  5-16-01

  	
   

  
				



 


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/ BJ

  	
   

  	
  /s/ PG

  
	
   

  	
   

  	
   

  	
   

  
	
  PacifiCare
  Commercial POS Health Plan

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  
	
   

  	
   

  	
   

  	
   

  
	
  Secure
  Horizons Health Plan

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  
	
   

  	
   

  	
   

  	
   

  
	
  Division of
  Financial Responsibility

  	
  /s/ BJ

  	
   

  	
  /s/ PG

  



 


 


68

















 


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 1

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.


 


l.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 Members 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.


 


69

















 


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 Flan 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 ***, 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


 


70

















 


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


 


71

















 


Plan Members.


 


3.3.1                        Reinsurance
Program.  Claims under the
Reinsurance Program shall be valued as follows: $1,500 per acute inpatient day,
$400 per Skilled Nursing Facility day and $0 for all other claims under the
program. The Reinsurance Deductible, Reinsurance Premium and Reinsurance
Coinsurance for the Commercial Plan shall initially be:


 


(i)                                     Reinsurance
Deductible shall be one hundred fifty thousand dollars ($150,000) per
Commercial Plan Member per calendar year.


 


(ii)                                  Reinsurance
Premium shall be fifty-six cents ($0.56) per Commercial Plan Member per month.


 


(iii)                               Reinsurance
Coinsurance: None.


 


3.3.2                        CHIP
Budget.  The CHIP Budget for
Commercial Plan Members shall be age/sex/plan adjusted to reflect eligible
Commercial Plan Members.  For the CHIP
Budget, the average PMPM yield shall be *** per Commercial Plan Member per
month based upon the membership assigned to the applicable IPA, as of the
October prior to the effective date of the applicable rate change,
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


 


72

















 


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


*** 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.


 


73

















 


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 one dollar ($1.00)
per Commercial Plan Member per month.


 


3.5                                 Maternity Payments.  This Section 3.5 is only applicable during the
period January 1, 2001, through December 31,
2001. For term pregnancies
delivered within nine (9) months of a Subscriber’s initial assignment to Medical Group, PacifiCare shall pay Medical Group
*** the time of processing the inpatient obstetrical claim.


 


3.6                                 Mammography Services.  This Section 3.6 is only applicable during the
period January 1, 2001, through December 31, 2001.  Medical Group shall receive *** for each
screening and diagnostic mammography study performed above the 1987 PacifiCare wide baseline,
specific to the PacifiCare commercial program, for such studies. (This baseline
equals ninety (90) studies per one thousand (1,000) adult females per Year.)


 


74

















 


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


 


	
   

  	
  PACIFICARE OF
  CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  6/20/01

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  
	
   

  	
  Prospect Health Source
  Medical Group

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G. Goll

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  5-16-01

  	
   

  
					



 


75

















 


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 1


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


 


76

















 


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 *** 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 *** 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.


 


77

















 


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-


 


78

















 


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 one hundred fifty thousand dollars ($150,000) per
Commercial Plan Member per calendar year.


 


(ii)                                  In-Network
Reinsurance Premium shall be fifty-six cents ($0.56) per Commercial POS Plan
Member per month.


 


(iii)                               Out-of-Network
Reinsurance Premium shall be ninety three cents ($0.93) per Commercial POS Plan
Member per month.


 


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,


 


79

















 


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 *** 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 *** 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, *** 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 Rates.  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.


 


80

















 


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


 


	
   

  	
  PACIFICARE OF
  CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President 

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  6/20/01

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  
	
   

  	
  Prospect
  Health Source Medical

  
	
   

  	
  Group

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Peter G. Goll

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  5-16-01

  	
   

  
						



 


81

















 


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.


 


1.1                                 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).


 


82

















 


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


 


83

















 


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.


 


84

















 


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


 


85

















 


valued as follows: ***
per acute inpatient day, *** per Skilled Nursing Facility day; and *** for all
other claims under the program. The Reinsurance Deductible, Reinsurance Premium
and Reinsurance Coinsurance for the Secure Horizons Plan shall initially be:


 


(i)                                     Reinsurance
Deductible shall be sixty thousand dollars ($60,000) per Secure Horizons Member
per calendar year.


 


(ii)                                  Reinsurance
Premium shall be two and 10/100 percent (2.10%) of the Secure Horizons Revenue.


 


(iii)                               Reinsurance
Coinsurance: None.


 


3.3.2                        SHIP
Budget.  The SHIP Budget for Secure
Horizons Members shall be *** of the Secure Horizons Revenue per Secure
Horizons Member per Month,
subject to the adjustments set forth in Article 5 of the Base Agreement
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:


 


Fifty percent (50%) to
Medical Group


 


86

















 


Fifty
percent (50%) 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


***
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
eight percent (8%) of the Monthly HCFA Payment (the “MSBP Budget”) and add to
it sixty four cents ($0.64) 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, the surplus shall be allocated as
follows:


 


fifty percent (50%) to
Medical Group


fifty percent (50%) to
PacifiCare


 


87

















 


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 two dollars ($2.00) per member per month.


 


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.


 


3.6                                 Mammography.  This
Section 3.6 is only applicable during the period January 1, 2001,
through December 31, 2001. Medical Group shall receive *** for
each screening and diagnostic mammography study performed above the 1987
PacifiCare-wide baseline, specific to the Secure Horizons program, for such
studies. (This baseline equals 267 studies per one thousand (1,000) adult
females.) The amount due to Medical Group shall be calculated based upon
utilization data submitted by Medical Group and shall be paid within one
hundred and fifty (150) days of the end of the current calendar year.


 


88

















 


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


 


 


	
   

  	
  PACIFICARE OF
  CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  6/20/01

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  
	
   

  	
   Prospect Health
  Source Medical 

  
	
   

  	
  Group

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter G. Goll

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  5-16-01

  	
   

  
					



 


89

















 


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


 


	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  	
   

  	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 












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


 


90

















 


	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  	
   

  	
  PacifiCare

  	 

	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  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 - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  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 - IP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Hospitialization
  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 (cast, 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 -SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Mental
  Health - OP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Mental
  Health - OP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Mental
  Health - OP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Mental
  Health - OP - Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 











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


 


91

















 


	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  	
   

  	
  PacifiCare

  	 

	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  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 the division of financial
responsibility have been deleted.


 


92