Exhibit 10.109


 


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 June, 1999, by and between PACIFICARE OF
CALIFORNIA, INC., a California corporation (“PacifiCare”), and Professional
Care IPA 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 folio


 


ARTICLE 1

DEFINITIONS


 


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


 


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


 


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


 


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


 


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


 


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


 












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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


1.14                           Hospital Services are Covered Services for Medical Group
Members which are initially paid for by PacifiCare and are the shared financial
responsibility of PacifiCare and Medical Group, as specified in the Hospital
Incentive Programs set forth in the Product Attachments.  A summary of Hospital Services is set forth
in the Division of Financial Responsibility for each Managed Care Plan.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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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.


 


l.26                              Product Attachments are the attachments to the Base Agreement
which set forth additional terms and conditions under which Medical Group shall
provide or arrange Covered Services to Medical Group Members pursuant to the
Managed Care Plans.  All Product
Attachments which are signed by both PacifiCare and Medical Group shall become
a part of this Agreement and are incorporated herein.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


ARTICLE 2

DUTIES OF MEDICAL GROUP


 


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


 


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


 


PacifiCare and Medical Group acknowledge and agree that Medical Group or
each of Medical Group’s Participating Providers shall maintain the
physician-patient


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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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
seventy-five (75) calendar days’ prior written notice to PacifiCare of any
significant changes in the capacity of Medical Group to provide or arrange
Covered Services that would prevent Medical Group from accepting additional
Members.  Medical Group shall use
reasonable efforts to eliminate or remedy any condition which results in a
significant adverse change in capacity. 
A significant change in capacity includes, without limitation, the
following: (i) inability of Medical Group to properly serve additional Members
due to a lack of Primary Care Physicians or other Participating Providers; (ii)
inability of any one of Medical Group’s Primary Care Physicians or other
Participating Providers to serve additional Members; or (iii) closure of any
Medical Group Facility.  PacifiCare may
continue to enroll Members with Medical Group until the expiration of the
notice period required under this Section, and in such event, Medical Group and
its Primary Care Physicians and other Participating Providers shall continue to
accept such Members.  PacifiCare shall
discontinue the enrollment of Members with Medical Group upon expiration of the
notice period required under this Section until such time, if any, that
Medical Group provides written notification to PacifiCare that it has the
capacity to accept additional Members.


 


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


 


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


 


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2.4 2                        Compliance with Standards of Accreditation
Organizations and Requirements of State and Federal Law. 
Medical Group’s subcontracts with Participating Providers shall comply
with the standards of Accreditation Organizations and requirements of State and
Federal Law.  If there are changes in
such standards and/or requirements, Medical Group shall amend its subcontracts
with Participating Providers to comply with such changes within thirty (30)
calendar days following notice thereof from PacifiCare.


 


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


 


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


 


2.4.5                        Performance of Subcontract Rights. 
Medical Group’s subcontracts shall require its Participating Providers
who are independent contractors to agree to perform their obligations under
their subcontract for the benefit of PacifiCare in the event of dissolution or
Insolvency of Medical Group, in the event of termination of this Agreement by
PacifiCare for cause pursuant to Section 6.2.2 or in the event of
termination by PacifiCare pursuant to Section 6.3.  Such obligation shall continue through the
continuing care period provided by this Agreement.  Medical Group’s subcontracts shall provide that in the event
PacifiCare exercises such option, Medical Group’s subcontractors agree to
accept payment from PacifiCare, as payment in full, at rates which are the
lesser of the Cost of Care or the rate set forth in the applicable
subcontract.  To the extent Medical
Group’s subcontracts do not comply with the requirements of this
Section 2.4.5 as of the date this Agreement is executed and delivered,
Medical Group shall cause its subcontracts to be amended to comply with the
forgoing by June 30, 2000.


 


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


 


2.6                                 Medical Records. 
Medical Group and its Participating Providers shall maintain all patient
medical records relating to Covered Services provided to Members, in such form
and containing such information as required by the QI Program, Accreditation
Organizations and State and Federal Law. 
Medical records shall be maintained in 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


 


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Providers shall maintain the confidentiality of all Member medical
records and treatment information in accordance with State and Federal
Law.  Medical records shall be retained
by Medical Group and its Participating Providers for at least six (6) years
following the provision of Covered Services and as required by State and
Federal Law.  The provisions of this
Section shall survive termination of this Agreement for the period of time
required by State and Federal Law.


 


2.7                                 Insurance.  Medical Group, at its sole cost
and expense, shall maintain throughout the term of this Agreement and, if
coverage is provided on a claims-made basis, for a period of four years
following termination of this Agreement, professional liability insurance
(i.e., medical malpractice insurance) and, if delegated for any Managed Care
Services, managed care errors and omissions insurance in the minimum amount of
one million dollars ($1,000,000) per occurrence and three million dollars
($3,000,000) annual aggregate, the annual aggregate to apply separately for
each physician and health care practitioner who is insured under the policy (or
policies) purchased by Medical Group.


 


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


 


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


 


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


 


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


 


A certificate of insurance shall be issued to PacifiCare prior to the
Commencement Date and upon the renewal of the insurance coverage specified in
this Section.  The certificate shall
provide that PacifiCare shall receive thirty (30) days’ prior written notice of
cancellation or material reduction in the insurance coverage specified in this


 


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Section.  Notwithstanding
anything to the contrary, if Medical Group has a claims-made based policy and
anticipates that such policy (or policies) will be canceled or not renewed,
Medical Group agrees to exercise any option contained in the policy (or
policies) to extend the reporting period to the maximum period permitted;
provided, however, that Medical Group need not exercise such option if the
superseding insurer will accept all prior claims.  Notwithstanding any other provision of this Agreement, failure to
provide the certificate of insurance shall be grounds for immediate termination
of this Agreement.


 


2.8                                 Financial Statements.


 


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


 


2.8.2                        Letter of Credit.


 


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 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 January 31, 200l and shall remain in full force and effect
throughout the entire term of this Agreement.


 


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


 


12

















 


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.


 


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


 


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


 


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


 


For each month in which Medical Group fails to submit Encounter Data
described above in this Section, PacifiCare shall deduct one percent (1%) of
the Medical Group’s Capitation Payment until such data is submitted.


 


2.9.5                        General Data and 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


 


13

















 


shall accurately and completely maintain all Encounter Data, all other
information and data required by this Agreement, including medical records,
necessary to characterize the scope and purpose of Covered Services provided to
Members.  Medical Group shall provide to
PacifiCare and to HCFA any required certification as to Medical Group’s
compliance with the foregoing.


 


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


 


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


 


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


 


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


 


14

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


ARTICLE 3

ADMINISTRATIVE DUTIES OF PACIFICARE


 


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


 


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


 


15

















 


Group and its Participating Providers or to
identify Medical Group or its Participating Providers in any specific
PacifiCare marketing or informational materials.


 


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


 


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


 


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


 


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


 


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


 


16

















 


ARTICLE 4

MANAGED CARE PROGRAM SERVICES


 


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


 


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


 


Medical Group shall, at the written request of PacifiCare, make available
its Participating Providers who are physicians to serve on PacifiCare’s QI
Committee.  Medical Group shall
establish and maintain an independent quality improvement committee which shall
meet as frequently as advisable (but not less than ten (10) times throughout
the year).  A member of the PacifiCare
medical services staff may participate in Medical Group’s quality improvement
committee meetings.  Medical Group shall
keep minutes of its quality improvement committee and subcommittee meetings,
copies of which shall be made available to PacifiCare upon ten (10) days’
written notice by PacifiCare to Medical Group. 
If the functions of the quality improvement committee are performed
together with its utilization review committee, Medical Group shall implement
and maintain procedures which maintain all applicable confidentiality
protections for quality assurance activities and decisions.


 


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


 


17

















 


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


 


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


 


4.1.3                        Credentialing. 
PacifiCare shall maintain standards, policies and procedures for
credentialing and recredentialing physicians, hospitals and other health care
professionals and facilities that provide Covered Services to Members under the
Managed Care Plans (“Credentialing Program”). 
The Credentialing Program shall be maintained in accordance with the
requirements of State and Federal Law and the standards of Accreditation
Organizations.


 


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


 


4.l.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.


 


18

















 


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


 


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


 


4.1.8                        Policies and Procedures.  For
Managed Care Program Services not delegated to Medical Group, Medical Group
agrees to abide by PacifiCare’s policies and procedures pertaining to the
administration of such services.  The
applicable policies and procedures may include, but not be limited to, policies
and procedures pertaining to PacifiCare’s Utilization Management Program,
Credentialing Program, and Claims Processing Guidelines.  Such policies and procedures will outline
the non-delegated requirements for claims submission, subcontract rate
information, utilization management, and credentialing.


 


4.2                                 Delegation of Managed Care Activities.


 


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


 


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


 


19

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


20

















 


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


 


4.4                                 Revocation and Resumption of Delegated
Activities.


 


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


 


4.4.2                        Revocation Notices.


 


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


 


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


 


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


 


21

















 


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


 


4.4.4                        Revocation Not Exclusive Remedy. 
Notwithstanding PacifiCare’s right to revoke the Delegated Activities,
Medical Group’s failure to perform the Delegated Activities shall be a breach
of the Agreement.  In such event,
PacifiCare may exercise all of its other rights and remedies to enforce the
Agreement, including the right of termination.


 


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


 


ARTICLE 5

COMPENSATION


 


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


 


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


 


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


 


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


 


22

















 


5.2                                 Payment for Performance of Delegated
Activities.  PacifiCare’s payment for performance of the
Delegated Activities by Medical Group is included in Capitation Payments made
to Medical Group.  The Capitation
Payment rates set forth in each Product Attachment assume that the Medical
Group is fully delegated to perform Managed Care Program Services.  Accordingly, for each month in which any
Delegated Activity is not delegated or has been revoked by PacifiCare as
provided at Article 4, the Medical Group’s Capitation Payment shall be
reduced by the following percentages:


 


	
  Activity Not Delegated

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Utilization Management

  	
   

  	
  ***

  	
   

  
	
  Credentialing

  	
   

  	
  ***

  	
   

  
	
  Claims Processing

  	
   

  	
  ***

  	
   

  



 


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


 


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


 


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


 


5.4.1                        Incentive Program Withhold. 
PacifiCare shall establish a single withhold from Medical Group’s
monthly Capitation Payment for purposes of offsetting potential deficits for
the combined incentive programs.  The
monthly incentive withhold shall initially be *** of Premium for each Managed
Care Plan.  PacifiCare, in its sole
discretion, shall prospectively adjust the withhold based on Medical Group’s
experience under the combined incentive programs at the time of the program
settlements described below.


 


23

















 


5.4.2                        Incentive Program Settlements. 
PacifiCare shall conduct combined settlements for all of the incentive
programs for Managed Care Plans applicable to Medical Group.  Surpluses and deficits under each of the
incentive programs shall be aggregated and offset against one another.  PacifiCare will conduct an estimated
calculation after six (6) months (the “Interim Calculation”) and a final
calculation annually (the “Final Calculation”) based on the calendar year.  The incentive program withhold described
above shall be refunded to the Medical Group at the time of the incentive
program settlements, except that Medical Group’s share of any incentive program
deficits shall be deducted from such refund. 
Payments under the combined incentive programs will be due from the
owing party within one hundred and twenty (120) days following the end of the
six (6) months for the Interim Calculation and within one hundred and eighty
(180) days following the end of the calendar year for the Final
Calculation.  For the Interim
Calculation, the payment due will be limited to seventy-five percent (75%) of
the calculated amount due to account for incurred but not received claims.  To the extent a Medical Group deficit has
been carried forward from a prior settlement period, this deficit shall be
offset against amounts due to Medical Group hereunder.  Medical Group shall have thirty (30) days
from the date of written notice to audit and submit any revisions to the
incentive program settlement to PacifiCare. 
Any submitted revisions must be approved by PacifiCare and such approval
shall not be unreasonably withheld. 
PacifiCare shall then have thirty (30) days to make any necessary
adjustment to the calculation and return the itemized calculation to Medical
Group.  Such calculation shall be
considered the final calculation unless Medical Group and PacifiCare agree to
extend the calculation process.  Any
amounts owing shall be paid to the appropriate party within thirty (30) days of
the release of the final itemized calculation. 
In the event that claims for providers were incurred during the calendar
year in question but were not paid until after the final calculation, such
costs shall be carried forward and applied to the subsequent calendar year’s
incentive program as an expense for that calendar year.


 


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


 


24

















 


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


 


5.5                                 Stop-Loss Program(s)


 


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


 


5.5.2                        Reinsurance Program. 
PacifiCare shall provide reinsurance protection (“Reinsurance Program”)
in order to limit Medical Group’s financial risk for Hospital Services under
the Commercial Hospital Incentive Program and Secure Horizons Hospital
Incentive Program (the “Hospital Incentive Programs”), when administered by
PacifiCare, and to limit POS Out-of-Network risk under the Commercial POS Control
Program, to a specified dollar amount per Medical Group Member per calendar
year (the “Reinsurance Deductible”), while encouraging Medical Group’s
continuing involvement with Medical Group Member’s care by sharing a portion of
the financial responsibility for Hospital Services which exceed the Reinsurance


 


25

















 


Deductible (“Reinsurance Coinsurance”).  The Reinsurance Deductible and Reinsurance
Coinsurance for Medical Group are specified in each Product Attachment.  Notwithstanding any other provision of this
Agreement, PacifiCare may amend the Reinsurance Deductible and Reinsurance
Coinsurance on an annual basis effective at the beginning of any calendar year
by providing sixty (60) calendar days’ prior written notice to Medical
Group.  For Hospital Services which
exceed the Reinsurance Deductible, the Reinsurance Coinsurance shall be based
on the Reinsurance Program as defined in the applicable Product Attachment,
subject to the Medical Group’s compliance with the procedures set forth in the
Provider Manual and the provisions set forth below.


 


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


 


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


 


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


 


26

















 


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


 


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


 


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


 


27

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


28

















 


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


 


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


 


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


 


5.13                           Character of Payments from PacifiCare. 
Capitation Payments to Medical Group pursuant to this Agreement are for the
primary purpose of compensating Medical Group for the value of Medical Group
Services provided pursuant to this Agreement. 
Medical Group shall assure that claims and compensation for Medical
Group Services provided or arranged pursuant to this Agreement are paid from
the Capitation


 


29

















 


Payments from PacifiCare and from other funds
available to Medical Group as may be necessary for Medical Group to satisfy its
financial obligations under this Agreement.  Medical Group specifically agrees that PacifiCare may exercise its
recoupment rights as set forth above in the event Medical Group fails to comply
with the foregoing.


 


ARTICLE 6

TERM AND TERMINATION


 


6.1                                 Term.  The term of this Agreement
shall commence on June 1, 1999 (the “Commencement Date”) and end on
May 31, 2001.  Thereafter, the term of
this Agreement shall be automatically extended for one (1) year 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 eighty (180) calendar days prior to the Anniversary Date or until
this Agreement is appropriately terminated by either party as provided herein.


 


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


 


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


 


(i)                                     Non-Payment.  Failure by PacifiCare to pay Capitation
Payments due Medical Group hereunder within thirty (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.


 


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


 


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


 


(ii)                                  Failure
to Provide Quality Services. 
Medical Group’s failure to arrange or provide Covered Services in
accordance with the standards set forth in this Agreement and PacifiCare’s QI
Program and UM Program.  Notwithstanding
the foregoing, PacifiCare reserves the right


 


30

















 


to immediately withdraw from Medical Group or any of its Participating
Providers any or all Members in the event the health or safety of Members is
endangered by the actions of Medical Group or any of its Participating
Providers or as a result of continuation of this Agreement.


 


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


 


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


 


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


 


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


 


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


 


31

















 


6.5                                 Transfer
of Medical Records.  Following
termination of this Agreement, at PacifiCare’s
request, Medical Group and its Participating Providers shall copy all requested
Medical Group Member patient medical files in the possession of Medical Group
or its Participating Providers and forward such files to another provider of
Covered Services designated by PacifiCare, provided such copying and forwarding
is not otherwise objected to by such Members. 
The copies of such medical files may be in summary form.  The cost of copying the patient medical
files shall be borne by Medical Group. 
Medical Group shall cooperate with PacifiCare in maintaining the
confidentiality of such Member medical records at all times.


 


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


 


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


 


ARTICLE 7

GENERAL PROVISIONS


 


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


 


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


 


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


 


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


 


7.5                                 Disputes Between PacifiCare and Medical Group


 


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


 


7.5.2                        Arbitration.  Any controversy, dispute or
claim arising out of the interpretation, performance or breach of this
Agreement which is not resolved pursuant to the Provider Dispute Resolution
Procedure specified above shall be resolved by binding arbitration at the
request of either party, in accordance with the Commercial Rules of the
American Arbitration Association.  Such


 


33

















 


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


 


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


 


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


 


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


 


If to PacifiCare:


 


PacifiCare of California


10833 Valley View Street


Cypress, California 90630


Attention: President


 


34

















 


If to Medical Group:


 


Professional Care IPA Medical Group


12750 Center Court Drive, #300


Cerritos, California 90703


Attention: Administrator


 


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 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.


 


35

















 


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


 


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


 


7.9                                 Confidential and Proprietary Information


 


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


 


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


 


36

















 


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 one (1) year after the effective date of termination
of this Agreement which may be reasonably interpreted as designed to persuade
Members, Subscribers or Subscriber Groups to disenroll from any Managed Care
Plan or discontinue their relationship with PacifiCare.  Notwithstanding any other provision of this
Agreement, Medical Group agrees that PacifiCare shall, in addition to any other
remedies provided for under this Agreement, have the right to seek a judicial
temporary restraining order, preliminary injunction, or other equitable relief
against Medical Group and its Participating Providers to enforce its rights
under this Section.  Nothing in this
Agreement shall be interpreted to discourage or prohibit Medical Group and its
Participating Providers from discussing a Member’s health care including,
without limitation, communications regarding treatment options, alternative
plans or other coverage arrangements, unless such communications arc 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


 


37

















 


obligations of Medical Group under this Agreement or that PacifiCare
prefers not to do business with the successor entity or management
company.  Medical Group warrants and
assures that this Agreement, if not otherwise terminated by PacifiCare, will be
assumed by all successor entities and that all successor entities and
management companies will be bound by the terms and conditions of this
Agreement.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


38

















 


ARTICLE 8

GOVERNING LAW AND REGULATORY REQUIREMENTS


 


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


 


8.2                                 No
Billing of Members (Member Hold Harmless Provision).  With the exception of Copayments and charges
for non-Covered Services delivered on a fee-for-service basis to Members,
Medical Group and its Participating Providers shall in no event, including,
without limitation, non-payment by PacifiCare, insolvency of PacifiCare, or
breach of this Agreement, bill, charge, collect a deposit from, seek
compensation or remuneration or reimbursement from, or have any recourse
against any Member or any person (other than PacifiCare) acting on behalf on
any Member or attempt to do any of the foregoing for Covered Services provided
or arranged pursuant to this Agreement.


 


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


 


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


 


39

















 


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 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.


 


40

















 


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


 


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


(i)                                     “Covered Services in Special Circumstances”
shall mean Covered Services provided by a Medical Group Participating Provider
following termination to a Member who is undergoing a course of treatment from
the Participating Provider for an acute condition, serious chronic condition,
high-risk pregnancy, or a pregnancy that has reached the second or third
trimester at the rime 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.


 


41

















 


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


 


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


 


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


 


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


 


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


 


42

















 


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


 


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


 


8.3.5                        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.


 


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


 


43

















 


of time required by State and Federal Law.


 


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


 


ARTICLE 9

EXPRESS REFERRALS


 


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


 


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


 


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


 


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


 


9.2                                 Duties of Medical Group


 


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


 


44

















 


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.


 


45

















 


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


 


	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Brian Jeffrey

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  VP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  11/28/00

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  Professional Care IPA Medical Group

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Ed Rotan

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President & COO

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						



 


46

















 


PACIFICARE OF CALIFORNIA


 


MEDICAL GROUP/IPA SERVICES AGREEMENT

(PROFESSIONAL CAPITATION)


 


EXHIBIT I

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):


Whittier
Hospital Medical Center


Western
Medical Center


Chapman
General Hospital


Placentia
Linda 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.


 


47

















 


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 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.


 


48

















 


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.


 


49

















 


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.

  



 


50

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  •
  Implementation of 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 scale 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 Service capabilities

  •
  Past experience for claims resolution

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

  	
   

  	
  N/A

  	
   

  	
  •
  Initial onsite assessment utilizing approved oversight tool.

  •
  Annual oversight assessment utilizing approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Audit Reporting

  	
   

  	
  Delegated

  	
   

  	
  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.


 


51

















 


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:

   

  	
   

  	
  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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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

  



 


52

















 


	
   

  	
   

  	
   

  	
   

  	
  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 Licensor):

  

  Meet 100% of NCQA Standards

  related to PSV of Licensor.

   

  	
   

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

  	
   

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

  •
  Annual onsite assessment

  
	
  Recredentialing 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.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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 within 24 months of prior credentialing

  	
   

  	
   

  	
   

  	
  •
  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 the entire
  contracted network to

  



 


53

















 


	
   

  	
   

  	
   

  	
   

  	
  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.

  	
   

  	
   

  	
   

  	
  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:

  	
   

  	
  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

  
	
  •
  Member complaints

  •
  Information from quality improvement activities

  •
  Member satisfaction

  •
  Site visits conducted

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  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

  



 


54

















 


	
   

  	
   

  	
   

  	
   

  	
  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, accrediation

  	
   

  	
  Submit list of subcontracted organizational providers on an annual
  basis

  	
   

  	
  •
  Annual assessment including P&Ps and random part 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.


 


55

















 


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 of
  organization-wide actions taken for improvement; and the results of those
  actions.

  	
   

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

   

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

   

  •
  Site visit assessments correlates with review of medical records

  



 


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


 


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


 


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


 


56

















 


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.


 


57

















 


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 LP care meeting all regulatory and PacifiCare standards

  	
   

  	
  •
  Weekly submission of authorization/denial logs

  •
  Monthly submission of encounter data

  	
   

  	
  •
  Pre-delegation onsite assessment in 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

  



 


58

















 


	
   

  	
   

  	
   

  	
   

  	
  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 MG must:

  •
  Comply with PacifiCare’s Turn Around Times

  •
  Follow PacifiCare’s approved medical necessity criteria

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

  	
   

  	
  Weekly submission of denial logs.

  	
   

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

  •
  Annual onsite assessment to determine ability to perform function.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Benefit Interpretations

  	
   

  	
  Delegated

  	
   

  	
  •
  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.



  •
  Notify PacifiCare of all

  	
   

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

  	
   

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

  •
  Annual onsite

  



 


59

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  member and provider appeals coming through
  MG

  	
   

  	
  overturn rate for specific MG.

  	
   

  	
  assessment to determine ability to perform
  function.

  



 


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


 


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


 


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


 


60

















 


	
   

  	
  PACIFICARE OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  11/28/00

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL GROUP

  Professional Care IPA Medical Group

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ed Rotan

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President & COO

  	
   

  
	
   

  	
   

  
	
   

  	
  Date: 

  	
   

  	
   

  
								



 


61

















 


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: Professional Care IPA 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/ Ed Rotan

  	
   

  
	
   

  
	
  Title:

  	
  President
  & COO

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
				



 


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/ ER

  
	
   

  	
   

  	
   

  	
   

  
	
  PacifiCare
  Commercial POS Health Plan

  	
  /s/ BJ

  	
   

  	
  /s/ ER

  
	
   

  	
   

  	
   

  	
   

  
	
  Secure
  Horizons Health Plan

  	
  /s/ BJ

  	
   

  	
  /s/ ER

  
	
   

  	
   

  	
   

  	
   

  
	
  Division
  of Financial Responsibility

  	
  /s/ BJ

  	
   

  	
  /s/ ER

  
	
  ws:

  	
   

  	
   

  	
   

  



 


62

















 


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.


 


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


 


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


 


1.4                                 Commercial Plan 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.


 


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


 


63

















 


foregoing,  Medical Group shall
ensure that all provisions of the OPM Agreement which are applicable to Medical
Group’s Participating Providers are included in Medical Group’s subcontracts
with its Participating Providers.  A
copy of the OPM Agreement shall be provided to Medical Group concurrent with
the execution of this Agreement.


 


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


 


ARTICLE 3

COMPENSATION


 


3.1                                 Capitation Payments for Commercial Plan
Members.  Capitation Payments for Commercial Plan
Members shall be forty-one and thirty-four hundredths percent (41.34%) of the
Commercial Plan Premium per Commercial Plan Member per month, 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                        Premium Adjustments.  The
Commercial Plan Premium and benefits may be amended for each Subscriber
Agreement upon the annual renewal date of each Subscriber Agreement at the sole
discretion of PacifiCare.


 


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


 


3.1.3                        Adjustment for Experience-Rated Managed Care
Plans.  Capitation Payments for Experience Rated
Plans shall be calculated utilizing the following definitions and methodology:


 


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


 


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


 


64

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(i)                                     Reinsurance Deductible shall be *** per Commercial Plan Member per calendar year.


 


(ii)                                  Reinsurance Premium shall be *** of Commercial
Plan Premium.


 


(iii)                               Reinsurance Coinsurance shall be *** of the
Cost of Care for amounts in excess of the Reinsurance Deductible but less than
*** and *** of the Cost of Care for amounts in excess of ***


 


65

















 


3.3.2                        CHIP Budget.  The CHIP Budget for Commercial
Plan Members for the period commencing June 1, 1999 and ending
December 31, 1999 shall be *** of the Commercial Plan Premium per Member
per month, excluding Commercial POS Plan Members, less PacifiCare Commercial
Plan Reinsurance Premium, if any,  and
is subject to the adjustments set forth in Article 5 of the Base Agreement
and the adjustments further specified below.


 


For the periods from and after January 1, 2000 the CHIP Budget for
Commercial Plan members shall be *** of the Commercial Plan Premiums per Member
per month, excluding Commercial POS Plan Members, less PacifiCare Commercial
Plan Reinsurance Premiums, if any, and is subject to the adjustments set forth
in Article 5 of the Base Agreement and the adjustments further specified
below.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


*** to Medical Group


*** to PacifiCare


 


66

















 


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 eighty percent (80%) of the premium received by PacifiCare
for Outpatient Pharmacy Supplemental Benefits for Commercial Plan Members plus
thirty-one cents ($0.31) per Commercial Plan Member per month, which amount is
established as a credit for rebates received from pharmaceutical
manufacturers.  This credit may or may
not reflect the total pharmaceutical manufacturer rebate revenues received by
PacifiCare.  The PIP Budget shall be
retained by PacifiCare for purposes of administering the PIP.


 


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


 


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


 


3.4.5                        PIP Deficit.  In the event that the PIP
Expense is greater than the PIP Budget, fifty percent (50%) of the deficit
shall be allocated to Medical Group.


 


67

















 


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


 


	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  11/28/00

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  
	
   

  	
  Professional
  Care IPA Medical Group

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ed Rotan

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President & COO

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							



 


68

















 


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


 


69

















 


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 *** of the ISL Premium amount set forth
in Section 3.2 of Product Attachment A from the amounts otherwise due to
Medical Group, unless PacifiCare has approved of Medical Group’s opt out of
PacifiCare’s ISL Program.


 


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


 


70

















 


accordance with the following provisions.


 


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


 


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


 


(ii)                                  POS
Plan Costs shall mean the following:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


3.2.2                        POS
Control Program Reinsurance.  Unless
PacifiCare has approved of Medical Group’s opt out of POS reinsurance (“POS
Control Program Reinsurance”), PacifiCare shall provide reinsurance (the
“Commercial POS Control Program Reinsurance”) in order to provide protection
for the Commercial POS Plan Budget when Cost of Care for POS In-Network


 


71

















 


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 *** per acute inpatient day, ***  per skilled nursing facility day, and ***
for all other claims.  The Reinsurance
Deductible and Reinsurance Premium for the Commercial POS Plan shall initially
be:


 


(i)                                     Reinsurance Deductible shall be *** per
Commercial Plan Member per calendar year.


 


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


 


(iii)                               Out-of-Network
Reinsurance Premium shall be seventy-seven hundredths percent (.77%) of the
Commercial Plan Reinsurance Premium amount set forth in Section 3.3.1 of
Product Attachment A.


 


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


 


3.2.4                        Documentation.  PacifiCare shall provide Medical Group with
a list of In-Network Hospital Services claim payments and Out-of-Network claim
payments in support of computation and accuracy of POS Plan Costs, third party
liability and coordination of benefit recoveries,
assumptions and data supporting the POS Plan Budget, the Budget Surplus, and
the Budget Deficit and the Capitation Restoration Amount.


 


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


 


72

















 


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.


 


73

















 


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


 


 


	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  11/28/00

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  
	
   

  	
  Professional
  Care IPA Medical Group

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ed Rotan

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President & COO

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
								



 


74

















 


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).


 


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


 


75

















 


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 preventive health care.


 


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


 


(iv)                              PacifiCare’s policies pertaining to enrollment
and assessment of new Secure Horizons Members including requirements to conduct
a health assessment of all new Secure Horizons Members within ninety (90) days
of the effective date of their enrollment.


 


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


 


76

















 


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


 


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


 


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


 


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


 


ARTICLE 3

COMPENSATION


 


3.1                                 Capitation Payments for Secure Horizons
Members.  Capitation Payments for Secure Horizons
Members shall be *** of the Secure Horizons Revenue per Secure Horizons Member
per month, plus zero dollars ($0) for each Secure Horizons Member for whom
PacifiCare has received a monthly member premium, subject to the adjustments
set forth in Article 5 of the Base Agreement and


 


77

















 


the adjustments set forth below in this Section.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(i)                                     Reinsurance
Deductible shall be *** per Secure Horizons Member per calendar year.


 


(ii)                                  Reinsurance
Premium shall be *** of the Secure Horizons Revenue.


 


(iii)                               Reinsurance
Coinsurance shall be *** of the Cost of Care for amounts in excess of the
Reinsurance Deductible but less than *** and *** of the Cost of Care for
amounts in excess of ***.


 


78

















 


3.3.2                        SHIP
Budget. The SHIP Budget for Secure Horizons Members commencing June 1,
1999 and ending December 31, 1999 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.


 


For the periods from and after
January 1, 2000 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:


 


*** to Medical Group


*** to PacifiCare


 


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


 


*** to Medical Group


*** to PacifiCare


 


79

















 


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 seven percent (7%) 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, *** of the surplus shall be allocated to Medical
Group.


 


3.4.4                        MSBP Deficit.  In the event the MSBP Expense
is greater than the MSBP Budget,
*** of the deficit shall be allocated to Medical Group.


 


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.


 


80

















 


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.


 


81

















 


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


 


	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Brian Jeffrey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  11/28/00

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICAL
  GROUP

  Professional Care IPA Medical Group

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Ed Rotan

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President & COO

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
					



 


82

















 


DIVISION OF FINANCIAL RESPONSIBILITY


 


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


 


Division of Financial Responsibility


 


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


 


	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  Incentive

  Program

  	
   

  	
  PacifiCare

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Allergy
  - Serum - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Allergy
  - Testing & Tx - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Ambulance
  (Air and Ground) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Amniocentesis
  - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Anesthesiology
  - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Autologous
  Blood Services - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Biofeedback
  (Medically Necessary) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Detox) - IP & OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Detox) - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - IP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - IP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - IP -Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - IP - Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - OP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - OP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - OP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical
  Dependency (Rehab) - OP- Prof - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemotherapy
  - IP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic
  - Medical - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic
  - Supplemental - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Circumcision
  - Op. Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Diagnostic Tests - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME
  - IP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  DME,
  Ostomy/Colostomy Supplies, Prosthetics/Orthotics - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Emergency
  Room - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Emergency
  Room - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic
  Studies - IP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic
  Studies - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic
  Studies - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Abortions - OP -Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Abortions - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Contraceptive Devices - Insertion - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Contraceptive Devices - Prescription - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family
  Planning - Infertility Procedures - OP-Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  



 












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


 


83

















 


	
  Family Planning - Infertility Procedures -
  OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Infertility Testing - OP
  - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Sterilization - IP &  OP -
  Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning -
  Sterilization - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Sterilization - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Fetal Monitoring - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Health Education - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Health Eval/Physical

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing Aids/Molds - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing Screening (Audiologic Evaluation) -
  OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hemodialysis / Dialysis - IP & OP -
  Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hemodialysis / Dialysis
  - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Home Health Care / Home Infusion Therapy -
  OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospice Services - IP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospitalization Services - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Immunizations & Inoculations (Medically
  Necessary) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Injectables - Not Part of Outpatient
  Pharmacy Benefits - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Laboratory/Pathology (Diagnostic Only) - OP
  - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Laboratory/Pathology (Diagnostic Only) - OP
  - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Laboratory/Pathology - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Lithotripsy - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Lithotripsy - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Medication -
  Prescription - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP - Fac - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP - Prof - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP - Prof - 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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  



 












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


 


84

















 


	
  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.


 


85