Exhibit 10.164


 


Amendment to HMO IPA/Medical Group Shared Savings Provider Agreement
between California Physicians’ Service dba Blue Shield of California and
Northwest


 












*** Confidential Treatment requested


 

















 


AMENDMENT NO. I


 


The HMO IPA/Medical Group Shared Savings Provider Agreement between
California Physicians’ Service, dba. 
Blue Shield of California (“BSC-HMO”), and NORTHWEST ORANGE COUNTY MEDICAL GROUP (“Medical Group”), with
an effective date of February 1, 2003
is further amended effective February 1, 2003
as follows:


 


Section 1.2 Authorization
is amended to read in full as follows


 


Authorization.  Is the procedure for obtaining the prior
approval of Blue Shield, or its designee (which may include Group), for
the provision or referral of Covered Services when such approval is required by
Blue Shield.


 


Section 1.5 Capitated Professional Services is amended in full
to read as follows:


 


Capitated Professional Services:  are those Covered Services which are
described in Exhibit B, hereto as the financial responsibility of Group.  Capitated Professional Services also include
any Covered Services which are not listed in Exhibit B., but which are
customarily provided by IPAs, Medical Groups to their patients.  Blue Shield may periodically amend Capitated
Professional Services to include any additional physician and/or ancillary
services, which must be provided by law. 
See Section 7.12 Material Change of Circumstances.


 


Section 1.17 Provider Manual is amended in full to read as
follows:


 


Provider Manual: refers to the manual(s) developed by Blue Shield dated
January 2002 and subsequent revised versions, which set forth the
operational rules and procedures applicable to the Group and Group
Providers.  The Provider Manual will
include the HMO Provider Manual, the HMO Benefit Guidelines and the Blue Shield
Medical Policy Manual.  The manual(s)
have been given to the Group and are incorporated into this Agreement by
reference.  Subsequent revised versions
will be provided to Group and are incorporated into this Agreement by reference.


 


Section 2.1 Capitated Professional Services is amended in full
to read as follows:


 


Capitated Professional Services. 
Group shall provide or arrange for the provision of all Medically
Necessary Capitated Professional Services to Members and shall be fully
financially responsible for those services as outlined in Exhibit B as Group
responsibility.  Such services shall be provided
or arranged through Group Providers who have been credentialed as required by
this Agreement and as more fully described in the Provider Manual.  Without limiting the foregoing, Group shall:
(i) be financially responsible for In-Area Emergency Services, and
Urgent Care Services provided by healthcare providers in addition to Group
Providers, as set forth in Exhibit B., (ii) refer Members, at Group’s cost and
when Group Providers are not available to provide Medically Necessary Capitated
Services, to non-Group Providers; (iii) provide all preventive health services
to which a Member is entitled under his/her Benefit Plan; and, (iv) make
available to Members those health education programs routinely provided by
Group and Group Providers at no charge to their patients.


 


Section 2.2 (b) Referrals For Other Covered Services is amended
in full to read as follows:


 


Group shall utilize the organ transplant provider network established
by Blue Shield for the provision of selected organ transplants.  Blue Shield shall, from time to time,
designate which transplant centers are to be utilized for specified transplants
and will communicate any changes to the Group prior to the effective date of
the change.


 


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Section 2.3 (a), 2.3 (b), 2.3 (c), and 2.3 (d) Availability is
amended in full to read as follows:


 


(a) Group shall ensure that routine Capitated Professional Services
shall be available to Members during normal physician business hours
(generally, Monday through Friday, 9:00 a.m. to 5:00 p.m.) and Emergency
Services and telephone advice and referral shall be available, as Medically
Necessary, twenty-four (24) hours per day, seven (7) days per week, three
hundred sixty five (365) days per year. 
Appointment, scheduling, and office waiting times shall be within the
applicable guidelines set forth in the Provider Manual, NCQA standards, and
state or federal law.  Capitated
Professional Services shall at all times during the term of this Agreement be
made readily available through PCP facilities located in the zip code areas set
forth in Exhibit A.


 


(b) Group shall require that each Group Physician maintain
adequate on-call coverage arrangements with another Group Physician to provide
coverage for members when that Group Physician is temporarily unavailable.  The provision of services to Members by the
on-call Group Physician shall be governed by the terms of this Agreement.


 


(c) Group and Group Providers shall participate in all Benefit Programs
set forth in Exhibit A.  Except for
those PCP’s who generally only serve, or generally do not serve, geriatric
patients in their practices, or pediatricians who serve only pediatric
patients, or OB/GYN’s who serve only female patients, Group shall require
that each of its PCP’s accepts all of the Members who select them during such
times that such PCP’s practice is open to new patients.


 


(d) Group shall ensure that at any given time, the practices of an
adequate number of its PCPs are open to Members to meet all access standards
required by Blue Shield, and its regulatory agencies.  Each PCP, whether or not his/her practice is closed to new
patients, shall accept each Member (and such Member’s immediate family members)
who is or had been a patient of PCP at anytime during the two (2) years
immediately prior to such Member selecting physician as his/her PCP.  Without limiting the foregoing, Group shall
ensure that at anytime that a PCP is accepting new patients of other health
care service plans, such PCP accepts Members hereunder.  In the event a PCP, during the term of this
Agreement, elects to close his/her practice to new Members, Group shall give
Blue Shield sixty (60) days prior written notice of such closure or notice
as soon as Group becomes aware of the closure.  In the event a PCP, during the term of this Agreement, ceases to
be a Group Provider, Group shall give Blue Shield sixty (60) days prior written
notice of such closure.


 


Sections 2.4(b), 2.4(c), and 2.4(d) are amended in full to read as
follows:


 


(b) To assist Group in meeting Blue Shield requirements hereunder,
Group shall, through a duly designated representative, use best efforts to
attend occasional provider education/orientation sessions conducted by Blue
Shield.


 


(c) In providing Capitated Professional Services hereunder, Group shall
utilize only Group Providers who are credentialed and re-credentialed in
accordance with Blue Shield’s standards as set forth in the Provider Manual,
unless the Medically necessary service is not available from a Group
Provider.  Group and/or each Group
Provider shall provide to Blue Shield, on request, credentialing information in
such form as reasonably required by Blue Shield, NCQA standards, and state
and federal law.


 


(d) Group represents and requires that during the term of this
Agreement, each physician through whom it will provide Capitated Professional
Services hereunder shall: (i) maintain a current, unrestricted license to
practice medicine in California; and, (ii) maintain such staff privileges with
at least one Blue Shield Hospital as necessary for physician to provide
services to Members hereunder; and, (iii) be certified and eligible to
participate in the Medicare Program. 
Group further represents and requires that: (iv) each


 


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non-physician Group Provider shall maintain a current and unrestricted
license to practice his/her profession or provide the contracted service; and,
(v) use of any physician extender shall be in strict compliance with the rules
of the California Medical Board.


 


Section 2.6 Group Service Contracts is amended in full to read
as follows:


 


Group shall provide to Blue Shield a written list of its Group
Providers, and each month notify Blue Shield of any additions or deletions to
such list (including any notices of termination of Group Providers), in
addition to which Group shall provide Blue Shield with immediate notice of
termination of Group Providers. 
Further, Group shall provide timely response to reasonable periodic written
requests from Blue Shield for verification of the current list of Group
Providers.  Group’s contracts with Group
Providers shall be in writing and shall require that such providers: (a)
seek payment for the provided services only from Group and under no
circumstances seek payment from the Member or from Blue Shield; (b) under no
circumstances balance bill or surcharge Members for Covered Services (including
in the event of Group and/or Blue Shield’s insolvency); (c) maintain and
disclose such records to Blue Shield and to Governmental Officials as set forth
in Article IX hereof; (d) permit Government Officials and Blue Shield to inspect
its offices, records, and facilities as set forth in Article X; (e) cooperate
with and participate in Blue Shield’s and Group’s quality improvement and
utilization management programs and Member grievance and appeal procedures;
and, (f) maintain such professional and general business liability insurance as
set forth in Article VIII hereof.  Upon
Blue Shield’s written request, Group’s form of provider contract(s),
along with the executed signature pages to such contracts, shall be provided to
Blue Shield.  Group may maintain the
confidentiality of its payment rates (other than bonus/withhold/shared risk or
savings arrangements), provided that such does not result in concealment or
misunderstanding of other terms and provisions of the contract.  Upon Blue Shield’s written request, such
contracts shall be promptly amended to contain any provisions required to be
contained in provider contracts by either the Department of Managed Health
Care (“DMHC”), CMS, or any other governmental agency.


 


Sections 2.9(a) and 2.9(b) Outpatient Drug Formulary and Pharmacy
Information are amended to read in full as follows:


 


(a) Group and Group Providers shall comply with the outpatient drug
formulary, drug prior authorization requirements, and pharmacy benefit design
(including maximum supplies, use of generics, and mail order for maintenance
drugs), as adopted and periodically modified by Blue Shield, as set forth in
the Provider Manual and as medically appropriate for the Member.


 


(b) In the event that Blue Shield provides to Group computerized or
electronic data regarding prescriptions obtained by Members and drugs supplied,
Group agrees that such information is provided for the limited and restricted
purpose of utilization management.  Under
no circumstances may Group copy or share such data with others, or utilize such
data, in whole or in part, directly or indirectly, to negotiate rebates,
discounts, or contracts with pharmaceutical manufacturers or other suppliers of
pharmaceuticals without the written approval of Blue Shield.


 


Section 2.11(a) Termination of Physician/Patient Relationship is
amended in full to read as follows:


 


Group or a Group Provider may terminate the professional relationship
with a Member only with Blue Shield’s consent which shall not be
unreasonably withheld and in accordance with the procedures set forth in
the Provider Manual.  In the event a
Group Provider terminates his/her relationship with a Member, Group shall
assist the Member in selecting another Group Provider for the provision of
Capitated Professional Services.


 


Sections 2.13(a) and 2.13 (b) Disclosures is amended in full to
read as follows:


 


3

















 


(a) In addition to the notice obligation set forth in Paragraph 2.5,
Group shall notify Blue Shield immediately in writing when it becomes aware of
the occurrence of any of the following events: (i) Group’s or a Group
Provider’s liability insurance is canceled, terminated, not renewed, or
materially modified; (ii) Group or a Group Provider has become a defendant in a
lawsuit filed by a Member or is required or agrees to pay damages to a Member
for any reason; (iii) an act of nature or any event occurs which has a
materially adverse effect on Group’s ability to perform its obligations
hereunder; (iv) a petition is filed to declare Group bankrupt or for
reorganization under the bankruptcy laws of the United States or a receiver is
appointed over all or any portion of the Group’s assets; or (v) Group is sued
by a healthcare provider for nonpayment of compensation; or (vi) any other
situation arises which could reasonably be expected to materially affect
Group’s ability to carry out its obligations under this Agreement.  Group shall also provide Plan with thirty
days’ advance notice of any proposed material change in the ownership of Group,
a change in its management services organization (if any), or the sale of all
or substantially all of the assets of the Group.


 


(b) Annually, within sixty (60) days following the end of Group’s
fiscal year or thirty days following such information being available to Group,
Group shall provide to Blue Shield access to its most recent annual
income statement, balance sheet, and statement of cash flow, which shall be
prepared in accordance with generally accepted accounting principles and shall
be certified by Group’s chief executive officer or chief financial
officer.  Group shall provide access
to any audited financial statements it may have to Blue Shield.  A narrative or work sheet describing the
calculation of Group’s IBNR shall accompany the   financial statements. 
The information set forth in this paragraph shall also be provided by
Group to Blue Shield in the event there is an actual or proposed change in
ownership of Group.  Group shall also,
upon written request, provide Blue Shield with access to
quarterly financial statements, which shall include a balance sheet, statement
of income and statement of cash flow prepared in accordance with generally
accepted accounting principles.


 


Section 2.16 Acceptance of Members is amended in full to read as
follows:


 


Group shall accept all Members who select or who are assigned to Group
or Group PCP’s, if the practice is open to new Members, who live or work
within the Group Service Area.  This
requirement shall not apply to Members with whom the Group’s relationship was
terminated in accordance with section 2.11 hereof.  Blue Shield shall undertake reasonable efforts in accordance with
a standard of good faith to assure that Members who select or are assigned to
Group or Group PCPs live or work within the Group Service Area.


 


Section 3.2 (a) Failure To Make Payment is amended in full to
read as follows:


 


(a) In the event that Group occasionally fails to pay a Group Provider
or other healthcare provider for Capitated Professional Services within the
time frames set forth in this Agreement, and Blue Shield reasonably determines
that such amount is due and payable by Group, Blue Shield may, after notice to
Group, and reasonable opportunity for Group to pay, pay the amount due,
and deduct and offset such payment from any amount then or thereafter payable
by Blue Shield to Group.


 


Sections 4.3(a) Termination of Delegation are amended in full to
read as follows:


 


In the event that Blue Shield is dissatisfied for any reason with
Group’s performance of delegated activities, Blue Shield may, after due
diligence and informal attempt to correct the problems, in its sole
discretion, modify Group’s status (with respect to all or a particular
delegated activity) from fully delegated to delegated with corrective
action.  Such notice of delegation with
corrective action shall set forth the deficiencies perceived by Blue Shield in
Group’s performance of delegated activities, and Group shall have ninety (90)
days to correct such deficiencies to the reasonable satisfaction of Blue
Shield.  In


 


4

















 


the event such deficiencies are not corrected to the reasonable
satisfaction of Blue Shield, Blue Shield may, in its sole discretion, terminate
the delegation or extend the period given Group to correct such deficiencies.


 


Section 5.2 Provider Manual is amended in full to read as
follows:


 


Provider Manual.  Blue Shield
shall develop a Provider Manual, and Group and Group Providers shall comply
with its provisions, which shall be communicated to Group.  Blue Shield may, in its discretion,
periodically modify the Provider Manual by written notice to Group.  The Provider Manual, as so amended, is
incorporated herein by reference.  To
the extent of any conflict between this Agreement and the Provider Manual, the
terms of this Agreement shall govern. 
In the event Group reasonably concludes that a change in the Provider
Manual would have an adverse financial impact on the Group, then Group and Blue
Shield shall confer in good faith regarding the change.  See Section 7.12 Material Change of
Circumstances.


 


Section 5.3 Blue Shield Reports is amended in full to read as
follows:


 


Blue Shield Reports.  Blue
Shield shall provide to Group such reports regarding utilization and other matters
as set forth in the Provider Manual


 


Sections 6.3(a) Eligibility List and Modifications are amended
in full to read as follows:


 


Blue Shield shall provide to Group on a monthly basis within ten days
of the start of the month, a member eligibility report and a member eligibility
change report, as further described in the Provider Manual.  These reports shall be submitted to the
Group electronically, unless both Blue Shield and the Group agree that it may
be submitted in writing.  Blue Shield
shall attempt to discourage retroactive cancellation or retroactive addition of
Members.  However, Blue Shield may make
exceptions as may be necessary for administrative or business reasons.  Subsequent Capitation to Group will be
adjusted to reflect the retroactive addition or deletion of Members.  With the exception of retroactive changes
for Members in Blue Shield 65 Plus and those Members enrolled through CalPERS
and FEHBP, retroactive additions or deletions shall not exceed ninety (90)
days.  For those members enrolled
through CalPERS and FEHBP, retroactive additions or deletions shall not exceed
the limitation on retroactive additions and deletions that Blue Shield has in
place with CalPERS and FEHBP.


 


Section 7.3 Copayments is amended in full to read as follows:


 


Group shall collect and retain, as additional compensation, the
Member’s applicable Copayment for Covered Services provided.  Such Copayment obligation shall not be
waived by Group or Group Providers on a regular or routine basis but may be
waived on a case-by-case basis in the event of a financial hardship on the part
of the member.


 


Section 7.4 Stop Loss Coverage is amended in full to read as
follows:


 


During the term of this Agreement, Group shall either obtain
professional stop loss coverage through Blue Shield under the terms and
conditions set forth in Exhibit H attached hereto or shall obtain professional
stop loss coverage from a third party insurer, which shall be communicated
to Blue Shield.  Upon request,
certificates and other proof of such coverage shall be provided to Blue
Shield.  Group shall provide Blue Shield
with timely notice of cancellation of coverage or change in carrier.  If Group elects to have Blue Shield provide
such stop loss coverage, by so indicating on the Signature Page hereto, Blue
Shield shall provide and charge Group for stop loss coverage as set forth in
Exhibit H.


 


5

















 


Section 7.12 Material Change of Circumstances is added in its
entirety as follows:


 


Material Change of Circumstances:  In the event of a Material Change, as
defined, during the term of this Agreement, and upon written request from
either party, Blue Shield and Group agree to meet to discuss in good faith the
impact of the Material Change on the financial relationship between the
parties.  If, within sixty (60) days
following the date of such request, the parties are unable to reach agreement
on the extent of financial impact of the Material Change, or the appropriate
change, up or down, in the amount of Capitation (Exhibit C.), the terms of the
Shared Savings program (Exhibit D.) or the Division of Financial Responsibility
(Exhibit B.), then the matter shall be sent to a mutually acceptable
independent actuary not affiliated with either party who will make such a
determination.  The cost of the
independent actuary shall be borne equally by the parties.  The determination of the independent actuary
shall be binding upon the parties unless either party, within thirty (30) days
of receipt of the actuary’s determination, files a Demand for Arbitration
pursuant to Section 11.2 hereof.  For
purposes of this section, “Material Change” shall include, but, not be limited
to, the following which results in a material change in cost to Group (an
increase or a decrease) or has a material impact on the risk relationship
between Blue Shield and Group: (i) a change in the type, scope or duration of
Covered Services mandated by legislation, regulations or a regulatory agency,
(ii) the addition or removal by Blue Shield of a service from the list of
Capitated Professional Services set forth in Exhibit B., (iii) the addition or
removal by Blue Shield of a service from the list of Shared Savings services
set forth in Exhibit B., (iv) the development of new technology, therapies or
pharmaceuticals or a change in Blue Shield Medical Policy which results in a
material change in costs over the cost of existing approved treatment for the
same condition (an increase or a decrease), or, (v) enactment of any statute or
regulations which otherwise results in a material change in cost to Group (an
increase or a decrease) or has a material impact on the risk relationship
between Blue Shield and Group.  A change
or collection of changes will not be considered to be “Material” unless the
aggregate net change in cost to Group (increase or decrease) is thirty cents
(30 cents) or more per member per month.


 


Section 8.6 Member Complaints and Grievances is amended in full
to read as follows:


 


Member Complaints and Grievances. 
Group shall promptly notify Blue Shield of receipt of any claims,
including professional liability claims filed or asserted by a Member against
Group or a Group Provider.  Group shall
cooperate with Blue Shield in identifying, processing, and resolving all Member
grievances and other complaints, in accordance with Blue Shield’s
complaint/grievance process and time limits set forth in the Provider Manual,
as well as in accordance with such time limits as required by state and/or
federal law.  Group shall comply with
Blue Shield’s resolution of any such complaints or grievances including
specific findings, conclusions and orders of the Department of Managed
Health Care.


 


Section 8.9(a) Insurance is amended in full to read as follows:


 


Group and Group Providers shall maintain professional liability
(malpractice) insurance coverage in the minimum amount of One Million Dollars
($1,000,000) per occurrence and Three Million Dollars ($3,000,000) annual
aggregate per physician per year for all physicians who are partners,
associates or employees of Group and warrants that all physicians with which
Group contracts will carry professional liability coverage in the same
amount.  Group and Group Providers
shall maintain general liability insurance coverage in the minimum amount of
One Million Dollars ($1,000,000) per occurrence for all business activities.  If Group or its Group Providers or
subcontracts have a claims-made malpractice insurance policy, then they agree
to keep the policy in effect for at least five (5) years past any termination
of this Agreement or purchase extended reporting coverage (tail insurance).


 


Section 9.1 Medical Records is amended in full to read as
follows:


 


6

















 


Group and Group Providers shall maintain the usual and customary records
for Members in the same manner as for other patients of Group and Group
Providers.  Group will require that all
Group Physicians establish and maintain in an accurate and timely manner for
each Member who has obtained care from such physician a medical record which is
organized in a manner which contains such demographic and clinical information
as is necessary, according to standards set forth by state, federal, and
accreditation agencies, to provide documentation as to the medical problems
and medical services provided to the Member. 
Such record shall include a historical record of diagnostic and
therapeutic services recommended or provided by, or under the direction of, the
provider.  Such records shall be in such
a form as to allow trained health professionals, other than the provider, to
readily determine the nature and extent of the Member’s medical problem and the
services provided and permit peer review of the care provided.  Such records shall, on request, and within
reasonable time requirements, be made available without charge to Blue Shield
and its designated agents.  Without
limiting the foregoing, Group shall, without charge, transmit Member’s medical
records information to a Member’s other providers, to Government Officials, and
to Blue Shield for purposes of utilization management, quality improvement and
other Blue Shield for purposes of utilization management, quality improvement
and other Blue Shield administrative purposes. 
Upon termination of this Agreement, or the re-assignment or transfer of
Members, one copy of such records shall be provided without charge to the
Member’s new medical group upon request.


 


Sections 10.1 (c) and 10.1 (d) Disclosure of Records is amended
to read in full as follows:


 


(c ) Upon forty-eight (48) hours written notice, Group shall
make any records of its quality improvement and utilization review activities
pertaining to Members and provider credentialing files available to Blue
Shield’s quality and utilization review committee.  Such sharing of records between the two committees shall be in
accordance with, and limited to, Sections 1157 of the California Evidence Code
and 1370 of the California Health and Safety Code and shall not be construed as
a waiver of any rights or privileges conferred on either party by those
statutes.


 


(d) Blue Shield, at its sole cost and expense, and with reasonable
prior written notice to Group, may from time to time audit the books and
records of Group as they relate to its services, claims payments, authorization
turn-around times, reporting, and billings under this Agreement.


 


Sections 10.2 Site Evaluations is amended in full to read as
follows:


 


Group and Group Providers shall permit Government Officials and Blue
Shield to conduct periodic site evaluations and inspections of their facilities
and records.  In the event that
Government Officials or Blue Shield find any deficiencies in such facilities or
records, Group, or Group Provider, as applicable, shall have thirty (30) business
days to substantially correct such deficiencies which are identified by such
Government Officials or Blue Shield.


 


Section 11.2 Arbitration of Disputes is amended in full to read
as follows:


 


If any dispute, controversy, or misunderstanding (other than a claim of
medical malpractice) arises between the parties to this Agreement which exceeds
the jurisdiction of Small Claims Court, which was not resolved in the Provider
Dispute Resolution procedure set forth in Paragraph 11.1, and which may
directly or indirectly concern or involve any term, covenant, or condition
hereof, the parties shall settle the dispute by final and binding arbitration
in Los Angeles, California, Arbitration shall be conducted under the Commercial
Rules of the American Arbitration Association. 
The arbitration decision shall be binding on both parties.  It is agreed that the arbitrator shall be
bound by applicable state and federal law and that the arbitrator shall issue
written findings of fact and conclusions of law.  The arbitrator shall have no authority to award damages


 


7

















 


or provide a remedy which would not be available to such prevailing
party in a court of law nor shall the arbitrator have the authority to award
punitive damages.  The cost of the
arbitration shall be shared equally by Group and Plan.  Each party shall be responsible for its own
attorneys’ fees.


 


Section 12.1 Term is amended in full to read as follows:


 


Term.  When executed by both
parties, this Agreement shall become effective as of the Effective Date, and
shall continue in effect for two (2) years thereafter, unless earlier
terminated as set forth below.  Unless
either party notifies the other party at least one hundred twenty (120)
calendar days prior to the expiration of said initial two year term, this
Agreement shall, following termination of the initial term, continue in effect
for additional one (1) year terms until terminated as set forth below.


 


Section 12.2 Termination Without Cause is amended in full to
read as follows:


 


Either party may terminate this Agreement at anytime without cause by
giving to the other party at least one hundred twenty (120) calendar days
written notice of termination.  The
termination shall become effective the first day of the month following the
expiration of the notice period.


 


Section 12.6 (b) Effect of Termination is amended in full to
read as follows:


 


Group shall, at Blue Shield’s option, continue rendering Capitated
Professional Services after the termination of this Agreement to Members
assigned to Group at the Blue Shield Allowable Rates noted in Exhibit E,
for the duration of the contracts in effect with Blue Shield through which
Members are enrolled with Blue Shield, or until such time as Blue Shield has
arranged for an alternative source of services for each such Member from other
contracting providers, but not to exceed ninety (90) days.


 


Section 13.7 Financial Solvency Reporting is amended in full to
read as follows:


 


The Group shall comply with any and all applicable reporting
requirements set forth in the Knox-Keene Act and regulations.


 


Section 13.8 Blue Shield Reporting Requirements is amended in
full to read as follows:


 


Blue Shield shall submit Quarterly and Annual reports to the Department
of Managed Health Care in compliance with the legal requirements of state
law.


 


Section 14.3 Entire Agreement is amended in full to read as
follows:


 


Entire Agreement.  This Agreement, all attachments and Exhibits
referenced in this Agreement and attached hereto, and the Provider Manual, as
amended from time to time, are incorporated herein by reference, and constitute
the entire understanding between the parties relating to the subject matter
hereof.  This Agreement does not
supersede or modify any agreement between the parties pertaining to Blue
Shield’s PPO Benefit Programs, including without limitation, any Physician
Member Application and Agreement between the parties or between Blue Shield and
Group physicians.  See Section 7.12
Material Change of Circumstances.


 


Sections 14.5 Notices is amended in full to read as follows:


 


Any notices or other communication made or contemplated by this
Agreement to be in writing shall be deemed to have been received by the party
to whom it is addressed three (3) business days after it is deposited in
the United States mail, certified postage prepaid, return receipt requested, or
the date of delivery by Federal Express or similar commercial courier service,
and addressed as set forth in Exhibit A., or to such other


 


8

















 


address as either party from time to time informs the other in
writing.  Further, notice may be given
during normal business hours by facsimile transmission to the number set forth
in Exhibit A, which shall be deemed received upon facsimile transmission
confirmation, or by personal delivery to the address set forth in Exhibit A,
which shall be deemed received upon receipt of a signature from the person or
office at the designated address.


 


Section 14.7(b) Assignment, Subcontracting, and Additions of PCPs
is amended in full to read as follows:


 


For purposes of providing services to Members hereunder, Group may not
add as PCPs any physician to the Blue Shield network whose principal
medical office is located outside the postal zip codes set forth as PCP Zip
Codes in Exhibit A., without Blue Shield’s prior written consent, which consent
will not be unreasonably withheld.


 


Sections 14.9 Confidentiality/Trade Secrets is amended in full
to read as follows:


 


The compensation terms of this Agreement and all terms relating to
compensation shall be confidential. 
Group shall not disclose such terms (other than to Government Officials and
appropriate business professionals who work with the Medical Group, such as
accountants, lawyers and consultants), except with the prior written
consent of Blue Shield.  However,
nothing herein shall prohibit Group or Group Providers from disclosing to
Members and others the method by which they are compensated (e.g., capitation,
fee-for-service, etc.); it is the precise compensation amounts for which
confidential treatment is required by this provision.


 


Sections 14.10 Non-Solicitation is amended in full to read as
follows:


 


During the term of this Agreement, and for six (6) months
thereafter, neither Group nor Group Providers shall solicit, induce, or
encourage any Member to disenroll from Blue Shield or select another health
care service plan for healthcare services. 
Notwithstanding the foregoing, Group and Group Providers shall be
entitled to freely communicate with Members regarding any aspect of their health
status or treatment.


 


All other conditions and terms of this Agreement shall remain the
same.  When executed by both parties,
this Amendment shall be effective as of February 1, 2003.


 


	
  BLUE SHIELD OF CALIFORNIA

  	
  NORTHWEST ORANGE COUNTY MEDICAL
  GROUP

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Lisa Farnan

  	
   

  	
  By:

  	
  /s/ Pratibha Patel

  	
   

  
	
   

  	
  LISA FARNAN

  	
   

  	
  PRATIBHA PATEL, MD

  
	
   

  
	
   

  
	
  Title:

  	
  VP, PROVIDER RELATIONS

  	
   

  	
  Title:

  	
  PRESIDENT

  	
   

  
	
   

  
	
  Date:

  	
  3-21-03

  	
   

  	
  Date:

  	
  3/12/03

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ James P. Aronick

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  JAMES P. ARONICK

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
  3/12/03

  	
   

  
							



 


9

















 


AMENDMENT
NO. XV


 


AMENDMENT
TO

BLUE SHIELD OF CALIFORNIA

HMO FULL SERVICE IPA AGREEMENT


 


The HMO Full Service IPA Agreement (hereinafter “Agreement”) between
California Physicians’ Services, Inc. d.b.a. Blue
Shield of California (hereinafter “Blue Shield”) and North West Orange County Medical Group
(hereinafter “IPA”) with an effective date of September
1, 1998 is further amended as follows:


 


Recitals


 


A.            Whereas, La Palma
Intercommunity Hospital Medical Center terminated their Capitated Hospital
Agreement with Blue Shield, effective January 1, 2003, for Commercial members
assigned to IPA and to La Palma Intercommunity Hospital Medical Center as their
primary hospital;


 


NOW, THEREFORE, in consideration of the recitals above and of the
intention of both parties to amend the Agreement to reflect a change in certain
terms, the Agreement is hereby amended as follows:


 


1.             The attached Exhibit
H Shared Savings Programs is added in its entirely;


 


2.             Exhibit H will be
effective January 1, 2003 for Commercial members assigned to IPA, who utilize
La Palma Intercommunity Hospital Medical Center as their primary hospital (“La
Palma Pod”).


 


All other terms and conditions of this Agreement shall remain the same.


 


	
  BLUE SHIELD OF CALIFORNIA

  	
  NORTHWEST
  ORANGE COUNTY

  MEDICAL GROUP

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Lisa Farnan

  	
   

  	
  By:

  	
  /s/ Pratibha Patel

  	
   

  
	
   

  	
  Lisa Farnan

  	
   

  	
  PRATIBHA PATEL, MD

  
	
   

  
	
   

  
	
  Title:

  	
  V.P., Provider Relations

  	
   

  	
  Title:

  	
  PRESIDENT

  	
   

  
	
   

  
	
  Date:

  	
  3-21-03

  	
   

  	
  Date:

  	
  3/12/03

  	
   

  
	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ James P. Aronick

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  JAMES P. ARONICK

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
  3/12/03

  	
   

  
												



 


1

















 


EXHIBIT
H


 


HMO Full
Service Medical Group Agreement


 


SHARED
SAVINGS PROGRAM


 


NORTHWEST
ORANGE COUNTY MEDICAL GROUP


 


Effective
Date: January 1, 2003 (La Palma Pod)


 


COMMERCIAL MEMBERS


 


FUNDING: For Members other than those enrolled in Blue Shield 65 Plus
plans and Blue Shield POS Benefit Programs, Blue Shield will allocate to a
Shared Savings Fund a per Member per month amount set forth in Exhibit H- l for
all Members assigned to Group, subject to retroactive adjustments either upward
or downward due to retroactive changes in membership.


 


CHARGING OF PAYMENTS: Blue Shield shall charge against the Shared
Savings Fund all payments made by Blue Shield for such Members during the
annual term of the Agreement which are designated as Hospital responsibility
under Schedule A-1, Division of Financial
Responsibility Matrix, less payments received by Blue Shield as a
result of third-party reimbursement, Workers’ Compensation recoveries and
coordination of benefits payments.  Blue
Shield shall include any payments for Shared Savings Services which are paid prior
to the date of the settlement, as well as a reasonable allowance, as determined
by Blue Shield’s actuaries, for incurred but not paid (IBNP) claims.  Any costs for Shared Savings Services not
included in any annual settlement shall be carried forward and included in the
Shared Savings settlement for the succeeding Agreement Year.  In addition, if this Agreement is replaced
or superceded any other agreement between the parties which contained a risk
sharing arrangement for similar services; then the following shall also be
charged against the Shared Savings Fund described herein: (i) any deficit in
the final settlement of that risk sharing arrangement and, (ii) any claims for
risk services which were incurred but not included in the settlement of the
risk arrangement in the prior agreement.


 


SHARED SAVINGS FUND SETTLEMENT: The Shared Savings Fund shall be
settled on an annual basis, within one hundred eighty (180) days following the
end of each annual term of the Agreement (being a 120 day claims run out and a
60 day determination period).  In the
event of termination of the Agreement for any reason, final settlement of the
Shared Savings Fund shall be performed one hundred fifty (150) days after the
date of termination and any amounts due from Blue Shield to Group shall be paid
within thirty (30) days thereafter.


 


Surplus:
If the total actual cost of Shared Savings Services is less than the total
allocation to the Shared Savings Fund, then Group shall be entitled to fifty
percent (50%) of the amount by which the allocation exceeds the costs, not to
exceed thirty-five percent (35%) of HMO Capitation Fees, minus any carry
forward resulting from deficits from previous Agreement years.


 


Deficit: If the total actual cost of Shared Savings
services is more than the total allocation to the Shared Savings Fund, then
fifty percent (50%) of the amount by which the actual costs exceed the total
allocation, not to exceed five percent (5%) of the HMO Capitation Fees, shall
be allocated to Group and shall be handled as follows: (i) the excess may be
deducted from any other settlements or payments, except capitation and
Professional Stop Loss Program payments made pursuant to Exhibit H, due to
Group from Blue Shield, and, (ii) any remaining amounts shall be carried
forward into future Agreement years and shall be deducted from any Shared
Savings payments to Group in future years.


 


SUMMARIES & SETTLEMENTS: Blue Shield shall provide to Group a
Shared Savings Program quarterly Report and a Shared Savings Annual Settlement,
as further described in the Provider Manual.


 


2

















 


EXHIBIT
H-1


 


HMO
IPA/MEDICAL GROUP AGREEMENT


 


Shared
Savings Fund Allocation for NorthWest Orange County Medical Group


 


Effective
Date: 01/01/03


 


As of
01/01/2003, the effective net yield (which includes the deduction for Stop
Loss, if applicable) for the following PMPMs are *** for the HMO Group, *** for
the HMO IFP, and *** for the HMO PERS based on the 07/01/2002 membership.


 


The
actual allocation to Shared Saving fund for each month will be calculated based
on the actual member mix for each age/sex category.


 


Members
Other Than Blue Shield 65 Plus Members


 


Age
& Sex Categories and Shared Savings Allocations


 


	
  Category

  	
   

  	
  Shared
  Savings Allocation (PMPM)

  
	
  Sex

  	
   

  	
  Age

  	
   

  	
  Group

  (non-POS)

  	
   

  	
  IFP

  (non-POS)

  	
   

  	
  PERS

  (non-POS)

  
	
  F

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  F

  	
   

  	
  65 + (M) *

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M

  	
   

  	
  0 - 1

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  2 - 6

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  7 - 18

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  19 - 21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  22 - 24

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  25 - 29

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  30 - 34

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  35 - 39

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  40 - 44

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  45 - 49

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  50 - 54

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  55 - 59

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  60 - 64

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  65 + (NM)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  M

  	
   

  	
  65 + (M) *

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 












* - Medicare Primary


*** All references to the Shared
Saving Fund Allocation have been deleted.


 


3