Exhibit 10.122


 


ORIGINAL


 


AMENDMENT


to the

PROVIDER SERVICES AGREEMENT


between

HEALTH NET, INC. AFFILIATES


And

PROSPECT MEDICAL GROUP


 


The
Provider Services Agreement (“Agreement”), dated January 1, 1998, between
Prospect Medical Group (“PPG”) and Health Net, Inc. Affiliates (“HNI”)
subsequently amended July 1, 2000, February 19, 2001, and
October 1, 2001 is hereby amended effective April, 1 2003.


 


HNI
and PPG hereby agree to amend the Agreement as follows:


 


1.                                       Article VI Term and Termination
Section 6.1 Term of the Agreement is deleted in its entirety and replaced
as follows:


 


6.1                               Term.  The
term of this Amendment shall commence April 1, 2003, and shall continue in
effect for a period of twenty one (21) months (“Initial Term”).  Thereafter, this Agreement shall
automatically renew for successive one-year (1) periods on the annual renewal
date, unless terminated as set forth herein. 
The term of this Agreement shall remain the same for all Benefit
Programs covered hereunder.


 


2.                                       Article VI Term and Termination,
Section 6.2 Without Cause Termination is deleted in its entirety and
replaced as follows:


 


6.2                               Without Cause Termination  After
the Initial Term either party may terminate this Agreement at the scheduled
renewal date upon one hundred twenty (120) days prior written notice to the
other party.  In the event HNI provides
PPG with such notice, FHS may, at its option, begin to transition Members
immediately under this Agreement to another Participating Provider after such
notice.


 


3.                                       Addendum A Benefit Programs and Affiliates to
the Agreement is deleted in its entirety and replaced with the new Addendum A
attached hereto.


 


4.                                       Addendum B, Commercial Health Maintenance
Organization (HMO) And Commercial Point Of Service (POS) Benefit Programs to
the Agreement is deleted in its entirety and replaced with the new Addendum
attached B hereto.


 


5.                                       Addendum B.2 Division of Responsibility Matrix
Of HMO, PPG And Shared Risk/Hospital Capitated Services Commercial HMO And
Point Of Service Benefit Programs of the Agreement is deleted in its entirety
and replaced with the new Addendum B.2 attached hereto.


 


6.                                       Addendum I Healthy Families Program is added
to the Agreement and attached hereto.


 


7.                                       Addendum J Financial Solvency Reporting
Requirement Applicable To Health Net Of California, Inc. is added to the
Agreement and attached hereto.


 


8.                                       Addendum K, Health Insurance Portability and
Accountability Act of 1996 (“HIPAA”) is added to the Agreement and is attached
herein.


 












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


 

















 


Except
as provided in this Amendment, all other provisions of the Agreement between
HNI and Provider not inconsistent herewith shall remain in full  force and effect.


 


IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their officers duly authorized to be effective on the date and
year first written above.


 


 


	
  Prospect Medical Group

  	
  Health Net, Inc. Affiliates

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  Peter Goll

  	
   

  	
  /s/
  Jenni Vargas

  	
   

  
	
  Signature

  	
  Signature

  
	
   

  	
   

  
	
  Peter
  Goll

  	
  Jenni
  Vargas

  
	
  Senior
  Vice President

  	
  Network
  Management &  Development
  Officer

  
	
   

  	
   

  
	
  3/17/03

  	
   

  	
  3-27-03

  	
   

  
	
  Date

  	
  Date

  



 


2

















 


ADDENDUM A


 


BENEFIT PROGRAMS AND AFFILIATES




I.                                         BENEFIT PROGRAMS


 


Benefit
Program participation included under this Agreement is as follows:


 


	
  BENEFIT PROGRAM

  	
   

  	
  ADDENDUM

  	
   

  	
  PPG

  PARTICIPATION

  Yes/No

  	
   

  
	
  Standard HMO

  	
   

  	
  B

  	
   

  	
  Yes

  	
   

  
	
  Flex Funded HMO

  	
   

  	
  B

  	
   

  	
  Yes

  	
   

  
	
  Small Group HMO

  	
   

  	
  B

  	
   

  	
  Yes

  	
   

  
	
  Individual HMO

  	
   

  	
  B

  	
   

  	
  Yes

  	
   

  
	
  AIM

  	
   

  	
  B

  	
   

  	
  Yes

  	
   

  
	
  Medicare COB

  	
   

  	
  B

  	
   

  	
  Yes

  	
   

  
	
  Commercial POS

  	
   

  	
  B

  	
   

  	
  Yes

  	
   

  
	
  Medicare HMO

  	
   

  	
  C

  	
   

  	
  Yes

  	
   

  
	
  PPO/EPO/POS (out-of-network)

  	
   

  	
  D

  	
   

  	
  Yes

  	
   

  
	
  Medi-Cal

  	
   

  	
  F

  	
   

  	
  No

  	
   

  
	
  TRICARE

  	
   

  	
  G

  	
   

  	
  Yes

  	
   

  
	
  Occupational Medicine

  	
   

  	
  H

  	
   

  	
  Yes

  	
   

  
	
  Healthy Families

  	
   

  	
  I

  	
   

  	
  Yes

  	
   

  



 


II.                                     AFFILIATES


 


Upon
execution of this Agreement, the Affiliates primarily using this Agreement
include, but are not limited to the following: Health Net of California Inc;
Health Net Life Insurance Company; Health Net Federal Services Inc. Employer
and Occupational Services Group (EOS); Foundation Integrated Risk Management
Solution, Inc.; and Foundation Health Systems Life and Health Insurance
Company.  The Affiliates are defined in
Section 1.1 of this Agreement.


 


Notwithstanding
the foregoing, PPG agrees that any other Affiliate of HNI not listed above may
access the rates set forth in this Agreement and Addenda.  This would include Members of non-California
based Affiliates who may receive Contracted Services from PPG.


 


III.                                 MAIN/SATELLITE OFFICES


 


	
  PPG tt

  	
   

  	
  Main
  and Satellite Offices

  
	
  505?1470

  	
   

  	
  Prospect
  Medical Group

  
	
  2979?1853

  	
   

  	
  Prospect
  - Nuestra Familia

  
	
  3067?1952

  	
   

  	
  Prospect
  -HealthSource

  
	
  3097?1978

  	
   

  	
  Prospect
  - Huntington Beach

  
	
  3064?1947

  	
   

  	
  Prospect
  Corona

  
	
  2980?1854

  	
   

  	
  Prospect
  Sherman Oaks

  



 


3

















 


ADDENDUM B


 


COMMERCIAL HEALTH MAINTENANCE ORGANIZATION (HMO) AND

COMMERCIAL POINT OF SERVICE (POS) BENEFIT PROGRAMS


 


A.                                    GENERAL REIMBURSEMENT
PROVISIONS.


 


1.                                      PPG understands and agrees that the
obligations of HNI set forth in this Addendum are only the obligations of
Health Net of California.  A California
Health Plan (hereafter “HMO”) and not the obligations of HNI or any other
Affiliate of HNI.  PPG shall be
compensated according to this Addendum B and this Addendum shall be applicable
to only those Commercial HMO and Commercial POS Members listed on the
applicable Capitation remittance summaries.


 


2.                                      Benefit Programs.  This
Addendum B is applicable to the following Benefit Programs:


•                  Commercial
HMO


•                  Standard HMO


•                  Flex Funded HMO


•                  Small Group HMO


•                  Individual HMO


•                  AIM


•                  Medicare COB


•                  Commercial
POS


 


3.                                      Compensation for PPG
Capitated Services.  As compensation for rendering PPG Capitated
Services.  HMO shall pay PPG Capitation
as set forth in this Addendum B for each Commercial HMO and Commercial POS
Member eligible to receive services from PPG during any particular month.  Capitation shall be payable on a per Member
per month (PMPM) basis. Capitation shall be computed on the basis of the most
current information available and shall be paid by HMO by wire transfer on or
before the fifteenth (15th) day of each month or the first business day
following the fifteenth, if the fifteenth is a holiday or on a weekend.  Each Capitation payment shall be accompanied
by a remittance summary.  The remittance
summary identifies the total Capitation payable and those Commercial HMO and
Commercial POS Members for whom Capitation is being paid.  In the event of a Capitation error,
resulting in an overpayment or underpayment to PPG, HMO shall adjust subsequent
Capitation to offset such error.


 


4.                                      Compensation to Other
Providers of PPG Capitated Services.  PPG shall compensate all
providers who render PPG Capitated Services to Commercial HMO and Commercial
POS Members assigned to PPG.  In the
event that PPG does not process and pay eligible claims submitted to PPG for
Capitated Services within applicable time limits, HMO may pay such claims at
the lesser of HMO’s contract rate with such provider, if any, PPG’s subcontract
terms, or provider’s billed charges. 
HMO shall deduct any such claim amounts paid from PPG’s Capitation, as
set forth in the Operations Manual.


 


5.                                      Contracted Services.  PPG
and Member Physicians shall render Contracted Services which are not PPG
Capitated Services to Members covered under this Addendum B and shall be
compensated on a fee-for-service basis at the rates set forth in Addendum
E.  PPG shall submit clams in accordance
with the terms of this Agreement and State and federal law.


 


6.                                      Withhold Fund and
Determination of Maximum Downside of Shared Risk Deficits.  Notwithstanding
any provision in this Agreement or in any Addendum hereto to the contrary,
PPG’s total downside liability for all Shared Risk Budget deficits shall not
exceed  *** of PPG’s gross annual
Capitation.  Any and all Withhold Fund
amounts as set forth herein shall be applied to offset such total downside
liability.


 


4

















 


B.                                    STANDARD HMO.


 


1.                                      Professional Capitation
Rates.


1.1                               Capitation Rates.  PPG
Capitation for Standard HMO Members shall be determined on a monthly basis by
multiplying the following normalized PMPM rates by the age, sex and benefit
plan factors set forth in Addendum B for each assigned Member, Normalized rates
represent the PMPM prior to the adjustment for PPG’s assigned Members’ age. sex
and benefit plan.  Actual PPG gross
Capitation shall fluctuate from month to month to the extent that PPG’s age,
sex and benefit plan mix fluctuates.


 




	
  Standard
  HMO Capitation

  
	
  April 1, 2003 *** PMPM through December 31, 2003

  
	
  January 1, 2004 ***  PMPM

  






 


2.                                      Professional Stop Loss
Program.  PPG elects not to participate in the
Professional Stop Loss Program.  PPG
shall provide HMO with proof of Professional Stop Loss coverage.


 


3.                                      Shared Risk Program.  PPG
shall participate in an incentive program for Shared Risk Services, which shall
reward PPG for effectively coordinating such care.  Under this Program, a budget shall be established for Shared Risk
Services, and the actual cost of such services shall be compared to the budget.


 


3.1                               Shared Risk Budget.  HMO shall
fund the Shared Risk Budget for Members with normalized rates.  These normalized rates shall be adjusted for
PPG’s assigned Members by the age, sex and benefit plan factors as set forth in
Addendum B.  Actual Shared Risk Budget
shall fluctuate from month to month to the extent that PPG’s age, sex and
benefit plan mix fluctuates.


 




	
  Standard
  HMO Shared Risk Budget

  
	
  April 1, 2003 through December 31, 2003. ***PMPM

  
	
  January 1, 2004 *** PMPM

  






 


3.2                               Shared Risk Administration.  As a
contingency for any PPG liability under this Shared Risk Program, HMO shall
deduct zero percent (0%) of PPG’s Capitation for Standard HMO Members and place
such amount in the Withhold Fund as described in the Agreement.


 


In
the event the shared risk claims exceed the shared risk budget at the interior
settlement date, HMO may, at its sole discretion, withhold from PPG’s gross
monthly capitation up to *** of PPG’s monthly capitation and may continue such
withhold until the final shared risk settlement.  The withheld amount shall be placed in the Withhold Fund as
described in the Agreement.  If there is
a deficit at the time of final settlement, HMO may at it’s sole discretion,
continue to withhold up to ***  of PPG’s
capitation for Standard HMO Members and place such amount in the Withhold Fund
as described in this agreement.


 


Each
Reconciliation Period, HMO shall calculate Shared Risk Claims in accordance
with the Operations Manual and compare such claim cost to the corresponding
Shared Risk Budget. HMO shall perform both an interim and final settlement. In
the event that such claims are less than the Shared Risk Budget for the Interim
Period. PPG’s share of the settlement shall be *** subject to Section 4.3
of this Agreement.


 


Shared
Risk Claims with dates of service within the Reconciliation Period, and paid by
March 31 of the following year, shall be used in the calculation.  Shared Risk Services incurred within the
Reconciliation Period, but paid after March 31 of the following year, will
be included in the next Reconciliation Period calculation. In the event any
amounts remain in the Withhold Fund following the reconciliation of any shared
risk program, those excess funds shall be paid to PPG by April 30 of the
following year.


 


3.3                               Shared Risk Budget Surplus.  In
the event of a Shared Risk Budget surplus, PPG’s share of the surplus shall be
limited to the lesser of (a) *** of the Shared Risk Budget surplus,


 


5

















 


or
(b) an amount not to exceed *** of the annual gross PPG Capitation. Subject to
Section 4.3 of the Agreement, the Shared Risk Budget surplus shall be
offset against any amounts payable by PPG. 
Any surplus remaining shall be paid to PPG by April 30 of the
following year.


 


3.4                               Shared Risk Budget Deficit.  In
the event of a Shared Risk Budget deficit, PPG’s share of the deficit shall be
limited to the lesser of (a) *** of the Shared Risk Budget deficit, or (b) an
amount not to exceed *** of the annual gross PPG Capitation. Subject to
Section 4.3, of the Agreement, any amounts payable by PPG shall be offset
against the Withhold Fund and any other amounts payable by HMO.


 


In
the event a deficit remains in the Shared Risk Program after such offset, such
deficit shall be carried forward to be applied against future years Shared Risk
Program surpluses and withhold funds.


 


3.5                               Shared Risk Reinsurance.  PPG
shall participate in the Shared Risk Reinsurance Program. The cost to PPG for
such participation shall be calculated as follows:


 


(a)                                  Out-of-Area Emergency and Urgently Needed
Services: *** of Shared Risk Budget.


 


Out-of-Area
Emergency and Urgently Needed Services are reimbursed at eighty percent (80%)
of allowed amount, and the remaining *** shall be charged against the Shared
Risk Budget.


 


(b)                                  In-Area Shared Risk Services: *** % of Shared
Risk Budget.


 


The
cost of In-Area Shared Risk Services utilized by a Member in a Reconciliation
Period shall be charged against the Shared Risk Budget as follows: *** amount
over ***


 


4.                                      AIDS Reinsurance Programs.  On a
network wide basis, reinsurance programs shall be established by HMO to cover
the payment of expenses incurred in the treatment of Members who have been
diagnosed with Acquired Immune Deficiency Syndrome (“AIDS Members”).


 


4.1                               AIDS Reinsurance. 
Professional, institutional, and pharmacy costs for AIDS Members shall
be the financial responsibility of HMO, as set forth in the Operations
Manual.  Additionally, the pharmacy cost
for HIV drugs shall be the financial responsibility of HMO under this Program.  PPG shall receive prior authorization from
HMO for an elective inpatient admission of an AIDS Member.  In addition, PPG shall provide HMO with
timely notification of any urgent/emergent admission of any AIDS Member who is
receiving anti-viral home treatments, or of any AIDS Member who is receiving
total parenteral nutrition. For purposes of this paragraph, timely notification
is within twenty-four (24) hours of an admission or the initial treatment.  In the event PPG fails to notify HMO as set
forth in this paragraph, AIDS related claims for such Members shall not be
eligible for payment under this Program.


 


4.2                               AIDS Reinsurance Premium.  The
Reinsurance Program rates, as set forth below, shall be deducted from PPG’s
Capitation:


 


•                  AIDS Reinsurance  *** PMPM


 


5.                                      Flex Funded HMO.  Flex
Funded HMO Members, (those enrolled in a benefit program which is fully or
partially self-funded) shall not be subject to a Dual Risk Program, nor to a
Shared Risk Program PPG Capitation. 
Professional Stop Loss and Reinsurance Programs shall be as set forth
above.


 


6

















 


C.                                    SMALL GROUP HMO.


 


1.                                      Professional
Capitation Rates.


 


1.1                               Capitation
Rates.  PPG Capitation for Small Group
HMO Members shall be determined on a monthly basis by multiplying the following
normalized PMPM rates by the age, sex and benefit plan factors set forth in
Addendum B for each assigned Member. 
Normalized PMPM rates represent the PMPM prior to the adjustment for
PPG’s assigned Members’ age, sex and benefit plan.  Actual PPG gross Capitation shall fluctuate from month to month
to the extent that PPG’s age, sex and benefit plan mix fluctuates.


 




	
  Small Group HMO Capitation

  
	
  April 1. 2003 *** PMPM through
  December 31, 2003

  
	
  January 1, 2004 ***  PMPM

  






 


2.                                      Professional
Stop Loss Program. PPG elects not to participate in the Professional
Stop Loss Program. PPG shall provide HMO with proof of Professional Stop Loss
coverage.


 


3.                                      Shared
Risk Budget.  HMO shall fund the Shared Risk
Budget for Members, with normalized rates. 
These normalized rates shall be adjusted for PPG’s assigned Members by
the age, sex and benefit plan factors as set forth in Addendum B.  Actual Shared Risk Budget shall fluctuate
from month to month to the extent that PPG’s age, sex and benefit plan mix
fluctuates.


 




	
  Small Group

  HMO Shared Risk Budget

  
	
  April 1, 2003 through
  December 31, 2003, *** PMPM

  
	
  January 1, 2004 *** PMPM

  






 


3.2                               Shared
Risk Administration.  As a
contingency for any PPG liability under this Shared Risk Program, HMO shall deduct  *** PPG’s Capitation for Small Group HMO Members
and place such amount in the Withhold Fund as described in the Agreement.


 


In the event the shared risk claims exceed
the shared risk budget at the interim settlement date.  HMO may, at its sole discretion, withhold
from PPG’s gross monthly capitation up to five percent (5%) of PPG’s monthly
capitation and may continue such withhold until the final shared risk
settlement.  The withheld amount shall
be placed in the Withhold Fund as described in the Agreement.  If there is a deficit at the time of final
settlement, HMO may at it’s sole discretion, continue to withhold up to *** of
PPG’s capitation for Small Group HMO Members and place such amount in the
Withhold Fund as described in this agreement.


 


Each Reconciliation Period, HMO shall
calculate Shared Risk Claims in accordance with the Operations Manual and
compare such claim cost to the corresponding Shared Risk Budget.  HMO shall perform both an interim and final
settlement.  In the event that such
claims are less than the Shared Risk Budget for the Interim Period, PPG’s share
of the settlement shall be ***, subject to Section 4.3 of this Agreement.


 


Shared Risk Claims with dates of service
within the Reconciliation Period, and paid by March 31 of the following
year, shall be used in the calculation. 
Shared Risk Services incurred within the Reconciliation Period, but paid
after March 31 of the following year, will be included in the next
Reconciliation Period calculation.  In
the event any amounts remain in the Withhold Fund following the reconciliation
of any shared risk program, those excess funds shall be paid to PPG by
April 30 of the following year.


 


3.3                               Shared
Risk Budget Surplus.  In the
event of a Shared Risk Budget surplus, PPG’s share of the surplus shall be
limited to the lesser of (a) *** of the Shared Risk Budget surplus, or (b) an
amount not to exceed *** of the annual gross PPG Capitation.  Subject to Section 4.3 of


 


7

















 


the
Agreement, the Shared Risk Budget surplus shall be offset against any amounts
payable by PPG.  Any surplus remaining
shall be paid to PPG by April 30 of the following year.


 


3.4                               Shared Risk Budget Deficit.  In
the event of a Shared Risk Budget deficit, PPG’s share of the deficit shall be
limited to the lesser of (a) *** of the Shared Risk Budget deficit, or (b) an
amount not to exceed *** of the annual gross PPG Capitation.  Subject to Section 4.3 of the
Agreement, any amounts payable by PPG shall be offset against the Withhold Fund
and any other amounts payable by HMO.


 


In the event a deficit remains in the Shared Risk Program after such
offset, such deficit shall be carried forward to be applied against future
years Shared Risk Program surpluses and withhold funds.


 


3.5                               Shared Risk Reinsurance.  PPG
shall participate in the Shared Risk Reinsurance Program. The cost to PPG for
such participation shall be calculated as follows:


 


(a)                                  Out-of-Area Emergency and Urgently Needed
Services: *** of Shared Risk Budget.


 


Out-of-Area Emergency and Urgently Needed Services are reimbursed at ***
of allowed amount, and the remaining *** shall be charged against the Shared
Risk Budget.


 


(b)                                  In-Area Shared Risk Services: ***% of Shared
Risk Budget.


 


The cost of In-Area Shared Risk Services utilized by a Member in a
Reconciliation Period shall be charged against the Shared Risk Budget as  follows: ***% of  any amount over $ ***.


 


3.6                               AIDS Reinsurance Premium.  As
further defined in Section B.4 of this Addendum B, the Reinsurance Program
rates, as set forth below, shall be deducted from PPG’s Capitation:


 


•                  AIDS Reinsurance  *** PMPM


 


D.            INDIVIDUAL HMO.


 


1.                                      Professional
Capitation Rates.


 


1.1                               Capitation Rates.  PPG
Capitation for Individual HMO Members shall be determined on a  monthly basis by multiplying the
following normalized PMPM rates by the age, sex, and benefit plan factors set
forth in Addendum B for each assigned Member. 
Normalized PMPM rates represent the PMPM prior to the adjustment for
PPG’s assigned Members’ age, sex and benefit plan.  Actual PPG gross Capitation shall fluctuate from month to month
to the extent that PPG’s age, sex and benefit plan mix fluctuates.


 




	
  Individual

  HMO Capitation

  
	
  April 1, 2003 *** PMPM through December 31, 2003

  
	
  January 1, 2004 *** PMPM

  






 


2.                                      Professional Stop Loss
Program.  PPG elects not to participate in the
Professional Stop Loss Program.  PPG
shall provide HMO with proof of Professional Stop Loss coverage.


 


8

















 


3.                                      Shared Risk Program.  PPG
shall participate in an incentive program for Shared Risk Services, which shall
reward PPG for effectively coordinating such care.  Under this Program, a budget shall be established for Shared Risk
Services, and the actual cost of such services shall be compared to the budget.


 


3.1                               Shared Risk Budget.  HMO
shall fund the Shared Risk Budget for Members, with normalized rates.  These normalized rates shall be adjusted for
PPG’s assigned Members by the age, sex and benefit plan factors as set forth in
Addendum B.  Actual Shared Risk Budget
shall fluctuate from month to month to the extent that PPG’s age, sex and
benefit plan mix fluctuates.


 




	
  Individual HMO Shared Risk Budget

  
	
  April 1, 2003, through December 31, 2003, *** PMPM

  
	
  January 1, 2004 $*** PMPM

  






 


3.2                               Shared
Risk Administration.  As a
contingency for any PPG liability under this
Shared Risk Program, HMO shall deduct ***% of PPG’s Capitation for Individual
HMO Members and place such amount in the Withhold Fund as described in the
Agreement.


 


In the event the shared risk claims exceed
the shared risk budget at the interim settlement date, HMO may, at its sole
discretion, withhold from PPG’s gross monthly capitation up to *** PPG’s
monthly capitation and may continue such withhold until the final shared risk
settlement.  The withheld amount shall
be placed in the Withhold Fund as described in the Agreement.  If there is a deficit at the time of final
settlement, HMO may at it’s sole discretion, continue to withhold up to *** of
PPG’s capitation for Individual HMO Members and place such amount in the
Withhold Fund as described in this agreement.


 


Each Reconciliation Period, HMO shall
calculate Shared Risk Claims in accordance with the Operations Manual and
compare such claim cost to the corresponding Shared Risk Budget.  HMO shall perform both an interim and final
settlement.  In the event that such
claims are less than the Shared Risk Budget for the Interim Period.  PPG’s share of the settlement shall be ***
subject to Section 4.3 of this Agreement.


 


Shared Risk Claims with dates of service within the Reconciliation
Period, and paid by March 31 of the following year shall be used in the
calculation.  Shared Risk Services
incurred within the Reconciliation Period but paid after March 31 of the
following year will be included in the next Reconciliation Period
calculation.  In the event any amounts
remain in the Withhold Fund following the reconciliation of any shared risk
program, those excess funds shall be paid to PPG by April 30 of the
following year.


 


3.3                               Shared Risk Budget Surplus.  In
the event of a Shared Risk Budget surplus, PPG’s share of the surplus shall be
limited to the lesser of (a) *** of the Shared Risk Budget surplus, or (b) an
amount not to exceed twenty percent (20%) of the annual gross PPG
Capitation.  Subject to Section 4.3
of the Agreement, the Shared Risk Budget surplus shall be offset against any
amounts payable by PPG.  Any surplus
remaining shall be paid to PPG by April 30 of the following year.


 


3.4                               Shared Risk Budget Deficit.  In
the event of a Shared Risk Budget deficit, PPG’s share of the deficit shall be
limited to the lesser of (a) *** of the Shared Risk Budget deficit, or (b) an
amount not to exceed *** of the annual gross PPG Capitation.  Subject to Section 4.3, of the
Agreement, any amounts payable by PPG, shall be offset against the Withhold
Fund and any other amounts payable by HMO.


 


In the event a deficit remains in the Shared Risk Program after such
offset, such deficit shall be carried forward to be applied against future
years Shared Risk Program surpluses and withhold funds.


 


9

















 


3.5                               Shared Risk Reinsurance.  PPG
shall participate in the Shared Risk Reinsurance Program.  The cost to PPG for such participation shall
be calculated as follows:


 


(a)                                  Out-of-Area Emergency and Urgently Needed
Services: *** of Shared Risk Budget.


 


Out-of-Area Emergency and Urgently Needed Services are reimbursed at
eighty percent (80%) of allowed amount, and the remaining *** shall be charged
against the Shared Risk Budget.


 


(b)                                  In-Area Shared Risk Services: *** of Shared Risk Budget.


 


The cost of In-Area Shared Risk Services utilized by a Member in a
Reconciliation Period shall be charged against the Shared Risk Budget as
follows: *** of any amount over ***.


 


4.                                      AIDS Reinsurance Premium.  As
further defined in Section B.4 of this Addendum B, the Reinsurance Program
rates, as set forth below, shall be deducted from PPG’s Capitation:


 


•                  AIDS
Reinsurance  *** PMPM


 


E.                                      ACCESS
FOR INFANTS AND MOTHERS.  The
Access for Infants and Mothers (“AIM”) Program
provides health care coverage to low-income women, pursuant to state law, who
are pregnant but without insurance for such pregnancy.  The AIM Program is funded by the State
through Proposition 99 Cigarette and Tobacco Tax Revenue.  At such time PPG is certified by the State
for participation in the AIM Program, PPG shall provide Covered Services for
AIM Members as set forth in the Operations Manual.


 


1.                                      Compensation.  HMO
shall pay PPG a flat fee of one thousand eight hundred fifty dollars ($1,850)
for each adult AIM Member to cover the professional services related to the
birth of an infant.  In addition to this
flat fee, HMO shall pay PPG *** PMPM for each adult AIM Member enrolled in the
AIM Program.  HMO shall pay PPG *** PMPM
during the first year of life for each infant AIM Member and *** PMPM during
the second year of life.


 


2.                                      Reinsurance Programs.  PPG’s
professional stop loss level shall be six thousand dollars ($6,000.00) per AIM
Member.  The professional stop loss
level shall be provided to the PPG for AIM Members at no cost.  All other terms and conditions of the
Agreement regarding Professional Stop Loss shall apply to AIM Members.  AIM Members shall not be included in the
AIDS Reinsurance Program.


 


3.                                      Shared Risk Programs.  HMO shall be solely responsible for all Shared
Risk services and for pharmacy benefit costs of AIM Members.


 


F.                                      MEDICARE
COB.  The Medicare Supplement
Benefit Programs are provided to Members who have primary coverage through Medicare. 
Capitation for Members enrolled in such Benefit Programs compensates PPG
for Co-payments that would be normally a Member’s responsibility under
Medicare.


 


1.                                      Capitation Rates.  PPG
Capitation rates for Medicare COB Members shall be at the following PMPM
levels, subject to age, sex and benefit plan factors set forth in Addendum B:


 


 


	
  Medicare COB HMO

  	
   

  	
  Medicare COB POS

  
	
  April 1, 2003, through
  December 31, 2003 *** PMPM

  	
   

  	
  April 1, 2003, through
  December 31, 2003 *** PMPM

  
	
  January 1, 2004 *** PMPM

  	
   

  	
  January 1, 2004 *** PMPM

  



 


2.                                      Reinsurance Programs. 
Medicare COB Members shall not be included in the Professional Stop Loss
Program, the AIDS Reinsurance Program or the Transfer Reinsurance Program.


 


10

















 


3.                                      Shared Risk Program.  HMO
shall be solely responsible for all Shared Risk Services and for pharmacy
benefit costs of Medicare COB Members.


 


G.                                    COMMERCIAL POS.


 


1.                                      Commercial POS Benefit
Program.  Under a POS Benefit Program, Members may
elect, at the time of obtaining each Covered Service, to utilize: (i) HMO
coverage through PPG; (ii) coverage by self-referring to any PPO provider; or
(iii) indemnity coverage for self-referring to non-Participating Providers in
accordance with Benefit Program requirements. 
Standard HMO Members, Small Group HMO Members, Individual HMO Members,
Medicare COB HMO Members and Flex Funded HMO Members may be eligible for
Commercial POS Benefit Programs.


 


2.                                      Definitions.


 


2.1                               In-Network Services.  PPG
Capitated Services and Shared Risk Services provided or arranged through PPG.


 


2.2                               Out-of-Network Services.  In
accordance with Benefit Program requirements, Covered Services provided as a
result of a Member’s self-referral to a PPO or HMO Provider or to a
non-Participating Provider. 
Out-of-Network Services may be provided in area or out of area.


 


3.                                      Compensation. 
Compensation to PPG for Commercial POS Members shall include: a) PPG
professional Capitation for In-Network professional services, b) any surplus
resulting from the Professional Out-of-Network Shared Risk Program, and c) any
surplus resulting from the Institutional In-Network and Out-of-Network Shared
Risk Program.


 


4.                                      Professional Capitation Rate.  PPG
shall be compensated for rendering professional In-Network Services to
Commercial POS Members at the PMPM amounts set forth for Commercial HMO Members,
less a forty percent (40%) Withhold (Professional Capitation).  This Withhold shall partially fund the
Professional Out-of-Network Budget.


 


5.                                      Professional Out-of-Network
Risk Sharing Program.  The budget for this Program shall be equal
to the sum of the following two components: 1) The Professional Out-of-Network
Withhold, as described in Section 4 above, and 2) an amount equal to 10%
of the Commercial POS Professional Capitation prior to withhold.


 


Each year, HMO shall settle the risk-sharing
program by calculating the difference between the budget and the actual
claims.  If a surplus remains, PPG’s
share shall be fifty percent (50%), not to exceed *** of PPG’s annual gross
capitation, subject to Section 4.3. 
PPG shall not be subject to any downside.


 


6.                                      Institutional
Shared Risk Program.


 


6.1                               POS Shared Risk Budgets.  The
budgets shall be determined for each Commercial POS population: Standard POS,
Small Group POS and, at a later date, Individual POS Members.  Each Budget shall cover In-Network, Out-of-Network
and Out-of-Area Shared Risk Services. 
Each of the normalized Shared Risk Budgets shall be equal to the
normalized HMO Shared Risk Budget, or institutional capitation PMPM, if
applicable, and multiplied by *** 
Actual Shared Risk Budget shall fluctuate from month to month to the
extent that PPG’s age, sex and benefit plan mix fluctuates.


 


11

















 


	
  Standard POS

  Shared Risk Budget

  	
   

  	
  Small
  Group

  POS Shared Risk

  Budget

  	
   

  	
  Individual POS

  Shared Risk

  Budget

  
	
  April 1, 2003, through
  December 31, 2003 *** PMPM

  	
   

  	
  $*** PMPM

  	
   

  	
  *** PMPM

  
	
  January 1, 2004, *** PMPM

  	
   

  	
  $*** PMPM

  	
   

  	
  *** PMPM

  



 


6.2                               POS Shared Risk
Administration.  Each Reconciliation Period, HMO shall
calculate Shared Risk Claims in accordance with the Operations Manual and
compare such claim cost to the corresponding Shared Risk Budget.  HMO shall perform both an interim and final
settlement.  In the event any amounts
remain in the Withhold Fund following the reconciliation of any shared risk
program, those excess funds shall be paid to PPG by April 30 of the
following year.  In the event that such
claims are less than the Shared Risk Budget for the Interim Period, PPG’s share
of the settlement shall be  ***, subject
to Section 4.3 of this Agreement.


 


Shared Risk Claims with dates of service within the Reconciliation
Period, and paid by March 31 of the following year shall be used in the
calculation.  Shared Risk Services
incurred within the Reconciliation Period but paid after March 31 of the
following year will be included in the next Reconciliation Period calculation.


 


6.3                               POS Shared Risk Budget
Surplus.  In the event of a POS Shared Risk Budget
surplus, PPG’s share of the surplus shall be limited to the lesser of (a) ***
or (b) an amount not to exceed *** of the annual gross PPG Capitation.


 


6.4                               POS Shared Risk Budget
Deficit.  In the event of a POS Shared Risk Budget
deficit, PPG shall not be liable for the deficit.


 


6.5                               POS Shared Risk Reinsurance.  PPG
shall participate in the POS Shared Risk Reinsurance Program which provides
reinsurance for In-Network and Out-of-Network services.  The cost to PPG for the POS Shared Risk
Reinsurance Program shall be calculated as follows:


 


(a)                                  Out-of-Area Emergency and Urgently Needed
Services: 6.44% of POS Shared Risk Budget.


 


Out-of-Area Emergency and Urgently Needed Services shall be reimbursed
at *** of cost, and the remaining
***  of the cost shall be charged
against the POS Shared Risk Budget.


 


(b)                                  In-Network and Out-of-Network POS Shared Risk
Services: *** of POS Shared Risk Budget.


 


The cost of In-Network and Out-of-Network POS Shared Risk Services
during the Reconciliation Period shall be charged against the POS Shared Risk
Budget as follows: *** of any amount over $***.


 


7.                                      Professional Stop Loss
Program.  The Professional Stop Loss Program includes
coverage for In-Network Services, an optional program, as well as for
Out-of-Network Services, a program in which PPG’s participation is required.


 


(a)                                  In-Network Professional Stop Loss.  PPG
elects not to participate in the Professional Stop Loss Program.  PPG shall provide HMO with proof of
Professional Stop Loss coverage.


 


(b)                                  Out-of-Network Professional Stop Loss. 
PPG’s Out-of-Network Professional Stop Loss threshold shall be *** per
Commercial POS Member during the calendar year.  The cost to PPG for


 


12

















 


the
Out-of-Network Professional Stop Loss program shall be $*** PMPM, which, shall
be deducted from PPG’s Out-of-Network Risk Sharing Budget.


 


8.                                      AIDS Reinsurance.  As
further defined in Section B.4 of this Addendum, the AIDS Reinsurance rate
shall be $0.56 PMPM, which shall be deducted from PPG’s Capitation and $0.38
PMPM shall be deducted from PPG’s Professional Out-of-Network Risk Sharing
Budget.  For the subsequent years, these
deductions shall fluctuate to correspond with the Professional Out-of-Network
Withhold percentage change.


 


I.                                         Pharmacy Shared Risk Program.  Not
applicable.  PPG does not participate in
Pharmacy Shared Risk Program.


 


J.                                      Immunizations: PPG assumes financial responsibility for
immunization under the capitation rate set forth in this Addendum New
immunizations approved by American Academy of Pediatrics and the Advisory
Committee on Immunization Practices (ACIP) of the US Public Health Service,
after the effective date of the Agreement, shall be reimbursed at rates that
are negotiated based on experiential data, which shall be mutually agreed upon
by HMO and PPG.  In the event HMO and
PPG cannot agree upon such rates, PPG shall be reimbursed in accordance with
Addendum E.


 


13

















 


ADDENDUM B.2

DIVISION OF RESPONSIBILITY

MATRIX OF HMO, PPG AND SHARED RISK/HOSPITAL CAPITATED SERVICES


 


COMMERCIAL HMO AND POINT OF SERVICE BENEFIT PROGRAMS


 


The following matrix outlines the division of
financial responsibility between HMO, PPG and Hospital.  The matrix is intended only as a summary
guide.  The applicable Subscriber’s
Certificate should be consulted for an accurate and complete description of
Covered Services and the Provider Operations Manual for clarification.


 


	
   

  	
   

  	
  PPG

  CAPITATED

  SERVICES

  	
   

  	
  HMO RISK

  SERVICES

  	
   

  	
  SHARED RISK/

  HOSPITAL

  CAPITATED

  SERVICES

  
	
  AIDS – Drugs

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  AIDS – Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  AIDS – Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ALLERGY
  IMMUNOTHERAPY

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ALLERGY
  TESTING

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ALPHA –
  FETOPROTEIN

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  AMBULANCE

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      In
  Area (30 Mile Radius)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Out
  of Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ANESTHESIOLOGY

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  BIOFEEDBACK

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  BLOOD/BLOOD
  PRODUCTS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Autologous/Homologous

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Blood
  Bank

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Storage
  and Collection of Blood

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  CHEMICAL
  DEPENDENCY

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Inpatient
  Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Inpatient
  Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Outpatient
  Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Outpatient
  Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Inpatient
  Detox Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Inpatient
  Detox Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  CHEMOTHERAPY

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •     Drugs, including Epogen, Neupogen and
  adjunctive therapies

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •     Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  CHIROPRACTIC
  (Medicare Approved)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  COLOSTOMY
  SUPPLIES

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  CONSULTATIONS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  COSMETIC
  SURGERY (Medically
  Necessary)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •     Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  CRITICAL
  CARE VISITS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 


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


 


14

















 


	
   

  	
   

  	
  PPG

  CAPITATED

  SERVICES

  	
   

  	
  HMO RISK

  SERVICES

  	
   

  	
  SHARED RISK/

  HOSPITAL

  CAPITATED

  SERVICES

  
	
  DENTAL
  SERVICES

  (When a covered
  benefit)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  DIAGNOSTIC
  TESTING - Outpatient
  Facility & Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  DURABLE
  MEDICAL EQUIPMENT

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Surgically
  Implanted

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  EMERGENCY
  ADMISSIONS – In-Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  EMERGENCY
  ADMISSIONS –  Out of Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  EMERGENCY
  ROOM VISITS – In Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  EMERGENCY
  ROOM VISITS –
  Out-of-Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  EXTENDED
  CARE/SKILLED NURSING FACILITY

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  GROWTH
  HORMONES

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HEARING
  AIDS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HEMODIALYSIS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Epogen,
  Neupogen

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HOME
  HEALTH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HOME
  VISITS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HOSPICE

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HOSPITAL
  BASED PHYSICIANS -

  Inpatient, Ambulatory Surgery or Emergency Room Admissions

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Technical
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  IMMUNIZATIONS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  INFANT
  APNEA MONITOR

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  INJECTABLES,
  SELF ADMINISTERED

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  INPATIENT
  VISITS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  IVF &
  GIFT

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 


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


 


15

















 


	
   

  	
   

  	
  PPG

  CAPITATED

  SERVICES

  	
   

  	
  HMO RISK

  SERVICES

  	
   

  	
  SHARED RISK/

  HOSPITAL

  CAPITATED

  SERVICES

  
	
  LITHOTRIPSY

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  MATERNITY - Deliveries and Non-Deliveries

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  MEDICAL
  ADMISSIONS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  MENTAL
  HEALTH – Inpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •     
  Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  MENTAL
  HEALTH – Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  OFFICE
  VISITS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PATIENT
  EDUCATION

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PATHOLOGY - Inpatient, Ambulatory Surgery or Emergency
  Room

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Technical
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PATHOLOGY – office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PATHOLOGY – Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Technical
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PERIODIC
  EXAMS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PRE
  ADMISSION -
  Outpatient Laboratory, X-ray
(within 72 hrs, or related
  admission)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PROSTHETIC/ORTHOTIC
  DEVICES

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Surgically
  Implanted

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  RADIOLOGY - Inpatient, Ambulatory Surgery or Emergency
  Room

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Technical
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  RADIOLOGY - Office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  RADIOLOGY - Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Technical
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SPEECH AND
  HEARING EXAMS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SUPPLIES- Medical, Surgical, Office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Related
  to a Hospital Stay:

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Surgical Supplies, Equipment, etc.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •     Related
  to an Outpatient Office Visit:

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Splints, Casts, Bandages, etc.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 


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


 


16

















 


	
   

  	
   

  	
  PPG

  CAPITATED

  SERVICES

  	
   

  	
  HMO RISK

  SERVICES

  	
   

  	
  SHARED RISK/

  HOSPITAL

  CAPITATED

  SERVICES

  
	
  SUPPLIES,
  DIABETIC

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Chem,
  Strips, Lancet, Needles, Syringes

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Glucometer

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SURGERY –  Inpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SURGERY –  Office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SURGERY –  Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  THERAPEUTIC
  INJECTIONS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  THERAPY: Physical, Occupational, Speech

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Inpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Outpatient/Office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  TRANSPLANTS
  (Non-experimental)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Covered
  Immunosupressives

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Organ
  Procurement

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  TRANSPLANT
  EVALUATIONS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  URGENT
  CARE VISITS –
  In-Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  URGENT
  CARE VISITS –  Out-of-Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  VISION
  CARE

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Exams
  and Medically Necessary Care

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Implanted
  Lenses (Cataract Surgery)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Lenses
  and Frames (Non-Cataract)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 


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


 


17

















 


ADDENDUM 1


 


HEALTHY FAMILIES PROGRAM


 


PPG
understands and agrees that the obligations of HNI set forth in this Addendum
shall be the obligations of HEALTH NET of California, (HEALTH NET), an
Affiliate of HNI, and not the obligations of HNI or any other Affiliate of HNI.


 


HEALTH
NET entered into an agreement with the California Managed Risk Medical
Insurance Board (“MRMIB”) to arrange for the provision of Covered Services to
persons who are eligible under the California Children’s Health Insurance
Program (aka, and hereinafter “Healthy Families Program”) and enrolled in, or
otherwise assigned to HEALTH NET, on a prepaid basis.  The Healthy Families Program is a government sponsored health
care program administered by the State of California, funded in part by federal
funds, and arranged by HMOs and their participating providers.


 


Notwithstanding
any provision in the Agreement to the contrary, PPG understands and agrees that
PPG shall arrange and provide health care services to Healthy Families Members
in accordance with the benefits and program requirements of the Healthy
Families Agreement.  PPG understands
that Evidence of Coverage documents are subject to change and approval by MRMIB
and PPG hereby agrees to arrange and provide health care services in accordance
with such changes.


 


A.            GENERAL PROVISIONS


 


1.             Provision of Covered
Services.  PPG shall arrange
Covered Services for assigned Members. 
For the purposes of this Addendum. 
“Covered Services” means those health care services, supplies and items
set that are specified as being covered under the Healthy Families
Agreement.  PPG shall ensure that it and
its Participating Providers arrange Covered Services for Members, in accordance
with the following, each of which is hereby incorporated by reference as if set
out in full herein:


 


1.1           The terms and conditions of this Addendum and the
Agreement.


 


1.2           The terms and conditions of HEALTH
NET’s Healthy Families Agreement with MRMIB, and the applicable Evidence of
Coverage.


 


1.3           HEALTH NET’s Healthy Families
policies and procedures and provider bulletins.


 


1.4           Healthy Families Program regulations
and statutes.


 


1.5           All laws applicable to PPG or HEALTH
NET.


 


1.6           HEALTH NET’s Utilization Management
Program and Quality Management Program.


 


1.7           Standards requiring services to be
provided in the same manner, and with the same availability, as services are
rendered to other patients.


 


1.8           No less than the minimum clinical
quality of care and performance standards that are professionally recognized
and/or adopted, accepted or established by HEALTH NET.


 


1.9           The most recent recommendations of
the American Academy of Pediatrics (AAP) with regard to Recommendations for
Preventative Pediatric Health Care, or other preventative care standards
mandated by MRMIB


 


18

















 


2.             Reports
and Information.  PPG and its Participating Providers shall
provide HEALTH NET, within the time requested by HEALTH NET, with all such
reports and information as  HEALTH
NET may require to allow it to meet the reporting requirements under the
Healthy Families Agreement or any applicable law.  Such reporting obligations include, but are not limited to,
monthly reporting to HEALTH NET of referrals of Members to the following
programs: California Children’s Services, referrals of Members with possible
Serious Emotional Disturbance to the County Mental Health Department, and
alcohol and drug treatment referrals to Managed Health Network.


 


3.             Carve-out
of California Children’s Services (CCS) Program services. 
Health care services to treat CCS-eligible conditions are “carved out”
of HEALTH NET’s coverage obligations under the Healthy Families Agreement.  However, PPG and its Participating Providers
are required to identify and timely refer Members with possible CCS-eligible
conditions to the County CCS Program. 
Upon referral, the Participating Provider shall inform the Member’s
parent or guardian.  The CCS Program
requires eligible children to be treated at CCS-certified facilities by
CCS-paneled providers.  The CCS Program
may require transfer to CCS-certified facilities with CCS-paneled
providers.  The CCS Program is
financially responsible for payment of health care costs to treat a
CCS-eligible condition.  The parties
understand and agree that HEALTH NET is not financially responsible for payment
of services related to CCS-eligible conditions.


 


4.             Referral
of Members having possible mental health conditions to Managed Health Network.  PPG
and its Participating Providers are required to identify and timely refer
Members with possible mental health conditions (other than Serious Emotional
Disturbance as set out in the following section) to HEALTH NET’s affiliate and
subcontractor, Managed Health Network. 
Managed Health Network is financially responsible for payment of
treatment of covered mental health services


 


5.             Services
for Members with Serious Emotional Disturbance (SED). 
Health care services to treat SED are the responsibility of the County
Mental Health Department.  However, PPG
and its Participating Providers are required to identify and timely refer
Members with possible SED to the County Mental Health Department. Upon
referral, the Participating Provider shall inform the Member’s parent or
guardian. The County Mental Health Department is responsible for the provision
and payment of health care costs to treat SED.


 


6.             Cultural
and Linguistic Services.  PPG and its Participating Providers shall:
(1) not require or encourage Members to utilize family members or friends as
interpreters; (2) record the language needs of Members in the medical record;
and (3) document Member request or refusal of interpreter services in the
Member’s medical record.  PPG and its
Participating Providers shall arrange interpreter services for Members either
through telephone language services or face-to-face interpreters PPG and its
Participating Providers are encouraged to directly make these interpretive
services available, however, HEALTH NET’s Member Services Department is
available to provide certain interpretive assistance to facilitate
Member-provider communications upon request.


 


7.             Initial
Health Assessments.  PPG and its Participating Providers shall
offer an initial health assessment to their assigned members within 120 days of
their enrollment in HEALTH NET's Healthy Families Plan.


 


8.             Eligibility. 
Eligibility and commencement of enrollment under Healthy Families is
determined by MRMIB.  Commencement of
coverage can occur at any day of a month


 


9.             Copayments. Copayments are subject to a *** limitation
and PPG and its Participating Providers are encouraged to make extended payment
arrangements available to Members experiencing an inability to pay a required
co-payment.


 


19

















 


B.            REIMBURSEMENT PROVISIONS


 


1.             PPG shall be compensated according
to this Addendum I and this Addendum shall be applicable to only those Healthy
Families listed on the Commercial HMO remittance summaries. HNI will modify
this Addendum I to reflect a new rate structure for adults, pending federal
approval of expanding this program to parents”.


 


2.             Compensation
for PPG Capitated Services. 
As compensation for rendering PPG Capitated Services, HEALTH NET shall
pay PPG Capitation as set forth in this Addendum I for each Healthy Families
Member to receive services from PPG during any particular month. Capitation
shall be payable on a per Member per month (PMPM) basis. Capitation shall be
computed on the basis of the most current information available and shall be
paid by HEALTH NET by wire transfer on or before the fifteenth (15th) day of
each month or the first business day following the fifteenth if the fifteenth
is a holiday or on a weekend.  Each
Capitation payment shall be accompanied by a remittance summary.  The remittance summary identifies the total
Capitation payable and those Healthy Families Members for whom Capitation is
being paid.  In the event of a
Capitation error, resulting in an overpayment or underpayment to PPG, HEALTH
NET shall adjust subsequent Capitation to offset such error.


 


3.             Compensation
to Other Providers of PPG Capitated Services.  PPG shall compensate all providers who
render PPG Capitated Services to Healthy Families Members assigned to PPG. In
the event that PPG does not process and pay eligible claims submitted to PPG
for Capitated Services within applicable time limits, HEALTH NET may pay such
claims at the lesser of HEALTH NET’s contract rate with such provider, if any.
PPG’s subcontract terms, or provider’s billed charges, HEALTH NET shall deduct
any such claim amounts paid from PPG’s Capitation, as set forth in the
Operations Manual.


 


4.             Contracted
Services.  PPG and Member
Physicians shall render Contracted Services which are not PPG Capitated Services
to Members covered under this Addendum I and shall be compensated on a
fee-for-service basis at one hundred percent of the Medi-Cal Fee Schedule.  PPG shall submit claims in accordance with
the terms of this Agreement and State and federal law.


 


5.             Withhold
Fund and Determination of Maximum Downside of Shared Risk Deficits.  Notwithstanding any provision in
this Agreement or in any Addendum hereto to the contrary, PPG’s total downside
liability for all Shared Risk Budget deficits shall not exceed *** %) of PPG’s
gross annual Capitation. Any and all Withhold Fund amounts, if applicable, as
set forth herein shall be applied to offset such total downside liability.


 


6.             Professional
Capitation Rates.


 


6.1           Capitation
Rates.  PPG Capitation for
Healthy Families Members shall be determined on a monthly basis by multiplying the number of members by the
flat capitation amount set forth in Addendum I.


 




	
  Healthy
  Families

  Capitation

  
	
  *** PMPM

  






 


7.             Professional
Stop Loss. PPG elects not to participate in the Professional Stop
Loss Program PPG shall provide HEALTH NET with proof of Professional Stop Loss
coverage.


 


8.             Shared
Risk Program. PPG shall participate in an incentive program for
Shared Risk Services, which shall reward PPG for effectively coordinating such
care.  Under this Program, a budget
shall be established for Shared Risk Services, and the actual cost of such
services shall be compared to the budget


 


20

















 


8.1          Shared Risk
Budget. HEALTH NET
shall fund the Shared Risk Budget for Members, with normalized rates. These
normalized rates shall be adjusted for PPG’s assigned Members by the age, sex
and benefit plan factors as set forth
in Addendum 1.1. Actual Shared Risk Budget shall fluctuate from month month to
the extent that PPG’s age, sex and benefit plan mix fluctuates.


 




	
  Healthy
  Families Shared Risk Budget

  
	
  April
  1, 2003 through December 31, 2003, ***7 PMPM

  
	
  January
  1, 2004 *** PMPM

  






 


8.2          Shared Risk
Administration.  Each Reconciliation Period, HEALTH NET shall
calculate Shared Risk Claims in accordance with the Operations Manual and
compare such claim cost to the corresponding Shared Risk Budget.  HEALTH NET shall perform both an interim and
final settlement. In the event that such claims are less than the Shared Risk
Budget for the Interim Period, PPG’s share of the settlement shall be ***
subject to Section 4.3 of this Agreement.


 


Shared
Risk Claims with dates of service within the Reconciliation Period and paid by
March 31 of the following year shall be used in the calculation. Shared Risk
Services incurred within the Reconciliation Period but paid after March 31 of
the following year will be included in the next Reconciliation Period
calculation. In the event any amounts remain in the Withhold Fund following the
reconciliation of any shared risk program, those excess funds shall be paid to
PPG by April 30 of the following year.


 


8.3          Shared Risk
Budget Surplus.  In the event of a Shared Risk Budget
surplus, PPG’s share of the surplus shall be limited to the lesser of (a)
***  of the Shared Risk Budget surplus,
or (b) an amount not to exceed *** of the annual gross PPG Capitation.  Subject to Section 4.3 of the Agreement, the
Shared Risk Budget surplus shall be offset against any amounts payable by PPG.
Any surplus remaining shall be paid to PPG by April 30 of the following year.


 


8.4          Shared Risk
Budget Deficit.  In the event of a Shared Risk Budget deficit,
PPG’s share of the deficit shall be limited to the lesser of (a) *** of the
Shared Risk Budget deficit, or (b) an amount not to exceed *** of the annual
gross PPG Capitation. Subject to Section 4.3, of the Agreement, any amounts
payable by PPG shall be offset against the Withhold Fund and any other amounts
payable by HEALTH NET.


 


In
the event a deficit remains in the Shared Risk Program after such offset, such
deficit shall be carried forward to be applied against future years Shared Risk
Program surpluses and withhold funds.


 


8.5          Shared Risk
Reinsurance.  PPG shall participate in the Shared Risk
Reinsurance Program. The cost to PPG for such participation shall be calculated
as follows:


 


(a)           Out-of-Area Emergency and Urgently
Needed Services: *** of Shared Risk Budget.


 


Out-of-Area
Emergency and Urgently Needed Services are reimbursed at eighty percent (80%)
of allowed Amount, and the remaining *** shall be charged against the Shared
Risk Budget.


 


(b)           In-Area Shared Risk Services *** of Shared Risk


 


21

















 


ADDENDUM I.1


 


AGE, SEX AND BENEFIT FACTORS


 


The age, sex and
benefit plan factors shall be developed by HEALTH NET based upon actuarial
assumptions consistent with existing actuarial assumptions and HEALTH NET’s
utilization experience. Such factors, as updated approximately every three
years to reflect changing demographic and utilization patterns, shall be
forwarded to PPG and are incorporated into this Agreement by reference.


 


A.            Age,
Sex and Benefit Plan Factors for PPG  Capitation
and Shared Risk Budgets:


 


A.
1         Age, Sex Factors for PPG
Capitation and Hospital Capitation/Shared Risk Budgets.


 




	
  Sex

  	
   

  	
  Age

  	
   

  	
  Inst

  Factor

  
	
  Child

  	
   

  	
  0

  	
   

  	
  5.228

  
	
   

  	
   

  	
  1

  	
   

  	
  0.644

  
	
   

  	
   

  	
  2 - 4

  	
   

  	
  0.406

  
	
   

  	
   

  	
  5 - 9

  	
   

  	
  0.296

  
	
   

  	
   

  	
  10 - 14

  	
   

  	
  0.338

  
	
   

  	
   

  	
  15 - 19

  	
   

  	
  0.607

  






 


A.2          Benefit Plan Factors for PPG
Capitation and Hospital Capitation/Shared Risk Budgets


 


Healthy Families


 




	
  Plan

  	
   

  	
  Inst

  Factor

  
	
  9Y

  	
   

  	
  0.9334

  
	
  9YA

  	
   

  	
  0.9079

  
	
  MW

  	
   

  	
  0.9076

  
	
  MWA

  	
   

  	
  0.9076

  






 


23

















 


ADDENDUM I.2


 


DIVISION OF RESPONSIBILITY

MATRIX OF HMO, PPG AND SHARED RISK/HOSPITAL CAPITATED SERVICES


 


HEALTHY FAMILIES PROGRAM


 


The
following matrix outlines the division of financial responsibility between
HEALTH NET, PPG and Hospital. The matrix is  intended
only as a summary guide. The applicable Subscriber’s Certificate should be
consulted for an accurate and complete description of Covered Services and the
Provider Operations Manual for clarification. CCS-eligible services are
excluded from HEALTH NET Risk Services.


 


	
   

  	
   

  	
  PPG

  CAPITATED

  SERVICES

  	
   

  	
  HEALTH NET

  RISK

  SERVICES

  	
   

  	
  SHARED RISK/

  HOSPITAL

  CAPITATED

  SERVICES

  
	
  AIDS – Drugs-Children 0-21 years

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  AIDS – Drugs-Adults 21 and older

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  AIDS – Facility Component-Children 0-21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  AIDS – Facility Component-Adults 21 and older

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  AIDS – Professional Component-Children 0-21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  AIDS – Professional Component-Adults 21 and older

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ALLERGY
  IMMUNOTHERAPHY

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ALLERGY
  TESTING

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ALPHA-FETOPROTEIN

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  AMBULANCE

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •     In Area (30 Mile Radius)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •     Out of Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  ANESTHESIOLOGY

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  BIOFEEDBACK

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  BLOOD/BLOOD
  PRODUCTS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •       Autologous/Homologous

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Blood
  Bank

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Storage
  and Collection of Blood

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  CHEMICAL DEPENDENCY

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •     Inpatient Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Inpatient
  Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Outpatient
  Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Outpatient
  Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  CHEMOTHERAPY
  - Children 0-21
  years

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Drugs, including Epogen,
  Neupogen and adjunctive therapies

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •     Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •     Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  CHEMOTHERAPY
  - Adults 21 years
  and older

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Drugs,
  including Epogen, Neupogen and adjunctive therapies

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •       Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  CHIROPRACTIC
  (Medicare Approved)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 


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


 


24

















 


	
   

  	
   

  	
  PPG

  CAPITATED

  SERVICES

  	
   

  	
  HEALTH NET

  RISK

  SERVICES

  	
   

  	
  SHARED RISK/

  HOSPITAL

  CAPITATED

  SERVICES

  
	
  COLOSTOMY
  SUPPLIES

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  CONSULTATIONS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  COSMETIC SURGERY

  (Medically
  Necessary)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  CRITICAL
  CARE VISITS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  DENTAL SERVICES

  (When a covered
  benefit)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  DIAGNOSTIC
  TESTING - Outpatient
  Facility & Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  DURABLE MEDICAL EQUIPMENT

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Surgically
  Implanted

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  EMERGENCY ADMISSIONS - In-Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  EMERGENCY ADMISSIONS - Out of Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  EMERGENCY ROOM VISITS-In Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  EMERGENCY ROOM VISITS - Out-of-Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  EXTENDED CARE/SKILLED NURSING FACILITY

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  GROWTH
  HORMONES

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HEARING
  AIDS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HEMODIALYSIS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Epogen,
  Neupogen

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •     Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HEPATITIS-B

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HOME
  HEALTH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HOME
  VISITS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  HOSPICE

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 


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


 


25

















 


	
   

  	
   

  	
  PPG

  CAPITATED

  SERVICES

  	
   

  	
  HEALTH NET

  RISK

  SERVICES

  	
   

  	
  SHARED RISK/

  HOSPITAL

  CAPITATED

  SERVICES

  
	
  HOSPITAL BASED PHYSICIANS – Inpatient, Ambulatory Surgery or Emergency
  Room Admissions

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •       Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •       Technical Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  IMMUNIZATIONS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  INFANT
  APNEA MONITOR

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  INJECTABLES,
  SELF ADMINISTERED

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  INPATIENT
  VISITS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      IVF & GIFT
  –Facility and Professional Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  LITHOTRIPSY

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component 

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  MATERNITY - Deliveries and Non-Deliveries

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  MEDICAL
  ADMISSIONS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  MENTAL
  HEALTH – Inpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  MENTAL
  HEALTH –
  Inpatient-Serious Emotional Disturbances(SED)-Children 0-21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  MENTAL
  HEALTH - Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  MENTAL
  HEALTH –
  Outpatient-Serious Emotional Disturbances (SED)-Children 0-21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  OFFICE
  VISITS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PATIENT
  EDUCATION

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 


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


 


26

















 


	
   

  	
   

  	
  PPG

  CAPITATED

  SERVICES

  	
   

  	
  HEALTH NET

  RISK

  SERVICES

  	
   

  	
  SHARED RISK/

  HOSPITAL

  CAPITATED

  SERVICES

  
	
  PATHOLOGY - Inpatient, Ambulatory Surgery or Emergency
  Room

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Technical
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PATHOLOGY
  – Office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PATHOLOGY
  – Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Technical
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PERIODIC
  EXAMS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PRE
  ADMISSION –
  Outpatient

  Laboratory, X-ray

  (within 72 hrs. or related admission)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  PROSTHETIC/ORTHOTIC
  DEVICES

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Surgically
  Implanted

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  RADIOLOGY
  – Inpatient,
  Ambulatory Surgery or Emergency Room

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Technical
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  RADIOLOGY
  – Office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  RADIOLOGY – Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Technical
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SPEECH AND
  HEARING EXAMS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SUPPLIES- Medical, Surgical, Office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Related
  to a Hospital Stay:

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Surgical Supplies, Equipment, etc.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Related
  to an Outpatient Office Visit:

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Splints, Casts, Bandages, etc.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SUPPLIES,
  DIABETIC

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Chern,
  Strips, Lancet, Needles, Syringes

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
   

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Glucometer

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SURGERY – Inpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SURGERY – Office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  SURGERY – Outpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  THERAPEUT1C
  INJECTIONS

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 


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


 


27

















 


	
   

  	
   

  	
  PPG

  CAPITATED

  SERVICES

  	
   

  	
  HEALTH NET

  RISK

  SERVICES

  	
   

  	
  SHARED RISK/

  HOSPITAL

  CAPITATED

  SERVICES

  
	
  THERAPY: Physical, Occupational, Speech

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Inpatient

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Outpatient/Office

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  TRANSPLANTS
  (Non-experimental)-Children
  0-21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Covered
  Immunosupressives

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Organ
  Procurement

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  TRANSPLANTS
  (Non-experimental)-Adults
  21 and older

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Covered
  Immunosupressives

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Organ
  Procurement

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  TRANSPLANT
  EVALUATIONS-Children 0-21

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  TRANSPLANT
  EVALUATIONS-Adults 21 and older

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Facility
  Component

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Professional

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  URGENT
  CARE VISITS -
  In-Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  URGENT
  CARE VISITS -
  Out-of-Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  VISION
  CARE

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Exams

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Medically
  Necessary Care

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Implanted
  Lenses (Cataract Surgery)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  •      Lenses
  and Frames (Non-Cataract)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  



 


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


 


28

















 


This is a DRAFT document that may contain
typographical errors that are subject to correction.


 


ADDENDUM 1.3


 


DISCLOSURE FORM


(Required
by California Welfare and Institutions Code Section 14452)


 


Prospect Medical Group


 


The undersigned hereby
certifies that the following information regarding:


 


Prospect Medical Group is
true and correct as of the date set forth below:


 


Officers/Directors/General
Partners:


 


Co-Owner(s):


 


Stockholders owning more than
ten percent of the stock of the Organization:


 


Major creditors holding more
than five percent of Organization’s debt:


 


Form
of Organization (Corporation, Partnership, Sole Proprietorship, Individual,
etc.):


 


If not already disclosed
above, is Organization, either directly or indirectly related to or affiliated
with the Contracting Health Plan? 
Please explain:


 


	
   

  	
  Dated

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Please type or print)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Please type or print)

  	
   

  
								



 


 


Medicare Amendment


January 1, 2003


 


29

















 


ADDENDUM J


 


FINANCIAL SOLVENCY REPORTING REQUIREMENT

APPLICABLE TO HEALTH NET OF CALIFORNIA, INC.


 


PPG understands and agrees
that the obligations of HNI set forth in this Addendum are only the obligations
of Health Net of California, Inc., (“HMO”), and not the obligations of HNI or
any other Affiliate of HNI.  This
Addendum J shall be applicable to the Benefit Programs set forth in Addenda B,
C, F and I.


 


PPG has agreed to a risk arrangement under
this Agreement as set forth in Addenda B, C, F and I, whereby PPG provides or
arranges for the provision of all medically necessary capitated services, for
the capitation payments described in this Agreement.


 


The California Legislature has enacted
legislation regarding financial standards and requirements for groups that
enter into risk arrangements with health care service plans, such as HMO, the
requirements of which are set forth in Health and Safety Code Section 1375.4.


 


The DMHC has promulgated
regulations regarding the financial reporting requirements for HMO and PPG,
which regulations are set forth in California Administrative Code Title 10 Rule
1300.75.


 


HMO and PPG agree to comply
with the regulations issued by the DMHC as set forth in this Addendum J.


 


I.             DEFINITIONS:


 


1.1       Risk
Arrangement.  Risk arrangement
shall include both “risk-sharing arrangement” and “risk- shifting arrangement,”
which are defined as follows:


 


a)      “Risk Sharing Arrangement” means any compensation arrangement
between PPG and HMO under which both PPG and HMO share a risk of financial
loss.


 


b)      “Risk-Shifting Arrangement” means a contractual arrangement
between a PPG and HMO under which HMO pays PPG on a fixed, periodic or
capitated basis, and the financial risk for the cost of services provided
pursuant to the arrangement is assumed by PPG.


 


II.            OBLIGATIONS
OF HMO:


 


2.1       Monthly
Reports. Notwithstanding any different provisions of the Agreement,
HMO will provide the following to PPG on a monthly basis, within ten (10) days
of the start of each month:


 


(a)     A single Member eligibility report,
including the following elements:


 


Member Identification Number


Name


Birth Date


Sex


Address


HMO contract selected


Employer Group Identification


Other Third Party coverage,
(if known)


Enrollment Date, (Original
Effective Date)/Dis-enrollment Date


PPG Number


 


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PPG Effective Date


Changes to Coverage


Co-Payment


Deductible (if applicable)


Amount of Capitation for Each
Member


Primary Care Physician
selected


 


(b)     A report of additions and terminations for
the month, including:


 


Member Name


Member Identification Number


Number of additional Members
under each Benefit Program


Number of deleted Members
under each Benefit Program


 


(c)     To inform PPG of the financial risk assumed under the Agreement
for each separate product type under the Agreement, (i.e., Medicare + Choice,
Commercial HMO, POS, etc.).


 


1.   The expected/projected utilization rates and
unit costs for each major expense category:


 


Inpatient


Outpatient


Primary Care Physician


Specialist


Pharmacy


Home Health


Durable Medical Equipment


Ambulance


 


2.         The source of the data and the
actuarial methods used in determining the utilization rates and unit costs by
Benefit Plan and product type.


 


3.         All factors, (such as age, sex,
geographic area, family size, experience rated, Benefit Plan design, including
co-payment and deductible levels), used to adjust payments or risk share
targets.


 


(d)     HMO shall submit such reports to PPG electronically, unless both
HMO and PPG agree that such may be submitted in writing.


 


2.2    Quarterly
Risk-Sharing Reports.  HMO shall provide to PPG on a quarterly
basis, within forty-five (45) days of the close of each calendar year quarter,
a quarterly risk-sharing report, containing a detailed description of each
amount, including expenses and income, allocated to PPG and HMO under each
Risk-Sharing Arrangement.  HMO shall
submit the quarterly risk-sharing report to PPG electronically, unless HMO and
PPG agree that such may be submitted in writing.


 


2.3    Annual Statement
of  Risk-Sharing Accounts.  No
later than one hundred eighty (180) days after the close of each calendar year
or the Agreement’s termination date, whichever occurs first. HMO shall complete
the reconciliation of and payment under all Risk-Sharing Arrangements in the
Agreement.


 


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III.
OBLIGATIONS OF PPG:


 


The
DMHC is drafting certain regulations regarding the Obligations of PPG’s
pursuant to the Financial Solvency Reporting Requirements of Senate Bill
260.  The expected release date of the
regulation is the first quarter of 2003. PPG agrees to be bound by such
regulations as promulgated by the DMHC.


 


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ADDENDUM K

HEALTH
INSURANCE PORTABILITY AND

ACCOUNTABILITY ACT (HIPAA)


 


A.         HNI and PPG are parties to the Agreement
pursuant to which PPG provides a service to, or performs a function on behalf
of, HNI and, in connection therewith, uses or discloses Protected Health
Information (“PHI”) that is subject to protection under the Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”);


 


B.         Any entity which creates or receives PHI from
or on behalf of HNI is a business associate, as defined in the HIPAA
implementing privacy regulations, 45 C.F.R. Parts 160 and 164 (“HIPAA Regulations”);


 


C.         Pursuant to the HIPAA Regulations, all PPG’s
contracted with HNI must agree in writing to certain mandatory provisions
regarding the use and disclosure of PHI; and


 


D.         The purpose of this Addendum is to satisfy the
requirements of the HIPAA Regulations, including, but not limited to, business
associate contract requirements set forth at 45 C.F.R. § 164.504(e), as it may
be amended from time to time.


 


NOW, THEREFORE, in consideration of the mutual
promises and covenants contained herein, the parties agree as follows:


 


1.                              Definitions.  Unless otherwise provided in
this Addendum, capitalized terms have the same meaning as set forth in the
HIPAA Regulations, 45 C.F.R. Parts 160 and 164.


 


2.                              Scope of Use and Disclosure of Protected
Health Information.  Except as otherwise limited in this
Addendum, PPG shall use and disclose PHI solely to provide the services, or
perform the functions, described in the Agreement, provided that such use or
disclosure would not violate the HIPAA Regulations if so used or disclosed by
HNI.  PPG, to the full extent
applicable, shall ensure that its directors, officers, employees, contractors
and agents shall:


 


(A)                    Not use or further disclose PHI other than as
permitted or required by this Addendum or as Required By Law;


 


(B)                      Implement all appropriate and reasonable
administrative, physical and technical safeguards to prevent use or disclosure
of PHI other than as provided by this Addendum;


 


(C)                      Mitigate, to the extent practicable, any
harmful effect that is known to PPG of a use or disclosure of PHI by PPG in
violation of the requirements of this Addendum;


 


(D)                      Report promptly to HNI’s designated Privacy
Officer any use or disclosure of PHI not provided for by this Addendum of which
PPG becomes aware;


 


(E)                        Require contractors or agents to whom PPG
provides PHI received from, or created or received by PPG on behalf of,  HNI, to agree to the same restrictions
and conditions that apply to PPG with respect to such PHI under this Addendum;


 


(F)                        Provide to HNI or, as directed by HNI, to an
Individual, in the time and manner designated by HNI, any information necessary
to allow HNI to respond timely to a


 


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request
by an Individual for a copy of the Individual’s PHI pursuant to 45 C.F.R. §
164.524; (1)


 


(G)                      Maintain for a period of six (6) years all
Designated Record Sets relating to PHI received from, or created or received by
PPG on behalf of, HNI;


 


(H)                     Maintain for a period of six (6) years records
of all disclosures of PHI, other than for the purpose(s) set forth in this
Addendum, including the date, name of recipient, description of PHI disclosed
and purpose of disclosure;


 


(I)                          Provide to HNI or, as directed by HNI, to an Individual, in the time and manner
designated by HNI, any necessary information collected in accordance with
Section 2(H) of this Addendum in order to allow HNI to respond timely to a
request by an Individual for an accounting of the disclosures of the
Individual’s PHI pursuant to 45 C.F.R. § 164.528; (2)


 


(J)                         Make any amendments to PHI that HNI directs or
agrees to pursuant to 45 C.F.R. § 164.526 at the request of HNI or an
Individual in the time and manner designated by HNI; (3)


 


(K)                     Make PPG’s internal practices, books, and
records relating to the use and disclosure of PHI received from, or created or
received by PPG on behalf of, HNI available to HNI or, at the request of HNI,
to the Department of Health and Human Services (“DHHS”), in a time and manner
designated by HNI or DHHS, for purposes of determining HNI’s compliance with
the HIPAA Regulations; provided that, in all events. PPG shall immediately
notify HNI upon receipt by PPG of any request received from DHHS relating to
HNI’s compliance with the HIPAA Regulations and shall provide HNI with copies
of any materials provided to DHHS;


 


(L)                       Upon termination of the Agreement, return or
destroy all PHI received from, or created or received by PPG on behalf of, HNI
that PPG still maintains, or which is maintained by any contractor or agents of
PPG, in any form and shall retain no copies of such PHI; provided that if such
return or destruction is not feasible, PPG shall extend the protections of this
Addendum to the PHI and limit further uses and disclosures to those purposes
that make the return or destruction of the information infeasible.  A senior officer of PPG shall certify in
writing to HNI, within five (5) days after termination, that all PHI has been
returned or destroyed as provided above and that PPG retains no copies of PHI
in any form; and


 


(M)                  Allow HNI, upon reasonable notice, to inspect
PPG’s procedures and practices with respect to compliance with the terms of
this Addendum; provided, however, that HNI has no duty to inspect and its
decision not to inspect does not relieve PPG of its compliance responsibility.


 


3.                              Obligations of HNI.  To
assist PPG in the proper use and disclosure of PHI, HNI shall:


 












(1)       May be omitted if PPG does not have PHI in a designated record
set.  Designated record sets are records
concerning enrollment, payment, claims, adjudication, and medical or case
management as well as any other records used to make a decision about an
Individual.


(2)       May be omitted if PPG does not have PHI in a designated record
set.


(3)       May be omitted if PPG does not have PHI in a designated record
set.


 


34

















 


(A)                    Provide PPG with the notice of privacy
practices that HNI produces in accordance with 45 C.F.R. § 164.520, as well as
any changes to such notice;


 


(B)                      Provide PPG with any changes in, or revocation
of, permission by an Individual to use or disclose PHI, if such changes affect
PPG’s permitted or required uses and disclosures;


 


(C)                      Notify PPG of any restriction on the use or
disclosure of PHI that HNI has agreed to in accordance with 45 C.F.R. § 164.522;
and


 


(D)                     Not request PPG to use or disclose PHI in any
manner that would not be permissible under the HIPAA Regulations if the PHI
were to be so used or disclosed by HNI. (4)


 


4.                             Standard Transactions. To the extent PPG conducts Standard
Transaction(s) on behalf of HNI, PPG shall, without limitation, comply with the
HIPAA Regulations, “Administrative Requirements for Transactions,” 45 C.F.R. §
162.100 et seq., by the compliance date of October 16, 2003, and shall not: (a)
Change the definition, data condition or use of a data element or segment in a
standard; (b) Add any data elements or segments to the maximum defined data
set; (c) Use any code or data elements that are either marked “not used” in the
standard’s implementation specification or are not in the standard’s
implementation specification(s); or (d) Change the meaning or intent of the
standard’s implementation specifications.(5)


 


5.                             Termination for Breach.  HNI
shall have the right to terminate the Agreement upon written notice if HNI
determines that PPG has breached a material term of the provisions of this
Addendum; provided that HNI’s remedies under this Addendum and the section(s)
of the Agreement related to termination, if any, shall be cumulative.


 


6.                             Survival of Terms. The obligations of PPG under Sections 2(F),
2(G), 2(H), 2(I) and 2(L) of this Addendum shall survive the termination of the
Agreement.


 


7.                             Injunctive Relief.  PPG
agrees that the remedies at law for any breach by it of the terms of this
Addendum shall be inadequate and that monetary damages resulting from such
breach are not readily measured. 
Accordingly, in the event of a breach or threatened breach by PPG of the
terms of this Addendum. HNI shall be entitled to immediate injunctive relief.


 


Nothing
herein shall prohibit HNI from pursuing any other remedies available to it for
such breach, and HNl’s rights under this Addendum and the sections of the
Agreement related to injunctive relief, if any, shall be cumulative.


 


8.                             Amendment of Agreement.  In
the event of a material change in the HIPAA Regulations or state law affecting
the use or disclosure of PHI, HNI may amend this Addendum and the Agreement as
necessary to comply with the change in the law or regulation and such amendment
shall become effective sixty (60) days after receipt by PPG.  HNI’s rights under this Addendum and the
section(s) of the Agreement related to amendments, if any, shall be cumulative.


 


9.                             Notice of Investigation or Lawsuit and
Indemnification.  PPG shall notify HNI immediately upon
receipt of notice of an investigation or of a lawsuit filed against PPG related
to or arising


 












(4)       If the Agreement provides for the use of PHI for purposes of
data aggregation or management and administrative activities of PPG, add the
following language to the end of this provision: “unless such use or disclosure
is necessary for the purposes of data aggregation or management and
administrative activities of PPG under the Agreement.”


(5)       May be omitted if there is no electronic
data transaction by PPG


 


35

















 


from
the use or disclosure of PHI by PPG pursuant to this Addendum.  Any indemnification provision in the
Agreement shall apply to PPG’s and HNI’s use and disclosure of PHI under this
Addendum.


 


10.                     Confidentiality.  Notwithstanding
the foregoing, PHI shall not be included within the definition of “confidential
information” in the section(s) of the Agreement related to protection of,
confidential information, if any, as PPG’s obligations with respect to PHI are
set forth in this Addendum.


 


11.                     State Law Requirements.  To
the extent that state law is more stringent than the HIPAA Regulations, any use
or disclosure of PHI by PPG shall be made in accordance with state law.


 


12.                     Interpretation. Any ambiguity in this Addendum shall be
resolved in favor of a meaning that permits HNI to comply with the HIPAA
Regulations.


 


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