Exhibit
10.156


 


AMENDMENT NUMBER 4 TO

MEDICAL GROUP/IPA SERVICES AGREEMENT


(Split Capitation)


 


This Amendment Number 4 to
Medical Group IPA Services Agreement (the “Amendment”) is entered into
effective as of January 1, 2004 by and between PacifiCare of California, a
California corporation (“PacifiCare”), and Northwest Orange County Medical
Group (“Medical Group”), with respect to the following facts:


 


RECITALS


 


A.        The
parties have previously entered into that certain Medical Group/IPA Services
Agreement dated January 1, 2001, as amended March 1, 2002 and January 1, 2003
(the “Agreement”).


 


B.          The
parties desire to amend this Agreement for the purpose of documenting their
agreement with respect to terms, including compensation, under the Agreement
tor periods commencing January 1, 2004.


 


NOW, THEREFORE, in
consideration of the foregoing, the parties hereto agree that the Agreement is
hereby modified as specified below:


 


1 .                                   The following Sections of
Article 2 of the Agreement are hereby amended in their entirety, to read as
follows:


 


ARTICLE 2

DUTIES OF MEDICAL GROUP


 


2.3.3                  Notice of Participating Provider Terminations. 
Medical Group shall provide sixty (60) calendar days’ prior written
notice to PacifiCare of the termination of any of its Participating Providers;
provided, however, that if any Participating Providers are terminated with less
than sixty (60) calendar days’ notice, then Medical Group shall provide written
notice to PacifiCare within five (5) business days of Medical Group becoming
aware of such termination. 
Notwithstanding the termination of any Participating Providers, Medical
Group shall remain responsible for providing or arranging Covered Services
through its remaining Participating Providers and shall remain financially
responsible for Medical Group Services provided to Medical Group Members under
this Agreement.  In the event of
termination of any of Medical Group’s Participating providers, Medical Group
shall notify all Members, who are receiving treatment from said Participating
Provider for an acute or chronic condition, pregnancy or other course of
treatment, in writing prior to the effective dale of termination for said
Participating Provider.


 


2.6                            Medical Records. 
Medical Group and its Participating Providers shall maintain all patient
medical records relating to Covered Services provided to Members, in such form
and containing such information as required by the QI Program, Accreditation
Organizations and State and Federal Law. 
Medical records shall be maintained in a manner that is current,
detailed, organized and permits effective patient care and quality review by
Medical Group and PacifiCare pursuant to the QI Program.  Medical records shall be maintained in a
form and physical location which is accessible to Medical Group’s Participating
Providers, PacifiCare, Government Agencies and Accreditation Organizations.


 


Upon request and within the time frame requested,
Medical Group and its Participating Providers shall provide to PacifiCare, at
Medical Group’s or Participating Provider’s expense, copies of Member medical
records for purposes of conducting quality assurance, case management and
utilization reviews, credentialing and peer review, claims processing,
verification and payment, resolving Member grievances and appeals and other
activities reasonably necessary for the proper administration of the Managed
Care Plans consistent with State and Federal Law.  If Medical Group or its Participating Providers do not provide
copies of Member medical records to PacifiCare within the time frame requested,
Medical Group and its Participating Providers shall allow PacifiCare immediate


 












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


 


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access
to such medical records for onsite copying and shall reimburse PacifiCare for
the actual copying expense.  Medical
Group and its Participating Providers shall maintain the confidentiality of all
Member medical records and treatment information in accordance with State and
Federal Law and have procedures in place that specify the purpose for which the
information will be used within Medical Group’s organization and to whom and
for what purposes Medical Group may disclose the information outside of Medical
Group.  Medical records shall be
retained by Medical Group and its Participating Providers for at least six (6)
years following the provision of Covered Services and as required by State and
Federal Law.  The provisions of this
Section shall survive termination of this Agreement for the period of time
required by State and Federal Law.


 


2.9.4                   Encounter Data. 
Medical Group shall maintain and provide to PacifiCare, no later than
the thirtieth (30th) day of each month, (i) the utilization data pertaining to
Covered Services which are provided directly by Medical Group and its
Participating Providers and (ii) the utilization data pertaining to Covered
Services which are paid for by Medical Group during the preceding month,
including data not provided in the most recent submission, as required by
PacifiCare (the “Encounter Data”). Medical Group shall submit Encounter Data in
accordance with the procedures and standards established by PacifiCare.  Medical Group shall submit Encounter Data in
an electronic format acceptable to PacifiCare.


 


Medical Group acknowledges and agrees that failure of
Medical Group to provide PacifiCare with Encounter Data in a timely and
complete manner will constitute a material breach of this Agreement and will be
subject to the cure provisions in Section 6.2,2. In addition to PacifiCare’s
other rights and remedies pursuant to this Agreement, in the event that Medical
Group has at any time during the term of this Agreement failed to provide
PacifiCare with substantially all Encounter Data for more than three (3) months
in any twelve (12) month period, PacifiCare shall have the right to terminate
this Agreement or, at PacifiCare’s sole discretion, terminate Medical Group’s
participation in the Secure Horizons Managed Care Health Plan.  Such termination shall be upon thirty (30)
days prior written notice to Medical Group, which termination shall be
effective on the later of the expiration of such thirty (30) day period or the
date set forth in PacifiCare’s notice unless, within ten (10) calendar days of
PacifiCare’s notice, Medical Group provides PacifiCare with all Encounter Data
that is due for periods through the date of PacifiCare’s notice.


 


2.                                  The following Sections or
Article 3 of the Agreement are hereby amended in their entirety, to read as
follows:


 


ARTICLE 3


ADMINISTRATIVE DUTIES OF PACIFICARE


 


3.8                            Transplant Services.


 


3.8.1                  Transplant Services - Definitions.


 


(i)                             “Transplant Services” are Covered Services for solid organ transplants,
autologous hemopoetic stem cell transplantation and allogeneic hemopoetic stem
cell transplantation as described in the applicable Subscriber Agreement and
Evidence of Coverage.


 


(ii)                                  “NPTN” Transplant Services are Transplant
Services provided pursuant to and in accordance with PacifiCare’s NPTN program.


 


(iii)                               “Non-NPTN” Transplant Services are all Transplant Services which are not
NPTN Transplant Services.


 


3.8.2                  Financial Responsibility for Transplant
Services.  The parties respective financial
responsibility for the various components of Transplant Services are described
in this Section 3.8 and the Division of Financial Responsibility Matrix.


 


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3.8.3                  Medical Management of Transplant Services.


 


(i)                                     All Transplant Services shall be  provided in accordance with the
provisions of PacifiCare’s MM Program. 
Specifically, but without limitation, authorization of the evaluation of
the recipient prior to listing for transplantation, the actual transplant
itself, and post transplant care up to three hundred sixty-five (365) days post
discharge, must be obtained from PacifiCare’s NPTN Medical Director, or his or
her designee, prior to the provision of Transplant Services.


 


(ii)                                  PacifiCare shall be responsible for providing,
coordinating and arranging for the Medical Management of all Transplant
Services regardless of whether PacifiCare or the Medical Group is financially
responsible for the provision of such Transplant Services.  Medical Group specifically agrees that even Transplant
Services for which Medical Group is financially responsible must be provided in
accordance with PacifiCare’s MM Program using PacifiCare’s designated NPTN
Participating Providers and that Medical Group’s failure to comply with the
foregoing may place PacifiCare in breach of its agreements with employer groups
or Participating Providers and may be inconsistent with the provisions of
PacifiCare’s Subscriber Agreements and Evidences of Coverage.


 


(iii)                               Transplant Services provided by Medical Group or pursuant to a Medical
Group referral that are not authorized by PacifiCare prior to the provision of
the Transplant Services shall constitute Non-NPTN Transplant Services.


 


3.9                                 PacifiCare-Sponsored Carve-Out Program
Management.  The Division of Financial Responsibility
(DFR) Matrix attached to this Agreement identifies the risk arrangements
between Medical Group and PacifiCare. 
In specific instances, PacifiCare has assumed financial responsibility
for specific Covered Services, drugs and agents (to include injectable drugs
and adjuncts) that were the previous responsibility of the Medical Group.  PacifiCare has established, at its sole
discretion, specified Carve-Out Programs. 
Specific Carve-Out Program descriptions, policies and procedures are
provided in Exhibit 8.


 


3.9.1                  PacifiCare’s Right to Modify the
PacifiCare-Sponsored Carve-Out Programs.  On a semi-annual basis and or
as directed by applicable law or regulatory requirement(s), and at its sole
discretion, PacifiCare reserves the right to propose additions or deletions to
the list of Carve-Out Program Covered Services, drugs and agents.  PacifiCare shall provide Medical Group with
forty-five (45) calendar days’ advanced notice of such changes, which notice
shall include PacifiCare’s proposed adjustment to Medical Group’s compensation
resulting from such changes, which adjustment shall be determined using
reasonable actuarial standards, taking into account other changes in
compensation made pursuant to Section 5.1 , all as determined by
PacifiCare.  Medical Group shall use
reasonable efforts to review PacifiCare’s proposal within thirty (30) calendar
days.  Medical Group and PacifiCare
shall enter into an Amendment to this Agreement documenting any agreement they
may reach on any changes to the list of Carve-Out Program Covered Services,
drugs and agents.


 


3.9.2                  PacifiCare’s Right to Terminate Medical
Group’s Participation in PacifiCare-Sponsored Carve-Out Programs. 
PacifiCare, at its sole discretion, reserves the right to terminate
Medical Group’s participation in PacifiCare-Sponsored Carve-Out Programs by
providing Medical Group sixty (60) calendar days advance written notice.  Upon
any such termination, PacifiCare shall adjust Medical Group’s compensation
consistent with the amounts specified in Attachment C of Exhibit 8.


 


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3.           The following Sections of
Article 4 of the Agreement are hereby amended in their entirety, to read as
follows:


 


ARTICLE 4

MANAGED CARE PROGRAM SERVICES


 


4.1                            Managed Care Program Services, PacifiCare
Accountability and Medical Group Cooperation.  Consistent with the
requirements of State and Federal Law and the standards of Accreditation
Organizations, PacifiCare shall be accountable for the performance of the
following services for all Managed Care Plans: (I) quality management and
improvement, (ii) medical management, (iii) credentialing, (iv) Member rights
and responsibilities, (v) preventive health services, and (vi) payment and
processing of claims (collectively, “Managed Care Program Services”). Without
limiting the foregoing or PacifiCare’s delegation of any Managed Care Program
Services to Medical Group, PacifiCare shall remain accountable to CMS for
complying with its obligations under the CMS Agreement.  Medical Group and its Participating
Providers shall cooperate with PacifiCare in the performance of all Managed
Care Program Services and conduct their activities in a manner consistent with
the provisions of this Article 4 including specifically, but without
limitation, PacifiCare’s QI Program, MM Program, Credentialing Program, Member
Services activities, and Claims Processing Guidelines.


 


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


 


Managed Care Program Services which are delegated to
Medical Group shall be specified in Exhibit 2 to this Agreement (collectively,
the “Delegated Activities”). Exhibit 2 may be amended from time to time during
the term of this Agreement by PacifiCare to reflect changes in delegation
standards; delegation status; performance measures; reporting requirements; and
other provisions of Exhibit 2.


 


Medical Group’s authority to perform medical
management functions, as described but not limited to Article 4, Section 4.1.2,
may be modified, at the sole discretion of PacifiCare at any time.


 


4.           The following Sections of
Article 5  of the Agreement are
hereby amended in their entirety, to read as follows:


 


ARTICLE 5

COMPENSATION


 


5.1.4                   Carve-Out Compensation.  To
the extent that PacifiCare has assumed responsibility for specified Covered
Services pursuant to the Carve Out programs described Exhibit 8. Medical
Group’s Capitation Payments, as identified in the applicable Product
Attachments, reflect any adjustments as agreed to by the parties.  Medical Group shall be responsible for
assessing the financial impact that the PacifiCare Sponsored Carve-Out Programs
will have on the Medical Group.


 


5.1.4.1          Limitations to the PacifiCare-Sponsored
Carve-Out Programs.  The PacifiCare-Sponsored Carve-Out Programs
shall: (a) cover only the specific medications and Covered Services contained
in the Carve-Out Program’s Descriptions and listed in Exhibit 8, (b) be subject
to modification as a result of mandates in applicable law and or regulatory
requirements and (c) apply only to those specific medications authorized by
PacifiCare and provided by PacifiCare’s contracted vendor(s) for 


 


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Self-Injectable Carve-Out Program (SICOP)  medications.  SICOP medications will be prescribed by Medical Group
Participating Providers and such Participating Providers shall be responsible
for all patient education relating to the applicable prescription(s).


 


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


 


5.11                      Recoupment Rights. 
PacifiCare shall have the right, but not the obligation, to pay claims
which Medical Group fails to pay for Covered Services provided to PacifiCare
Members if Medical Group fails to pay such claims following ten (10) days
written notice from PacifiCare.  Except
as may otherwise be specifically provided in this Agreement.  PacifiCare shall have the right to recoup
any and all amounts owed by Medical Group to PacifiCare against amounts,
including Capitation Payments, owed by PacifiCare to Medical Group.  [So long as neither party has given a notice
of termination of this Agreement, PacifiCare shall give Medical Group not less
than thirty (30) working days prior written notice of any proposed recoupment
from Medical Group’s capitation payments.] 
PacifiCare shall not recoup any amounts described in such notice if the
Medical Group contests the recoupment in the manner contemplated by Health and
Safety Code Section 1371.1 and applicable implementing regulations.  Any dispute shall be subject to the dispute
resolution provisions of this Agreement. 
If Medical Group does not object to the applicable amount to be recouped
and does not otherwise pay the amount to PacifiCare, PacifiCare may recoup such
amount from amounts due Medical Group under this Agreement.  PacifiCare’s right to recoup shall include
the following amounts owed to PacifiCare by Medical Group: (i) amounts owed by
Medical Group due to overpayments or payments made in error by PacifiCare; (ii)
amounts owed by Medical Group as a result of claims for Medical Group Services
that PacifiCare may pay on behalf of Medical Group; (iii) amounts owed by
Medical Group for Covered Services provided outside the Medical Group Service
Area; (iv) amounts owed by Medical Group as a result of the outcome of the
Member appeals and grievance procedure; (v) amounts owed by Medical Group in
connection with any other prior or existing agreement between Medical Group and
PacifiCare or any PacifiCare Affiliate; and (vi) amounts owed by Medical Group
pursuant to Section 5.4.3 (Incentive Program Settlements) above.


 


As
a material condition to PacifiCare’s obligations under this Agreement, Medical
Group agrees that all recoupment and any offset rights pursuant to this
Agreement shall be deemed to be and to constitute rights of recoupment
authorized in State or Federal law or in equity to the maximum extent possible
under law or in equity and that such rights shall not be subject to any
requirement of prior or other approval from any court or other government
authority that may now or hereafter have jurisdiction over Medical Group.


 


5.18                      Non-Capitated Services Submission of Claims
Claims Payment.  Medical Group shall submit all claims for
non-capitated services reimbursement under this Agreement to PacifiCare no
later than ninety (90) calendar days from the date of service or, if a third
party or Coordination of Benefits claim,


 


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upon
receipt of payment or notice of denial from a primary payor.  Medical Group shall submit such claims in
accordance with the procedures and standards established by PacifiCare.  If Medical Group elects to submit claims electronically
to PacifiCare, such electronic format shall be acceptable to PacifiCare or its
agent.


 


For each Clean Claim submitted by Medical Group,
PacifiCare or the applicable Payor shall pay the amount due to Medical Group
within forty-five (45) working days following receipt of a Clean Claim, as
defined below, by PacifiCare or within such other period of time as may be
provided by State and Federal Law for the applicable Managed Care Plan.  For purposes of this Section. a “Clean
Claim” is a claim for Covered Services submitted by Medical Group which is
complete and includes all the information reasonably required by PacifiCare,
and as to which request for payment there is no material issue regarding
PacifiCare’s obligation to pay under the terms of a Managed Care Plan or
PacifiCare’s MM Program.  In the event
it is determined that a claim is not a Clean Claim, PacifiCare shall, within
the time frames set forth above for the payment of Clean Claims, use reasonable
efforts to advise Medical Group of the basis upon which a claim is not eligible
for payment and specify any additional information required for PacifiCare to
pay the amount due with respect to the applicable claim.


 


Medical Group acknowledges and agrees that payors are
solely responsible for payment to Medical Group for non-capitated Covered
Services provided to Members of payor plans whether claims are submitted to and
paid by Payor directly or by PacifiCare on behalf of payor.  PacifiCare shall not be responsible or
liable for any claims decisions or for any payment of claims by payors.


 


5.19                      Timely Submission of Medical Group Requests
for Claims Determination Reconsideration.  Medical Group requests for
reconsideration of a claims determination must be forwarded in a format
acceptable to PacifiCare within ninety (90) calendar days from receipt of
applicable claims determination from PacifiCare.  Medical Group’s failure to submit written requests within such
time period shall result in the request being denied by PacifiCare.


 


5.20                      Timely Submission of Medical Group Requests
for Recoupment Reconsideration of Recoupment Actions by PacifiCare.  To
request reconsideration of recoupment actions taken by PacifiCare, Medical
Group must submit such request in a format acceptable to PacifiCare within
ninety (90) calendar days from the date of PacifiCare’s recoupment action.  Medical Group’s failure to submit a request
for reconsideration within the timeframe specified herein shall result in the
denial of the reconsideration request.


 


5.            The following Sections of
Article 6 of the Agreement are hereby amended in their entirety, to read as
follows:


 


ARTICLE 6


TERM AND TERMINATION


 


6.1                            Term.  The term of this Agreement
shall commence on January 1, 2004 (the “Commencement Date”) and end on December
31, 2005. Thereafter term of this Agreement shall be automatically extended for
a one year term every January 1 (“Anniversary Date”), unless either party
provides the other with written notice of such party’s intention not to extend
the term no later than one hundred eighty (180) days prior to each Anniversary
Date or until this Agreement is appropriately terminated by either party as
provided herein.


 


6.            The following Sections of
Article 6 of the Agreement are hereby added, to read as follows:


 


6.9                            Notification Upon Termination.  In
the event of termination, Medical Group shall identify to PacifiCare, in
writing, any Members who are receiving treatment from Medical Group or its
Participating Providers for an acute or chronic condition, pregnancy or other
course of treatment at the time of such written notice and at least forty five
(45) calendar days prior to the effective date of termination.  Upon receiving such notification, PacifiCare
will send written notification of Medical


 


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Group’s termination to the Members identified by
Medical Group per this section prior to the effective date of termination.


 


7.           The following Sections of
Article 7 of the Agreement are hereby amended in their entirety, to read as
follows:


 


ARTICLE 7


GENERAL PROVISIONS


 


7.5.2                   Arbitration.  Any controversy, dispute or
claim arising out of the interpretation, performance or breach of this
Agreement which is not resolved pursuant to the Provider Dispute Resolution
Procedure specified above shall be resolved by binding arbitration at the
request of either Party, in accordance with the JAMS Comprehensive Arbitration
Rules and Procedures, as modified by any other instructions that the Parties
may agree upon at the time.  Such
arbitration shall occur in Los Angeles, California, unless the parties mutually
agree to have such proceeding in some other locale.  The arbitrator shall apply California substantive law and federal
substantive law where state law is preempted.


 


7.5.2.1               Legal and Equitable Remedies.  The
arbitrator shall have the power to grant all legal and equitable remedies
provided by California law.  The
arbitrator shall prepare in writing and provide to the parties an award
including factual findings and the legal reasons on which the award is based.


 


7.5.2.2               Costs and Fees.  The Parties shall share equally the cost of the
arbitration, including, but not limited to the arbitrator’s fee and any related
charges.  Each Party shall be
responsible for any and all costs associated with presenting its position at
arbitration, including, but not limited to attorney fees and expert fees.  In the event either party seeks preliminary
injunctive relief or a temporary restraining order, each Party shall bear its
own attorneys’ fees.


 


7.5.2.3               Waiver.  Each Party knowingly
acknowledges and agrees that the foregoing constitutes a waiver of their
constitutional right to a jury trial.


 


7.5.2.4               Confidentiality.  The
entire procedure shall be confidential and neither of the Parties nor
arbitrator may disclose the content or results of any arbitration hereunder
without the written consent of all Parties, except to the extent disclosure is
required to enforce any applicable arbitration award or as may be otherwise
required by law or upon the request of a regulatory agency and except that
either Party may make such disclosures to its auditors, accountants, attorneys,
insurers, actual and prospective investors and actual and potential lenders.


 


7.8                            Amendments


 


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


 


7.8.2                   Amendments to Provider Manual. 
PacifiCare may by notice amend or change any or all provisions of the
Provider Manual by providing forty-five (45) business days’ prior written
notice to Medical Group unless either PacifiCare or Medical Group reasonably
determines that the amendment is material and is not made in order to comply
with a change in State or Federal Law or Accreditation Standard, in which case
the provisions of Section 7.8.5. below, shall apply.  Any notice amendment pursuant to the terms of this Section shall
be binding upon Medical Group at the end of the forty-five (45) business day
period.


 


7.8.3                   Amendments to Agreement to Comply with State
and Federal Law.  PacifiCare may amend this Agreement by
providing thirty (30) calendar days prior written notice to Medical Group in
order to maintain compliance with State and Federal Law   Such amendment shall be binding upon
Medical


 


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Group at the end of the thirty (30) calendar day
period and shall not require the consent of Medical Group.


 


7.8.4                   Amendments to Managed Care Plans  
PacifiCare may by notice amend or change any or all provisions of the
Managed Care Plans by providing forty-five (45) business days’ prior written
notice to Medical Group unless either PacifiCare or Medical Group reasonably
determines that the amendment is material and is not made in order to comply
with a change in State or Federal Law or Accreditation Standard, in which case
the provisions of Section 7.8.5, below, shall apply.  Any notice amendment pursuant to the terms of this Section shall
be binding upon Medical Group at the end of the forty-five (45) business day
period.


 


7.8.5                   Material Changes. 
Medical Group and PacifiCare shall seek to agree to amendments to this
Agreement which satisfactorily addresses material changes proposed by
PacifiCare which are not permitted to be made by a notice amendment pursuant to
the terms of this Agreement or applicable State and Federal Law.  In such event, the applicable amendment
shall not be effective until the parties amend the Agreement through a written
amendment signed by both parties.  For
the purposes of this Section “material” shall have the meaning set forth in
Health and Safety Code Section 1375.7(1)(2), which at the time of execution of
this Agreement, states that “material” shall mean a change to which a
reasonable person would attach importance in determining action to be taken
upon such provision.


 


In the event PacifiCare has provided Medical Group
with notice of an amendment pursuant to Sections 7.8.2 or 7.8.4, above, and
Medical Group reasonably determines that such amendment is material, Medical
Group retains its rights to terminate the Agreement pursuant to California
Health and Safety Code Section 1375.7(b). If Medical Group exercises its right
to terminate the Agreement pursuant to California Health and Safety Code
Section 1375.7(b). Medical Group agrees to provide PacifiCare with written
notice of its intent to terminate the Agreement not less than five (5) business
days prior to the expiration of the forty-five (45) business day notice period
provided at Sections 7.8.2 and 7.8.4 and Medical Group agrees that PacifiCare
may withdraw its notice amendment on or before the expiration of the forty-five
(45) business day notice period thereby canceling Medical Group’s termination
right.


 


8.          The following Sections of
Article 8 of the Agreement are hereby amended in their entirety, to read as
follows:


 


ARTICLE 8


GOVERNING LAW AND REGULATORY REQUIREMENTS


 


8.3.2                   Obligations if PacifiCare Ceases Operating or
Termination of Agreement for Nonpayment.  Notwithstanding any other provisions
of this Agreement, Medical Group agrees that in the event PacifiCare ceases
operations for any reason, including insolvency, Medical Group and its
Participating Providers shall provide or arrange Covered Services and shall
not, at any time, bill, charge, collect or receive any form of payment from any
Member for Covered Services provided after PacifiCare ceases operations.


 


At such time as PacifiCare may cease operations or
Medical Group terminates this Agreement on the basis of PacifiCare’s failure to
make timely Capitation Payments, Medical Group and its Participating Providers
shall continue to provide or arrange for Covered Services (i) to all Members
for not less than thirty (30) calendar days thereafter or such shorter period
of time as the applicable Member’s premium had been paid to PacifiCare and (ii)
to those Members who are hospitalized on an inpatient basis at the time
PacifiCare ceases operations or Medical Group terminates this Agreement until
such Members are discharged from the hospital. 
Medical Group shall not bill, charge, collect or receive any form of
payment from any Member for such Covered Services.


 


8.4                            Inspection and Audit of Records and Facilities. 
Medical Group and its Participating Providers shall provide access at
reasonable times upon demand by PacifiCare, Accreditation Organizations and
Government Agencies to periodically audit or inspect the facilities, offices,
equipment, books.


 


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documents and records of Medical Group and its Participating Providers
relating to the performance of this Agreement and the Covered Services provided
to Members, including, without limitation, all phases of professional and
ancillary medical care provided or arranged for Members by Medical Group and
its Participating Providers.  Member
medical records and Medical Group’s financial condition and financial records
pertaining to the cost of operations and income received by Medical Group for
Covered Services rendered to Members.


 


Medical Group and its Participating Providers shall comply with any
reasonable requirements or directives issued by PacifiCare, Accreditation
Organizations and Government Agencies as a result of such evaluation,
inspection or audit of Medical Group and its Participating Providers.  Medical Group and its Participating
Providers shall retain the books and records described in this Section for at
least six (6) years and acknowledge that certain Government Agencies may have
the right to inspect and audit Medical Group’s books and records for six (6)
years beyond termination of this Agreement or until the conclusion of any
governmental audit that may be initiated that pertains to such records,
whichever is latest unless: (i) the CMS determines there is a special need to
retain a particular record or group of records for a longer period and notifies
PacifiCare or Medical Group at least thirty (30) days before the normal
disposition date; (ii) there has been a termination, dispute, or fraud or
similar fault by Medical Group, in which case the retention may be extended to
six (6) years from the date of any resulting final resolution of the
termination, dispute, or fraud or similar fault; or (iii) the CMS determines
that there is a reasonable possibility of fraud, in which case it may inspect,
evaluate, and audit Medical Group at any time. 
Without limiting the foregoing, following the commencement of any audit
by a Government Agency, Medical Group shall retain its relevant books and
records until completion of said audit. 
The provisions of this Section shall survive termination of this
Agreement for the period of time required by State and Federal Law.


 


9.             The following Sections of
Article 10 of the Agreement are hereby added, to read as follows:


 


ARTICLE 10


READY REPLY


 


10.1                           Statement of Purpose/Additional Defined Terms


 


10.1.1             Statement of Purpose.  For
the purposes of increasing Member satisfaction, PacifiCare has designed
procedures to enable PacifiCare and Medical Group to accelerate the time in
which Member complaints are addressed through the “Ready Reply Program” as
defined and described in this Article 10. The Ready Reply Program’s goal is to
voluntarily exceed existing legal and community standards for time-periods in
which Member complaints are resolved. 
The Ready Reply Program accelerated review procedures shall in no manner
decrease the care and level of review given by PacifiCare or Medical Group to
the resolution of Member complaints. 
Medical Group acknowledges that PacifiCare will be making affirmative
commitments to its Members that the Ready Reply Providers (as defined below)
have specially designed systems to enhance Member satisfaction.  This Article 10 documents Medical Group’s
commitment to participate in and support the Ready Reply Program.


 


10.1.2          Additional Defined Terms.  In
addition to those defined terms that are set forth in the Agreement, the
following defined terms shall have the meanings set forth below:


 


(a)                             Ready Reply is the name of the program established by PacifiCare to accelerate the
timeliness of resolution of Member complaints.


 


(b)                            Ready Reply Provider is any PacifiCare Participating Provider that
participates in the Ready Reply Program.


 


9

















 


10.2                           Duties of Medical Group


 


10.2.1             Establish Ready Reply Program Processes.  On
or before January 1, 2004, Medical Group shall establish such processes as are
necessary or advisable for Medical Group to support Ready Reply Program
including, but not limited to, fulfilling the specific obligations set forth in
this Section 10.2. If, for any reason, Medical Group fails to maintain Ready
Reply Program processes that meet all of the requirements of Ready Reply
Program, Medical Group shall provide immediate written notice thereof to
PacifiCare.  Medical Group’s failure to
so notify PacifiCare that it is no longer maintaining standards in compliance
with the Ready Reply Program shall be a material breach of the Ready Reply
Agreement subjecting Medical Group to all of the remedies contemplated thereby.  If Medical Group is unable to cure the
breach.  Medical Group will use best
efforts to continue the complaint management program for a period of six (6)
months to allow PacifiCare ample time to remove Medical Group from all Ready Reply
marketing materials.


 


10.2.2             24 Hour Resolution of Member Complaints. 
Medical Group shall assist PacifiCare in its goal of resolving
substantially all Member complaints within periods of not more than twenty-four
(24) hours or one (1) business day of either PacifiCare’s or Medical Group’s receipt
of notice of a Member complaint. 
Medical Group agrees to assist PacifiCare in obtaining such goal by,
among other commitments as set forth herein, completing all actions required
pursuant to this Agreement as soon as possible, but in no event not later than
4pm of the next business day.


 


10.2.3             Education of Medical Group Personnel. 
Medical Group shall assure that all of Medical Group’s personnel who may
receive or have any communications with or regarding Members understand the
commitments of Medical Group as set forth in this Article 10.


 


10.2.4             Medical Group Key Contact. 
Medical Group shall appoint a single person to be on duty at Medical
Group to act as the Medical Group key contact (“Medical Group Key Contact”) and
to coordinate the resolution of Member complaints with PacifiCare.  During regular business hours, the Medical
Group Key Contact shall contact PacifiCare no more than sixty (60) minutes
following receipt of a Member complaint or PacifiCare’s notice to Medical Group
of a Member complaint.  PacifiCare
recommends that the Medical Group Key Contact carry a pager to assure the
ability to comply with the foregoing. 
The Medical Group Key Contact shall, without limiting the foregoing, be
responsible for assuring that the Medical Group meets its commitment at Section
10.2.2 above.


 


10.2.5             Notice of Contact Persons. 
Medical Group shall provide PacifiCare’s Key Contact with written notice
throughout the term of this Article 10, with timely updates thereto, with the
names and means of contacting the Medical Group Key Contact for the applicable
day by telephone, facsimile, pager (if available), electronic mail, and U.S.
mail.


 


10.2.6             Accountability Responsibility. 
Medical Group shall require and enable the Medical Group Key Contact to
remain accountable and responsible for the Medical Group’s resolution, with
PacifiCare, as contemplated by the Ready Reply Program.


 


10.2.7             Technological Systems. 
Medical Group shall maintain manual or technological systems and
staffing levels as necessary and advisable to support Ready Reply.


 


10.2.8             Confidentiality of Medical Information. 
Medical Group shall assure that the Medical Group’s communications systems, including without
limitation, its electronic mail and internet systems, protect the
confidentiality of medical information in compliance with the provisions of
this Agreement and the requirements of State and Federal law.


 


10.2.9             Trade Secret Protection. 
Medical Group shall maintain PacifiCare’s Ready Reply Program as a
confidential trade secret pursuant to the confidentiality provisions of the
Agreement.


 


10

















 


10.2.10       Access to Records    Medical Group will provide PacifiCare with
any and all necessary and reasonable information including medical records, policies
and procedures, and other related information necessary in order tor PacifiCare
to verify that Medical Group is in compliance with the provisions of this
Article 10. as determined by PacifiCare. 
PacifiCare will use best efforts to notify Medical Group of such
requests in writing.


 


10.2.11       Marketing Activities.  Medical Group shall participate in
PacifiCare’s marketing activities to promote Ready Reply and to promote the
Medical Group as a Ready Reply Provider.


 


10.3                           Duties and Specific Rights of PacifiCare


 


10.3.1             Marketing Activities. 
PacifiCare shall engage in marketing activities to promote the Ready
Reply Program, including identifying Medical Group as a Ready Reply Provider in
PacifiCare’s Provider Directory.


 


10.3.2             Nonce of Contact Persons.  PacifiCare
shall provide Medical Group’s Key Contact with written notice throughout the
term of this Article 10, with timely updates thereto, with the names and means
of contacting the PacifiCare Key Contact for the applicable day by telephone,
facsimile, pager (if available), electronic mail, and U.S. mail.


 


10.3.3           Determination of Compliance by Medical Group. 
PacifiCare reserves the right to determine whether Medical Group is in
compliance with the terms of this Addendum and the requirements of the Ready
Reply Program.  If PacifiCare determines
that Medical Group is not meeting its commitments as set forth in this
Addendum, PacifiCare shall cease marketing Medical Group as a Ready Reply
Provider, and any future marketing of Medical Group as a Ready Reply Provider
will be at the sole discretion of PacifiCare.


 


10.4                           Additional Provisions


 


10.4.1             PacifiCare Grievance Policies and Procedures
and Appeal Policies and Procedures.  PacifiCare’s Grievance
Policies and Procedures, as set forth in the applicable Subscriber Agreements
and the Provider Manuals remain in full force and effect.  This Article 10 does not apply to or make
any changes to the PacifiCare Member Appeals Policies and Procedures as set
forth in the applicable Subscriber Agreement and the Provider Manuals.


 


10.4.2             Term.              The term of this Article 10 shall commence as
of the date first set forth above and shall terminate concurrently with the
termination of the Agreement.


 


10.4.3             Termination.  PacifiCare may terminate this
Article 10 at any time, with or without cause, upon ninety (90) days prior
written notice to Medical Group. 
Termination of this Article 10 by PacifiCare without cause shall not
terminate or otherwise affect the Agreement.


 


10.                    Product Attachment A
(PacifiCare Commercial Health Plan) to the Agreement is hereby deleted in its
entirety and replaced with a new Product Attachment A, attached hereto and
incorporated herein by this reference.


 


11.                    Product Attachment B
(PacifiCare Commercial Point-of-Service Health Plan) to the Agreement is hereby
deleted in its entirety and replaced with a new Product Attachment B, attached
hereto and incorporated herein by this reference.


 


12.                    Product Attachment C (Secure
Horizons Health Plan) to the Agreement is hereby deleted in its entirety and
replaced with a new Product Attachment C, attached hereto and incorporated
herein by this reference.


 


13.                    Exhibit 2 Delegated
Activities.  is hereby deleted in
its entirety and replaced with a new Delegated Activities exhibit, attached
hereto and incorporated herein by this reference.


 


11

















 


14.                    Exhibit 5. Division of
Financial Responsibility.  is hereby
deleted in its entirety and replaced with a new Division of Financial
Responsibility matrix, attached hereto and incorporated herein by this
reference.


 


15.                    Exhibit 6. Quality
Incentive Program.  is hereby added,
attached hereto and incorporated herein by this reference.


 


16.                    Exhibit 9. PacifiCare’s
Injectable/Chemotherapy Carve-Out Program. 
is hereby added, attached hereto and incorporated herein by this
reference.


 


17.                    Use of Defined Terms.  Capitalized terms utilized in this Amendment
and not defined herein shall have the same meaning set forth in the definitions
to the Agreement.


 


18.                    Agreement Remains in Full
Force and Effect.  Except as
specifically amended by this Amendment, the Agreement shall continue in full
force and effect.


 


12

















 


IN WITNESS WHEREOF, the
undersigned parties hereby agree to this Amendment as of the date first set
forth above.


 


	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  BY:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NORTHWEST ORANGE COUNTY

  MEDICAL GROUP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PRATIBHA PATEL

  	
   

  
	
   

  	
  Title:

  	
  PRATIBHA PATEL, MD 

  PRESIDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  11/3/03

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James P. Agronick

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
  Date:

  	
  11/3/03

  	
   

  
						



 


13

















 


PRODUCT ATTACHMENT A


 


PACIFICARE COMMERCIAL HEALTH PLAN


 


Northwest
Orange County Medical Group – La Palma


 


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


 


ARTICLE 1


DEFINITIONS


 


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


 


1.1                                 Commercial Plan Members are Medical Group Members enrolled in the
PacifiCare Commercial Plan.


 


1.2                                 Commercial Plan Premium is the Premium received by PacifiCare each
month for PacifiCare Commercial Plan Members, excluding amounts to pay broker
and agent commissions, compensation, [administrative fees paid to affiliates in
connection with joint marketing arrangements.] 
Premium taxes and Premiums for Supplemental Benefits.


 


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


 


1 4                                 PacifiCare Commercial Plan is any and all of the various Managed Care
Plans sold by PacifiCare to individuals (excluding individuals eligible for the
PacifiCare Medicaid Plan and the Secure Horizons Health Plan) and employer
groups, associations with employer group participation and unions which
purchase benefits for their employees and their dependents.


 


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


 


ARTICLE 2


DUTIES OF MEDICAL GROUP


 


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


 


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


 


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


 


14

















 


ARTICLE 3


COMPENSATION


 


3.1                                 Age Gender/Benefit Adjusted Commercial Capitation. 
Capitation Payments for Commercial Plan Members shall be made based upon
a per Member per month base capitation rate (‘‘Base Capitation Rate”) adjusted
to reflect the Medical Group Members’ age, gender, and benefit plan
participation.  For 2004, the Base
Capitation Rate shall be ***) per Commercial Plan Member per month.  For 2005, the Base Capitation Rate shall be
fifty-two dollars ($52.00) per Commercial Plan Member per month.  Age/gender adjustment factors are
actuarially determined and are listed below. 
Benefit adjustment factors are actuarially determined and may take into
consideration variations in benefit plan types, Copayment and coinsurance
levels.  PacifiCare may change its
benefit adjustment factors as needed to support the differing plan types that
it offers.  On an annual basis,
PacifiCare may modify the benefit adjustment factors based on actuarially
determined changes.  The Standard
Service Capitation Amount will vary during subsequent months as a result of
changes in the age, gender, and benefit plan participation of the Medical
Group’s Members for the applicable month. 
The total monthly Capitation Payment shall also be adjusted in the
manner set forth in Article 5 of the Base Agreement.


 


The
following are PacifiCare’s age/gender adjustment factors.


 


	
  Age. Sex

  Grouping

  	
   

  	
  Factor

  
	
   

  	
   

  	
   

  
	
  Child
  0

  	
   

  	
  1.8412

  
	
  Child
  1

  	
   

  	
  1.1116

  
	
  Child
  2-9

  	
   

  	
  0.4434

  
	
  Child
  10-17

  	
   

  	
  0.4411

  
	
  Female
  18-19

  	
   

  	
  0.6649

  
	
  Female
  20-24

  	
   

  	
  0.9544

  
	
  Female
  25-29

  	
   

  	
  1.362

  
	
  Female
  30-34

  	
   

  	
  1.3911

  
	
  Female
  35-39

  	
   

  	
  1.3147

  
	
  Female
  40-44

  	
   

  	
  1,3872

  
	
  Female
  45-49

  	
   

  	
  1.5017

  
	
  Female
  50-54

  	
   

  	
  1.7097

  
	
  Female
  55-59

  	
   

  	
  1.9981

  
	
  Female
  60-64

  	
   

  	
  2.2818

  
	
  Female
  65 Plus

  	
   

  	
  1.9375

  
	
  Male
  18-19

  	
   

  	
  0.384

  
	
  Male
  20-24

  	
   

  	
  0.3787

  
	
  Male
  25-29

  	
   

  	
  0.4805

  
	
  Male
  30-34

  	
   

  	
  0.6052

  
	
  Male
  35-39

  	
   

  	
  0.6675

  
	
  Male
  40-44

  	
   

  	
  0.8186

  
	
  Male
  45-49

  	
   

  	
  1.0095

  
	
  Male
  50-54

  	
   

  	
  1.311

  
	
  Male
  55-59

  	
   

  	
  1.7451

  
	
  Male
  60-64

  	
   

  	
  2.197

  
	
  Male
  65 Plus

  	
   

  	
  2.0S13

  



 


15

















 


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


 


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


 


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


 


(i)                               ISL Premium shall be zero dollars ($0) per
Commercial Plan Member per month.


 


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


 


If PacifiCare has approved of Medical Group opting
out of the ISL Program, the above amounts and percentages will reflect “zero.”
In such event.  Medical Group shall be
required to obtain ISL coverage from a third-party insurance carrier in
accordance with Section 5.5.3 of the Base Agreement.  The ISL Program is subject to annual updates as further specified
in Section 5.5 of the Base Agreement.


 


3.3                                 Commercial Hospital Incentive Program. 
Medical Group and Hospital shall establish and maintain an annual
Commercial Hospital Incentive Program for the PacifiCare Commercial Plan (the
“CHIP”). The CHIP shall be designed to provide an incentive for efficient and
effective use of Hospital Services, and shall be consistent with this Agreement
and with State and Federal Law.  A copy
of the CHIP is included in the Exhibits and incorporated herein.  Medical Group shall provide PacifiCare with
a copy of any and all revisions to the CHIP, which shall be deemed incorporated
into this Agreement, copies of any and all reports and payment schedules
prepared by Medical Group or Hospital relating to the CHIP and evidence of
stop-loss reinsurance obtained pertaining to the CHIP (which insurance must be
approved by PacifiCare).  PacifiCare reserves
the right to require that the CHIP be modified from time to time to comply with
this Agreement and State and Federal Law. 
Without limiting the foregoing, the CHIP shall provide that in the event
of a deficit under the CHIP which exceeds any established withhold.  Medical Group shall not be responsible for
reimbursing Hospital or PacifiCare for such deficit nor shall PacifiCare offset
such deficit against Medical Group’s Capitation Payments due under this Agreement.


 


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


 


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


 


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


 


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


 


16

















 


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


 


3.4.5                        PIP Deficit.  In the event that the PIP
Expense is greater than the PIP Budget, fifty percent (50%) of the deficit
shall be allocated to Medical Group, not to exceed one dollar eighty cents
($1.80) per Commercial Plan Member per month.


 


17

















 


product attachment b


 


pacificare commercial point-of-service plan


 


Northwest Orange County Medical Group — La Palma


 


In addition to the terms and conditions set forth in the Base Agreement
and Product Attachment A, the following terms and conditions, as defined below,
are also applicable to the PacifiCare Commercial Point-of-Service Plan.


 


ARTICLE I


DEFINITIONS


 


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


 


1.1                                 Commercial POS Plan Members are Medical Group Members enrolled in the
PacifiCare Commercial POS Plan


 


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


 


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


 


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


 


ARTICLE 2


DUTIES OF MEDICAL GROUP


 


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


 


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


 


ARTICLE 3


COMPENSATION


 


3.1                                 Capitation Payments for Commercial POS Plan
Members.  For Commercial POS Plan Members, PacifiCare
shall pay Medical Group *** of the Capitation Payments for Commercial Health
Plan Members.  Said Capitation Payments
may be subject to the adjustments set forth in Article 5 of the Base Agreement
(if any).  The payment described in this
Section is payment in full for In-Network Services, except for Copayments,
coordination of benefits, and third party recoveries.


 


18

















 


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


 


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


 


19

















 


PRODUCT ATTACHMENT C


 


SECURE HORIZONS HEALTH PLAN


 


Northwest
Orange County Medical Group — La Palma


 


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


 


ARTICLE 1

DEFINITIONS


 


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


 


1.1                                 CMS Agreement is the Medicare – Choice contract between
PacifiCare and CMS.


 


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


 


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


 


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


 


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


 


1.6                                 Secure Horizons Revenue is the Monthly CMS Payment for Medical Group
Members enrolled in the Secure Horizons Health Plan, less payments for broker
and agent commissions/compensation (if any) and premium taxes (if any) plus
amounts paid by CMS to PacifiCare for certain third parties for services
provided in connection with the identification and enrollment of individuals
who can be designated as Specified Low-Income Beneficiaries (as defined by CMS)
eligible for the Qualified Medicare Beneficiary Program premium (as defined by
applicable Federal and State laws and regulations).  As of the Effective Date, PacifiCare does not pay broker or agent
commissions or compensation with respect to the Secure Horizons Health Plan and
there are currently no premium taxes.


 


ARTICLE 2

DUTIES OF MEDICAL GROUP


 


2.1                                 Compliance with CMS Agreement and Federal
Medicare Law.  Medical Group shall comply with all
requirements in the CMS Agreement which are applicable to Medical Group as a
subcontractor of PacifiCare as a result of this Agreement.  Without limiting the foregoing, Medical
Group shall ensure that all provisions of the CMS Agreement which are
applicable to Medical Group’s Participating Providers as a subcontractor of
PacifiCare are included in Medical Group’s subcontracts with its Participating
Providers.  A copy of the CMS Agreement
shall be made available to Medical Group concurrent with the execution of this Agreement.  Medical Group and us Participating Providers
shall comply with Title XVI11 of the Social Security Act and the regulations
adopted thereunder by CMS for the Medicare program.


 


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


 


20

















 


provide or arrange Covered Services to Secure Horizons Members shall
comply with facility standards established by CMS.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2.7                                 Nondiscrimination. 
Medical Group understands that CMS requires compliance with the
provisions of this Section as a condition for participation in Medicare
plans.  Medical Group shall comply with
Title VI of the Civil Rights Act of 1964, as amended (42 U.S.C. Section 2000d
et. seq.), Section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C.
Section 794) and the regulations thereunder, Title IX of the Education
Amendments of 1972, as amended (20 U.S.C. Section 1681 et seq.), the Age
Discrimination Act of 1975, as amended (42 U.S.C. Section 6101 et. seq.),
Section 654 of the Omnibus Budget Reconciliation Act of 1981, as amended (42 U.S.C.
Section 9849), the Americans With Disabilities Act (P.L. 101-365) and all
implementing regulations, guidelines and standards as are now or may be
lawfully adopted under the above statutes.


 


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


 


21

















 


ARTICLE 3

COMPENSATION


 


3.1                                 Capitation Payments for Secure Horizons
Members.  Capitation Payments for Secure Horizons
Members shall be *** of the Secure Horizons Revenue per Secure Horizons Member
per month, subject to the adjustments set forth in Article 5 of the Base Agreement
and the adjustments set forth below in this Section.


 


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


 


3.1.2                        One Time Adjustment for 2004 Increases in
Secure Horizons Revenue.  The Capitation Percentage set forth above
assumes a prospective Secure Horizons Revenue increase of two percent (2%) over
the average Secure Horizons Revenue for Assigned Medical Group Members (the
“Annual Increase”).  Such assumption is
based upon the estimated average payment rates for Medicare Parts A and B
overall for calendar year 2004 as published by CMS in March 2003.  In the event that the actual Annual Increase
is more than *** as determined by law or legislative or regulatory action or
federal administrative agency interpretation (as calculated by PacifiCare for
Assigned Medical Group Members) and the amount of the actual Annual Increase in
excess of *** has been specifically determined by CMS to be used for the
enhancement of benefits for Medicare+Choice beneficiaries that are the
financial responsibility of PacifiCare (“Benefit Enhancements”), PacifiCare
shall reduce the Capitation Percentage to an amount that will adjust Medical
Group’s Capitation Payments to account for the Benefit Enhancements.  The resulting adjustment, if any, in the
Capitation Percentage shall be a one-time adjustment limited by that amount, or
portion thereof, that has been specifically determined by CMS to be used for
the Benefit Enhancements.  The new 2004
Capitation Percentage (“Adjusted Capitation Percentage”), if necessary, shall
begin with the January 2004 Standard Service Capitation Payment and the
Adjusted Capitation Percentage shall be effective through the Term of the
Agreement.


 


In the event that the actual Annual Increase is more
than ***, as determined by law or legislative or regulatory action or federal
administrative agency (as calculated by PacifiCare for Assigned Medical Group
Members) and the amount of the actual Annual Increase in excess of two percent
(2%) has not been specifically determined by CMS to be used for Benefit
Enhancements, the calculation of the Secure Horizons Revenue shall include the
entire increase.


 


One Time Adjustment for 2005 Increases in Secure
Horizons Revenue.  The Capitation Percentage set forth above
assumes a prospective Secure Horizons Revenue increase of *** over the average
Secure Horizons Revenue for Assigned Medical Group Members (the “Annual
Increase”).  Such assumption is based
upon the estimated average payment rates for Medicare Parts A and B overall for
calendar year 2005 as published by CMS in March 2004.  In the event that the actual Annual Increase is more than ***, as
determined by law or legislative or regulatory action or federal administrative
agency interpretation (as calculated by PacifiCare for Assigned Medical Group
Members) and the amount of the actual Annual Increase in excess of two percent
(2%) has been specifically determined by CMS to be used for the enhancement of
benefits for Medicare-Choice beneficiaries that are the financial
responsibility of PacifiCare (“Benefit Enhancements”), PacifiCare shall reduce
the Capitation Percentage to an amount that will adjust Medical Group’s
Capitation Payments to account for the Benefit Enhancements.  The resulting adjustment, if any, in the
Capitation Percentage shall be a one-time adjustment limited by that amount, or
portion thereof, that has been specifically determined by CMS to be used for
the Benefit Enhancements.  The new 2005
Capitation Percentage (“Adjusted Capitation Percentage”),


 


22

















 


if necessary, shall begin with the January 2005
Standard Service Capitation Payment and the Adjusted Capitation Percentage
shall be effective through the Term of the Agreement.


 


In the event that the actual Annual Increase is more
than two percent (2%), as determined by law or legislative or regulatory action
or federal administrative agency (as calculated by PacifiCare for Assigned
Medical Group Members) and the amount of the actual Annual Increase in excess
of two percent (2%) has not been specifically determined by CMS to be used for
Benefit Enhancements, the calculation of the Secure Horizons Revenue shall
include the entire increase.


 


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


 


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


 


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


 


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


 


If PacifiCare has approved of Medical Group opting out of the ISL
Program, the above amounts and percentages will reflect “zero.” In such event,
Medical Group shall be required to obtain ISL coverage from a third-party
insurance carrier in accordance with Section 5.5.3 of the Base Agreement.


 


3.3                                 Secure Horizons Hospital Incentive Program. 
Medical Group and Hospital shall establish and administer an annual
Secure Horizons Hospital Incentive Program for the Secure Horizons Plan (the
“SHIP”).  The SHIP shall be designed to
provide an incentive for efficient and effective use of Hospital Services, and
shall be consistent with this Agreement and with State and Federal Law.  A copy of the SHIP is included in the Exhibits
and incorporated herein.  Medical Group
shall provide PacifiCare with a copy of any and all revisions to the SHIP,
which shall be deemed incorporated into this Agreement; copies of any and all
reports and payment schedules prepared by Medical Group or Hospital relating to
the SHIP and evidence of stop-loss reinsurance obtained pertaining to the SHIP
(which insurance must be approved, in writing, by PacifiCare).  PacifiCare reserves the right to require
that the SHIP be modified from time to time to comply with this Agreement and
State and Federal Law.  Without limiting
the foregoing, the SHIP shall provide that in the event of a deficit under the
SHIP which exceeds any established withhold, Medical Group shall not be
responsible for reimbursing Hospital or PacifiCare for such deficit nor shall PacifiCare
offset such deficit against Medical Group’s Capitation Payments due under this
Agreement.


 


If PacifiCare provides reinsurance protection for the SHIP, such
reinsurance shall be obtained in accordance with PacifiCare’s Reinsurance
Program then in effect and elections for such Reinsurance Program shall be made
by Hospital, in writing, with written notice to Medical Group.  Hospital shall not change its Reinsurance
Program elections without the written consent of Medical Group.  Reinsurance Premiums shall be paid by
Hospital and PacifiCare may deduct such Reinsurance Premiums from Hospital’s
Capitation Payments.


 


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


 


23

















 


PRODUCT ATTACHMENT A


 


PACIFICARE COMMERCIAL HEALTH PLAN


 


Northwest
Orange County Medical Group – West Anaheim


 


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


 


ARTICLE 1

DEFINITIONS


 


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


 


1.2                                 Commercial Plan Members are Medical Group Members enrolled in the
PacifiCare Commercial Plan.


 


1.2                                 Commercial Plan Premium is the Premium received by PacifiCare each
month for PacifiCare Commercial Plan Members, excluding amounts to pay broker
and agent commissions/compensation, [administrative fees paid to affiliates in
connection with joint marketing arrangements,] Premium taxes and Premiums for
Supplemental Benefits.


 


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


 


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


 


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


 


ARTICLE 2

DUTIES OF MEDICAL GROUP


 


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


 


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


 


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


 


24

















 


ARTICLE 3

COMPENSATION


 


3.1                                 Age Gender Benefit Adjusted Commercial
Capitation.  Capitation Payments for Commercial Plan
Members shall be made based upon a per Member per month base capitation rate
(“Base Capitation Rate”) adjusted to reflect the Medical Group Members’ age,
gender, and benefit plan participation. 
For 2004, the Base Capitation Rate shall be *** per Commercial Plan
Member per month.  For 2005, the Base
Capitation Rate shall be *** per Commercial Plan Member per month.  Age gender adjustment factors are
actuarially determined and are listed below. 
Benefit adjustment factors are actuarially determined and may take into
consideration variations in benefit plan types, Copayment and coinsurance levels.  PacifiCare may change its benefit adjustment
factors as needed to support the differing plan types that it offers.  On an annual basis, PacifiCare may modify
the benefit adjustment factors based on actuarially determined changes.  The Standard Service Capitation Amount will
vary during subsequent months as a result of changes in the age, gender, and
benefit plan participation of the Medical Group’s Members for the applicable
month.  The total monthly Capitation Payment
shall also be adjusted in the manner set forth in Article 5 of the Base
Agreement.


 


The following are PacifiCare’s age/gender adjustment factors:


 


	
  Age Sex

  Grouping

  	
   

  	
  Factor

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Child 0

  	
   

  	
  1.8412

  	
   

  
	
  Child 1

  	
   

  	
  1.1116

  	
   

  
	
  Child 2-9

  	
   

  	
  0.4434

  	
   

  
	
  Child 10-17

  	
   

  	
  0.4411

  	
   

  
	
  Female 18-19

  	
   

  	
  0.6649

  	
   

  
	
  Female 20-24

  	
   

  	
  0.9544

  	
   

  
	
  Female 25-29

  	
   

  	
  1.362

  	
   

  
	
  Female 30-34

  	
   

  	
  1.3911

  	
   

  
	
  Female 35-39

  	
   

  	
  1.3147

  	
   

  
	
  Female 40-44

  	
   

  	
  1.3872

  	
   

  
	
  Female 45-49

  	
   

  	
  1.5017

  	
   

  
	
  Female 50-54

  	
   

  	
  1.7097

  	
   

  
	
  Female 55-59

  	
   

  	
  1.9981

  	
   

  
	
  Female 60-64

  	
   

  	
  2.2818

  	
   

  
	
  Female 65 Plus

  	
   

  	
  1.9375

  	
   

  
	
  Male 18-19

  	
   

  	
  0.384

  	
   

  
	
  Male 20-24

  	
   

  	
  0.3787

  	
   

  
	
  Male 25-29

  	
   

  	
  0.4805

  	
   

  
	
  Male 30-34

  	
   

  	
  0.6052

  	
   

  
	
  Male 35-39

  	
   

  	
  0.6675

  	
   

  
	
  Male 40-44

  	
   

  	
  0.8186

  	
   

  
	
  Male 45-49

  	
   

  	
  1.0095

  	
   

  
	
  Male 50-54

  	
   

  	
  1.311

  	
   

  
	
  Male 55-59

  	
   

  	
  1.7451

  	
   

  
	
  Male 60-64

  	
   

  	
  2.197

  	
   

  
	
  Male 65 Plus

  	
   

  	
  2.0813

  	
   

  



 


25

















 


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


 


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


 


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


 


(ii)                                  ISL Premium shall be zero dollars ($0) per
Commercial Plan Member per month.


 


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


 


If PacifiCare has approved of Medical Group opting out of the ISL
Program, the above amounts and percentages will reflect “zero.”  In such event, Medical Group shall be
required to obtain ISL coverage from a third-party insurance carrier in
accordance with Section 5.5.3 of the Base Agreement.  The ISL Program is subject to annual updates as further specified
in Section 5.5 of the Base Agreement.


 


3.3                                 Commercial Hospital Incentive Program. 
Medical Group and Hospital shall establish and maintain an annual
Commercial Hospital Incentive Program for the PacifiCare Commercial Plan (the
“CHIP”).  The CHIP shall be designed to
provide an incentive for efficient and effective use of Hospital Services, and
shall be consistent with this Agreement and with State and Federal Law.  A copy of the CHIP is included in the Exhibits
and incorporated herein.  Medical Group
shall provide PacifiCare with a copy of any and all revisions to the CHIP,
which shall be deemed incorporated into this Agreement, copies of any and all
reports and payment schedules prepared by Medical Group or Hospital relating to
the CHIP and evidence of stop-loss reinsurance obtained pertaining to the CHIP
(which insurance must be approved, in writing, by PacifiCare).  PacifiCare reserves the right to require
that the CHIP be modified from time to time to comply with this Agreement and
State and Federal Law.  Without limiting
the foregoing, the CHIP shall provide that in the event of a deficit under the
CHIP which exceeds any established withhold, Medical Group shall not be
responsible for reimbursing Hospital or PacifiCare for such deficit nor shall PacifiCare
offset such deficit against Medical Group’s Capitation Payments due under this
Agreement.


 


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


 


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


 


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


 


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


 


26

















 


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


 


3.4.5                        PIP Deficit.  In the event that the PIP
Expense is greater than the PIP Budget, fifty percent (50%) of the deficit
shall be allocated to Medical Group, not to exceed one dollar eighty cents
($1.80) per Commercial Plan Member per month.


 


27

















 


PRODUCT ATTACHMENT B


 


PACIFICARE COMMERCIAL POINT-OF-SERVICE PLAN


 


Northwest
Orange County Medical Group – West Anaheim


 


 


In
addition to the terms and conditions set forth in the Base Agreement and
Product Attachment A, the following terms and conditions, as defined below, are
also applicable to the PacifiCare Commercial Point-of-Service Plan.


 


ARTICLE 1

DEFINITIONS


 


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


 


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


 


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


 


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


 


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


 


ARTICLE 2

DUTIES OF MEDICAL GROUP


 


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


 


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


 


ARTICLE 3

COMPENSATION


 


3.1                                 Capitation Payments for Commercial POS Plan
Members.  For Commercial POS Plan Members, PacifiCare
shall pay Medical Group *** of the Capitation Payments for Commercial Health
Plan Members.  Said Capitation Payments
may be subject to the adjustments set forth in Article 5 of the Base Agreement
(if any).  The payment described in this
Section is payment in full for In-Network Services, except for Copayments,
coordination of benefits, and third party recoveries.


 


28

















 


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


 


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


 


29

















 


PRODUCT ATTACHMENT C


 


SECURE HORIZONS HEALTH PLAN


 


Northwest
Orange County Medical Group – West Anaheim


 


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


 


ARTICLE 1

DEFINITIONS


 


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


 


1.1                                 CMS Agreement is the Medicare - Choice contract between
PacifiCare and CMS.


 


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


 


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


 


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


 


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


 


1.8                                 Secure Horizons Revenue is the Monthly CMS Payment for Medical Group
Members enrolled in the Secure Horizons Health Plan, less payments for broker
and agent commissions/compensation (if any) and premium taxes (if any) plus
amounts paid by CMS to PacifiCare for certain third parties for services
provided in connection with the identification and enrollment of individuals
who can be designated as Specified Low-Income Beneficiaries (as defined by CMS)
eligible for the Qualified Medicare Beneficiary Program premium (as defined by
applicable Federal and State laws and regulations).  As of the Effective Date, PacifiCare does not pay broker or agent
commissions or compensation with respect to the Secure Horizons Health Plan and
there are currently no premium taxes.


 


ARTICLE 2

DUTIES OF MEDICAL GROUP


 


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


 


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


 


30

















 


provide or arrange Covered Services to Secure Horizons Members shall
comply with facility standards established by CMS.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2.7                                 Nondiscrimination. 
Medical Group understands that CMS requires compliance with the
provisions of this Section as a condition for participation in Medicare
plans.  Medical Group shall comply with
Title VI of the Civil Rights Act of 1964, as amended (42 U.S.C. Section 2000d
et. seq.), Section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C.
Section 794) and the regulations thereunder, Title IX of the Education
Amendments of 1972, as amended (20 U.S.C Section 1681 et. seq.), the Age
Discrimination Act of 1975, as amended (42 U.S.C. Section 6101 et. seq.),
Section 654 of the Omnibus Budget Reconciliation Act of 1981, as amended (42
U.S.C. Section 9849), the Americans With Disabilities Act (P.L. 101-365) and
all implementing regulations, guidelines and standards as are now or may be
lawfully adopted under the above statutes.


 


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


 


31

















 


ARTICLE 3

COMPENSATION


 


3.1           Capitation Payments for Secure Horizons
Members.  Capitation Payments for Secure Horizons
Members shall be *** of the Secure Horizons Revenue per Secure Horizons Member
per month, subject to the adjustments set forth in Article 5 of the Base
Agreement and the adjustments set forth below in this Section.


 


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


 


3.1.2        One Time Adjustment for 2004 Increases in Secure Horizons Revenue.  The
Capitation Percentage set forth above assumes a prospective Secure Horizons
Revenue increase of *** over the average Secure Horizons Revenue for Assigned
Medical Group Members (the “Annual Increase”). 
Such assumption is based upon the estimated average payment rates for
Medicare Parts A and B overall for calendar year 2004 as published by CMS in
March 2003.  In the event that the
actual Annual Increase is more than two percent (2%), as determined by law or
legislative or regulatory action or federal administrative agency
interpretation (as calculated by PacifiCare for Assigned Medical Group Members)
and the amount of the actual Annual Increase in excess of *** has been
specifically determined by CMS to be used for the enhancement of benefits for
Medicare+Choice beneficiaries that are the financial responsibility of
PacifiCare (“Benefit Enhancements”), PacifiCare shall reduce the Capitation
Percentage to an amount that will adjust Medical Group’s Capitation Payments to
account for the Benefit Enhancements. 
The resulting adjustment, if any, in the Capitation Percentage shall be
a one-time adjustment limited by that amount, or portion thereof, that has been
specifically determined by CMS to be used for the Benefit Enhancements.  The new 2004 Capitation Percentage
(“Adjusted Capitation Percentage”), if necessary, shall begin with the January
2004 Standard Service Capitation Payment and the Adjusted Capitation Percentage
shall be effective through the Term of the Agreement.


 


In the event that the actual Annual Increase is more
than *** as determined by law or legislative or regulatory action or federal
administrative agency (as calculated by PacifiCare for Assigned Medical Group
Members) and the amount of the actual Annual Increase in excess of two percent
(2%) has not been specifically determined by CMS to be used for Benefit
Enhancements, the calculation of the Secure Horizons Revenue shall include the
entire increase.


 


One Time Adjustment for 2005 Increases in Secure
Horizons Revenue.  The Capitation Percentage set forth above
assumes a prospective Secure Horizons Revenue increase of *** over the average
Secure Horizons Revenue for Assigned Medical Group Members (the “Annual
Increase”).  Such assumption is based
upon the estimated average payment rates for Medicare Parts A and B overall for
calendar year 2005 as published by CMS in March 2004.  In the event that the actual Annual Increase is more than ***, as
determined by law or legislative or regulatory action or federal administrative
agency interpretation (as calculated by PacifiCare for Assigned Medical Group
Members) and the amount of the actual Annual Increase in excess of *** has been
specifically determined by CMS to be used for the enhancement of benefits for
Medicare+Choice beneficiaries that are the financial responsibility of
PacifiCare (“Benefit Enhancements”), PacifiCare shall reduce the Capitation
Percentage to an amount that will adjust Medical Group’s Capitation Payments to
account for the Benefit Enhancements. 
The resulting adjustment, if any, in the Capitation Percentage shall be
a one-time adjustment limited by that amount, or portion thereof, that has been
specifically determined by CMS to be used for the Benefit Enhancements.  The new 2005 Capitation Percentage
(“Adjusted Capitation Percentage”),


 


 


32

















 


if necessary, shall begin with the January 2005
Standard Service Capitation Payment and the Adjusted Capitation Percentage shall
be effective through the Term of the Agreement.


 


In the event that the actual Annual Increase is more
than two percent (2%), as determined by law or legislative or regulatory action
or federal administrative agency (as calculated by PacifiCare for Assigned
Medical Group Members) and the amount of the actual Annual Increase in excess
of two percent (2%) has not been specifically determined by CMS to be used for
Benefit Enhancements, the calculation of the Secure Horizons Revenue shall
include the entire increase.


 


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


 


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


 


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


 


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


 


If PacifiCare has approved of Medical Group opting out of the ISL
Program, the above amounts and percentages will reflect “zero.” In such event,
Medical Group shall be required to obtain ISL coverage from a third-party
insurance carrier in accordance with Section 5.5.3 of the Base Agreement.


 


3.3           Secure Horizons Hospital Incentive Program. 
Medical Group and Hospital shall establish and administer an annual
Secure Horizons Hospital Incentive Program for the Secure Horizons Plan (the
“SHIP”).  The SHIP shall be designed to
provide an incentive for efficient and effective use of Hospital Services, and
shall be consistent with this Agreement and with State and Federal Law.  A copy of the SHIP is included in the
Exhibits and incorporated herein. 
Medical Group shall provide PacifiCare with a copy of any and all
revisions to the SHIP, which shall be deemed incorporated into this Agreement;
copies of any and all reports and payment schedules prepared by Medical Group
or Hospital relating to the SHIP and evidence of stop-loss reinsurance obtained
pertaining to the SHIP (which insurance must be approved, in writing, by
PacifiCare).  PacifiCare reserves the
right to require that the SHIP be modified from time to time to comply with
this Agreement and State and Federal Law. 
Without limiting the foregoing, the SHIP shall provide that in the event
of a deficit under the SHIP which exceeds any established withhold, Medical
Group shall not be responsible for reimbursing Hospital or PacifiCare for such
deficit nor shall PacifiCare offset such deficit against Medical Group’s
Capitation Payments due under this Agreement.


 


If PacifiCare provides reinsurance protection for the SHIP, such
reinsurance shall be obtained in accordance with PacifiCare’s Reinsurance
Program then in effect and elections for such Reinsurance Program shall be made
by Hospital, in writing, with written notice to Medical Group.  Hospital shall not change its Reinsurance
Program elections without the written consent of Medical Group.  Reinsurance Premiums shall be paid by
Hospital and PacifiCare may deduct such Reinsurance Premiums from Hospital’s
Capitation Payments.


 


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


 


33

















 


PACIFICARE OF CALIFORNIA


 


MEDICAL GROUP/IPA SERVICES AGREEMENT
(SPLIT CAPITATION)


 


EXHIBIT 2

DELEGATED ACTIVITIES

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


 


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


 


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


 


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


 


The Grids also identify (i) the
elements and performance measures established by PacifiCare for the Delegated
Activities in accordance with the NCQA accreditation standards and State and
Federal law and regulatory requirements, (ii) the reports which shall be
provided to PacifiCare by Medical Group for each of the Delegated Activities
and the frequency of reporting, and (iii) the oversight activities which
PacifiCare shall perform with respect to each of the Delegated Activities.


 


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


 


34

















 


MEDICAL MANAGEMENT DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare Oversight

  
	
  MM
  Program Structure and Process

  	
   

  	
  ý  Delegated
o  Not
  delegated

  	
   

  	
  Medical
  Group (MG) will meet all regulatory, NCQA, and PacifiCare Standards.

  

  Development and documentation of program structure and accountability,
  including:



  1.  Goals
  &  Objectives, including
  behavioral health care aspects

  2.  Cmte responsibilities;

  a)  Membership

  b)  Minutes

  c)  Dissemination of information

  d)  Education of staff & providers

  3.  MM
  Director & senior physician’s and designated behavioral health care
  practitioner roles

  4.  MM Dept
  interfaces with other depts.

  5.  Program
  is evaluated & approved annually

  	
   

  	
  •               Annual submission of MM Program and Work
  Plan and Evaluation.



  •               Submission of corrective action plans as
  needed.

  	
   

  	
  •               Initial onsite assessment using approved
  oversight document.



  •               Annual oversight assessment.



  •               Identification of corrective action plans
  for elements of non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  For
  each MM function delegated there must be documentation of:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.               Staff & Physician responsibilities
  related to each MM function.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2.               Appropriate and Adequate professional and
  non-professional staffing mix and decision-making responsibilities

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3.               Regular and after-hours MM process and
  communication services defined

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  4.               Interface with PacifiCare appropriately

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  5.               Data elements as required

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.               Reporting capability

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Implementation
  of corrective action plan for elements of non-compliance.

  	
   

  	
   

  	
   

  	
   

  



 


35

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Communication
  Services

  	
   

  	
  ý  Delegated

  o  Not
  delegated

  	
   

  	
  Medical
  Group (MG) provides communication services to practitioners and members
  regarding MM issues relating to inbound calls during and after business hours
  and outbound calls during business hours, in compliance with NCQA and
  PacifiCare standards.

  	
   

  	
  Reviewed
  during annual assessment.

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pre-Service
  Authorization Professional:

  

  

  Institutional

  	
   

  	
  

  

  ý  Delegated

  o  Not
  delegated

  

  ý 
  Delegated

  o  Not
  delegated

  	
   

  	
  For
  pre-service authorization the Medical Group (MG) must:

  •                  Comply with PacifiCare’s Turn Around Times
  and notification requirements, consistent gathering of appropriate
  information, and assisting in transition of care when benefits end

  •                  Follow nationally recognized medical
  necessity criteria or criteria based on sound clinical evidence

  •                  Develop and document program to perform
  pre-service authorization function of outpatient care meeting all regulatory
  and PacifiCare standards

  	
   

  	
  •                  Weekly submission of authorization/denial
  logs

  •                  Monthly submission of encounter data

  •                  Participation in census verification process

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Concurrent
  Review

  	
   

  	
  ý 
  Delegated

  o  Not
  delegated

  	
   

  	
  For concurrent review MG must:

  •                  Comply with PacifiCare’s Turn Around Times
  and notification requirements.

  •                  Follow nationally recognized medical
  necessity criteria or criteria based on sound clinical evidence

  •                  Develop and document programs to perform
  concurrent review of acute and Skilled Nursing Facility inpatients meeting
  all regulatory and PacifiCare standards, including cooperative process with
  facilities for on-site review as appropriate.

  	
   

  	
  •                  Daily submission of patient census by
  admission and discharge and Level of Care

  •                  Monthly submission of Bed Days per thousand
  members per year

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function

  



 


36

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Discharge
  Planning 

  	
   

  	
  ý  Delegated

  o  Not
  delegated

  	
   

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



  Issue
  timely and appropriate acute facility notice of noncoverage.



  Issue
  timely and appropriate Skilled Nursing Facility Notice of Non-coverage.

  	
   

  	
  Reviewed
  during annual assessment.

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Out
  Of Area (OOA) 

  	
   

  	
  o 
  Delegated

  ý  Not delegated 

  	
   

  	
  If
  not delegated, report any OOA notifications received by group.



  If
  delegated, develop and document program to perform OOA concurrent review
  meeting all regulatory and PacifiCare standards.

  	
   

  	
  If
  delegated, include OOA in weekly authorization/denial log submission 

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Case
  Management 

  	
   

  	
  ý  Delegated

  o  Not
  delegated 

  	
   

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



  If
  NOT delegated, responsible to share coordination of care with PacifiCare Case
  Managers 

  	
   

  	
  Monthly
  submission of Case Management Log

  •             ESRD

  •             Transplants

  •             Catastrophic 

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Transplants
  

  	
   

  	
  ý  Not
  delegated

  	
   

  	
  Develop
  and document Policies and Procedures to support notification to PacifiCare of
  potential transplant candidates.



  Responsible
  to provide PacifiCare with all necessary information to make medical
  determination and manage the case.

  	
   

  	
  Report
  cases immediately.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  New
  Technology 

  	
   

  	
  ý Not delegated 

  	
   

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

  	
   

  	
  Ad
  Hoc 

  	
   

  	
  N/A

  



 


37

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Retrospective
  Review



  Professional:

  

  

  

  

  

  Institutional

  	
   

  	
  

  

  ý 
  Delegated

  o  Not
  delegated

  

  

  



  ý 
  Delegated

  o  Not
  delegated

  	
   

  	
  For
  Retroactive-review of services MG must:

  •                  Comply with PacifiCare’s Turn Around Times
  and notification requirements.

  •                  Follow nationally accepted medical necessity
  criteria or criteria based on sound clinical evidence

  •                  Develop and document program to perform
  retrospective review function.

  	
   

  	
  Weekly
  submission of authorization/denial logs

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Denials

  

  Professional:

  

  

  



  Institutional

  	
   

  	
  ý 
  Delegated

  o  Not
  delegated

  

  

  

  



  ý 
  Delegated

  o  Not
  delegated

  	
   

  	
  For
  Denials of services MG must:

  •                  Comply with PacifiCare’s Turn Around Times
  and notification requirements.

  •                  Follow nationally recognized medical
  necessity criteria or criteria based on sound clinical evidence

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

  	
   

  	
  Weekly
  submission of denial logs.

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Benefit
  Interpretations

  	
   

  	
  ý  Not
  delegated

  	
   

  	
  For
  Benefit Interpretations MG must:

  •                  Comply with PacifiCare’s Turn Around Times
  and notification requirements.

  •                  Request PacifiCare interpretation when
  unable to make clear determination based on resources provided by PacifiCare
  (e.g., Benefits Manual)

  •                  Request PacifiCare determination regarding
  medical necessity when requested service appears to be of an experimental or
  investigational nature for a member who has a “life-threatening” or
  “seriously debilitating” condition as defined in the California Health &
  Safety Code (see note below)*.

  	
   

  	
  N/A

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function.

  



 


38

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Appeals

  	
   

  	
  ý 
  Not delegated

  	
   

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



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

  	
   

  	
  PacifiCare
  will provide the MG a quarterly report to show number of appeals and overturn
  rate for specific MG

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Satisfaction
  with MM Process

  	
   

  	
  ý 
  Delegated

  o  Not
  delegated

  	
   

  	
  MG
  will meet all regulatory, NCQA, and PacifiCare Standards.



  MG
  will annually gather and evaluate information about member and practitioner
  satisfaction with the MM process and address opportunities for improvement.

  	
   

  	
   

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Emergency
  Services 

  	
   

  	
  ý 
  Delegated

  o  Not
  delegated

  	
   

  	
  MG
  will meet all regulatory, NCQA, and PacifiCare Standards.



  Emergency
  policies and procedures require: 

  •                  Coverage of emergency services to screen and
  stabilize the member without prior approval where a prudent layperson, acting
  reasonably, would have believed that an emergency condition existed

  •                  Coverage of emergency services if an
  authorized representative, acting for PBHC, authorized the provision of
  emergency services. A behavioral healthcare practitioner or physician reviews
  presenting symptoms as well as the discharge diagnosis for potential denial
  of emergency services

  	
   

  	
   

  	
   

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

  •                  Annual onsite assessment to determine
  ability to perform function.

  



 


39

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Ensuring
  Appropriate Utilization

  	
   

  	
  ý 
  Delegated

  o  Not
  delegated

  	
   

  	
  MG
  will meet all regulatory, NCQA, and PacifiCare Standards.



  MG
  at least annually monitors and analyzes relevant data and takes action to
  correct any patterns of potential or actual inappropriate under- or
  over-utilization, using quantitative and qualitative data analysis.

  	
   

  	
   

  	
   

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



  •                  Annual onsite assessment to determine
  ability to perform function.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Subdelegation
  of Medical Management

  	
   

  	
  ý 
  Delegated

  o  Not
  delegated

  	
   

  	
  If
  MG subdelegates MM, MG will:



  •                  Develop detailed documentation of mutually
  agreed upon delegation agreement identifying: 

  •                  Listing of responsibilities of delegate (MG)
  &  sub-delegate;

  •                  Specific delegated activities;

  •                  Process for evaluating sub-delegate’s
  performance, and

  •                  Remedies if sub-delegate does not perform



  •                  Conduct pre-delegation evaluation



  •                  Conduct annual evaluation, including file
  review, according to NCQA’s methodology



  •                  If sub-del agreement includes the use of
  Protected Health Information (PHI), the sub-del document includes:

  •                  List of allowed uses of PHI

  •                  Description of sub-delegate safeguards to
  protect the information from inappropriate use or further disclosure

  •                  Stipulation that the delegate will ensure
  that subdelegates have similar safeguards

  •                  Stipulation that the subdelegate will
  provide individuals with access to

  	
   

  	
  Submit
  copies of subdelegation agreements to PacifiCare prior
  to subdelegation and on an annual basis

  	
   

  	
  •                  Annual assessment of sub-delegation process,
  including agreements, polices and procedures, and ongoing evaluation of
  performance, according to NCQA standards & methodology



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

  



 


40

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  their
  PHI

  •                  Stipulation that the subdelegate will inform
  the organization if inappropriate uses of the information occur

  •                  Stipulation that the subdelegate will ensure
  PHI is returned, destroyed or protected if the delegation agreement ends 

  	
   

  	
   

  	
   

  	
   

  



 


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


 


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


 


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


 












*
California Health and Safety Code Section 1370.4(a)(l)(B)(i) and (ii) and
Section 1370.4(a)(l)(C) defines the following terms: “Life-threatening” means
either or both of the following: (i) Diseases or conditions where the
likelihood of death is high unless the course of the disease is interrupted.
(ii) Diseases or conditions with potentially fatal outcomes, where the end
point of clinical intervention is survival. “Seriously debilitating,” means
diseases or conditions that cause major irreversible morbidity.


 


41

















 


CREDENTIALING DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacificCare

  Oversight

  
	
  Credentialing Program
  description and/or Policies and Procedures (P&Ps)

  	
   

  	
  ý  Delegated
o  Not
  delegated

  	
   

  	
  Full Compliance with NCQA
  Standards: 

  •      Define the scope of practitioner network to
  be cred/recred, i.e. MD, DO, DPM, DDS, DC, and behavioral health and other
  licensed independent practitioners.

  •     Define criteria and verification sources used to meet criteria 

  •     Describe the process to delegate credentialing/

  recredentialing

  •     Describe process used to ensure that credentialing and recredentialing
  are conducted in a non-discriminatory manner 

  •      Ensure confidentiality. 

  •      Describe decision making
  process,

  •      Specify practitioner
  rights, notification process and time frames.

  	
   

  	
  Submit Credentialing.
  Program annually. 



  Revised credentialing
  policies and procedures submitted at least annually.

  	
   

  	
  •                  Initial onsite assessment 

  •                  Annual oversight assessment 

  •                  Evaluate and approve written Credentialing Program 

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

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credentialing Committee

  	
   

  	
  ý 
  Delegated 



  o  Not
  delegated

  	
   

  	
  Full Compliance with NCQA
  Standards: 

   

  •      The
  Medical Group (MG) designates a credentialing committee, including a range of
  participating practitioners of different specialties, that makes
  recommendations regarding credentialing decisions using a peer review
  process. 

   

  •      The
  MG documents committee’s opportunity to review credentials of all
  practitioners and advice in all credentialing recredentialing decisions

  	
   

  	
  Annual credentialing
  program to include committee structure.

  	
   

  	
  •      Initial
  onsite assessment 

  •      Annual
  oversight assessment 

  •      Annual
  Review of Committee minutes 

  •      Annual
  review of membership 

  •      Frequency
  of meetings 

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

  



 


42

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacificCare

  Oversight

  
	
  Primary source verification of credentialing information

  	
   

  	
  ý 
  Delegated 



  o  Not delegated

  	
   

  	
  Full compliance with NCQA
  Standards regarding verification of information within 180 days prior to
  Committee approval date. Meet 100% of NCQA & regulatory body standards
  related to primary source verification of the following: 

  •     License

  •      Education
  & Training 

  •      Board
  certification

  •      Professional
  liability claims for past 5 years 



  Meet 100% of NCQA &
  regulatory body standards related to data collection of the following: 

  •      DEA/CDS 

  •      Work
  History 

  •      Hospital
  Admitting privileges, if applicable

  	
   

  	
  Submit current list of practitioners credentialed and date approved
  with quarterly report

  	
   

  	
  •      Initial
  onsite assessment 

  •      Annual
  oversight assessment 

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

  •      Annual
  audit conducted of provider’s practitioners’ credentialing files according to
  NCQA methodology.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Application/ Attestation

  	
   

  	
  ý 
  Delegated 



  o  Not
  delegated

  	
   

  	
  Full compliance with NCQA
  Standards.



  The MG application must
  include a statement regarding:

  •      Reasons
  for any inability to perform. 

  •      Lack
  of present illegal drug use.

  •      History
  of loss of license or felony conviction.

  •      History
  of loss or limitation of privileges or disciplinary activity.

  •      Current
  malpractice insurance coverage, including dates & coverage amount 

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

  •      Signed
  within 180 days prior to Committee approval date.

  	
   

  	
  Immediate submission of any
  changes to application.

  	
   

  	
  •      Initial
  onsite assessment.

  •      Annual
  oversight assessment. 

  •      Annual
  audit conducted of provider’s practitioners’ credentialing files according to
  NCQA methodology. 

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

  



 


43

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacificCare

  Oversight

  
	
  Initial
  Sanction Information

   

  	
   

  	
  ý 
  Delegated 



  o  Not delegated

  	
   

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

  •     Sanction or Limitations information on licensure,
  as appropriate, must cover the most recent 5 year period available through
  the data source:

  •      MD. DOs: NPDB, State Board
  of Medical Examiners, or Federation of State Medical Boards

  •      DCs: State Board of
  Chiropractic Examiners or the Federation of Chiropractic Licensing Boards

  •      DDSs: NPDB or State Board
  of Dental Examiners

  •      DPMs: State Board of
  Podiatric Examiners or Federation of Podiatric Medical Boards

  •      Nonphysician behavioral,
  health &  other
  independently licensed practitioners: Appropriate state agency or State Board
  of Licensure or Certification

  •     For all practitioners (except DDS): review
  of Medicare/ Medicaid sanctions,
  must cover the most recent 3-year period available through the data source:

  •      NPDB

  •      FSMB

  •      Cumulative Sanctions Report

  •      Medicare and Medicaid
  Sanctions and Reinstatement Report

  •      Federal Employees Health
  Benefits Program department record

  •      State Medicaid agency or
  intermediary and the

  	
   

  	
  None

  	
   

  	
  •      Initial onsite assessment

  •      Annual oversight assessment

  •      Annual audit conducted of
  provider’s practitioners credentialing files according to NCQA methodology.

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

  



 


44

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  Medicare
  intermediary

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial office site visit
  and medical record keeping practice review of all PCPs, OB/GYNs, and High
  Volume Behavioral Healthcare practitioners (applicable to HMO products only)

  	
   

  	
  ý 
  Delegated 

  
o  Not
  delegated

  	
   

  	
  Full compliance with NCQA 

  Standards regarding Initial site visit/medical record keeping review prior to
  the Committee approval date.

  Set standards for office
  sites and establish thresholds for acceptable performance.

  

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

  •      Physical
  accessibility

  •      Physical
  appearance

  •      Adequacy
  of waiting room and exam room space

  •      Availability
  of appointments

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

  

  Specify methodology for identification of potential high volume behavioral
  health practitioners.

  Institute actions for
  improvement with sites not meeting thresholds. Evaluate effectiveness of
  actions at least every 6 months until sites with deficiencies meet
  thresholds. Follows same procedure for an initial site visit when a PCP,
  OB/GYN, or high volume behavioral health practitioner relocates or opens a
  new site. Procedures for detecting deficiencies subsequent to the initial
  site visit, at least every six months. Reevaluates site of new deficiencies
  and institutes actions for improvement.

  

  Incorporation of this information into the credentialing process.

  	
   

  	
  On an annual 

  basis, include list of all site reviews subsequent to the initial site visit.

  	
   

  	
  •      Initial
  onsite assessment

  •      Annual
  oversight assessment

  •      Annual
  review of audit tool

  •      Annual
  audit conducted of provider’s practitioners’ credentialing files according to
  NCQA methodology.

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

  



 


45

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
  Recredentailing Primary
  source verification (PSV) 

  	
   

  	
  ý 
  Delegated 

  
o  Not
  delegated

  	
   

  	
  Full
  compliance with NCQA Recredentialing Standards regarding verification of
  information within 180 days prior to Committee approval date. Recredentialing
  must be completed within 36 months of prior credentialing or recredentialing
  activity.

  Meet
  100% of NCQA and regulatory body standards related to obtaining from
  practitioner: 

   

  •      Signed Attestation regarding 

  •      Reasons for any inability
  to perform, 

  •      lack of present illegal
  drug use

  •      History of loss or
  limitation of privileges or disciplinary activity, and

  •      Current malpractice
  insurance coverage, including dates & amount, and

  •      correctness and
  completeness of application

  Meet
  100% of NCQA and regulatory body standards related to primary source
  verification of the following: 

   

  •      License 

  •      Board certification (if
  expired or new since initial credentialing)

  •      Professional liability
  claims 

  

  Meet 100% of NCQA and regulatory body standards related to data collection of
  the following: 

   

  •      DEA/CDS 

  •      Hospital Admitting
  privileges, if applicable

  	
   

  	
  Include
  list of all practitioners recredentialed, including approval dates, on a
  quarterly basis (with quarterly report) 

   

  	
   

  	
  •      Initial
  onsite assessment 

  •      Annual oversight assessment
  

  •      Annual audit conducted of
  provider’s practitioners’ recredentialing files according to NCQA methodology.

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

  



 


46

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
  Recredentialing Sanction
  information

  	
   

  	
  ý 
  Delegated 

  
o  Not
  delegated

  	
   

  	
  Full
  compliance with NCQA Recredentialing Standards regarding verification of
  information within 180 days prior to Committee approval date. Recredentialing
  must be completed within 36 months of prior credentialing or recredentialing
  activity (as required by CMS & DMHC). 

  

  Recredentialing
  information found in credentialing files includes the following:

  •      Sanction or Limitations
  information on licensure, as appropriate, must cover the last 3-year period
  available through the data source (data that may not have come to the
  attention of the provider previously): 

  •      MD, DOs: NPDB, State Board
  of Medical Examiners, or Federation of State Medical Boards 

  •      DCs: State Board of
  Chiropractic Examiners or the Federation of Chiropractic Licensing Boards 

  •      DDSs: NPDB or State Board
  of Dental Examiners 

  •      DPMs: State Board of Podiatric
  Examiners or Federation of Podiatric Medical Boards

  •      Nonphysician behavioral
  health &  other
  independently licensed practitioners: Appropriate state agency or State Board
  of Licensure or Certification 

  •      For
  all practitioners (except DDS) review of Medicare Medicaid sanctions, must
  cover the last 3-year period available through the data source (data that may
  not have come to the attention of the provider previously): 

  	
   

  	
  None 

  	
   

  	
  •      Initial onsite assessment 

  •      Annual oversight assessment
  

  •      Annual audit conducted of
  provider’s practitioners’ recredentialing files according to NCQA
  methodology. 

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

   

  



 


47

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  •      NPDB 

  •      FSMB 

  •      Cumulative Sanctions Report
  

  •      Medicare and Medicaid
  Sanctions and Reinstatement Report 

  •      Federal Employees Health
  Benefits Program department record 

  State
  Medicaid agency or intermediary and the Medicare intermediary

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Performance Monitoring (Applicable to HMO products only)

  	
   

  	
  ý 
  Delegated 

  
o  Not
  delegated

  	
   

  	
  Full
  compliance with NCQA Recredentialing Standards. 

  

  Specify criteria/methodology for identification of potential high volume
  behavioral health practitioners. 

  

  Incorporate the
  following information into the recredentialing decision making process for
  PCPs and high volume behavioral health practitioners:

  •      Member complaints (as
  received from plan) 

  •      Information
  from quality improvement activities

  	
   

  	
  List of all recredentialing
  decisions completed on an annual basis

  	
   

  	
  •      Initial onsite assessment 

  •      Annual oversight assessment
  

  •      Annual audit conducted of provider’s practitioners’ recredentialing files according
  to NCQA methodology.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ongoing monitoring of
  Sanctions and Complaints 

  	
   

  	
  ý 
  Delegated 

  
o  Not
  delegated

  	
   

  	
  Full
  compliance with NCQA standards. 

  

  P&Ps for ongoing monitoring of sanctions and complaints include
  addressing the following sources;

  •      Medicare and Medicaid Sanctions 

  •      State Sanctions or
  limitations on licensure

  •      Complaints (as received
  from Plan)

  

  Evidence the MG collects
  and reviews information from the above-referenced sources. 

  

  MG takes action on instances of poor quality.

  	
   

  	
  New P&Ps submitted at
  least annually

  

  Notification to PacifiCare of any actions reported on a practitioner
  immediately.

  	
   

  	
  •      Initial onsite assessment 

  •      Annual oversight assessment
  

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

  



 


48

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
  Notification to Authorities
  and Practitioner Appeal
  Rights 

  	
   

  	
  ý 
  Delegated 

  
o  Not
  delegated

  	
   

  	
  Full compliance with NCQA Standards. 

  

  P&Ps for altering the conditions of the practitioner’s participation with
  PacifiCare based on quality of care of service: 

  

  P&Ps for reporting of quality deficiencies to appropriate authorities. 

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

  P&Ps
  to describe appeals process &  process
  of notifying practitioners of appeal rights. 

   

  	
   

  	
  New
  P&Ps submitted at least annually 

  

  Notification to PacifiCare of any actions reported on a practitioner
  immediately.

  	
   

  	
  •      Initial onsite assessment 

  •      Annual oversight assessment
  

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Assessment of
  Organizational Providers 

  	
   

  	
  ý 
  Delegated 

  
o  Not
  delegated

  	
   

  	
  For
  all contracted acute care hospitals, home health agencies, SNFs,
  free-standing surgical centers, and facilities providing mental health or substance
  abuse services in an inpatient, residential or ambulatory setting where the
  contract is held by the MG. 

  1.     Confirms
  good standing with State and Federal regulatory bodies (including if
  providing services to Medicare enrollees, MG must confirm provider’s
  participation in Medicare); and 

  2.     Confirms
  accreditation; or 

  3.     Conducts
  an on-site quality assessment, if there is no accreditation status; 

  4.     If a
  free-standing surgical center is not accredited, the MG must confirm Medicare
  certification (Calif. Health & Safety Code) 

  5.     And initially & at least every three
  years, confirms continued good standing of regulatory bodies, and if
  applicable, accreditation

  	
   

  	
  Submit list of contracted organizational providers on an annual basis 

  	
   

  	
  •      Initial onsite assessment 

  •      Annual assessment including
  P&Ps and random audit of files, two in each of the categories: one
  accredited, one non-accredited, as applicable 

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

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sub-Delegation of
  Credentialing 

  	
   

  	
  ý 
  Delegated 

  
o  Not
  delegated

  	
   

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

   

  •        Detailed
  documentation of mutually agreed upon delegation agreement 

  	
   

  	
  Submit copies of
  sub-delegation agreements to PacifiCare prior to

  	
   

  	
  •      Initial onsite assessment 

  •      Annual
  assessment of sub-delegation process, including 

  



 


49

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  identifying:
  



  •      Listing
  of responsibilities of delegate (MG) & sub-delegate; 



  •      Specific
  delegated activities; 



  •      Process
  for evaluating sub-delegate’s performance. and 



  •      Remedies
  if sub-delegate does not perform 



  •      If
  sub-delegation includes the use of Protected Health Information (PHI), the
  sub-delegation document includes: 

  •      List
  of allowed uses of PHI 

  •      Description
  of sub-delegate safeguards to protect the information from inappropriate use
  or further disclosure 

  •      Stipulation
  that the delegate will ensure that subdelegates have similar safeguards 

  •      Stipulation
  that the subdelegate will provide individuals with access to their PHI 

  •      Stipulation
  that the subdelegate will inform the organization if inappropriate uses of
  the information occur 

  •      Stipulation
  that the subdelegate will ensure PHI is returned, destroyed or protected if
  the delegation agreement ends 



  •      MQ
  retains right to approve/ disapprove new providers and to discipline
  providers 

  •      Pre-delegation
  evaluation 

  •      Annual
  evaluation, including 

  	
   

  	
  subdelegation and on an
  annual basis 

  	
   

  	
  agreements,
  polices and procedures, and ongoing evaluation of performance, according to
  NCQA standards & methodology 



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

   

  



 


50

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  file
  review, according to NCQA’s methodology 



  •      If
  deficiencies found, evidence of MG & sub-delegate follow up for
  opportunities for improvement 

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accessibility to
  Credentialing Files 

  	
   

  	
  ý 
  Delegated 

  
o  Not
  delegated

  	
   

  	
  Should
  any of the following provider events occur, PacifiCare shall have access to
  MG’s credentialing files to ensure practitioners are properly credentialed
  for continuity and coordination of care for members: 

  •      Bankruptcy 

  •      Termination of contract 

  •      De-delegation of
  credentialing activities 

  

  Credentialing files must
  be available, including making appropriate copies, for regulatory &
  accreditation audits.

  	
   

  	
  Immediately
  notify PacifiCare of any such provider event.

  

  As needed, provide
  PacifiCare access to MG credentialing/
  recredentialing files should any of the referenced provider events occur.

  

  Comply with requests for selected credentialing files for regulatory &/or accreditation audits. 

  	
   

  	
  •      Access MG credentialing/
  recredentialing files should any of
  the referenced provider events
  occur. 

  •      Collection
  of copies of selected credentialing/recredentialing files from MG for
  regulatory and accreditation audits, as applicable.

  



 


The Medical Group agrees to
be accountable for all responsibilities delegated by PacifiCare and will not
further delegate any such responsibilities without the prior approval by
PacifiCare. PacifiCare’s responsibilities relating to Credentialing and those
responsibilities, which PacifiCare has delegated to the Medical Group, are
outlined above.


 


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


 


PacifiCare retains the right
to approve, suspend and terminate individual practitioners, providers and
sites.


 


51

















 


CLAIMS DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  CMS Regulations 

  	
   

  	
  ý Delegated 

  
o Not delegated

  	
   

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

  •                  Claims payment turnaround times 

  •                  Appropriate reimbursement for contracted and
  non-contracted providers 

  •                  Interest payments 

  •                  Denials/denial letters 

  •                  BBA regulations 

  •                  Provider reporting 

  •                  Y2K compliance 

  	
   

  	
  Monthly

  	
   

  	
  •                  Initial onsite assessment utilizing approved
  oversight tool.

  •                  Annual oversight assessment utilizing
  approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PacifiCare Standards for
  Commercial Products 

  	
   

  	
  ý Delegated 

  
o Not delegated

  	
   

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

  •                  Claims payment turnaround times 

  •                  Appropriate reimbursement for contracted and
  non-contracted providers 

  •                  Interest payments 

  •                  Denials/denial letters 

  •                  Provider reporting 

  •                  Appropriate IBNR reserves 

  	
   

  	
  Monthly

  	
   

  	
  •                  Initial onsite assessment utilizing approved
  oversight tool.

  •                  Annual oversight assessment utilizing
  approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State Regulations 

  	
   

  	
  ý Delegated 

  
o Not delegated

  	
   

  	
  Compliance
  with State Regulations for claims processing: 

  •                  COB and TPL review 

  •                  Compliance with all Medicaid Regulations 

  	
   

  	
  N/A

  	
   

  	
  •                  Initial onsite assessment utilizing approved
  oversight tool.

  •                  Annual oversight assessment utilizing
  approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPM Requirements 

  	
   

  	
  ý Delegated 

  
o Not delegated

  	
   

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

  •                  COB identification 

  •                  Debarred providers suspended

  	
   

  	
  N/A

  	
   

  	
   

  



 


52

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  Standards for Employer
  Performance Guarantees 

  	
   

  	
  ý Delegated 

  
o Not delegated

  	
   

  	
  Meet Employer performance
  guarantee measurements for claims processing and payment.

  	
   

  	
  As required by employer 

  	
   

  	
  •                  Initial onsite assessment utilizing approved
  oversight tool.

  •                  Annual oversight assessment utilizing
  approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eligibility and Benefits 

  	
   

  	
  o Delegated 

  
ý Not delegated

  	
   

  	
  Medical
  Group must:

  Verify
  eligibility at time of claim review 

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

   

  	
   

  	
  N/A

  	
   

  	
  •                  Initial onsite assessment utilizing approved
  oversight tool.

  •                  Annual oversight assessment utilizing
  approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financial Accounting 

  	
   

  	
  ý Delegated 

  
o Not delegated

  	
   

  	
  Meets
  PacifiCare financial accounting requirements and solvency requirements including
  those for: 

  •                  Financial statements 

  •                  IBNR reserves 

  •                  Processes for expense reduction 

   

  	
   

  	
  Annually

  	
   

  	
  •                  Initial onsite assessment utilizing approved
  oversight tool.

  •                  Annual oversight assessment utilizing
  approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Check Production Processes 

  	
   

  	
  ý Delegated

  



  	
   

  	
  Compliance with timely
  claims payments and IRS requirements

  	
   

  	
  N/A

  	
   

  	
  •                  Initial onsite assessment utilizing approved
  oversight

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Staffing 

  	
   

  	
  ý Delegated 

  
o Not delegated

  	
   

  	
  Staffing sufficient to
  support claims processing

  	
   

  	
  N/A

  	
   

  	
   

  



 


53

















 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  hours
  of operation 

  	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Audit Reporting 

  	
   

  	
  ý Delegated 

  
o Not delegated

  	
   

  	
  Appropriate
  and adequate audit reporting available including: 

  •                  Reports provided for audit 

  	
   

  	
  As needed for audits 

  	
   

  	
  •                  Initial onsite assessment utilizing approved
  oversight tool.

  •                  Annual oversight assessment utilizing
  approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Encounter Data 

  	
   

  	
  ý Delegated 

  
o Not delegated

  	
   

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

  	
   

  	
  Monthly

  	
   

  	
  •                  Initial onsite assessment utilizing approved
  oversight tool.

  •                  Annual oversight assessment utilizing
  approved oversight tool.

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

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

  



 


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


 


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


 


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


 


54

















 


QUALITY IMPROVEMENT DELEGATION GRID


 


	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
  Program Structure 

  	
   

  	
  Not Delegated 

  	
   

  	
  Medical
  Group is required to maintain the following: 

  QM
  Program 

  Structure
  to carry out Quality Mgmt.  Program 

  QM
  Program outlining structure and content 

  Program
  description must be evaluated annually and updated as necessary 

   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Program Operations 

  	
   

  	
  Not Delegated 

  	
   

  	
  Participate
  and cooperate in PacifiCare’s Quality Improvement program 

  Collect
  data for PacifiCare’s Quality Improvement Activities 

  Carry
  out corrective actions required by PacifiCare 

  Have
  a peer review process Participate in PacifiCare Quality Improvement
  Committee, (if requested) 

  Provide
  PacifiCare access to Medical Records

  Identify
  barriers to improving key initiatives 

  Implement interventions
  Comply with PacifiCare’s confidentiality standards 

  	
   

  	
   

  	
   

  	
   

  



 


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


 


55

















 


PACIFICARE OF CALIFORNIA


 


MEDICAL GROUP/IPA SERVICES AGREEMENT


(SPLIT CAPITATION)


 


NORTHWEST
ORANGE COUNTY MEDICAL GROUP


 


EXHIBIT 5


 


DIVISION OF FINANCIAL RESPONSIBILITY


(This Exhibit 5 is an integral part of this Agreement)


 


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


 


Division of Financial Responsibility


 


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


 


	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  	
   

  	
  PacifiCare

  	
   

  
	
  Allergy - Serum – OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Allergy - Testing & Tx - OP - Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Ambulance (Air and Ground) – OP. in Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Ambulance (Air and Ground) – Out of Area

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Amniocentesis – OP - Fac & Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Anesthesiology – IP & OP – Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Autologous Blood Services - OP - Fac &
  Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Brofeedback (Medically Necessary) – OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Blood and Blood Products (Incl. Prof.)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Detox) - IP & OP –
  Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Detox) - IP & OP –
  Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - IP – Fac – CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - IP – Fac – SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - IP – Prof. –
  CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - IP – Prof. –
  SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - OP – Fac – CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - OP – Fac – SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - OP – Prof. –
  CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemical Dependency (Rehab) - OP – Prof. –
  SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chemotherapy - IP & OP - Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic – Medical - OP - Fac &
  Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Chiropractic – Supplemental - OP - Fac
  & Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Circumcision - OP - Fac & Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Diabetic Management Supplies (to include
  insulin pumps, Glucometer and test strips)

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  
	
  Diagnostic Tests (to include contrast
  medium) - OP - Fac & Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Dialysis (to include Hemodialysis and
  Peritoneal Dialysis) - IP & OP – Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Dialysis (to include Hemodialysis and
  Peritoneal Dialysis) - Op – Fac (including all drugs)

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  
	
  DME (including apnea monitors), Prosthetics
  (including surgically implanted) Ortho?cs, artificial limbs – IP

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  
	
  DME (including apnea monitors), Prosthetics
  (including surgically implanted) Ortho?cs, artificial limbs – OP

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  
	
  Emergency Room - OP – Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Emergency Room - QP – ER Phys

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  



 












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


 


56

















 


	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  	
   

  	
  PacifiCare

  	
   

  
	
  Endoscopic Diagnostic Studies (Performed
  without Biopsies)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Endoscopic Diagnostic Studies (with
  Biopsies)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Abortions (Elective) - IP
  and OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Abortions (Elective) - IP
  and OP - Fac.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Contraceptive Devices –
  Insertion and Removal - OP - Prof.

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  
	
  Family Planning - All “Legend”
  Contraceptives (e.g. Norplant/IUD) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Contraceptive Devices –
  Prescription - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Infertility
  Procedures/Testing - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Infertility
  Procedures/Testing - OP - Fac.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Infertility Testing - OP
  - Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Sterilization - IP &
  OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Sterilization - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Family Planning - Sterilization - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Fetal Monitoring - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Fetal Monitoring - IP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Health Education - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Health Eval/Physical

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing Aids/Molds - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hearing Screening (Audiological Evaluation)
  - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Home Health Care / Homebound Infusion
  Therapy - OP - Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hosp Based Phys Interpretative Sys (to
  include Radiology & Pathology - IP & OP - Prof

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospice Services - Fac. - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospice Services – Prof. – CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Hospitalization Services (to include
  Medical and Surgical) - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Immunizations & Inoculations
  (Preventative) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Infusion Therapy - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Injectables - Not Part of Outpatient
  Pharmacy Benefits AND Not Part of PacifiCare’s Self- Injectable Carve-Out
  Program (SICOP) - OP

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  
	
  Laboratory Pathology (Diagnostic Only) - OP
  - Fac and Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Laboratory/Pathology - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Lithotripsy - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Lithotripsy - OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Medication - Prescription - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  MENTAL HEALTH: AB88 Benefits (Mental Health
  Panty applies to CO only)

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  
	
  Mental Health - IP & OP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP & OP - Prof. - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  MENTAL HEALTH: Secure Horizons and
  Commercial (non AB88 Benefits)

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  
	
  Mental Health - IP and OP - Fac - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP and OP - Fac. - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP and OP - Prof. - CO

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Mental Health - IP and OP - Prof. - SH

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Observation Room - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Oral Medications (NOT Part of the
  Outpatient Pharmacy Benefit) -OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Ostomy/Colostomy Supplies - IP & OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Out of Area (Urgent and Emergent
  Non-Referred Covered Services) - IP & OP - Fac

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  
	
  Out of Area (Urgent and Emergent
  Non-Referred Covered Services) - IP & OP - Prof.

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation Therapy and Related Professional
  Services - IP & OP - Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation Therapy Treatment - IP - Fac
  (Includes Free Standing)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiation Therapy Treatment - OP - Fac
  (Includes Free Standing)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiology (Diagnostic Theraputic &
  Nuclear Medicine) - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiology (Diagnostic Theraputic &
  Nuclear Medicine) - IP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  



 












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


 


57

















 


	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  	
   

  	
  PacifiCare

  	
   

  
	
  Radiology (Diagnostic Theraputic &
  Nuclear Medicine: - Outpatient Surgery

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Radiology - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Reconstructive Surgery - IP & OP -
  Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Reconstructive Surgery - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Rehabilitation - Cardiac/OT/PT/RT/ST - OP -
  Fac & Prof., IP Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Rehabilitation - Cardiac/OT/PT/RT/ST – IP -
  Fac.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Skilled Nursing Facility - IP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Sleep Studies – OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Surgical Procedures - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Surgical Procedures - IP and OP - Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Surgical Implants and Devices IP and OP
  (Permanent, Mechanical and Surgically Implanted AND Includes Corneal
  Transplants/OLs)

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transfusions (including Blood and Blood
  Products) - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant (excludes corneal): OP and IP
  Professional Services

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Transplant (excludes corneal): OP and IP
  Facility

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Urgent Care - OP - Fac & Prof

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  Vision - Medical Treatment (to include
  cataract treatment related items) - OP - Prof.

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  	
   

  ***

  	
   

  
	
  Vision - Refraction for Contact
  Lenses/Frames - Op - Prof.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

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

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  



 












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


 


58

















 


PACIFICARE OF CALIFORNIA


 


MEDICAL GROUP IPA SERVICES AGREEMENT

(SPLIT CAPITATION)


 


EXHIBIT 6


 


QUALITY INCENTIVE PROGRAM


(This Exhibit 6 is an integral part of this Agreement)


 


QUALITY INCENTIVE PROGRAM FOR SECURE HORIZONS MEMBERS


 


1.                  Introduction.


 


This
Exhibit sets forth the terms of PacifiCare’s quality incentive program (the
“Quality Incentive Program” or the “QIP”). The program is designed to
compensate Medical Group for efforts it takes to improve the quality of
services provided to PacifiCare Members as reflected by data measured by
PacifiCare, all as described below.


 


The
Quality Incentive Program provides additional compensation to physician groups
which are successful in improving and maintaining certain levels of patient
safety, patient satisfaction and quality of care.  The Quality Incentive Program tracks specific performance
measures and calculates payments to the Medical Group based on aggregating and
paying specific amounts for separate performance measures, as described in this
Exhibit.


 


2.                  Definitions.


 


In
addition to other terms defined in this Exhibit or in the Agreement, the
following terms shall have the meanings set forth below:


 


2.1                                 Eligible Membership shall be the monthly Secure Horizons Members
reflected on the PacifiCare Eligibility List for the month preceding the month
in which the applicable QIP Payment will be made.  The determination of Eligible Membership shall not be changed at
any later time to reflect retroactive membership adjustments otherwise made by
PacifiCare in connection with its Managed Care Plans.  Additionally.  Eligible
Membership shall exclude Secure Horizons Members who had been transferred to
Medical Group in a group transfer from another PacifiCare Participating Provider
within six (6) months prior to the date of the applicable QIP Payment.


 


2.2                                 Measurement Component shall mean the Measures
described in Section 3, QIP Table.


 


2.3                                 Measurement Period is the period for which PacifiCare shall
measure data in order to calculate the applicable QIP Payment.  The Measurement Period shall vary as defined
in Section 3, QIP Table.


 


2.4                                 PacifiCare Hospital Quality Index is a public quality report of PacifiCare’s
contracted hospitals which measures specific areas related to cardiac care,
obstetrics, general surgery, gynecology, cancer treatment, medical conditions
and pediatric care, as well as satisfaction and utilization, and is based on
data and criteria derived from publicly available resources, including, but not
limited to, California’s Office of Statewide Health Planning and Development.


 


2.4                                 PacifiCare Member Satisfaction Survey is the PacifiCare Member survey which is
conducted annually by an independent research company and provides comparative
information on physician groups based on Members’ evaluations and assessments
of their respective physician group’s services.


 


59

















 


2.5                                 PacifiCare Quality Index is the public quality report of PacifiCare’s
contracted physician groups and IPAs which rates such physician groups and IPAs
on measures related to clinical and service quality, affordability, and
administrative accuracy.


 


2.7                                 Performance Target is the performance target for each
Measurement Component as defined in the Table. 
Performance Targets are determined at the sole discretion of PacifiCare.


 


2.8                                 PMPM Component Payment shall be the amount attributable to each
Measurement Component as specified in the QIP Table and shall be earned by
Medical Group only if Medical Group meets or exceeds the Performance Target for
the applicable Measurement Component.


 


2.9                                 PMPM Payment Rate shall be the total of the PMPM Component
Payments earned by Medical Group for the applicable Measurement Period.


 


2.10                           Provider Profile is the public quality report of PacifiCare’s
contracted physician groups and IPAs which is based on various measures,
provides detailed information, and enables these physician groups and IPAs to
make meaningful comparisons of their performance with other such providers in the
network.


 


2.11                           QIP Payments are the quarterly payments made pursuant to the Quality Incentive
Program.


 


2.12                           Table means the QIP Table or tables set forth below in Section 3, specifying
the Measurement Components, Performance Targets, Measurement Period, Data
Source.  PMPM Component Payment and
Members Measured.


 


2.13                           Members Measured is described in the Table.  For Measurement Components in which Members
Measured is a combination of Commercial and Secure Horizons membership,
PacifiCare shall perform calculations utilizing a weighted average of the
Commercial and Secure Horizons membership.


 


3.                  2004 QIP Table


 


	
  Measure

  	
   

  	
  Performance
  Target

  	
   

  	
  Measurement

  Period

  	
   

  	
  Data
  Source

  	
   

  	
  PMPM
  Component

  Payment from SH

  	
   

  	
  Members
  Measured

  
	
  Appropriate
  Care

  	
   

  	
  55%-64.9%
  to achieve 50% of PMPM payment- 65% or greater to achieve 100% of PMPM
  payment

  	
   

  	
  Calendar
  year 2002

  	
   

  	
  PacifiCare
  Hospital Quality Index

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Patient
  Safety

  	
   

  	
  55%-64.9%
  to achieve 50% of PMPM payment- 65% or greater to achieve 100% of PMPM
  payment

  	
   

  	
  Calendar
  year 2002

  	
   

  	
  PacifiCare
  Hospital Quality Index

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Patient
  Satisfaction

  	
   

  	
  55%-64.9%
  to achieve 50% of PMPM payment- 65% or greater to achieve 100% of PMPM
  payment

  	
   

  	
  Calendar
  year 2002

  	
   

  	
  PacifiCare
  Hospital Quality Index

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Utilization

  	
   

  	
  55%-64
  9% to achieve 50% of PMPM payment- 65% or greater to achieve 100% of PMPM
  payment

  	
   

  	
  Calendar
  year 2002

  	
   

  	
  PacifiCare
  Hospital Quality Index

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Breast
  Cancer screening

  	
   

  	
  71.3%
  -73.6% screening performed on members measured to achieve 50% of PMPM
  payment. 73 7% or greater to achieve 100% of PMPM payment

  	
   

  	
  24
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons females age 52-69 assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cervical
  Cancer Screening

  	
   

  	
  57
  3%-02.5% screening performed on members measured to achieve 50% of PMPM
  payment. 62 6% or greater to achieve 100% PMPM payment

  	
   

  	
  36
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  Commercial
  females age 21 -64 assigned to PMG

  



 


60

















 


	
  Measure

  	
   

  	
  Performance
  Target

  	
   

  	
  Measurement

  Period

  	
   

  	
  Data
  Source

  	
   

  	
  PMPM
  Component

  Payment from CO

  	
   

  	
  Members
  Measured

  
	
  Childhood
  Immunizations  

  	
   

  	
  40%-49
  9% of recommended Immunizations performed on members measured to achieve 50%
  of PMPM payment. 50% or greater to achieve 100% PMPM Payment  

  	
   

  	
  12
  month  period ending six months prior to payment period 

  	
   

  	
  PacifiCare
  Quality Index  and Provider Profile 

  	
   

  	
  $

  	
  0.1429 

  	
   

  	
  Children
  age 2  

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HgbAIc
  Testing - Diabetes  

  	
   

  	
  76.8%
  - 80.8% testing performed on members measured to achieve 50% of PMPM payment.
  80 9% or greater to achieve 100% of the  PMPM payment 

  	
   

  	
  12
  month period ending  six months prior to payment period 

  	
   

  	
  PacifiCare
  Quality
  Index and
  Provider Profile 

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  Diabetic
  Members age 31 or older All Commercial and Secure Horizons assigned to PMG 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I
  DL Cholesterol Testing  Diabetic 

  	
   

  	
  66.4%
  -70.6% testing performed on members measured to achieve 50% of PMPM payment.
  70.7% or greater to achieve 100% of the PMPM payment  

  	
   

  	
  12
  month period ending  six months prior to payment period 

  	
   

  	
  PacifiCare
  Quality
  Index and
  Provider Profile 

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons  assigned to PMG 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IDI
  Cholesterol Testing - CAD

  	
   

  	
  54.5%-68.5%
  testing performed  on members measured to achieve 50% of PMPM
  payment. 68. 6% or greater to  achieve
  100% of the PMPM payment 

  	
   

  	
  12
  month  period ending six months prior to payment period 

  	
   

  	
  PacifiCare
  Quality
  Index and
  Provider Profile 

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons  assigned to PMG 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Use
  of Appropriate Medication for Asthma

  	
   

  	
  75%-77
  4% of asthmatics measured received appropriate medication to achieve 50% of
  PMPM payment, 77 5% or greater to achieve 100% of the PMPM payment

  	
   

  	
  12
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  Commercial
  Members age 5-56 assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Anti-depressant
  Medication Management Option 3

  	
   

  	
  45.6%-49.9%
  of members with depression diagnosis measured received medication option 3 to
  achieve 50% of PMPM payment, 50% or greater to achieve 100% of the PMPM
  payment

  	
   

  	
  12
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Potentially
  Avoidable Hospitalizations

  	
   

  	
  7.2%-5.3%
  of members hospitalized for a potentially avoidable condition to achieve 50%
  of PMPM payment, 52% or less to achieve 100% of the PMPM payment

  	
   

  	
  12
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Inpatient
  Readmission

  	
   

  	
  2.8%-2.1%
  of members readmitted within 30 days of an admission for same MDC (excluding
  maternity care) to achieve 50% of PMPM payment. 2.0% or less to achieve 100%
  of the PMPM payment

  	
   

  	
  12
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Primary
  Care Access Complaints (PTMPY)

  	
   

  	
  5.9%-5.0%
  of members dissatisfied with primary care access to achieve 50% of PMPM
  payment. 4 9% or less to achieve 100% of the PMPM payment

  	
   

  	
  12
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Use
  of Preferred Antibiotics

  	
   

  	
  64%
  -69.4% of members tested received preferred antibiotics to achieve 50% of
  PMPM payment. 69.5% or greater to achieve 100% of the PMPM payment

  	
   

  	
  12
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  All
  Commercial and Secure Horizons Members 18 and older assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Satisfaction
  with PMG

  	
   

  	
  64.2%-68%
  overall satisfaction level to achieve 50% of PMPM payment, 68.1% or greater
  to achieve 100% PMPM payment

  	
   

  	
  2003
  Member Satisfaction Survey

  	
   

  	
  PacifiCare
  Member Satisfaction Survey

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  Commercial
  Members assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Satisfaction
  with PCP

  	
   

  	
  74.7%-77.1%
  overall satisfaction level to achieve 50% of PMPM payment, 77.2% or greater
  to achieve 100% of PMPM payment

  	
   

  	
  2003
  Member Satisfaction Survey

  	
   

  	
  PacifiCare
  Member Satisfaction Survey

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  Commercial
  Members assigned to PMG

  



 


61

















 


	
  Measure

  	
   

  	
  Performance
  Target

  	
   

  	
  Measurement

  Period

  	
   

  	
  Data
  Source

  	
   

  	
  PMPM
  Component

  Payment from SH

  	
   

  	
  Members
  Measured

  
	
  Satisfaction
  with Specialist  

  	
   

  	
  71.3%-
  73.5% overall satisfaction  level to achieve 50% PMPM payment, 73.6% or
  greater to achieve 100% PMPM payment 

  	
   

  	
  2003
  Member  Satisfaction Survey 

  	
   

  	
  PacifiCare
  Member Satisfaction Survey 

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  Commercial
  Members  assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Satisfaction
  with Referral Process  

  	
   

  	
  64.9%-
  68.1% overall satisfaction level to achieve 50% PMPM  payment. 68.2% or
  greater to achieve 100% PMPM payment 

  	
   

  	
  2003
  Member Satisfaction  Survey 

  	
   

  	
  PacifiCare
  Member  Satisfaction Survey 

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  Commercial
  Members assigned to PMG  

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PCP
  Communicates  Effectively 

  	
   

  	
  58.3%-60%
  overall satisfaction  level to achieve 50% PMPM payment. 60.1% or
  greater to achieve 100% PMPM payment 

  	
   

  	
  2003
  Member  Satisfaction Survey 

  	
   

  	
  PacifiCare
  MemberSatisfactionSurvey

  	
   

  	
  $

  	
  0.1429

  	
   

  	
  Commercial
  Members assigned to PMG

  



 


4.                  Calculation and Payment of QIP Payments.  The
following calculations and payment mechanisms shall apply:


 


(a)                                  Payment Frequency.  QIP
Payments, if earned, shall be paid to Medical Group quarterly.  The QIP Payments shall be made together with
Medical Group’s Capitation Payment for the months of July 2004. October 2004,
January 2005, and April 2005. Payments will be based upon performance for the
measurement periods specified in the table above.


 


(b)                                 Payment Calculation.  Each
quarterly QIP Payment shall equal: the Eligible Membership multiplied by three
(3), the product of which shall be multiplied by the PMPM Payment Rate.


 


(c)                                  Criteria for Determining QIP Payment
Eligibility.  In order to comprehensively assess Medical
Group’s improvements in the Measurement Components, data on services provided
to both Commercial Health Plan Members and Secure Horizons Health Plan Members
will be measured in connection with the Quality Incentive Program.  However, the Quality Incentive Program is
solely a component of the compensation payable to Medical Group Members for
Covered Services provided to Secure Horizons Members.  Accordingly, quarterly QIP Payments shall be added to the monthly
Capitation Payments payable for Secure Horizons Members for the applicable
month (as provided at subparagraph 4(a), above) and shall be deemed a payment
for the provision of Covered Services provided to Secure Horizons Members.


 


5                                          QIP Payments Final. 
PacifiCare’s calculation of the QIP Payment shall be final.  Medical Group recognizes that the
measurement of the QIP data is subject to variation and reasonable statistical
and operational error.  Medical Group
acknowledges that PacifiCare would not be willing to offer the Quality Incentive
Program if PacifiCare’s calculation of the QIP Payments would expose PacifiCare
to increased risk of disputes and litigation arising out of PacifiCare’s
calculation of the QIP Payment. 
Accordingly, in consideration of PacifiCare’s agreement to offer the
Quality Incentive Program to Medical Group, Medical Group agrees that Medical
Group will have no right to dispute PacifiCare’s determination of the QIP
Payment, including determination of any data or the Eligible Membership.


 


6                                          QIP Programs for Future Periods. 
PacifiCare in its sole and absolute discretion may implement quality
incentive programs for periods from and after January 1, 2005. Any such
programs shall be on terms determined by PacifiCare.  PacifiCare currently intends to provide for a Quality Incentive
Program for calendar year 2005. Until PacifiCare and Medical Group enter into a
written agreement with respect to any such new program for calendar year 2005,
or thereafter, no such program shall be binding upon PacifiCare.


 


7                                          Cancellation and Termination of QIP.  The
Quality Incentive Program shall terminate at such time as Medical Group is no
longer assigned with an Eligible Membership of at least one thousand (1,000)
Commercial Members and at least one hundred (100) Secure Horizons Members.  In the event of such termination, the QIP
Payments shall be prorated by changing the multiple “3” in Paragraph 4(b) above
to be the number of whole months between the last quarterly QIP Payment and the
month of termination.  (Example: Last
QIP Payment is July 2004 and the termination date is September 2004, the “3” in
Paragraph 4(b) would be changed to “2”.)


 


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1.                                       Effect of Termination of Agreements.  In
the event of the termination of the Agreement, for any reason, no QIP Payments
shall be  earned or made following
termination of the Agreement.


 


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PACIFICARE OF CALIFORNIA


 


MEDICAL GROUP/IPA SERVICES AGREEMENT

(SPLIT CAPITATION)


 


EXHIBIT 9


 


PACIFICARE’S INJECTABLE/CHEMOTHERAPY CARVE-OUT PROGRAM


(ICCOP)

(This Exhibit 9 is an integral part of this Agreement)


 


October 31, 2003


 


PacifiCare of California

Network Management

5757 Plaza Drive, #150

Cypress, CA 90630

Attention: Network Management


 


Dear Network Management,


 


As part of the Northwest
Orange County Medical Group (“Medical Group”) negotiations with PacifiCare of
California (“PacifiCare”) regarding the Health Services Agreement (“Agreement”)
between Medical Group and PacifiCare to which this letter will be attached as
Exhibit 5, Medical Group wishes to accept financial risk, for the remaining
term, of the Agreement for certain injectable medications as more specifically
indicated in the Agreement, as amended. 
Pursuant to California Health and Safety Code Section 1375.8, this
letter confirms Medical Group’s request to accept financial risk for specific
categories of injectable medications as specified in the Agreement, as amended,
including but not limited to the Division of Financial Responsibility and all
applicable Attachments and Exhibits.


 


As an authorized
representative of Medical Group, I hereby certify Medical Group’s intention to
retain the financial risk for certain injectable medications.


 


Regards,


 


 


	
  /s/ James P. Agronick

  	
   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
  Chief Executive Officer

  	
   

  
	
  Title

  	
   

  
	
   

  	
   

  
	
  11/3/03

  	
   

  
	
  Date

  	
   

  



 


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