Document:

Exhibit 10.155

 

 

AMENDMENT
NUMBER 1 TO

MEDICAL
GROUP/IPA SERVICES AGREEMENT

(Split
Capitation)

 

This
Amendment Number 1 to Medical Group/IPA
Services Agreement (the “Amendment”) is entered into effective the
1st day of January, 2003, 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 (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
for periods commencing January 1, 2003.

 

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

 

1.                               CMS.
Throughout the Agreement, references to “HCFA” are now changed to “CMS” to
reflect the agency’s new name, the Centers for Medicare and -Medicaid Services.

 

2.                                 DMHC.
Throughout the Agreement, references to “DOC” are now changed to “DMHC” to
reflect the agency’s new name, the Department of Managed Health Care.

 

3.                                Medical
Management. Throughout the Agreement, references to “Utilization
Management” (“UM”) are replaced with “Medical Management” (“MM”).

 

1.1                       The following Sections of the
Agreement are hereby added:

 

ARTICLE 1

DEFINITIONS

 

1.34                    CMS is
the Centers for Medicare and -Medicaid Services, an administrative agency of the
United States Government, responsible for administering the Medicare program.

 

1.35        DMHC
is the California Department of Managed Health Care.

 

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

 

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

 

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1.37                   National
Preferred Transplant Networks (“NPTN”) is the national preferred
referral network of hospitals, professionals, ancillary, and other
Participating Providers that have been selected by PacifiCare (based on various
criteria including quality, performance levels, and outcomes) to provide to
PacifiCare Members Covered Services consisting of specific transplant services
as set forth in the applicable NPTN Agreement by and between PacifiCare and the
NTPN Participating Providers.

 

1.38                   Referral
Services shall be those Covered Services, which are not Primary Care
Services, and are provided by a Participating Provider upon referral from
Medical Group, in accordance with the requirements of the PacifiCare MM
Program.

 

1.39                   Standard
Service Capitation Amount. 
The Standard Service Capitation amount is the average monthly per member
per month Capitation Payment based on the age/gender/benefit factors, prior to
adjustments.  The Standard Service
Capitation Amount is found on the monthly capitation report.

 

1.2                       The following
Sections of the Agreement are hereby deleted and replaced in their entirety, to
read as follows:

 

ARTICLE 1

DEFINITIONS

 

1.8                         Covered
Services are those medically necessary health care services,
supplies and benefits which are required by a Member as determined by Medical
Group, PacifiCare or pursuant to an independent third party review in
accordance with the Member’s Managed Care Plan and PacifiCare’s Quality
Improvement Program and Medical Management Program.  Covered Services include, which services may include experimental
services that are either described as Covered Services in the Subscriber Agreement
or are deemed medically necessary by PacifiCare or the applicable independent
external review agent designated in accordance with applicable State and
Federal Law.  For purposes of this
Agreement, “medically necessary” shall have the meaning set forth in the
applicable Subscriber Agreement.

 

1.9                         Division
of Financial Responsibility (DFR) is the matrix for each Managed
Care Plan which specifies the financial responsibility for Covered Services
between PacifiCare, Medical Group and the Hospital Incentive Program.  Experimental services that are Covered
Services per the definition above shall have the financial responsibility
described in the DFR.  The Division of
Financial Responsibility is an integral part of this Agreement.

 

1.11                   Emergency
Services are Covered Services provided in a hospital emergency
facility or comparable facility to evaluate, treat and stabilize a medical
condition of a recent onset and severity, including, without limitation, severe
pain, that would lead a prudent layperson, possessing an average knowledge of
medicine and health, to believe that his or her condition, sickness, or injury
is of such a nature that failure to get immediate medical care could result in:
(i) placing the Member’s health - in serious jeopardy; (ii) serious

 

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impairment
to bodily functions; (iii) serious dysfunction of any bodily organ or part;
(iv) serious disfigurement; or (v) in the case of a pregnant woman, serious
jeopardy to the health of the fetus. The final determination of whether
Emergency Services were required shall be made by the PacifiCare medical
director or designee, subject to appeal under the applicable Member appeals
procedure [or pursuant to the Dispute Resolution Procedure and Arbitration proceedings
of Section 7.5 of this Agreement.]

 

1.17      Medical Group Service Area is the
geographic area within which Medical Group provides and arranges for Medical
Group Services as defined in Exhibit 1 to this Agreement.

 

1.24      Premium is the premium received by
PacifiCare each month, excluding amounts to pay broker and agent
commissions/compensation, premium taxes and premiums for Supplemental Benefits
as defined in the applicable Product Attachment.

 

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

 

1.3        The following
Sections of the Agreement are hereby deleted in their entirety:

 

ARTICLE 1

DEFINITIONS

 

1.33      Utilization Management ("UM")
Program.

 

2.1        The following
Sections of the Agreement are hereby added:

 

ARTICLE 2

DUTIES OF MEDICAL GROUP

 

 

2.14      Provide Medical Services. With the
prior approval of PacifiCare (except in the case of Urgently Needed Services
and Emergency Services), Medical Group shall arrange any necessary Referral
Services to PacifiCare's selection of Participating Providers for Medical Group
Members (which shall be shown on the PacifiCare list of providers of Referral
Services). [Should Medical Group direct Referral Services for Members to
providers other than those on PacifiCare's list of providers of Referral
Services and make such referral without PacifiCare 's prior approval, Medical
Group understands and accepts that Medical Group may be responsible for any
increased costs of PacifiCare for professional or facility services not
provided in accordance with the foregoing, for an amount during a calendar year
of up to twenty percent (20%) of the Medical Group's total capitation payments
from PacifiCare.] If PacifiCare incurs increased costs for Covered Services as
a result of the foregoing, PacifiCare will provide written notification to
Medical Group of such occurrence and Medical Group agrees that PacifiCare may

 

 

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deduct the amount of such increased
costs from any future Capitation Payments or amounts otherwise owed to Medical
Group  under this Agreement.  Furthermore, PacifiCare may determine that
such failure constitutes material breach of this Agreement.  Medical Group may address any objection to
PacifiCare’s determination of increased costs according to the Dispute
Resolution Procedures described in this Agreement.  Should Medical Group prevail in any Dispute Resolution Procedure,
PacifiCare shall refund the amount of any overturned deduction to Medical Group
within forty-five (45) days following the resolution of the dispute.  Further, PacifiCare shall refund any deductions
in excess of twenty percent (20%) of PacifiCare’s total capitation payments to
Medical Group/Hospital in any single calendar year.

 

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

 

2.3.5                 Adverse
Changes in Capacity. 
Medical Group and its Participating Providers will continue to accept
Members enrolled by PacifiCare for so long as Medical Group and its
Participating Providers have the capacity to provide and arrange Covered
Services under this Agreement and for so long as Medical Group continues to
accept new patients from any HMO or other prepaid health plan.  Medical Group shall provide at least ninety
(90) calendar days’ prior written notice to PacifiCare of any significant
changes in the capacity of Medical Group to provide or arrange Covered Services
that would prevent Medical Group from accepting additional Members, Medical
Group shall use reasonable efforts to eliminate or remedy any condition which
results in a significant adverse change in capacity.  A significant change in capacity includes, without limitation,
the following: (i) inability of Medical Group to properly serve additional
Members due to a lack of Primary Care Physicians or other Participating Providers;
(ii) inability of any one of Medical Group’s Primary Care Physicians or other
Participating Providers to serve additional Members; or (iii) closure of any
Medical Group Facility.

 

PacifiCare may continue to enroll
Members with Medical Group until the expiration of the notice period required
under this Section, and in such event, Medical
Group and its Primary Care Physicians and other Participating Providers

 

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shall continue to
accept such Members.  PacifiCare shall
discontinue the enrollment of Members with Medical Group upon expiration of the
notice period required under this Section until such time, if any, that Medical
Group provides written notification to PacifiCare that it has the capacity to
accept additional Members.

 

In addition to the foregoing, if
Hospital advises PacifiCare that it is unable to serve additional Members, in
accordance with the notice provisions of
Hospital’s agreement with PacifiCare, (the “Hospital Agreement”), PacifiCare
shall cease enrolling new Members with Medical Group upon expiration of the
notice period set forth in the Hospital Agreement until the Hospital provides
PacifiCare with written notification that the Hospital has the capacity to
accept additional Members in the applicable Managed Care Plan.

 

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

 

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

 

2.4.5                  Performance
of Subcontract Rights. 
Medical Group’s subcontracts shall require its Participating Providers
who are independent contractors to agree to perform their obligations under
their subcontract for the benefit of PacifiCare in the event of dissolution or
Insolvency of Medical Group, in the event of termination of this Agreement by
PacifiCare for cause pursuant to Section 6.2.2 or in the event of termination
by PacifiCare pursuant to Section 6.3. 
Such obligation shall continue through the continuing care period
provided by this Agreement.  Medical
Group’s subcontracts shall provide that in the event PacifiCare exercises such
option, Medical Group’s subcontractors agree to accept payment from PacifiCare,
as payment in full, at rates which are the lesser of the Cost of Care or the
rate set

 

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forth in the applicable
subcontract.  To the extent Medical
Group’s subcontracts do not comply with the requirements of this Section 2.4.5
as of the date this Agreement is executed and delivered, Medical Group shall
cause its subcontracts to be amended to comply with the forgoing by March 31,
2003.  PacifiCare shall be obligated to
pay Medical Group’s Participating Providers only for such periods as PacifiCare
specifically elects, in writing, to access Medical Group’s subcontracts.

 

2.5                         Acceptance
and Transfer of Members. 
Medical Group and its Participating Providers may not impose any limitations
on the acceptance of Members for care or treatment that are not imposed on
other patients.  PacifiCare, Medical
Group and its Participating Providers shall not request, demand, require or
seek directly or indirectly the transfer, discharge or removal of any Member
for reasons of Member’s need for, or utilization of, Covered Services, except
in accordance with the procedures established by PacifiCare for such
action.  Medical Group and its
Participating Providers shall not refuse or fail to provide or arrange Covered
Services to any Member.

 

PacifiCare and Medical Group shall
exercise reasonable efforts in following the procedures for transfer, discharge
or removal of Members as set forth in the Provider Manual.  Nevertheless, PacifiCare may require
transfer of Medical Group Members for any reason, and Medical Group may request
that PacifiCare transfer Medical Group Members to another of PacifiCare’s
Participating Providers if Medical Group is unable to provide the Covered
Services required by this Agreement for reasons related to capacity of Medical
Group and its Participating Providers. 
In addition, Medical Group may request that PacifiCare transfer a
Medical Group Member to another of PacifiCare’s Participating Providers in the
event of a material breakdown in the physician-patient relationship.  PacifiCare shall evaluate such requests
considering the best interests of the Member.

 

In the event PacifiCare grants a
request for transfer of a Member by Medical Group, the transfer shall not be
effective until the end of the month following the month in which the Member
receives notice of transfer, unless the Member agrees to an earlier transfer
and PacifiCare has made arrangements with another of PacifiCare’s Participating
Providers to accept the Member.

 

2.8                         Financial
Statements.

 

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

 

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within one hundred and twenty (120)
calendar days of the end of each fiscal year, copies of its audited annual
Financial Statements together with copies of all auditor’s letters to
management in connection with such audited annual financial statements.

 

2.9                         Administrative
Requirements

 

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

 

For each month in which Medical Group
fails to submit Encounter Data described above in this Section.  PacifiCare shall deduct one percent (1.0%)
of the Medical Group’s Capitation Payment until such data is submitted.

 

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

 

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

 

7

 

PacifiCare or the PacifiCare Affiliate
will process payment for such services or treatment in accordance with the
payment procedures for the applicable benefit plan or program.

 

Medical Group shall cooperate with
PacifiCare’s Participating Providers and PacifiCare Affiliates and agrees to
provide Medical Group Services to Members enrolled in Managed Care Plans and
health benefit plans of Affiliates and to assure reciprocity of health care
services. Without limiting the foregoing, if any Member receives services or
treatment constituting Covered Services from Medical Group or its Participating
Providers and a capitated Participating Provider is financially responsible for
such services, such Participating Provider shall be solely responsible for
compensating Medical Group for such services. Payment by such Participating
Provider shall be at the rates agreed by the Participating Provider and Medical
Group or, if there is no applicable agreement, at the rates provided by
applicable State and Federal Law or, at the election of the Participating
Provider, at the rates set forth in this Agreement, less applicable Copayments,
coinsurance, and/or deductibles, as payment in full for such services or
treatment. The provisions of Section 8.2 [No Billing of Members (Member Hold
Harmless Provision)] shall be binding upon Medical Group regardless of whether
PacifiCare or another capitated Participating Provider is at financial risk for
services provided.

 

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

 

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

 

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

 

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

 

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

 

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3.1                       The following
Sections of the Agreement are hereby added:

 

ARTICLE 3

ADMINISTRATIVE DUTIES OF PACIFICARE

 

3.8                         Transplant
Services. Medical Group acknowledges and agrees that, at
PacifiCare’s direction, transplant services shall be provided by PacifiCare’s
National Preferred Transplant Network Providers, in accordance with
PacifiCare’s Medical Management policies and procedures and the Provider
Manual.

 

3.8.1                  Medical
Management of Transplant Services. Medical management for any
service related to the evaluation of, actual transplant of and follow-up care
(within contractual time frames) of any solid organ (except skin and cornea) or
transplantation of any bone marrow, peripheral stem cell or cord blood
component shall be the sole responsibility of PacifiCare. The Provider Manual
provides additional guidelines and policies and procedures governing the
management of Transplant Services. Authorization of the evaluation of the
recipient prior to listing for transplantation, the actual transplant itself,
and post transplant care services up to 365 days post discharge, must be
obtained from PacifiCare’s NPTN Medical Director, or his designee, prior to
initiation of services.

 

3.8.2                  Limitation
of PacifiCare’ Financial Responsibility. Transplant services provided
or arranged by Medical Group that are not prior authorized by PacifiCare, not
coordinated with PacifiCare as provide in this Section 3.8 and the provider
Manual or performed at a non-NPTN facility shall be the sole financial
responsibility of the Medical Group.

 

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 Attachments B and C of
Exhibit 5, if applicable.

 

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
make additions or deletions to the list of Carve-Out Program Covered Services,
drugs and agents. PacifiCare shall provide Medical Group with 30 days’ advanced
notice of such changes. Upon any such change, PacifiCare shall notify Medical
Group of any 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.

 

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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 30 calendar days advance written notice.
Upon any such termination, PacifiCare shall adjust Medical Group’s compensation
consistent with the amounts specified in Attachments A, B and C of Exhibit 5.

 

3.2                       The following
Sections of the Agreement are hereby deleted and replaced in their entirety, to
read as follows:

 

ARTICLE 3

ADMINISTRATIVE DUTIES OF PACIFICARE

 

3.2                         Marketing.
PacifiCare shall make reasonable efforts to market the Managed Care Plans.
Medical Group agrees that PacifiCare may, in its discretion, use Medical
Group’s name, address and telephone number as well as the names, addresses and
telephone numbers and specialties of its Participating Providers in
PacifiCare’s marketing and informational materials including, without
limitation, PacifiCare’s directory of Participating Providers. Nothing in this
Agreement shall be deemed to require PacifiCare to conduct any specific
marketing activities on behalf of Medical Group and its Participating Providers
or to identify Medical Group or its Participating Providers in any specific
PacifiCare marketing or informational materials. Specifically, but without
limiting the foregoing, PacifiCare may from time to time offer benefit plans
that only include certain networks of Participating Providers. PacifiCare is
not obligated to include Medical Group as a Participating Provider in any
specific benefit plan or provider network.

 

3.3                         Enrollment
and Assignment of Members. PacifiCare shall be responsible for
distributing the PacifiCare Enrollment Packet to Members upon enrollment and at
open enrollment periods. PacifiCare shall provide benefit information to
Members concerning the type, scope and duration of benefits to which Members
are entitled under the Managed Care Plans. Nothing in this Agreement shall be
construed to require PacifiCare to assign any minimum or maximum number of
Members to Medical Group or to utilize Medical Group for any Members in the
Medical Group Service Area. At any time during the term of this Agreement,
without terminating this Agreement, PacifiCare may cease assigning Members to
Medical Group.

 

3.5                         Benefit
Design and Interpretation; Coverage Decisions. PacifiCare shall be solely
responsible for the benefit design of all Managed Care Plans, including
establishing benefits, Premiums and Copayments. PacifiCare, or the applicable
independent external review agent designated in accordance with applicable
State and Federal Law, shall be responsible for interpreting the terms of and
making final coverage determinations under the Managed Care Plans.

 

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4.                              The following
Sections of the Agreement are hereby deleted and replaced in their entirety, to
read as follows:

 

ARTICLE 4

MANAGED CARE PROGRAM SERVICES

 

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

 

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

 

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.

 

4.4.1                PacifiCare’s
Right to Revoke Delegated Activities. PacifiCare may, in its sole
discretion, revoke any or all Delegated Activities at any time, for any reason.

 

4.4.2                Revocation
Notices.

 

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

 

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5.1                       The following Sections of the Agreement are hereby added, to
read as follows:

 

ARTICLE 5

COMPENSATION

 

5.1.4                        Adjustments
For PacifiCare-Sponsored Carve-Out Programs. Based upon the assumption of
financial responsibility by PacifiCare, PacifiCare shall reduce the Medical
Group’s monthly Standard Service Capitation Payment by the amounts specified in
Attachments A, B and C of Exhibit 5, if applicable.

 

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 the Carve-Out Program’s Descriptions
and listed in Attachments A, B and C of Exhibit 5, (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
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).

 

5.1.4.2                        Medical
Group’s Failure to Comply with PacifiCare-Sponsored Carve-Out Programs. If
PacifiCare determines that Medical Group is not complying with the stipulated
Carve-Out Program Policies and Procedures, PacifiCare may terminate the
respective Carve-Out Program. Upon any such termination, PacifiCare shall
notify Medical Group of any adjustment to Medical Group’s compensation, which
adjustment shall be determined using reasonable actuarial standards, taking
into account other changes in compensation made pursuant to this Amendment, all
as determined by PacifiCare.

 

In addition to the foregoing, the
PacifiCare-Sponsored Carve-Out Programs and Medical Group’s participation in
the Carve-Out Programs shall be subject to the provisions of PacifiCare’s
policies and procedures applicable to the Carve-Out Programs, copies of which
shall be provided to Medical Group.

 

5.14                   PacifiCare
Quality Incentive Program. PacifiCare’s Quality Incentive
Program (“QIP”) is a bonus program which recognizes PacifiCare Participating
Providers who have statistically demonstrated sound clinical care practice,
quality-focused provision or arrangement of Covered Services on behalf of their
assigned PacifiCare Members and

 

12

 

demonstrated superior customer
satisfaction.  Exhibit 6 of this
Agreement describes the QIP. The terms of Exhibit 6 reflect PacifiCare’s participation
in the “pay for performance” initiative of the Integrated Healthcare
Association.

 

5.15                   PacifiCare
Women’s Health Bonus Program. PacifiCare’s Women’s Health Bonus
Program (WHBP) is designed to compensate Medical Group and its Participating
Providers for efforts taken to improve the accessibility of women’s health
services and the stability of PacifiCare’s women’s health network as reflected
by data measured by PacifiCare. Exhibit 7 of this Agreement describes the WHBP.

 

5.16                   Legislation
Regulating Medical Group Risk. Medical Group recognizes that the
compensation set forth in Product Attachments A, B and C of this Agreement is
established in exchange for Medical Group’s provision of Covered Services that
are the financial responsibility of Medical Group, as outlined in
the applicable Division of Financial Responsibility Matrix (“DFR”) to this
Agreement.  In the event that
legislation is passed which requires PacifiCare to assume financial risk for
certain Medical Group Services or to exclude services from any incentive
program under this Agreement, then PacifiCare and Medical Group will convene a
meeting no later than forty-five (45) days following the passage of the
legislation, for the purpose of discussing the commensurate adjustment to the
Medical Group’s compensation.

 

PacifiCare will present Medical Group
with its actuarial valuation of the services that will no longer be the
financial or shared risk responsibility (under an incentive program) of Medical
Group. Within thirty (30) days following the initial meeting, Medical Group
will have the opportunity to either present PacifiCare with its expense data or
an independent actuarial valuation of the same services. If Medical Group
chooses to retain an independent actuary at its expense, the selection of the
actuary must be mutually agreeable to both parties.

 

If the independent actuary’s findings
indicate that the value of the services is less than PacifiCare’s valuation and
if PacifiCare and Medical Group reach mutual agreement on a lower valuation,
then an adjustment corresponding to the mutually agreed upon valuation shall be
made to the Medical Group’s compensation as of the effective date of
PacifiCare’s implementation of the legislation.

 

Medical Group understands and agrees
that if its actuarial valuation of the services is not finalized and agreed
upon by both Medical Group and PacifiCare at least sixty (60) days prior to
PacifiCare’s implementation date of the legislation then PacifiCare’s actuarial
valuation amount will be used to determine the reduction to the Medical Group’s
compensation and to implement and comply with the legislation. Medical Group
may, at its discretion, pursue the Dispute Resolution Procedure as outlined in
Section 7.5.1 of this Agreement.

 

Furthermore, Medical Group agrees to
comply with any updates to PacifiCare’s Medical Management Program concerning
the administration and provision of Covered Services to Members that may become
legislated as PacifiCare risk only.

 

13

 

5.17                   Last
Month’s Capitation. In the event of termination of this Agreement, PacifiCare
may withhold from Medical Group’s last month’s Capitation Payment an amount
reasonably estimated by PacifiCare to equal the amount Medical Group owes to
PacifiCare pursuant to the terms of this Agreement and for which PacifiCare
does not have reserves or financial assurances.

 

5.18                   Payments
which are the Responsibility of Capitated Providers.
Medical Group acknowledges and agrees that if Medical Group is, now or hereafter,
a party to any subcontract or other agreement with PacifiCare Participating
Providers who receive capitation and are responsible for arranging for Covered
Services through their sub-contractual arrangements (“Capitated Providers”),
that Medical Group shall look solely to the applicable Capitated Provider, and
not PacifiCare, for payment for Covered Services provided to PacifiCare Members
that are covered by PacifiCare’s agreements with such Capitated Providers.

 

5.19                   Non-Capitated
Services Submission of Claims/Claims Payment. Medical Group shall submit all
claims for non-capitated services reimbursement under this Agreement (including
claims for interest) to PacifiCare no later than sixty (60) calendar days from
the date of service or, if a third party or Coordination of Benefits claim,
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.

 

Medical Group acknowledges and agrees
that if Medical Group fails to submit claims as specified by this Section,
PacifiCare reserves the right to deny payment for such claims. For each Clean
Claim submitted by Medical Group, PacifiCare or the applicable Payor shall pay
the amount due to Medical Group within sixty (60) business days following
receipt of a Clean Claim by PacifiCare and in accordance with applicable 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.

 

14

 

5.20                   Timely
Submission of Medical Group Requests for Claims Payment Reconsideration.
Pursuant to Section 7.5 of this Agreement and in accordance with the provisions
set forth in the Provider Manual, Medical Group may dispute any claims payment
by PacifiCare described in Section 5.19. Medical Group requests for
reconsideration of a claims payment must be forwarded, in writing, to
PacifiCare within sixty (60) working days from receipt of applicable claims
payment from PacifiCare, Medical Group’s failure to submit written requests as
specified in this Section 5.20 shall result in the request being denied by
PacifiCare, and no further action may be taken by Medical Group.

 

5.21                   Timely
Submission of Medical Group Requests for Recoupment Reconsideration of
Recoupment Actions by PacifiCare. Pursuant to Section 7.5 of
this Agreement and in accordance with the provisions set forth in the Provider
Manual, Medical Group may dispute any recoupment by PacifiCare as described in
Section 5.11 above. To request reconsideration of recoupment actions taken by
PacifiCare, Medical Group must submit such request in writing to PacifiCare
within ninety (90) working days from the date of PacifiCare’s recoupment
action. Medical Group’s failure to submit a written request for reconsideration
within the timeframe specified herein shall result in the denial of the
reconsideration request and the release of PacifiCare from any further
reconsideration of the recoupment.

 

5.2                       The following Sections of the Agreement are hereby deleted
and replaced in their entirety, to read as follows:

 

ARTICLE 5

COMPENSATION

 

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

 

5.4                         Incentive
Programs. Incentive programs are designed to ensure that PacifiCare,
Medical Group and, for some programs, Hospital work collaboratively to provide
or arrange Covered Services in an effective and efficient manner by ensuring
appropriate utilization of Covered Services. The incentive programs may be
administered by Medical Group and Hospital or by PacifiCare for each Managed
Care Plan as described below and set forth in the applicable Product
Attachment.

 

15

 

5.4.1                        Incentive
Program Withhold. PacifiCare shall establish withholds from Medical Group’s
monthly Capitation Payment for purposes of offsetting potential deficits for
the combined incentive programs administered by PacifiCare, excluding the
Commercial Hospital Incentive Program and the Secure Horizons
Hospital Incentive Program for which separate withholds may be established. The
monthly incentive withhold shall initially be zero percent (0%) of the Standard
Service Capitation Amount for the PacifiCare Commercial Health Plan.  PacifiCare, at its sole discretion, shall prospectively
adjust the withhold based on Medical Group’s experience under the combined
incentive programs at the time of the program settlements described below.

 

5.4.3                        PacifiCare
Incentive Program Settlements. PacifiCare shall conduct combined
settlements, inclusive of a reserve allowance for incurred but not reported
claims expense, for all of the Managed Care Plan incentive programs applicable
to Medical Group and administered by PacifiCare, and with respect to all
regular other adjustments to undisbursed Capitation Payments as may be specifically
set forth in the Product Attachments to this Agreement. Surpluses and deficits
under each of the incentive programs shall be aggregated and offset against one
another. PacifiCare will conduct a final calculation annually (the “Final
Calculation”) based on the contract calendar year. Payments under the combined
incentive program settlements will be due from the owing party within one
hundred and eighty (180) days following the end of the contract calendar year
for the Final Calculation. To the extent a Medical Group deficit has been
carried forward from a prior settlement period, this deficit shall be offset
against amounts due to Medical Group hereunder. In the event that claims for
providers were incurred during the contract calendar year in question but were
not paid until after the Final Calculation, such costs shall be carried forward
and applied to the subsequent contract calendar year’s incentive program as an
expense for that contract calendar year.

 

Unless otherwise agreed by the parties
in writing, the Final Calculation shall not bar either party from providing
information reflecting that the Final Calculation should be adjusted, which
adjustments may be requested by either party no later than one year following
the end of the applicable contract calendar year.

 

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

 

16

 

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 set forth below.

 

5.5.2                        Notification
of ISL and Reinsurance Claims. Medical Group shall provide written
notification to PacifiCare when Medical Group becomes aware that claims for
Medical Group Services provided to Medical Group Member(s) equal fifty, percent
(50%) of the ISL Deductible or fifty percent (50%) of the Reinsurance Deductible, respectively.  Such written notification shall be provided
to PacifiCare
no later than the fifteenth (15th) day of the month following the month in
which such threshold is reached.

 

Medical Group acknowledges and agrees
that if Medical Group fails to provide the written notice required by this
Section within the time frame specified in this Section, Medical Group Shall be
financially responsible for ten percent (10%) of all Medical Group Services provided
to the Medical Group Member(s) in excess of the ISL Deductible, which amount
shall be in addition to the ISL Coinsurance.

 

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

 

5.7                         Cost
of Care. Certain provisions of this Agreement require that Medical
Group provide or arrange health care services which are not covered by Capitation
Payments at Cost of Care and certain provisions of this Agreement require that
Covered Services be valued at Cost of Care. For purposes of this Agreement,
“Cost of Care” shall be calculated using the lesser of billed charges or in
accordance with the PacifiCare Fee Schedule.

 

The PacifiCare Fee Schedule shall be
based upon the following: (i) for professional services that are included under
the Medicare RBRVS Fee Schedule, reimbursement shall be one hundred percent
(100%) of Medicare’s geographically adjusted fee schedule

 

17

 

according to the Medicare payment
locality the provider resides in; (ii) for all other health care services
(other than inpatient and outpatient Hospital Services) that are not included
in RBRVS but included in a Medicare Fee Schedule, reimbursement shall be one
hundred percent (100%) of the Medicare rate for the current period as released
by CMS (“CMS” is not a defined term until Product Attachment C.) by December of
the preceding year; (iii) for inpatient and outpatient Hospital Services, the
Cost of Care shall be the lesser of the amount determined under PacifiCare’s
Fee Schedule and paid by PacifiCare or the prevailing Medicare allowable; (iv)
for outpatient pharmaceuticals, to include injectable drugs and adjuncts, shall
be the lesser of billed charges, or the average wholesale price (AWP) less
fifteen percent (15%), or the amount determined under PacifiCare’s prevailing
Fee Schedule and paid by PacifiCare.

 

5.8                         Collection
of Copayments. Medical Group and its Participating Providers shall be
responsible for the collection of Copayments upon rendering Medical Group
Services to Medical Group Members in accordance with the applicable Subscriber
Agreement. Any Copayments which are stated as a percentage shall be calculated
using the Cost of Care for such Medical Group Services. Medical Group and its
Participating Provider shall not refuse to provide Medical Group Services in
the event a Member is unable to pay the Member’s Copayment except as may be
specifically permitted in the Provider Manual or as approved in advance by
PacifiCare.

 

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

 

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

 

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

 

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

 

18

 

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 immediately
recoup any and all amounts owed by Medical Group to PacifiCare against amounts,
including Capitation Payments, owed by PacifiCare to Medical Group. This right
shall include, without limitation, PacifiCare’s right to recoup the following
amounts owed to PacifiCare by Medical Group: (i) amounts owed by Medical Group
due to overpayments or payments made in error by PacifiCare; (ii) amounts owed
by Medical Group as a result of claims for Medical Group Services that
PacifiCare may pay on behalf of Medical Group; (iii) amounts owed by Medical
Group for Covered Services provided outside the Medical Group Service Area;
(iv) amounts owed by Medical Group as a result of the outcome of the Member
appeals and grievance procedure; (v) amounts owed by Medical Group in
connection with any other prior or existing agreement between Medical Group and
PacifiCare or any PacifiCare Affiliate; 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.

 

5.12                   Adequacy
of Compensation. Except as specified in Section 5.9 above, Medical Group
agrees to accept payment as provided herein as payment in full for providing
and arranging the Covered Services required under this Agreement, whether that
amount is paid in whole or in part by Member, PacifiCare or any
Subscriber, including other health care plans that pay before PacifiCare as
required by applicable State or Federal coordination of benefits provisions.
This Section does not prohibit Medical Group from collecting applicable
Copayments, coinsurance or deductibles consistent with the Managed Care Plans.

 

5.13                   Character
of Payments from PacifiCare. Capitation Payments to Medical Group
pursuant to this Agreement are for the primary purpose of compensating Medical Group
for the value of Medical Group Services provided pursuant to this Agreement.
Medical Group shall assure that claims and compensation for Medical Group
Services provided or arranged pursuant to this Agreement are paid from the
Capitation Payments from PacifiCare and from other funds available to Medical Group
as may be necessary for Medical Group to satisfy its financial obligations
under this Agreement.

 

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. Medical Group specifically agrees that
PacifiCare may exercise its recoupment rights as set forth above in the event
Medical Group fails to comply with the foregoing.

 

19

 

6.1                       The following Sections of the Agreement are hereby added:

 

ARTICLE 6

TERM AND TERMINATION

 

6.8                         Termination
of Managed Care Plan. Upon ninety (90) days’ prior written
notice. PacifiCare may terminate the Medical Group’s participation in any of
the Managed Care Plans described in the Product Attachments to this Agreement.
At the end of the ninety (90) day period, PacifiCare may begin transferring the
Members receiving Covered Services pursuant to such Managed Care Plan. Until
such Members are transferred, following the termination date of the applicable
Managed Care Plan, Medical Group shall be obligated to continue to provide
services pursuant to Section 8.3 (the continuing care provisions) of this
Agreement.

 

6.2                       The following Sections of the Agreement are hereby deleted
and replaced 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, 2003 (the “Commencement
Date”) and end on December 31, 2003. Thereafter, the 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 at least one hundred
eighty (180) calendar days prior to each Anniversary Date or until this
Agreement is appropriately terminated by either party as provided herein.

 

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

 

(i)                                     Non-Payment.
Failure by PacifiCare to pay Capitation Payments due Medical Group hereunder
within thirty (30) days of the Capitation Payment due date or failure by
PacifiCare to make any other payments due Medical Group hereunder within
forty-five (45) days of any such payment’s due date and PacifiCare’s failure to
make such payment within the cure period provided at Section 6.2.3, below.

 

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

 

(v)                                 Change
in Hospital Agreement. In addition to other provisions of
this Agreement, PacifiCare may terminate this Agreement in the event of the
termination of the Hospital Services Agreement (“Hospital Agreement”) between
Hospital and PacifiCare pursuant to which Hospital provides Covered Services to
Medical Group Members on a capitated basis or amendment of the Hospital
Agreement to change the compensation

 

20

 

methodology of the Hospital to one
based on per diem rates. PacifiCare shall provide Medical Group with written
notice of its intent to terminate this Agreement pursuant to this Section at
least ninety (90) days prior to the effective date of the termination of this
Agreement. The requirements set forth in Section 6.2.3 shall not apply to
termination by PacifiCare pursuant to this Section.

 

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

 

6.4                         (Renumbered
to 6.4, as it was incorrectly numbered in Base Agreement as 3.1)

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

 

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

 

21

 

Unless otherwise agreed by the parties
in writing, the Final Calculation shall not bar either party from providing
information reflecting that the Final Calculation should be adjusted, which
adjustments may be requested by either party no later than one year following
the end of the applicable contract calendar year.

 

7.                              The following Sections of the Agreement are hereby deleted
and replaced 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 Commercial Rules of the
American Arbitration Association. Such rules provide that the parties shall
share equally the cost of the arbitration except that Medical Group shall not
be responsible for costs (excluding attorney fees and expert fees) in excess of
the costs of a judicial proceeding. Such arbitration shall occur in Los
Angeles, California, unless the parties mutually agree to have such proceeding
in some other locale. The arbitrators shall apply California substantive law
and Federal substantive law where State law is preempted. Civil discovery for
use in such arbitration may be conducted in accordance with the provisions of
California law, and the arbitrator(s) selected shall have the power to enforce
the rights, remedies, duties, liabilities and obligations of discovery by the
imposition of the same terms, conditions and penalties as can be imposed in
like circumstances in a civil action by a court of competent jurisdiction of
the State of California. The provisions of California law concerning the right
to discovery and the use of depositions in arbitration are incorporated herein
by reference and made applicable to this Agreement.

 

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

 

Notwithstanding the above, in the event
either Medical Group or PacifiCare wishes to obtain preliminary injunctive
relief or a temporary restraining order (together “injunctive relief”), such
party may initiate an action for such relief in a court of general jurisdiction
in the State of California. The parties specifically agree that such injunctive
relief shall only be available with respect to matters directly relating to the
continued provision of Covered Services to Members or the acceptance,
assignment or transfer of Members. The decision of the court with respect to
the requested preliminary injunctive relief or temporary restraining order
shall be subject to appeal only as allowed under California law. However, the
courts shall not have the authority to review or grant any request or demand

 

22

 

for damages. Each party shall bear its
own attorneys’ fees. Medical Group and PacifiCare knowingly acknowledge and
agree that the foregoing constitutes a waiver of their constitutional right to
a jury trial.

 

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

 

If to PacifiCare:

 

PacifiCare of California

5757 Plaza Drive, Suite 150

Cypress, CA 90630

Attention: Vice President, Network
Management

 

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

 

7.11                      Notification
and Approval of Sale or Change in Management of Medical Group.
Medical Group agrees that it shall provide prior written notice to PacifiCare
of its intent to either (i) sell, transfer or convey its business or any
substantial portion of its business assets to another entity (“successor
entity”) or (ii) enter into a management contract with a physician practice
management company (“management company”) which does not manage Medical Group
as of the Commencement Date. Such prior written notice shall be given at least
one hundred twenty (120) days prior to Medical Group selling its business or
entering into such contract. As set forth in Section 6.4, PacifiCare shall have
the right to terminate this Agreement upon written notice to Medical Group if
PacifiCare reasonably determines that any successor entity or any management
company cannot satisfactorily perform the obligations of Medical Group under
this Agreement or that PacifiCare prefers not to do business with the successor
entity or management company. Medical Group warrants and assures that this
Agreement, if not otherwise terminated by PacifiCare, will be assumed by all
successor entities and that all successor entities and management companies
will be bound by the terms and conditions of this Agreement.

 

23

 

8.1                       The following Sections of the Agreement are hereby added:

 

ARTICLE 8

GOVERNING LAW AND REGULATORY REQUIREMENTS

 

8.6                         Equal
Opportunity / Affirmative Action. PacifiCare is an equal
employment opportunity employer. As such, the provisions of Executive Order
11246, as amended (Equal Opportunity/Affirmative Action), 38 U.S.C. 4212, as
amended (Vietnam Era Veterans Readjustment Assistance Act), and Section 503 of
the Rehabilitation Act of 1973, as amended (Handicapped Regulations), and the
implementing regulations found at 41 C.F.R. 60-1&2, 41 C.F.R. 60-250, and
41 C.F.R. 60-741, respectively, are hereby incorporated by reference.

 

8.7                         Confidentiality
of Protected Health Information.

 

8.7.1                        Use of
Protected Health Information. Medical Group shall not use or
disclose Protected Health Information (as defined at 45 C.F.R. § 164.504) for
any purpose other than (i) the purposes contemplated by this Agreement; (ii) as
required or allowed under the Health Insurance Portability and Accountability
Act and the regulations promulgated thereunder at 45 C.F.R. Parts 160 through
164 (collectively, “HIPAA”); or (iii) as otherwise required by law.

 

In no event may Medical Group use or
disclose Protected Health Information in a manner that violates or would
violate HIPAA if such activity were engaged in by PacifiCare. PacifiCare shall
provide copies of relevant portions of HIPAA to Medical Group upon request.

 

8.7.2                        Safeguards.
Medical Group shall use reasonable efforts to implement and maintain such
operational and technological safeguards as are necessary to ensure that
Protected Health Information relating to Members is not used or disclosed by
Medical Group or by any subcontractors, affiliates, or business associates of
Medical Group except as is provided in this Agreement.

 

8.7.3                        Reporting
of Unauthorized Use or Disclosure. Medical Group shall promptly
report to PacifiCare any use or disclosure of Protected Health Information
received from PacifiCare relating to any Member of which Medical Group becomes
aware that is not provided for or permitted in this Agreement or by HIPAA.
Medical Group shall permit PacifiCare to investigate any such report in
accordance with the provisions of Section 8.7.6.

 

8.7.4                        Use of
Subcontractors. To the extent that Medical Group uses one or more
subcontractors or agents to perform its obligations under this Agreement, and
such subcontractors or agents receive or have access to Protected Health
Information of Members, Medical Group shall cause each such subcontractor or
agent to sign an agreement with Medical Group containing substantially the same
restrictions and conditions related to the protection and confidentiality of
Protected Health Information as those that apply to Medical Group under this
Agreement. In addition, each such contract shall identify PacifiCare as an

 

24

 

intended third party beneficiary with
rights of enforcement and indemnification from such subcontractors or agents in
the event of any violations thereof.

 

8.7.5                        Access
to and Correction of Information; Disclosure Records.
Medical Group shall permit PacifiCare Members timely access to, and to obtain a
copy of, Protected Health Information in accordance with the provisions of 45
C.F.R. § 164.524. Medical Group shall permit Members to submit proposed
corrections to Protected Health Information, and Medical Group shall accept or
deny such proposed corrections in accordance with the provisions of 45 C.F.R. §
164.526. Medical Group shall keep records of all disclosures of Protected
Health Information on an ongoing basis and shall maintain such information for
a period of at least six (6) years, and Medical Group shall make available the
information required to provide an accounting of disclosures as required by 45
C.F.R. § 164.528.

 

8.7.6                        Right
to Audit. Medical Group shall make its practices, books and records
related to Protected Health Information received from PacifiCare, or created or
received by Medical Group on behalf of PacifiCare or related to PacifiCare
Members, available to PacifiCare and to the Secretary of Health and Human
Services to determine Medical Group’s compliance with HIPAA and with the
provisions of this Section 8.7. In the event it is determined that Medical
Group is in violation of HIPAA or this Section 8.7, Medical Group shall
promptly remedy any such violation and shall certify the same in writing to
PacifiCare.

 

8.7.7                        Future
Confidentiality of Records. From and after expiration or
termination of this Agreement, Medical Group shall continue to maintain the
confidentiality of the Protected Health Information and shall use or disclose
the Protected Health Information only as permitted by this Agreement or State
and Federal law.

 

8.2                       The following
Sections of the Agreement are hereby deleted and replaced in their entirety, to
read as follows:

 

ARTICLE 8

GOVERNING LAW AND REGULATORY REQUIREMENTS

 

8.3                         Continuing
Care Obligations of Medical Group.

 

8.3.1                        General
Obligations. In the event of termination of this Agreement for any
reason, Medical Group and its Participating Providers shall continue to provide
or arrange Covered Services to Members, including any Members who become
eligible during the termination notice period, beginning on the effective date
of termination and continuing until the later of (a) twelve (12) months
following the effective date of termination of this Agreement, (b) December 31
of the then current calendar year, or (c) the expiration of the period in which
Medical Group is obligated to arrange or provide Covered Services in Special
Circumstances as provided at Section 8.3.3 below.  Notwithstanding the foregoing, with respect to Members for whom
PacifiCare arranges for a transfer to another PacifiCare

 

25

 

Participating Provider and provides
written notice to Medical Group of such transfer, this Agreement shall cease to
apply for such Members, as of the effective date of such Member’s transfer. In
addition to the foregoing, Medical Group and its Participating Providers will
continue to provide or arrange Covered Services to any Members who cannot be
transferred within the time period specified above in accordance with
PacifiCare’s legal and contractual obligations to (i) provide Covered Services
under the Managed Care Plans and Subscriber Agreement and/or Evidence of
Coverage, (ii) provide notice of termination to Members and (iii) ensure
continuity of care for its Members.  The
continuing care obligations of Medical Group will survive the termination of
this Agreement.

 

8.3.5                        Services
to be Provided to Members Transferred to Medical Group from a Terminated
Participating Provider. Subject to Medical Group’s capacity
to accept additional Members as set forth in Section 2.3.5 of this Agreement,
Medical Group agrees to accept transfers of Members from other Participating
Providers in circumstances in which such Participating Provider’s agreement
with PacifiCare has terminated. Upon such transfer, Medical Group agrees that
it shall accept prior authorizations for Covered Services provided to such
Members and shall be financially responsible for all continuing Covered
Services to be provided or arranged for such transferred Members following
termination of the other Participating Provider’s agreement with PacifiCare.

 

26

 

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

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg Wright

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP,
  Network Management

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Northwest
  Orange County Medical Group

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Pratibha Patel

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  PRATIBHA PATEL, MD PRESIDENT

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  3/17/03

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/
  James P. Agronick

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3/17/03

  	
   

  

 

27

 

PRODUCT ATTACHMENT A

 

PACIFICARE COMMERCIAL HEALTH
PLAN

 

Northwest
Orange County – 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;

 

ARTICLE 1

DEFINITIONS

 

The following terms shall have the
meaning attributed below for purposes of 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 Commercial Plan.

 

1.2                                 Commercial
Plan Premium is the Premium received by PacifiCare Commercial Plan
Members, excluding amounts to pay broker and agent commissions/compensation,
[administrative fees paid, 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.

 

28

 

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.

 

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 2003, 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.

 

29

 

The following are PacifiCare’s age
gender adjustment factors:

 

	
  Gender/Age Band

  	
   

  	
  Physician

  
	
   

  	
   

  	
   

  
	
  Child 0

  	
   

  	
  1.9939

  
	
  Child 1

  	
   

  	
  1.2664

  
	
  Child 2 - 9

  	
   

  	
  0.4730

  
	
  Child 10 - 17

  	
   

  	
  0.4375

  
	
  Female 18 - 19

  	
   

  	
  0.7395

  
	
  Female 20 - 24

  	
   

  	
  1.4564

  
	
  Female 25 - 29

  	
   

  	
  1.6593

  
	
  Female 30 - 34

  	
   

  	
  1.4785

  
	
  Female 35 - 39

  	
   

  	
  1.2495

  
	
  Female 40 - 44

  	
   

  	
  1.3095

  
	
  Female 45 - 49

  	
   

  	
  1.2221

  
	
  Female 50 - 54

  	
   

  	
  1.5869

  
	
  Female 55 - 59

  	
   

  	
  1.7404

  
	
  Female 60 - 64

  	
   

  	
  2.0135

  
	
  Female 65 plus

  	
   

  	
  2.0630

  
	
  Male 18 - 19

  	
   

  	
  0.3554

  
	
  Male 20 - 24

  	
   

  	
  0.4774

  
	
  Male 25 - 29

  	
   

  	
  0.5702

  
	
  Male 30 - 34

  	
   

  	
  0.6033

  
	
  Male 35 - 39

  	
   

  	
  0.7038

  
	
  Male 40 - 44

  	
   

  	
  0.7700

  
	
  Male 45 - 49

  	
   

  	
  0.8742

  
	
  Male 50 - 54

  	
   

  	
  1.3235

  
	
  Male 55 - 59

  	
   

  	
  1.7024

  
	
  Male 60 - 64

  	
   

  	
  2.2284

  
	
  Male 65 plus

  	
   

  	
  2.3563

  

 

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 dollars ($0.00) per Commercial Plan Member per
calendar year.

 

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

 

30

 

(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.

 

31

 

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.

 

 

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

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg Wright

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP,
  Network Management

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Northwest
  Orange County Medical Group-

  La Palma

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Pratibha Patel

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   PRATIBHA PATEL, MD

  PRESIDENT

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  3/ 21 /03

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/
  James P. Agronick

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3/ 21 /03

  	
   

  

 

32

 

PRODUCT ATTACHMENT B

 

PACIFICARE COMMERCIAL POINT-OF-SERVICE
PLAN

 

Northwest
Orange County – 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 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

 

33

 

Providers shall encourage Members to
receive Covered Services from non-Participating Providers.  Medical Group shall include the requirements
of this Section in all subcontracts with its Participating Providers.

 

ARTICLE 3

COMPENSATION

 

3.1                                 Capitation
Payments for Commercial POS Plan Members. For Commercial POS Plan
Members, PacifiCare will pay Medical Group *** of the Capitation Payment of the
monthly Standard Service Capitation Amount for Commercial Plan Members, subject
to the adjustments set forth in Article 5 of the Base Agreement and the
adjustments set forth below in this Section. The payment described in this
Section is payment in full for In-Network Services, except for Copayments,
coordination of benefits and third party recoveries.

 

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

 

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

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg Wright

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP,
  Network Management

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Northwest
  Orange County Medical Group-

  La Palma

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Pratibha Patel

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   PRATIBHA PATEL, MD

  PRESIDENT

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  3/ 5/ 03

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/
  James P. Agronick

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3/ 5/ 03

  	
   

  

 

34

 

PRODUCT ATTACHMENT C 

 

SECURE HORIZONS HEALTH PLAN 

 

Northwest
Orange County – 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 (when applicable), amounts paid 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 eligible for the Qualified Medicare Beneficiary Program premium.

 

35

 

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 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.

 

36

 

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

 

2.8                                 Termination
of 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.

 

37

 

ARTICLE 3

COMPENSATION

 

3.1                                 Capitation
Payments for Secure Horizons Members. Capitation Payments for Secure
Horizons Members shall be thirty-six and forty hundredths percent (36.40%) 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 ISL Program.

 

3.1.2                        3.1.2        One Time Adjustment for 2003 Increases
in Secure Horizons Revenue. The Capitation Percentage set forth above
assumes a prospective Secure Horizons Revenue increase effective as of January
1, 2003, of *** over the average Secure Horizons Revenue for Assigned Medical
Group Members for calendar year 2002 (the “Annual Increase”). Such assumption
is based upon the estimated average payment rates for Medicare Parts A and B
overall for calendar year 2003 as published by CMS in March 2002.

 

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 no later than
December 31, 2002 (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 2003 Capitation Percentage (“Adjusted
Capitation Percentage”), if necessary, shall begin with the January 2003
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 interpretation no later than
December 31, 2002 (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 dollars ($0.00) per Secure Horizons Member per
calendar year.

 

38

 

(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.

 

39

 

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

 

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg Wright

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP,
  Network Management

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Northwest
  Orange County Medical Group-

  La Palma

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Pratibha Patel

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   PRATIBHA PATEL, MD

  PRESIDENT

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  3/ 17/ 03

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/
  James P. Agronick

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3/17/03

  	
   

  

 

40

 

PRODUCT ATTACHMENT A

 

PACIFICARE COMMERCIAL HEALTH
PLAN

 

Northwest
Orange County – 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.

 

41

 

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.

 

ARTICLE 3

COMPENSATION

 

3.2                                 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 2003, 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:

 

	
  Gender/Age Band

  	
   

  	
  Physician

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Child 0

  	
   

  	
  1.9939

  	
   

  
	
  Child 1

  	
   

  	
  1.2664

  	
   

  
	
  Child 2 - 9

  	
   

  	
  0.4730

  	
   

  
	
  Child 10-17

  	
   

  	
  0.4375

  	
   

  
	
  Female 18 - 19

  	
   

  	
  0.7395

  	
   

  
	
  Female 20 - 24

  	
   

  	
  1.4564

  	
   

  
	
  Female 25 - 29

  	
   

  	
  1.6593

  	
   

  
	
  Female 30 - 34

  	
   

  	
  1.4785

  	
   

  
	
  Female 35 - 39

  	
   

  	
  1.2495

  	
   

  
	
  Female 40 - 44

  	
   

  	
  1.3095

  	
   

  
	
  Female 45 - 49

  	
   

  	
  1.2221

  	
   

  
	
  Female 50 - 54

  	
   

  	
  1.5869

  	
   

  
	
  Female 55 - 59

  	
   

  	
  1.7404

  	
   

  
	
  Female 60 - 64

  	
   

  	
  2.0135

  	
   

  
	
  Female 65 plus

  	
   

  	
  2.0630

  	
   

  
	
  Male 18 - 19

  	
   

  	
  0.3554

  	
   

  
	
  Male 20 - 24

  	
   

  	
  0.4774

  	
   

  
	
  Male 25 - 29

  	
   

  	
  0.5702

  	
   

  
	
  Male 30 - 34

  	
   

  	
  0.6033

  	
   

  
	
  Male 35 - 39

  	
   

  	
  0.7038

  	
   

  
	
  Male 40 - 44

  	
   

  	
  0.7700

  	
   

  
	
  Male 45 - 49

  	
   

  	
  0.8742

  	
   

  
	
  Male 50 - 54

  	
   

  	
  1.3235

  	
   

  
	
  Male 55 - 59

  	
   

  	
  1.7024

  	
   

  
	
  Male 60 - 64

  	
   

  	
  2.2284

  	
   

  
	
  Male 65 plus

  	
   

  	
  2.3563

  	
   

  

 

42

 

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 dollars ($0.00) per Commercial Plan Member per
calendar year.

 

(iii)                               ISL
Premium shall be zero percent (0%) of the 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.

 

43

 

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.

 

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.

 

3.4.6                        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.

 

44

 

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

 

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg Wright

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP,
  Network Management

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Northwest
  Orange County Medical Group-

  West Anaheim

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Pratihba Patel

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  PRATIHBA PATEL, MD

  PRESIDENT

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  3/ 17/ 03

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/
  James P. Agronick

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3/ 17/ 03

  	
   

  

 

45

 

PRODUCT ATTACHMENT B

 

PACIFICARE COMMERCIAL
POINT-OF-SERVICE PLAN

Northwest
Orange County - 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

 

46

 

Providers shall encourage Members to
receive Covered Services from non-Participating Providers. Medical Group shall
include the requirements of this Section in all subcontracts with its
Participating Providers.

 

ARTICLE 3

COMPENSATION

 

3.1                                 Capitation
Payments for Commercial POS Plan Members. For Commercial POS Plan
Members, PacifiCare will pay Medical Group *** of the Capitation Payment of the
monthly Standard Service Capitation Amount for Commercial Plan Members, subject
to the adjustments set forth in Article 5 of the Base Agreement and the
adjustments set forth below in this Section. The payment described in this
Section is payment in full for In-Network Services, except for Copayments,
coordination of benefits and third party recoveries.

 

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

 

 

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

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg Wright

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP,
  Network Management

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Northwest
  Orange County Medical Group-

  West Anaheim

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Pratihba Patel

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  PRATIHBA PATEL, MD

  PRESIDENT

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  3/ 17/ 03

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/
  James P. Agronick

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3/17/03

  	
   

  

 

47

 

PRODUCT ATTACHMENT C

 

SECURE HORIZONS HEALTH PLAN

 

Northwest
Orange County – 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.

 

1.5                                 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 (when applicable), amounts paid 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 eligible for the Qualified Medicare Beneficiary Program premium.

 

48

 

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 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.

 

49

 

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

 

2.8                                 Termination
of 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.

 

50

 

ARTICLE 3

COMPENSATION

 

3.1                                 Capitation
Payments for Secure Horizons Members. Capitation Payments for Secure
Horizons Members shall be thirty-six and forty hundredths percent (36.40%) 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 ISL Program.

 

3.1.2                        3.1.2        One Time Adjustment for 2003 Increases
in Secure Horizons Revenue. The Capitation Percentage set forth above assumes a
prospective Secure Horizons Revenue increase effective as of January 1, 2003,
of *** over the average Secure Horizons Revenue for Assigned Medical Group
Members for calendar year 2002 (the “Annual Increase”). Such assumption is
based upon the estimated average payment rates for Medicare Parts A and B
overall for calendar year 2003 as published by CMS in March 2002.

 

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 no later than December
31, 2002 (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 2003 Capitation Percentage (“Adjusted Capitation
Percentage”), if necessary, shall begin with the January 2003 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 interpretation no later than December 31, 2002
(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 dollars ($0.00) per Secure Horizons Member per
calendar year.

 

51

 

(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.

 

52

 

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

 

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg Wright

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP,
  Network Management

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Northwest
  Orange County Medical Group-

  West Anaheim

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Pratihba Patel

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  PRATIHBA PATEL, MD

  PRESIDENT

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  3/ 17/ 03

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/
  James P. Agronick

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3/ 17/ 03

  	
   

  

 

53

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA SERVICES
AGREEMENT

(SPLIT CAPITATION)

 

EXHIBIT 1

MEDICAL GROUP FACILITIES AND
HOSPITAL(S)

(This Exhibit 1 is an integral part of this Agreement)

 

Medical Group Facilities:

 

Prior to the Commencement Date, Medical
Group shall provide PacifiCare with a list of all Medical Group Facilities.

 

Facilities
shall also include each facility at which a Medical Group Participating
Provider routinely provides services pursuant to this Agreement.

 

All
Medical Group Facilities shall, in accordance with PacifiCare’s policies and
procedures, be subject to PacifiCare’s prior written approval.

 

Hospital(s):

 

La Palma Intercommunity Hospital for
Northwest Orange County Medical Group

West Anaheim Medical Center for
Northwest Orange County Medical Group-Anaheim

 

Medical Group Service Area:

 

The Medical Group Service Area is the
geographic area served by the Medical Group’s Participating Providers,
including referral providers.  The
Medical Group Service Area is defined as being within a thirty (30) mile radius
of each of the Medical Group Facilities, and includes the facilities and
physician offices beyond the thirty mile radius where Referral Services are
arranged for by Medical Group. The Medical Group Service Area shall be
determined by PacifiCare, based upon the shortest route using public streets
and highways.

 

54

 

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) medical records,
(iv) quality management and improvement and (v) medical management.

 

The Grids set forth the specific
activities with respect to (i) claims processing and payment, (ii)
credentialing and recredentialing, (iii) medical records, (iv) quality
management and improvement and (v) 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) medical records, (iv) quality management and improvement and (v) 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. PacifiCare also does not formally delegate to contracting
medical groups the responsibility for performing member services. However,
PacifiCare does require contracting medical groups under the Agreement to
participate, cooperate and comply with PacifiCare’s activities relating to
member services, preventive health services, and medical record reviews as
required by PacifiCare.

 

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

 

55

 

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 MANAGEMENT DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare Oversight

  
	
  UM Program Structure and
  Process

  	
   

  	
  ý Delegated 
o Not delegated

  	
   

  	
  Development and
  documentation of program structure and accountability, including,

   

  1.               Goals & Objectives, including behavioral
  health care aspects

  2.               Committee responsibilities:

  a)              Membership

  b)             Minutes

  c)              Dissemination of information

  d)             Education of staff &  providers

   

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

  4.               UM Dept interfaces with other depts.

  5.               Program is evaluated & approved annually

   

  For each UM function
  delegated there must be documentation of:

   

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

  2.               Adequate staffing mix

  3.               After-hours UM process defined

  4.               Interface with PacifiCare appropriately

  5.               Data elements as required

  6.               Reporting capability

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

   

  	
   

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

  •                  Submission of corrective action plans as
  needed.

  	
   

  	
  •                  Initial onsite assessment using approved
  oversight document

  •                  Annual oversight assessment

  •     Annual PacifiCare committee approval of UM Program documents

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prior Authorization
  Professional

   

   

   

   

  Institutional

   

  	
   

  	
  ý Delegated
o Not delegated
 

  
o Delegated

  ý Not Delegated

  	
   

  	
  For prior authorization the
  Medical Group (MG) must

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

  •                  Follow nationally recognized medical
  necessity criteria

  •                  Develop and document program to perform
  prior authorization function of OP 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

  

 

56

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare Oversight

  	
   

  
	
  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 

  •       Develop and document programs to perform
  concurrent review of acute and Skilled Nursing Facility inpatients meeting
  all regulatory and PacifiCare standards

  	
   

  	
  •       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 function

  •       Annual onsite assessment to determine
  ability to perform function

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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 Skilled Nursing Facility Notice of Non-coverage timely and
  appropriately.

  	
   

  	
  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 Group delegated, OOA
  should, be included in weekly authorization/denial log submission

  	
   

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

  •       Annual onsite assessment to determine
  ability to perform function

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Case Management

  	
   

  	
  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 coordinate 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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Retrospective-Review

  

  Professional

  

  Retrospective Review Institutional

  	
   

  	
  ý Delegated 

  o Not delegated

  

   

  oDelegated

  ý Not delegated

  	
   

  	
  For Retroactive-review of
  services MG must: 

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

  •        Follow PacifiCare’s approved medical
  necessity criteria 

  •       Develop and document program to perform
  retrospective review function.

  	
   

  	
  Weekly submission of
  authorization/denial logs

  	
   

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

  •       Annual onsite assessment to determine
  ability to perform function

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Denials

  Professional

  

  Institutional

  	
   

  	
  ý Delegated

  oNot delegated

  

  
o Delegated

  ý Not delegated

  	
   

  	
  For Denials of 1 services
  MG must 

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

  •       Follow nationally recognized medical
  necessity criteria 

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

  	
   

  	
  Weekly submission of denial
  logs.

  	
   

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

  •       Annual onsite assessment to determine
  ability to perform function

  	
   

  

 

57

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare Oversight

  
	
  Benefit

  Interpretations

  	
   

  	
  ý Not delegated

  	
   

  	
  For
  Benefit Interpretations MC 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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Appeals

  	
   

  	
  o Delegated

  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.

  

 

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)(1)(B)(i) and (ii) and Section 1370.4(a)(1)(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.

 

58

 

CREDENTIALING DELEGATION GRID 

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  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 credentialed. i e MD, DO, DPM, DDS, DC, and
  behavioral health and other licensed independent practitioners.

   

  •      Define criteria and
  verification of criteria

   

  •     Describe decision making process, including
  how advice is received from participating pracitioners

   

  •      Describe the process to
  delegate credentialing/recredentialing

   

  •      Describe right of
  practitioner to review information.

   

  •      Develop process to notify
  practitioner of discrepancies

   

  •      Include practitioner’s
  right to correct erroneous information

   

  •      Ensure confidentiality

   

  •      Define Medical Director

  responsibilities and participation.

   

  	
   

  	
  Submit Credentialing
  Program annually

   

  Revised credentialing
  policies and procedures submitted at least annually

  	
   

  	
  •      Initial
  onsite assessment

   

  •      Annual
  oversight assessment

   

  •     Annual PacifiCare Committee approval

   

  •      Evaluate
  and approve written Credentialing

  Program

   

  •      Implementaion
  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 advice in all credentialing/ recredentialing
  decisions.

   

  •      The
  MG documents meaningful process for consideration of performance at
  recredentialing.

   

  	
   

  	
  Annual credentialing
  program to include committee structure.

  	
   

  	
  •      Initial
  onsite assessment

  •      Annual
  oversight assessment

  •      Annual
  PacifiCare Committee approval

  •      Annual
  Review of Committee minutes

  •      Annual
  review of membership

  •      Frequency
  of meetings

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Primary source verification
  of credentialing information

  	
   

  	
  ý Delegated

   

  o Not

  delegated

  	
   

  	
  Full
  compliance with NCQA Standards regarding verification of information within
  180 days of Committee approval date.

   

  Meet
  90% of all NCQA credentialing standards on file review.

   

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

  •     License

  •      Hospital
  Admitting privileges, if applicable

  •      Education
  & Training

  •      Board
  certification

  	
   

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

  	
   

  	
  •      Initial
  onsite assessment

   

  •      Annual
  oversight assessment

   

  •      Annual
  PacifiCare Committee approval

   

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

   

  •     Annual audit conducted of provider’s

   

  

 

59

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  •      Professional
  liability claims

   

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

  •     DEA, CDS

  •      Work
  History

  •      Malpractice
  Insurance

  	
   

  	
   

  	
   

  	
  practitoners 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 of Committee approval date.

  	
   

  	
  Immediate submission of any
  changes to application

  	
   

  	
  •      Initial
  onsite assessment

   

  •      Annual
  oversight assessment

   

  •      Annual
  PacifiCare Committee approval

   

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

   

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

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National Practitioner Data
  Base (NPDB) Information/Initial Sanction Information

  	
   

  	
  ý Delegated

   

  o Not

  delegated

  	
   

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

   

  •      Information
  from NPDB

   

  •     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

   

  •     Non-physician 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

   

  	
   

  	
  None

  	
   

  	
  •      Initial
  onsite assessment

   

  •      Annual
  oversight assessment

   

  •      Annual
  PacifiCare committee approval

   

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

   

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

  

 

60

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  sanctions,
  must cover the most recent 3 year period available through the data source
  NPDB or Medicare/Medicaid sanction report

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial office site visit
  and medical record keeping practice review of all PCPs, OB, GYNs, and High
  Volume Behavioral Healthcare practitioners

  	
   

  	
  ý Delegated

   

  o Not

  delegated

  	
   

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

   

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

   

  •      Physical
  accessibility

  •      Physical
  appearance

  •      Adequacy
  of waiting room and exam room space 

  •      Availability
  of appointments vs expected performance standards

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

   

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

  Established thresholds for acceptable performance against identified
  standards Institutes actions for improvement with sites not meeting
  thresholds.

  Evaluation of 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 quarterly. 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

   

  •      Annual
  PacifiCare Committee approval

   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Recredentialing Primary
  source verification (PSV)

  	
   

  	
  ý Delegated

   

  o Not

  delegated

  	
   

  	
  Full compliance with NCQA
  Recredentialing Standards regarding verification of information within 180
  days of Committee approval date.

   

  Recredentialing conducted
  every three years by the MG

   

  Recredentialing must be
  completed within 36 months of prior credentialing or recredentialing activity
  (as required by CMS & DMHC)

   

  Meet 90% of all NCQA
  Recredentialing standards on file review.

   

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

   

  	
   

  	
  Include list of all practitioners
  re-credentialed, 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

   

  •      Annual
  PacifiCare Committee approval

   

  

 

61

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  •      License

  •      Hospital
  Admitting privileges, if applicable

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

  •      Professional
  liability claims

  •      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 data collection of the following:

  •      DEA/CDS

  •      Malpractice
  Insurance

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Recredentialing National
  Practitioner Data Base (NPDB) information/Recredentialing Sanction
  information

  	
   

  	
  ý Delegated

   

  o Not

  delegated

  	
   

  	
  Full compliance with NCQA
  Recredentialing Standards regarding verification of information within 180
  days of Committee approval date.

  Recredentialing conducted
  every three years by the MG.

  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:

  •      Information
  from NPDB

  •      Sanction
  or Limitations information on licensure, as appropriate, must cover the last
  2 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

  	
   

  	
  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.

  •      Annual
  PacifiCare Committee approval

   

  

 

62

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  •      Non-physician
  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 2 year period available through the data source (data that may
  not have come to the attention of the provider previously):

  •      NPDB
  or Medicare/ Medicaid sanction report

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Incorporation of the
  following data in the Recredentialing decision-making process for PCPs and
  high volume behavioral health practitioners.

   

  •      Member
  complaints

   

  •      QI
  activities

   

  	
   

  	
  ý Delegated

   

  o Not

  delegated

  	
   

  	
  Full compliance with NCQA
  Recredentialing Standards.

  Recredentialing conducted
  every three years by the MG (CMS, DMHC)

  Recredentialing must be
  completed within 36 months of prior credentialing or recredentialing
  activity, (as required by CMS & DMHC).

  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

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

  	
   

  	
  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

   

  •      Annual
  PacifiCare Committee approval

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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 PCC 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

   

  •      Annual
  PacifiCare Committee approval

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Process for Peer Review,
  Disciplinary Action

  	
   

  	
  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

  	
   

  	
  New P&Ps submitted at
  least

  annually

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

   

  	
   

  	
  •      Initial
  onsite assessment

   

  •      Annual
  oversight assessment

   

  •      Annual
  PacifiCare committee approval

  

 

63

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
   

  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

  	
   

  	
   

  	
   

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

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Assessment of
  Organizational Providers
  (hospitals, home health agencies, SNFs, free- standing surgical centers, behavioral health facilities providing
  mental health or substance abuse services in an inpatient, residential or
  ambulatory setting.  If PMG maintain a
  contract for Medicare - Choice members then additional facilities are
  required, laboratories, outpatient rehabilitation, dialysis centers, and
  physical therapy/speech therapy facilities)

  	
   

  	
  ý Delegated

   

  o Not

  delegated

  	
   

  	
  For contracted acute care
  hospitals, home health agencies, SNFs, free-standing surgical centers,
  behavioral health facilities, laboratories, outpatient rehabilitation,
  dialysis centers, physical therapy/speech therapy provider facilities where
  the contract is held by the MG. (NCQA, CMS)

  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.     If not accredited, develops standards of
  participation and reviews for compliance, and

  4.     Initially & at least every three
  years, confirms continued good standing of regulatory bodies, and if
  applicable, accreditation

  •      At
  least 90% of all medical organizational providers meet all requirements

  •      At
  least 50% of all behavioral health care delivery organizational providers
  meet all requirements.

   

  	
   

  	
  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

   

  •      Annual
  PacifiCare committee approval

   

  •     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 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

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

  •     Pre-delegation
  evaluation

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

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

  	
   

  	
  Submit copies of
  sub-delegation agreements to PacifiCare prior to sub-delegation and on an
  annual basis

   

  	
   

  	
  •      Initial
  onsite assessment

   

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

   

  •      Annual
  PacifiCare committee approval

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

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accessibility to
  Credentialing Files

  	
   

  	
  ý Delegated

   

  o Not

  delegated

  	
   

  	
  Should any of the following
  provider events occur, PCC shall have access to Medical Group’s credentialing
  files to ensure practitioners are properly credentialed for continuity and
  coordination

  	
   

  	
  Immediately notify PCC of
  any such provider event.

  	
   

  	
  •      Access
  MG credentialing recredentialing files should any of the referenced provider

  

 

64

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  of care for members

  •      Bankruptcy

  •      Termination
  of contract

  •      De-delegation
  of credentialing activities

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

   

  	
   

  	
  As needed, provide PCC
  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

  	
   

  	
  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.

 

MEDICAL
RECORDS DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare

  Oversight

  
	
  Systematic Review of
  Medical Records

  	
   

  	
  ý Delegated

  o Not

  delegated

  	
   

  	
  •  Set documentation standards and distribute
  to practice sites. Documentation audit tool to include all elements required
  by NCQA and PacifiCare

   

  •  At least annually, audit medical records
  from a sample of primary care practitioners with 50 or more members.

   

  •  Conduct focused follow-up to improve
  documentation by PCPs who perform poorly against standards.

   

  	
   

  	
  Annual submission of
  medical records review work plan and audit tool

  At least annually report at
  a minimum, the number of physicians whose

  medical records were
  reviewed, any practitioner- specific actions taken for improvement; and the
  results of those actions

  	
   

  	
  Quality Improvement Committee or their designee reviews and approves
  Annual Work Plan and monitoring report

   

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

   

  

 

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

 

65

 

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

 

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

 

CLAIMS DELEGATION GRID

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group

  Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
  CMS Regulations

  	
   

  	
  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

  	
   

  	
  Delegated

  	
   

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

  Claims payment turnaround
  times

  Appropriate reimbursement for contracted and non-contracted providers

  Interest payments 

  Denials’ denial letters

  Provider reporting

  Appropriate IBNR reserves

  	
   

  	
  Monthly

  	
   

  	
  Initial onsite assessment
  utilizing approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State Regulations

  	
   

  	
  Delegated

  	
   

  	
  Compliance with State
  Regulations for claims processing:

  COB and TPL review

  Compliance with all Medicaid Regulations

  	
   

  	
  N/A

  	
   

  	
  Initial onsite assessment
  utilizing approved oversight tool.

  Annual oversight assessment utilizing approved oversight tool.

  Additional onsite reviews as warranted by the plan utilizing approved
  oversight tool.  Implementation of
  Corrective Action Plan(s) for elements of non-compliance.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPM Requirements

  	
   

  	
  Delegated

  	
   

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

  COB identification

  Debarred providers suspended

  	
   

  	
  N/A

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standards for Employer
  Performance Guarantees

  	
   

  	
  Delegated

  	
   

  	
  Meet Employer performance
  guarantee measurements for claims processing and payment.

  	
   

  	
  As required by employer

  	
   

  	
  Initial onsite assessment
  utilizing approved oversight tool.

  Annual oversight assessment utilizing approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eligibility and Benefits

  	
   

  	
  Not delegated

  	
   

  	
  Medical Group must

  Verify eligibility at time of claim review

  Update eligibility and benefit

  	
   

  	
  N/A

  	
   

  	
  Initial onsite assessment
  utilizing approved oversight tool.

  Annual oversight assessment utilizing approved oversight tool.

  

 

66

 

	
  Function

  	
   

  	
  Delegation

  Status

  	
   

  	
  Medical
  Group

  Responsibility/

  Performance Measure

  	
   

  	
  Reporting

  Frequency

  	
   

  	
  PacifiCare
  Oversight

  
	
   

  	
   

  	
   

  	
   

  	
  information in their system
  as often as communicated by the plan

  	
   

  	
   

  	
   

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financial Accounting

  	
   

  	
  Delegated

  	
   

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

  Financial statements

  IBNR reserves

  Processes for expense reduction

  	
   

  	
  Annually

  	
   

  	
  Initial onsite assessment
  utilizing approved oversight tool.

  Annual oversight assessment utilizing approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Check Production Processes

  	
   

  	
  Delegated

  	
   

  	
  Compliance with timely
  claims payments and IRS requirements including:

  Check production processes

  Performing Provider Satisfaction Survey 

  Process to settle claims in collections 

  1099 production processes

  	
   

  	
  N/A

  	
   

  	
  Initial onsite assessment
  utilizing approved oversight tool.

  Annual oversight assessment utilizing approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Staffing

  	
   

  	
  Delegated

  	
   

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

  Staffing levels

  Customer Service capabilities

  Past experience for claims resolution

  Staff available to answer claims questions during normal hours of operation

  	
   

  	
  N/A

  	
   

  	
  Initial onsite assessment
  utilizing approved oversight tool.

  Annual oversight assessment utilizing approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Audit Reporting

  	
   

  	
  Delegated

  	
   

  	
  Appropriate and adequate
  audit reporting available including:

  • Reports
  provided for audit

  	
   

  	
  As needed for audits

  	
   

  	
  Initial onsite assessment utilizing
  approved oversight tool.

  Annual oversight assessment utilizing approved oversight tool.

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

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Encounter Data

  	
   

  	
  Delegated

  	
   

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

  	
   

  	
  Monthly

  	
   

  	
  Initial onsite assessment
  utilizing approved oversight tool.

  Annual oversight assessment utilizing approved oversight tool.  

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

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

  

 

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

 

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

 

67

 

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.

 

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.

 

68

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Greg Wright

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP.
  Network Management

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Northwest
  Orange County Medical Group

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pratihba Patel

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  PRATIHBA PATEL,
  MD

  PRESIDENT

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  3/5/03

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James P. Agronick

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  3/5/03

  	
   

  

 

69

 

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) for Pacificare,
Capitated Medical Group and the Hospital, the intent being to clarify Services
categories in order to provide for accurate administration. The matrix under
which broad Covered Service categories suggest the appropriate financial
Covered Services not specifically listed. The applicable Subscriber Agreement
Coverage should be consulted for an accurate and complete description of
Coverage the Provider Manuals for administrative/operational clarification.
Member benefits 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.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Biofeedback
  (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)/
  Orthotics, artificial limbs - IP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  DME
  (including apnea monitors), Prosthetics (excluding surgically implanted)/
  Orthotics, artificial limbs - OP

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Emergency
  Room - OP - Fac

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  Emergency
  Room - OP - E.R. Phys.

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  

 

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

 

70

 

	
  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 – Presentation – 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 S?s (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 Parity 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.

 

71

 

Division
of Financial Responsibility

 

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

 

	
  Service Description

  	
   

  	
  Medical

  Group

  	
   

  	
  Hospital

  	
   

  	
  PacifiCare

  
	
  Radiology
  (Diagnostic/Theraputic & Nuclear Medicines) - 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/IOLs)

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  
	
  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.

 

 

72

 

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)

 

1.                                       Introduction.

 

This Exhibit sets forth the terms of a quality incentive program being
implemented by PacifiCare. 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” or the “QIP”).

 

The Quality Incentive Program provides additional compensation to
Medical 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 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                                 Leapfrog as used in the Table shall refer to data reported to PacifiCare on the
website maintained by The Leapfrog Group and supplemental data reviewed by
PacifiCare as reported by the California Office of Statewide Health Planning
and Development.

 

73

 

2.3                                 Measurement Component shall mean the Measures described in the
QIP. Table.

 

2.4                                 Measurement Period is the period for which PacifiCare shall
measure data in order to calculate the applicable QIP Payment. For the initial
and subsequent QIP Payment, the Measurement Period shall vary as defined in
Section 3, QIP Table.

 

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

 

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

 

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

 

2.8                                 Table means the table or tables set forth below specifying the Measurement
Components, Performance Targets, Measurement Period, Data Source, Members
Measured and PMPM Component Payment.

 

2.9                                 Performance Target is the performance target for each
Measurement Component as defined in Section 3, QIP Table. Performance
Targets are determined by the sole discretion of PacifiCare.

 

Members
Measured is defined as described in Section 3. 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.   QIP
Table.

 

	
  Measure

  	
   

  	
  Performance
  Target

  	
   

  	
  Measurement

  Period

  	
   

  	
  Data Source

  	
   

  	
  PMPM
  Component

  Payment

  	
   

  	
  Members
  Measured

  
	
  Leapfrog
  Initiative Participation

  	
   

  	
  85%
  of elective admissions at hospital self-reported on Leapfrog website

  	
   

  	
  12
  month period ending six months prior to month of payout

  	
   

  	
  Leapfrog
  website

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CABG
  volume threshold (per PHS TAG threshold), combined with CCMRP risk-adjusted
  CABG outcomes

  	
   

  	
  85%
  of CABG admissions at qualifying hospitals with >100 CABGs in latest
  reported year (or per latest OSHPD data available) AND NOT CCMRP “Worse Than
  Expected” outcome status

  	
   

  	
  12
  month period ending six months prior to month of payout

  	
   

  	
  Leapfrog
  website, supplemented by OSHPD data

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PTCA
  volume threshold (per PHS TAG threshold)

  	
   

  	
  85%
  of PTCA admissions at hospitals with >200 PTCAs in latest reported year
  (or per latest OSHPD data available)

  	
   

  	
  12
  month period ending six months prior to month of payout

  	
   

  	
  Leapfrog
  website, supplemented by OSHPD data

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  

 

74

 

	
  Measure

  	
   

  	
  Performance
  Target

  	
   

  	
  Measurement

  Period

  	
   

  	
  Data Source

  	
   

  	
  PMPM
  Component

  payment

  	
   

  	
  Members
  Measured

  
	
  Computerized
  patient entry

  	
   

  	
  85%
  of elective admissions at hospitals with self-reported compliance on Leapfrog
  website

  	
   

  	
  12
  month period ending six months prior to month of payout

  	
   

  	
  Leapfrog
  website, supplemented by OSHPD data

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Intensive
  ICU staffing

  	
   

  	
  85%
  of elective admissions at hospitals with self-reported compliance on Leapfrog
  website

  	
   

  	
  12
  month period ending six months prior to month of payout

  	
   

  	
  Leapfrog
  website, supplemented by OSHPD data

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PEP-C
  Project Participation

  	
   

  	
  85%
  of elective admissions at hospitals participating in PEP-C Project

  	
   

  	
  2002
  Survey

  	
   

  	
  California
  Health and Foundation

  	
   

  	
  $

  	
  .1258

  	
   

  	
  All
  Commercial and Secure Horizons assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Breast
  Cancer screening

  	
   

  	
  70.6%
  screening performed on members measured

  	
   

  	
  24
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  .2265

  	
   

  	
  Females
  age 52-69

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cervical
  Cancer Screening

  	
   

  	
  51.0%
  screening performed on members measured

  	
   

  	
  36
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  .2265

  	
   

  	
  Females
  age 21 - 64

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Childhood
  Immunizations

  	
   

  	
  45.0%
  of recommended Immunizations performed on members measured

  	
   

  	
  12
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  .2265

  	
   

  	
  Children
  age 2

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HgbA
  1c Testing - Diabetes

  	
   

  	
  72.0%
  Testing performed on members measured

  	
   

  	
  12
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  .2265

  	
   

  	
  Diabetic
  members age 31 or older

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LDL
  Cholesterol Testing - CAD

  	
   

  	
  71.4%
  Testing performed on members measured

  	
   

  	
  12
  month period ending six months prior to payment period

  	
   

  	
  PacifiCare
  Quality Index and Provider Profile

  	
   

  	
  $

  	
  .2265

  	
   

  	
  Diabetic
  members age 3 1 or older

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Satisfaction
  with PMG

  	
   

  	
  69.0%
  overall satisfaction level

  	
   

  	
  2002
  Member Satisfaction Survey

  	
   

  	
  PacifiCare
  Member Satisfaction Survey

  	
   

  	
  $

  	
  .2265

  	
   

  	
  All
  Commercial and Secure Horizons members assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Satisfaction
  with PCP

  	
   

  	
  77.2%
  overall satisfaction level

  	
   

  	
  2002
  Member Satisfaction Survey

  	
   

  	
  PacifiCare
  Member Satisfaction Survey

  	
   

  	
  $

  	
  .2265

  	
   

  	
  All
  Commercial and Secure Horizons members assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Satisfaction
  with Specialist

  	
   

  	
  73.4%
  overall satisfaction level

  	
   

  	
  2002
  Member Satisfaction Survey

  	
   

  	
  PacifiCare
  Member  Satisfaction
  Survey

  	
   

  	
  $

  	
  .2265

  	
   

  	
  All
  Commercial and Secure Horizons members assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Satisfaction
  with Referral Process

  	
   

  	
  68.9%
  overall satisfaction level

  	
   

  	
  2002
  Member Satisfaction Survey

  	
   

  	
  PacifiCare
  Member Satisfaction Survey

  	
   

  	
  $

  	
  .2265

  	
   

  	
  All
  Commercial and Secure Horizons members assigned to PMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PCP
  Communicates Effectively

  	
   

  	
  63.1%
  overall satisfaction level

  	
   

  	
  2002
  Member Satisfaction Survey

  	
   

  	
  PacifiCare
  Member Satisfaction Survey

  	
   

  	
  $

  	
  .2265

  	
   

  	
  All
  Commercial and Secure Horizons members assigned to PMG

  

 

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

 

75

 

(a)                                  Payment Frequency. QIP Payments 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 2003, October 2003. January 2004, and April 2004.

 

(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. Payments shall be based solely on Eligible
Membership, which only includes Secure Horizons Members. However, payments for
certain Measurement Components, if earned, shall be made from commercial
capitation funds.

 

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 number of Eligible Members.

 

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, 2004. Any such programs shall be on terms determined by
PacifiCare. PacifiCare currently intends to provide for a quality incentive
program for calendar year 2004. Until PacifiCare and Medical Group enter into a
written agreement with respect to any such new program for calendar year 2004,
or thereafter, no such program shall be binding upon PacifiCare.

 

7.                                       Cancellation and Termination of QIP. The terms of this Exhibit shall be
cancelled and of no effect if Medical Group does not participate in the Secure
Horizons Health Plan as of January 1, 2003. Additionally, the Quality
Incentive Program shall terminate at such time as Medical Group no longer is
assigned eligible Membership of at least both one thousand (1,000) Commercial
Health Plan Members and one hundred (100) Secure Horizons Health Plan 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 2003 and the termination date is
September, the “3” in Paragraph 4(b) would be changed to “2”.)

 

76

 

8.                                       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.  In the event that the Medical Group’s
participation in the Secure Horizons Health Plan terminates prior to
April 10, 2004 but the Agreement continues to be in effect and apply to Commercial Health Plan Members, QIP Payments shall continue to be made through
the April 2004 quarterly period, with the QIP Payments to be made based
upon the Eligible Members for the month preceding the effective date of the
termination of the Medical Group’s participation in the Secure Horizons Health
Plan under the Agreement.

 

77

 

PACIFICARE OF CALIFORNIA

 

MEDICAL GROUP/IPA SERVICES AGREEMENT

(SPLIT CAPITATION)

 

EXHIBIT 7

 

WOMEN’S HEALTH BONUS PROGRAM

(This Exhibit 7 is an integral part of this Agreement)

 

1.                                       Introduction.

 

This Exhibit sets forth the terms of a bonus program being implemented
by PacifiCare. The program is designed to compensate Medical Group and its
Participating Providers for efforts taken to improve the accessibility of
women’s health services and the stability of PacifiCare’s women’s health
network as reflected by data measured by PacifiCare, all as described below
(the “Bonus Program”).

 

The Bonus Program will apply only to Medical Group’s provision of
services in certain counties for 2003. The Bonus Program shall not be available
to Medical Group unless: 1) Medical Group and PacifiCare were parties to the
Commercial Health Services Agreement for the entire 2002 calendar year; 2)
Membership in each unique PacifiCare Dec is a minimum of 1,000 Commercial
members throughout calendar year 2003; 3) Medical Group must meet the minimum
threshold for number of physicians (OB/GYNs and Pediatricians); and, 4) The
other Bonus Program requirements are met as outlined below.

 

2.                                       Bonus Program Terms. Medical Group and its Participating
Providers will be eligible for the following separate payments under the Bonus
Program: (a) access bonus payments relating to obstetrical/gynecological
services and pediatric services, (b) stability bonus payments relating to
obstetrical/gynecological services, (c) stability bonus payments relating to
pediatric services. Such payments may be earned upon satisfaction of the
conditions set forth in this Exhibit.

 

a.                                       Access Bonus. PacifiCare shall make “Access Bonus”
payments with respect to each Obstetrician-Gynecologist and each Pediatrician
who is available to accept additional PacifiCare members and who maintains extended
office hours throughout calendar year 2003. Determinations whether the provider
is available to accept additional PacifiCare members and is maintaining
extended office hours shall be determined by calls made periodically by
PacifiCare to the provider’s office. Payments shall be made to Medical Group
for Obstetrician-Gynecologists and Pediatricians who are independent
contractors of Medical Group or employed by Medical Group. The amount of the
Access Bonus payments shall be: (i) one hundred twenty-five dollars ($125.00)
for each delivery (without regard to

 

78

 

multiple births) performed by the Obstetrician-Gynecologist if such
provider is determined to have been available to accept additional PacifiCare
members and to have maintained extended office hours throughout the entire 2003
calendar year; and (ii) a one thousand dollar ($1,000) single payment for each
pediatrician determined to have been available to accept additional PacifiCare
members and to have maintained extended office hours throughout the entire 2003
calendar year. Pediatricians who participate in more than one Medical Group or
in more than one unique PacifiCare Dec, is only eligible for a one time
payment.

 

b.                                      Stability Bonus - Obstetrical/Gynecological
Services. PacifiCare shall
make “Stability Bonus” payments directly to Medical Group if (i) Medical Group
maintains at least one Obstetrician/Gynecologist for each thirteen thousand
(13,000) patients assigned to Medical Group for all plans and (ii) Medical
Group shall, as of December 31, 2003 contract with not less than ninety
percent (90%) of the same obstetrician/gynecologists contracting with Medical
Group as of October 1, 2002. Determinations whether the Medical Group
meets the foregoing criteria shall be determined by PacifiCare’s review of
information in PacifiCare’s provider directories or system.

 

Bonus Payment - The amount of the Stability Bonus shall be twenty cents
($0.20) per commercial health plan member per month, not adjusted for
age/sex/plan-type factors, for the calendar year 2003.

 

c.                                       Stability Bonus - Pediatric Services. PacifiCare shall make Stability Bonus
payments directly to Medical Group if (i) Medical Group maintains one
Pediatrician for every twelve thousand patients, and (ii) Medical Group as of
December 31, 2003 contract with not less than ninety percent (90%) of the
pediatricians contracting with Medical Group as of October 1, 2002.
Determinations whether the Medical Group meets the foregoing criteria shall be
determined by PacifiCare’s review of information in PacifiCare’s provider
directories. PacifiCare shall pay Medical Group twenty cents ($0.20) for each
Assigned Medical Group Member assigned to Medical Group.

 

Stability Payment. The amount of the Stability Bonus shall be twenty
cents ($0.20) per commercial health plan member per month, not adjusted for
age/sex/plan-type factors, for the calendar year 2003.

 

d.                                      Additional Terms. “Extended office hours” means physician
office is accepting appointments before 8:30 a.m. or after 5:30 p.m. at least
one day per week. “Patients” for the purpose of determining the Stability Bonus
shall be the number of Medical Group patients, regardless of payment source
(e.g., private pay, HMO, PPO, etc.), who would be reasonably expected to
request services from Medical Group on an annual basis.

 

e.                                       Timing of Bonus Payments. All payments by PacifiCare pursuant to the
Bonus Program shall be made to Medical Group by May 15, 2004.

 

79

 

3.                                       Bonus Program Summary.

 

	
  Measure

  	
   

  	
  Payment to
  Medical Group

  
	
  Access
  – OB/GYN

  	
   

  	
  ***
  per delivery

  
	
  Access
  – Pediatrician

  	
   

  	
  ***
  one time payment.

  
	
  OB-GYN
  Network Stability

  	
   

  	
  ***
  PMPM

  
	
   

  	
   

  	
   

  
	
  Pediatrician
  Network Stability

  	
   

  	
  ***
  PMPM

  

 

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

 

5.                                       Bonus Programs for Future Periods. PacifiCare in its sole and absolute
discretion may implement Bonus programs for periods from and after
January 1, 2004. Any such programs shall be on terms determined by
PacifiCare. Until PacifiCare and Medical Group enter into a written agreement
with respect to any such new program for calendar year 2004, or thereafter, no
such program shall be binding upon PacifiCare.

 

6.                                       Cancellation and Termination of Bonus Program. The terms of this Exhibit shall be
cancelled and of no effect if Medical Group does not, for any reason,
participate in PacifiCare’s Commercial Health Plan through December 31,
2003.

 

80

 

5.                                       Use of Defined Terms. 
Terms utilized in this Amendment shall have the same meaning set forth
in the definitions to the Agreement.

 

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

 

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

 

	
   

  	
  PACIFICARE
  OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Greg Wright

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP,
  Network Management

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Northwest Orange County
  Medical Group

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PRATIBHA PATEL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  PRATIBHA
  PATEL, MD 

  PRESIDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  3/5/03

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ James P. Agronick

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3/5/03

  	
   

  

 

81Exhibit
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.

 

1

 

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.

 

2

 

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.

 

3

 

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 

 

4

 

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,

 

5

 

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

 

6

 

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

 

7

 

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.

 

8

 

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”.)

 

62

 

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.

 

63

 

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

  	
   

  

 

64

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